Hong Kong

The Hong Kong government has launched a public consultation on enhancements to regulate licensed money lenders. Currently, any entity or person carrying on a business as a money lender in Hong Kong must obtain a money lender’s licence. The licensing of money lenders and regulation of money-lending activities are governed by the Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong) and implemented by the Licensing Court, the Companies Registry (CR) and the Police, each playing different roles and functions within the money lenders regulatory regime. In recent years, the community has become increasingly concerned about excessive personal borrowing, especially by foreign domestic helpers (FDHs) and other low-income earners. Statistics reveal that unsecured personal loans granted by licensed money lenders reached a high level of 9.3% in 2024. Larger money lenders reflected that the default rate for borrowers with monthly income of HKD10,000 or less was 9.4%, and the rate for FDHs was 9.9% in 2023. The Hong Kong government is proposing the following measures, which mainly focus on unsecured personal loans: Enhancing regulation of unsecured person loans It is proposed that a cap be set on (a) the aggregate amount of unsecured personal loans or (b) the “debt servicing ratio”. If the borrower’s monthly income is HKD5,000 or less, (a) the aggregate unsecured personal loan cap is one month’s income and (b) the “debt servicing ratio” cap is 35%.  Where the monthly income is between HKD5,001 and HKD10,000, (a) the aggregate unsecured personal loan cap is two months’ income and (b) the “debt servicing ratio” cap is 40%. For example, if a borrower’s monthly income is HKD5,000, his debt servicing amount is capped at HKD1,750 (35% of HKD5,000). If he takes a personal loan with an annual interest rate of 30% to be repaid in 12 monthly instalments, then the maximum principal amount will be HKD18,000. Further, to prevent situations where borrowers take large loans before disappearing when their employment contracts end, the government proposes that repayment periods for unsecured personal loans shall not exceed the remaining term of the borrowers’ employment contracts. Strengthening protection of public interest Under the current regime, an intending borrower may provide a referee to the money lender if the referee has given written consent to act in respect of the loan application. The role of a referee is confined to the provision of information about an intending borrower, and the referee should not be required to repay the loan. Yet, employers of certain defaulting borrowers, including those employing FDHs who reside with them, and non-debtors are harassed by money lenders and debt collectors, causing social problems. To further protect public interest, including the interests of FDH employers, the government proposes that when borrowers provide referees in their loan applications, money lenders must proactively send a letter to the referee to verify the authenticity of the written consent, or else, the referee must sign the written consent in person at the money lender’s premises. As an alternative, the government proposes prohibiting money lenders from requiring borrowers to provide referees when applying for unsecured personal loans. Optimising the borrower affordability assessment The “Credit Data Smart” (CDS) was introduced in April 2024 by the Hong Kong Monetary Authority together with industry associations of banks, money lenders and deposit-taking companies. The CDS enhances protection of consumer credit data and also provides more choices of consumer credit reference service providers.  As in May 2025, 36 money lenders (accounting for about 64% of the loan business of all licensed money lenders) have joined the CDS. The government proposes to require all licensed money lenders to regularly submit personal credit information of their borrowers to the CDS, including loan applications, terms of approved loans and repayment records, to complete the database of the CDS. It also proposes requiring money lenders with a certain scale of unsecured personal loan business to, before approving loans, assess the affordability of intending borrowers based on their personal credit reports under the CDS, in order to enhance their application assessments. Enhancing complaint handling process The government will mandate the CR to enhance the transparency in handling complaints against money lenders and to strengthen communication and exchange of intelligence with the Police. Also, the CR is expected to reinforce the system for supervising money lenders in handling complaints. It is to regularly collect and analyse statistics from money lenders on complaints received by them. It will also monitor whether money lenders with persistently high complaint figures have established procedures to ensure proper handling of customer complaints, to take appropriate remedial actions and to ensure their employees and agents can provide complainants with correct information. Stepping up publicity and education The Government will increase awareness and education targeting FDH communities, young people, and low-income earners to help them better understand the risks of excessive borrowing. To spread the messages effectively, the campaign will use multiple languages and different methods, and the messages will also be conveyed by the Labour Department, the Investor and Financial Education Council, and non-governmental organisations. For FDHs in particular, the government will remind them not to use their employers as loan referees or give their employers’ home addresses as their own contact details when applying for personal loans. It will provide more accessible channels for FDH employers to report money lenders that violate licensing conditions. Enhancing money lender regulatory regime The government proposes the licensing and supervision of money lenders should be handled centrally by a government department (i.e. CR), including reviewing and approving applications, monitoring compliance and prosecuting violations. Details of money lenders with repeated offences will be published on the government’s website for public reference. These measures will require amendments of relevant provisions of the Money Lenders Ordinance. Rossana Chu is a partner and Beverly Fu is an associate at YYC Legal [email protected] [email protected]

Hugill & Ip, renowned for its comprehensive corporate, family and private client services, is pleased to announce the appointment of Polly Chu as Partner, effective mid-October 2025. Polly Chu’s arrival marks the strategic launch of the firm’s dedicated Real Estate and Conveyancing practice, significantly enhancing Hugill & Ip’s ability to provide seamless, end-to-end legal solutions for both corporate entities and private individuals navigating Hong Kong’s property market. Polly Chu is a highly respected practitioner with over two decades of experience in all aspects of Hong Kong property law. Her expertise spans residential and commercial conveyancing, leasing, property financing (including mortgages and refinancing), and handling complex property-related disputes. Her appointment underscores Hugill & Ip’s commitment to expanding its core service offerings in response to growing client demand for integrated legal support across their most valuable assets. In her new role, Polly will lead the development of the new practice area, focusing on streamlining property transactions, providing robust due diligence for commercial acquisitions, and advising on complex land matters in the context of wealth management and corporate restructuring. Strategic expansion and partner commentary The addition of the Real Estate and Conveyancing practice is a strategic move designed to integrate property expertise directly into the firm’s existing strengths in litigation, private client, and corporate law. Caroline McNally commented on the strategic advantage Polly Chu brings to dispute resolution: "Polly’s expertise is a vital addition. In complex commercial and family disputes, property assets are frequently central. Whether it involves enforcing a contract for sale, managing landlord-tenant litigation, or dealing with adverse possession claims, her ability to provide immediate, precise real estate advice will significantly strengthen our advisory and litigation strategies. This ensures our clients receive seamless, end-to-end solutions, whether they are buying, selling, or fighting to protect their assets. Her presence allows us to manage property-related risks proactively from the outset of any dispute." Alfred Ip highlighted the importance of real estate expertise for private clients and wealth management: "For our private clients, real estate often forms the cornerstone of their wealth and estate planning, whether it’s a family home or an investment portfolio. Polly’s deep knowledge of Hong Kong conveyancing procedures allows us to integrate property structuring flawlessly into our trust and succession planning services. This ensures generational wealth transfer is handled efficiently, securely, and in full compliance with complex land registration requirements. This expansion is essential for holistic private client care, safeguarding our clients' most valuable physical assets." Adam Hugill emphasised the benefit to the firm’s client base: "The launch of the Real Estate practice is a game-changer for many of our clients, who require swift and accurate advice when dealing with property. Whether they are disposing of matrimonial properties, conducting property due diligence for M&A transactions, or managing large-scale corporate relocations, Polly provides the necessary specialist insight. This integration allows us to offer a truly comprehensive service, managing both the corporate structure and the underlying assets with expert precision." About Polly Chu Polly Chu holds extensive experience advising high-net-worth individuals, property developers, and institutional investors on diverse property portfolios. She is known for her meticulous attention to detail and her ability to navigate the complex regulatory environment of Hong Kong’s land and property laws. Polly is dedicated to providing practical, commercially sensible advice that achieves client objectives efficiently.

In Re Success Lane Development Limited [2025] HKCFI 1121, the Companies Court considered whether a company could resist a winding-up petition presented based on outstanding interlocutory costs orders (payable forthwith or within 14 days upon summary assessment) by relying on a cross-claim for damages in ongoing legal proceedings. Background The dispute between the Petitioner and the debtor Company  arose over a "Long Stay Room Contract" under which the Company rented a hotel room for storage purposes.  In the District Court, the Petitioner alleged that the Company had damaged various items stored in the hotel room, and claimed against the Petitioner for damages in the sum of at least HK$3,000,000. The Petitioner had obtained various costs orders against the Company as a result of interlocutory applications in the District Court proceedings.  The costs orders are all payable forthwith in the total sum of HK$697,534.66 plus judgment interest (the “Costs Orders”). Based on the unpaid Costs Orders, the Petitioner served a Statutory Demand on the Company.  Shortly after the expiry of the Statutory Demand, the Company applied to set aside and stay the Costs Orders by commencing a separate set of District Court proceedings.  Yet, the said applications were also dismissed. As of the date of the Petition hearing, the Costs Order were either orders not appealed against, or orders against which leave to appeal had been refused by the Court of Appeal.  The main issue at the hearing was whether the Company could resist the Petition (based on Costs Orders payable forthwith) with a cross-claim (for damages in the sum of at least HK$3,000,000 in the ongoing District Court proceedings, the “Cross-claim”). The Court’s Reasons The Companies Court held that the Company could not resist the Petition with the Cross-claim for the following reasons:- (1) The underlying policy of making costs orders payable forthwith is to deter parties from commencing unmeritorious interlocutory applications. To uphold this policy, the Court should regard such costs orders as free-standing, and though such costs orders are not equivalent of cash, it should be as readily enforceable almost as readily cash-able as cheques. In this case, the Company should not be allowed to use the Cross-claim to resist the Petition. (2) There could be no injustice done to the Company if it is to be wound up, because if the Company has a valid claim against the Petitioner, the Company in liquidation could still pursue it. (3) On the contrary, it would be unjust if the Company could resist the Petition based on the Corss-clam, as (a) it would in effect confer a right on the Company to retain the Petitioner’s money as a security for its Cross-claim, and (b) the Costs Orders, being free-standing and supposed to be readily enforceable, have nothing to do with the Cross-claim, in the sense that even if the Company eventually succeeds in its claim in the District Court, the Company would still have to pay the Costs Orders. Having said that, the Companies Court also indicated that its decision was made based on the present facts, and that there may be different considerations if, e.g. the District Court main proceedings are not ongoing but finally concluded, or the receiving party may be to blame for not enforcing any immediately payable costs orders earlier. In view of this case, company debtors should note that the existence of a cross-claim against the petitioner generally would not constitute a valid ground to oppose a winding-up petition presented based on costs orders payable forthwith.  As such, it is advisable for company debtors to settle any costs orders payable forthwith as soon as possible to avoid winding-up petitions being presented against them.  In case of any doubt, legal advice should be sought. If you have any inquiries, please feel free to contact us for more information. Managing Partner: Ian Lo Email: [email protected] Partner: Anderson Siu Email: [email protected]  

Factual Background Up Energy Development Group Ltd (the “Company”) was incorporated in Bermuda and listed on the Hong Kong Stock Exchange. It entered into provisional liquidation in October 2016 and was eventually wound up in Bermuda Court on 11 March 2022.  In Hong Kong, the winding up order was made on 6 May 2022. At the Hong Kong Court of First Instance (the “CFI”), the Company’s provisional liquidators (“PLs”) appointed by the Bermuda Court submitted that they anticipated winding-up order would be made shortly in Bermuda (which did materialize), and they did not need an additional ancillary winding-up order in Hong Kong as there were no benefits.  However, the CFI found otherwise. Ince represents the opposing creditor (the “Appellant”), in its appeal against the winding-up order made by the CFI.   Legal Position in Hong Kong for Winding Up Foreign Incorporated Companies In asking Hong Kong courts to exercise their discretion to wind up foreign incorporated companies, petitioners must satisfy the 3 threshold requirements below:- There must be a sufficient connection with Hong Kong; There must be a reasonable possibility that the winding-up order would benefit those applying for it; and The court must be able to exercise jurisdiction over one or more persons in the distribution of the company’s assets. The 3 threshold requirements represent the Hong Kong courts’ self-imposed restraints emanated from the Hong Kong Court of Final Appeal’s decision in Kam Leung Sui Kwan v Kam Kwai Lai (2015) 18 HKCFAR 501, which considered the need to avoid exorbitantly usurping the jurisdiction where the company is incorporated, as it is supposedly the most appropriate jurisdiction to wind up a company. Amongst the aforesaid requirements, the 2nd threshold requirement faces the most contention in terms of its factual application. The legal principles are, however, quite settled, and will be satisfied as long as the benefit is of “real possibility”, rather than merely a “theoretical” one when assessed by a “pragmatic” lens. (see Shandong Chenming Paper Holdings Limited v Arjowiggins HKK 2 Ltd (2022) 22 HKCFAR 98).   Findings of the Court of Appeal (“CA”) While CA agrees it was unsatisfactory that the petitioner did not plead how the 2nd threshold requirement was met and only mentioned such matters in its skeleton arguments, which afforded no opportunity for the PLs and the Appellant to properly respond, this alone was not determinative of the appeal. Rather, the crux lies in whether the CFI was correct in finding that the 2nd threshold requirement is satisfied on the evidence. In this connection, CA answered in the negative. First, CA found there were “real problems” with respect to the assets relied on by CFI. (1) In respect of the Company’s bank deposit: about HK$170,000 out of the HK$200,000 is due to the bank, which left only HK$30,000 of cash, which is negligible in the scheme of things. (2) In respect of the Company’s cash funds: whilst CFI found the Company would presumably have substantial cash funds as it had incurred substantial legal costs in dealing with resumption of trading, the Scheme, the petition and the Bermuda Proceedings, and remuneration paid to PLs. However, CA agreed with the Appellant that the petitioner did not raise evidence or even in its skeleton submissions any of such matters, and it would thus be speculative to assume that such cash funds (which were derived from loans as submitted by the PLs) would necessarily belong to the Company rather than, for example, held on trust for the loan funders. (3) Further, 2 of the 3 companies which CFI thought were “direct subsidiaries” of the Company were in fact only indirectly held by the Company through BVI companies. In this regard, even the petitioner’s own BVI legal expert considered that a HK winding up order would be unlikely to be recognised in the BVI, and thus would not really derive benefit for the creditors. The only remaining subsidiary UE Finance, is dwarfed by liabilities, and there is accordingly no basis to regard Company’s shareholding in UE Finance as a meaningful asset to produce value for its creditors. Second, CA accepted that the “full suite of powers” enjoyed by liquidators under Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) are only theoretical in the present case, as the petitioner did not explain why such powers are needed or would benefit the creditors.  In particular, CA placed significance in the PL’s stance that they did not see any specific matter that called for investigation, especially because they had been in their office for several years and would have acquired considerable familiarity with the affairs of the Company.  In other words, there was no factual basis for saying that there is reasonable possibility for real benefit for the petitioner from the winding up. Third, whilst the status of the Company as a HK listed company might theoretically entail the following 6 matters (as found by CFI):- (1) The Company maintained principal place of business in HK and has given an undertaking to comply with the Listing Rules; (2) The Company maintained sufficient management presence in HK; (3) The Company raised funds through the issue of shares; convertible notes or bonds and benefited from ability to trade on HKEx; (4) The Company borrowed loans from banks and other financial institutions in HK; (5) The Company had an obligation to comply with the provisions under the Companies Ordinance which apply to non-HK company; and (6) The Company had an obligation to comply with Securities and Futures Ordinance, CA found that the above factors do not justify that there is a reasonable possibility of real benefit derived from the availability of more extensive powers on winding up. CA found that the above factors do not justify that there is a reasonable possibility of real benefit derived from the availability of more extensive powers on winding up.   Conclusion Although the CA maintains even the most contentious 2nd threshold requirement remains a “low” test with many types and ranges of benefits already explored and accepted by case precedents, factual circumstances must still be applied in support of the argument that there are real benefits from a winding up order in Hong Kong. Any creditor seeking to wind up a company in Hong Kong should also properly plead matters related to the 3 threshold requirements to avoid the argument of procedural unfairness. In case of doubt, legal advice should be sought. The full CA judgment can be accessed here.   If you have any inquiries, please feel free to contact us for more information Managing Partner: Ian Lo Email: [email protected] Partner: Anderson Siu Email: [email protected]