PRC Laws No Excuse For Non-compliance With SFC Requests

Keywords: PRC laws, non-compliance, SFC, Hong Kong, section 183 notices

On 23 May 2014, the Court of First Instance ordered Hong Kong accounting firm Ernst & Young (EY) to produce documents relating to a PRC company, Standard Water Limited (the "Company"), to the Securities and Futures Commission (SFC). The court rejected EY's argument that it did not have access to the documents or was otherwise prevented under PRC law from complying with the SFC's section 183 Notices ("the Notices"). This landmark decision in Hong Kong provides some important guidance from the Hong Kong court on compliance with section 183 notices where doing so may contravene foreign laws.

Key Findings

A party subject to a section 183 notice must itself decide how best to comply with a section 183 notice. At a minimum, the documents must be reviewed to determine whether there are any laws which may restrict disclosure to the SFC. If prior approval of other authorities is required to comply