Due Diligence in Hong Kong
Charltons undertakes comprehensive legal due diligence investigations and reports for clients who are buying or selling companies or businesses. We can provide a tailored and cost-effective service based on a client’s requirements, budget and risk profile.
Our Hong Kong due diligence investigations cover a range of sectors and will typically include corporate structure, public registry searches, review of material contracts, ownership of target shares and other key assets, employment related issues, and compliance with statutory requirements and constitutional documents. The scope of due diligence investigation will depend on the purpose of the acquisition and the target’s industry sector, and may also be influenced by practical realities such as available time, expense and overriding need to get the transaction done. Due diligence on regulated businesses (such as SFC-licensed corporations and other financial intermediaries) may entail extensive investigation into past and ongoing compliance.
We will review due diligence results and identify red flags. We aim to provide useful and actionable information for clients, to enable them to proactively assess and mitigate the risks involved when making acquisitions. We can also structure and draft key transaction documentation to address transaction risks and purchase price adjustments arising from due diligence findings.
Our team comprises multi-cultural and multi-lingual lawyers with considerable experience of local and international M&A deals. The firm also has extensive personal links with firms in over 60 countries worldwide and often acts as the coordinating law firm for due diligence in M&A transactions when advice from multiple jurisdictions is required. Our lawyers provide an insightful and highly personalised service to clients, often working round the clock to deliver on transactions spanning several time zones.
Some aspects of due diligence on Hong Kong companies would involve the conducting of public searches from publicly available sources. These include:
- conducting company and business registration searches
- such public searches will focus on examining such matters as, inter alia:
- holding of a valid business registration certificate
- completeness and timeliness of corporate filings
- compliance with the Companies Ordinance (Cap. 622 of the Laws of Hong Kong)
- litigation and winding up/bankruptcy searches on the company and each of its directors and key officers (past and present)
The litigation search would typically cover the following cause books and action lists:
- Cause Book of the Registry of the High Court of Hong Kong
- Cause Book of the Registry of the District Court of Hong Kong
- Daily List of the Registry of the Small Claims of Hong Kong
- Daily List of the Registry of the Magistrates’ Courts of Hong Kong
- Daily List of the Registry of the Labour Tribunal of Hong Kong
- Daily List of the Registry of the Lands Tribunal of Hong Kong
Winding up searches would cover compulsory winding up searches on the company and bankruptcy and approved individual voluntary arrangement searches for individuals conducted through the Official Receiver’s Office. NB: it should however be noted that the Official Receiver’s Office does not keep records of voluntary winding ups. However, the Companies Ordinance requires a printed copy of the resolution passed by the company for voluntarily winding up must be registered within Companies Registry within 15 days from passing of that resolution. Further, the company must give notice of the resolution by advertisement in the Gazette Intellectual property searches on the company would typically cover the following public searches:
- patent searches on the Patent Registry of the Intellectual Property Department (IPD)
- trade mark searches on the Trade Mark Registry of the IPD
- registered design searches on the Designs Registry of the IPD