Our Partners Jenny Wong and Mathew Liu, and our Associate Koey Wong, have been accredited as General Mediators by Hong Kong Mediation Accreditation Association Limited.
SFKS is pleased to announce that our Senior Associate Ada Wu becomes the 2025 - Fourth Batch of Hong Kong lawyers qualified to practice in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”). Following this accreditation, Ada is qualified to provide professional legal services in specific civil and commercial matters involving laws of Chinese Mainland.
Ada’s GBA qualification will further enhance our capability in providing quality services to clients in an efficient manner. We are committed to strengthening our communication with the legal professionals in Chinese Mainland, and contributing to the modernization and development of the legal profession in GBA.
We heartily congratulate and thank the following recipients of Long Service Awards:-
Served for 40 Years: Shereen Ho, Secretary
Served for 35 Years: Margaret Choi, Partner
Served for 35 Years: Gigi Li, Secretary
Served for 30 Years: Celine Tse, Accounts Officer
Served for 30 Years: Vincent Wu, Legal Executive
Served for 25 Years: Simon Siu, Senior Partner
Served for 25 Years: Olson Lai, Senior Associate
Served for 25 Years: Rebecca Lau, Secretary
Served for 20 Years: Roy Leung, Managing Partner
Served for 10 Years: Carrie Li, Associate
Served for 10 Years: Frances Li, Company Secretary
Their experiences and excellence have made our firm’s success. The awards have been presented in our internal session in December 2025.
In a recent decision of HD HYUNDAI INFRACORE CHINA CO., LTD v. LI ZHIWEI [2025] HKCFI 5714, the Hong Kong Court of First Instance provided significant clarity on the enforcement of Mainland Chinese judgments, particularly compensation orders arising from criminal proceedings, under the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap.645) (the “Ordinance”).
Background
The dispute arose from a fraud perpetrated against HD Hyundai Infracore China Co., Ltd. (the “Plaintiff”), resulting in a loss of approximately RMB 190 million. Li Zhiwei (the “Respondent”), one of the fraudsters, was convicted in the Mainland in 2017. In 2022, the Higher People’s Court of the Inner Mongolia Autonomous Region finalised a judgment requiring the joint and several return of the RMB 190 million to the Plaintiff.
The enforcement proceedings initially recovered approximately RMB 24.9 million and were terminated in July 2023. Following the commencement of the Ordinance in Hong Kong in January 2024, the Plaintiff applied to the Intermediate People’s Court of Wuhai City, Inner Mongolia Autonomous Region (the “IPC”) to resume enforcement proceedings. In 2024, an enforcement ruling was issued, ordering the return of the remaining RMB 162,061,811.37 (the “2024 Criminal Enforcement Ruling”). The Plaintiff subsequently initiated legal action in Hong Kong against the Respondent in December 2024, seeking to register a part (the “Relevant Part”) of the 2024 Criminal Enforcement Ruling as follows: -
“现責令李志伟 [Li]… 向被害单位艾奇蒂现代迪万伦工程机械有限公司 (原名斗山工程机械 (中国 )有限公司 ) [HD Hyundai] 退赔人民币162061811.37 元 。”
Legal Issues
The main legal challenge was determining whether an "enforcement ruling" issued by a Mainland court under the Ordinance was registrable. To address this, the Court examined the following key legal issues: -
The Court’s Analysis
The Honourable DHCJ Mr. Wong outlined the concerns of Master Hui, who had dismissed the ex parte application on 12 March 2025, on the grounds that the 2024 Criminal Enforcement Ruling appeared to be a mere administrative outcome of enforcement and therefore not a registrable judgment under the Ordinance. However, the Plaintiff lodged an appeal and adduced further evidence, including an explanatory note from the IPC and an expert report from Mr Jiang Zhe.
Regarding the nature of the 2024 Criminal Enforcement Ruling, Mr. Jiang’s expert evidence clarified that it falls under category 11 (i.e., “other matters to be settled by a ruling”) pursuant to Article 157 of the Civil Procedural Law of the Mainland (the “CPL”), rendering it a legally effective (i.e., enforceable and non-appealable) judgment in the Mainland. Further, the 2024 Criminal Enforcement Ruling involves resumed enforcement and an order for asset transfer, rather than being a mere asset-preservation ruling.
Given that the enforcement procedure is independent of the trial procedure in the Mainland, the Court held that an enforcement ruling is an independent, standalone decision rather than a mere repetition of the underlying criminal judgments. In particular, the validity of a duly issued enforcement ruling remains unaffected even if the underlying legal instrument is revoked or found to be erroneous. An enforcement ruling may also address facts beyond the scope of the underlying judgment and/or that occurred after the judgment.
In adopting textual, purposive and systematic approaches suggested by the PRC legal expert, the Court held that the Relevant Part, despite appearing before the words “裁定如下”, remained an operative part of the 2024 Criminal Enforcement Ruling.
The Honourable DHCJ Mr. Wong ordered, inter alia, the registration of the Relevant Part.
Significance
This case demonstrates the Hong Kong courts’ intention to uphold a simple and straightforward registration regime without scrutinising the evidence and documents in Mainland proceedings. It is followed by the Hong Kong courts’ deference to the IPC’s explanatory note and the PRC expert evidence when interpreting the nuances of Mainland laws, whether procedural or substantive.
Another key insight is despite the underlying criminal judgment was handed down in 2022, the Hong Kong Court accepted the IPC’s explanatory note and the PRC expert opinion and recognized that the 2024 Criminal Enforcement Ruling as an independent and standalone judgment. As noted, an enforcement ruling remains valid even if the underlying trial judgment is later revoked. Accordingly, the 2024 Criminal Enforcement Ruling (which was dated after the commencement of the Ordinance) is considered independent and therefore registrable, even where the criminal offence and conviction occurred before the Ordinance’s commencement date.
In a separate proceeding, the interlocutory injunction was granted in favour of the Plaintiff pursuant to section 21M of the High Court Ordinance (Cap.4) in May 2024, 7 months before the filing of the registration application in December 2024. This was intended to aid Mainland enforcement proceedings and the subsequent registration in Hong Kong. Coupled with the new registration regime, ancillary reliefs will hopefully ensure the effective enforcement of Mainland legal interests and assist in preserving assets.
Importantly, this case establishes a notable precedent for the application of the Ordinance, illustrating a nuanced shift from the old registration regime. The broader scope of the new registration regime provides a more effective and convenient route to recovery.
Conclusion
Mainland judgement given in proceedings that are criminal in nature and contains an order for the payment of a sum of money in respect of compensation or damages by a party to the proceedings were not covered in the old registration regime. The present case clarifies significantly on how this part of the new registration regime would actually come into place. This precedent serves as a good guidance to the practitioners for the analysis on the nature of the criminal judgments and their registrability under the new regime. It is most welcome that the Hong Kong Court in this case did demonstrate the determination to adopt a pragmatic and facilitating approach to enforcing compensation orders from Mainland criminal proceedings.
The judgment of the decision can be viewed here.
This article is co-authored by our Partner Jenny Wong and our Trainee Solicitor Jasper See.
Disclaimer : This material is provided for general information only. It does not constitute legal or other professional advice nor constitute any lawyer-client relationship between Sit, Fung, Kwong & Shum and any user or browser. No liabilities are assumed arising from any reliance of information in this material.
The financial landscape of Hong Kong is undergoing a major transformation with the impending launch of the Uncertificated Securities Market (USM) Regime, expected in early 2026. This initiative, driven by the Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing Limited (HKEX), represents a pivotal shift from the traditional paper-based system to a modern, electronic framework for holding and transferring listed securities. For listed companies in Hong Kong, understanding the legal and operational implications of this regime is crucial for a smooth transition and compliance. This material highlights the key features of the regime, as well as action points for listed companies and implications for investors.
The USM regime is established through a comprehensive legal framework. The foundation is the Securities and Futures and Companies Legislation (Amendment) Ordinance 2021, which introduced necessary changes to the Securities and Futures Ordinance (SFO), the Companies Ordinance (CO), and the Stamp Duty Ordinance (SDO). This primary legislation provides the legal basis for the uncertificated system and the new regulatory regime for approved securities registrars.
Supporting this are two key pieces of subsidiary legislation: the Securities and Futures (Uncertificated Securities Market) Rules (Cap. 571AS) (USM Rules), governing the operational and procedural aspects of the USM environment, and the Securities and Futures (Approved Securities Registrars) Rules (Cap. 571AT) (ASR Rules), which formalize the approval and regulation of persons providing securities registrar services.
For HKEX-issuers, the HKEX has published Listing Rule amendments to facilitate the implementation of the USM regime, which apply to both HKEX-listed issuers and HKEX-listing applicants.
The core objective of the USM is to provide an efficient and secure means for investors to hold legal title to their Hong Kong-listed securities in their own names, electronically, eliminating the need for physical share certificates: Summary of Features of USM.
The introduction of the USI profile is a key change, allowing investors to hold legal title directly. While USI-held securities must still be deposited into CCASS for trading on HKEX, the process will be faster and more convenient than the current paper-based system, encouraging greater investor participation and shareholders’ transparency.
The USM regime applies to "prescribed securities" including listed shares, depositary receipts, SFC-authorised funds where the units are withdrawable from CCASS (e.g. REITs), subscription warrants and rights under a rights issue. The transition is phased, with mandatory participation for Key Jurisdiction Issuers (KJIs)—listed companies incorporated in Hong Kong, Mainland China, Bermuda, and the Cayman Islands.
KJIs must set a USM participation date, which cannot be later than a specified deadline falling within a five-year period from the USM implementation date (expected early 2026 to 2031). HKEX will determine the specific deadline for USM participation for each HKEX-listed company considering factors such as the size of the HKEX-listed company, the number of title instruments in circulation, any forthcoming corporate actions and whether amendments are required to its terms of issue or constitutional documents. Issuers incorporated in other jurisdictions may participate voluntarily, provided their local laws permit. The transition for existing prescribed securities will occur in batches between 2026 and early 2031.
The transition requires proactive and timely steps from listed companies, particularly KJIs. See a table outlining the Critical Actions and Expected Timelines for Listed Companies.
The requirement to appoint an ASR by the USM Implementation Date applies to all issuers of prescribed securities, regardless of whether their securities have become participating securities under the USM. This is an immediate and critical step, as any gap in ASR appointment could lead to a suspension of securities trading on HKEX. Issuers shall update internal processes to handle new compliance obligations under the USM regime, and have parallel systems in place to accommodate both certificated and uncertificated securities.
For new applicants seeking a listing after the USM Implementation Date, the requirements are even more immediate. They must appoint an ASR and amend their constitutional documents prior to their date of listing. Furthermore, they must provide information on their USM participation in their listing document.
The USM regime introduces significant changes for investors, primarily offering a new choice in how they hold their securities.
Holding Options:
1 Through Intermediaries (CCASS Nominee): This remains the default and most common option for trading, where securities are held in the name of HKSCC Nominees to facilitate trading on HKEX. This is convenient for trading but means the investor holds a beneficial, not legal, title.
2 Directly in Own Name (USI Facility): Investors can opt to hold legal title in their own name via a digital Uncertificated Securities Investor (USI) profile set up with the ASR, and manage their securities electronically online using the platform operated by the ASR. This is not mandatory and investors can still keep their securities already issued in certificated form. If an investor holds multiple participating securities, and the issuers of such securities have appointed different ASRs, the investor will need to set up multiple USI accounts with these different ASRs.
Key Investor Benefits:
• Enhanced Security: Eliminates the risk of loss, theft, or forgery associated with physical share certificates.
• Faster Processing: The manual and time-consuming process of transferring paper-based shares (which can take around 10 business days) is replaced by electronic transfer, significantly speeding up settlement.
• Direct Shareholder Rights: Holding securities via a USI Facility set up with the ASR allows investors to enjoy full shareholder rights directly, including receiving corporate communications from issuers, initiating or affirming transfer instructions and submitting instructions in respect of certain corporate actions electronically and directly without relying on intermediaries.
Phasing out Existing Paper Certificates: Investors holding physical share certificates are not mandated to dematerialize existing securities (i.e. convert them to uncertificated form) except in certain specific circumstances. However, from its USM participation date, an issuer can only issue new securities in uncertificated form (e.g. on a rights issue or scrip dividend) and cannot issue physical title instruments in respect of existing securities (e.g. upon a transfer). This means request for replacement due to loss or damage of physical title instruments, and transfers and issuances of securities, after the issuer’s participation in USM will result in uncertificated securities. In addition, existing securities held in CCASS in the name of HKSCC Nominees will all be dematerialized, and uncertificated securities cannot be rematerialized except in limited situations such as delistings. If investors want to dematerialize their existing securities, they need to set up a USI Facility, and deposit their physical certificates, with the relevant ASR to convert them into uncertificated form.
A significant benefit of the USM regime is the potential for enhanced ownership transparency. As more investors hold securities in their own names, issuers will gain a clearer picture of their shareholder base, facilitating more direct engagement and communication. This improved transparency is particularly relevant for corporate actions like takeovers and privatisations, as it may reduce the reliance on the complex and time-consuming ownership investigation procedure empowered to a listed issuer under section 329 of the SFO (which involves sending a set of notices tracing ownership from brokers through to the ultimate beneficial owners), leading to more efficient transaction processes.
The Uncertificated Securities Market Regime is a major step in modernising Hong Kong's securities market infrastructure, aligning it with international best practices. While the transition presents legal and operational challenges for listed companies, particularly the KJIs, the long-term benefits of increased efficiency, reduced risk, and enhanced investor engagement are substantial. Legal advisers can guide their clients through the necessary constitutional amendments, ASR appointments, and operational adjustments to ensure full compliance and readiness for the paperless future of Hong Kong's capital markets. The time for listed companies to act is now, engaging with their securities registrars and legal advisors to map out a clear and timely transition plan.
Disclaimer : This material is provided for general information only. It does not constitute legal or other professional advice nor constitute any lawyer-client relationship between Sit, Fung, Kwong & Shum and any user or browser. No liabilities are assumed arising from any reliance of information in this material.
