SFKS was delighted to welcome the Legal and Compliance Department team of our long-standing client, China Resources Group (the "CR Legal Team"), for an exchange visit. The visiting team included Assistant Chief Legal Counsel Durward Kan, Senior Group Legal Counsel Johnny Ip, and Senior Group Legal Counsel Anderson Liu.
During the meeting, representatives from our firm, including Managing Partner Roy Leung, Senior Partner Joseph Wong, and Partner Margaret Choi, provided an in-depth overview of our firm's recent business developments and achievements. They exchanged insights with the experienced CR Legal Team on key practice areas such as real estate, corporate and commercial matters, M&A and financing, arbitration and mediation, and intellectual property, all of which are core legal service areas of our firm.
SFKS has long been serving major corporations and state-owned capital investment companies, including China Resources Group. The Group currently owns 9 Hong Kong-listed companies and 13 Chinese mainland-listed companies, totaling 22 listed companies, with a broad and deep business portfolio ranging from cross-border investment to consumer goods. Its businesses span integrated energy, industrial finance, technology and energy development, emerging industries, urban construction, health products, and food and beverage retail. Leveraging our diversified core legal services and cross-border legal expertise between Hong Kong and the Chinese mainland, SFKS looks forward to continuing to provide efficient, high-quality legal services and support to major corporate groups.
SFKS is one of the law firms on the Panel List of Hong Kong Legal Services Providers Supporting Overseas Expansion, compiled by the Department of Justice and featured in the GoGlobal Cross-sectoral Professional Services Platform launched by the Hong Kong Trade Development Council (HKTDC). Our Managing Partner Roy Leung attended the HKTDC GoGlobal Connect Launch Ceremony on 14 April 2026, which was officiated by Algernon Yau, Secretary for Commerce and Economic Development of the Hong Kong SAR Government, and Prof Frederick Ma, Chairman of the HKTDC.
SFKS fully support Chinese Mainland enterprises in “going global” to expand into international markets through Hong Kong as a strategic platform. We have abundant experiences in corporate affairs, commercial litigation and cross-border dispute resolution, and other industry-specific services, e.g. IT, banking and finance, infrastructure engineering, consumer goods. Comprehensive services to Chinese enterprises are provided by our teams of experienced lawyers, some of which are also qualified as Greater Bay Area (GBA) lawyers, China-Appointed Attesting Officers and Notary Public.
Our Senior Associate Cindy Fong has been appointed as a member of the Overseas Lawyers Qualification Examination (OLQE) Committee and the Trainee Solicitors Committee (TSC) of the Law Society of Hong Kong, for a term of 1 year respectively.
The OLQE Committee establishes and reviews the competency standard required for overseas lawyers sitting the OLQE, including its syllabi, reading list, information package and policy.
The TSC considers policy matters relating to the trainee solicitor contract system and the training of trainee solicitors, including the quality of training to trainee solicitors, and makes recommendations thereto.
SFKS works closely with the Law Society of Hong Kong in a wide range of legal and social matters, especially to strengthen legal practices, support legal training and continuous professional development, and connect members of the Law Society of Hong Kong with other legal communities in Chinese Mainland and worldwide.
Introduction
In an attempt to modernize the position of trust law in Hong Kong, consultations regarding amendments to the Trustee Ordinance (Chapter 29 of the Laws of Hong Kong) (the “Ordinance”) were made in 2009 and 2012 respectively. Such amendments finally came into effect on 1 December 2013. Different amendments were made, including, among others, the enactment of Section 41X of the Ordinance in relation to the reservation of powers by the settlor in investment or asset management functions under the trust. This provision provides, among other things, the following:
“(1) A trust is not invalid only because of the person creating the trust (the settlor) reserving to the settlor any or all powers of investment or asset management functions under the trust.
(2) If a power or function referred to in subsection (1) has been reserved by the settlor, a trustee who acts in accordance with the exercise of the power or function is not in breach of the trust.”
Section 41X only deals with the reservation of power (“Reserve Power”) by the settlor in investment or asset management functions, and no other powers or persons are provided for in the provision. While the legislative intent has made it clear that the amendment is only to put it beyond doubt that a trust would not be invalidated because of the mere fact that the settlor has reserved the settlor’s power of investment or asset management functions, questions have arisen as to whether only the settlor is allowed to reserve them?
Delegation of Reserve Power by Settlor
Position as to Trustee:
For trustees, at common law, the fundamental rule was that a trustee could not delegate a power given to him if the power reposed a personal trust and confidence in him. However, the Ordinance now expressly provides for the power of appointment of agents and the delegation of functions by a trustee. Under Section 41B of the Ordinance, the trustee may delegate to another person as his agent certain functions other than the distribution of assets, the decision on payment out of income or capital, the appointment of trustees and the power of delegation. A trustee still cannot delegate the fundamental duties and functions which should be exercised at its discretion.
Position as to Settlor:
There is no equivalent provision for the Reserve Power of the settlor. Unlike the trustee, traditionally the settlor should have dropped out of the picture when the trust is properly constituted, there is nothing which must be reserved at the discretion and control of the settlor in order for the settlor to fulfil any duty under the law, and there is no power which the settlor has to delegate in general. Accordingly, the delegation of power by a settlor (as opposed to a trustee) is not a common feature and may not be necessary in a trust.
Unlike trustees who are in the position of trust and confidence, the settlor may not have such onerous duties. Where the Reserve Power of the settlors is merely a personal right, the settlors should be able to exercise such power at their own discretion for their own benefits. We submit a settlor may delegate the exercise of power to others as it will not affect any fulfilment of duties owed to the beneficiaries. Moreover, if Section 41B of the Ordinance has specifically allowed the trustees to authorize a person to exercise one or more of their delegable functions as their agent, the settlors, who do not owe any onerous duty to the beneficiaries in general, should be subject to a lesser degree of control and they should also be able to delegate their Reserve Power as they deem necessary or desirable.
Structuring the Reserve Power and Delegation Framework:
As part of the arrangement of a trust, the Reserve Power should be expressly specified in the trust deed, which is the basic document constituting the trust. The reservation of power may also be contained in some other documents and the trustee may give effect to these documents, such as a letter of wishes, but such documents may not be legally binding themselves. Alternatively, as can be seen from the case of Zhang Hong Li v DBS Bank (Hong Kong) Limited [2019] HKCU 4372, where the Reserve Power was made by appointing a settlor as the investment advisor to the private investment company of the trust and allowing her to make the decisions, the trust arrangement may also be designed in a way that a settlor will have effective control of investment and asset management functions.
If the settlor of a trust also desires to delegate the Reserve Power, such power of delegation should also be specified in a trust instrument in order to provide for clarity. If the trustees can delegate their power through other documents, such as a management agreement, we submit settlors should also be able to delegate the Reserve Power through other documents. Since the settlors are in general able to exercise Reserve Power for their own benefits, they will naturally be able to delegate the power without being subject to constraints.
Delegation of Reserve Power of the Settlor in case of Disability
Will an Enduring Power of Attorney (“EPOA”) help in case the settlor is mentally disabled:
An EPOA enables an individual (the donor) to appoint a trusted person (the attorney) to manage their property and financial affairs should they become mentally incapacitated, thereby providing a straightforward and cost-effective way of managing property and financial affairs. Unlike a conventional power of attorney, which becomes invalid if the donor loses mental capacity, an EPOA "survives" through that transition, provided it is executed according to prescribed statutory requirements while the donor is still of sound mind and is registered. The EPOA respects the donors’ autonomy by allowing them to choose who will act on their behalf, ensures a smooth transition in the management of their affairs, and helps avoid the distress, delay, and expense associated with court applications. However, the EPOA is limited to property and financial matters, and does not extend to decisions such as those about personal care or medical treatment.
Under Section 8(1) of the Enduring Powers of Attorney Ordinance (Chapter 501 of the Laws of Hong Kong) (“EPOAO”), the EPOA only empowers the attorney to deal with the property and financial affairs of the power donor, as opposed to the health and welfare and other matters, of the donor. Clear definitions of “property” and “financial affairs” are not provided in the EPOAO. The attorney may administer and apply the property of the donor to maintain the donor and other people for whom the donor might be expected to provide for or meet their needs. However, an EPOA which attempts to confer upon the attorney wider powers and authority than permitted in the EPOAO may be considered invalid.
Effects on Reserve Power:
Since once a trust is properly constituted, the settlor of the trust ceases to have any legal or beneficial interest in the trust property, unless the settlor is also one of the beneficiaries. In the situation where the settlor has reserved only investment and asset management functions and has no other interest in the trust property, arguably, matters in relation to trust assets are no longer the property and financial affairs of the settlor, as opposed to those of the trustee and the beneficiaries. Even when the Reserve Power is substantial such that the settlor may exercise effective control of the trust property, the benefits arising from such exercise of powers are only received by the beneficiaries of the trust. Accordingly, the investment and asset management functions are not part of the property and financial affairs of the settlor and the EPOA is unlikely to be able to save the situation.
However, the situation may be different when the settlor is also one of the beneficiaries. The investment and asset management functions may concern the property and financial interests of the settlor. In any event, for the purposes of certainty, the trust deed may be drafted in a way to cater for the situation when a settlor becomes mentally incapacitated and to provide directions on the subsequent exercise of the powers of investment or asset management functions.
Will
Reserve Power in respect of investment and asset management functions is not real or personal property per se. It is a mere power and function created by the trust instrument. Section 41X of the Ordinance also only addresses the reservation of such powers to the settlor and it does not mention his or her successors. If the trust instrument does not specifically allow the powers to survive upon the death of the settlor or be exercisable by the executors or assigns, it is likely the Reserve Power naturally dies with the settlor and cannot be bequeathed by a will.?
As a general proposition, a testator can by law dispose by will of all real and personal estate to which he or she is beneficially entitled for an interest not ceasing at his or her death and which if not so disposed of would have devolved upon his or her executor or administrator. Although certain choses in action, for example, rights of action for damages or other matters which devolve on the personal representative, copyrights and other intellectual property rights can be disposed of by will, a Reserve Power in respect of investment and asset management functions does not belong to the above class of personal rights and properties conferring an interest. It is unlikely that such Reserve Power can be bequeathed by a will.
Nevertheless, there is no harm to include in the settlor’s will a testamentary wish devolving the Reserve Power to a power holder and let the trustee decide on whether or not to follow that power holder’s directions. The trust instrument may also expressly allow a successor power holder to be designated by the settlor.
Conclusion
As Hong Kong positions itself as a leading hub for trusts and family offices, modernizing its trust law to accommodate Reserve Powers will enhance flexibility for settlors and other persons whom the settlors trust, align with international practice, and strengthen its competitiveness against offshore jurisdictions. By validating Reserve Powers such as investment directions, the appointment and removal of trustees or protectors, and the variation of trust terms, Hong Kong can provide settlors with greater confidence in structuring family wealth while ensuring that trusts remain legally robust. The Ordinance may also provide for clarity on the validity of the delegation of powers of the settlors and the limit of liability of the trustees. This can enhance certainty and confidence in the trust regime in Hong Kong. Moreover, this reform will further support the growth of family office services, attract high‑net‑worth individuals seeking sophisticated succession planning, and reinforce Hong Kong’s role as a premier jurisdiction for private wealth management.
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.
Sit, Fung, Kwong & Shum is a Hong Kong Special Administrative Region law firm and does not practice nor provide legal advice on the laws of other jurisdictions. References to the laws position of any other jurisdictions (including but not limited to the British Virgin Islands, the Cayman Islands, Jersey, Bermuda, and Singapore) in this material are provided for general reference and comparative purposes only and do not constitute any advice, opinion or representation on the law or practice in those jurisdictions.
IPRs Enforcement Actions in HK Trade Fairs
Hong Kong has earned a strong reputation for hosting international exhibitions, attracting renowned exhibitors and millions of visitors who aim to conclude business deals within a short exhibition period. These exhibitions serve as a vital platform for exhibitors to showcase their products, which often involve the development and exploitation of intellectual property rights ("IPRs"), including trade marks, copyrights, designs, and patents. Nonetheless, such events can also become a venue for infringers to display products that infringing the IPRs of others. Given that exhibition periods are typically short, lasting only a few days, it is crucial for IPRs owners to act swiftly. This article will discuss various enforcement actions that IPRs owners can take during the brief exhibition period to duly protect their IPRs while also seeking opportunities for further exploitation.
Generally, there are three local measures to enforce IPRs at trade fairs in Hong Kong, namely: (a) applying to the High Court of Hong Kong for interlocutory injunctions ("Court's Injunctions"); (b) filing complaints with the Hong Kong Customs and Excise Department ("HK Customs' Actions") and (c) filing complaints with the IPR offices provided by trade fair organizers ("organizers’ Actions").
Court's Injunctions
Parties to take enforcement actions:-
IPRs owners shall take an ex parte application to the Court for an interlocutory injunction with a returnable date for parties to attend before the Court. Upon the grant of an interim injunction, the IPRs owners shall serve the sealed copy of the injunction upon the alleged infringing parties.
Parties against whom enforcement actions are taken:-
Infringing exhibitors displaying any infringing products, including photos, and other related parties such as suppliers (if identified).
Will enforcement actions be taken against the organizers of the trade fairs?:-
For trade marks, it is possible under Section 18 of the Trade Marks Ordinance (Cap 559). For copyrights, it is possible under Section 31 of the Copyright Ordinance (Cap 528).
Types of IPRs enforced:-
All types of IPRs.
Documents and details required:-
Pleadings with an affidavit / affirmation of full and frank disclosure establishing that:- (a) there is a serious question to be tried on the merits of the case; (b) the balance of convenience lies in favor of granting an injunction; and (c) a cross-undertaking in damages (if appropriate). Documentary proofs of IPRs ownership and the infringing activities of the exhibitors are essential to be included in the said affidavit / affirmation.
Official fee required (apart from legal fees payable to instructing solicitors/counsel):-
Yes. There are official fees for filing the ex parte application for an interlocutory injunction and for obtaining sealed copies of the injunction granted.
General Procedure:-
An urgent ex parte application with the required documents shall be filed with the court during office hours for an immediate hearing date to grant the interlocutory injunction and a subsequent hearing date returnable by both parties. The urgent ex parte application can also be made outside court office hours by calling the duty judge to grant the interlocutory injunction and an immediate hearing date returnable by the parties. Upon the grant of the interlocutory injunction, the IPRs owners shall serve it upon the infringer, requesting them not to display the infringing products. Failing which, actions for contempt of court may be brought against the infringer. However, if the infringer has a valid defense, they shall attend court on the fixed returnable date to request further directions.
Who decides if there is a prima facie case of IPR infringement at Fair Trade?:-
Judge on the Intellectual Property List in the Court of First Instance of the High Court or other duty judge
Time frame for taking actions:-
The interlocutory injunction can be granted within half a day if all documents are in order.
Actions taken at the trade fairs:-
The IPRs owners shall serve the sealed copy of the injunction against the infringing exhibitors and the organizer of the trade fair.
Post-exhibition action:-
The IPRs owners may pursue the same actions at court for relief such as damages.
Advantages:-
It is an efficient measure to stop or deter infringing activities at the stance of trade fair. Damages may be awarded if parties pursue the same actions at court after the trade fair.
Limitations:-
It involves rather complicated court procedure requiring instructing solicitors and counsel and legal costs and disbursements are rather high.
HK Customs' Actions
Parties to take enforcement actions:-
IPRs owners shall file complaints with HK Customs. Upon acceptance of the complaints, HK Customs will conduct seizure of infringing products and commence prosecution against infringing exhibitors at the stance of trade fair.
Parties against whom enforcement actions are taken:-
Infringing exhibitors displaying any infringing products, including photos, and other related parties such as suppliers (if identified).
Will enforcement actions be taken against the organizers of the trade fairs?:-
For trade marks, it may not be possible under Section 9 of the Trade Descriptions Ordinance (Cap 362). For copyrights, it may not be possible under Section 118 of the Copyright Ordinance (Cap 528).
Types of IPRs:-
Trade marks, copyrights.
Documents and details required for recordation with HK Customs:-
The requested documents and details generally include:- (a) original authorization letter, copies of IPR certificates or latest trade mark records in Hong Kong; (b) statutory declaration under Section 121 of the Copyright Ordinance; (c) sample(s) of genuine and corresponding alleged goods; (d) copy of the invoice(s) of the sample(s) of alleged goods (if any); (e) appointment of examiner(s) by the trade mark owner(s) (Note: the appointed examiner(s) is/are required to conduct subsequent seizure identification and undertake to give evidence and testify in the courts of Hong Kong; an examiner is considered competent if they are capable of differentiating counterfeits by their knowledge, experience, and/or through access to the right holder’s records) and (f) record of preliminary examination.
Official fee required (apart from legal fees):-
No.
General Procedure:-
Preferably, the above documents for a prior complaint (not necessarily related to the infringing products to be displayed) shall be submitted to HK Customs. HK Customs will invite the examiner for the IPRs owners to conduct a competency test. Upon satisfaction with the documents filed and the examiner's competency, recordation is considered completed. Practically, it is not easy for overseas IPRs owners to arrange for their examiners to come to Hong Kong to assist with investigation and prosecution. When the alleged infringing products are displayed at trade fairs, the IPRs owners can immediately report to HK Customs for further action.
Who decides if there is a *prima facie* case of IPR infringement?:-
The officers in charge at Hong Kong Customs.
Time frame for taking actions:-
The recordation process is rather slow (especially the satisfaction of the competency test for examiners). Once it is completed, the process of search and seizure of infringing goods displayed at trade fairs upon receiving complaints can be conducted expediently.
Actions taken at the trade fairs:-
The officers of HK Customs will search and seize the infringing products at trade fairs for further investigation or prosecution.
Post-exhibition action:-
HK Customs may commence prosecution against the infringing exhibitors. Fine sanctions may be imposed upon the infringing exhibitors. However, no damages will be awarded to the IPRs owners. Upon conviction of the infringing exhibitors, the IPRs owners may request HK Customs to provide relevant documents and details to commence a separate civil action against the infringing exhibitors for relief such as damages.
Advantages:-
It is an efficient measure to stop or deter infringing activities at the trade fair upon completion of recordation with HK Customs. Criminal sanctions such as fines and imprisonment may be imposed by HK Customs
Limitations-
It is quite time-consuming to complete recordation, especially the appointment of examiners who must pass the competency test. Also, the burden of proof is high for prosecution (beyond reasonable doubt) and there is no award for damages to the owners of IPRs.
Fair Organizers’ Actions
Parties to take enforcement actions:-
IPR owners shall file complaints with the Organizers’ IPR Office. Upon acceptance of the complaints, the Organizers will issue a "Taking Down Notice" against the infringing exhibitors, requesting them to remove the infringing products, conduct seizure of infringing products and / or imposing other sanctions against infringing exhibitors pursuant to exhibition agreement entered into between the Organizer and the infringing exhibitors.
Parties against whom enforcement actions are taken:-
Infringing exhibitors.
Will enforcement actions be taken against the infringing organizers of the trade fairs?:-
No.
Types of IPRs:-
Trade marks, copyrights, registered designs, and patents granted (both short-term and standard), depending on the exhibition agreement between the organizer and the infringing exhibitors.
Documents and details required:-
The requested documents and details generally include:-(a) original authorization letter; (b) copies of IPR certificates or latest trade mark records in Hong Kong (Note: the IPR Office will conduct a latest IPR online check); (c)Statutory declaration under Section 121 of the Copyright Ordinance and (d)Particulars of infringing products displayed, such as exhibition stand numbers, photos, or samples.
Official fee required (apart from legal fees):-
It is solely depended on trade fair organizers’ discretion. The IPRs owners are advised to review the official website of the trade fairs regarding the onsite IPRs protection measures and procedure.
General Procedure:-
Upon identifying infringing products at the trade fair, the IPR owners shall file the required documents with the Organisers' IPR Office. After conducting a formalities check (including an updated IPR search), an officer of the Organisers' IPR Office will attend the exhibition stands where the infringing products are displayed to collect evidence, such as taking photos and collecting promotional materials. The officer will then prepare a report for the senior officers, who will decide whether to issue the "Taking Down Notice." Upon issuing the Taking Down Notice, the officer will serve the notice to the infringing exhibitors, requesting removal of the infringing products. If the infringing exhibitors refuse to remove the infringing products, the Organisers' IPR Office may impose sanctions, including refusing the infringer permission to join the same exhibition in the future pursuant to the exhibition agreement. If, however, the infringer can raise a valid defense (e.g., it has been granted a license to use the IPRs or has obtained the relevant IPRs, such as a short-term patent based on a utility model granted overseas), the Organizers’ IPR Office will take no further action and leave the parties to resolve the dispute via other means.
Who decides if there is a *prima facie* case of IPR infringement?:-
The senior officers in charge of the Organizers’ IPR Office of the trade fair organizers, who may be their in-house legal counsels or partners of outsourced HK solicitors' firms.
Time frame for taking actions:-
The actions can be taken within half a day to one day if a prima facie case of infringement is identified.
Actions taken at the trade fairs:-
The officer of the Organizers’ IPR Office will request the removal of infringing articles.
Post-exhibition action:-
The IPRs Owners may commence new actions at court to resolve the disputes and claim relief and damages against the infringing exhibitors.
Advantages:-
It is a simple and fast procedure to stop or deter infringing activities at the trade fair, whereby even laymen can file complaints without appointing legal representatives.
Limitations:-
The sanctions of removal of infringing articles at the trade fair may be lenient. Meanwhile, no damages will be awarded.
Conclusion
Upon reviewing the three ways of enforcing IPRs during the short exhibition period, it is highly recommended that IPRs owners develop a strategy to tackle infringement matters according to their budget and resources. On-site investigation prior to taking enforcement action is essential, particularly reviewing and collecting brochures showing the infringing products, taking photos of the displayed infringing items, obtaining the contact details of the infringer, and inquiring about the sources of the infringing products. On-site enforcement actions should be conducted as soon as possible once infringement is identified, in order to stop or deter any potential dealings or transactions between infringers and potential buyers. Post-exhibition enforcement action is also advisable to prevent infringers from continuing to infringe the exhibitors' IPRs in the future.
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.
Changes on SHRs
The Law Society of Hong Kong just announced that the Chief Justice has approved the new set of Solicitors’ Hourly Rates for Party and Party Taxation (“SHRs”), which will take effect from 1 April 2026 in that it will apply to all work done from that date onwards. This is the first adjustment since the existing SHRs adopted on 1 January 2018. For legal work done prior to 1 April 2026, the existing SHRs will continue to apply.
The new sets of SHRs with comparison to the existing SHRs are now tabulated for easy reference.
The second four‑yearly review was conducted by a Standing Committee appointed by the Chief Justice, which took Composite Consumer Price Index movements as the starting point and then considered factors such as acceptability and affordability, access to justice, effects on firms of different sizes, impact on legal aid and prevailing economic conditions. The adjustment ranges from 6.9% to 8.00%, representing a modest increase tracking accumulated inflation.
Implications
With higher SHRs, the potential exposures on costs for fully contested proceedings increase. Litigants should be advised on their potential cost exposures/recoverability with the updated SHRs, so that decisions to fight or settle are made on an informed basis.
Litigants should be aware of the distinction between solicitor-client rates and party-and-party SHRs. Party-and-party taxation is designed to ensure that the successful party is compensated for the necessary and proper costs of litigation, but not for all costs actually incurred, thereby keeping litigation costs reasonable and proportionate. Even under the updated SHRs, a successful litigant is unlikely to recover 100% of its actual costs from the opponent. Besides, litigants should note that in line with the position since 2018, the SHRs remain guidelines only – taxing masters are not bound by them and retain a wide discretion to adjust rates upwards or downwards on a case‑by‑case basis.
As legal practitioners, we will facilitate litigation clients to assess cost-proportionality and explore alternative dispute-resolution methods, such as mediation, which are more commercially attractive than full-brown litigation. To assist litigants in pursuit of justice under an affordable fee structure, we may consider offering phased budgets and options such as deploying solicitors of different seniority for complex or strategic works depending on their nature, strategic value and time to be spent in accordance with the economic value and complexity of the dispute.
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.
