How should businesses navigate Hong Kong’s Article 23 law? The Post has answers

The Publish talks to a number of worldwide company legal professionals about how companies can address the brand new legislation.

1. Ought to companies regulate the way in which they function?

It relies on whom you ask. Hong Kong officers have reassured chambers of commerce that companies won’t must conduct additional compliance checks, as it is going to be troublesome for them to unintentionally run afoul of nationwide safety offences.

Ministers have sought to allay considerations by saying the possibility of companies inadvertently leaking state secrets and techniques, which include particular stringent standards, may be very low, including the legislation won’t have an effect on regular interactions between residents and companies with overseas organisations.

The federal government additionally renamed the offence of “exterior interference” through an modification by including “endangering nationwide safety” after it to spotlight any crime linked to improper means can be separated from “regular worldwide exchanges”, in commerce, academia and tradition.

However James Ellender, the Asia-Pacific managing director of threat consultancy agency Futurum Asia, stated his agency had seen an increase in inquiries with the brand new legislation, whereas a number of the firm’s greatest shoppers had already requested for worker screening and due diligence checks on suppliers for the reason that third quarter of 2023.

His remark was shared by different legal professionals the Publish talked to, with one suggesting the brand new evaluations “wouldn’t make Hong Kong higher”.

Actually, worldwide company legal professionals additionally appeared to want staying away from commenting on the brand new legislation. Of the 17 authorized professionals approached by the Publish, solely three replied.

2. How ought to companies deal with confidential knowledge?

The Beijing-decreed laws, which got here sizzling on the heels of the anti-government protests a yr earlier than, outlaws acts of secession, subversion, terrorism and collusion with overseas forces.

Not like earlier observe, native employees of some corporations had both been banned from accessing delicate or confidential knowledge, or may solely have restricted entry after making use of for it, in line with the lawyer’s understanding.

He anticipated overseas corporations in Hong Kong would solely fine-tune their inside measures with the brand new legislation given the key modifications had already been made a number of years in the past.

Accountancy or investigation companies which researched China’s financial system or regarded into white-collar crimes may additionally face increased dangers in gentle of the brand new theft of state secrets and techniques offence, he added.

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3. What about conferences with exterior events and authorities officers?

The company lawyer stated worldwide corporations may think about minimising their native employees’s involvement in exchanges with overseas events or officers.

“They will let their abroad employees deal with that. Actually, some corporations have already been practising this,” he stated.

United States-based lawyer Dan Harris, a founding companion of Seattle worldwide legislation agency Harris Sliwoski and co-author of the China Legislation Weblog, stated the Article 23 laws had made it “more and more dangerous” for companies to have conferences with different events, and even to take care of authorities officers.

He suggested companies to tread rigorously and keep away from any actions that might be seen as a menace to nationwide safety, whereas setting up procedures for speaking with authorities officers.

4. What corporations may face increased dangers?

Legal professionals have stated infrastructure or telecommunications corporations, that are concerned in additional delicate dealings and have a safety facet, might face extra dangers, whereas others that are merely concerned in manufacturing, akin to textile or clothes, will face fewer.

5. Will the brand new legislation have an effect on the enterprise surroundings?

Each the native and central governments have argued that the brand new legislation, as a substitute of driving away companies as some overseas media and politicians have warned, will solely do the other.

Chief Secretary Eric Chan Kwok-ki, Hong Kong’s No 2 official, as an example, stated final month that the enterprise sector valued a comparatively secure and secure social surroundings.

He added that the 2019 social unrest was a transparent instance of exercise that ­destabilised town and induced uncertainty.

“I don’t assume petrol bombs [being hurled], protests and storms taking place on daily basis are an excellent surroundings for doing ­enterprise,” he stated.

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However US-based Harris stated some corporations may rethink whether or not they need to keep in Hong Kong when there have been many different locations that may be “far much less dangerous”.

Weiheng Chen, senior companion and head of Better China Follow at US-based legislation agency Wilson Sonsini, stated given the brand new legislation had been enacted, the main focus ought to shift to how it could be enforced.

“The actual enterprise affect shall be seen by way of the implementation course of. There are sensible areas akin to knowledge safety and coping with foreign-government affiliated events that the enterprise neighborhood is keen to get clarifications on,” he stated.

“Any implementation steerage from the Hong Kong authorities ought to be welcomed earlier than the supply of case legislation interpretations.”