13 April, 2018
The Financial Institution (Resolution) Ordinance (“FIRO”) came into operation on 7 July 2017. Its primary objective is to establish a cross-sector resolution regime that grants certain powers to the Insurance Authority, the Monetary Authority and the Securities and Futures Commission to intervene and manage the failure of financial institutions in Hong Kong where such failure could have adverse systemic consequences.
Of relevance from an employment law perspective is Part 8 of the FIRO, which is not yet in force. Part 8 introduces a clawback mechanism which enables the above-mentioned resolution authorities to make applications to the court to claw back fixed or variable remuneration received by an officer (e.g. director, shadow director, CEO, etc.) in respect of services provided to the financial institution during the controlled period (i.e. three years and a further three years’ extended period as may be fixed by the court, immediately before the date on which the resolution of the financial institution was initiated). The court may make a clawback order against an officer if it is satisfied that (1) the officer, in performing his or her functions, acted or omitted to act in a way that caused or materially contributed to the financial institution ceasing, or being likely to cease, to be viable; and (2) the act was done, or the omission was made, intentionally, recklessly or negligently.
For further information, please contact:
Samantha Cornelius, Linklaters
samantha.cornelius@linklaters.com
