HONG KONG SAR, CHINA Law and Practice Contributed by: Vincent Lung and Mike Yeung, Parkside Chambers
Prospectus Disclosure Companies seeking listing or conducting securities offerings should disclose material AI-related risks in prospectuses. This is particularly important for AI businesses, technology companies, platform compa - nies and companies whose valuation depends heavily on AI capability. Relevant risk factors may include: • model limitations; • data quality and data rights; • third-party model dependence; • cybersecurity; • regulatory uncertainty; • IP ownership; • customer reliance; • explainability; • safety; • competition; and • ethical or reputational risk. Sustainability and Governance Disclosure AI may also be relevant to ESG or governance disclo - sure where it affects data privacy, workforce manage - ment, customer fairness, cybersecurity, climate data, operational resilience or ethics. A prudent listed company should maintain internal disclosure controls for AI-related statements. Public claims about AI capability, productivity gains, compli - ance, safety or governance should be accurate, bal - anced and supported by evidence.
Commission, Customs and Excise, law enforcement agencies and private claimants. Private claims may be brought by customers, employ - ees, shareholders, contractual counterparties, IP own - ers or affected individuals. 8.4 Key Disclosure Requirements for AI Use No General Standalone AI Disclosure Rule Hong Kong does not currently impose a general stan - dalone requirement for all companies to disclose AI use, AI strategy or AI governance in annual reports. Disclosure depends on materiality, the company’s sta - tus and the legal context. For private companies, AI disclosure is usually not required unless it is relevant to financial reporting, con - tractual obligations, regulatory filings, data breaches, litigation or shareholder reporting. Listed Company Disclosure Listed companies should disclose AI-related matters where they are material to investors. This may include AI strategy, dependence on AI systems, technology risks, data risks, cybersecurity risks, regulatory uncer - tainty, IP risks and material incidents. If AI-related information constitutes inside information, it must be disclosed as soon as reasonably practi - cable under the Securities and Futures Ordinance. This may arise where an AI incident materially affects operations, financial performance, reputation or regu - latory status.
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