HONG KONG Law and Practice Contributed by: Vincent Sum and Sylvia Leung, Mayer Brown
Mayer Brown Mayer Brown Hong Kong LLP 19th Floor Prince’s Building 10 Chater Road Central Hong Kong Tel: +852 2843 2211 Email: HK.Office@mayerbrown.com Web: www.mayerbrown.com
1. Specific Financial Asset Types 1.1 Common Financial Assets Financial assets commonly securitised in Hong Kong include trade receivables, consumer/credit card loan receivables, lease/sales receivables, residential and commercial mortgage loans and collateralised loan obligations (mainly corporate or project loans). 1.2 Structures Relating to Financial Assets The transaction structure typically follows a similar pattern, regardless of asset type. This involves pooling the underlying assets into a portfolio, which is then sold to a special-purpose entity (SPE). The SPE will finance the purchase by issuing securities to investors in the form of debt securities. The portfolio will serve as col - lateral to secure the securities. The cash flows generated from the underlying assets (eg, loan repayments or rentals) are used to service these debt securities, providing returns to the inves - tors. Variations on the structure may be used to cater for special considerations, such as com - mercial, accounting, tax and rating.
1.3 Applicable Laws and Regulations Principal applicable laws and regulations that could have a material impact on the structures relating to financial assets include (but are not limited to): • Banking Ordinance (Cap. 155 – ie, Chapter 155) and the Code of Banking Practice; • Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”) (in particular, Chapter 37 of the Listing Rules on Listing of Debt Issues to Professional Investors); • Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (governing conducts of financial intermediaries); • Companies Ordinance (Cap. 622); • Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (CWUMPO); • Conveyancing and Property Ordinance (Cap. 219) in connection with insolvency, claw-back and avoidance of certain transfers of prop - erty; • Inland Revenue Ordinance (Cap. 112); • Law Amendment and Reform (Consolidation) Ordinance (Cap. 23) in respect of effecting
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