Britain in Hong Kong Sept-Oct 2020

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National Security Law and Business

The National Security Law came into effect in June this year. Here’s what businesses need to know about the new legislation. – By Thomas So, Liang Pu and Evan Zhou


he Law of People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (the ‘Law’) has received impassioned attention in the region, and globally, after it was passed and later came into effect on 30 June 2020, in HKSAR. This article looks specifically at Articles 21, 23, 26 and 29 of the Law which are of particular relevance to the business sectors.

Offences in the supporting role Corporates and organisations should note that supporting roles (such as inciting, assisting in, abetting or providing financial assistance or property or other support) for acts endangering national security are explicitly prohibited under Articles 21, 23 and 26 of the Law (‘Supporting Role Offences’). Further, article 29 prohibits companies’ collusion with foreign countries or institutions or with external elements to endanger national security (‘Collusion Offence’). To constitute corporate criminal liability for the Supporting Role Offences, one needs to establish, among other things, that there is an intention to support the commission of the primary acts or offences in question. Under both PRC Law and common law, intention may be established by proving or inferring actual and subjective intention, knowledge or recklessness to support the commission of the primary offences. Hence, if the defendant did not have such intention or knowledge,


or genuinely did not appreciate or foresee such risks, then the person should not be held liable for the Supporting Role Offences. Moreover, under both common law and PRC Law, the state of mind of a company’s directors and managers can also be attributed to the company itself. In large companies, the intention of the board of directors can constitute the company’s intention whereas the intention of lower ranking staff is less likely to be able to be so attributed.

Both individuals and companies can be held liable under the Law Individuals who directly perpetrate the relevant offences would be held personally liable under the Law. If an individual directs or makes use of companies to commit the offences, not only the companies will be subject to penalties (such as fines, suspension of operation or revocation of license or business permit),1 but also the individuals behind the company may be held liable for the same crime, by virtue of Section 101E of the Criminal Procedure Ordinance (Cap 221) which stipulated that a director or other officer concerned in the management of the company will also be guilty of the like offence as the company if the same was committed with the consent or connivance of such a director or other officer.

Internal compliance consideration Companies are recommended to review and enhance