Originally published 10 November 2010
Keywords: shadow companies, Hong Kong, shadow company names, Hong Kong
Following the passing of the Companies (Amendment) Ordinance 2010 in July this year, the Hong Kong Government recently announced that several parts of the new legislation, including the measures to tackle shadow company names, will come into effect on 10 December 2010.
In Hong Kong, there has been an increasing number of shadow companies which adopt other entities' household brands as company names without authorisation. The Government passed the Amendment Ordinance in response to strong calls from brand owners and intellectual property practitioners. Mayer Brown JSM has actively participated in the lobbying exercise and has closely followed the development, as captured in our previous Legal Updates: (Hong Kong Passes Law to Tackle Shadow Companies - 9 July 2010; Latest Legislative Developments on "Shadow Companies" - 8 March 2010; Consultation Conclusions on Proposed Reform of Company Names Law - 9 January 2009).
The Government recently gazetted that those new statutory provisions on shadow companies will come into effect on 10 December 2010.
The chief weapon introduced is the new power of the Companies Registrar to act upon orders by Hong Kong courts to direct a shadow company to change its company name to one not including the prohibited brand name(s). If the shadow company fails to comply, the Registrar can proceed to replace the objectionable part(s) of the company name with its registration number.
Once the new law becomes effective, brand owners who have obtained a favourable court order can invoke this new power of the Registrar by submitting a sealed copy of court order and a prescribed form of the Registrar (to be made available on the effective date).
Over the years, we have represented brand owners in over 350 cases against shadow companies in Hong Kong. From our experience, many brand owners face practical difficulties in ensuring those shadow companies do change their objectionable names as required by the court orders. While in the past we have through various means helped our clients achieve their objectives, we believe the new law would provide a cost-effective alternative to assist the enforcement of those court orders.
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