In January 2020, the Hong Kong Monetary Authority (“HKMA”) issued a consultation paper on the policy proposals for a set of rules to be made relating to contractual stays on termination rights in financial contracts for authorized institutions under Financial Institutions (Resolution) Ordinance (Cap.628) (“Consultation Paper”) for public consultation.
Under the Financial Institutions (Resolution) Ordinance (Cap.628) ("Ordinance"), the HKMA is the resolution authority for banking sector entities, including without limitation, all authorized institutions. The HKMA is empowered under section 92 of the Ordinance to make rules that the terms and conditions of a contract entered into by it contain a provision to the effect that the parties to the contract agree to be bound by any suspension of termination rights that may be imposed by the HKMA under the Ordinance. This is known as the "Stay Rules".
It is said that subject to the outcome of the public consultation, the intention is to introduce the rules as subsidiary legislation under the Ordinance into the Legislative Council for negative vetting in the 2020/2021 legislative session.
The Council has reviewed the Consultation Paper with the assistance of the Insolvency Law Committee. The Law Society has made a submission on the consultation questions posed. The full submission can be found on the Law Society's website: http://www.hklawsoc.org.hk/pub_e/news/submissions/20200401.pdf