You have embarked on an entrepreneurial adventure in Hong Kong. You have set up your own company, maybe you have become a partner? All the important acts necessary for the smooth running of your company and the development of your business (articles of association, partnership agreement) have been signed and your “Company Secretary” takes care of all the other formalities.
Have you thought about the necessary measures to ensure the continuity of business in case something happens to you? This is based on the assumption of death, but you must also plan for situations where you are unable to act due to illness or accident.
If nothing is foreseen you take the risk of paralysing the day-to-day management of your company, and the risk that your employees cannot be paid.
- How to avoid deadlock situations when the manager of a company finds himself unable to make decisions, unable to express his will.
This is particularly important in the event that the manager has not delegated powers (Powers of Attorney).
Powers of attorney are essential for entrusting trusted persons with the power to carry out administrative and management acts, and giving them, for example, access to the company’s accounts or the power to manage a particular asset.
In Hong Kong we speak of Enduring Powers of Attorney (EPA). EPAs must be signed by a physician and a lawyer and then registered with the Court of Appeal, and come into force only when it is established that the principal is no longer able to take decisions.
- This serves as a reminder of the importance of advance directives.
It is the expression of wishes relating to the end of life. In Hong Kong the principle is not yet fully accepted and remains a sensitive issue. Nevertheless, it is essential to discuss with your family and friends and to put your wishes regarding end-of-life care in writing. This is discussed in the case of serious illness, but it also concerns the consequences of a vegetative state following an accident. For more information, here is the link to the public service in France and my article on the subject.
- The will:
As an entrepreneur, it is necessary to provide a succession plan, in order to designate the person(s) who will take over the reins of your company in the event of death. A distinction should be made between decision making and benefit sharing.
There are then several cases to consider: the company has one or more shareholders, the company creation documents provide for the terms of transmission of shares or takeover. The will will complement the system put in place.
In Hong Kong, the importance of making a will should not be underestimated. Indeed, the transfer of shares can only be done through the procedure of judicial settlement of the succession called “Probate“. If you are French and have not made testamentary arrangements for executors, things could get stuck for a while or even years.
The reflection undertaken within the framework of the establishment of a will makes it possible to avoid certain pitfalls such as blockages linked to complex arrangements of companies, to the presence of minor children for whom a guardian has not been designated for example.
This is particularly important if you are a young unmarried entrepreneur. This category of the population too often neglects the aftermath. Parents are not always the best people to take over a startup. This is what will happen in the absence of a will and a spouse.
- The marriage contract
Depending on what is at stake and whether your company is based in Hong Kong, the United Kingdom or another Common Law country, a French marriage contract of separation of property may not be sufficient to protect your interests in your company in the event of divorce.
Here again, there are several possible scenarios. If you have made a French marriage contract, make sure that it meets the Common Law requirements for a valid prenuptial agreement. If you have signed a Common Law prenuptial agreement, make sure that it is applicable in France and that it complies with the provisions of European Regulation 2016/1104 of 26 June 2016.
If you have not made a contract, and you are considering getting married or entering into a partnership, you should look into the matter in order to choose the most appropriate instrument.
The fact that you are already married does not prevent you from signing a marriage contract in the future.
Here is a summary of the “checklist” of instruments to be put in place. This advice is also valid for non-entrepreneurs.
For more information, do not hesitate to contact Sarah-Jane TASTEYRE.