Power of Attorney in Hong Kong
The Power of Attorney in Hong KongUpdated on Saturday 23rd January 2021
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The power of attorney is a document that allows an appointed agent to conduct a business or a set of issues that will involve handling the assets of the principal. It is used in Hong Kong as a means to grant power to another individual to act on behalf of the donor for the purpose of solving a legal business matter or conclude any other legal activities.
The power of attorney in Hong Kong can be used for various purposes and, in general, it can be classified into one of the following categories described in this list:
- General: allows the agent to engage in any type of activity, business or financial, in order to handle the assets and the affairs of the principal; because of the fact that it allows for unlimited power, only a trusted agent should be appointed.
- Limited: used for a single purpose or for a related set of acts, for example selling real estate on behalf of the principal when he is unable to do so or perhaps opening a company when the beneficial owner cannot be present in the country.
- Durable: conditioned by a certain event, for example, the powers of the agent can end in the event in which the principal becomes mentally ill or incapacitated.
- Springing: a document that is somewhat scheduled to enter into effect once it is signed by the principal or in case of a previously specified event; for example, it can be used only in the event in which the principal falls ill or becomes physically/mentally incapacitated.
The power of attorney can be used for multiple purposes and it is a document of interest both for private individuals and for company directors in Hong Kong. It can be used for business or financial purposes but also for health care.
The power of attorney in Hong Kong is subject to a set of regulations and special consideration should be given to the governing laws when drawing up such a document.
The Power of Attorney Ordinance in Hong Kong
The legal execution of a power of attorney is governed by Chapter 31: the Powers of Attorney Ordinance of the Laws of Hong Kong. This legislative document highlights the manner in which a power of attorney may be drafted and the situations in which it can apply. For example, a requirement is that this document is to be signed by the principal and, in some cases, sealed by the principal or the donor of power. When it is signed and sealed by another individual, namely the agent, two other individuals must be present during this time.
The power of attorney in Hong Kong is a document with a straightforward form, one that includes the date and address of the principal, his name and the name and address of the agent. It must be duly signed by both parties. The Ordinance also sets forth the terms for mental incapacity, a condition in which one cannot understand the effects and the implications of a power of attorney and is unable to express his/her wish to grant the power of attorney.
Our law firm in Hong Kong can provide you with specialized assistance for the execution of this document, regardless of the business or personal purposes for which you might need to conclude it.
The grantor and the agent for a power of attorney in Hong Kong
For the purposes of a power of attorney, the principal or grantor entrusts an agent to take care of certain matters, as expressed in the document. Both individuals will have to provide information about themselves, like the number of the Hong Kong passport and/or their place of residence. The power of attorney is signed in the presence of a witness and the grantor can request an expiration date for the document or it can be revoked afterward.
The power of attorney grants full authority and power to the agent or attorney-in-fact and it can be used to perform any and all acts necessary for the completion of the tasks expressly defined in the document.
If you are a foreign investor in Hong Kong and need help completing certain tasks, one of the lawyers from our Hong Kong law firm can act as the attorney-in-fact. We can help represent you if you cannot be present in the city to perform certain business activities or transactions. A power of attorney can also be used by those investors who wish to open a company in Hong Kong or purchase a property in the city.
Special types of power of attorney in Hong Kong
A power of attorney can be used for multiple purposes and there are several types of these documents that grant less or more power to the agent. A special or limited power of attorney will be used for a defined purpose and solely for that purpose. It can be issued to allow the agent to make financial decisions on behalf of the grantor, or to make legal claims and conduct litigation in Hong Kong. It can be also limited in time.
A general power of attorney can be used by Hong Kong companies to appoint an individual that will act as the company’s representative and will execute all and any necessary acts for the company including entering into agreements, opening bank accounts, purchasing and selling necessary items, substitute or displace agents, open branches and generally act as the company agent and lawfully represent it.
The enduring power of attorney is used to appoint one of more individuals and has the following characteristics:
- it can be used for financial matters: on behalf of the grantor; the individual or individuals can be empowered to handle daily transactions;
- it has a specific form: the Enduring Power of Attorney Ordinance sets forth the requirements for drawing up this document; our team of lawyers in Hong Kong can assist you in drafting it according to law;
- it is registered: this power of attorney is registered with the High Court of Hong Kong when the grantor is losing or has lost his mental capacity;
- remains valid: this power of attorney remains valid even after the grantor or donor has lost his mental capacity.
For individuals who are already suffering from certain neurocognitive disorders, the drawing up of an enduring power of attorney in Hong Kong can only take place if they still retain their mental capacity to create it. Our attorneys in Hong Kong will not use the enduring power of attorney should the creator remain mentally capable, moreover, one has the ability to choose to limit the powers of the agent or agents, meaning that he or she can choose to restrict some issues and the attorney will not have control over these.
An individual can choose to appoint one or more attorneys for an enduring power of attorney and, if this is the case, he will specify if they are to act jointly or individually.
Mental capacity is defined as being the ability to make one’s own decisions. Dementia, and the loss of one’s decision-making abilities, can occur due to Alzheimer’s disease. Families in Hong Kong can request specialized assistance from the Hong Kong Alzheimer’s Disease Association.
The authorities of an agent appointed via a power of attorney
Before deciding to sign this document, you should make sure that you understand the powers the attorney will have in your specific case. Below, our team of lawyers in Hong Kong describes the powers that an appointed attorney will have in case of banking matters, a common situation in which clients choose to use this document:
- manage all of the bank accounts after the owner has lost his mental capacity (only possible with an enduring power of attorney);
- lodge an account inquiry with the bank (possible with a general and enduring power of attorney);
- make payments on behalf of the account holder;
- open or close bank accounts (only possible in some cases that can be defined by our team);
- change the account holder’s correspondence address;
- retrieve items from a safe deposit box, if such a service is in use by the account holder;
- order statements or checkbooks.
Please keep in mind that these are only examples of the actions that can be performed under an enduring (and, in some cases, a general power of attorney). Banks can also accept special powers of attorney for some of the actions, provided that these documents clearly specify the actions that can be undertaken by the agent and that the bank considers these to be reasonable and acceptable.
Banks and other institutions in Hong Kong reserve the right to only accept enduring powers of attorney that have been registered with the High Court and when the grantor has lost his mental capacity. This is why we suggest that individuals who are interested in drawing up this document reach out to our agents for complete information on how to register the power of attorney in Hong Kong.
Hong Kong residents do not commonly seek professional financial assistance for retirement planning, however, an issue that could be addressed by using an enduring power of attorney. A report discussing retirement planning in the Special Administrative Region highlights the following:
- 65% of responders said that they did not have a formal plan for managing their assets during retirement;
- this is an issue that deserves more attention as projections indicate the in the following 20 years Hong Kong’s population will increase rapidly, with the elderly population of 65 and above likely to more than double in the next two decades;
- the Hospital Authority in Hong Kong indicates that the prevalence rates of dementia are between 5 and 8% in individuals over 65 years of age and 20 to 30% in those over 80 years.
While it is preferable for an individual to exercise his or her own financial decisions, as previously mentioned, the enduring power of attorney can be a suitable solution for elderly citizens looking to manage their assets and entrust a specialist, such as one of our lawyers in Hong Kong, to manage their finances.
It is useful to know that an enduring power of attorney is signed by the donor in the presence of the solicitor and a medical practitioner (at either the same time or no longer than 28 days apart).
Frequently asked questions about the power of attorney in Hong Kong
Does a power of attorney have to be done by an attorney?
The power of attorney is a legal document that has a standard form, in most cases. Interested individuals can use a ready-made template, however, this does need to be drawn up according to certain rules (such as including complete identification details for the grantor and the agent). It is advisable to seek assistance from our lawyers in Hong Kong for a review of the document, if not for the entire draw up procedure. This way, you can make sure that the document observed your best interests and that the powers that are awarded are in line with your wishes.
How do I authorize a power of attorney?
In Hong Kong, a power of attorney is registered rather than authorized. By taking the mandatory step of registering this legal instrument you make sure that is can be used for the legal purpose it was created. This applies in case of enduring powers of attorney and it includes several steps:
- send an application for registration in writing with the Registrar of the High Court;
- include a cover letter that stipulates the names and addresses of the donor and the attorney or the attorneys of both parties (if applicable);
- bring the original certified copy of the legal instrument;
- pay the registration fee, which has a value of approximately 440 HKD (this may be subject to change, we advise interested individuals to check the current fee value).
When the health state of the donor is a fragile one and a medical practitioner is present at the time of the signing of the instrument, then a copy of the medical professional’s practicing certificate is also included in the application. One of our lawyers can provide you with more details when the power of attorney in Hong Kong needs to be concluded in the presence of a physician.
The documents are to be lodged personally in Hong Kong at the High Court Building.
Once the registration is complete, the Registry issues a signed letter which informs the donor that the power of attorney was registered. A date and number of registration are provided.
We invite you to watch the following video for information on using a power of attorney in Hong Kong:
When should I conclude a power of attorney in Hong Kong?
Entrepreneurs or individuals should consider concluding a power of attorney and registering it (as needed for enduring instruments) when you can predict that in the foreseeable future you will need an agent to handle a number of financial or business matters in your name. This can take place as soon as you decide to open a company in Hong Kong or invest here or, as needed, during the investment or the business when you can no longer be present on location for several issues. It is important to note that taking the time to personally sign the instrument is essential and this may mean that traveling to Hong Kong will be required.
Individuals who wish to use a power of attorney for special medical purposes or for special financial issues should not wait until their health state deteriorates to draw up this document. It is advisable to conclude and sign a power of attorney while in a good physical and mental state. Likewise, no individual should ever be pressured into signing this document by a third party (the one who will act as the agent) without thoroughly reading and understanding the powers that are to be entrusted.
It is important to note that the power of attorney in Hong Kong is not the same as a will. The latter is used for the purpose of distributing the assets after the death of their holder while the power of attorney is used to handle asset-related and financial matters during the donor’s lifetime. However, there are situations when a will and a healthcare power of attorney can be used in addition to one another, in relation to medical treatment for a terminal disease or for issues such as the option to not resuscitate.
In some cases, the attorney-in-fact can be a relative or an entrusted individual. Nonetheless, in all cases that involve a power of attorney in Hong Kong, it is highly advisable to only appoint a trusted individual or a legal professional, such as a lawyer. The individual thus appointed will make important decisions about your financial assets, personal property, business affairs, and healthcare issues according to the document.
The power of attorney is a versatile tool that can be used for business or personal purposes. If you would like to know more about the power of attorney and how you can conclude such a document you can contact our law firm in Hong Kong.