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Disclosure Letter for Hong Kong

Disclosure Letter Template for Hong Kong

A Disclosure Letter under Hong Kong law is a formal document that accompanies a main transaction agreement (typically a sale and purchase agreement or investment agreement) and serves to qualify the warranties given in that agreement. It provides specific disclosures of exceptions, qualifications, or clarifications to the warranties and representations made in the main agreement. The document follows Hong Kong legal requirements and practices, incorporating local corporate law principles, particularly those under the Companies Ordinance and relevant securities regulations. It serves as a critical risk allocation tool by documenting known issues and protecting the disclosing party from future warranty claims.

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What is a Disclosure Letter?

The Disclosure Letter is a crucial document in Hong Kong corporate transactions, particularly in mergers and acquisitions, company sales, or significant investments. It serves as a companion document to the main transaction agreement, providing detailed disclosures that qualify the warranties given by the seller or warrantor. The document typically includes both general disclosures (such as matters of public record) and specific disclosures that correspond to particular warranties in the main agreement. Under Hong Kong law, the Disclosure Letter has significant legal implications as it effectively modifies the warranty coverage and impacts the buyer's ability to bring warranty claims post-completion. It requires careful preparation with input from various business functions and thorough review by legal counsel to ensure all material issues are properly disclosed while maintaining the seller's legal protection.

What sections should be included in a Disclosure Letter?

1. Letter Details: Date, sender/recipient details, and reference to the main agreement

2. Introduction: Purpose of the letter and reference to the main transaction

3. General Disclosures: Standard disclosures that apply to all warranties, including matters of public record and information in specified data rooms

4. Specific Disclosures: Detailed disclosures organized by reference to specific warranties in the main agreement

5. Basis of Disclosure: Statement of the basis on which disclosures are made and their effect on the warranties

6. Confirmation: Confirmation of accuracy and completeness of disclosures

7. Execution: Signature blocks and execution formalities

What sections are optional to include in a Disclosure Letter?

1. Supplemental Disclosures: Additional section for disclosures made after the initial disclosure letter but before completion of the transaction

2. Fair Disclosure Statement: Optional detailed statement about what constitutes 'fair disclosure' - particularly useful in complex transactions

3. Materiality Statements: Optional section defining materiality thresholds for disclosures

4. Data Room Reference: Detailed section referring to a data room index when extensive due diligence materials are provided separately

What schedules should be included in a Disclosure Letter?

1. Schedule 1 - Warranty Reference Table: Cross-reference table matching disclosures to specific warranties in the main agreement

2. Schedule 2 - Data Room Index: Index of all documents in the data room that form part of the disclosure

3. Schedule 3 - Specific Disclosure Documents: Copies of key documents referenced in the specific disclosures

4. Schedule 4 - Group Structure Chart: Corporate structure chart showing relevant group companies (if applicable)

5. Appendix A - Defined Terms: Definitions used in the disclosure letter that aren't already defined in the main agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Hong Kong

Cost

Free to use
Relevant legal definitions


























Clauses

























Relevant Industries

Financial Services

Technology

Manufacturing

Real Estate

Healthcare

Retail

Energy

Transportation

Telecommunications

Professional Services

Consumer Goods

Media and Entertainment

Education

Construction

Mining and Resources

Relevant Teams

Legal

Finance

Compliance

Risk Management

Corporate Development

Mergers & Acquisitions

Corporate Secretariat

Executive Management

Board of Directors

Internal Audit

Operations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Legal Director

Corporate Secretary

Head of Mergers & Acquisitions

Finance Director

Compliance Officer

Risk Manager

Due Diligence Officer

Transaction Manager

Corporate Development Director

Investment Director

Managing Director

Board Director

Industries






Teams

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