Under the Transfer of Businesses (Protection of Creditors) Ordinance (Cap. 49) (“Transfer of Business Ordinance”), a transfer of business refers to a transfer or sale of a trade or occupation (other than a profession) or any part of it, whether the business is carried on with a view to profit or not.
It does not include the following-
Pursuant to Section 3 of the Transfer of Business Ordinance, whenever any business is transferred (with or without goodwill), the transferee (the buyer of the business) shall become liable for all the debts and obligations, including tax liabilities, arising out of the carrying on of the business by the transferor (seller of the business).
This transfer of debts and liabilities are imposed on the transferee irrespective of any agreement between the transferor and transferee except other parts of the Transfer of Business Ordinance states otherwise.
That means the creditors of the business could demand the transferee/ buyer of the business to pay off the debts and to perform obligations previously incurred by the business before the transfer.
Pursuant to Section 4 of the Transfer of Business Ordinance, a transferee shall not become liable of the debts and obligations of the transferor's business under Section 3 of the ordinance, if the transferee has given a notice of transfer in the government gazette.
The notice of transfer must be given not more than 4 months before the date of transfer of business, and not less than 1 month before the date of transfer, and has become complete at the date of transfer.
Notice of transfer shall become complete upon the expiry of 1 month after the date of publication in the government gazette.
For legal services and advice on transfer of business and other corporate and commercial matters, please contact our Solicitor & Notary Public Ms. Natalia Cheung [E-mail: natalia@ccsn.hk / Tel: +852 6777 5767]
Website: www.ccsn.hk