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Kenneth Hong

Kenneth Hong

Managing Partner

Ken has more than 16 years of experience advising and acting for clients who are private and public companies, and government agencies across a wide range of industry and business sectors including property, mining, retail, construction, financial services, and manufacturing. As the Managing Partner, Ken has been instrumental in growing the firm’s practice by recruiting talented bilingual lawyers and servicing many Korean, Japanese and Chinese blue-chip companies operating and/or investing in Australia. Under his leadership, H & H Lawyers became one of the most respected Asian-Australian law firms. Being fluent in Korean, Ken specialises in advising major Korean multinational companies and has a close working relationship with several major Korean and Australian law firms. He is also currently the legal advisor to the Consulate General of the Republic of Korea and Korea Trade-Investment Promotion Agency in Sydney and Melbourne. Ken is the current president of the Korean Australian Lawyers Association, and in 2019, he was named as one of ’40 Under 40 Most Influential Asian-Australian’.

Expertise

Qualifications

  • Lawyer, Supreme Court of NSW

  • Migration Agent (MARN 0744689)

  • Notary Public

Insights

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Workplace & Employment

Modern Slavery Reporting Requirements

In Australia, the Modern Slavery Act 2018 commenced operation on 1 January 2019, creating reporting obligations for certain entities. The term modern slavery is used to describe situations where coercion, threats or deception are used to exploit victims and undermine or deprive them of their freedom. It describes serious exploitation and not substandard working conditions or the underpayment of workers. The Australian government, in support of UN Guiding Principles, aims to combat modern slavery in the Australian community and in the global supply chains of Australian goods and services. Who needs to report? Entities that have: Consolidated revenue of at least $100 million for the relevant reporting period (a financial year), and which Are Australian identities, or Undertake business in Australia in that financial year What do I need to report? The mandatory criterion are: The reporting entity’s structure, operations and supply chains; Modern slavery risks in the reporting entity’s operations and supply chains (including those of subsidiary entities); Actions taken (including by subsidiary entities) to assess and address those modern slavery risks, including due diligence and remediation processes; How the reporting entity assesses the effectiveness of actions taken; and The process of consultation with subsidiary entities in preparing the modern slavery statement. When do I need to report by? Affected entities must report in respect of the first full reporting period following commencement and must report within 6 months of that period ending. For example, the reporting period for entities with a 30 June year end will be 1 July 2021 to 30 June 2022, with reporting due by 31 December 2022. Further information Further information and links to the online registers can be found here: https://www.homeaffairs.gov.au/criminal-justice/Pages/modern-slavery.aspx Please contact H & H Lawyers for further legal advice for submitting a modern slavery report. [Disclaimer] The contents posted are general legal information, not legal advice, and the author and publisher have no legal responsibility for the contents. Each post is based on the law that was in force at the time of writing. Please consult a lawyer directly for accurate legal advice.

30 Mar 2021


Commercial & Corporate

Recent changes in FIRB

The Australian government has made significant changes to Australian foreign investment law, also known as the FIRB regime. This article will summarise the pivotal changes to this regime. Key legislation: Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) Foreign Investment Reform (Protecting Australia's National Security) Regulations 2020 (Cth) Foreign Acquisitions and Takeovers Regulation 2015 (Cth) (FATR) The test of national security is of increasing importance in determining approval of foreign investment in Australia, as seen by the introduction of new FIRB laws in the form of theForeign Investment Reform (Protecting Australia’s National Security) Regulations 2020(the2020 Amendments), which came into effect on 1 January 2021. The 2020 Amendments serve to implement major reforms to the FIRB regime in Australia with respect to foreign government investors and national security, with the key changes relating to the following areas: Mandatory notification of FIRB for ‘notifiable national security action’. Treasurer’s ‘last resort powers’ of unwinding a transaction after FIRB approval. Treasurer’s ‘call-in’ powers and reviewing national security actions. Treasurer’s ability to extend decision making periods. Harsher penalties for non-compliance with FIRB regime. Increased FIRB powers of compliance and enforcement. Re-defining ‘foreign government investor.’ Change in ‘significant action’ control test. Mandatory notification of FIRB for ‘notifiable national security action’ Prior to the recent reforms the foreign investment laws in Australia required foreign persons to notify any ‘notifiable action’ or ‘significant action.’ The new 2020 Amendments now also require mandatory notification of ‘notifiable national security action’. This is when a foreign person: acquires a 'direct interest' (10%+ or in a position of control or influence) in a 'national security business' (see point 2 below regarding what is considered 'national security business') acquires an interest in Australian land that is defence premises, or in which an Australian national intelligence agency has or will have an interest which is either publicly known or could be known upon making reasonable inquiries or which is land covered by an area of Australian land declared by the Treasurer by legislative instrument; or starts to carry on a 'national security business'. The exemptions from notifiable and significant actions are also applicable to the new notifiable national security actions, however there will be no money lending exemptions for notifiable national security actions and there are changes to existing exemptions. Moreover, this reform introduces a new concept of ‘national security business’ which covers the following: (critical infrastructure) where the business is a responsible entity or a direct interest holder (holding 10%+) in relation to a critical infrastructure asset under the Security of Critical Infrastructure Act 2018 (Cth), including the electricity, gas, water, and ports sectors. (telecommunications) where the business is a carrier or carriage service provider under the Telecommunications Act 1997 (Cth) (defence) where the business does any of the following: develops or manufactures critical goods or critical technology intended for a military end-use or military use by "relevant defence persons" (being defence and intelligence personnel in activities relating to Australia's national security, or the defence force of another country in activities that may affect Australia's national security); supplies critical goods or critical technology that are, or are intended to be, for a military end-use or military use by relevant defence persons; or provides or intends to provide critical services to relevant defence persons; or (data and personal information) where the business: stores or has access to information with a security classification. stores or maintains personal information of Australian defence and intelligence personnel collected by Australia's Defence Force, Defence Department, or an Australian national intelligence agency, which if accessed could compromise Australia's national security; or collects, stores, maintains or has access to personal information of Australian defence and intelligence personnel that has been collected as part of an arrangement with the Australian Defence Force, Defence Department or an Australian national intelligence agency, which if disclosed could compromise Australia's national security. To the extent a foreign person starts or acquires an interest in these national security businesses (as described above), it will be necessary to notify FIRB. Treasurer’s ‘last resort powers’ of unwinding a transaction even after FIRB approval Prior to the 2020 Amendments, if an action is a risk to ‘national interest’, the Treasurer could prohibit the transaction or make divestment orders even if the transaction had already occurred. However, the previous regime restricted these divestment powers to only when the applicant had breached a condition under an existing FIRB approval or failed to notify FIRB when it was required to do so. The Treasurer was also unable to change or make new conditions to an existing FIRB approval without the applicant’s consent or unless the Treasure was sure there would not be a disadvantage to the applicant. Under the new regime, the Treasurer now holds wide ranging ‘last resort’ powers that can approve or reject anything on the grounds of ‘national security’. Even after FIRB has approved the investment, the Treasurer, subject to satisfying a list of newly introduced requirements, now has the authority to impose additional conditions, change existing conditions or order the divestment and sale of the investments.Foreign investors should be weary of these changes and obtain legal advice to ascertain the extent of how FIRB and the Treasurer may impact the mode of investment desired. A recent example of the Treasurer exercising such power was in the rejection of China State Construction Company’s proposed $300 million acquisition deal for the major Australian building contractor Probuild over concerns of national security. Treasurer’s ‘call-in’ powers and reviewing national security actions The Treasurer’s new ‘call-in power’ allows them to review any action which was not previously notified to FIRB, is a significant action or reviewable national security action, or may pose a national security concern. After the review, the Treasurer can make prohibition or divestment orders if satisfied the action would result in a risk to national security. The Treasurer can initiate a review any time within 10 years after the action occurs. Treasurer’s ability to extend decision making periods Previously, the Treasurer’s ability to extend the FIRB assessment decision making period was limited to a public interim order, which could prevent the applicant from proceeding with a transaction by up to 90 days. The previous regime also allowed for applicants to request for an extension of decision time, so as to avoid a public interim order.However, the 2020 Amendments now allows the Treasurer to extend the decision period up to 90 days unilaterally and the applicant cannot complete the investment until the Treasurer has delivered its decision. Harsher penalties for non-compliance with FIRB regime The 2020 Amendments increase and include a wider range of criminal and civil penalties for non-compliance with the FIRB regime, e.g.: failure to give notice of notifiable action or notifiable national security action; taking an action notified to FIRB prior getting FIRB approval; breaching a FIRB approval condition. Depending on the extent of the non-compliance or misrepresentations to FIRB, as at the date of this article, the Treasurer has the powers to impose penalties that include up to 10 years imprisonment for individuals or civil penalties of up to $1.11 million for individuals or up to $555 million for corporations. Increased FIRB powers of compliance and enforcement The 2020 Amendments provide the Treasurer with increased powers, beyond giving infringement notices and fines. The Treasurer will have monitoring and investigation powers with other government agencies and will have access to premises with consent or with a warrant to gather more information. The Treasurer will also have the power to accept enforceable undertakings from foreign persons and the power to give directions to persons to prevent or address suspected breaches of the FIRB regime. For example, a direction may be issued to a foreign person to comply with provisions of relevant legislation or existing FIRB approval conditions. Finally, the Treasurer will also revoke FIRB approval upon proof that the grant of approval was based on false or misleading information. Foreign persons who undertake actions pursuant to a no-objection notice must notify the government within 30 days after taking the actions. Re-defining ‘foreign government investor’ Previously, foreign government investors were defined as a corporation, trustee of a unit trust or general partner of a limited partnership, in which a foreign government investor from more than one foreign country collectively have at least 40% interest. Certain types of foreign persons may no longer be considered a foreign government investor under the new 40% rule Even if 40% or moreof its interests are held collectively by more than one foreign government investors, a fund vehicle may still not be considered a foreign government investor under the 40% test if: No investor from one country holds 20% or more interest in the fund vehicle No foreign government investor in the fund vehicle has access to non-public information about the fund’s investments that affect the financial metrics of the underlying investment. The foreign government investors are truly passive and exert no control. This is an important change for foreign fund vehicles that invest into Australia. Change in ‘significant action’ control test The previous regime ensured any foreign person with the acquisition of interests in an Australian entity constituted a ‘significant action’ only if there is a change in control. However, this caused a drafting anomaly where a person who already had substantial interest in an Australian entity could increase that interest without such increase constituting a significant action. The 2020 Amendments change this control test so that it would no longer need to be satisfied where the acquirer already has a pre-existing substantial interest in the relevant Australian entity by itself or with one or more associates. Moneylending activities require FIRB approval in relation to National Security Assets In relation to moneylending activities by foreign persons, there is a general exemption for the requirement to obtain FIRB approval for moneylending activities. However, with these new regulatory reforms, the exemption no longer applies for moneylending activities that involves the acquisition of security interests in a national security business or national security land. [Disclaimer] The contents posted are general legal information, not legal advice, and the author and publisher have no legal responsibility for the contents. Each post is based on the law that was in force at the time of writing. Please consult a lawyer directly for accurate legal advice.

15 Mar 2021


Workplace & Employment

Casual vs Permanent

On 20 May 2020, the Full Court of the Federal Court of Australia handed down its decision in WorkPac Pty Ltd v Rossato. The case centres around labour hire firm WorkPac, which employed Robert Rossato as a mine worker at two Queensland mines owned by Glencore. Mr Rossato was a casual employee, on rolling contracts, over a three-and-a-half-year period. As a casual, he was paid an extra 25 percent loading on top of his wage — which is the usual practice to make up for not being given benefits such as annual leave. The Full Federal Court dismissed WorkPac’s application for a declaration that Mr Rossato was a casual employee, instead finding that Mr Rossato was a permanent employee. It was found that because Mr Rossato's employment was "regular, certain, continuing, constant and predictable", and he was given rostered shifts well in advance, he was eligible to entitlements that full time employees receive under the National Employment Standards (NES) in the Fair Work Act 2009 (Cth) and the relevant Enterprise Agreement: being paid annual leave, paid personal/carer’s leave, paid compassionate leave, and payment for public holidays. This is an important decision for employers who engage casuals, whether directly or as a host employer. Pending any intervention by the Federal Government or appeal to the High Court, employers should now carefully review their casual employment arrangements, update the terms of their casual contracts, and revisit their arrangements with labour hire companies and their workers. In particular: • Employers should review their casual arrangements with a view to determining whether some other form of engagement is more appropriate – including part time and fixed term arrangements. • Assuming casual engagement is still appropriate, specific attention should be given to the employee’s written contract to ensure that the casual loading is a separately identifiable amount that is stated to be paid as a result of the employee not being entitled to NES or other entitlements peculiar to permanent employment. We also suggest a statement to the effect that if the employment is subsequently determined not to be casual employment, the employer is entitled to repayment of the casual loading. • Regular reviews of casual arrangements should be conducted – at least once every 12 months – to assess the likelihood of the employment being a “firm advance commitment” of employment. We can assist you if you have any questions about how the Workpac v Rossato decision may impact the work arrangements in your own organisation or more generally in relation to how you are employing or engaging your workforce.

24 Jun 2020


Firm News

“40 Under 40: Most Influential Asian-Australian Awards” recognises Kenneth Hong

Congratulations Ken on being recognised as a finalist in the Professions category at the “40 Under 40: Most Influential Asian-Australian Awards”. The Awards recognise the achievements of young Asian-Australian leaders in their fields. They are designed to celebrate the achievements of the next generation of Asian-Australians, making them more visible in the wider community and providing a stepping stone to further leadership opportunities.

17 Sep 2019


Firm News

Bringing the worlds of business together – H & H Lawyers

Thursday, 13 June 2019 – Rise of the boutique law firm Doing business with international partners – whether it be an entity operating on Australian soil or a local brand venturing offshore – can be fraught with difficulty. Between establishing a fresh customer base, navigating new laws, regulations and corporate governance, creating effective relationships and becoming nuanced with cultural mores (perhaps the trickiest of all), the business of doing business has the potential to bring an enterprise undone. For instance, exchanging a business card using one hand rather than two can be seen as a sign of disrespect in some cultures. Who would necessarily know? With Australians increasingly undertaking business across the world and with Asian powerhouses such as Japan, Korea and China, navigating the behind-the-scenes landscape, as well as providing direct services and advice, has become all important. Business owners and operators need to focus on what they do best, so employing people who specialise in troubleshooting make-or-break sensitive legal, technical and cultural matters is a vital and strategic move. Sydney’s H & H Lawyers offers this official and unofficial role in its capacity as a firm on the path to being Australia’s biggest ‘‘Asian’’ law firm. H & H Lawyers’ services include commercial and corporate advisory, acquisitions, dispute resolution, employment law, corporate migration and intellectual property. “Our bilingual lawyers have been inundated with work representing multinational corporations and government agencies from Japan, Korea and China that want to expand their businesses into Australia,” says Principal Ken Hong. “We have also been very busy acting for local clients with Japanese, Korean or Chinese backgrounds, or that have transactions with their counterparts in those three countries. “Demand for our services has escalated, so we are rapidly expanding to meet the demand.’’ Fellow Principal Yukio Hayashi says a vital aspect of the firm’s work includes “bridging fundamental cultural differences”. “This cross-cultural dexterity is not necessarily part of our brief, but it’s what we offer as well, as it is so essential,’’ he says. “Our team not only speaks the languages, but also intimately understands the cultural nuances of Asia. This saves our clients so much time in getting straight to the actual issues and resolutions. Without the right knowledge of culture, a lot of key messages can be lost in translation, particularly legal concepts, leading to a frustrating experience for all. “We had one situation recently in which there was an investment in an Australian business by a Japanese company. There were excellent managers and staff in situ, but the incoming management from Japan had their way of doing things that did not rest well with the Australian team, and vice versa.” “This friction was no one’s fault, but we made it our job to navigate the cultural minefield. We were able to get each side to see things from the other’s perspective and that made all the difference.” Hong and Hayashi say that by going this extra mile, the law firm can resolve difficulties and help international-facing businesses to thrive. “The importance of Australia’s trade relationships with Korea, China and Japan need no further explanation,’’ says Hong. “They are our top three trading partners. We look forward to continuing with our work and contributing to Australia’s successful trade relationships with those three countries.” Says Hayashi: “Our firm is well placed and equipped to help clients have a more fruitful, efficient and enjoyable experience in doing business.’’

13 Jun 2019


Legal News

Get set for a 3.0% increase to base pay rates

​The Fair Work Commission has announced a 3.0% increase to minimum wages following its 2019 Annual Wage Review. The new national minimum wage will be $740.80 per week or $19.49 per hour. The increase applies to base pay rates from the first full pay period starting on or after 1 July 2019. What do I need to do? Nothing for now. We’re working on updating our pay tools with the new rates. This usually takes us around 3-4 weeks. We’ll send you an email when the updated pay rates are available. Who does the increase apply to? The change only applies to employees that get their pay rates from the national minimum wage, a modern award or in some cases a registered agreement. Most employees are covered by an award. Find out more: Annual Wage Review Decision Fair Work Commission – Annual Wage Review 2018 – 2019 Privacy Policy Follow us on Twitter, LinkedIn or like us on Facebook for updates on the minimum wage decision and other important news affecting your workplace.

31 May 2019