Chinese side Guangzhou Evergrande have been charged by the Asian Football Confederation (AFC) after fans held up a banner criticising the Hong Kong independence movement.
The banner read: "Annihilate British dogs, extinguish HK independence poison", and was unveiled during Guangzhou's 6-0 Asian Champions League win over Hong Kong champions Eastern.
Hong Kong is a former British colony.
The charges relate to breaches of the ethics code and spectator misconduct.
Hong Kong was returned to China in 1997, under a promise that it would enjoy a high degree of autonomy.
At Tuesday's game at Mong Kok Stadium in Hong Kong, one Eastern supporter displayed the territory's colonial-era flag, which features Britain's Union Jack.
The AFC's ethics code says clubs could be forced to play at least two games behind closed doors over any offensive "words or actions" by their fans, while individual supporters found guilty could be banned from stadiums for a minimum of two years.
Eastern manager Chan Yuen-ting, the first woman to lead a professional men's football team to a top-flight title, said she did not see the banner.
"I was focused on the game, I didn't see what happened in the stands," added Evergrande and former Chelsea boss Luiz Felipe Scolari.
Martin Yip, BBC Chinese, in Hong Kong:
Both Hong Kong and Guangzhou fans had been trading curses before kick-off, and not long after Evergrande's fifth goal, the banner showed up.
More cursing between the two sides followed, and then came the spark - a few Evergrande fans rushed down the stand in anger, apparently intending to run across the corridor to the local fans' stand. Security officers were already at the scene negotiating the taking down of the banner, and stopped the young men.
As Eastern left the pitch in great humiliation after a 6-0 loss, no further troubles were reported outside.
And residents around the area might feel relieved.
Mong Kok saw some of the most fierce clashes during the 2014 Umbrella Movement sit-in protests, and just over a year ago, a policeman fired warning shots when protests in support of an illegal snack bazaar turned violent.
But the old colonial Hong Kong flag went largely unnoticed. Not even the main pro-Beijing newspapers in town have reported it so far. But China's social media is buzzing in anger.
Back in 2015, Hong Kong was fined by Fifa after fans booed the Chinese national anthem during a World Cup qualifier match.
Hong Kong is allowed to compete under the name "Hong Kong, China" under the Basic Law - the city's mini-constitution. It shares the same national anthem with mainland China as a result.