► reading news

Focus Asia

The new Hong Kong Company Ordinance

Hong Kong fully rewrites its Companies Ordinance (Chapter 32 of the Laws of Hong Kong) with the aim to enhance corporate governance, ensure better regulation, facilitate business and modernize its company law. The new Companies Ordinance is expected to commence operation in 2014. Meanwhile, over ten regulations will have to be made to facilitate implementation of the new Ordinance.

(Hong Kong, 2012-10-12) In July 2012, the new Companies Bill was passed by the Hong Kong Legislative Council. The new Companies Ordinance, which consists of more than 900 sections and 10 schedules, aims to achieve four main objectives, namely: to enhance corporate governance, ensure better regulation, facilitate business and modernize the law.

 

Major Initiatives

1. Measures for Enhancing Corporate Governance

  • Restricting Corporate Directorship in Private Companies: at least one director must be a natural person – to enhance transparency and accountability.
  • Replacing the Headcount Test: the “headcount test” for privatizations and specified schemes of arrangement is replaced by a “not more than 10% disinterested voting” requirement.
  • Clarifying Directors’ Duty of Care, Skill and Diligence: new standards for directors’ duty of care, skill and diligence is clarified - to provide clear guidance to directors.
  • Strengthening Auditors’ Powers: auditors are now empowered to require a much wider range of persons to provide information or explanation reasonably required for the performance of the auditor’s duties. Failing to provide requested information or explanation to the auditor may commit a criminal offence.
  • Fostering Shareholder Protection: scope of unfair prejudice remedy is extended in the new Companies Ordinance to cover “proposed acts and omissions” – even if they are not yet effected. More effective rules are introduced to deal with directors’ conflicts of interests and his employment contract, if long termed.
  • Enhancing Shareholder Engagement in the Decision-Making Process: the threshold requirement for members of a HK company to demand a poll is reduced from 10% to 5% of the total voting rights.

 

2. Measures for Ensuring Better Regulation

  • Strengthening the Enforcement Regime and Criminal Liability for Auditors: the liabilities of officers of companies for contravention of provisions are increased, including lowering the threshold for prosecuting a breach or contravention and extending it to cover reckless acts through a new definition of “responsible person”. There is introduced a new offence in relation to inaccurate auditor’s reports.
  • Increasing Powers of the Registrar of Companies: provides new powers for the Registrar of Companies (the “Registrar”) to obtain documents or information to ascertain whether any conduct that could constitute an offence in relation to the provision of false or misleading statement to the Registrar has taken place.

 

3. Measures for Facilitating Business

  • Facilitating Simplified Reporting: HK companies that meet specified size criteria are allowed to prepare simplified financial statements and directors’ reports. Statement and report requirements are also simplified for larger HK companies, if they fall under specific criteria.
  • Streamlining Procedures: allowance to dispense with Annual General Meetings by unanimous shareholders’ consent. A court-free procedure to reduce the share capital is introduced, based on a solvency test. All types of HK companies are now allowed to purchase their own shares out of capital – they can also provide now financial assistance to another party for the purpose of acquiring its own shares or the shares of its holding company.
  • Facilitating Business Operations: the use of a common seal is now optional and the requirement to have an official seal for use abroad is relaxed. General Meetings are permitted to be held at more than one location using electronic technology. New rules governing communications to and by HK companies in electronic form are being settled.

 

4. Measures for Modernizing the Law

  • Withholding Personal Details from Public: new provisions to withhold directors’ residential addresses and full identity card/passport numbers of individuals from public view.
  • Abolishing Par Value for Shares: a mandatory system of no-par for all HK companies with a share capital is adopted, which retires the par value of shares. This is in line with international trends and to provide HK companies with more flexibility in structuring their share capital.
  • Removing the Power to Issue Share Warrants: power of HK companies to issue share warrants to bearers is removed.

 

The Hong Kong Companies Registry published a full abstract about the “New Companies Ordinance” Major Initiatives, which can be downloaded here.

A dedicated thematic section on the “New Companies Ordinance” has been set up on the website of the Companies Registry to provide information and updates on the implementation of the new Companies Ordinance. It is expected that the Companies Registry will continue to issue briefing materials and guidelines on the new Ordinance, and organize seminars and briefing sessions before its implementation.

The full version of the “New Companies Ordinance” as it has been published in the Gazette in August 2012, can be downloaded here.
Furthermore, HK CR published a summarizing Outline Paper.

 

Discussion

Keine Kommentare

Post a comment

 

HOLDINGS | TRUSTEES | LAW | TAX | FACILITATION | CORPORATE

Welcome to the Web of MCI Counselors Law & Tax - have a good day!

Language

New articles

\r\n (Dubai & Berlin, 30/09/2014) The increasing “European-ization” of all areas will now also make no longer halt before inheritance. At least, once international ba...
\r\n (Dubai, 04/09/2014) This week the World Economic Forum (WEF) published the results of its annual Global Competitiveness Report (GCR) 2014-2015 with impressive rankings for the U...
\r\n (Dubai, 30/08/2014) Since June/July this year, licensees of Dubai’s DMCC start to rub their eyes when it comes to their annual license renewal. Out of the blue, the Free Z...
\r\n (Dubai, 08/08/2014) MCI offers actually several Shelf Companies, aged between 2yrs, 10mths and 6yrs, 1mth - as per August 2014.\r\n\r\n\r\n\r\n \r\n \r\n \r\n DESCRIPTION\r\n \r\n \r\n ...
\r\n (Hong Kong, 2014-07-27) This month, the first revision of Shanghai Free Trade Zone’s (FTZ) Negative List took place.\r\n\r\n\r\n\r\n Shanghai Free Trade Zone (FTZ) was launched in...
\r\n (Dubai, 14/07/2014) The UAE Ministry of Labour (MOL) has announced that it will stop the usage of the old plastic labour cards & paper contracts starting from July 13, 2014....
\r\n (Hong Kong, 25-06-2014) We found a very interesting BBC documentary about China's debt policy and situation from February 2014, critical as well (of course). But watch yours...
\r\n (Dubai, 13/04/2014) With effect 01/05/2014, Emirates NBD massively increases the required Minimum Balances for its Business Banking Clients.\r\n\r\n\r\n\r\n Emirates NBD, one of UAE'...
\r\n (Dubai, 26/03/2014) Finally, Virtual Currency (VC) Tax Rules - including the most popular, Bitcoin - came to the US on March 25! Several insiders predicted that the government w...
\r\n (Hong Kong, 2014-03-26) On March 25, Hong Kong and the United States signed a Tax Information Exchange Agreement (TIEA), which will provide the necessary basis for Hong Kong to ...

Facebook

Tags