The Hong Kong Special Administrative Region Government launched the third public consultation on the Companies Ordinance rewrite June 26. This phase of the the rewrite covers share capital, capital maintenance rules and statutory amalgamation procedures.
This three-month consultation ends September 30. Following is a summary of the points covered in this phase:
The government proposes to introduce a mandatory, no-par value share system for all companies (i.e., shares will no longer have par or nominal value) and provide a period of 12 months for companies to review their arrangements before migration to no-par. The consultation document also proposes to make other consequential and related amendments after the migration to no-par.
Under existing arrangements, companies incorporated in Hong Kong with share capital are required to have a par value ascribed to their shares. Each share, therefore, has a fixed face value that is its par value, which is the minimum price at which shares can generally be issued.
The government does not recommend adopting an across-the-board, solvency-test approach to distributions of all forms. Nevertheless, the government would like to invite views on whether the existing capital maintenance rules concerning reduction of capital, purchase by a company of its own shares and financial assistance by a company to another party for the acquisition of its own shares should be streamlined or modified.
The government is considering introducing a court-free statutory amalgamation procedure alongside the existing court-sanctioned procedure.
“While looking forward to views from all interested parties and stakeholders on the proposals, we would also like to thank the Standing Committee on Company Law Reform (SCCLR) and the relevant advisory group comprising representatives from professional and business organizations, academics and members of the SCCLR for their invaluable advice and recommendations offered,” a government spokesman said.
The Companies Ordinance rewrite exercise began in mid-2006. Its goals are to modernize company law and enhance Hong Kong’s competitiveness and attractiveness as an international business and financial center.
The second, three-month consultation on company names, directors’ duties, corporate directorship and registration of charges extended ended June 30.
The views collected from these consultations will be considered for incorporation into a draft bill, which will be issued for public consultation in mid-2009. The new Companies Bill is tentatively scheduled to be introduced to the Legislative Council in the third quarter of 2010.
The consultation document on this third phase can be downloaded from the Web site: [www.fstb.gov.hk/fsb]. Comments and submissions should be sent by mail to the Companies Bill Team, Financial Services and the Treasury Bureau, 15/F, Queensway Government Offices, 66 Queensway, Hong Kong, or by fax to (852) 2869-4195 or by email to co_rewrite@fstb.gov.hk on or before September 30.
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