The Hong Kong Special Administrative Region Government recently announced the launch of the second consultation on the Companies Ordinance rewrite, covering measures to improve provisions on company names, directors’ duties, corporate directorship and registration of charges.
The government would like to consult on the following four proposals:
1) Company names: To empower the Registrar of Companies to act on a court order to direct a defendant company to change its infringing name and substitute the non-compliant defendant company’s name with its registration number to tackle possible abuse of the company name registration program by “shadow companies.”
2) Directors’ duties: Whether the directors’ general duties — which are mainly found in the case law — should be codified to make them more accessible to the public, and if so, whether the United Kingdom’s (UK) approach, which imposes a duty on directors to promote the success of the company having regard to a wider list of factors, such as the interests of employees, and the impact of the company’s operations on the community and the environment, should be followed.
3) Corporate directorship: To abolish corporate directorship altogether, subject to a reasonable grace period, or following the UK approach, which requires that every company must have at least one individual as a director, for the purpose of improving the accountability and transparency of company operations and the enforceability of directors’ obligations.
4) Registration of charges: To update the list of registerable charges, improve the procedure for registration of charges by making the instrument of charge available in full on the public register and shorten the registration period from five weeks to three weeks to reduce the period whereby the charge is “invisible” to third parties. The government also invites initial views on whether there is any need to introduce an administrative mechanism for late registration of charges to replace the current system of applying to the court.
The rewrite exercise, which began in mid-2006, aims to modernize company law and enhance Hong Kong’s competitiveness and attractiveness as an international business and financial center.
The first consultation on accounting and auditing provisions in the Companies Ordinance was conducted in 2007, and the conclusions are available on the Web site [www.fstb.gov.hk/fsb/co_rewrite/eng/home/home.htm]. Another consultation on subjects such as share capital, capital maintenance rules and statutory amalgamation procedures will be conducted in mid-2008.
The views collected from the consultations will be considered for incorporation into a White Bill to 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 second set of proposals 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 June 30.
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