Hong Kong Seeks Opinions on Companies Ordinance Rewrite

Hong Kong(SANEPR.com) July 1, 2008 -- The Bureau has proposed empowering the Registrar of Companies to act on a court order to prevent possible abuse of the company name registration regime by "shadow companies."

The consultation paper also suggests considering whether the directors' general duties, which are mainly found in the case law, should be codified to make them more accessible to the public. It also considers, whether the UK's approach to this matter should be adopted. This approach imposes a duty on directors to further the success of the company by having regard to a wider list of factors, such as employees' interests, and the impact of the company's operations on the community and the environment.

The Bureau also seeks views on the abolition of corporate directors. But if this was adopted it would be subject to a reasonable grace period. The alternative might be following the UK approach, which requires every company to have a least one person as a director for the purpose of accountability and transparency of company operations and the enforceability of directors' obligations.

The paper also recommends improving the procedure for registration of charges by making the instrument of charge available in full on the public register, and shortening the registration period from five to three weeks to reduce the period whereby the charge is "invisible" to third parties.

The Government has also invited 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.

Another consultation on share capital, capital maintenance rules and statutory amalgamation procedures amongst others 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. All this is with the view to a introducing a new Companies Bill into the Legislative Council in 2010.

Hong Kong to Update Trust Law

Hong Kong Financial Secretary John Tsang confirmed in his recent budget speech, that the Government will review the Trustee Ordinance. This was modelled on the English Trustee Act of 1925 and has not been altered since 1934.

"We will review the Trustee Ordinance in order to increase the competitiveness of our trust services industry" said Tsang.

The move follows review of the existing Ordinance by the Society of Trust & Estate Practitioners (STEP) Hong Kong and the Hong Kong Trustees'Association in 2006.

The review said all levels of trust business was moving from Hong Kong and that Hong Kong was being sidelined for new business. Singapore is one of the principle beneficiaries of this trend. The recommendations are for far reaching reforms to Hong Kong's trust law, including provisions for purpose trusts.

The Hong Kong Government is also to review the regulatory framework for the securities market, to improve market quality and reduce compliance costs for the industry.

To tie in with the implementation of Qualified Domestic Institutional Investor (QDll) arrangements by the Chinese Mainland, the Hong Kong Government and regulatory bodies will continue to liaise with the Mainland, improve market infrastructure, promote financial intermediary activities, encourage financial innovation and launch new financial products.

"We are working hard to develop an lslamic financial platform in Hong Kong so as tap a market with an estimated value of USD1,000 bn. Furthermore, in the past few months, we have led financial sector delegations to visit Vietnam ad India," said Tsang.

"Last year, the Securities and Futures Commission and the Hong Kong Exchanges and Clearing issued a joint policy statement on the listing of overseas enterprises to list here. The government will continue to monitor and promote the development of the local financial markets in collaboration with the financial regulators," he said.

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