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A comprehensive rewrite of the Companies Ordinance (CO), which seeks to update and modernise the legal framework for companies in Hong Kong, will facilitate the conduct of business and enhance Hong Kong's competitiveness and attractiveness as an international financial and business centre.
The Permanent Secretary for Financial Services and the Treasury (Financial Services), Miss Au King-chi, gave a speech on the challenges in rewriting the CO at the Hong Kong Securities Institute's seminar today (January 15). She said that the CO is the cornerstone of business operation in Hong Kong and that the Government considers it important to gauge the views of stakeholders and the general public in the rewrite process.
The Financial Services and the Treasury Bureau has prepared a draft Companies Bill for a final round of consultation in two phases. The first phase began on December 17 last year, whereas the second phase will be launched in March this year.
"We hope that through the rewrite, the legal framework for regulating companies can keep pace with the times, facilitate business operation, and enhance corporate governance for the better protection of stakeholders like minority shareholders and creditors. This will in turn bring substantial economic benefits to Hong Kong, and consolidate our position as an international financial and business centre," Miss Au said.
She outlined a number of topical issues covered in the consultation at the seminar. First, the Government is seeking public views on whether the "headcount test" for approving a scheme of arrangement should be retained or abolished. Second, the Administration proposes to empower the Registrar of Companies to act on a court order requiring a "shadow company" to change its name. Third, the consultation looks into codifying directors' duties on care, skill and diligence. Last but not the least, the Government will review the existing requirements of disclosing directors' residential addresses and personal identity numbers of directors and company secretaries on the public register in view of privacy concerns.
"The proposed changes to the CO will be relevant to many. For directors, we will clarify their duties in relation to the standard of care, skill and diligence by codifying them in the new CO.
"For shareholders, the new CO will enable them to communicate more effectively and conveniently with their company through electronic means and to allow them to participate in company meetings at different places through the use of information technologies.
"For the SMEs, we will allow more companies to enjoy simplified accounting and reporting requirements so as to save their compliance and business costs. We will also introduce company incorporation and filing of documents on-line. Together with an expedited company name approval process, a company can be formed on-line within a day. This will put Hong Kong on a par with comparable jurisdictions like the UK and Singapore," Miss Au said.
"For a number of issues, there is divergence of views among the public on how the CO should be reformed. Our job is to strike a reasonable balance among the diverging interests, and this is indeed the key challenge in the CO rewrite exercise," Miss Au said.
She appealed to members of the Securities Institute and other interested persons to submit their views to the Government on or before March 16. The Government will then refine the draft Bill in the light of the comments received and introduce the Companies Bill into the Legislative Council by December this year.
Ends/Friday, January 15, 2010
Issued at HKT 17:09
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