HONG KONG BUSINESS
COMPANY LAW AMENDMENTS
Amendment to Companies Ordinances
1. The Companies (Amendment) Ordinance 2003 ("the Amendment Ordinance") was passed by the Legislative Council of HKSAR on 2 July 2003. According to the Commencement Notice published in the Gazette on 12 December 2003, the Amendment Ordinance will come into operation on 13 February 2004, except clause 67 [sections 158C(1)(a) and (b)] which will become operative at a later stage.
Formation of Companies
2. Amended ordinances now permit the formation of a company by one or more persons (Section 4(1)) and prohibit the incorporation of a company limited by guarantee with a share capital (Section 4(4)).
Change of Company Name
3. A local company is required to give notice of the change of name within 15 days after the passing of the special resolution changing its name in a specified form (Section 22(1A)). The filing of a printed copy of the special resolution in relation to the change of name with the Registrar of Companies ("the Registrar") is not longer required.
Return of Allotments
4. Section 45 has been amended to shorten the period for filing a Return of Allotments (Form SC1), the relevant contract and the Return of Particulars of a Contract Relating to Share Allotment (Form SC5) from 8 weeks to 1 month. In addition, the requirement to report the occupations or descriptions of the allottees in Form SC1 has been deleted. To simplify the filing requirement, a certified copy of the contract will be accepted in lieu of a duly stamped contract and a Form SC5 is no longer required to be adjudicated before delivery to the Registrar.
Increase and Consolidation of Share Capital
5. The notice of consolidation of share capital, conversion of shares into stock etc. must be given in Form SC11 (Section 54).
6 A company is required to give notice of an increase in nominal share capital within 15 days after it takes effect and to remove the requirement for a printed copy of the resolution authorizing the increase to be filed with the Registrar (Section 55).
Reduction of Share Capital
7. Sections 58, 59 and 61 have been amended and a new section 61A has been added to streamline the procedures relating to reduction of share capital and to remove the requirement for court approval to a reduction of share capital if the sole purpose of the reduction is to redesignate the nominal value of the shares to a lower amount. Five specific conditions must also be satisfied, namely: the company only has one class of shares; all issued shares are fully paid up and the amount of the net assets of the company is not less than its paid-up share capital; the reduction applies to and affects all shares equally; the amount arising from the reduction is not less than an amount representing the difference between the amount of the company's fully paid-up capital immediately before and after the reduction and the amount arising from the reduction is credited to the share premium account of the company.
Duties of a Company with Respect to Issue of Certificates
8. Companies other than private companies must complete transfers of shares and debentures and have certificates thereof ready for delivery within 10 business days after the date on which a transfer is lodged with the company (Section 70).
Register of Members
9. The occupations or descriptions of members of the company are not longer required to be stated in the company's register of members has been repealed. However, a company is required to record that fact in the company's register of members if the number of whose members falls to one or increases to two or more (Section 95A).
Quorum Where the Company Has Only One Member
10. One member constitutes a quorum for a meeting of a company having only one member (Section 114AA).
11. A number of provisions relating to 'Directors' have been amended as follows:-
(a) Section 2(1) has been amended to contain a general definition of a 'Shadow Director' which includes someone who can influence a majority of the directors. Consequential amendments resulting from the definition have been made to sections 49BA(10)(b), 109(5), 158(10)(a), 168C(2), 271(3), 341, 344A(7) and 351(2).
(b) Section 153A(1) permits a private company to have only one director.
(c) Section 153A(6) provides that, where a private company has only one member and that member is the sole director of the company, the company may in general meeting nominate a natural person who has attained the age of 18 years as a reserve director of the company to act in the place of the sole director in the event of his death.
(d) Section 153B provides that an alternate director is the agent of the director who appoints him and provides that a director shall be vicariously liable for torts committed by his alternate. Section 153C provides that a written record of a decision of the sole director of a private company shall be sufficient evidence of that decision.
(e) Section 157B(1) provides that a director may be removed by an ordinary resolution instead of a special resolution notwithstanding any provision in the company's constitution.
(f) A new section 157D(4) has been added to state the definition of 'director' to include a reserve director and a person deemed to be a director under section 153A(8). A new specified form 'Notification of Resignation of Reserve Director' (Form D8) has been introduced for use by the resigning reserve director to notify the Registrar of his resignation pursuant to section 157D.
(g) Section 158(4) has been amended to include the requirements for a company to notify the Registrar of the nomination of a reserve director in the specified form within 14 days from such nomination and of any changes in the reserve director in the specified form within 14 days from the occurrence of the change. The new specified forms introduced for these purposes are 'Notification of Reserve Director (Nomination/Cessation)' (Form D5) and 'Notification of Change of Particulars of Reserve Director' (Form D7).
(h) A new section 158(5A) has been added to require the person who is nominated as a reserve director to sign and deliver to the Registrar, within 14 days from the nomination, a statement in the specified form (Form D6) that he has accepted his nomination and has attained the age of 18 years.
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