New Hong Kong Companies Ordinance: What will remain in the current Companies Ordinance?01 Jan 2014 | Newsletter/briefing
WHEN IN FORCE: 3 March 2014
COMPANIES AFFECTED: All companies
UPON THE NEW CO COMING INTO EFFECT, WHAT HAPPENS TO THE CURRENT COMPANIES ORDINANCE?
- the new CO repeals most of the core provisions affecting companies under the current Companies Ordinance
- the current Companies Ordinance will remain in force but with a much narrower scope of content and, accordingly, will be re-titled the "Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32)"
WHAT IS LEFT BEHIND IN THE CURRENT COMPANIES ORDINANCE?
- the provisions of the current Companies Ordinance will continue to cover:
- winding-up and insolvency of companies
- offerings of shares and debentures (i.e. the prospectus regime)
- disqualification of directors
- prevention of evasion of the Societies Ordinance
- a number of minor changes made to the remaining provisions ensure consistency with the new CO regime. These include amendments which reflect new terminology and changes such as the abolition of the memorandum of association
- Schedule 9 to the new CO sets out the details of how each section of the current Companies Ordinance is amended following the commencement of the new CO
WHAT FURTHER CHANGES MAY BE MADE TO THE CURRENT COMPANIES ORDINANCE?
- the Bills Committee on the Companies Bill has indicated that the provisions on prospectuses will likely be moved to the Securities and Futures Ordinance, pending a separate review by the Securities and Futures Commission. The Securities and Futures Commission expects to introduce a bill in relation to these amendments (The Securities and Futures and Companies Legislation (Investor Protection Amendment) Bill) to the Legislative Council within the first half of the 2013/2014 legislative session. A notable change looking to be made in this bill will be a new concept of sponsor criminal liability in respect of material misstatements or omissions in a prospectus
Winding-up and insolvency
- the Government plans to introduce a bill introducing comprehensive amendments to the corporate insolvency and winding-up provisions in 2014/2015
- a consultation paper published in April 2013 made the following proposals:
- to streamline the existing procedures for the winding-up of companies
- to address deficiencies in the present law in respect of transactions at an undervalue and invalidation of floating charges
- to enhance the effectiveness of the private and public examination procedures
- to strengthen the regulation of winding-up and insolvency practitioners
- consultations regarding the introduction of a corporate rescue procedure are scheduled to take place in 2013/2014
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