16 August, 2019
Introduction
The Regulation, which took effect on 1 August 2019, aligns the obligations of non-Hong Kong companies with those of Hong Kong companies relating to the display of company names and disclosure of liability status. The Regulation generally re-enacts the provisions of section 792 of the Companies Ordinance (Section 792), however, the language used in the Regulation is slightly different from Section 792. Section 792 was repealed on the same day the Regulation took effect.
Set out below is a summary of the Regulation.
Display of name and place of incorporation at business venue
Under the Regulation, a non-Hong Kong company must continuously display its name and place of incorporation in legible characters at every business venue of the company. The name and place of incorporation must be positioned so that it may easily be seen by any visitor to the business venue.
If a location is a business venue of more than 6 non-Hong Kong companies, and any of those companies display both its name and place of incorporation through an electronic device, for the purposes of displaying the required information "continuously", the information:
- should be displayed for at least 15 continuous seconds at least once in every 4 minutes; or
- is capable of being displayed within 4 minutes after a request for the display is made through the electronic device.
"Business venue", in relation to a non-Hong Kong company, means:
- an office or place in Hong Kong where the company carries on its business and that is open to the public; or
- the principal place of business of the company in Hong Kong.
Section 792 also contained a similar rule, requiring non-Hong Kong companies to conspicuously exhibit its name and place of incorporation at every place where it carries on business.
However, the Regulation sets out more clearly what needs to be done in order to comply with the display requirements.
Name and place of incorporation to appear in communication and transaction documents
A non-Hong Kong company must state in legible characters its name and place of incorporation in every communication document and transaction instrument of the company in Hong Kong. "Communication document" is defined to mean a business letter, notice, or other official publication of the company. "Transaction instrument" is very widely defined, and covers, amongst other things, contracts, deeds, bills of exchange, cheques, consignment notes, invoices, receipts, and letters of credit. Both "communication document" and "transaction instrument" include documents or instruments in hard copy form, electronic form or any other form.
This requirement under the Regulation is wider than the previous rules. Although Section 792 contained a similar requirement, it applied to fewer categories of documents (only bill-heads, letter paper, notices and other official publications).
Disclosure of members' limited liability
If the liability of the members of a non-Hong Kong company is limited, the company must:
- conspicuously exhibit a notice of this fact at every business venue of the company, and
- state in legible characters that fact in every communication document and transaction instrument in Hong Kong.
Please refer to the section above for the definition of "communication document" and "transaction instrument". Section 792 contained a similar requirement, however, it applied to fewer categories of documents.
Conclusions
The requirements under the Regulation are generally similar to the previous requirements under Section 792. If a non-Hong Kong company contravenes the Regulations, every responsible person of the company, and every agent of the company who authorizes or permits the contravention, may commit an offence and may be liable to a fine of HK$10,000.
If a communication document or transaction instrument of a non-Hong Kong company does not include the information required under the Regulation, although there may be a breach of the Regulation, the relevant document should still remain valid, given that the Regulation does not expressly provide that a breach of the Regulation invalidates the relevant document.
In normal circumstances, in particular in relation to small companies or non-listed companies, the Companies Registry may not become aware if a non-Hong Kong company has breached the Regulation unless it has received a complaint. If a non-Hong Kong company comes across a wide range of people in the course of conducting its business, it would be prudent for such company to ensure that their communication documents and transaction instruments comply with the Regulation, in order to reduce the chance of any complaint being filed against them.
For further information, please contact:
Chin Yeoh, Partner, Ashurst
chin.yeoh@ashurst.com
