17 January, 2019
The Companies (Amendment) (No. 2) Ordinance 2018 (Amendment Ordinance) was published in the Gazette on 7 December 2018. The Amendment Ordinance introduces revisions to the Companies Ordinance (Cap. 622)(CO) and its subsidiary legislations to clarify existing CO provisions and further facilitate corporate activities in Hong Kong.
Major revisions under the Amendment Ordinance include: streamlining corporate reporting obligations, enhancing accounting-related provisions, and modifying certain procedural and technical regulations concerning local and non-local (i.e. non-Hong Kong) companies. We would like to highlight the following revisions in particular:
- Hong Kong companies will no longer be required to maintain a printed copy of their articles of association; it will be permissible to solely maintain the articles in electronic form (amending section 76 CO);
- If a company has both an English name and a Chinese name, both names must be stated in its articles of association (amending section 81 CO);
- The existing CO requirement for companies to register an alteration of their articles of association will be exempted if the alteration is made in respect of a change of company name (amending section 88 CO);
- In the event that all holders of a specific class of shares agree to vary the rights attached to that particular class (either by written consent of all such shareholders, or passage of a unanimous resolution by such shareholders in a general meeting), the variation shall take effect on the date of, or such other date as specified in, the written consent or the unanimous resolution. No shareholder may apply to the Court to have such variation disallowed (amending sections 180, 182, 188 and 190 CO);
- Section 275(3) CO, which provides an exemption from the general prohibition on companies for giving financial assistance (where the financial assistance is for the purpose of acquiring shares in its holding company, or reducing or discharging a liability incurred thereof, if the holding company is incorporated outside Hong Kong), has been repealed as it is no longer necessary;
- Both Hong Kong companies and registered non-Hong Kong companies will no longer be required to notify the Registrar of Companies of the change in the place where copies of instruments creating charges are kept if the change only relates to a change in its registered office address or principal place of business, as appropriate (amending section 351 CO);
- The eligibility requirements for private and guarantee companies to qualify for reporting exemptions under the CO(allowing for simplified accounts and director’s reports) have been clarified and amended, expanding the types of companies eligible for the exemptions (amending sections 359, 360, and 364 through 366 CO);
- The CO provisions governing ‘financial year’, ‘accounting reference period’ and ‘primary accounting reference’ date have been updated to better clarify their operation (amending sections 367 through 369 CO);
- The CO provisions governing financial statements and directors’ reports have largely been amended for better clarity (amending sections 379, 380, 383, 385, 388 and 390 CO);
- The formal authority of the Financial Secretary to regulate revisions of financial statements is extended (amending section 450 CO);
- In addition to the minutes of proceedings at all meetings of directors, a company shall also record all resolutions passed by its directors without a meeting (amending section 481 CO);
- The Amendment Ordinance clarifies that wholly owned subsidiaries of a non-Hong Kong company may undergo horizontal amalgamation (amending sections 678 and 681 CO);
- The Companies (Disclosure of Company Name and Liability Status) Regulation (Cap. 622B) has been amended to require companies having an English or Chinese registered name intending to display or state a name of or for the company (in English or Chinese) to use only such English or Chinese registered name, as appropriate;
- Under the Amendments to Companies (Model Articles) Notice, certain types of alteration of share capital now only require an ordinary resolution, including (i) capitalization of profits; (ii) allotment and issuance of bonus shares; (iii) conversion of shares into larger or smaller number of shares; and (iv) cancellation of shares that have not been taken or agreed to be taken by any person, or that have been forfeited (amending Article 87 of the Model Articles); and
- The Companies (Non-Hong Kong Companies) Regulation(Cap. 622J) has been amended to clarify that the address of the authorized representative of a registered non-Hong Kong company must be an address in Hong Kong (amending section 9 thereof).
Apart from the amendments to sections 792 and schedule 7 of the CO, the Amendment Ordinance will come into force on 1 February 2019.
For further information, please contact:
Alex Yang, Deacons
alex.yang@deacons.com.hk
