Tuesday, August 14, 2012
Hong Kong’s rewritten Companies Ordinance (CO) was gazetted on August 10, following the passage of the Companies Bill by the Legislative Council on July 12.
The comprehensive rewrite aims to achieve four main objectives - enhancing corporate governance, ensuring better regulation, facilitating business and modernising the law. It allows Hong Kong to leverage the developments of company law in other comparable jurisdictions, and further enhance its competitiveness and attractiveness as a major international business and financial centre.
The bill was tabled by the government in January last year, but the rewrite of the Companies Ordinance (CO) started in mid-2006, and three public consultations were conducted to gauge views on a number of complex subjects.
In the course of the rewrite exercise, the Financial Services and the Treasury Bureau benefited from the advice of the Standing Committee on Company Law Reform as well as four advisory groups and a joint government/Hong Kong Institute of Certified Public Accountants working group, which was set up to advise on specific areas of the rewrite.
Some of the measures introduced by the bill to enhance corporate governance include: improving the accountability of directors so as to enhance transparency and accountability, and clarifying directors’ duty of care, skill and diligence; emphasizing shareholder engagement in the decision-making process; improving the disclosure of company information; and strengthening auditors’ rights.
In addition, better regulation will be ensured by means of the accuracy of information on the public register, an improvement to the registration of charges scheme, and a strengthening of the enforcement regime through the Registrar. There will be easier reporting for small- and medium-sized enterprises, which will also be able to prepare simplified financial and directors’ reports.
A government spokesman said: "The new CO, comprising 921 sections and 11 schedules, provides a modernised legal framework for the incorporation and operation of companies in Hong Kong. Its objectives are to enhance corporate governance, improve regulation, facilitate business and modernise the law with a view to strengthening Hong Kong's competitiveness as a corporate domicile and enhancing its status as a major international commercial and financial centre."
The new ordinance will commence operation on a date to be appointed by the Secretary for Financial Services and the Treasury. Before its commencement, the government will submit more than ten pieces of implementing subsidiary legislation to the legislature for vetting and enactment in 2013, and the new CO will start operation after their enactment, tentatively scheduled for 2014.
"We aim to consult relevant stakeholders on the proposed subsidiary legislation in the coming months," the government spokesman noted.