Wednesday, July 18, 2012
The government welcomed the passage of Hong Kong’s new Companies Bill by the Legislative Council on July 12, saying it was an historic moment opening a new chapter in the development of company law in Hong Kong.
The bill was tabled by the government in January last year to enhance corporate governance, improve regulation, facilitate business, and modernize the law to strengthen Hong Kong's status as an international commercial and financial centre, and its competitiveness.
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 (SMEs), while SMEs will also be able to prepare simplified financial and directors’ reports.
The Secretary for Financial Services and the Treasury, Professor K C Chan, emphasized that "the CO rewrite exercise is a challenging and highly complex project which could not have come to fruition without the concerted efforts of the government and the relevant sectors of the community over the years”.
The government will now draft more than ten pieces of subsidiary legislation in the next legislative session, and the new Companies Ordinance will start operation after their enactment. Chan added that the government will work with the industry in familiarizing enterprises and stakeholders with the requirements of the ordinance to facilitate compliance.