NEWS
Jul-20-2010 Hong Kong Legislative Council Passes Companies (Amendment) Bill 2010
Hong Kong’s Legislative Council passed the Companies (Amendment) Bill 2010 (Legal Supplement No. 3 to Gazette No. 3, Vol. 14 ) on July 7, 2010. The amendments will allow company registration applicants to file their corporate registration forms and documents through electronic means upon the implementation of Phase II of the Integrated Companies Registry Information System (“ICRIS II”), thus enhancing the business-friendliness of Hong Kong.
The Secretary for Financial Services and the Treasury, Professor K C Chan, welcomed the passage of the Bill.
Speaking at the resumption of the second reading debate of the Bill in the Legislative Council, Professor Chan said: "The Bill mainly aims to tie in with the development of ICRIS II by the Companies Registry (“CR”), which will enable on-line applications for company registration and filing of company documents.”
"We expect the new system to come on stream in phases early next year. We have to amend the Companies Ordinance (“CO”) accordingly to facilitate on-line applications for company registration, for example, to allow the signing of the incorporation forms using passwords, streamline the attestation requirements for signatures by founder members, and facilitate the issue of certificates of incorporation by the Registrar of Companies through electronic means," he added.
"The Bill also expedites the company name approval process by the CR. In short, a company name will be accepted for registration instantaneously if it satisfies certain preliminary requirements, namely, that it is not identical to another name on the register and does not contain certain specified words or expressions. Thereafter, if the company's name is found to be objectionable, the Registrar of Companies will be empowered to direct the company in question to change its name within a period specified by the Registrar," Professor Chan said.
To address the concern about verification of the identities of applicants in electronic company registration, the CR will put in place a registration system to require any person using the ICRIS to register as a user before he/she can register a company and deliver documents electronically. Under the registration system, individual users can register in person at the CR's office; can register on-line using digital certificates issued by Hongkong Post or any recognised Certification Authorities, or can register on-line provided that the identity of the applicant is duly certified by a local professional.
Other amendments introduced in the Companies (Amendment) Bill 2010 include:
- strengthening Hong Kong's company name registration system to enhance enforcement against possible abuses by "shadow companies", which are companies incorporated in Hong Kong with names very similar to existing and established trademarks or trade names. Representatives of such companies often pose as the owners of legitimate trademarks or trade names in order to produce counterfeit products. The Bill empowers the Registrar of Companies to act pursuant to court orders to direct a "shadow company" to change its name. The Registrar may substitute the company's name with its registration number if it fails to comply with the Registrar's direction to change its name. The intellectual property sector in general endorses the amendments and considers that the amendments will effectively resolve the problem of "shadow companies".
- amending the CO so that Hong Kong companies can make use of electronic means (including their websites) to communicate with their shareholders;
- amending the relevant provisions of statutory derivative action (“SDA”) by expanding the scope of SDA to cover "multiple" derivative actions. Once the Bill becomes effective, a member of a related company of a specified corporation will be able to commence or intervene in proceedings on behalf of the corporation. This amendment will further enhance the protection of the interests of minority shareholders in a group of companies; and
- introducing technical amendments to the CO to remove the limitations arising from provisions in the CO that compel the use of paper documents of title and paper instruments of transfer in relation to shares and debentures. This technical amendment is an important step in the legislative process to promote the development of a scripless market, and lays the foundation for the implementation of a scripless market in Hong Kong.
The amendments will enable the CR to provide a one-stop company and business registration service upon the implementation of ICRIS II. Any person who submits an application for company registration will be deemed to have applied for business registration at the same time.
"With the above service in place, an on-line application for registration of a local company and business registration will be completed within one day, compared with an average of four working days under the existing system. This improvement not only facilitates business, but also puts Hong Kong on a par with comparable jurisdictions like the UK and Singapore," Professor Chan said.