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Speech by SFST at Opening Ceremony of Corporate Registers Forum 2006 (English only) (with photos)

    Following is a speech by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, at the Opening Ceremony of the Corporate Registers Forum 2006 today (March 22):

Gordon, distinguished guests, ladies and gentlemen,

     Good morning. First of all, I wish to extend a warm welcome to all of you, particularly our friends from overseas. Our Companies Registry is deeply honoured to sponsor the Corporate Registers Forum 2006 and I am delighted to be here with you this morning to officiate at the opening ceremony.

     The forum provides a very good opportunity for corporate registers from all over the world to gather together to review the latest developments in corporate business registers internationally and exchange experiences and information on the present and future operation of corporate business registration systems. I believe all participants will gain insight into the two forum themes, "Corporate Compliance" and "The role of companies and business registries in promoting economic and business development", and will benefit greatly from the presentations and discussions over the next few days. Thank you for coming to the forum, and thank you in advance for all your input and discussions over the coming three days.  

     As a major international financial and business centre, with Mainland China as our hinterland, Hong Kong serves as a regional hub and a base for international and, increasingly, Mainland companies to manage their business operations in East Asia. Our role is certainly not confined to grooming local investors. We also serve as a gateway for overseas investors into the Mainland. At the same time, we have not overlooked our role in serving as a platform for Mainland enterprises to expand to overseas markets.

     Our success is built on a number of very important and fundamental strengths. These include the rule of law supported by an independent judiciary, a clean and efficient government, a low and simple tax regime, a level-playing field for all businesses free from government interference and highly developed and modern telecommunications and transport infrastructures.

     On top of these strengths, we are also one of the most open economies in the world and our system is well recognised to be fair, advanced, efficient and transparent. Indeed, earlier, in January this year, we have been ranked by the Heritage Foundation as the world's freest economy for the 12th consecutive year. Hong Kong's unique strengths have much appeal for international investors.

     We take pride in offering a business-friendly environment. Let me give you an illustration. The first company was incorporated in Hong Kong in 1865. The third company, incorporated in 1866, is still with us and is a public company listed on the Stock Exchange of Hong Kong. By 1994, the number of companies incorporated had grown to half a million. In 2005, just 11 years later, we have altogether one million companies incorporated in Hong Kong. To put things in perspective, we have a population of just less than 7 million.  

     Hong Kong has a robust regulatory regime and our regulatory requirements are on a par with international standards. In order to enhance investors' confidence in market quality, we place a lot of importance on safeguarding investors' interests. Effective enforcement is as important as, if not more important than, a sound regulatory framework. In this respect, our regulatory and enforcement authorities deal firmly but fairly with those who are in breach of the statutory requirements under our companies and securities legislation. An ingrained sense of fair play underpins our level playing field for business.

     In Hong Kong, company law provides the legal framework that enables businessmen to form and operate companies and sets out the parameters within which companies operate, in order to safeguard the interests of those parties who have dealings with them, such as shareholders and creditors. To provide Hong Kong with an up-to-date legal infrastructure attuned to its needs in the 21st century, we have embarked on an exercise to rewrite the Companies Ordinance, a law book that is several inches thick. This rewrite will be the final stage of a major programme of company law reform which started several years ago and brought about the introduction of a number of major reforms such as a statutory derivative action and enhancement of shareholder remedies in general.  

     The proposed rewrite is intended to streamline and modernise the company law provisions, strengthen the existing corporate governance framework and leverage from company law developments around the world. At the macro level, the exercise will enhance Hong Kong's status, competitiveness and attractiveness as a major international business and financial centre. At the micro level, the rewrite will improve the structure and user-friendliness of the legislation; remove antiquated concepts, such as the assumption of paper-based communications between a company and its members, and facilitate electronic communication in this respect; and modernise and simplify the legal language. As a result, the new Companies Ordinance will help to save the compliance and business costs incurred by over the 500,000 companies registered in Hong Kong.

     The rewrite exercise will also cover recommendations made by our Standing Committee on Company Law Reform to improve corporate governance in areas such as requirements regarding the nomination and election of directors, holding of company general meetings, creditor protection and accounting and auditing requirements.

     To enhance market quality, we propose to establish a statutory Financial Reporting Council to carry out investigations into suspected irregularities concerning the auditors of listed entities, and conduct enquiries into suspected non-compliance with financial reporting standards. We are set to commence the work for setting up the council once the proposed legislation is passed by our legislature.  

     All these major initiatives will significantly enhance Hong Kong's position, competitiveness and attractiveness as a major international business and financial centre. We will also further enhance our links with the international business community in both Hong Kong and abroad.

     Ladies and gentlemen, I would like to thank you all again for coming to Hong Kong and sharing your experiences and insight with us. We wish you an enjoyable stay in Hong Kong, Asia's World City.  

     Thank you very much.

Ends/Wednesday, March 22, 2006
Issued at HKT 10:26


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