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Third consultation conclusions on Companies Ordinance rewrite released
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     The Government today (February 2) released the third public consultation conclusions on the Companies Ordinance rewrite covering share capital, capital maintenance regime and statutory amalgamation procedure.

     A total of 40 submissions were received during the three-month consultation ending on September 30 last year.  

     A spokesman for the Financial Services and the Treasury Bureau said, ¡§After careful consideration in consultation with the Standing Committee on Company Law Reform (SCCLR) of all the public feedback, a number of recommendations are adopted.

     ¡§One of key recommendations is the migration from the current par value system to a mandatory no-par value share regime.

     ¡§Under the existing regime, companies having a share capital are required to have a par or nominal value ascribed to their shares.  Respondents generally agreed that the concept of par was no longer useful and might even be misleading.¡¨  

     ¡§In addition to providing a statutory deeming provision to facilitate the migration to no par, we will allow a period of 24 months for companies to review their arrangements before migration,¡¨ the spokesman said.

     Another recommendation is to remove the requirement for authorised capital - i.e. the maximum amount a company is permitted to raise by issuing shares.  

     ¡§This will simplify the process of raising capital by companies.  Nevertheless, a company, if it so wishes, may specify the maximum number of shares it can issue in its Articles of Association,¡¨ the spokesman said.

     Other recommendations involve streamlining and rationalising some of the complex capital maintenance rules in the Companies Ordinance, including those on reduction of capital, purchase by a company of its own shares and financial assistance by a company to another party for the acquisition of its own shares, and introducing a court-free statutory amalgamation procedure for the amalgamation of wholly-owned intra-group companies.  

     The reforms aim at simplifying the law and reducing business costs while at the same time protecting the interests of creditors and minority shareholders.

     A draft Companies Bill incorporating all the proposals is being prepared with an aim of consulting the public in the fourth quarter of this year before introducing to the Legislative Council in 2010.

     The consultation conclusions and the compendium of the submissions are available on the website: (http://www.fstb.gov.hk/fsb/co_rewrite) and the Companies Registry¡¦s website: (http://www.cr.gov.hk/).

Ends/Monday, February 2, 2009
Issued at HKT 11:00

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