************************************************************
The Government today (October 25) released the conclusions of the Second Phase Consultation on the Draft Companies Bill.
The consultation is part of the Companies Ordinance rewrite exercise, which aims to make the ordinance more user-friendly and facilitate the conduct of business with a view to enhancing Hong Kong's competitiveness and attractiveness as a major international business and financial centre.
Announcing the adoption of proposals on issues highlighted for consultation, a spokesman for the Financial Services and the Treasury Bureau said, "We have carefully considered all the comments received, and have also consulted the Standing Committee on Company Law Reform.
"We will require a solvency test as well as compliance with specified procedures for financial assistance to be given by a company to a third party for acquisition of its own shares. This arrangement will be applicable to both private and public companies," he said.
Other proposals to be adopted include:
* enhancing the investigatory powers of inspectors appointed by the Financial Secretary to investigate into the affairs of a company by requiring the preservation of relevant records and documents, as well as providing better safeguards for confidentiality of information and protection of informers in relation to the investigations;
* empowering the Registrar of Companies to obtain documents and explanations, etc., for ascertaining whether there is misconduct relating to the provision of false or misleading information to the Companies Registry; and
* requiring a company to explain its refusal (upon request) to register a transfer of shares.
The spokesman said, "With respect to the proposals relating to accounts and audit, which drew considerable comments, we have considered those comments in detail and have fine-tuned our proposals where appropriate.
"For example, taking into account the views of the accounting profession that simplified reporting requirements might not be suitable for larger companies with more complex accounts, we now propose to remove the option for large private companies to prepare simplified financial reports, even if they have members' approval.
"On the other hand, many respondents pointed out that it would be impractical to conduct effective investigation into the affairs of non-Hong Kong companies which do not have a place of business in Hong Kong. We would therefore not extend the scope of investigations to include those companies."
He added that proposals pertaining to preparation of separate directors' remuneration reports for listed and unlisted companies incorporated in Hong Kong will not be adopted either, taking into account many respondents' reservations.
"We appreciate the merits of enhancing the level of transparency of directors' remuneration. In this regard, we have invited the Securities and Futures Commission and Hong Kong Exchanges and Clearing Limited to keep under review the compliance and effectiveness of the Listing Rules on disclosure of directors' remuneration," he said.
"We are finalising the Companies Bill, taking into account the two phases of consultation and other technical and drafting comments. We aim to introduce the Companies Bill into the Legislative Council in early 2011.
"We would like to thank all the companies, business organisations, professional bodies and individuals who have actively participated in the topical and draft Bill consultations. Their input has been invaluable," the spokesman added.
A total of 57 submissions were received during the three-month consultation, which ended on August 6 this year. The consultation conclusions and copies of the submissions received are available for public viewing on the Financial Services and Treasury Bureau's website(www.fstb.gov.hk/fsb/co_rewrite), and the Companies Registry's website (www.cr.gov.hk).
Ends/Monday, October 25, 2010
Issued at HKT 19:36
NNNN
