Go through the presentation and know about new Hong Kong company law ordinance which is taking Hong Kong’s competitiveness into a new era. URL:- www.archerscs.co.uk

1. www.archerscs.co.ukwww.archerscs.co.uk

2. New Hong Kong Company
Law Ordinance

3. A new Company Ordinance was first introduced in July 2012 which has
effectively revamping the old company law enforced since the early 80s
with an aim to maintain Hong Kong city’s status quo as one of the most
attractive business and financial centre in the world.
After 2 years of ongoing debates and joint efforts by the Hong Kong
Legislative Council and different business industries, a new Companies
Ordinance has came into force on 3rd
March this 2014 which aims to
put in place a better and convenience to follow regulations to support
small and medium size businesses.
New Hong Kong Company Law Ordinance
– Taking Hong Kong’s competitiveness
into a new era

4. We highlight few key important changes which are
likely to be asked:
Constitutional Documents
Share Capital
Directorship Appointment
The Use of Common Seal
Dispensing with the Annual General Meetings Requirement
Simplified Reporting for Small Private Companies
Business Review

5. Constitutional Documents
The previous template Memorandum and Articles of Association should
no longer be used. Under the new CO, only the Articles of Association
are required.
The new Ordinance mirrors the company law framework operates in
the UK which has prescribed a set of model Article of Association which
companies can adopt or tailor made a bespoke company Article of
Association.
Share Capital
Under the new CO, the shares of a private company will not have any
par value attached to the share and it may now issues company shares
at a price lower than their par value.

6. Directorship Appointment
Under the previous Ordinance, a corporation is allowed to be appointed
to as the sole director in a private company. Under the new Ordinance,
now at least one director must be a natural person.
The law applicable to listed companies and their respective subsidiaries
under the existing law remain unchanged and are not allowed to
appoint corporate directors.
If your existing private company only has one corporate director as the
sole director of the company then a natural person must be appointed
to the company board within 6 month grace period.

7. The Use of Common Seal
The requirement that legal deeds are required to executed by
affixing its common seal which are often considered as
impractical. Under the new Ordinance, the use of a common
seal becomes optional therefore a deed can be executed
without affixing the common seal.
Any existing companies wish to dispense with the common
seal requirement or to set out any particular requirement in
executing a legal deed under the new Ordinance then
amendments must be made to the Company Article of
Association to effect the changes.

8. Private Companies now have an option under the new
Ordinance to dispense with the AGMs simply by passing a
shareholders resolution.
Note that if your existing company Articles of Association
contains any provisions on company to hold an AGM then
these provisions must be amended before the company
can opt to dispense with the AGMs requirement.
Dispensing with the Annual General Meetings
Requirement

9. Simplified Reporting for Small Private Companies
The new Ordinance broadens the exemption on small private companies
to prepare simplified accounts and financing reports based on the SME
Financial Reporting Framework and Standard if it is
Whether a company is qualified for this exemption will depend on its
group’s annual revenues, assets and number of employees.
Business Review
Generally, public companies and private companies (other than those
qualified for simplified reporting or a wholly owned subsidiary
company) are required to prepare a business review as part of the
annual directors’ report.

10. Overviews on Company Internal
Contracts and Procedures
There are a number of amendments bring by the new Ordinance
which should be noted as to how it affects any existing contracts or
internal policies and procedures.
We highlight below few important ones:
Directors’ Duties
Loan to Directors
Service Contract

11. Directors’ Duties
When the New Company Ordinance was first came in force in 2012, the
Legislative Council ruled out the idea to codify director’s duties (which
is one of the principle company law form part of the UK Companies
Act 2006) as it was considered as unnecessary due to the safeguards
afford by the common law rules.
However, under the new set of ordinance now provides that the
standard of care a director must exercise has now been codified into
statutory duties.
In deciding whether a director has fulfilled his duties of care, skill and
diligence, his conduct will be considered based on both the subjective
and objective tests

12. Subjective test – the director’s own general knowledge, skill and
experience; and
Objective test – the general knowledge, skill and experience that a
person in that position is expected to have
Loan to Directors
Companies can make a loan to a director. The new Ordinance set out a
more detailed provisions mirrored the UK Companies Act 2006 that the
loan agreement should be reviewed if a loan to a director or to any
connected person to a director (ie. Relatives and business partners etc.,)

13. Service Contract
The approval of the company board and its members in a
prescribed manner is required under the new ordinance for
any guaranteed term of employment of a director for
longer than three years.
Any contract with a guaranteed term over three years
without members’ prior approval is void unless members
grant approval on the contract.

14. Mail us:-
info@archerscs.co.uk
Phone no. :-
44 (0) 2033978776
URL:-
www.archerscs.co.uk