12 November 2007
The major amendments to the Companies Ordinance introduced by the Amendment Ordinance and the Fees Order involve:
1. The introduction of the term "non-Hong Kong companies"
The existing term "oversea companies" is replaced with the term "non-Hong Kong companies".
2. The simplification of the registration requirements of non-Hong Kong companies
A new specified form is to be introduced for application for Part XI registration. In addition to the existing information, the date of establishment of a non-Hong Kong company's place of business in Hong Kong and the appointment date of its Hong Kong authorised representative are required to be stated in the new form.
Under the new law, to apply for registration under Part XI, a non-Hong Kong company does not need to deliver its accounts to the Registrar of Companies ("ROC") if one of the following conditions (the "Conditions") is fulfilled:
(a) it is not required by (i) the law of the place of its incorporation, (ii) the laws of any other jurisdictions where the company is registered as a company, or (iii) the rules of any stock exchange or similar regulatory bodies in those jurisdictions, to publish its accounts or to deliver copies of its accounts to any person in whose office they may be inspected as of right by members of the public; or
(b) it has been incorporated for less than 18 months and the accounts have not been made up.
A company no longer needs to provide to the ROC a certificate issued by a lawyer or auditor confirming that it satisfies the Conditions for exemption from submitting accounts (the "Lawyer/Auditor Certificate"). Under the new law, the company merely needs to state that it fulfills one of the Conditions by ticking the relevant box in the new specified form.
A company no longer needs to fulfill the "private company" criteria currently set out in the Companies Registry's external circular in order to be exempt from delivering its accounts.
If the constitutional documents and accounts of the company are not in English or Chinese, only their certified translations in English or Chinese will be required to be delivered to the ROC. Certified copies of such documents in their original language are no longer required. However, for the certificate of incorporation of the company, certified copies in both the original language and of the English or Chinese translation are still required to be delivered.
3. The introduction of a new statutory deadline to file annual returns of non-Hong Kong companies and the provision of an escalating fee for late filing
A new annual return is introduced to facilitate fuller disclosure regarding information on share capital, authorised representative, directors and secretary, etc. Unlike the old law, a company can no longer apply to be exempted from filing its annual return to the ROC by submitting a Lawyer/Auditor Certificate.
A non-Hong Kong company will be required to file its annual return to the ROC within 42 days after each anniversary of the date of its registration under Part XI, together with a prescribed registration fee of HK$180. If the annual return is filed late, the registration fee will be increased on a sliding scale to a maximum of HK$4,800 if the annual return is filed more than 9 months after the due date.
A certified copy of the company's latest published accounts will be required to be filed together with the annual return, unless the company fulfills either of the Conditions for exemption for filing accounts, in which case a statement to this fact can be provided in the annual return. A Lawyer/Auditor Certificate is no longer required to be submitted for this purpose.
4. The introduction of new specified forms and new time limits for reporting changes of non-Hong Kong companies
The following events are required to be reported to the ROC, within the new time limits, using new specified forms:
Changes in the particulars of a non-Hong Kong company, e.g. alteration of statues, change of director/secretary/authorised representative or their particulars, change of address, or change of name (within 1 month of the date of the relevant change). A certified copy of the certificate effecting the name change in the original language, and its certified translation in English or Chinese (if applicable), are also required to be filed.
Commencement of liquidation (whether or not instituted in the place of incorporation), the appointment of a liquidator or any change of particulars of the liquidator (within 14 days of the commencement/appointment/change).
Dissolution (within 14 days of the date of dissolution). A certified copy of an instrument effecting the dissolution, or its certified translation in English or Chinese, is also required to be filed.
Ceasing to have a place of business in Hong Kong (within 7 days of the cessation).
5. Amendments regarding the authorised representatives of non-Hong Kong companies
An authorised representative is a Hong Kong person appointed by a non-Hong Kong company to accept service of process and notices on behalf of the Company. Under the new law, a non-Hong Kong company needs to maintain an authorised representative for 1 year (instead of 3 years) after it ceases to have a place of business in Hong Kong.
A copy of a notice of termination of appointment as authorised representative, served by either the authorised representative or the non-Hong Kong company, to the other party, or its certified translation in English or Chinese, will be required to be filed with the ROC, together with a specified form, within 1 month after the date of the termination notice. Termination takes effect on the expiration of 21 days from the filing of the specified form, or the date of termination as stated in the termination notice, whichever is the later.
6. The clarification of the circumstances under which a non-Hong Kong company is required to register charges on its properties
Charges on properties in Hong Kong created by a non-Hong Kong company which is registered under Part XI will be required to be registered within 5 weeks after creation of the charge (or 5 weeks after the company is registered under Part XI). This means that a non-Hong Kong company which has established a place of business in Hong Kong but which has not registered under Part XI is not required to register charges on its properties. See our Legal Update "Hong Kong: Soon Comes The End Of Slavenburg Registration (12 Nov 2007)" for more details.
7. Other Amendments
The definition of "place of business" under Part XI is amended to include a share transfer or share registration office but does not include an office specified in the 24th Schedule (i.e. a local representative office established or maintained with the approval of the Monetary Authority by a bank).
The ROC (instead of the Financial Secretary) may approve a non-Hong Kong company to use a name other than its corporate name.
The upper limit (currently 20) on the number of partners in a partnership is removed.
In addition to the above, the provisions of the Amendment Ordinance amending the Companies (Forms) Regulations took effect on 20 April 2007. The amendments expand the category of persons who can certify copies of documents required to be delivered to the ROC under Part XI, and those who can certify the competency of persons translating such documents. Certification can now be given by an officer (e.g. director/secretary) or the authorised representative of a non-Hong Kong company, without the need for such officer or authorised representative to make the certification under oath in front of a person having authority to administer an oath. In addition, a Hong Kong solicitor, accountant or professional company secretary practising in Hong Kong can also certify copies of documents and the competency of the translator.
The provisions of the Amendment Ordinance which relate to prospectuses and shareholders' remedies came into operation on 3 December 2004 and 15 July 2005 respectively (see our Legal Updates "Amendments To The Companies Ordinance Relating To Prospectuses To Take Effect (29 Oct 2004)" and "Amendments To The Companies Ordinance Relating To The Shareholder Remedies To Take Effect (22 Jul 2005)". The remaining provisions of the Amendment Ordinance which have not yet taken effect are those relating to the incorporation procedures for Hong Kong companies.
Implication And Recommendation
In the past, the Companies Registry has been rather relaxed in enforcing the compliance requirements of non-Hong Kong companies under the Companies Ordinance. The introduction of a new deadline for filing of annual returns and the imposition of an escalating fee for late filing may signal stricter enforcement by the Companies Registry against non-Hong Kong companies. Non-Hong Kong companies with branch offices in Hong Kong should ensure that their branch offices comply with all the new compliance requirements brought forward by the Amendment Ordinance and the Fees Order and seek professional assistance as appropriate.
There is some uncertainty in the Amendment Ordinance regarding transitional arrangements for the filing of 2007 annual returns and accounts for non-Hong Kong companies. It is expected that the Companies Registry will clarify such transitional arrangements by the end of November 2007. In the meantime, we recommend oversea companies currently registered under Part XI to file their 2007 annual returns, together with their accounts, as soon as possible and preferably before the commencement of the Amendment Ordinance.
1. Click here to view the Government Gazette relating to the Companies (Amendment) Ordinance 2004;
2. Click here to view the Government Gazette relating to the Companies Ordinance (Amendment of Eighth Schedule) Order 2007;
3. Click here to view the Companies Registry announcement of 18 October 2007.