By Baron Laudermilk
Hong Kong passed a bill that will help small and medium sized business (SMEs) develop on July 12th, this indicates that the passage of Hong Kong new Companies Bill will open a new chapter in the development of company law in Hong Kong and strengthen Hong Kong status as a worldwide commercial and financial hub
The bill was left standing by the government last January to enhance the corporate government, improve regulation, facilitate business, and modernize the law to enhance Hong Kong status as a global financial and commercial center.
The evaluation of the Companies Ordinance (CO) started in mid-2006, and three public consultancies were conducted to gauge views on the number of complex subjects that needed to be improved. In the course of the rewritings, the Financial Services and the Treasury Bureau benefited from the advice from the Standing Committee on Company Law Reform as well as four advisory groups, and the Hong Kong Institute of Certified Public Accounts working group, which was established to advise on specific passages that needed to be rewritten.
Some of the measures that are new in the bill will help enhance the accuracy of information on the public register, and improve the registration of charges scheme, and strengthening of the enforcement process through the Registrar.
ChunXia, an assistant professor of finance at University of Hong Kong, told Asia Outbound that these new amendments are not only good for SMEs in Hong Kong, but also boost investors confidence in the market.
he accuracy of information on the public registration, and the strengthening of the enforcement regime are widely requested and appreciated by investors, especially since we have been experiencing the long lasting financial crisis. In the past the proponents of accurate information disclosure mainly address its importance by arguing that it helps to reduce investors' risk aversion regarding information asymmetry and therefore encourage active investments, said Chun.
Reporting for small-and-medium sized businesses will also be simplified, which has been in great demand for the past few years as paperwork has been becoming more burdensome.
Frank Song, the director of the centre for China Research at The University of Hong Kong, who has written extensively on Hong Kong laws and regulations, told Asia Outbound that the new Companies Bill will truly help SMEs in various ways.
nhancing regulation through transparency has proven to be a very effective, yet low cost approach to improving the quality of companies. The newly passed Companies Bill strikes a balance by requesting companies to disclose more accurate information while allowing SMEs to prepare a simplified financial and directors reports. It should help to strengthen Hong Kong status as an international commercial and financial centre, said Song.
Professor K C Chan, the Secretary for Financial Services and the Treasury, Professor K C Chan, emphasized that "the CO rewrite exercise is a challenging and highly complex project which could not have come to fruition without the concerted efforts of the government and the relevant sectors of the community over the years. /p>
