Hong Kong: Changes In Legislation From 2014

2020

By Courtesy of the Government of HKSAR.

In the first quarter of 2014, the new Companies Ordinance shall come into force in Hong Kong. It was passed by the Hong Kong Legislative Council in order to enhance corporate governance, ensure better regulations, facilitate business, modernize the law and make the companies more transparent and accountable.

The new Companies Ordinance consists of 921 sections and 11 schedules. Some of the major and more interesting reforms are outlined below:

Restricting the appointment of corporate directors by requiring every private company to have at least one natural person to act as director.

Clarifying in the statute the directors' duty of care, skill and diligence with a view to providing clear guidance to directors.
Adoption of a mandatory system of no-par value of shares for all companies with a share capital
Removal of the power of companies to issue share warrants to bearers
Introducing a comprehensive set of rules for proposing and passing a written resolution.
Reducing the threshold requirement for members to demand a poll from 10% to 5% of the total voting rights.
Requirement on disinterested members' approval for various prohibited transactions and replacing the headcount test for specified privatization and takeover schemes
Empowerment of the Registrar to give directions to a company to appoint directors and company secretaries
Empowerment of the Registrar to compound specified offences to encourage due compliance and optimize the use of judicial resources
Introduction of new exceptions to prohibitions on loans and similar transactions in favor of directors and connected entities
Allowing all companies to buy back shares out of capital and to provide financial assistance for acquisition of own shares, subject to a solvency test
Allowing eligible small private companies to prepare simplified financial and directors' reports
Dispensing with annual general meeting by unanimous shareholders' consent