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the court to prevent the financial assistance being given (ss. 43(9)
and 44(1) - (5)), the special exemption for private companies is
seen to provide a singularly unattractive route to follow."
1.23
In an effort to deal with the faults in Section 48 in
a way which is less complicated than the new measures adopted in
Britain and more suited to the practical needs of Hong Kong, we
have instructed the Secretary:
(1) To draft proposals for new provisions which would
allow unlisted companies only to provide financial
assistance for the purchase of their own shares,
based on the proposed new version of Section 48
which appeared in the Companies (Amendment) Bill
which was published as a White Paper in 1980 but
subject to -
(a) incorporating all the exemptions and clarifications
in Section 42 of the Companies Act 1981,
(b) bringing the statutory declaration requirements
into line with those in the 1981 Act,
(c) incorporating the net assets/distributable
profits provisions in Section 43(2) of the
1981 Act, and
(a) imposing heavy monetary and custodial penalties
for breach of the provisions.
However, the provisions in Section 43(8) of the 1981 Act
regarding an auditor's report are not to be included;
(2) To send these proposals to the usual professional and
business organisations for their views; and
(3) To inform the organisations at the same time that we
will consider recommending that listed companies be
allowed to provide financial assistance for the
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