33
We agree with these views and do not recommend the imposition of a
maximum age limit for directors.
7.
Section 157G of the Companies Ordinance (Prohibition of
tax-free payments to directors)
7.1
Section 157G was introduced by the Companies (Amendment) Ordinance
1984 in implementation of a recommendation in the Second Report (April 1973)
of the Companies Law Revision Committee, which read as follows:
"The Cohen Committee took the view that payment to directors
of fees or salaries tax-free should be prohibited since this practice
created a class of person who is immune from any increase in taxation.
Giving effect to the Committee's recommendations, section 189 of the
Companies Act, 1948, prohibits the payment of director's remuneration
free of tax except under a contract in force on 18th July 1945 (which
was the date of the publication of the Cohen Committee's Report). While
there is perhaps no clamant need for such a section in Hong Kong as our
tax laws stand at present, it seems to be sound in principle, and we
recommend that a similar section should be included in our Ordinance.
One of our Members, Professor Willoughby, submitted to the
Standing Committee that the Section should be repealed. Part of his
argument was as follows:
7.2
#1
"At first sight the section appears to be a sensible restriction
on the remuneration of directors. On further reflection it is unnecessary,
has nothing to do with tax avoidance and is at variance with the Inland
Revenue Ordinance.
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