HONG KONG LEGISLATIVE COUNCIL
2 November 1988
香港立法局
一九八八年十一月二日
43
Preferential payment in insurance company liquidations:
Under section 265(1) of the Ordinance payment of wages, salaries and other benefits to employees and workmen and statutory Crown debts take priority over other debts in the winding up of a company. There is, however, no provision for preferential treatment of persons with insurance claims against an insurance company in liquidation; they are regarded as general unsecured creditors. This situation can give rise to hardship where, as is often the case, the liquidation process is lengthy or the assets insufficient to meet the claims of all creditors. While the Insurance Companies Ordinance gives some protection to claimants under contracts of life insurance, there is no equivalent protection given to claimants under contracts of general, that is non-life insurance.
To relieve possible hardship, clause 9 seeks to amend section 265 to establish a hierarchy of preferred claims in the event of the winding up of an insurance company. The first class will continue to be existing claims under section 265(1). A new second class will be claims under an insurance contract written by an authorized insurer in Hong Kong. This will cover direct insurance business and is designed to give the greatest protection to individual claimants, that is policy holders and entitled third parties. To avoid double benefits, it will exclude claims eligible for relief under insolvency compensation schemes such as the Motor Insurers' Bureau Insolvency Fund.
A new third class of priority claims will be claims under contracts of re- insurance, after offsetting all receivables. These claimants will usually be other insurance companies. Both new classes will relate only to general insurance business. Also, to avoid double benefits, both classes will exclude claims accorded priority in another jurisdiction.
Filing of annual returns:
Section 109 of the Ordinance requires a company to submit its annual return to the Registrar of Companies for registration within 42 days of its annual general meeting. Failure to do so is an offence. The Registrar has mounted several prosecutions but these have proved to be very time-consuming. We consider that a more effective way to tackle the growing problem of defaults is to introduce penalty rates upon late filing.
At present the fee payable upon delivery of the annual return is $50 for a private company and $100 for any other company. Clause 13 of the Bill seeks to amend section 109 to remove this distinction so that all returns submitted for