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(g.) Mortgages and Charges.-All future mortgages and charges on the company's property or undertaking will be void as against the creditors and liquidator unless they are registered within six weeks after the date of their creation.
(h.) Auditors.-The powers of auditors are enlarged, their responsibility is increased, their duties are rendered more stringent, and provision is made to ensure that the shareholders shall hear and have access to their report. This subject is entirely unregulated by statute at present. In practice, of course, provision is made in the Articles for audit, but there is no restriction on the nature of the provisions that the promoters may choose to adopt.
(i.) Winding up by the Court.-Every liquidator in
a
winding up by the court is placed under the regular and systematised control of the official receiver. He must send his accounts to the official receiver to be audited, must pay all receipts into an account con- trolled by him, must give him all necessary informa- tion, and must apply to him for his release. The official receiver reports to the court on the assets and liabilities of the company, on the causes of its failure, and if any fraud has been committed. At present, of course, the liquidator has in many cases to obtain the sanction of the court before taking action; the court makes a special order in each case as to the passing of his accounts, and may take cognizance of any neglect or misfeasance on his part if moved in that behalf; and the Registrar of the Supreme Court has to counter- sign all his cheques. But there is no authority whose duty it is to watch his conduct, or who is empowered to take action of his own motion in case of necessity. Some provision is also made for the case of voluntary winding up, but of course there is no regular control. (j.) Directors and Promoters.-The company must keep and file a register of directors. Provision is made to ensure that the persons held out to the public as intending directors shall really take up the office. In any proceeding by a subscriber against a director or promoter for misrepresentation in the prospectus, the onus will in future be on the director to show that he had reasonable ground to believe, and did believe, the misleading statement to be true. At present the onus is on the subscriber to show that the director knew the statement to be false. Failure to comply with the requirements of the law will in many cases entail a pecuniary penalty on the directors. Power is given to the court to relieve directors who have acted honestly and reasonably and who ought fairly to be excused. (k.) Foreign Corporations.-Every company incorporated outside the Colony which commences business in Hongkong after the commencement of the new Ordin- ance will have to give certain information and file an annual balance sheet.
(1.) False Statements in Returns.---Anyone who knowingly and wilfully makes a material misstatement in a return, report, balance sheet, certificate, etc., will commit a misdemeanour.
(m.) Banks.-In future, partnerships of more than ten persons formed for the purpose of banking will be illegal unless registered. Banking partnerships were omitted from the Companies Ordinance, 1865, because it was intended to deal with them separately. They have, however, been left entirely unregulated. (n.) Generally speaking, the provisions of the Bill apply to existing, as well as to future, companies. There are exceptions, and in particular it may be noted that foreign companies already doing business here, and existing banks, need not register.
It must, of course, be understood that some of the less important matters dealt with by the Bill are at present ordinarily regulated in the memorandum and articles of cach individual