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Objects and Reasons.
This Bill is complementary to the Clins (Companies) Order-in-Council, 19!, and the joint object of these two enactments is to increase the control over Hougkung von- panies which carry on business in China.
These companies fall into two classes, i.e., companies which are managed from Hongkong, and companies which are managed from some place in China. The former class Are termed in the Onder-in-Council and Bill Hongkong China Companies", and the latter class are termed "China Companies".
In the case of companies which are managed from Hongkong, the territorial jurisdiction of the Colonial Government and Courts enables an effective control to be exercised over the company through the persons of its directors and officers here, whatever their nationality. In the case, however, of companies of the second class, the directors and officers of which are resident outside the British Dominions, there is uo effective control over the company unless some at least of the directors and officers are of British nationality, beruse the jurisdiction of the Supreme Court for China is in general contined to British subjects and protected persons. It is this difficulty which has led to the introduction of the above Order-in- Sonneil and this Bil.
The solution which has been adopted is to require that Hongkong companies which are amuaged from some place in China shall bave connected with them a certain number of British subjects on whom a personal control enu be exercised, and to provide that the shares in any such com- panies which are limited by shares will be fully paid ap within three months after allotment. The exact provisions in the case of companies limited by shares are that the majority of the directors, and the auditors, must be British subjects, that no person other than & British -object shall be uppointed to art within the limits of the Onder-in-Council as liquidator of such a company, or as receiver or in mager on behalf of the debenture holders, except with the spiction of the Court, and that no shares shall be issued except either as fully paid up or upon the term that the shares shall be fully paid up witbit three months after allotment. The provision as to the shares is in order to avold the diffenty of recovering calls from persons of non-British nationality in China. In the comparatively rare case of companies limited by guarantee, the provisions are that no Kucli company sla!! be allowed to operate without the run- seur of the Minister, who may as a condition of this consent require that no persou other than a British subject shall be a member, or that any member who is not British subject shall give scrurity for insuring the pay- ment of the amant for which he would be liable under the guarantee.
The Order-in-Commeil also provides that the jurisdiction conferred by the Hongkong Companies Ordinances upon any Court shall within the limits of the Order-in-Council be exercised by the Supreme Court for China, und that that purisdiction shall, subject to the provisions of the Order, be exercised in conformity with the provisiour of The Unler-in- the Hongkong Companies Ordinances.
Council and Bill togeiber provide that in all matters rolat- ing ton Hongkong Chius company the jurisdiction of the Supreme Court of Hongkong and of the Supreme Court for China shall be conentrant and mutually auxiliary, and provisions are made for transferring proceedings from one Supreme Court to the other.
At the same time provision is made for the establish- ment of a Register of companies at Shanghai, where all documents relating to China companies will be filed and leex pail.
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The opportunity has also been taken of making certain minor amendments in the law which ard desirable. These will be referred to specifically below.
Clatteo 1 is furnal.
The
Clause 2 contains definitions, the definition of China Company", Hongkong Chin Company", and "British Company", being taken from the Oriler-in-Council, nomenclature of the Orler-in-Council bus been departed from in one rospect, namely, in substituting the term "The Companies Ordinances" for the term “ The Ordinance”.
Clanse 3 proposes to establish a Register at Shanghai and provides that all acts done by or before the Registrar at Shanghai shall be of the same validity as if they lind been lone by or before the Registrar of Companies in Hongkong. It also directs that all documents required by the Companies Ordinance to be filed with the Registrar of Companies shali is the ease of a China Company be filed with the Registrar at Shanghai, and that a copy of all such documents shall in the case of a Hongkong China Com- pany, as defined in the Bill, be filled with the Registrar at Shanghai. It also provides at all fees which a company is required to pay to the Registrar of Companies shall in the case of a Clim Company be paid to the Registrar ut. Shanghai,
Clause deals with the question of transfer from one Register to another, either on notice by the company concerned or on the motion of one of the two Registrars, al provides for an appeal to the Supreme Court from any order of transfer.
Sub-clause (6) of this clause is inserted in order to bring the notices referred to within the terms of the Table of Fees in the First Schedule to the Companies Ordinance. 1911.
Clause 5 is complementary to corresponding provisions in the Order-in-Council, and the two sets of clauses taken together ure intended to make the Supreme Court of Hongkong and the Supreme Court for Ching of conenrrent jurisdiction, and auxiliary to each other, in all matters relating to a Hongkong Company, as defined in the Bill. The clause also empowers the Supreme Court of Hong- kong to enforce orders of the Supreme Court for Chinx in all matters relating to Chium Companies.
Clause 6 enacts certain amendments in the Companies Onlinruce, 1911. Most of these are self explanatory and are necessitated by the new order of things introduced by the Order-in-Conneil. The others are shortly referred to below.
Sub-clause (1) of clanse 6 repeals a clause which will not be necessary when the Supreme Court and the Supreme Court for Chins are auxiliary to excl. other.
Sub-clause (2) of clause 6 ropeals three sub-clauses which are unnecessary, notice of the situation of the registered office being sufficiently, and more suitably, dealt with in section 63 of the Companies Ordinance, 1913. There is no precedent in the Companies (Consolidation) Act, 1908, for these three sub-clauses.
Sub-clause (3) of clanse 6 is intended to prevent the improper use of the word British" in the names of companies. The proviso is added because all China Companies will have a real and substantial British charac
ter.
Sab-clause (6) of clanse 6 is intended to assist in mark- ing the distinction between Chion Companies and other limited companies, established under the law of a foreign state, which are not subject to British control in China.
Sub-clause (7) of clanse 6 is intended to correct a slight error which crept into the Companies Amendment Ordi- nace, 1913. This point is further dealt with in clause. 8 (1).
Sub-clause (10) of clause 6 is an attempt to impose more stringent conditions on the colorwencement of business by a new company in order to prevent fraud.
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