2.
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get the protection of the British flag and the Hong Kong Government,
although their main activities will be conducted in China where
the writ of the Hong Kong Government does not run. Of course,
if an existing bank wanted to transfer its activities to Hong Kong, the Governor could refuse, but if Section 353 (2), or something
like it is not in the Statute Book, then there will be the risk
of people starting a bank nominally in Hong Kong, and immediately
proceeding to operate branches all over China.
As the memorandum says, the Hong Kong Legislature has
no power to enact laws having application outside Hong Kong, but
the clause in question only applies to a banking company "formed
and registered in the Colony" and surely it is within the
competence of the Hong Kong Legislature to regulate the actions
of a company formed in Hong Kong by saying that it must not
operate outside the Colony. The draft section does not attempt
to prescribe any conditions under which foreign branches shall
operate once the Governor has given his licence, and if the section
is to be deleted it seems to me that the effect will be that no
local banking company will ever be given leave to operate, because
the risk of its extending its efforts into China will be too great
to be overlooked.
As I say, this has no doubt been present to the minds of the critics, but I feel bound to mention it, though of course I
/do
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