ON
THURSDAY, AUGUST 9, 1984
IN THE CASE OF PRIVATE LIMITED COMPANIES, FAILURE TO COMPLY WITH THE COMPANIES ORDINANCE MAY NOT BE AS SERIOUS AS IN THE CASE OF PUBLIC COMPANIES, AND THE REQUIREMENTS OF THE ORDINANCE WERE DIFFERENT. HE SAID THERE WERE AT PRESENT OVER 120 000 PRIVATE COMPANIES ON THE REGISTER AND IT WAS NOT POSSIBLE TO MONITOR THEM AS STRICTLY AS PUBLIC COMPANIES. NEVERTHELESS, PRIVATE COMPANIES AND THE IR DIRECTORS WOULD CONTINUE TO BE PROSECUTED WHEN FILING OFFENCES UNDER THE ORDINANCE CAME TO LIGHT.
MR GLEESON NOTED, HOWEVER, THAT IN SOME CASES A PUBLIC COMPANY MAY BE ASSOCIATED WITH ONE OR MORE PRIVATE COMPANIES OWNED BY ONE OR MORE OF THE SUBSTANTIAL SHAREHOLDERS OF THE PUBLIC COMPANY. IN SUCH CASES IT CAN, AND DOES, HAPPEN THAT THE ASSOCIATION OR RELATIONSHIP BETWEEN THE PUBLIC COMPANY AND THE PRIVATE COMPANY OR COMPANIES COULD SIGNIFICANTLY AFFECT, SOMETIMES ADVERSELY, THE POSITION OF THE PUBLIC COMPANY. FOR THIS REASON, WHERE THIS RELATIONSHIP IS SEEN BETWEEN A PUBLIC COMPANY AND A PRIVATE COMPANY THE LATTER WOULD BE TREATED PROCEDURALLY FOR ENFORCEMENT PURPOSES AS IF IT WERE A PUBLIC COMPANY.
MR GLEESON ALSO DREW ATTENTION TO THE POSITION OF THE
DIRECTOR.
+NON-EXECUTIVE
+ IN HONG KONG THERE IS A POPULAR, ALTHOUGH ENTIRELY MISTAKEN, BELIEF THAT A NON-EXECUTIVE DIRECTOR DOES NOT HAVE THE SAME DUTIES AND OBLIGATIONS AS AN EXECUTIVE' DIRECTOR. NON-EXECUTIVE DIRECTORS ARE SUPPOSED ONLY TO HAVE PRIVILEGES. MITIGATION IS SOMETIMES MADE BY PEOPLE WHO SHOULD KNOW BETTER.
THIS PLEA IN
+THERE IS NO SUCH CREATURE KNOWN TO THE COMPANIES ORDINANCE AS AN 'NON-EXECUTIVE DIRECTOR' AND THE COURTS HAVE SHOWN NO SYMPATHY WITH THIS TYPE OF PLEA, HE SAID.
ON PENALTIES MR GLEESON SAID THAT IN HIS OPINION SOME OF THESE WERE NOT SUFFICIENT TO ACT AS A DETERRENT IN THIS DAY AND AGE. THE STAKES, PARTICULARLY IN THE CASE OF PUBLIC COMPANIES, WERE OFTEN VERY HIGH. THE MAXIMUM PENALTIES, BOTH FINANCIAL AND CUSTODIAL, PRESCRIBED IN THE COMPANIES ORDINANCE NEEDED THEREFORE BE REVISED UPWARDS, AND HE WAS GLAD TO SAY THAT THE STANDING COMMITTEE ON COMPANY LAW REFORM HAD AGREED TO DISCUSS THE LEVEL OF SUCH PENALTIES. THERE WOULD ALSO BE CONSULTATION WITH THE ATTORNEY GENERAL ON THIS.
+ I HOPE THAT THE NEW PROCEDURE WILL SECURE GREATER COMPLIANCE WITH THE COMPANIES ORDINANCE AND THAT IT WILL HAVE A BENEFICIAL EFFECT ON COMPANY ADMINISTRATION GENERALLY.
+ IT IS ENTIRELY CONSISTENT WITH THE PROPOSALS NOW BEING CONSIDERED BY THE SECURITIES COMMISSION FOR A NEW SET OF LISTING RULES WHICH, IF INTRODUCED, WILL SIGNIFICANTLY IMPROVE DISCLOSURE OF COMMERCIAL AND OTHER INFORMATION IN RESPECT OF PUBLIC LISTED COMPANIES, HE SAID.
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