1974-HKRS28-16-22_Part06 — Page 1

Obligation

to lay group

accounts before

holding company.

1945 c. JB. F. 1:30.

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(b) any reference to a profit and loss account shall be taken, in the case of a company not trading for profit, as referring to its income and expenditure account, and references to profit or to loss and, if the company has subsidiaries, references to a consolidated profit and loss account shall be construed accordingly.

124. (1) Where at the end of its financial year a company has subsidiaries, accounts or statements (in this Ordinance referred to as "group accounts") deal- ing as hereinafter mentioned with the state of affairs and profit or loss of the company and the subsidiarics shall, subject to subsection (2), be laid before the company in general meeting when the company's own balance sheet and profit and loss account are so laid. (2) Notwithstanding anything in subsection (1)– (2) group accounts shall not be required where the company is at the end of its financial year the wholly owned subsidiary of another body corporate incorporated in Hong Kong; and (b) group accounts need not deal with a sub. sidiary of the company if the company's directors are of opinion that-

(i) it is impracticable, or would be of no real value to members of the company. in view of the insignificant amount involved, or would involve expense or delay out of pro- portion to the value to members of the com- pany: or

(i) the result would be misleading, or harmful to the business of the company or any of its subsidiaries; or

(ii) the business of the holding company and that of the subsidiary are so different that they cannot reasonably be treated as a single undertaking:

and, if the directors are of such an opinion about each of the company's subsidiaries, group accounts shall not be required: Provided that the approval of the Financial Secretary shall be required for not dealing in group

Form of group accounts, 1948 c. 38 *.151.

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accounts with a subsidiary on the ground that the result would be harmful or on the ground of the difference between the business of the holding com- pany and that of the subsidiary.

(3) If any person being a director of a com- pany fails to take all reasonable steps to secure compliance as respects the company with the pro- visions of this section, he shall, in respect of each offence, be liable on summary conviction to im- prisonment for six months and to a fine of ten thousand dollars:

Provided that,

(a) in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove that be had reasonable ground believe and did

believe that a competent and reliable per- son was charged with the duty of seeing that the requirements of this section were complied with and was in a position to discharge that duty; and

(b) a person shall not be sentenced to im- prisonment for an offence under this sec- tion waless, in the opinion of the court dealing with the case, the offence was com- mitted wilfully.

(4) For the purposes of this section a body corporate shall be deemed to be the wholly owned subsidiary of another if it has no members except that other and that other's wholly owned subsidiaries and its or their nominees,

125. (1) Subject to subsection (2), the group accounts laid before a holding company shall be con- solidated accounts comprising—

(a) a consolidated balance sheet dealing with the state of affairs of the company and all the subsidiaries to be dealt with in group accounts:

(b) a consolidated profit and loss account dealing with the profit or loss of the com- pany and those subsidiaries.