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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 is the Articles for audit, but there is no restriction on the nature of the provisions that the promoters may choose to adopt.
(1.) Winding up by the Court.-Every liquidator in a winding up by the court is placed under the regular and systomatised control of the official receiver." He inust 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 caso 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 fake 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. 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 kuew 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
In
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 aunnal balance sheet.
(1) Pulse Statements in Returns. ---Anyone who knowingly and wilfully makes a material misstatement in a return, report, balance sheet, certificate, etc., will commit a inisdemeanour.
(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 each individual
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company, but they are made absolute in the Bill and are not left to the discretion of the promoters of companies, and the remark does not in any case apply to such matters as criminal offences, civil liability of directors and promoters, returns to be filed, or winding up requirements and control.
DETAILED MEMORANDUM.
Banking Purtureships.
Banks were omitted from the operation of the present Com- panies Ordinance, 1865, apparently because it was intended to deal with them by separate legislation. They have, however, been left entirely unregulated. In future, all partnerships of more than tea persons formed in Hongkong for the purpose of banking will be illegal unless registered as companies under the Bill. Existing banks which were formed here may register but are not obliged to do so.
Banks which are incorporated outside the Colony are not effected and need not in any case register as companies under the Bill, but if they first establish a place of business in the Colony after the commencement of the Bill they must register under Clause 252 and file an annual balance sheet. Ordinarice. Sections 4,6; Act, Sections 1, 108, 113, 249, 251, 256, 274. Bill, Clanses 2, 108, 113, 227, 229, 234, 252.
Stump Duty,
In future, the memorandum and articles of association will each have to bear a stamp of $30 (10-- in England). They bear no stamp at present. The provision for the stamp duty on share warrants to bearer has been omitted from the Bill as it is proposed to deal with this matter in an amendment of the Stamp Ordinance. Ordinance, Section 51; Act, Sections 6, 12; Bill, Clauses 7, 13, 38.
Certificate of Incorporation.
The registrar's certificate of incorporation is made more fully conclusive. This change was introduced in England by the Companies Act 1900, and is intended to get rid of the inconvenience of the wording of the present section, which has been held not sufficient to cover the case of less than seven porsons having signed the memorandum of association, and the doubts as to the ease where some of the signatories were infants. Ordinance, Section 22 (3); Act, Section 17 (1); Bill, Clanso 18 (1).
Annual Summary.
The annual summary filed with the registrar of companies will contain fuller information, especially on the following points
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(a.) Shares issued as fully or partly paid up otherwise than
in cash must be distinguished." (b) The amount paid or allowed by way of commission or discount in respect of shares or debentures must be stated.
(e) The names and addresses of the directors must be given. (d.) The total amount due on all mortgages and charges which require to be registered must be specified.
(e.) Where a company keeps a local register the number of shares on the local register, and their distinguishing numbers or marks, if any, must be stated. This provi- sion is not in the English Act. In the case of English companies, colonial registers are comparatively rare, and the exemption from probate duty is confined to the estates of persons domiciled out of the United Kingdom. In the case of Hongkong companies, local registers are frequent, and the exemption from probate duty is absolute. The proposed provision will save trouble in the ascertaining whether probate duty is payable, and will cause no inconvenience as it is believed that all the companies which keep local registers have all their shares on the local registers. At present, however, that fact has to be ascertained afresli and sworn to in every new estate.
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