CO129-462 - Governor Sir Stubbs - 1920 [7-10] — Page 99

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The Judge said:-

"Most British companies carrying on business in Chine, otherwise than by agents, are incorporated in Hongkong, and, strictly speaking, should have been managed there, but the exigencies of trade compelled, the Government to wink at the fact that the manage- ment in the Colony was only nominal, whilst the real seat of the company was in China. Such an abnormal state of things was sure to lead to abuse, and the ease with which under Company law, whether that of the United Kingdom or Hongkong, companies can be registered, soon led to the formation of companies, I which were British only in name, or at least had very large foreign interests, whilst an appreciable number of them were none too respectable.It thus became necessary to assist British enterprise by removing doubts and difficulties from the position of existing bone fide British companies and to ensure that the facilities offered by Hongkong were not abused by foreigners, including Chinese, who by incorporating themselves as a British company with- drew themselves from their own country's jurisdic- tion without becoming substantially amenable to that of the British courts."

The Companies Order-in-Council and Ordinance of 1915.

were not final in that a further tightening of effective control

over 'China' Companies was contemplated in such ways as further

experience should indicate as necessary and advisable.

As the result of such experience the China Companies (Amendment) Order-in-Council, 1919, was made on the 9th October,

1919, and came into force on the 1st of January last.

It was assumed, I understand, at the Conference in

1913, and I know has been accepted by the Foreign Office as a

convenient legal hypothesis, that a British corporation cannot

be created elsewhers than on British Territory. When discussing

that question once with Sir W. H. Davidson, K.C., then Senior

Legal Adviser to the Foreign Office, he pointed out to me the

practical difficulties which would then have arisen, in Zanzibar,

for instance, had we acted on the hypothesis, as the Germans

wished to there, and as they did in China, that included in extraterritorial rights was the right of a Power enjoying them to include in the persons entitled to its protection a "persona", a

company, created in a country wherein extraterritorial rights

were enjoyed, so long as such company was duly incorporated

according to either the general commercial law of such Power, or

in