XN000022-1983-03-04 — Page 4

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FRIDAY, MARCH 4, 1983

THE PROPOSED LEGISLATION WILL INTRODUCE A LARGE NUMBER OF CHANGES IN SOME OF THE MOST IMPORTANT AREAS OF COMPANY LAW. FOR EXAMPLE, PROVISIONS ON THE APPOINTMENT, REMOVAL AND RESIGNATION OF AUDITORS ARE BROUGHT INTO LINE WITH THE UK COMPANIES ACT OF 1976 AND NEW RESTRICTIONS AND OBLIGATIONS ARE IMPOSED ON DIRECTORS IN THEIR MANAGEMENT FUNCTIONS VIZ-A-VIZ BOTH THE COMPANY AND SHAREHOLDERS.

FOLLOWING ARE SOME IMPORTANT CHANGES MADE TO THE 1980 BILL AS A RESULT OF CONSULTATION

(A) THE PROHIBITION OF CORPORATE DIRECTORS IS NOW LIMITED

TO PUBLIC COMPANIES AND PRIVATE COMPANIES WHICH FORM PART OF A GROUP CONTAINING A COMPANY LISTED ON A STOCK EXCHANGE IN HONG KONG. ALL OTHER PRIVATE COMPANIES ARE PERMITTED TO CONTINUE TO HAVE CORPORATE DIRECTORS;

(B) THE PROVISION ON THE GENERAL FIDUCIARY DUTY OF DIRECTORS

HAS BEEN EXCISED; AND

(C)

THE PROVISION ON THE VALIDITY OF ULTRA VIRES TRANSACTIONS BETWEEN A COMPANY AND PERSONS WITHOUT ACTUAL NOTICE HAS ALSO BEEN EXCISED.

THE EXAMPLES ARE FAR FROM BEING EXHAUSTIVE, AS THE BILL CONTAINS SOME 260 CLAUSES. MR JACOBS SAID TO UNDERSTAND THE FULL EFFECTS OF THE PROVISIONS IN THE PRESENT BILL AND THE DIFFERENCES FROM THE 1980 BILL, INTERESTED PARTIES WOULD BE ADVISED TO OBTAIN A COPY OF THE BILL FOR REFERENCE.

TO ENSURE THAT COMPANY LEGISLATION IN HONG KONG IS CONSTANTLY UP-DATED IN THE LIGHT OF CHANGES ON THE COMMERCIAL SCENE, A

APART STANDING COMMITTEE ON COMPANY LAW REFORM WILL BE FORMED. FROM GOVERNMENT REPRESENTATIVES. IT IS EXPECTED TO INCLUDE PEOPLE FROM THE PROFESSIONAL AND BUSINESS SECTORS. ITS FIRST TASK WILL BE TO CONSIDER VARIOUS PROVISIONS EXCISED FROM THE 1980 BILL.

LAW TO STAMP OUT FALSE TRADE DESCRIPTION IN ADVERTISEMENT

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THE CUSTOMS AND EXCISE DEPARTMENT'S MAIN CONCERN ON THE ADVERTISING ASPECTS OF THE TRADE DESCRIPTIONS ORDINANCE IS TO STAMP OUT THE POSITIVELY FRAUDULENT, AND IS LESS CONCERNED WITH THE HYPERBOLE THAT IS SOMETIMES A FEATURE OF THE ADVERTISING INDUSTRY.

THIS WAS STATED TODAY (FRIDAY) BY THE DEPUTY COMMISSIONER OF CUSTOMS AND EXCISE, MR KEITH BROADBRIDGE, ADDRESSING THE FIRST ANNUAL CONFERENCE OF THE HONG KONG ADVERTISERS ASSOCIATION. HE EXPLAINED THAT THE 1981 TRADE DESCRIPTIONS ORDINANCE HAD INTRODUCED THE OFFENCE OF A FALSE TRADE DESCRIPTION IN AN ADVERTISEMENT, BUT THAT THERE WERE STATUTORY DEFENCES AVAILABLE FOR THOSE WHO HAD TO RELY ON INFORMATION PROVIDED BY OTHERS.

/MR BROACERIDGE