XN000022-1988-11-02 — Page 2

WEDNESDAY, NOVEMBER 2, 1988

BILL PROVIDES FOR BETTER ADMINISTRATION OF COMPANY LAW

A BILL CONTAINING A NUMBER OF MISCELLANEOUS AMENDMENTS COMPANIES ORDINANCE WAS INTRODUCED INTO THE LEGISLATIVE COUNCIL. (WEDNESDAY).

MOVING THE SECOND READING OF THE COMPANIES (AMENDMENT) BILL, THE FINANCIAL SECRETARY, THE HON PIERS JACOBS, SAID ITS WAS TO PROVIDE FOR THE BETTER ADMINISTRATION OF COMPANY LAW KONG.

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(NO. 3) PURPOSE IN HONG

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"THESE AMENDMENTS REFLECTED RECOMMENDATIONS MADE STANDING COMMITTEE ON COMPANY LAW REFORM. THE INSURANCE ADVISORY COMMITTEE, THE LAW REFORM COMMISSION AND BY THE REGISTRAR GENERAL, MR JACOBS SAID.

"THE OPPORTUNITY HAS ALSO BE TAKEN TO CORRECT MINOR TEXTUAL ERRORS IN THE ORDINANCE AND TO DEAL WITH SOME PROCEDURAL MATTERS,'

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EXPLAINING THE MAIN AMENDMENTS, MR JACOBS SAID SECTION 265(1) PROVIDED THAT PAYMENT OF WAGES, SALARIES AND OTHER BENEFITS ΤΟ EMPLOYEES AND WORKMEN AND STATUTORY CROWN DEBTS TOOK PRIORITY OVER OTHER DEBTS IN THE WINDING UP OF A COMPANY.

THERE WAS, HOWEVER, NO PROVISION FOR PREFERENTIAL TREATMENT PERSONS WITH INSURANCE CLAIMS AGAINST AN INSURANCE COMPANY LIQUIDATION, WHO WERE REGARDED AS GENERAL UNSECURED CREDITORS.

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"THIS SITUATION CAN GIVE RISE TO HARDSHIP WHERE, AS IS OFTEN CASE, THE LIQUIDATION PROCESS IS LENGTHY OR THE ASSETS INSUFFICIENT TO MEET THE CLAIMS OF ALL CREDITORS,' MR JACOBS SAID.

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**WHILE THE INSURANCE COMPANIES ORDINANCE GIVES SOME PROTECTION то CLAIMANTS UNDER CONTRACTS OF LIFE INSURANCE, THERE IS NO EQUIVALENT PROTECTION GIVEN TO CLAIMANTS UNDER CONTRACTS OF GENERAL, THAT IS NON-LIFE INSURANCE."

TO RELIEVE POSSIBLE HARDSHIP, MR JACOBS SAID CLAUSE 9 OF THE BILL SOUGHT TO AMEND SECTION 265 TO ESTABLISH A HIERARCHY OF PREFERRED CLAIMS IN THE EVENT OF THE WINDING UP OF AN INSURANCE COMPANY,

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UNDER THE NEW HIERARCHY, THE FIRST CLASS WOULD CONTINUE ΤΟ BE EXISTING CLAIMS UNDER SECTION 265(1) WHILE A NEW SECOND CLASS WOULD BE CLAIMS UNDER AN INSURANCE CONTRACT WRITTEN BY AN AUTHORISED INSURER IN HONG KONG.

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