XN000022-1996-04-25 — Page 5

The application of the doctrine was developed in English courts in the nineteenth century and was intended as a protection for its members and creditors, he said.

"However, it has since become a trap for third parties, who may discover that their contracts with a company are unenforceable, and an obstacle for companies, which might commence new business without realising that a change in objects is necessary," he added.

The doctrine has been abolished by statute in a number of common law jurisdictions, such as Australia, New Zealand and Canada.

Under the Bill, companies will be given the capacity of a natural person. Any company which chooses to do so may still state its objects and powers in its memorandum and these will be binding on the company's directors and management.

However, third parties will enjoy protection in their contractual dealings with the company.

The related doctrine of constructive notice, which deems a person to have knowledge of the contents of documents which are available for inspection in the Companies Registry, is also abolished as far as companies' memoranda and articles of association are concerned.

Following a consultation exercise and taking note of developments that have taken place elsewhere, the Standing Committee on Company Law Reform, recommended doing away with these undesirable legal principles.

The spokesman pointed out that the Registrar of Companies was currently undertaking a major exercise to revise and update the many statutory forms under the Ordinance.

Work on making the main forms bilingual and more user-friendly was already advanced, the spokesman said.

"At present, even minor amendments to forms must go through the full legislative process before they can be implemented," he said.

"This discourages timely review and improvement. It is therefore proposed that in future the Registrar be given the power, within certain statutory limits, to determine the content and format of the forms administratively," he added.