TNAG-1645-FCO40-2292-Company-law-reform-in-Hong-Kong-Companies-(Amendment)-(No.-2-1987 — Page 74

14

1.20

(2) the provisions allowing the provision of financial

assistance by private companies are developments of

those recommended by the Jenkins Committee with

additions; the most important additions are those

referred to in (3)(a) and (b) above;

(3) the detailed procedures for provision of financial

assistance by a private company are so complicated and

strict that it is unlikely that many private companies

will in fact be able to use them in practice; and

(4) the concept of "distributable profits" forms a very

important part of the provisions and there are detailed.

statutory provisions on what constitutes distributable

profits in Part III of the Companies Act 1980, as

amended (now Part VIII of the Companies Act 1985);

however there are no provisions on the subject in the

Companies Ordinance."

As mentioned previously, when consideration of the subject of

purchase by a company of its own shares started in 1985, various

professional and business organisations were consulted.

They were

also consulted regarding Section 48 at the same time. On this subject,

only one of the professional organisations thought that no amendment

was necessary. The other organisations thought that the section

needed amendment but while the two business organisations had no

specific objections to the new British legislation, the other

professional organisation commented: "Simplicity is important and

for this reason the provisions of Clause 24 of the draft Companies

(Amendment) Bill 1980 (which contained the proposed new version of

Section 48) are attractive and ought not to be disregarded.

The

/15...