TNAG-1645-FCO40-2292-Company-law-reform-in-Hong-Kong-Companies-(Amendment)-(No.-2-1987 — Page 76

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the court to prevent the financial assistance being given (ss. 43(9)

and 44(1) - (5)), the special exemption for private companies is

seen to provide a singularly unattractive route to follow."

1.23

In an effort to deal with the faults in Section 48 in

a way which is less complicated than the new measures adopted in

Britain and more suited to the practical needs of Hong Kong, we

have instructed the Secretary:

(1) To draft proposals for new provisions which would

allow unlisted companies only to provide financial

assistance for the purchase of their own shares,

based on the proposed new version of Section 48

which appeared in the Companies (Amendment) Bill

which was published as a White Paper in 1980 but

subject to -

(a) incorporating all the exemptions and clarifications

in Section 42 of the Companies Act 1981,

(b) bringing the statutory declaration requirements

into line with those in the 1981 Act,

(c) incorporating the net assets/distributable

profits provisions in Section 43(2) of the

1981 Act, and

(a) imposing heavy monetary and custodial penalties

for breach of the provisions.

However, the provisions in Section 43(8) of the 1981 Act

regarding an auditor's report are not to be included;

(2) To send these proposals to the usual professional and

business organisations for their views; and

(3) To inform the organisations at the same time that we

will consider recommending that listed companies be

allowed to provide financial assistance for the

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