43825-1915-Supplementary-Bills-read-a-first-time--Companies — Page 8

483

9. The Companies Ordinances, in so far as they affect Application companies carrying on business within the limits of the of China China Orders-in-Council, shall be read with and subject Order-in- to the China (Companies) Order-in-Council, 191

(Companies)

Council, 191

•

10. This Ordinance shall come into force on the 1st Commence- day of January, 1916.

ment.

Objects and Reasons.

This Bill is complementary to the China (Companies) Order-in-Council, 191, and the joint object of these two enactments is to increase the control over Hongkong com- panies which carry on business in China.

These companies fall into two classes, i.e., companies which are managed from Hongkong, and companies which are managed from some place in China. The former class are termed in the Order-in-Council and Bill Hongkong China Companies ", and the latter class are termed “China Companies".

In the case of companies which are managed from Hongkong, the territorial jurisdiction of the Colonial Government and Courts enables an effective control to be exercised over the company through the persons of its directors and officers here, whatever their nationality. In the case, however, of companies of the second class, the directors and officers of which are resident outside the British Dominions, there is no effective control over the company unless some at least of the directors and officers are of British nationality, because the jurisdiction of the Supreme Court for China is in general confined to British subjects and protected persons. It is this difficulty which has led to the introduction of the above Order-in-Council and this Bill.

The solution which has been adopted is to require that Hongkong companies which are managed from some place in China shall have connected with them a certain number of British subjects on whom a personal control can be exercised, and to provide that the shares in any such com- panies which are limited by shares will be fully paid up within three mouths after allotment. The exact provisions in the case of companies limited by shares are that the majority of the directors, and the auditors, must be British subjects, that no person other than a British subject shall be appointed to act within the limits of the Order-in-Council as liquidator of such a company, or as receiver or manager on behalf of the debenture holders. except with the sanction of the Court, and that no shares shall be issued except either as fully paid up or upon the term that the shares shall be fully paid up within three months after allotment. The provision as to the shares is in order to avoid the difficulty of recovering calls from persons of non-British nationality in China. In the comparatively rare case of companies limited by guarantee, the provisions are that no such company shall be allowed to operate without the con- sent of the Minister, who may as a condition of this consent require that no person other than a British subject shall be a member, or that any member who is not a British subject shall give security for insuring the pay- ment of the amount for which he would be liable under the guarantee.

The Order-in-Council also provides that the jurisdiction conferred by the Hongkong Companies Ordinances upon any Court shall within the limits of the Order-in-Council be exercised by the Supreme Court for China, and that that jurisdiction shall, subject to the provisions of the Order, be exercised in conformity with the provisions of the Hongkong Companies Ordinances. The Order-in- Council and Bill together provide that in all matters relat- ing to a Hongkong China company the jurisdiction of the Supreme Court of Hongkong and of the Supreme Court for China shall be concurrent and mutually auxiliary, and provisions are made for transferring proceedings from one Supreme Court to the other.