ENG-1984 — Page 116

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INDUSTRY AND TRADE

company authorised to do so by the Insurance Authority, to Lloyd's of London, and to an association of underwriters approved by the Governor in Council.

The Registrar General, who has been appointed the Insurance Authority for the purposes of the ordinance, must be satisfied that certain conditions are met before authorising a company. These include the suitability of the directors and controllers of the company; a minimum paid-up capital requirement of $5 million ($10 million in cases of companies undertaking both long term and general business or statutory business, the latter meaning insurance cover required by statute); and a solvency margin requirement of $2 million ($4 million or $6 million in different cases depending on whether both long term and general business are carried on, and whether statutory business is included). Any company, irrespective of the place of incorporation, which is authorised to carry on insurance business in the United Kingdom is given certain exemptions under the new ordinance and may be authorised by the Insurance Authority on the strength of its compliance with the United Kingdom Insurance Companies Act.

There are 284 insurance companies, including 130 local companies, authorised to transact insurance business in Hong Kong.

Money Lenders

Under the Money Lenders Ordinance, which came into force in December 1980, anyone wishing to carry on business as a money lender must apply to a Licensing Court, consisting of a magistrate and two lay assessors, for a licence. In the first instance, the application is submitted to the Registrar General as Registrar of Money Lenders and a copy is sent to the Commissioner of Police, who may object to the application. The application is advertised, and any member of the public who has an interest in the matter also has the right to object. During the year, 435 applications were received and 415 licences were granted. At year-end, there were 453 licensed money lenders.

The ordinance provides severe penalties for a number of statutory offences such as carrying on an unlicensed money lending business. It also provides that any loan made by an unlicensed money lender shall not be recoverable by court action. Any person, whether a licensed money lender or not, who lends or offers to lend money at an interest rate exceeding 60 per cent per annum commits an offence and agreement for the repayment of any such loan or any security given in respect of such loan shall be unenforceable. Prior to May 16, 1984, the time limit for prosecuting a person for the last mentioned offence was six months. On that date this time limit was extended to two years by the Money Lenders (Amendment) Ordinance 1984.

Bankruptcies and Liquidations

In Hong Kong, the number of business failures leading to formal insolvency proceedings in court is always comparatively small in relation to the total number of businesses closing down, but nevertheless it has increased considerably since 1980.

During the year there were 312 petitions in bankruptcy and 424 petitions for the com- pulsory winding-up of companies. The court made 185 receiving orders, two administra- tion orders and 315 winding-up orders. As in past years, the Official Receiver was appointed trustee or liquidator in most cases. Assets realised by the Official Receiver during 1984 amounted to $157 million. In addition to these compulsory liquidations, 918 companies went into voluntary liquidation - 900 by members' voluntary winding-up and 18 by creditors' voluntary winding-up.