Registration of Charges and their Discharge

There are the following major changes to the list of registrable charges -

• A charge on an aircraft or any share in an aircraft is specifically included (section 334(1)(h))

• A charge on instalments due, but not paid, on the issue price of shares is added (section 334(1)(f))

• A charge for the purpose of securing any issue of debentures (section 80(2)(a) of the old Companies Ordinance (Cap. 32) ("the old Ordinance")) is removed.

Further, it is clarified that if a company charters a ship from a shipowner, the shipowner's lien on the subfreights for amounts due under the charter is not to be regarded as a charge on the book debts of the company or as a floating charge on the company' s undertaking or property and is not registrable as such (section 334(4)).

No. Section 334(3)(b) of the new CO specifically states that if a company maintains a deposit of money with another person (whether the money is deposited by the company or by any other person for the company’s benefit), a charge on the company’s right to repayment is not to be regarded as a charge on book debts.

Yes. Under the new CO, a certified copy of the instrument creating or evidencing the charge, instead of the original instrument, is required to be delivered to the Registrar for registration (sections 335, 336 and 338 to 340) (Please also see Q6 below).

No, the original charge instrument should not be delivered for registration. If it is erroneously delivered, the Registrar will not be responsible for any damage to the original document that may result from the document scanning process or for the safe return of the original charge instrument to the presentor.

Yes, there is a change in the time limit. Under the new CO, the time limit within which the certified copy charge instrument and the specified form must be delivered for registration is one month after the date of creation or, where the charge is created outside Hong Kong comprising property situated outside Hong Kong, one month after the date on which a certified copy of the said instrument could, if despatched with due diligence, have been received in Hong Kong in due course of post.

Section 333(4) of the new CO provides that a copy instrument in relation to a charge delivered for registration is a certified copy if it is certified as a true copy by –

1. a director or company secretary of the company or registered non-Hong Kong company delivering the copy for registration, or a person authorized by that company or registered non-Hong Kong company for that purpose; or
2. 1. any other person interested in the charge or
   2. in the case of -
      1. an interested person who is a natural person, a person authorized by the interested person for the purpose; or
      2. an interested person that is a body corporate, a person authorized by the interested person for the purpose, or a director or company secretary of the interested person.

Please note that the certification must contain the name and capacity of the person making the certification and the date on which the certification is made. If the certification is made on behalf of the chargor (company) / mortgagee, this fact must be stated so as to show that the requirement under section 333(4) has been satisfied.

Only the Certificate of Registration of Charge will be issued after registration of the charge. There will be no endorsement on the certified copy of charge instrument and the certified copy will not be returned to presentors.

Yes, the certified copy of the charge instrument together with the specified form will be available for public inspection in the Companies Register. The availability of a certified copy of the charge instrument will give rise to constructive notice of all the terms in the charge instrument, including negative pledge clauses, to those who may reasonably be expected to search the register, such as banks, financiers and relevant professionals.

For charges created before the commencement of the new CO, the provisions of the old Ordinance apply in respect of registration, and what should be submitted are the same documents as are necessary for registration under the old Ordinance (the particulars of charge in the specified form and the instrument by which the charge is created or evidenced). However, if for any reason the requisite documents are not submitted to the Registrar for registration within eight weeks after the commencement of the new CO, the documents to be delivered for registration will be the new form and a certified copy of the instrument creating or evidencing the charge. Transitional provisions are set out in sections 62 to 75 of Schedule 11 to the new CO.

Yes. Under section 345 of the new CO, if the notification of payment, satisfaction, release or cessation is delivered to the Registrar for registration, it must be in the specified form and must be accompanied by a certified copy of any instrument evidencing the payment, satisfaction, release or cessation, and both will be placed on the Companies Register and made available for inspection by members of the public (Please also see Q12 below).

Yes. Form NM2 must be delivered with a certified copy of the evidence of discharge for registration even if it is signed by the chargee or mortgagee (Please also see Q12 below).

Section 345(5) of the new CO provides that a copy of an instrument evidencing the payment, satisfaction, release or cessation of a registered charge is a certified copy if it is certified as a true copy by –

1. the mortgagee or the person entitled to the charge; or
2. in the case of -
   1. a mortgagee or entitled person who is a natural person, a person authorized by the mortgagee or entitled person for the purpose; or
   2. a mortgagee or entitled person that is a body corporate –
      1. a person authorized by the mortgagee or entitled person for the purpose; or
      2. a director or company secretary of the mortgagee or entitled person.

Please note that the certification must contain the name and capacity of the person making the certification and the date on which the certification is made. If the certification is made on behalf of the mortgagee, this fact must be stated so as to show that the requirement under section 345(5) has been satisfied.

There are no specific transitional provisions and all applications for registration of debt satisfaction or release from a charge delivered after the commencement of the new CO are subject to the provisions of the new CO, and applications delivered before the commencement of the new CO were subject to the provisions of the old Ordinance.