Press Releases

Government launches first phase consultation on draft Companies Bill

The first phase public consultation on the draft provisions of the Companies Bill (CB) was launched by the Government today (December 17).

The Secretary for Financial Services and the Treasury, Professor K C Chan, said: "The CB aims to enhance corporate governance, ensure effective and better regulation, facilitate the conduct of business and modernise our company law to meet the needs of business.

"When the Companies Ordinance rewrite exercise is completed, it will modernise the legal framework for companies in Hong Kong and enhance our competitiveness and attractiveness as a major international business and financial centre."

The three-month consultation is part of the Companies Ordinance rewrite exercise. As the draft CB is fairly lengthy, the public consultation will be conducted in two phases.

The first phase covering 10 parts or about half of the CB will mainly deal with corporate governance matters. The second phase consultation covering the other half of the CB is scheduled to be launched in March 2010.

Besides seeking views on the draft provisions, the consultation paper has highlighted several issues for consultation. These include –

(a) whether the "headcount test" for approving a scheme of compromise or arrangement should be retained or abolished;

(b) whether residential addresses of directors and identification numbers of directors and company secretaries should continue to be disclosed on the public register;

(c) whether private companies associated with a listed or public company should be subject to more stringent regulations similar to public companies for the purposes of the provisions on fair dealings by directors; and

(d) whether the common law derivative action should be abolished.

The Financial Services and the Treasury Bureau looks forward to receiving comments from all interested parties and stakeholders, and will further refine the draft CB in the light of the comments received with the aim of introducing the CB into the Legislative Council by the end of 2010.

Since the start of the Companies Ordinance rewrite exercise in mid-2006, three rounds of public consultations have been conducted in 2007 and 2008 to seek views on some complex subjects. The views gathered in these consultations, together with the recommendations of the Standing Committee on Company Law Reform and the Advisory Groups have been incorporated into the draft CB.

The consultation document on this first phase consultation is available from www.fstb.gov.hk/fsb. Comments and submissions could be sent by mail to the Companies Bill Team, Financial Services and the Treasury Bureau, 15/F, Queensway Government Offices, 66 Queensway, Hong Kong, or by fax to (852) 2869 4195 or by email to co_rewrite@fstb.gov.hk on or before March 16, 2010.