Part II
The new Hong Kong Companies Ordinance – a practitioner’s guide
to the new era
Simone Kong
15th August 2013
Hong Kong
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基于亚洲
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Schedule 2
Model Articles for Private Companies Limited by Shares
源于亚洲
基于亚洲
服务全球
Model Articles for Private
Companies Limited by Shares
• Made by the Financial Secretary on 16 May 2013
• To be effective on the same that the Company
Ordinance Cap 622 is effective
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Model Articles
• A company to be incorporated under the new
Companies Ordinance (“New CO”) may
– adopt in parts or
– in its entirety at its volition
• No impact on existing companies
• i.e. Companies applying Table A Schedule 1 of
Companies Ordinance Cap 32
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Model Articles
• There are three schedules
– Schedule 1: Public companies
– Schedule 2: Private companies
– Schedule 3: Companies limited by guarantee
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Model Articles
• New arrangement of topics – more practical
• Change corresponding to change in New CO
• Clarified previous Table A’s provisions, e.g. alternate
directors
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Model Articles
Clarified topics arranged in the following sequence:
1.
2.
3.
4.
Directors and company secretary;
Members’ rights and the proceedings at general meetings;
and distributions
miscellaneous matters, including communications to and by
the company
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Major Changes
1. Decision making by directors
– Procedures for written resolutions and removal of alternate
director
– Voting at directors’ meeting where there is a conflict of interests
have been updated to take into account the changes in Part 11
of the New CO and other changes
– Catering for dispersed meeting, i.e. where directors meet via
telecommunication or video conferences, or with the aid of
other communication technology
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Major Changes
2. Proceedings at general meetings
– A new article is added on the rights of directors and anyone who is not
a member of the company to attend and speak at general meetings
– Articles relating to the effect, validity and the delivery of relevant
notices for proxies is set out in great details
– Articles on the contents and timeframe for notices of meetings have
been revised:• At least 21 days’ notice for AGM
• At least 14 days’ notice of other general meeting
• Must include a statement containing information indicating the purpose
of the resolution
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Major Changes
3. Share capital
– Articles relating to forfeiture of partly-paid shares are set out in
greater details
– An new article to deal with surrender of share in lieu of
enforcement of a call for payment
– Amendments to provide for greater flexibility resulting from
migration to no-par regime
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Highlights of the Model Articles
Article 4.
Members’ Reserve Power
• The members may, by special resolution, direct the directors
to take, or refrain from taking, specified action
• The special resolution does not invalidate anything that the
directors have done before the passing of the resolution
Cf Table A, Article 82
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Highlights of the Model Articles
Article 8.
Unanimous decision
• (1) A decision of the directors is taken in accordance with this
article when all eligible directors indicate to each other (either
directly or indirectly) by any means that they share a common
view on a matter.
• (2) Such a decision may take the form of a resolution in
writing, copies of which have been signed by each eligible
director or to which each eligible director has otherwise
indicated agreement in writing.
Cf Table A, Article 108
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Highlights of the Model Articles
Article 9.
Calling directors’ meeting
• (1) Any director may call a directors’ meeting by giving notice
of the meeting to the directors or by authorizing the company
secretary to give such notice.
• (2) Notice of a directors’ meeting must indicate –
(a) its proposed date and time; and
(b) where it is to take place.
• (3) Notice of a directors’ meeting must be given to each
director, but need not be in writing.
Cf Table A, Article 100
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Highlights of the Model Articles
Article 10. Participation in directors’ meetings
• (2) In determining whether directors are participating in a
directors’ meeting, it is irrelevant where a director is and how
they communicate with each other.
• (3) If all the directors participating in a directors’ meeting are
not in the same place, they may regard the meeting as taking
place wherever any one of them is
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Highlights of the Model Articles
Article 12. Meeting if total number of directors less
than quorum
• If the total number of directors for the time being is less than
the quorum required for directors’ meetings, the directors
must not take any decision other than a decision(a) To appoint further directors; or
(b) To call a general meeting so as to enable the
members to appoint further directors.
Cf Table A, Article 102
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Highlights of the Model Articles
Article 19. Record of decisions to be kept
• The directors must ensure that the company keeps a written
record of every decision taken by the directors under article
7(1) for at least 10 years from the date of the decision.
Cf Table A, Article 88
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Highlights of the Model Articles
Article 22. Appointment and retirement of directors
• (1) A person who is willing to act as a director, and is permitted by
law to do so, may be appointed to be a director(a) by ordinary resolution; or
(b) by a decision of the directors.
• (2) Unless otherwise specified in the appointment, a director
appointed under paragraph (1)(a) holds office for an unlimited
period of time.
• (3) An appointment under paragraph (1)(b) may only be made to(a) fill a casual vacancy; or
(b) appoint a director as an addition to the existing directors if the
total number of directors does not exceed the number fixed in
accordance with these articles. Manivest. Originated in Asia, Based in Asia, Serving the World
Highlights of the Model Articles
Article 22. Appointment and retirement of directors
• (4) A director appointed under paragraph 1(b) must(a) retire from office at the next annual general meeting
following the appointment; or
(b) if the company has dispensed with the holding of annual
general meetings or is not required to hold annual general
meetings, retire from office before the end of 9 months after
the end of the company’s accounting reference period by
reference to which the financial year in which the director was
appointed is be determined.
Cf Table A, Article 97
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Highlights of the Model Articles
Article 25. Termination of director’s appointment
• A person ceases to be a director if the person(a) Ceases to be a director under the Ordinance or the Companies
(Winding up and Miscellaneous Provisions) Ordinance (Cap.32) or is
prohibited from being a director by law;
(b)…
(c) Becomes a mentally incapacitated person;
(d)….
(e) For more than 6 months has been absent without the directors’
permission from directors’ meetings held during that period; or
Cf Table A, Article 90
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Highlights of the Model Articles
Article 35. Notice of general meetings
• (1) An annual general meeting must be called by notice of at least
21 days in writing.
• (2) A general meeting other than an annual general meeting must
be called by notice of at least 14 days in writing
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Highlights of the Model Articles
Article 35. Notice of general meetings
• (4) The notice must specify the date and time of the meeting;
(a)….
(c) State the general nature of the business to be dealt with at the meeting
(d)……
(e) If a resolution (whether or not a special resolution) is intended to be
moved at the meeting(i)Include notice of the resolution; and
(ii)Include or be accompanied by a statement containing any information or
explanation that is reasonably necessary to indicate the purpose of the
resolution;
(f) If a special resolution is intended to be moved at the meeting, specify the
intention and include the text of the special resolution; and
(g) Contain a statement specifying a member’s right to appoint a proxy
under section 596(1) and (3) of the Ordinance.
Cf Table A, Article 52
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Highlights of the Model Articles
Article 38. Attendance and speaking at general
meetings
• (1) A person is able to exercise the right to speak at a general meeting
when the person is in a position to communicate to all those attending the
meeting, during the meeting, any information or opinions that the person
on the business of the meeting.
• (4) In determining attendance at a general meeting, it is immaterial
whether any 2 or more members attending it are in the same place as
each other.
• (5) Two or more persons who are not in the same place as each other
attend a general meeting if their circumstances are such that if they have
rights to speak and vote at the meeting, they are able to exercise them.
Cf Table A
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Highlights of the Model Articles
Article 41. Attendance and speaking by nonmembers
• (1) Directors may attend and speak at general meetings whether
or not they are members of the company.
• (2) The chairperson of a general meeting may permit other
persons to attend and speak at a general meeting even though they
are not(a) Members of the company; or
(b) Otherwise entitled to exercise the rights of members in relation to
general meetings.
Cf Table A
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Highlights of the Model Articles
Article 42. Adjournment
• (2) If at the adjourned meeting, a quorum is not present within
half an hour from the time appointed for holding the meeting, the
member or members present in person or by proxy constitute a
quorum.
Cf Table A, Article 56
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Highlights of the Model Articles
Article 56. All shares to be fully paid up
• No share is to be issued unless the share is fully paid.
New
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Highlights of the Model Articles
Article 64. Power of directors to refuse transfer of
shares
(4) If a requires is made under paragraph (2)(a), the directors must,
within 28 days after receiving the request(a) send the transferor or transferee who made the
request a statement of the reasons for the refusal; or
(b) register the transfer.
Cf Table A, Article 24 and 25
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Highlights of the Model Articles
Article 80. Means of communications to be used
• (2) Subject to these articles, any notice or document to be sent or
supplied to a director in connection with the taking of decisions by
directors may also be sent or supplied by the means by which that
director has asked to be sent or supplied with such a notice or
document for the time being.
New
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Highlights of the Model Articles
Article 81. Company seals
• (2) A common seal must be a metallic seal having the company’s
name engraved on it in legible form.
New
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Highlights of the Model Articles
Article 82. No right to inspect accounts and other
records
• A person is not entitled to inspect any of the company’s
accounting or other records or documents merely because of
being a member, unless the person is authorized to do so by(a) an enactment;
(b) an order under section 740 of the Ordinance;
(c) the directors; or
(d) an ordinary resolution of the company.
Cf Table A, Article 126
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Maintenance of Capital and
Share Capital Transaction
Solvency Test
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Solvency Test
New Concept
• The New CO modifies the maintenance capital rules by
introducing a solvency test for the following transactions:1. Reduction of capital (Pt 5 Div 3, Sub-Div 2)
2. Redemption and buy back of shares (Pt 5 Div 4)
3. Giving of financial assistance by a company for the acquisition of
its own share (Pt 5 Div 5 Sub-Div 4)
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Solvency Test
The solvency test as 2 limbs:1. Immediately after the transaction, the company is not unable
to pay its debts;
AND
1. 12 months immediately following the transaction, the
company will be able to pay
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Reduction of Capital
2 methods:
1. By Special Resolution supported by Solvency Statement (Part
5 Division 3 Subdivision 2) (New)
2. By confirmation of the court (Part 5 Division 3 Subdivision 3
s.221(1))
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Reduction of Capital By Special
Resolution supported by Solvency Statement
• Do not require approval of court, therefore quicker
and less costly than the existing procedure
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Reduction of Capital By Special
Resolution supported by Solvency Statement
Requires:
1.
Approval of disinterested members by special resolution
(Part 5 Division 3 Subdivision 2)
2.
Satisfy the solvency test (Part 5 Division 3 Subdivision 2)
3.
Publish notices in Government Gazette and newspapers
Any creditor or member may petition to the court for a
cancelation order.
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Reduction of Capital By Special Resolution
confirmed by Court
Creditors entitled to object the reduction of capital
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Deregistration
S.738 Application for deregistration
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Deregistration
S.738 Application for deregistration
S.738(2) An application must not be made unless, at
the time of the applicationa)
b)
c)
d)
e)
All the members agree to the deregistration;
The company has not commenced operation or business, or has
not been in operation or carried on business during the 3 months
immediately before the application;
The company has no outstanding liabilities;
The company is not a party to any legal proceedings; and
The company’s assets do not consist of any immovable property
situate in Hong Kong.
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Deregistration
S.291AA Application to Registrar for
deregistration of defunct private company
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Deregistration
S.291AA Application to Registrar for
deregistration of defunct private company
S.291AA(2) An application to deregister a private
company can only be made ifa) All the members of the company agree to the deregistration;
b) The company has not commenced operation or business, or has not
been in operation or carried on business during the 3 months
immediately before the application;
c) The company has no outstanding liabilities.
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Restoration to Companies Register
S.748 Application to Registrar for
restoration of company
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Restoration to Companies Register
S.748 Application to Registrar for restoration of
company
• Applies to a company whose name has been struck off the
Companies Register under the old CO as well as the New CO.
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Restoration to Companies Register
S.749 Conditions for granting the application
1.
The company was, at the time its name was struck off the
Companies Register, in operation or carrying on business;
2.
The Government does not object to the restoration, f there is any
immovable property situated in Hong Kong previously vested in or
held on trust for the company by the Government;
3.
All the filings with the Companies Registrar has been filed; and
4.
Any other conditions that the Companies Registrar thinks fit, are
met.
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Restoration to Companies Register
S.752 Effect of Restoration
1.
The company is regarded as having continued in existence
as if it had not been dissolved;
2.
May apply to the court for directions, and orders to the
company and all other persons in the same position as
nearly as may be as if the company had not been
dissolved.
3.
Such application must be made within 3 years after the
date of the restoration.
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Thank you
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