12 important changes to know about the new Companies Ordinance
With the imminent commencement of the new Companies Ordinance on 3rd March 2014, we have highlighted 12 important changes as follows:
- Restriction on Corporate Directorship
After 3rd September 2014, all private companies must have at least one natural person to act as a director.
- Abolition of requirement of Memorandum of Association
With the abolition of memorandum of association, a company will have just one constitutional document which are the articles of association. Provisions within the memorandum of association of existing companies will be deemed to become part of the articles of association.
- Abolition of Par value
There will be a new mandatory system of no-par value for shares of all Hong Kong companies with a share capital. Existing balances in share premium account and capital redemption reserve will become part of the company’s share capital.
- Execution of Documents
A common seal is no longer mandatory and companies may sign a deed under its common seal or alternatively under hand.
- Restriction on disclosure of Residential Address and Identification number
The residential address and the full identification number/passport of directors will no longer be available to the public.
- Written Resolutions
New procedural rules must be compiled for proposing, passing and recording a written resolution to be effective.
- Annual General Meeting
Companies may dispense with the holding of an AGM by unanimous shareholders’ consent.
- Right to demand a poll
The new threshold for demanding a poll is reduced to 5% of the total voting rights compared to the 10% under the current regime.
- Responsible persons
The new Ordinance extends the scope of “responsible person” to include shadow directors and also lowers the threshold for committing an offence to cover actual knowledge, wilful blindness and recklessness.
- Financial Assistance for Acquiring Shares
The new Ordinance introduces new exceptions which allows companies to provide financial assistance for acquisition of their own shares subject to satisfying a solvency test and obtaining of the relevant approvals from the board and/or the shareholders.
- Simplified Reporting Requirements
The new Ordinance extends the scope for small and medium private companies to prepare simplified financial and director’s reports.
- Registration of Charges
The time limit for registration of a charge is shortened to one month from the current five weeks after the creation of the charge.