On 1 February 2013, the Companies (Disclosure of Company Name and Liability Status) Regulation (the “Regulation”, accessed here) was gazetted. The Sub-committee on Subsidiary Legislation Made under the New Companies Ordinance (the “Sub-committee”) then issued a paper titled Supplementary Information arising from the Meeting on 21 February 2013 (the “Paper”, accessed here), which provides insight into the new requirements under the Regulation. The Regulation will apply to all companies registered in Hong Kong, and is expected to come into effect sometime in 2014 along with the new Companies Ordinance.
The purpose of the Regulation is to provide businesses and individuals with greater information when entering into an agreement with a company. It is intended that by making the disclosure of the registered name and liability status of companies mandatory, the Regulation will allow businesses and individuals to determine the identity of the counterparty with sufficient certainty.
Under the Regulation, companies must disclose their registered name and liability status (i.e. whether they are incorporated with or without limited liability) on all websites relating to the company which the company has caused or authorised to appear. Where a website is shared by a group of companies, the registered name and liability status of each company must be shown. Further, companies must disclose their registered name and liability status on all:
(a) Communication Documents, which include:
- business letters;
- notices; and
- any other official publication of the company.
(b) Transaction Instruments, which include:
- contracts or deeds signed by or on behalf of the company;
- bills of exchange, promissory notes or endorsements signed by or on behalf of the company;
- cheques or orders for money or goods signed by or behalf of the company; and
- consignment notes, invoices, receipts or letters of credit of the company.
Communication Documents and Transaction Instruments in electronic form (e.g. emails and soft copies of documents) will also be covered by the Regulation. The problem posed by this is that employees will have to determine which emails constitute Communication Documents and which do not. While a standard footer disclosing the registered name and liability status of the employee’s company could be incorporated into every email, this does not entirely solve the problem. For example, where several companies operate within a group, an email sent on behalf of the group of companies will need to include details of all companies involved. In addition, an employee who writes at different times on behalf of different subsidiaries of a company will need to manage multiple footers. While a hyperlink to a website containing the details of all relevant companies may be the most practical solution, it is unclear whether this solution would be permitted under the Regulation.
The Sub-committee has expressly stated that where a company’s website, Communication Document or Transaction Instrument is accessed via a mobile application (an “App”), the website, Communication Document or Transaction Instrument must contain the registered name and liability status of the company. However, there is no requirement to display the registered name and liability status of the company on the App itself.
A company will be exempted from the requirements under the Regulations only if:
- a company has had no accounting transactions since its incorporation; or
- a liquidator, receiver or manager of the property of a company has been appointed and the liquidator, receiver or manager carries on his business in the registered office of the company.
In addition, while a domain name registration is a contractual arrangement between a company and a registration service provider (and is therefore considered to be a Transaction Instrument under the Regulation), the Sub-committee has expressed that the identity of the registrant of a company’s domain name need not be the same as the registered name of a company.
Should a company, a responsible person of a company, or an individual acting on behalf of a company fail to disclose the registered name and liability status of a company as required under the Regulation, each individual involved will commit a criminal offence and be liable to a fine of up to HK$10,000.