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Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 gazetted

03 June 2016

The Government gazetted today (June 3) the Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 (the Amendment Ordinance).

A government spokesman said, "The Amendment Ordinance will improve and modernise Hong Kong's corporate winding-up regime by providing measures to increase protection of creditors as well as streamline and further enhance the integrity of the winding-up process. This will help to further align our corporate winding-up regime with the latest international developments, and enhance Hong Kong's business environment by giving confidence to investors and creditors.

"An effective corporate winding-up regime will ensure that the value of the remaining assets of an insolvent company will be preserved as far as possible and that the assets will be distributed amongst the creditors of the company, including its employees, suppliers and contractors, in a fair and orderly manner," the spokesman added.

On creditor protection, the Amendment Ordinance provides for the power of the court to set aside transactions at an undervalue entered into by a company within five years before the commencement of its winding up. A "transaction at an undervalue" is defined as a transaction entered into by a company at the relevant time on terms that provide for the company to receive no consideration, or for a consideration which is significantly less than the value of the subject of the transaction.

For streamlining the winding-up process, the Amendment Ordinance provides a number of measures to simplify the proceedings of the committee of inspection and promote court-free procedures in order to save time and costs for administering winding-up cases.

To further enhance the integrity of the winding-up process, the Amendment Ordinance provides that aggrieved parties may apply to the court for an order to enforce liabilities arising from the liquidator's misfeasance or breach of duty or trust, notwithstanding that the liquidator has applied to the court and obtained a court order releasing them as liquidator after completion of the relevant winding-up case.

The Amendment Ordinance was enacted by the Legislative Council on May 27, 2016. The Official Receiver's Office will make the corresponding administrative arrangements, including issuing notifications and briefing practitioners on the relevant matters, and will carry out promotional activities, such as publicity through its website and publications.
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