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Transitional Arrangements

 
  Abolition of Memorandum of Association and Matters relating to Company Articles
  Abolition of Par Value of Shares
  Accounts and Audit
  Annual Returns of Local Companies
  Deregistration and Restoration
  Enhancement of Auditor's rights
  Headcount Test
  Major Changes Affecting Directors
  Major Changes in Filing Requirements
  Meetings, Resolutions and Company Records
  Non-Hong Kong Companies
  Registration of Charges and their Discharge
  Restricting Corporate Directorship in Private Companies
  Specified Forms

 

Abolition of the Memorandum of Association and Matters relating to Company Articles

There are no transitional arrangements for abolition of the Memorandum of Association ("MA").

The deeming provision set out in section 98 of the new Companies Ordinance, Cap. 622 ("the new CO"), however, provides that conditions (i.e. provisions) of the MA of an existing company will be deemed to be regarded as provisions of the company's Articles of Association ("AA"). In addition, as a result of the migration to no-par, any such condition which states the amount of share capital with which the company proposes to be registered or is registered is regarded as deleted and any such condition that divides the share capital into shares of a fixed amount is also regarded as deleted (section 98(4)).

It is NOT necessary for a company registered under the old Companies Ordinance (Cap. 32) ("the old Ordinance") to make changes to its constitutional documents as a result of the abolition of MA under the new CO, nor is there any need for companies to amend their AA which have made reference to the provisions of the old Ordinance (section 921(5)).Companies may however take the opportunity to review their existing constitutional documents to see if there are any changes that they wish to make as a result of the new CO.

Table A in the First Schedule to the old Ordinance, in so far as not modified by the provisions of the new CO, continues to apply to those existing companies who had adopted Table A (by default or otherwise) as their AA.

Please also see the FAQs on Abolition of the Memorandum of Association.

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Abolition of Par Value of Shares

There are transitional and deeming provisions in Schedule 11 to the new CO relating to the move from par value shares to no-par value shares. The provisions are intended to provide legislative safeguards to ensure that contractual rights defined by reference to par value and related concepts will not be affected by the abolition of par.

Nonetheless, individual companies may wish to review their particular situation to determine if they need to introduce specific changes to relevant company documents having regard to their own circumstances. The documents include the company's constitutional documents, contracts entered into by the company, trust deeds involving the company and share certificates issued by the company.

Please also see the FAQs on Abolition of Par Value of Shares.

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Accounts and Audit

For a financial year of an existing company that begins before the commencement of the new CO (i.e. before 3 March 2014) and ends on or after that date, the relevant provisions of the old Ordinance in relation to accounts and directors' report continue to apply in relation to the company for that financial year (sections 76, 77, 78, 80, 83 and 84 of Schedule 11 to the new CO).

Please also see the FAQs on Accounts and Audit.

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Annual Returns of Local Companies

For an existing public company or guarantee company, if the financial year of the company begins before the commencement of the new CO on 3 March 2014 and ends on or after that date, the requirement to file an annual return with reference to the annual general meeting date under sections 107 and 109 of the old Ordinance continues to apply in relation to the company for that financial year.

If the company is a private company having a share capital, sections 107 and 109 of the old Ordinance continue to apply in relation to the company's annual returns made up to a date before 3 March 2014.

If the annual return of a guarantee company is delivered for registration pursuant to the old Ordinance under the transitional arrangements of the new CO, the escalating scale of annual registration fee introduced by the Companies (Fees) Regulation (Cap. 622K) will not apply.

Please also see the FAQs on Annual Returns of Local Companies.

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Deregistration and Restoration

Apart from the three conditions specified in the old Ordinance, namely the company has not commenced / has ceased operation or business, it has no outstanding liabilities and all the members agree to the deregistration, three additional conditions for deregistration (i.e. the company is not a party to any legal proceedings and that neither the company nor its subsidiary has any immovable property situate in Hong Kong) are specified under the new CO.

The new specified form "Application for Deregistration of Private Company or Company Limited by Guarantee" (Form NDR1) must be used with effect from 3 March 2014.

The following provisions of the old Ordinance, as in force immediately before their repeal, continue to apply in respect of a matter provided for in the provisions:

 
 

Section 291AA – Deregistration of a company

 

Section 291AB – Application for reinstatement of a deregistered company

 

Section 292(2) – Effect of court order for restoration or reinstatement on bona vacantia

Please refer to sections 128 to 131 of Schedule 11 to the new CO for the conditions and application of the transitional arrangements.

Please also see the FAQs on Deregistration and Restoration.

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Enhancement of Auditor's rights

The relevant provisions in the old Ordinance which impose duties on a company, its officers and its subsidiary to give to the auditor information and explanation for the purposes of an audit and the provisions which give the auditor a right of access to the company's books and accounts (i.e. sections 133 and 141(5)) continue to apply in relation to a financial year beginning before the commencement date of the new provisions (i.e. 3 March 2014) and ending on or after that commencement date.

The relevant provision in the old Ordinance relating to the statement of circumstances given by an auditor who resigns (i.e. section 140A) continues to apply in relation to a resignation of a person appointed as auditor for a financial year beginning before the commencement date of the new provisions and ending on or after that commencement date.

Please also see the FAQs on Enhancement of Auditor's rights.

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Headcount Test

The relevant provisions in the old Ordinance (i.e. sections 166, 166A and 167) and the Companies (Winding-up) Rules (Cap. 32H) (i.e. rule 117) continue to apply in relation to a scheme if an application to the Court under section 166(1) of the old Ordinance is made before the commencement date of the new provisions on 3 March 2014.

Please also see the FAQs on Headcount Test.

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Major Changes Affecting Directors

So far as it relates to directors, section 165 of the old Ordinance which relates to the possible liability of directors continues to apply in relation to any relevant exemption or indemnification provision existing immediately before the commencement of sections 468, 469 and 470 of the new CO on 3 March 2014.

If a company has dispensed with the holding of an annual general meeting in accordance with section 613 of the new CO, the condition specified in section 157HA(4)(b) of the old Ordinance in respect of a transaction to provide any of its directors with funds to meet expenditures as described in section 157HA(3)(a) of the old Ordinance, which is still outstanding on the commencement of Division 2 of Part 11 of the new CO continues to apply as if the condition was that –

 
 

the approval of the company is required on or before the last date on which the company would otherwise have been required to hold an annual general meeting; and

 

any liability falling on any person in connection with the transaction must be discharged within 6 months after that date if that approval is not forthcoming.

Sections 163, 163A, 163B, 163C and 163D of the old Ordinance continue to apply in relation to a loss of office or retirement specified in those sections that occurred before the commencement of Division 3 of Part 11 of the new CO. In the case of a directorship, a loss of office or retirement occurred when the person ceased to be a director; in the case of any other office, when the person ceased to hold the office.

Please also see the FAQs on Major Changes Affecting Directors.

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Major Changes in Filing Requirements

For the transitional arrangements on the use of specified forms, please see Specified Forms below. For filing obligations under the old Ordinance which have a continuing effect after the new CO commences, please see the respective Parts under Schedule 11 to the new CO.

Please also see the FAQs on Major Changes in Filing Requirements under the New Companies Ordinance.

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Meetings, Resolutions and Company Records

The transitional and saving arrangements for Part 12 of the new CO (Company Administration and Procedure) are set out in sections 98 to 121 of Schedule 11 to the new CO, specifically –

The transitional and saving arrangements in relation to the requirement to keep a register of directors and a register of company secretaries are provided in sections 114 and 117 of Schedule 11.

The transitional and saving arrangements for existing companies in respect of keeping particulars of shadow directors and of the addresses of company secretaries who are natural persons are provided in section 116 and sections 118 to 119 of Schedule 11 respectively.

Unless the registered particulars of the company secretary fall to be altered on or after the commencement date of the new CO, an existing company need not comply with the new requirement to keep, in the company's register of company secretaries, the correspondence address of a company secretary who is a natural person until it makes up its first annual return to a date on or after the commencement date of the new CO; or (if the company fails to do so) the last date to which the company should have made up that return.

Please also see the FAQs on Meetings, Resolutions and Company Records.

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Non-Hong Kong Companies

The transitional provisions are set out in detail in sections 132 to 140 of Schedule 11 to the new CO. The position relating to pending applications for registration and registration of returns is that they are regarded as applications made under the new CO but fees will be paid by reference to the Eighth Schedule to the old Ordinance. In most other cases, the general position is that where the action was commenced under the old Ordinance, the provisions of the old Ordinance will continue to apply. This covers for example, the sending of notice regarding cessation of a place of business, the sending of notice of dissolution, striking the name of a non-Hong Kong company off the register and restoration of company to the register.

Please also see the FAQs on Non-Hong Kong Companies.

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Registration of Charges and their Discharge

For charges created before the commencement of the new CO on 3 March 2014, the provisions of the old Ordinance apply in respect of registration. However, if for any reason the requisite documents required under the old Ordinance are not delivered to the Registrar of Companies for registration within eight weeks after the commencement of the new CO, the new specified form and a certified copy of the instrument creating or evidencing the charge will be required to be registered under the new CO. The following table summarises the position:

Date of Creation of the Charge

 

Date of Delivery

Documents to be Delivered

 

Before 3 March 2014

 

Within 8 weeks from 3 March 2014

 

 

 

 

Either

 
 

Form M1; and

 

Original instrument creating or evidencing the charge

Or

 
 

Form NM1; and

 

Certified copy of the instrument creating or evidencing the charge

 

Note:

The following combinations will NOT be accepted:

 
 

Form NM1 + original instrument

 

Form M1 + certified copy of instrument (except for charges created outside Hong Kong)

 

(The prescribed time for delivery is 5 weeks)

 

From 28 April 2014 onwards

 

 
 

Form NM1; and

 

Certified copy of the instrument creating or evidencing the charge

 

(Court order for extension of the registration period is required if a charge is delivered beyond the prescribed time for delivery)

 

On or after

3 March 2014

 

From 3 March 2014 onwards

 

 
 

Form NM1; and

 

Certified copy of the instrument creating or evidencing the charge

 

(The prescribed time for delivery is one month)

 

There are no specific transitional provisions for the registration of debt satisfaction or release from a charge. The provisions of the old Ordinance continue to apply to those applications for entries of satisfaction or release made before the commencement date of the new CO. Upon the commencement of the new CO, all applications for registration will be subject to the provisions of the new CO. The documents to be delivered are as follows:

Date of Discharge or Release

 

Date of Delivery

Documents to be Delivered

 

Any dates

From 3 March 2014 onwards

 
 

Form NM2 (Notification of Payment / Satisfaction of Debt, Release from Charge, etc.); and

 

Certified copy of evidence of discharge

 

Note:

Form M2 will not be accepted with effect from 3 March 2014

 

Please also see the FAQs on Registration of Charges and their Discharge.

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Restricting Corporate Directorship in Private Companies

The new CO requires every private company to have at least one director who is a natural person. For private companies registered under the old Ordinance, there will be a grace period of 6 months after the commencement date of the new CO (i.e. 3 March 2014) for the companies to comply with the new requirement.

Appointments of new individual directors should be reported to the Registrar of Companies in the specified form within 15 days pursuant to section 645 of the new CO.

Please also see the FAQs on Restricting Corporate Directorship in Private Companies.

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Specified Forms

New specified forms should be used with effect from the commencement of the new CO on 3 March 2014. However, the Companies Registry would continue to accept old forms which are specified under the old Ordinance for a period of three months from the commencement of the new CO, i.e. up to 2 June 2014, subject to the following exceptions:


New forms that must be used with effect from 3 March 2014

Corresponding old forms which have been replaced

Form NNC1

Incorporation Form (Company Limited by Shares)

 

Form NC1

Incorporation Form (Company Limited by Shares)

Form NNC1G

Incorporation Form (Company Not Limited by Shares)

Form NC1G

Incorporation Form (Company Not Limited by Shares)

Form NDR1

Application for Deregistration of Private Company or Company Limited by Guarantee

Form DR1

Application for Deregistration of a Defunct Private Company

Form NN12

Return of Approved Name for Carrying on Business in Hong Kong by Registered Non-Hong Kong Company

Form N12

Statement of Approved Name for Carrying on Business in Hong Kong by a Non-Hong Kong Company

Form NM2

Notification of Payment / Satisfaction of Debt, Release from Charge, etc.

 

Form M2

Memorandum of Satisfaction or Release of Property from Charge


New form that must be used with effect from 28 April 2014

Corresponding old form which has been replaced

Form NM1

Statement of Particulars of Charge

Form M1

Mortgage or Charge Details

 

Please also see the FAQs on Major Changes in Filing Requirements under the New Companies Ordinance.

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