Tokenised bonds are bonds that have been converted into digital form using Distributed Ledger Technology (“DLT”). They can generally be categorised as either digitally native bonds, which are issued directly on a DLT platform at the time of issuance, or non-digitally native bonds, which are traditional bonds issued off-chain and subsequently immobilised, with a digital representation created and recorded on a DLT platform.
Yes. Bonds, including those in the form of tokenised bonds, fall within the definition of “debenture” in section 307 of the Companies Ordinance (Cap. 622) (the “CO”). Section 308(1) of the CO requires that if a company issues a series of debentures that are not transferable by delivery, the company must keep in the English or Chinese language a register of the holders of the debentures.
Note: According to section 2(5A) of the CO, a re-domiciled companies will be regarded as companies incorporated in Hong Kong with effect from the re-domiciliation date as defined in section 820A of the CO (i.e. the date on which a certificate of re-domiciliation is issued to the re-domiciled companies) and will be required to comply with all the relevant requirements under the CO in the same manner as a company formed and registered under the CO unless otherwise specified.
If a company intends to keep the register of debenture holders in DLT format, which can be regarded as electronic form by virtue of sections 2(1) and 655(7) of the CO, it must ensure that:-
- the register contains information required under section 308(2) of the CO;
- the register is kept in accordance with section 309(1) of the CO and section 3(1) of Cap. 622I such that it is accessible for inspection at the company’s registered office or a place in Hong Kong;
- the register is capable of being reproduced in hard copy form as required in section 655(3) of the CO;
- the register allows inspection in hard copy form or by electronic means as required in section 655(4) of the CO; and
- there are adequate precautions to guard against falsification of records kept in the register and adequate steps to facilitate the discovery of the falsification as required under section 656(1) of the CO.
