The Memorandum of Association is abolished completely under the new Companies Ordinance (Cap. 622) ("the new CO"). For companies formed and registered under a former Companies Ordinance ("existing companies"), a condition that was in the Memorandum of Association immediately before the commencement of the new CO is deemed to be regarded as a provision of the Articles of Association of that company under section 98 of the new CO. However, any such condition which states the amount of share capital with which the company 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)).
No, please see the response in respect of Q1 above. Companies may however take the opportunity to review their constitutional documents to see if there are any changes that they wish to make as a result of the new CO.
New companies incorporated under the new CO must have Articles of Association dealing with the following matters:-
- the company name (section 81);
- the articles of a limited company must state that the liability of its members is limited (section 83(1));
- the articles of an unlimited company must state that the liability of its members is unlimited (section 83(2));
- the articles of a company limited by shares must state that the liability of its members is limited to any amount unpaid on shares held by the members (section 84(1));
- the articles of a company limited by guarantee must state that each person who is a member of the company undertakes that if the company is wound up while the person is a member, or within one year after ceasing to be a member, that the person will contribute an amount required, not exceeding a specified amount, to the company's assets (section 84(2));
- the articles of a company with a share capital must state the capital and initial shareholdings (section 85(1) and section 8 of Part 5 of Schedule 2);
- the articles of an association to be incorporated with a licence granted under section 103, or of a company with such a licence must state the company's objects whilst the licence remains in force (section 82(1)). For any other company, it is not mandatory to state its objects in its Articles of Association but it may do so (section 82(2)); and
- the articles of a company with a share capital may state the maximum number of shares that the company may issue (section 85(2)). Note this is not mandatory.
Existing companies will comply with the requirements to have the mandatory articles by virtue of the deeming provision in section 98 of the new CO and there is nothing that they need to do to comply with the provisions. Please note however that -
- only an unlimited company incorporated under the new CO need comply with section 83(2) of the new CO, which requires the articles of such a company to state that the liability of its members is unlimited;
- section 84(1) of the new CO which requires the articles of a company limited by shares to state that the liability of the members is limited to any amount unpaid on the shares does not apply to the articles of an existing company that is deemed to be a company limited by shares under section 4(3) of the old Ordinance;
- there is no requirement for existing companies to comply with section 85 of the new CO which requires the articles of a company with a share capital to state the details of capital and initial shareholdings. This requirement applies only to companies which are required to have such information in their incorporation forms. This will therefore apply only to companies with a share capital incorporated under the new CO.
Table A, 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 articles of association.
Yes, please refer to the list of "Articles made void by provisions of the new Companies Ordinance" (pdf Format).
Companies should review their Articles to ensure that they will be able to take advantage of some of the new initiatives under the new CO, for example the provisions on financial assistance for acquisition of shares, non-court based reduction of capital, capitalization of profits under the new no par regime, etc. If in doubt they should seek professional advice.
No. All shares issued, before, on and after the commencement date of the new CO shall have no par value. The law has deemed all shares issued before the abolition to have no par value (section 135 of the new CO). There is no conversion process required from the companies.
Nonetheless, individual companies may wish to review their particular situation to determine if they need to introduce more specific changes to their documents having regard to their own unique circumstances, e.g. the company's constitutional documents, contracts entered into by the company, trust deed involving the company and share certificates for use under the no-par regime by the company.
With the abolition of par value, "share premium" no longer exists. There is a deeming provision in the new CO to provide for the amalgamation of the existing share capital amount with the amount in the company's share premium account (section 37 of Schedule 11 to the new CO). The previously permitted uses of share premium existing on the date of commencement of the new CO have been preserved, for example, to pay up shares which are issued as bonus shares (section 38 of Schedule 11 to the new CO). For this purpose, the company should continue to maintain records of the balance of the former share premium account.
Yes. On the commencement date of the new CO, any amount standing to the credit of the company's capital redemption reserve becomes part of the company's share capital (section 37 of Schedule 11 to the new CO).
No. As explained in Q9 and Q10, there is a deeming provision in the new CO for this purpose.
From the accounting point of view, what the company needs to do is to transfer the amounts standing to the credit of the share premium account and capital redemption reserve account to the share capital account on or after the commencement date of the new CO. Financial statements for years ending on a date before the commencement date of the new CO should continue to disclose the share premium account and capital redemption reserve account. Financial statements for years ending on a date on or after the commencement date of the new CO should reflect the transfer of the balances of the share premium account and capital redemption reserve account into the share capital account.
No. The liability of a shareholder for calls in respect of money remaining unpaid on shares issued before the commencement date of the new CO (whether on account of the nominal value of the shares or by way of premium) is not affected by the fact that the shares in question ceased to have a nominal value (section 39 of Schedule 11 to the new CO). The shareholder remains liable for the unpaid amount.
Upon commencement of the new CO, the provisions in the Memorandum of Association of an existing company (deemed to be provisions in the Articles of Association after commencement of the new CO) relating to authorised share capital and par value of the shares are for all purposes to be regarded as deleted (section 98(4) of the new CO). The share capital of a company would be its issued share capital. There are also transitional and deeming provisions in Schedule 11 of the new CO dealing with the migration to no par.
No. The statutory deeming provision in the new CO (section 40 of Schedule 11) provides that for the purpose of interpreting and applying (i) a resolution of a company made and (ii) a trust deed or other document executed before the commencement of the new CO, a reference to the par or nominal value of a share (whether made expressly or by implication) is a reference to the nominal value of the shares immediately before that commencement date.
The new CO contains transitional and deeming provisions relating to the move from par value shares to no-par value shares (sections 35 to 41 of Schedule 11). 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. The transitional and deeming provisions save considerable work, expense and time for companies and reduce the possibility of disputes.
No. The new requirements regarding financial reporting apply to the company's first financial year after the commencement of the new CO and subsequent financial years (section 358).
No. Similar to the financial reporting requirements mentioned in Q16 above, the new requirements regarding contents of a directors' report apply to the directors' report of an existing company for the first financial year after the commencement of the new CO and subsequent financial years (sections 358(1) and (5)).
A company's first financial year after the commencement of the new CO begins on the first day of its first accounting reference period and ends on the last day of that period (section 367(1)). For an existing company, the first accounting reference period begins on the day immediately following its primary accounting reference date and ends on the first anniversary of that date (section 368(1)). Please see the answer to Q21 for examples.
The first accounting reference period is determined as follows -
- For an existing company, it begins on the day immediately following its primary accounting reference date and ends on the first anniversary of that date (section 368(1)). Please see the answer to Q21 for examples.
- For a company formed and registered under the new CO, it begins on its incorporation date and ends on its primary accounting reference date (section 368(2)).
- For the meaning of "primary accounting reference date", please see the answer to Q20 below.
The "primary accounting reference date" is the end date of the accounts or financial statements by reference to which the first accounting reference period, i.e. the first financial year, of a company under the new CO is determined (section 368).
Existing company
For an existing company, the primary accounting reference date is the date up to which the company's accounts for the financial year beginning before the commencement of the new CO ("the relevant financial year") are made, if the accounts have been laid before the company in general meeting under section 122 of the old Ordinance or provided to the members under section 111(6) of the old Ordinance on or after the commencement date of the new CO (sections 369(1)(a), (2) and (3)). Please see the answer to Q21 for examples.
If the accounts for the relevant financial year have not been so laid or provided to members, the primary accounting reference date is determined as follows, pursuant to sections 369(1)(b), (2) and (4) –
it is the end date of the accounts for the relevant financial year that have been prepared on or before the date by which the company is required by section 111(1) of the old Ordinance to hold a general meeting (sections 369(1)(b)(i) and (2));
if (a) does not apply, it is the first anniversary of the end date of the accounts for the financial year immediately preceding the relevant financial year that have been prepared on or before the date by which the company is required by section 111(1) of the old Ordinance to hold a general meeting for the financial year immediately preceding the relevant financial year (sections 369(1)(b)(ii) and (4)); and
in any other case, it is the date by which the company is required by section 111(1) of the old Ordinance to hold a general meeting (section 369(1)(b)(iii)).
Company registered under the new CO
For a company registered under the new CO, the primary accounting reference date is a date specified by the directors that falls within 18 months after its incorporation date, or if no date is specified by the directors, the last date of the month in which the first anniversary of the company’s incorporation falls (sections 369(5) to (7)).
The following examples are given on the basis that the new CO came into operation on 3 March 2014 and the accounts of the companies have been prepared under the old Ordinance in the circumstances described in sections 369(1) to (4).
Notes:
For the accounts made up to the "primary accounting reference date":
The financial reporting requirements of the new CO do not apply. Provisions under the old Ordinance should be complied with instead.
If the company is a public company or a guarantee company, the annual return accompanied by certified true copies of financial statements, directors' report and auditor's report should be delivered for registration within 42 days from the date of annual general meeting pursuant to sections 107 and 109 of the old Ordinance. (Schedule 11 section 121).
For the financial statements covering the first "accounting reference period" i.e. first financial year:
They are the first financial statements required to be prepared under the new CO.
If the company is a public company or a guarantee company, the annual return accompanied by certified true copies of financial statements, directors' report and auditor's report should be delivered for registration within 42 days after the company's return date. The return date is 6 months (for a public company) or 9 months (for a guarantee company) after the end of the company's accounting reference period.
For private companies:
For local private companies, there is no change in the requirement to deliver annual returns. A private company should deliver the annual return for registration within 42 days after the anniversary of the date of the company's incorporation.
For an existing public company, the new requirements apply to the first financial year of the company that begins on or after the commencement date of the new CO and all subsequent financial years (section 121(1)(b) of Schedule 11 to the new CO).
For the financial year which begins before the commencement date of the new CO and ends on or after that date, the requirements under the old Ordinance in respect of the filing of annual returns continue to apply pursuant to the transitional arrangements under the new CO (section 121(1)(a) of Schedule 11 to the new CO).
For a public company registered under the new CO, the new requirements apply in respect of the filing of the first and subsequent annual returns of the company. Its first annual return should be delivered for registration (together with certified true copies of the relevant financial statements, directors' report and auditor's report) within 42 days after the company's return date, i.e. 6 months after the end of the company's accounting reference period.
For examples on the date of delivery of annual returns, please see the answer to Q21 in "Accounts and Audit" above.
For an existing guarantee company, the new requirements apply to the first financial year of the company that begins on or after the commencement date of the new CO and all subsequent financial years (section 121(1)(b) of Schedule 11 to the new CO).For an existing guarantee company, the new requirements apply to the first financial year of the company that begins on or after the commencement date of the new CO and all subsequent financial years (section 121(1)(b) of Schedule 11 to the new CO).
For the financial year which begins before the commencement date of the new CO and ends on or after that date, the requirements under the old Ordinance in respect of the filing of annual returns continue to apply pursuant to the transitional arrangements under the new CO (section 121(1)(a) of Schedule 11 to the new CO).
For a guarantee company registered under the new CO, the new requirements apply in respect of the filing of the first and subsequent annual returns of the company. Its first annual return should be delivered for registration (together with certified true copies of the relevant financial statements, directors' report and auditor's report) within 42 days after the company's return date, i.e. 9 months after the end of the company's accounting reference period.
For examples on the date of delivery of annual returns, please see the answer to Q21 in "Accounts and Audit" above.
No. If the annual return is delivered for registration pursuant to 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.
Yes. The register of directors (section 641) and the register of company secretaries (section 648) may be kept separately under the new CO. For the transitional and saving arrangements in relation to this change please refer to Schedule 11 sections 114 and 117. The registers may be kept at the company's registered office or a place prescribed by the Company Records (Inspection and Provision of Copies) Regulation (Cap. 622I) (sections 641(3) and 648(3)). The place prescribed by the Regulation is a place in Hong Kong.
The particulars in respect of a shadow director are no longer required to be contained in the register of directors under the new CO. For the transitional and saving arrangements in relation to this change please refer to Schedule 11 section 116.
If the company secretary is a natural person, the requirement in the old Ordinance for the register to contain the company secretary's "usual residential address" is replaced by a requirement to contain the company secretary's correspondence address (section 650(1)(a)). For the transitional and saving arrangements in relation to this change please refer to Schedule 11 sections 118 to 119.
For charges created before the commencement of the new CO, the provisions of the old Ordinance apply in respect of registration, and what should be submitted are the same documents as are necessary for registration under the old Ordinance (the particulars of charge in the specified form and the instrument by which the charge is created or evidenced). However, if for any reason the requisite documents are not submitted to the Registrar of Companies for registration within eight weeks after the commencement of the new CO, the documents to be delivered for registration will be the new form and a certified copy of the instrument creating or evidencing the charge. Transitional provisions are set out in sections 62 to 75 of Schedule 11 to the new CO.
There are no specific transitional provisions and all applications for registration delivered after the commencement of the new CO are subject to the provisions of the new CO, and applications submitted before the commencement of the new CO were subject to the provisions of the old Ordinance.
Pursuant to sections 89(1) and (2) of Schedule 11 to the new CO, there is a grace period of 6 months after the commencement date of the new CO for companies registered under the old Ordinance to comply with the new requirement. Appointment of new directors should be reported to the Registrar of Companies in the specified form within 15 days pursuant to section 645 of the new CO.
No. The grace period only applies to private companies registered pursuant to the old Ordinance. All private companies registered under the new CO must have at least one natural person as director on incorporation.
No. An existing dormant company will only need to comply with the requirement to have at least one director who is a natural person when it ceases to be a dormant company pursuant to section 5(5) of the new CO. Please refer to sections 89 (3) and (4) of Schedule 11 to the new CO.
A total of 76 forms, including 29 brand new forms, have been specified by the Registrar of Companies for use with effect from the commencement of the new CO. Please refer to the New Companies Ordinance – Outline of Major Changes in Filing Requirements for details.
The new set of specified forms for use under the new CO was published in the Gazette on 1 November 2013. You may download the specified forms free of charge from the 'Forms' - 'Specified Forms' section at the Companies Registry's website. Hard copies of specified forms can also be purchased at the Information Counter of the Companies Registry, 14th floor, Queensway Government Offices, 66 Queensway, Hong Kong.
No. You should use the new forms which have been specified by the Registrar of Companies for use after the implementation of the new CO. However, as a transitional arrangement, the Companies Registry would continue to accept old forms which were 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:
(A) The following new forms must be used with effect from the commencement of the new CO on 3 March 2014:
(B) The following new form must be used after eight weeks from the commencement of the new CO (i.e. from 28 April 2014 onwards):
Although a set of newly specified forms have been introduced, the new forms are designed with reference to the layout and format of the old specified forms as far as possible. To facilitate smooth transition to the new forms, the form numbers of old specified forms have been kept but a prefix 'N' has been added to all new or revised forms for easy identification.
