Currency: Hong Kong Company law pre-1997, with references to post 1997 amendments and issues. Background and Sources of Company Law
The legal system of Hong Kong is based on English common law, with the Companies Ordinance being the core regulator of companies in Hong Kong. When the British assumed control of Hong Kong after the Opium War, it introduced English legislation to the territory. The Hong Kong courts have maintained a strict application of English common law unless its application causes injustice or oppression. A body corporate is defined as a legal person created and recognised by the law. A company is defined in s.2 (1) to mean a company formed and registered under the Ordinance or an existing company. Upon incorporation of a company an artificial legal entity is created that is separate and distinct from its members. A Partnership on the other hand is the relationship which exists between persons or companies carrying on a business in common with a view of profit. A Trust is defined as a relationship between a trustee and beneficiaries in respect of trust property. It commonly involves three parties, the settler, the trustee and the beneficiaries. Company Structure
Shareholders are the members and owners of the company. The directors’ are appointed by the shareholders’ to manage the company. Companies can be limited by shares or by guarantee or can be unlimited liability companies. Memorandum and Articles are the constitution of the company. Types of Companies; Effect of Incorporation
The main business structures in Hong Kong are limited companies, partnerships, or sole proprietorships. A company may be a private company limited by shares, public company limited by shares, limited partnership, sole proprietorship and trusts. Hong Kong also, accepts the unusual concept of one shareholder, one director company, where shareholder and director are the same person. Companies classified with reference to liability of its members are: companies limited by shares, companies limited by guarantee, and unlimited companies. The Ordinance does not define or use the term ‘public company’, it distinguishes between public companies which may invite members of the public to invest money in them and the vast majority of companies, which have no intention of inviting the public, that is the private companies. The term ‘holding company’ is not directly defined. Instead s.2 (7) refers to a company which is a subsidiary of another company being the holding company. A company is a separate legal entity. It may enforce rights by suing, and it may incur liabilities and be sued by others. Perpetual succession, also applies, where the company will continue to exist regardless of what happens to its members, until its name is struck off the register of companies. There is also a requirement for a company to have a common seal: s.16 (2). Being a separate legal entity a company may own property separate from the property of its members. Members’ liability varies depending on the company type. Procedure for Incorporation
Before a company is incorporated it must lodge a Memorandum, but not all companies need to lodge Articles: s. 9 and 15. A statutory declaration of compliance with the Ordinance, must be produced to the Registrar. Various fees must be paid when documentation is lodged with the Registrar: s.304 upon registration the Registrar certifies that the company is incorporated. It generally takes two weeks to incorporate a company unless the company is a ‘ready-made’ company in which they would be available for immediate purchase. In Hong Kong, Company names, which suggest a connection to the Government, similar or identical to an existing company, contrary to public interest, implies royal or government patronage are generally prohibited and certain words which suggest specialist activity can only be used when the appropriate licenses have been obtained. Names must also end with Limited to...