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Short news and ideas

New Corporate Law In Hong Kong


24/06/2014

On March 15th, 2014 new corporate legislation (Companies Ordinance) came into force in Hong Kong. Hong Kong, one of the world’s most important trading and financial centres, was returned to China by the British Crown in 1997, as a Special Administrative Region of the People’s Republic of China (SAR). The Chinese leadership undertook to leave the economic structure of Hong Kong intact for 50 years, that is, until 2047.

This is also reflected in the new legislation. The foundations based on the old UK company law have remained, but have been amended to reflect the most modern regulations of the financial world and economic practices. Thus, the formation of companies has been made simpler, and, for example, it is not necessary to file Articles of Association, though it is still possible if required. In accordance with the new law, only registered shares will be permitted, and these must be issued for no par value. This not only conforms with the OECD’s requirements on transparency, but also incorporates the wishes of the modern capital market, as shares with no par value allow for flexible modification of the company’s share capital. In future, company directors may be either individuals or corporate directors, although in cases where there is only one director in a company, this must be a private individual. That is, each and every company must appoint at least one private individual as a director. The directors can hold meetings in any country in the world, and telephone and electronic meetings (e.g. Skype) are permitted. The directors may choose the location of any one director as the place where the meeting was held. 

Today, Hong Kong is still one of the world’s most popular company formation jurisdictions. It is not only the proximity to China and the size of the market there which makes it so significant, but also the numerous foreign businessmen who choose Hong Kong as the seat for their companies. With the introduction of the new company law, the local government are able to offer even more stable and attractive possibilities to those who really wish to operate their companies in the long run, not only in the region, but worldwide.

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