It has been revealed that Hong Kong's Financial Services and Treasury Bureau is drafting a Companies Bill with an aim of consulting the public in the fourth quarter before tabling it to the Legislative Council in 2010.
The Bureau released on February 2 the third public consultation conclusions on the Companies Ordinance rewrite, covering share capital, capital maintenance regime and statutory amalgamation procedure.
After considering all the public feedback in consultation with the Standing Committee on Company Law Reform, the Bureau has adopted a number of recommendations, including the migration from the current par value system to a mandatory no-par value share regime.
Presently, companies having a share capital must have a par or nominal value ascribed to their shares. Respondents generally agreed the concept of par is no longer useful and might even be misleading.
Besides providing a statutory deeming provision to facilitate the migration to no par, a period of 24 months will be allowed for companies to review their arrangements before migration.
The bill will also remove the requirement for authorized capital - the maximum amount a company is permitted to raise by issuing shares. This will simplify the process of raising capital. A company may also specify the maximum number of shares it can issue in its Articles of Association.
Other proposals to be incorporated include streamlining and rationalizing some complex capital-maintenance rules, such as those on capital reduction, a firm's purchase of its own shares and financial assistance to another party for acquiring its own shares, and introducing a court-free statutory amalgamation procedure for merging wholly-owned intra-group firms.
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