Companies Ordinance Rewrite

Advisory Group on Share Capital, Distribution of Profits and Assets and Charges Provisions ("AG1")

1. As a part of and for the purpose of the rewrite of the Companies Ordinance which aims at providing a legal infrastructure attuned to Hong Kong 's needs in the 21st century through streamlining and modernizing its provisions, strengthening its corporate governance framework and leveraging from company law developments around the world, to
   
1. review the current law and practice on share capital and debenture and capital maintenance under Parts II and IIA of the Companies Ordinance, including but not limited to, the allotment of shares, share buy back, financial assistance, reduction of capital, and the distribution of profits and assets;
   
2. review the current law and practice on company security interests and charges under Part III of the Companies Ordinance, including but not limited to, the nature of security rights in property, objectives and scope of the company charge registration requirements, mechanics of registration and priority;
   
3. review the current law and practice on arrangements, reconstructions and takeovers;
   
4. identify and consider the issues and difficulties arising from (i) to (iii) above and the options available;
   
5. recommend appropriate legislative amendments to address any issues identified/considered under (iv) above; and
   
6. consider such other issues as may be raised by the Companies Bill Team (“CBT”).
   
2. In conducting the review, AG 1 shall have regard to, review and/or assess:
   
1. the Terms of Reference of the rewrite of the Companies Ordinance;
   
2. the existing law and proposals for law reform in other comparable jurisdictions, in particular, the UK Companies Act 2006, the UK Law Commission Report on Company Security Interests (Law Comm. No. 296) issued in August 2005, the Australian Corporations Act 2001, the New Zealand Companies Act 1993, the Singaporean Companies Act 1994; and any subsequent amendments to the company laws of Australia, New Zealand and Singapore as well as local and international commercial, regulatory and legal conditions, standards and developments;
   
3. the recommendations of and where provided, papers considered by the Standing Committee on Company Law Reform at its regular meetings; and
   
4. the papers prepared by the CBT and the reasoned recommendations and proposals prepared by the External Consultant appointed by the government to assist in the rewrite of the Companies Ordinance
   
3. AG 1 should also assume, for the purpose of the review, that Hong Kong will move to a no-par value share regime.