Tuesday, July 27, 2010

Hong Kong Legislation Provides for Electronic Company Filings and Expanded Derivative Actions

Legislation recently passed by the Hong Kong Legislative Council allows for the electronic filing of company registration statements and other corporate documents. Similarly, the legislation authorizes Hong Kong companies to make use of electronic means, including company websites, to communicate with their shareholders.

Professor KC Chan, the Financial Services Secretary, said that the new system should come on stream in phases early next year. Hong Kong will amend its Companies Ordinance to facilitate on-line applications for company registration, for example, to allow the signing of the incorporation forms using passwords, streamline the attestation requirements for signatures by founder members, and facilitate the issuance of certificates of incorporation through electronic means. The Secretary said that the new electronic filing regime will put Hong Kong on a par with comparable jurisdictions like the UK and Singapore.

The legislation also expands the statutory derivative action to cover multiple derivative actions. Under the legislation, a member of a related company of a specified corporation can commence or intervene in proceedings on behalf of the corporation. The changes will further enhance the protection of the interests of minority shareholders in a group of companies.

The legislation also strengthens Hong Kong's company name registration system to enhance enforcement against possible abuses by shadow companies, which are
companies incorporated in Hong Kong with names very similar to existing and
established trademarks or trade names and often pose as representatives of the
owners of such trademarks or trade names to produce counterfeit products. The Act empowers the authorities to act pursuant to court order to direct a shadow company to change its name.

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