Monday, May 30, 2022

New Book edited by Stefan Lo: Company Law in Hong Kong – Practice and Procedure 2022 (Sweet and Maxwell)

Company Law in Hong Kong – Practice and Procedure 2022
General Editor: Dr Stefan H C Lo
Sweet and Maxwel1
January 2022

Preface by the General Editor
Company Law in Hong Kong – Practice and Procedure covers the main areas of core company law, including major parts of the Companies Ordinance (Cap.622) (“CO”).
     The main legislative development in 2021 in the company law field relates to commencement of some of the provisions of the CO that had not been commenced when the rest of the CO came into operation in 2014 (following enactment in 2012). These are the provisions introducing certain privacy protections for inspection of personal particulars of directors and others in the Companies Register (as maintained by the Companies Registrar), as well as in companies’ own registers of directors and secretaries. These provisions were not commenced in 2014 due to controversies arising at the time as to whether the new provisions unduly undermine transparency regarding company controllers. In the original public consultation on the topic in 2009 and 2010 (see Financial Services and the Treasury Bureau, CO Rewrite – Draft Companies Bill First Phase Consultation Paper (December 2009) and Consultation Conclusions (August 2010)), there was majority support for the new proposals from respondents to the consultation and the provisions in the Companies Bill were duly enacted by the Legislative Council. It was only when draft subsidiary legislation (setting out certain details of the new regime) was published for public consultation towards the end of 2012 (see Financial Services and the Treasury Bureau, New Companies Ordinance – Subsidiary Legislation for Implementation of the New Companies Ordinance Phase 2 Consultation Document (November 2012)) that the topic became controversial amongst the public. The Government could not reach a consensus with stakeholders at the time and the decision was made not to commence the relevant provisions (mostly contained in Parts 2 and 12 of the CO) when the rest of the CO commenced in 2014. The Government had then indicated that it will consult stakeholders and the public again at a later time, with the reforms to be revisited in due course. In the event, the Government in 2021 announced that the uncommenced provisions will now come into operation in three phases in the period 2021 to 2023. The first phase has been implemented, with the uncommenced parts of CO ss.643, 644 and 651 coming into operation on 23 August 2021, enabling companies to replace the residential address of directors in their registers of directors with a correspondence address and redacting part of the identification number of directors and company secretaries in the registers of directors and company secretaries. See further the Company Records (Inspection and Provision of Copies) (Amendment) Regulation 2021 and the Companies Registry’s External Circular No.1/2021 – Commencement of New Inspection Regime Phase 1 (16 August 2021).
     As is the case each year, there have been a number of new Hong Kong cases dealing with company law handed down in the past year. One interesting decision is that of the Court of Appeal in Wang Pengying v Ng Wing Fai [2021] 1 HKLRD 997, dealing with the common law derivative action pursuant to the fraud on the company exception to the proper plaintiff rule in Foss v Harbottle (1843) 2 Hare 461. Most derivative actions nowadays are commenced via the statutory route in CO ss.732 and 733. But the common law derivative action was not abolished when the statutory derivative action was introduced in Hong Kong and there are still cases on the common law action which arise from time to time in Hong Kong. In the Wang Pengying case, the court considered the scope and nature of the fraud exception under the common law, albeit the comments were by way of obiter. The case is discussed in Chapter 8. Other notable cases in the past year include Chen Pao Tzu v Chen Sheng Kuei [2021] 1 HKLRD 1071, dealing with the irregularity principle in the context of general meetings (see Chapters 5 and 8) and China Metal Recycling (Holdings) Ltd v Chun Chi Wai [2021] HKCFI 378, dealing with directors’ duties and liabilities of third parties involved in a director’s breach (see Chapter 11 in the context of recovery for improperly paid dividends).

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