• • • • • • • • • • • • • •

~

~

~ ~

,..,-;) Companies Registry ~ ~ li.l n IIH 11K

THE REVIEW PERIOD

Ill Mi&M

~) E0~ *·~~~-~~~~~-8·

~-*~~m•~~8~m·~M~-~~m ifdEF>fJ=~jjiJ o

~~~H~m~-~~-·~~~~M=+A

8¥~~$~S· · ~~A±~~-@~M~

!J;Q~~m~nQ•~• o 1EI3l~rJttl · t±c-1111-=~

t~~-~-@~m~·*•ffl~*~ttoo~

~~~~~$~ · ~~~~-1111-=~A~-

8 ~t~~9:~ 3007L~~tt00Rffl o

as~3mm-Et~ ~1~ 6,ooo**JT~~ttOO$~J!l · @-1111=~t~itD~ 14,1oo*$~J!J · 13lttlW ~~~t~~ I >R § ~1 8,000Fs9~~~~100R~9:

A. (~1~ 1000~7L) · 13l~~~ff'J::rJJ:t±cW~~~

*lE~~~~M · ~WM~~~~-~~A.m J_& 0

frg~~-@~~·~~~tt$~~~-§ffi

B!!roXJ-' · ft1-'B~-1lt~1.i~13000 Fs9 otE~~ft1&

-~··§~~-~*otfM~~~··~~

34, 135 Fs9*JT~~~1$~~ 0

(b) 0~3t1HHc tE&H9:l't~~ · *•?!T.l! ~~~--·~ffl~~P · ft~tt-1111=/

11-=:~m~~~Po*•tie-1111~~-~&

=~~~~~R~ · ~M~tt¥~~~tE~~

~w~~*~~•~m~ · ~~w~~~~w

&:ij'if o ~:f'J~;!'f~~JjJ · JiiJD~~:9Hlf-!H*•

);k:~t~1~r~V~-'f~~~t4~fi~ 0

(c) tiHijlJtf-t: tE M iE9: l't~ ~ · *.~~He

23, 173 1SJttJ!tl~1!J: · 1WfiH1~4501~7L · tX'­1111=/11=~mf"ll't~~t±J~1 10% · ~uw~~ *-'ff§'fi o

(d) !!t jJj

~~a~WJ o *•~¥ml! 121~*~00$~J!l&~~t±J

~~-§~--M~om~·~~~$-§ffi

a-'f~o

n PUBLIC SERVICES

(a) New Companies The commencement date of the Registry as a

Trading Fund coincided with the date of an increase in the Registry's fees

which had been last reviewed two or three years before.

The principal fee proposals affecting the Registry are subject to the

negative procedure in the legislative Council and are required to be

tabled in the Council for 28 days. As a result of the decision not to

implement the new fees until after the 28 day period, the public was in

effect given a month's notice of the proposed increases and a large

number of applications to incorporate new companies were received in

the last week of July 1993 to avoid the increase in the incorporation fee of

$300 per company which became effective on 1 August 1993.

At that time, normal activity was in the order of 6,000 incorporations per

month. 14,1 00 applications were received in July 1993 and as a

consequence the Registry lost the fees of an estimated 8,000 incorporations (about $10 million) as this was credited to the General

Revenue prior to the creation of the Trading Fund.

Activity in new company incorporations inevitably fell away for a few

months thereafter,reaching a monthly low of about 3,000 companies, but

picked up again in the last few months of the year. 34,135 new

companies were incorporated during the review period .

(b) General Registration The total volume of documents processed

during the review period was less than anticipated and in fact showed an

overall reduction compared with the same period in 1992/93. A major

initiative was undertaken in January and February 1994 to combat

abuses in previous years of the requirements for companies to file Annual

Returns in a complete and properly authenticated manner. The exercise

was very successful and served to reinforce the view that the Registry was

determined to maintain a high standard of information available to the

public.

(c) Charges A total of 23,173 charges with a value of

approximately $45 billion were registered during the review period,

about 10% higher than during the same period in 1992/93 and in line

with the budgeted level.

7

I

• • • • • • • • • • • • • •

(d) Searches The number of company searches was a little higher

than anticipated during the review period. A total of 1.27 million

successful searches were made and copies of microfiches issued. Activi ty

was quite constant throughout the period.

EJ CUSTOMER RELATIONS

The Registry recognises that one of the most importan t elements

determining its success as a Trading Fund, is its rela tions with its

customers. To address that issue, a Customer Services Division w as

formed . During the review period, its staff visited major customers on a

regular basis; handled customer queries and coordinated responses to ·

complaints; and introduced the first two pamphlets in a series explaining,

in easy to read format, the Registry's services and prices.

In 1991, a Joint Standing Committee was formed to provide a forum for

the Registry to exchange views with representatives of its major customers .

The Committee has met twice during the review period and has w orked

well as a channel for the Registry to test legislative and procedural

changes prior to implementation and also for the customer representatives

to seek clarification of and solutions to problems arising from their

dealings with the Registry. During the review period, the Committee was

retitled as the Customer Liaison Group and has been expanded to include

ad personam members representing those categories of customers who

are not represented by the various professional organisations.

Documents being filmed in the Registry's camera room.

E.Z:iflttfiHJJIENffi!JJlr*J · Y:f'F iE!fo:Nf~fitHEIJ'&ffU,f\

8

I

Customers can check company names through the computer terminals in the Registry's Queensway Office. E J5 iiJ f'l! fll;zt;;JJIEWt£sitiim$f)mIf.JJIE r*J $f) '1/Ufi;H'? titJtlf~ fkj .Z: if115fili

2Js:&tj~tJJ7~H~:'~£jjz:~[;j'SJXJJ~j')= · ;~:tq;-

1~~.\!@lt;J*i±-*~~ppJTlf!jij'~~mi* · lt;!Jlt:zis: &tJ5X~~P~~$o:fEM~m~·~$A-~

~m~~~.\!@~J=';&t~~p~~~·~~•

fiJ't~fHi=li:tY:~ ; &ED1m~F>fl171 1Hm.Y · >~~~~ *~:zis:&t~~~~&~~m~7• oft11:12- *siJ~~~~ *~Sjj~ • ~~%1Jtt]j o

a-hh-~J5X~~•~m~~·~·~:zis:&t

~-~~~.\!@~,P~R~~-~~·~~-~

aM~m~~~~F>fl~·~~m~~-~·:zis:

&t·fi~~~~~~~~M·~~~~,P&%

-~~-R~~~~ · &~~~,PR~m~&

~*~~m~~~~:zis:&ti±I~tt*~ffi~~

~~fto:fEM~m~·~-~~~ · ~~~~

~r='&9HtH'~H o ~-~~tll!d-1C~91' · 1HsiJtB ;/JDJ\fR1fi:~W91'JJX. · t,\ 1~A!t1711-1C~-~/f~

'*·~~**~~p 0

• • • • • • • • • • • • • •

. t r:;r; Companies Registry 1 ~ 0a:JiliiiiIIJ.

~m;p;z~-1~JI.sl:~BF9 · t,Z~~~1E~1tzr<OJ

B'it · tE~BF9#]JtU5t~7JJID · !JIj"foi±J®~I~n o

~;iJ D *9:~ i~J».A~ · j)_ j!UJc-~:E!rlG~"F ,

MiE!<:*~&~~FlUtiiJ:91' · !JIIffl*9:J.i=~ :fH».~t:Pffi

~131: · t,Z;b o ~5R~f.!ii~"F~:E! · &t~1~MiE9:&A JJi!j)j'(~:t!, %F~R~&t:ti~~R~ o

a~m;p;z~m~~~ttOO~ff~ · ttMMm

~·~@~~~~a~-~~~~=~ =+-

8~~-~M · ~~ttoo~a-~·~~m:A

*~-~~~--·j)_··~&m::t~~~~~

tt@*~o

~~~IHffi~~~I~.B:~ · ~m:Et!l'•l'l!J)5t;IJ D ~~I@;B'it

~~0

Companies Registry participants in the Civil Service walk for charity in aid of the Community Chest . .z: PJttfllfEIE~ Ii~ffl~JJo .Z:!9f ~ gr~f'Ti:>.Z:~:Iifif!J:

~ffii@;~~~·~M~m;~-I~~~~~

l:: · "foi±J®~@l- o §M· ~~BIIJl;B'it~~tlt,Z

m8 fiffii~U't~~f ; ~11'x~MI' · 1tM5:sl1~!tfm m~o~~·~m:B~M~m~~- · mi±J~

~~~~7J~~ffil@;~~~-~~~·@~~

n~~w~~~~~-~!tfm~~~~~otf:

·-~~~ · ~~~~~7J~~ffil@;~~~·

:sl1~~~1IDM~~m:~A¥•*·~~~$0

I "fo1J];~*~Hi' 8 fiffi ~ I@;B'it~~~ o

~~ttoom:~:t~~~~~-7J~·~m•~m:

~~~jlz:~~I o ~t!~j:li]~,&J. j= g~~~t,:~li]

!Z'tJF · ~fill -0£!~3m~IH~z~YE · ~il'1H1EX $l'E~ihill · 3K~~~-~~Hi.~J'~¥JR o

IJ STAFF O RGANISATION AND ESTABLISHMENT

The org anisation of the Registry was al tered when it became an

independent department in anticipation of its role as a Trading Fund.

Additional directorate officers were appointed to manage the Registry's

overall operation, financial services and development programme. N ew

non-directorate posts were created to strengthen the senior operational

management of the Registry, and to provide financial and human resource

administration and customer services and development support.

The Registry experienced a considerable number of vacancies during the

review period which w ere filled only after 31 M arch 1994 as the result of

a successful recruitment campaign for Companies Registration Officers,

who form the backbone of the Registry's supervisory and operational staff .

To compensate for the shortfall in staff during the year, additional

temporary staff were ta ken on as and when the workload warranted it.

Temporary staff are an important part of the Registry's organisation,

allowing it to respond more readily to changes in activity levels. At

present, all temporary staff are employed on day-to-day terms w ith no

benefits except leave . A proposal has been put to the Government,

however, that there may be advantages in employing temporary staff on a

fixed contract basis, provided always that such a contract may be

resolved if economic or other conditions so dictate. In any event, it is not

envisaged that all the Registry's needs can be met by such an arrangement

as there will still be a case for day-to-day terms of employment for some

aspects of the business.

A new, informal consultation forum has been established whereby the

Registry Manager meets, on a regular basis, the staff in each working unit

of the Registry, to supplement the regular channels of communication. lt

has proved most successful so far and will be extended in future years .

Consultation with Registry staff has taken place on a proposal to introduce

an incentive scheme to relate, at least in part, salaries with performance.

There are many issues to be considered both by the staff and the

management of the Registry, and no specific agreement has been reached

as yet. The proposal is currently being assessed by the Government.

9

I

• • • • • • • • • • • • • •

!] LEGAL SERVICES

(a) Enforcement and Prosecutions During the review period, a

significant enforcement initiative commenced under the provisions of the

new section 290A of the Companies Ordinance which came into effect on

1July 1993. This section allows the Registrar to initiate action to strike-off

companies which have not filed their annual returns for two or more

consecutive years. Enforcement teams are being created for a period of

two to three years to tackle the problem, and the first staff were in post by

the end of the review period.

The prosecution unit continued to pursue with considerable success cases

of public companies failing to comply with their filing obligations under

the Companies Ordinance.

The relevant statistics regarding striking-off and prosecution action during

the review period are as follows­

(i) No. of striking-off actions initiated 2774

(i i) No. of cases successfully prosecuted 60

(ii i)Total amount of fines/ penalties levied $2 million

The Registry 's library is used extensively, particularly by Legal Services Division lawyers 2/S:b'Ewf'r~IU& o 2fs:J1E)._~JtJ!:~;'~f$~!1fif!Ji¥Jf$Bifi • #!I!'ii4' f!fiii'JJ!ftl/MJ~f&tiM!J S ;lifi ft o

10

I

*•B~~•mfi-~mtt~~w••~~·

gf<gtfiJ~gRt~·IS1¥JrM:sXir553'¥JrMW~&~~

IJHlHi;J o 8:37*~~~ P'l ~ J.l'ljfE ~lj · iJWHl%fE lilT

~·~~~*-~ff~A·~- 0 ~~~~~

jjl]. ~1JIEtn'¥it~:rwgtl~7dJOOJ&'ilffrt1 o

~l •ffa•m ~m~mP'l · *•~-hh

.:=.if-tfl- a 'i' !lffi~ i;j§JM~i:?ll~*lfn§g29oA M~ S1 MH~ ogf< fi* ff~~gq: .z; j§J Hfffi•• :1~:11& 5~ ll5 ~~•mif:st~~*~~~if~~SkJ.z; j§J H

fffi o*• B~.sL:t~5JIJ¥flfi *£J. · r~m~m=if P'l· ~~~-M~~MS1i;j§Jo m~I~A·

B~MiEYm?K~IfflifF o

~~~••~~*~~.z;j§]~mm~~~~~

S1 i; .w.i; j§J ' ~~:9:~M2 0

m~mP'l·~••~.z;j§')Hfffi&~~fi~ S'\J~

gtJt'f~ ~rrf •

200~ :7[

(b) tffm-1t19~ 1993ifi;j§J (il.?nl (§'g25ml fi* m~-hh.:=.if+-fl~a•~~~ · M~­

hh~if~fl=+ha 'i'~ · ~A.z;j§J~~x

Hfffi~.s'z: S'\J~ifSm~~if~~ · ~«~%·

•~x~.z;j§Jffi.ffS'\J•••m·•~*•~ ~~iTJi;j§J·$~~1 ofi.?n5!~:t~:9: 1~ · fl.A i; j§]~~ if~~ S'\]~00 · ~·~~51~~~

if · 5~J~!lU1~?&*·~~9t- o

(i) .s'z:IJijtJ~1*11'J!~:~X9:fi~ ' !H1i ~3~Jt):g'ffi

~:sX~&mMS'\Ji; j§J·$~~HA± · ~~

60

• • • • • • • • • • • • • •

I r;;r;] Companies Registry ~0g_)ttJlii11K

(b) New Legislation The Companies (Amendment) (N o.2)

Ordinance 1993 was enacted on 4 N ovember 1993. Those sections

which were implemented on 29 April 1994 require private companies to

file their annual returns by reference to the anniversary dates of their

incorporations and enable the setting up of the Index of Directors of listed

companies showing all their directorships. The revision of the time-table

for submitting annual returns should resul t in a much more even flow of

such documents to the Registry throughout the year, resulting in benefits to 3 long service Registry staff received their retirement souvenirs from Mr. Gordon )ones, Registrar of Companies. both customers and staff. From left to right, Mr. Fung Sau-kong, Clerical Officer I, Mr. )ones, Mr. Wong Chok-Kin, Clerical Officer I, and Mr. Che Kwong-ngah, Clerical Officer I. During the review period, the Registry also provided views and advice in.z: ifJ ttfllf~iHf'lii'!~.Jic:±i&JiH2:ff:o'H" :=. fs'lf##Od~. · Ell tr~:ti · llL'!ff~-.K&.:Z!HIF'flmJljJic:± · if'lii'!i!?.Jic:± · -K&. relation to : y Jil 'fi!i!H£Jic:±.& -JJJ:Z fl i'tE~ffffJic:±

fM'J5!B!~t±:l8\J£fY)~~t~~ · 1±~;;.-:PJmP"l · (i) legislation enabling more effective action to be taken against

~~A±m~~m•a~~•••m: fraudulent, unfit or defaulting directors and persons with a view to

disqualifying them from acting as directors of companies during

(i) t~t±:l~~ ' ~~q:.g.~t~&tE~)~lEi\:lifffiS\J periods specified by Courts in the disqualification orders;

~W-~Wttfffi~~~~~~·~~~RW

~g.:Y,)!/E*~$: ' 5t':ftM~7~~-It;l~~~mt~JEt~ (ii) proposals to allow for the incorporation of qualified and properly

t~!!WJt.7~'F$14im~I!EE-8\JJ!tjH"9~ o registered public accountants in Hong Kong and to afford auditors

statutory protection from liability arising through the reporting by them

IJ 0 iil 1!& :¥:*~~~it of fraud to the relevant specified authorities.

a) ~Mlt~ 1±MiE9Jt~P"l · ~~5!2!1:1'i'£ffi'~~ I] STANDING COMMITIEE ON COMPANY LAW REFORM

-·~B~=~·~ · ~-~~~~~~t±:l~

J~~~~n o 2jo;J$E~ Jlt j:~jj:l::~))jj't ' Jmfjg~-8\J~.h~ a) Regular Meetings During the review period, the Standing

-~ o ~~m~~5!2!1:1'i'£m~~-·8\J8Jlt&I Committee on Company Law Reform (SCCLR) met on three occasions to

11=~·1~' '6J.Wi>l:H~·r'i]#,~'@j'·I'PH'JiE9:fiD?!Tt~Y: consider a wide variety of amendments to the Companies Ordinance.

8\J~ +5m¥1V'i5-~ o The Registry provides the secretariat to the SCCLR. Full details of the

SCCLR's work may be found in the Committee's Tenth Report to the

(b) :i:Jm~M0ii:l11~19~ ' ~H9:~m-- fLfL[9~ Governor in Council.

=~=B~~ffl·-~~~ · ~~~~~~00

~~~~~~o~-~*~~~&~8\J~·& b) Overall Review of the Companies Ordinance In his budget

x~~-w~~S\J~~1±~~~~~ooE8m* speech on 2 March 1994, the Financial Secretary announced that there

~m · ~*~~~w••~~~~~~ffi~-* would be an overall review of the Companies Ordinance. A more

#£m ~;t 1~ JW~ § il$ -gn~11* i?IJ . frrl: ®'< ~~ o 'i liD structured overall review, opposed to continued and hocas ad

ffllE~~~@.g.~Am·~J!t~R~~ · ~!E amendments of the Ordinance, is considered necessary having regard to

~~8\J~~·~x~~~~w~~~&1'i'£m~ Hong Kong's changing circumstances and major developments in

~-·8\JH~o'ifiD~·$·M~·~~~R company law in other comparable jurisdictions . The Registry is

tl:l.J~~oo~*i 0 contributing to work currently underway to identify a suitable candidate to

11

I

• • • • • • • • • • • • • •

undertake the review; resolve the review's modus operandi , including its e M~

relationship with the SCCLR; and obtain the necessary fund ing.

~-~-~~~~~~~@M~m~~~•

mFINANCE 156o~:7T; . llit:a:l'l:~~430~:7T;~~ o

The surplus for the Registry's first period as a Trading Fund was $15.6 m1'!.\J:t~~~~~~9:i\)filtJ> (Jtjgiii ~B(l )(a)$9: ) ·

million, well in excess of the budget of $4.3 million. 1EJ.Iffl5Z:VJI *:X: 'f:l'i:m~~, · ±~®:ESJ~B~jgiii ~B

jg3mffim&~am~~~e·~•&~fi~

Although there was a considerable shortfall in revenue during the period 1:;~ ~it!'~:r• ~~~?!T~HY~ flfiilo wmtj'f:l'l:

[see Section Ill (1) (a)], expenditure was also lower than expected, due to m~i!I o

a number of factors, notably: the staff vacancies described in Section Ill

(3); lower than expected oncost rates charged by the Government in

respect of civil servants; and lower than expected inte-rest rates.

A notional sum of $3.3 million has been charged by the Government in

lieu of taxation, to simulate the conditions under which a commercial

organisation would operate.

No dividend is proposed as it is predicted there will be a negative cash

flow in 1994/95 due to the high level of capital expenditure anticipated.

Customers lodging documents with the Registry. :§:p!I,:Jzyf!j:

The Accounts together with the notes on the Accounts are at Appendix A.

The report of the Director of Audit on the Accounts is at Appendix B. m~-~~•••~•~ · ~-~~~fi•~ 0~'J 330~:7T;:6~J::~ ;f~ ffj::

Statistics showing the Registry's activities are at Appendix C.

~~ffl~-hh~/hli~M ·~•ESJ~fflm

6 DEVELOPMENT '!i ~ lffl5t :!.~ iJD · )fit i\ ~ fJ!, ~~%~)lit tfj ~ fJ!, ~ ~, · ESJtl:Ut~/fiJLH~~9:.~. o

The development work in the review period has concentrated on three

main areas. Firstly, the implementation of the proposals by the m~~~§ ~IPJ~±ti · ti!it<~flf;J!it<A · rm1Y I& Government's Efficiency Unit for changes in working practices which have ww-&9JL~ ~~ ~ § ~~ tfj ~¥lYE~ ~.IJti~ flf;J!it<

been accepted by the Registry; secondly, the implementation of the first B o

phase of upgrading the Registry's computer; and thirdly, the identification

of the priorities to be set for future development plans and their time frame. ~-~J:i'[I1-l=~f.v't~l&cFti~flf;J&T<C o

A series of working groups has implemented the accepted 6 ~~ recommendations for working practices for the Registry and altogether 51

changes have been made since the Efficiency Unit's Report was received M~m~ · ~-~D~I~-~~=~@ojg

in 1993. -~•R~fi~•~~mmte~~$9I~~

ff:~~J&~~ ; jg=~Jtfjjg-miJo~sl'~!U~*

m~~· jg=~~BWD~~~~~-~~ff:

&ntfj B~F~9~ o

12

I

• • • • • • • • • • •

r;;r;) Companies Registry ~ i i!i] itt JIJt ~

:zis:htBJJX.s'z:~j~I"f:O!J'~!l · Jr ~~:g-Jj[~@i812Jz: A major enhancement of the Registry's computer system is underway

•I~~~~- · ~-nn~it'w•~•~~ and should be effective in late 1994 . Work has been hampered by

delays in obtaining additional accommodation and although the

Government has agreed the Registry's needs, it has been unable to

:zls:ht:E.lUif'T.!JD~5R~Jii;j*,t't · -f.&1't~-*-ftftl2ll it' provide the additional space required. Moves are underway to seek

*iGJJX o~~mif'F~ ~lmB~* ~~3l1~±~m1f&:91' assistance from the private sector in the short term.

M'L:>~W~~o~~~-:zis:ht~~~-~M'L:>

~ · 1§~~m*J~ 1~:?E-gB?JT~811f&:?l,±m:iJ o 1,% The enhancement of the Registry's computer system will introduce an

M~~~2~ · :zis:htm~ammu.A.~~o index of all the directorships held by directors of listed companies and of

any persons who are disqualified from holding directorships of

:zis:htM~$ ~ ~11\j*,t'tf~ · ~iSJlttB - 1~:ti·~ companies and .will, in addition, provide a detailed index of all

'§I · J"IJte_trh'L:>~]i·pfT~f81 :?E- gB]i.lfflt documents filed with the Registry. The information available to the

iz: • t;( & fiiJt.&:EfY ji!J ~ 1~ tB f'L> ~ :ti. 81 ;\ public will, as a consequence, be much improved and at the same time,

± o tlHI' · Jjj\ISJ,~ j~-j~yj!j:~'§l • ~$51J:zjs:ht the extent of labour intensive activities in the Registry will be reduced.

81~-::>z:~o~~ · :zis:ht~ ~ ~ffim~81~

+4 • ~~~][.1,%~$\fi · ~ _§_j~j.,'gB:JJ- ;\jJ'$* 81 The Registry's management has been considering the direction to take in

I~ o developing its facilities. In general, the Registry is aware that there is

considerable scope for improvement in the way data is captured and

:zis:ht81~l~~~I~1Ff!Wi~·~~ @i ~~~81*3R~~ held, and that there should be an increase in the number of services

~ · )~t)J I ~HE~!x:~ ~ +4~t.f:iJ[ij · Jl~~M available on-line. To identify the specific requirements, the Registry has

2)(:. o :ftj:~ j~~~ii;llHWfitr~~+4:iJE§J · Jjj\~ commissioned a study to analyse the market's perception of what

.!JD ~$~~1% o 1,% ~m:5JIJ ~G ~>Y · :zis:ht B ~ f'JliJf services it wishes to obtain from the Registry, in what time frame, and at

fE ' t;(:JJ-tfT rh t~lf1:zis:ht,6J]-j:~ j~~~1%81 ti!lt~ · ~ what price.

~m 81 B:!t is9 ~Ill& ~9: W~ :iJ E§J 811'tW~- o

A Companies Registration officer in the Registry's Com­

puter Room testing the new document indexing system. 'Z::i'fJWflf:EfH±'i!rD!il~i:~y~ *lii¥J:Xi*1f 5/JUJ't

13

I