The implementation of the new Companies Ordinance (Cap 622) early next year will have many compliance implications for company secretaries in Hong Kong. Ted Tyler, Stefan Lo and Natalie Wong, the Companies Ordinance Rewrite Team, Department of Justice, answer some practical questions raised at their recent ECPD seminar on the new Companies Ordinance.

Under the new Companies Ordinance a Hong Kong company can keep its company records in electronic form. If the records are kept in electronic form and the company requires a certificate of true copy, or notarisation of some of the records, would a Hong Kong notary and China-Appointed Attesting Officer be able to help?

‘The existing Companies Ordinance (Cap 32) allows for the keeping of specified company records in electronic form (see section 348C), so the new Companies Ordinance provisions (section 376 for accounting records and sections 654 to 656 for company records) are nothing new. Also, the existing Companies Ordinance provides for copies or extracts from the Companies Registry certified by the Registrar to be admissible as evidence in legal proceedings (section 305(3)) and this is repeated in section 46 of the new Companies Ordinance.

Assuming someone requires a hard copy version of some company record not available from the Companies Registry, it would in our view be sufficient, unless otherwise specifically required, for the the company secretary to certify on the hard copy of the record that it was a true copy of the original.

We do not see why a notary or China- Appointed Attesting Officer need be involved in relation to such a copy. They are, of course, involved in the certification and witnessing of the execution of legal documents and of legal facts, such as particulars of a company, but to be involved in the certification of a copy of a company record they would need to be present when the hard copy was produced from the electronic record.’

If a company decides to keep its company records in electronic form after the implementation of the new Companies Ordinance, how should it deal with the existing records in hard copy? Should it scan all the records and shred the originals?

‘In our view the existing hard copy form of company records should be retained as such. Schedule 11 Part 12 of the new Companies Ordinance contains transitional and savings provisions for existing company records. There is no reason why the existing hard copy records could not be scanned, but
the original registers, books etc, must be retained.’

Can a Hong Kong company amend its M&A to accept electronic signatures from directors and shareholders under the Electronic Transactions Ordinance?

‘The Electronic Transactions Ordinance (ETO) provisions only apply in the company context if the electronic communications provisions in the Companies Ordinance are not incompatible (see section 16 of the ETO). Prior to the Companies (Amendment) Ordinance 2010, the Companies Ordinance assumed a paper filing system for communications with the Companies Registry. The 2010 amendments (sections 346A and 346B) permitted delivery of documents to the Registrar in the form of an electronic record with digital signature supported by a recognised certificate (importing section 2(2) of the ETO).

So even now it would be possible to amend Articles to deal with digital signatures
in this context, if desired. When the new Companies Ordinance comes into operation, the gist of section 346A can now be found in section 32(5) which deals with delivery by electronic means and provides that the Registrar may specify requirements as to the hardware and software to be used (this may exclude the application of the ETO) and section 346B is not restated in the new Companies Ordinance.

If your question relates to electronic communications by directors or members to the company, the current Companies Ordinance does not make any provision for this. So the ETO would apply in this context and the Articles could deal with electronic signatures. The new Companies Ordinance does provide for electronic communications by a natural person to a company (see section 828) subject to the requirements of the section and, in particular, the requirements as to the sender’s identity in section 828(5) where authentication is required. This would exclude the application of the ETO with electronic signatures etc.’

If notice of resignation of a director of a company is required, the director has to give notice of the resignation in writing – can ‘in writing’ be simply an email notification without signature?

‘Under the current Companies Ordinance, section 157D applies to the resignation of directors and section 157D(3) provides that where notice of resignation is required to be given by the articles, the resignation will not have effect unless it is given in writing. An email notification without signature would not satisfy that requirement.

Under the new Companies Ordinance, section 464(5) provides that if the articles require notice of the resignation to be given and to be effective, the notice must be in writing and sent to the company
in hard copy form or in electronic form. Communication in electronic form is dealt with in Part 18 of the new Companies Ordinance in section 828. No signature is required and section 464(5) does not require authentication of the notice (as to which, see section 828(5)).’

Is a Hong Kong company required to keep a record of the history of changes of address and passport details of directors and shareholders? The Companies Ordinance seems to be silent on this. If a lawyer certified the register of directors of a company showing address A of a director in 2010 and the company now requests the lawyer to certify the register of directors showing address B of the same director in 2013 (without stating the change of address from A to B on the register), would the lawyer certify document?

‘A company is not currently required to keep a separate record of changes in residential addresses and passport details. A change of residential address or passport number of a director has to be notified to the Registrar of Companies (Companies Ordinance section 158(4) and directors are required to inform the company of any change (section 158B)).

We understand that a copy of the change of particulars of directors sent by the company to the Registrar is usually kept with the company’s Register of Directors and the entry in the Register as to the relevant director would be amended to reflect the new address.

We do not understand why a lawyer would be required to certify a copy of the relevant part of the company’s register of directors. It is the same issue as in the first question above, namely, unless otherwise specifically required, it should be sufficient for the company secretary to certify the copy. The lawyer in your question would probably not recall the director’s earlier address and certify the part of the register showing the new address, but we would have thought that, if the register did not show that there had been a change of address, the company secretary should have informed the lawyer about the change of address.’

Ted Tyler, Deputy Principal Government Counsel; Stefan Lo, Senior Government Counsel; and Natalie Wong, Senior Government Counsel – Commercial

III (Companies Ordinance Rewrite) Department of Justice