Ask the Expert January 2014
Q: What are the key changes in the new Hong Kong Companies Ordinance (CO) effective 1 March 2014 regarding listed companies’ share registers?
A: From a registry perspective, the following are the key changes brought about by the new CO:
1. Adoption of mandatory no par value on share capital
As par value does not show the real value of shares, section 135 of the new CO abolishes the concept of par value. The change also abolishes nominal value, share premium and the requirement for authorised capital. Those certificates already printed with par value to be issued after 3 March 2014 will need to be reprinted to remove the par value.
2. The common seal to become optional
To simplify the execution of documents, section 124 of the new CO states that a common seal is optional. There is no requirement for a share certificate to be sealed. Companies are invited to consider eliminating the need to seal certificates, or to use a printed seal on certificates instead of using a manually affixed seal.
3. New streamlined procedures for lost certificates
Taking into account technological developments, notices related to lost certificates will no longer have to be posted in newspapers – they may be posted on a company’s website instead. Notices under sections 164 and 166 of the new CO should be published on a company’s website (HK$200,000 and below) and in the Gazette (above HK$200,000 or other cases as specified).
4. Multiple proxies permitted
To align with international best practices, section 596(3) of the new CO allows multiple proxies (currently limited to two) in the case of a company having a share capital. Multiple proxies can only vote when a poll is called.
5. Replacement of the headcount test
To prevent vote manipulation such as share splitting, sections 674(2)(a)(ii) and (b)(ii) of the new CO state that the headcount test for approving a general offer or a takeover is replaced with the requirement that votes cast against the scheme do not exceed 10% of the voting rights attached to all disinterested shares.
6. Requirement for companies to explain a refusal to register a transfer of shares
To enhance transparency, sections 151(3) and (4) of the new CO state that companies should give reasons explaining their refusal to register a transfer of shares upon request and within 28 days of receiving such a request.
For details of all the changes discussed above, please refer to the ‘New Companies Ordinance’ and ‘Frequently Asked Questions’ sections of the Companies Registry website (www.cr.gov.hk). Candy Wong, Vice-President of Client Services Computershare Hong Kong Investor Services Ltd Candy.email@example.com www.computershare.com
Candy Wong, Vice-President of Client Services Computershare Hong Kong Investor Services Ltd Candy.firstname.lastname@example.org www.computershare.com