Vol 13 (2016) - Issue 5

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The Recent Amendments to the Companies (Winding Up and Miscellaneous Provisions) Ordinance in Hong Kong: Just a Nip and Tuck

Insolvency law reform in Hong Kong can be compared to The Lord of Rings trilogy as this amendment is in fact the third time lucky. As noted in an article earlier that reforms began back as the 1990s. The first Bill was introduced in 2000, but the term of the Legislative Council’s was expiring and it was impossible to deal with controversial provisions of the provisional supervision (PS) proposals. The second try was in 2001. Again the issue of Protection of Wages on Insolvency fund was not settled, so the Bill was put on hold. The matter of PS resurfaced again in 2009, consultation ended in 2010. Then, on 16 April 2013 the Hong Kong government launched another consultation but this time the title of the consultation document was 'Improvement of Corporate Insolvency Law Legislative Proposals'. The subject and scope of this attempt was slightly different from the two previous endeavours. According to The Secretary for Financial Services and the Treasury, Professor K.C. Chan, 'The proposals would facilitate more efficient administration of the windingup process and increase the protection of creditors through streamlining and rationalising the company winding-up procedures and enhancing the regulation of the winding-up process.' The government press release also stated that,
‘The proposals cover the following five aspects of the winding-up process:
(1) the commencement of winding-up;
(2) the appointment, powers, vacation of office and release of provisional liquidators and liquidators;
(3) the conduct of the winding-up process;
(4) voidable transactions; and
(5) the investigation during winding-up, offences antecedent to or in the course of winding-up and powers of the court.’

Evidently, PS was not on the table and the emphasis instead was to, 'increase the protection of creditors through streamlining and rationalising the company winding-up procedures ...'. Perhaps what was not surprising is the fact that the proposals were based on the 1999 'Report on the Winding-up Provisions of the Companies Ordinance' by the Law Reform Commission.