This paper considers whether
provisions should be added to the Bill
relating to the assets of an organization
proscribed under the proposed section 8A
of the Societies Ordinance.
|
Current position under the Bill |
| 2. |
At present, the Bill does not contain
any express provision dealing with the
assets of a proscribed organization. It
follows that the distribution of those
assets would be governed by any relevant
legislation or common law principles relating
to the type of organization involved. For
example, if the proscribed organization
were a partnership, Part X of the Companies
Ordinance (Cap 32) would apply. Under Part
X, an unregistered company may be wound
up in specified circumstances and the assets
distributed in accordance with the Ordinance.
Some organizations that are established
under specific Ordinances (e.g. credit
unions) are subject to winding up provisions
under those Ordinances.
|
| 3. |
In general, the existing law is able to
deal adequately with the winding up of a
proscribed organization and the distribution
of its assets. However, there are two areas
in respect of which specific provisions may
be desirable. |
Unregistered companies |
| 4. |
The circumstances in which an unregistered
company may be wound up under the Companies
Ordinance are found in section 327(3) of
Cap 32 and are as follows -
| (a) |
if the company is dissolved,
or has ceased to carry on business,
or is carrying on business only for
the purpose of winding up its affairs;
|
| (b) |
if the company is unable to pay
its debts;
|
| (c) |
if the court is of opinion that
it is just and equitable that the company
should be wound up. |
|
| 5. |
Since a proscription of an unregistered
company would make it impossible for the
organization to carry on its activities,
it might be appropriate to add proscription
under section 8A of the Societies Ordinance
to the above grounds for winding up. And,
in order to facilitate a winding up where
this is appropriate, the Registrar of Companies
could be given the power to apply to the
Court for a winding up of a proscribed unregistered
company. Since a proscription would make
further activities of the unregistered company
unlawful, it is considered that the Court
should be required to wind up a proscribed
unregistered company where an application
is made to it. |
Companies registered under
Cap 32 |
| 6. |
The Schedule to the Bill includes an amendment
to the Companies Ordinance (item 2), the
effect of which is that a proscribed organization
that is a company registered under the Companies
Ordinance would be struck off the companies
register and dissolved. Under section 292
of Cap 32, the general rule is that all the
property and rights vested in, or held in
trust for, a dissolved company vest in the
Government. However, it may not be appropriate
to apply that rule in the current context,
since (e.g.) bona fide creditors of the company
would be prejudiced. |
| 7. |
A similar provision for striking-off and
dissolving a company is found in section
360C of Cap 32. That section empowers the
CE in Council to order the striking-off of
a company which would, if it were a society,
be liable to be prohibited under section
8 of the Societies Ordinance. However, a
section 360C striking-off is governed by
sections 360D to 360M which provide (amongst
other things) for the distribution of the
assets of the company to creditors etc by
the Official Receiver (see annex). |
| 8. |
On the face of it, those sections provide
a much more elaborate, and a fairer, system
for dealing with a company that is proscribed
under section 8A than the provisions dealing
with the dissolution of defunct companies.
It may therefore be appropriate to apply
them to a section 8A dissolution. |
Organizations registered
under other Ordinances |
| 9. |
An organization proscribed under section
8A might be registered under an Ordinance
other than the Companies Ordinance. In such
a case, that registration ought to be cancelled.
In order to ensure that this is the case,
it may be appropriate to provide that the
person responsible for maintaining the relevant
register shall cancel the registration of
the proscribed organization. |
| 10. |
After such cancellation, the winding up
of the organization could be achieved either
under the relevant Ordinance or, if that
Ordinance does not contain winding up provisions,
under the Companies Ordinance. |
