Commencement date announced for shadow companies reform

Hong Kong
It has been announced that the proposed amendments to Hong Kong’s Companies Ordinance, which introduce measures to deal with ‘shadow companies’, will come into effect on December 10 2010.
 
In brief, these amendments strengthen the powers of the Companies Registry to deal with abuses caused by shadow companies - that is, companies registered with names that are deceptively similar to third-party brand or company names, which are often established in Hong Kong to give support to infringing activity on mainland China.
 
At present, existing companies:
  • have 12 months to object to the Companies Registry in respect of newly registered companies with names that are 'too like' their own; or
  • can, at any time, seek a court order against companies named uncomfortably close to their brands.
However, under the existing law, it has been difficult to deal with shadow companies, as company name changes can be made only by shareholder resolution, and very often the shareholders are based outside Hong Kong and ignore court rulings. The registry can direct a company to change its name, but has no means of ensuring that a name change actually takes place. Under the amended law, the registry will have the power, in certain circumstances, to implement a name change itself.
 
The amendments should greatly reduce the cost for rights owners of dealing with the problem of shadow companies. 
 
 
Tom Grek, Rouse, Hong Kong

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