Commencement date announced for shadow companies reform

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:

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. 

 

For further details please see "Measures to combat shadow companies proposed" and "Shadow companies amendments to become law".