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Date of last Update: 06 August 1998

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The TCI Legislative Council (LegCo) passed several new amendments to the Companies Ordinance 1981 as part of the ongoing programme of continual improvement to company law in the jurisdiction. The Companies (Amendment) Ordinance 1997 took effect prior to the end of the year.

The latest amendments allow companies optionally to register charges (also commonly referred to as pledges or mortgages) given over their property. Such charges are generally granted to a lender to secure borrowing by the company. There is no requirement to register such a charge, but where registration occurs, the charge will (by operation of law) acquire priority over unregistered charges.

This regime is similar to that in operation in a number of other common law jurisdictions, but differs in that registration is entirely optional. Commercial lenders, however, are expected to insist upon registration in most cases.

Additional reporting requirements for ordinary companies limited by guarantee (as opposed to being limited by share capital) were originally contained in the Bill for this Ordinance. Local guarantee companies presently do not have to file with the Registrar of Companies the same information as other companies trading locally. However the proposed unification of annual return and notification requirements for all types of ordinary companies was deferred until a more complete overhaul of the Companies Ordinance is undertaken. It should be noted that the proposed provisions were not to affect Exempted Companies (IBCs); these remain largely exempt from disclosure of such information unless as a result of legal process.

Advice on these specific new legislative provisions is available from the Trust Company or its lawyers, Misick and Stanbrook.