Section: 79 Heading: Payment of certain debts out of assets subject to floating charge in priority to claims under the charge Version Date: 30/06/1997
(1) Where a receiver is appointed on behalf of the holders of any debentures of a company secured by a charge which, as created, was a floating charge, or possession is taken by or on behalf of those debenture holders of any property comprised in or subject to the charge, then, if the company is not at the time in course of being wound up, the debts, which in every winding-up are under the provisions of Part V relating to preferential payments to be paid in priority to all other debts, shall, according to their respective priorities under section 265, be paid out of any assets coming to the hands of the receiver or other person taking possession as aforesaid in priority to any claim for principal or interest in respect of the debentures. (Amended 10 of 1987 s. 3)
(1A) In the application of the provisions of Part V, section 265 shall be construed as if the provision for payment of accrued holiday remuneration becoming payable on the termination of employment before or by the effect of the winding-up order or resolution were a provision for payment of such remuneration becoming payable on the termination of employment before or by the effect of the appointment of the receiver or possession being taken as aforesaid. (Added 6 of 1984 s. 45)
(2) The periods of time mentioned in the said provisions of Part V shall be reckoned from the date of the appointment of the receiver or of possession being taken as aforesaid, as the case may be.
(2A) Where the date referred to in subsection (2) occurred before the commencement* of the Companies (Amendment) Ordinance 1984 (6 of 1984), subsections (1) and (2) shall have effect with the substitution, for references to the provisions of Part V, of references to the provisions which, by virtue of section 265(7) are deemed to remain in force in the case therein mentioned, and subsection (1A) shall not apply. (Added 6 of 1984 s. 45)
(3) Any payments made under this section shall be recouped as far as may be out of the assets of the company available for payment of general creditors.
Section: 79A Heading: Interpretation Version Date: 13/02/2004
Expanded Cross Reference:
49, 49A, 49B, 49BA, 49C, 49D, 49E, 49F, 49G, 49H, 49I, 49J, 49K, 49L, 49M, 49N, 49O, 49P, 49Q, 49R, 49S
PART IIA
DISTRIBUTION OF PROFITS AND ASSETS
(1) In this Part-
"appointed day" (指定日期) means the date of commencement* of this Part under the Companies (Amendment) Ordinance 1991 (77 of 1991);
"called up share capital" (已催缴股本), in relation to a company, means so much of its share capital as equals the aggregate amount of the calls made on its shares (whether or not those calls have been paid), together with any share capital paid up without being called and any share capital to be paid on a specified future date under the articles, the terms of allotment of the relevant shares or any other arrangements for payment of those shares and "uncalled share capital" (未催缴股本) is to be construed accordingly;
"capitalisation" (资本化), in relation to a company's profits, means any of the following operations (whenever carried out)-
(a) applying the profits in wholly or partly paying up unissued shares in the company to be allotted to members of the company as fully or partly paid bonus shares; or
(b) transferring the profits to capital redemption reserve;
"distribution" (分发) means every description of distribution of a company's assets to its members, whether in cash or otherwise, except distribution by way of-
(a) an issue of shares as fully or partly paid bonus shares;
(b) the redemption or purchase of any of the company's own shares out of capital (including the proceeds of any fresh issue of shares) or out of unrealised profits in accordance with sections 49 to 49S; <* Note - Exp. X-Ref.: Sections 49, 49A, 49B, 49BA, 49C, 49D, 49E, 49F, 49G, 49H, 49I, 49J, 49K, 49L, 49M, 49N, 49O, 49P, 49Q, 49R, 49S *>
(c) the reduction of share capital by extinguishing or reducing the liability of any of the members on any of the company's shares in respect of share capital not paid up, or by paying off paid up share capital; and
(d) a distribution of assets to members of the company on its winding up;
"net assets" (净资产), in relation to a company, has the same meaning as in section 157HA(15). (Amended 28 of 2003 s. 33)
(2) References to profits and losses of any description are (respectively) to profits and losses of that description made at any time.
(3) Without prejudice to-
(a) the construction of any other expression (where appropriate) by reference to accepted accounting principles or practice; or
(b) any specific provision for the treatment of profits of any description as realised,
it is declared that references in this Part to realised profits, in relation to a company's accounts, are to such profits of the company as fall to be treated as realised profits for the purposes of those accounts in accordance with principles generally accepted with respect to the determination for accounting purposes of realised profits at the time when those accounts are prepared.
Section: 79A Heading: Interpretation Version Date: 13/02/2004
Expanded Cross Reference:
49, 49A, 49B, 49BA, 49C, 49D, 49E, 49F, 49G, 49H, 49I, 49J, 49K, 49L, 49M, 49N, 49O, 49P, 49Q, 49R, 49S
PART IIA
DISTRIBUTION OF PROFITS AND ASSETS
(1) In this Part-
"appointed day" (指定日期) means the date of commencement* of this Part under the Companies (Amendment) Ordinance 1991 (77 of 1991);
"called up share capital" (已催缴股本), in relation to a company, means so much of its share capital as equals the aggregate amount of the calls made on its shares (whether or not those calls have been paid), together with any share capital paid up without being called and any share capital to be paid on a specified future date under the articles, the terms of allotment of the relevant shares or any other arrangements for payment of those shares and "uncalled share capital" (未催缴股本) is to be construed accordingly;
"capitalisation" (资本化), in relation to a company's profits, means any of the following operations (whenever carried out)-
(a) applying the profits in wholly or partly paying up unissued shares in the company to be allotted to members of the company as fully or partly paid bonus shares; or
(b) transferring the profits to capital redemption reserve;
"distribution" (分发) means every description of distribution of a company's assets to its members, whether in cash or otherwise, except distribution by way of-
(a) an issue of shares as fully or partly paid bonus shares;
(b) the redemption or purchase of any of the company's own shares out of capital (including the proceeds of any fresh issue of shares) or out of unrealised profits in accordance with sections 49 to 49S; <* Note - Exp. X-Ref.: Sections 49, 49A, 49B, 49BA, 49C, 49D, 49E, 49F, 49G, 49H, 49I, 49J, 49K, 49L, 49M, 49N, 49O, 49P, 49Q, 49R, 49S *>
(c) the reduction of share capital by extinguishing or reducing the liability of any of the members on any of the company's shares in respect of share capital not paid up, or by paying off paid up share capital; and
(d) a distribution of assets to members of the company on its winding up;
"net assets" (净资产), in relation to a company, has the same meaning as in section 157HA(15). (Amended 28 of 2003 s. 33)
(2) References to profits and losses of any description are (respectively) to profits and losses of that description made at any time.
(3) Without prejudice to-
(a) the construction of any other expression (where appropriate) by reference to accepted accounting principles or practice; or
(b) any specific provision for the treatment of profits of any description as realised,
it is declared that references in this Part to realised profits, in relation to a company's accounts, are to such profits of the company as fall to be treated as realised profits for the purposes of those accounts in accordance with principles generally accepted with respect to the determination for accounting purposes of realised profits at the time when those accounts are prepared.
Section: 79B Heading: Certain distributions prohibited Version Date: 30/06/1997
(1) A company shall not make a distribution except out of profits available for the purpose.
(2) For the purposes of this Part, a company's profits available for distribution are its accumulated, realised profits, so far as not previously utilised by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of capital duly made.
(3) A company shall not apply an unrealised profit in paying up debentures, or any amounts unpaid on its issued shares.
(4) Where the directors of a company are, after making all reasonable enquiries, unable to determine whether a particular profit made before the appointed day is realised or unrealised, they may treat the profit as realised; and where after making such enquiries they are unable to determine whether a particular loss so made is realised or unrealised, they may treat the loss as unrealised.
Section: 79C Heading: Restriction on distribution of assets Version Date: 30/06/1997
(1) A listed company may only make a distribution at any time-
(a) if at that time the amount of its net assets is not less than the aggregate of its called up share capital and undistributable reserves; and
(b) if, and to the extent that, the distribution does not reduce the amount of those assets to less than that aggregate.
(2) A listed company's undistributable reserves are-
(a) the share premium account;
(b) the capital redemption reserve;
(c) the amount by which the company's accumulated, unrealised profits, so far as not previously utilised by capitalisation of a description to which this paragraph applies, exceed its accumulated, unrealised losses (so far as not previously written off in a reduction or reorganisation of capital duly made); and
(d) any other reserve which the company is prohibited from distributing by any enactment (other than one contained in this Part) or by its memorandum or articles,
and paragraph (c) applies to every description of capitalisation except a transfer of profits of the company to its capital redemption reserve on or after the appointed day.
(3) A listed company shall not include any uncalled share capital as an asset in any accounts relevant for the purposes of this section.
Section: 79D Heading: Exemption of certain companies Version Date: 30/06/1997
The Financial Secretary may, on the application of any listed company whose principal business consists of investing its funds in securities, land or other assets with the aim of spreading investment risk and giving its members the benefit of the results of the management of the assets, modify or exempt in relation to that company any of the requirements of sections 79B and 79C, subject to such terms and conditions as he may consider appropriate.
Section: 79E Heading: Realised profits of insurance company with long term business Version Date: 30/06/1997
(1) Where an insurance company to which Parts III to VI of the Insurance Companies Ordinance (Cap 41) apply carries on long term business-
(a) any amount properly transferred to the profit and loss account of the company from a surplus in the fund or funds maintained by it in respect of that business; and
(b) any deficit in that fund or those funds,
are to be (respectively) treated, for the purposes of this Part, as a realised profit and a realised loss; and, subject to this, any profit or loss arising in that business is to be left out of account for those purposes.
(2) In subsection (1)-
(a) the reference to a surplus in any fund or funds of an insurance company is to an excess of the assets representing that fund or those funds over that liabilities of the company attributable to its long term business, as shown by an actuarial investigation; and
(b) the reference to a deficit in any such fund or funds is to the excess of those liabilities over those assets, as so shown.
(3) In this section-
"actuarial investigation" (精算调查) means an investigation to which section 18 of the Insurance Companies Ordinance (Cap 41) applies or which is made in pursuance of a requirement imposed by section 32 of that Ordinance;
"long term business" (长期业务) has the same meaning as in the Insurance Companies Ordinance (Cap 41).
Section: 79F Heading: Distribution to be justified by reference to company's accounts Version Date: 30/06/1997
Expanded Cross Reference:
79G, 79H, 79I, 79J, 79K, 79L
Relevant Accounts
(1) This section and sections 79G to 79L are for determining the question whether a distribution may be made by a company without contravening section 79B or 79C. <* Note - Exp. X-Ref.: Sections 79G, 79H, 79I, 79J, 79K, 79L *>
(2) The amount of a distribution which may be made is determined by reference to the following items as stated in the company's accounts-
(a) profits, losses, assets and liabilities;
(b) provisions within the meaning of paragraph 30(1) of the Tenth Schedule (depreciation, renewals, diminution in value of assets, retentions to meet liabilities, etc.); and
(c) share capital and reserves (including undistributable reserves).
(3) Except in a case falling within subsection (4), the company's accounts which are relevant for this purpose are its last annual accounts, that is to say, those prepared under Part IV which were laid in respect of the last preceding financial year in respect of which accounts so prepared were laid; and for this purpose accounts are laid if section 122 has been complied with in relation to them.
(4) In the following 2 cases-
(a) where the distribution would be found to contravene the relevant section if reference were made only to the company's last annual accounts; or
(b) where the distribution is proposed to be declared before any accounts are laid in compliance with section 122,
the accounts relevant under this section (called "interim accounts" in the first case, and "initial accounts" in the second) are those necessary to enable a reasonable judgment to be made as to the amounts of the items mentioned in subsection (2).
(5) The relevant section is treated as contravened in the case of a distribution unless the statutory requirement about the relevant accounts (that is, the requirement of this section and sections 79G, 79H and 79I, as and where applicable) are complied with in relation to that distribution.
Section: 79G Heading: Requirement for last annual accounts Version Date: 30/06/1997
(1) If the company's last annual accounts constitute the only accounts relevant under section 79F, the statutory requirements in respect of them are as follows.
(2) The accounts shall have been properly prepared in accordance with this Ordinance, or have been so prepared subject only to matters which are not material for determining, by reference to items mentioned in section 79F(2), whether the distribution would contravene that relevant section; and, without prejudice to the foregoing-
(a) in the case of a company where the shareholders have agreed to apply the provisions of section 141D, so much of the accounts as consists of a balance sheet shall give a true and correct view of the state of the company's affairs; and
(b) in the case of any other company-
(i) so much of the accounts as consists of a balance sheet shall give a true and fair view of the state of the company's affairs as at the balance sheet date; and
(ii) so much of the accounts as consists of a profit and loss account shall give a true and fair view of the company's profit or loss for the period in respect of which the accounts were prepared.
(3) The auditors shall have made their report on the accounts under section 141 or 141D as appropriate; and subsection (4) applies if the report is a qualified report, that is to say, it is not a report without qualification to the effect that in the auditors' opinion the accounts have been properly prepared in accordance with this Ordinance.
(4) The auditors shall in that case also have stated in writing (either at the time of their report or subsequently) whether, in their opinion, the matter in respect of which their report is qualified is material for determining, by reference to items mentioned in section 79F(2), whether the distribution would contravene the relevant section; and a copy of the statement shall have been laid before the company in general meeting.
(5) A statement under subsection (4) suffices for the purposes of a particular distribution not only if it relates to a distribution which has been proposed but also if it relates to distributions of any description which includes that particular distribution, notwithstanding that at the time of the statement it has not been proposed.
Section: 79G Heading: Requirement for last annual accounts Version Date: 30/06/1997
(1) If the company's last annual accounts constitute the only accounts relevant under section 79F, the statutory requirements in respect of them are as follows.
(2) The accounts shall have been properly prepared in accordance with this Ordinance, or have been so prepared subject only to matters which are not material for determining, by reference to items mentioned in section 79F(2), whether the distribution would contravene that relevant section; and, without prejudice to the foregoing-
(a) in the case of a company where the shareholders have agreed to apply the provisions of section 141D, so much of the accounts as consists of a balance sheet shall give a true and correct view of the state of the company's affairs; and
(b) in the case of any other company-
(i) so much of the accounts as consists of a balance sheet shall give a true and fair view of the state of the company's affairs as at the balance sheet date; and
(ii) so much of the accounts as consists of a profit and loss account shall give a true and fair view of the company's profit or loss for the period in respect of which the accounts were prepared.
(3) The auditors shall have made their report on the accounts under section 141 or 141D as appropriate; and subsection (4) applies if the report is a qualified report, that is to say, it is not a report without qualification to the effect that in the auditors' opinion the accounts have been properly prepared in accordance with this Ordinance.
(4) The auditors shall in that case also have stated in writing (either at the time of their report or subsequently) whether, in their opinion, the matter in respect of which their report is qualified is material for determining, by reference to items mentioned in section 79F(2), whether the distribution would contravene the relevant section; and a copy of the statement shall have been laid before the company in general meeting.
(5) A statement under subsection (4) suffices for the purposes of a particular distribution not only if it relates to a distribution which has been proposed but also if it relates to distributions of any description which includes that particular distribution, notwithstanding that at the time of the statement it has not been proposed.
Section: 79I Heading: Requirements for initial accounts Version Date: 30/06/1997
(1) The following are the statutory requirements in respect of initial accounts prepared for a proposed distribution by a listed company.
(2) The accounts shall have been properly prepared, or they shall have been so prepared subject only to matters which are not material for determining, by reference to items mentioned in section 79F(2), whether the proposed distribution would contravene the relevant section.
(3) Section 79H(3) applies as respects the meaning of "properly prepared" (妥为拟备).
(4) The company's auditors shall have made a report stating whether, in their opinion, the accounts have been properly prepared; and subsection (5) applies if their report is a qualified report, that is to say, it is not a report without qualification to the effect that in the auditors' opinion the accounts have been so prepared.
(5) The auditors shall in that case also have stated in writing whether, in their opinion, the matter in respect of which their report is qualified is material for determining, by reference to items mentioned in section 79F(2), whether the distribution would contravene the relevant section.
(6) A copy of the accounts, of the auditors' report under subsection (4) and of the auditors' statement (if any) under subsection (5) shall have been delivered to the Registrar.
(7) If the accounts are, or the auditors' report under subsection (4) or the statement (if any) under subsection (5) is, in a language other than English or Chinese, a translation into English or Chinese of the accounts, the report or the statement (as the case may be) certified in the prescribed manner to be a correct translation, shall also have been delivered to the Registrar. (Amended 83 of 1995 s. 11)
Section: 79J Heading: Method of applying section 79F to successive distributions Version Date: 30/06/1997
Expanded Cross Reference:
47A, 47B, 47C, 47D, 47E, 47F, 47G, 48
(1) For the purpose of determining by reference to particular accounts whether a proposed distribution may be made by a company, section 79F has effect, in a case where one or more distributions have already been made in pursuance of determinations made by reference to those same accounts, as if the amount of the proposed distribution was increased by the amount of the distributions so made.
(2) Subsection (1) applies (if it would not otherwise do so) to-
(a) financial assistance lawfully given by a listed company out of its distributable profits in a case where the assistance is required to be so given by section 47D;
(b) financial assistance lawfully given by an unlisted company out of its distributable profits in a case where the assistance is required to be so given by section 47E(2);
(c) financial assistance given by a company in contravention of section 47A, in a case where the giving of that assistance reduces the company's net assets or increases its net liabilities;
(d) a payment made by a company in respect of the purchase by it of shares in the company (except a payment lawfully made otherwise than out of distributable profits); and
(e) a payment of any description specified in section 49F (company's purchase of right to acquire its own shares, etc.),
being financial assistance given or payment made since the relevant accounts were prepared, as if any such financial assistance or payment were a distribution already made in pursuance of a determination made by reference to those accounts.
(3) In this section-
"financial assistance" (资助) has the same meaning as in sections 47A to 48; <* Note - Exp. X-Ref.: Sections 47A, 47B, 47C, 47D, 47E, 47F, 47G, 48 *>
"net liabilities" (净负债), in relation to the giving of financial assistance by a company, means the amount by which the aggregate amount of the company's liabilities (within the meaning of section 47D(2)(b)) exceeds the aggregate amount of its assets, taking the amount of the assets and liabilities to be as stated in the company's books of account immediately before the financial assistance is given.
