Reporting Documents

Obligations: Presenting financial statements at the annual general meeting (AGM) or to every member

 

	Legal requirement	Failure to comply	Wilful failure to comply
S429(3)	Company must send financial statements to members 21 days before holding of AGM as per S429(1).	$300,000
S429(4)	Director(s) wilfully fail to take steps to comply with S429(1).	$300,000	12 months' imprisonment

 

Note : A company not required to holding the AGM under section 612 need not comply with section 429(1). For the circumstances under which a company is not required to hold the AGM under section 612, please see {S612}. 

 

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Directors' Report

 

Sections 388 to 391 and section 543(2) deal with directors' report.

 

388	Companies must prepare a directors' report for each financial year, including the requirement of a business review, and the provisions relating to the exemption for the preparation of the directors' report.
389	Special circumstances under which a private company must prepare directors' report as per requirement under section 388
390	The contents of the directors' report in general
543(2)	The directors' report must include the information of the management contract conclusion between the directors and the Company.

 

 

 

 

 

 

 

 

The following also deals with the directors' report:

 

1) Schedule 5 of the Companies Ordinance

 

Schedule 5 (S388(1)(a)) specificially provides for the business review that the directors's report must contain.

 

2) Companies (Directors' Report) Regulation (Cap 622D)

 

The Regulation (S388(1)(b)) summarizes the contents of the directors' report, as provided under section 390 and schedule 5 of the Companies Ordinance (Cap 622), and that includes additional items in the directors' report such as directors' interest, donation, recommended dividends, issue of capital, issue of debenture, equity-linked agreement, reasons for directors' resignation and permitted idemnity provision.

 

Section 388 (Business Review)

 

It provides that

 

(1)    A company's directors must prepare for each financial year a report that—

 

(a)    complies with sections 390, 543(2) and Schedule 5;

(b)    contains the information prescribed by the Regulation; and

(c)    complies with other requirements prescribed by the Regulation.

 

(2)  The requirement under S388(1) applies to a holding company, for which the consolidated directors' report must be prepared.

 

(3)  Subsection (1) or (2) does not require the directors' report for a financial year to comply with Schedule 5 if—

(a)    the company falls within the reporting exemption for the financial year;

(b)    the company is a wholly owned subsidiary of another body corporate in the financial year; or

(c)    the company is a private company that does not fall within the reporting exemption for the financial year, and a special resolution is passed by the members to the effect that the company is not to prepare a business review required by that Schedule for the financial year.

 

(4)  A resolution for the purposes of subsection (3)(c)—

(a)  may be passed in relation to—

(i)  a financial year; or

(ii)  a financial year and every subsequent financial year;

(b)  must be passed at least 6 months before the end of the financial year to which the directors’ report relates; and

(c)  may only be revoked by a special resolution.

 

(5) Subsections (1), (2) and (3) have effect subject to section 389, which specifically provides for the conditions under which the company becomes a public company and consequently it must prepare directors' report as per section 388(1) or 388(2).

 

Non-compliance of S388

 

(6)    A director of a company who fails to take all reasonable steps to secure compliance with subsection (1) or (2) commits an offence and is liable to a fine of $150000.

(7)    A director of a company who wilfully fails to take all reasonable steps to secure compliance with subsection (1) or (2) commits an offence and is liable to a fine of $150000 and to imprisonment for 6 months.

 

Section 390 (Cap 622) and Regulation (Cap 622D)

 

Section 390 lays down the general requirements for the directors' report. The detailed requirements of a directors' report are laid down under the Companies (Directors' Report) Regulation (Cap 622D), which provides for the reporting reuqirements of the directors' report for the company that falls or that does not fall, within the scope of reporting exemption respectively.

 

Section 391

 

Requirements	Fines for non-compliance
S391(1) A directors' report must be approved, and signed on their behalf by a director or the commpany secretary.	If S391(1) is contravened, the company and every responsible person is subject to a fine at level 4 (HK$25,000).
S391(2) Every copy of a directors' report, laid before AGM or sent to members, must state the name of person who signed the report.	If S391(2) is contravened, the company and every responsible person is subject to a fine at level 4 (HK$25,000).