Panel A Scheme Rules

Rules for Admission of Firms and Persons for Taking-up Appointment of Liquidators or Special Managers in Non-Summary Court Winding-up Cases

These Rules set out the provisions of the Official Receiver’s Office’s scheme (“the Scheme”) to nominate for appointment accountants who are members of the Hong Kong Institute of Certified Public Accountants (“HKICPA”) as liquidators or special managers in Court winding-up cases where the Official Receiver’s Office (“ORO”) is of the opinion that the property of the wound-up company is likely to exceed in value $200,000 (“non-summary cases”).

General

In these Rules, except where the context requires otherwise, reference to “firm” shall include “sole proprietorship”, “partnership” and “company”; reference to “partners” shall mean “directors” in the case of a company and “the sole proprietor” in the case of sole proprietorship; the singular shall include the plural and vice versa and a reference to one gender shall include all genders. The Annexes attached to these Rules shall form part of these Rules.

 

I. Administrative Panel of Insolvency Practitioners for Court Winding-Up (“APIPCW”)

Firms and HKICPA members meeting the qualification requirements stated in paragraphs 1 to 6 below and wishing to take up work under the Scheme are required to be admitted to the APIPCW.

Admission to the APIPCW - Firms and Appointment Takers (“ATs”)

1. (i) A firm must have provided liquidation services in Hong Kong for at least three years immediately preceding its application.
(ii) The requirement under paragraph (i) above may be regarded as having been met in the following circumstances -
(a) in respect of a newly established firm, at least two ATs and three Insolvency Practitioners (“IPs”) of the firm have been admitted as such under the Scheme for not less than three years immediately preceding the establishment of the firm and at least one of the ATs/IPs has been involved, for not less than three years immediately preceding the establishment of the firm, in the management of a firm which provides liquidation services in Hong Kong. For the purpose of this sub-paragraph, a firm is a newly established firm if it has commenced its business not more than twelve months prior to its application for admission under the Scheme.
(b) in respect of a merged firm, at least one of the merged firms is able to meet the requirement under paragraph (i) above immediately prior to the merger. For the purpose of this sub-paragraph, a firm is a merged firm if the merger took place not more than twelve months prior to its application for admission under the Scheme.
(c) in respect of a firm that has established a new department or division on liquidation; e.g. the firm has taken on the liquidation section/personnel of another firm that has left the market, at least two ATs and three IPs of the new department or division of the firm have been admitted as such under the Scheme for not less than three years immediately preceding the establishment of the new department or division and at least one of the ATs/IPs has been involved, for not less than three years immediately preceding the establishment of the new department or division, in the management of a firm which provides liquidation services in Hong Kong. For the purpose of this sub-paragraph, a firm does not fall within the description under this sub-paragraph if its new department or division on liquidation has been established for more than twelve months prior to its application for admission under the Scheme.
2. A firm must have adequate minimum resources as follows -
(i) at least four directly employed full-time certified public accountants (i.e. members of the HKICPA) each of whom must have at least three years of post-qualification experience, and three of whom must be IPs with the qualifications stated in paragraph 6 below;
(ii) professional staff who have a good command of both English and Chinese; and
(iii) at least 16 directly employed full-time staff (including the certified public accountants/IPs referred to in (i) above) available to perform the service and deal with cases allocated to the firm under the Scheme.
For the purpose of assessing the minimum resources of a firm under this paragraph, a partner of the firm shall be regarded as being under the direct employment of the firm.
3. Appointments as liquidators or special managers should be in the names of at least two ATs of the firm, one of whom must be a partner, a director or the sole proprietor of the firm and the other AT must be a principal of the firm or hold a position above that at the firm. All ATs must be IPs. At least one AT must be contactable at any time and ATs must be available in Hong Kong when required by the Court, the ORO or creditors.
4. All ATs and IPs of a firm are required to be admitted to the APIPCW administrated by the ORO.
5. Each firm must sign an undertaking in the form attached to these Rules at Annex A with, inter alia, the following provisions -
(i) to accept any case allocated to it by the Official Receiver (“OR”), except for special reasons acceptable to the ORO which preclude it from doing so;
(ii) to carry out to the best of the ability of every AT of the firm every insolvency case that is to be allocated;
(iii) to carry out statutory investigation;
(iv) to continue to handle a case to reach its reasonable conclusion;
(v) to accept and abide by all the terms of these Rules;
(vi) to inform the ORO of any change which affects APIPCW status, including any change in contact information and in AT/IP personnel within 14 days of the change;
(vii) to acknowledge and accept that the status of APIPCW firm may be removed if the firm is no longer able to satisfy any admission criterion, and a fresh application will have to be made if the firm wishes to be re-admitted; and
(viii) to accept any decision of the Appeal Panel as final in case of a dispute.

Admission to the APIPCW - Individuals

6. Each IP of the firm must be a HKICPA member and a full-time employee/partner of the firm with -
(i) (a) minimum chargeable hours of relevant insolvency work (excluding Members’ Voluntary Liquidations (“MVL”) and bankruptcies) of -
600 in the last 3 years

or 750 in the last 5 years

with a minimum of 100 hours in any one year. A pass in the HKICPA Professional Diploma in Insolvency Programme is equivalent to 50 hours of insolvency work; and
(b) involvement at senior and responsible positions in 10 unconnected non-summary insolvency cases (excluding MVL and bankruptcies) in the last five years; and
(ii) experience in managing insolvency cases and either holding the position of partner of the firm, or occupying a position of manager or above and reporting directly to the partner of the firm.
7. If the requirements in paragraph 6 above cannot be satisfied, the relevance of other professional qualifications and insolvency work including experience in handling overseas insolvency work may be considered under exceptional circumstances with strong justifications and will be determined by the Admission Committee at its sole discretion on the merit of each case.
 

II. Enabling or General Bonds of Liquidators/Special Managers

8. Every APIPCW firm must be covered by current professional indemnity insurance and the ATs may be required to give separate security on individual case pursuant to rule 47 of the Companies (Winding-up) Rules (Cap. 32H) (“Cap. 32H”) to the satisfaction of the OR.

III. Appointment of Liquidators

9. Following the making of a winding-up order, the OR becomes provisional liquidator by virtue of his office [section 194(1)(a) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (“Cap. 32”)]. If the property of the wound-up company is in the opinion of the OR not likely to exceed in value $200,000, the OR may appoint other persons as provisional liquidator in his place in accordance with the provisions of section 194(1A) (Cap. 32). Unless the Court has made an order for the company to be wound up in a summary manner where the assets are not likely to exceed in value $200,000 [section 227F (Cap. 32)], the provisional liquidator must summon separate meetings of creditors and contributories of the company within three months of the date of the winding-up order [section 194(1)(b) (Cap. 32) and rule 106 (Cap. 32H)] to appoint a liquidator.

First Meeting of Creditors and Contributories

10. (i) In the first meeting of creditors and contributories in non-summary Court winding-up cases convened by the OR, the OR will explain the purposes of the meetings and first invite the persons attending to nominate and resolve to appoint a liquidator of their choice in place of the OR. The OR will explain in the meetings that an application will then need to be made to the Court for an appointment order.
(ii) In the absence of any nomination by the creditors and contributories or prior appointment of any special manager from the APIPCW roster list, the OR will explain the Scheme and recommend the ATs of the next eligible firm on the APIPCW roster list to the creditors and contributories for appointment as liquidators.
(iii) If the creditors and contributories resolve to appoint liquidators of their own choice who happen to be ATs (or IPs) of an APIPCW firm on the roster list, then the appointment will not be counted as one appointment under the APIPCW roster.
(iv) The creditors and contributories may in some instances resolve to appoint the OR as the liquidator. The OR will inform them that it is the ORO’s policy to have someone else appointed as liquidator in place of the OR. The OR will advise creditors and contributories that if they do resolve to appoint the OR as liquidator, the OR may apply to the Court to appoint liquidators or special managers from the APIPCW roster list.
11. If the OR has doubts about the suitability of a liquidator nominated by the creditors and contributories of their own choice, the OR may object to the appointment in the application to the Court for an appointment order and may recommend the ATs of the next eligible firm on the APIPCW roster list to the Court for appointment as liquidators.
12. By virtue of section 194(2) (Cap. 32), where the OR is the liquidator of the Company, he may, at any time, apply to the Court for the appointment of a person as a liquidator in place of the OR. The OR may nominate ATs of the next eligible APIPCW firm on the roster list in his application to the Court.
12A. Any appointment or nomination for appointment of a liquidator is subject to the disqualification and disclosure provisions under sections 262A to 262F (Cap. 32) and rule 155 (Cap. 32H).

Special Managers

13. When the OR is appointed as provisional liquidator, and he is of the opinion that the assets of the wound-up company is likely to exceed in value $200,000, the OR may, if satisfied that the nature of the estate or business of the company, or the interests of the creditors or contributories generally, or there are other grounds therefor, require the appointment of special managers, apply to the Court to appoint ATs of an APIPCW firm as special managers under section 216 (Cap. 32). In that case, the appointment as special managers will be counted as one appointment under the roster. In the first meeting of creditors and contributories later convened by the OR, the OR will in the absence of any nomination by the creditors and contributories recommend the special managers to the creditors and contributories for appointment as liquidators. In that case, the appointment as liquidator will not be counted as another appointment under the roster.
13A. Any appointment or nomination for appointment of a special manager as liquidator is subject to the disqualification and disclosure provisions under sections 262A to 262F (Cap. 32) and rule 155 (Cap. 32H).

Provisional Liquidators

14. (i) If the appointment of the provisional liquidator under section 193 (Cap. 32) is made from the APIPCW roster, then it will be counted as one appointment under the roster. If the provisional liquidator so appointed becomes liquidator under section 194 (Cap. 32), the appointment will not be counted as another appointment under the roster.
(ii) Where the petitioner has successfully applied to the Court to appoint a firm which is an APIPCW firm to be the provisional liquidator prior to a winding-up order by the Court, and the appointment continues under section 194(1)(aa) (Cap. 32), the appointment will not be counted as one appointment under the roster.
14A. Any appointment or nomination for appointment of a provisional liquidator is subject to the disqualification and disclosure provisions under sections 262A to 262F (Cap. 32) and rule 155 (Cap. 32H).

The Roster System

15. Subject to the disqualification and disclosure provisions under sections 262A to 262F (Cap. 32) and rule 155 (Cap. 32H), the appointment will be given to the ATs of the first firm on the roster. Newly admitted or re-admitted firms will be placed at the end of the roster list for allocation of cases. Firms voluntarily withdrawn, previously suspended or removed will have to submit a fresh application if they wish to be re-admitted.
 

IV. Admission Committee

16. (i) An Admission Committee, comprising three ORO officers (one of whom shall serve as the Chairman) and three representatives from HKICPA or other professional bodies as determined by the OR as members, shall meet if required to consider any new application for admission, review admission status of admitted firms, ATs and IPs, review complaints on the performance of any firm, AT or IP or misconduct of any AT or IP in such capacity on the APIPCW and take any action including reprimand, suspension or removal of any firm, AT or IP from the APIPCW.
(ii) The Chairman and two other members, one of whom must be a representative from the HKICPA and the other an ORO officer shall be a quorum for the meeting of the Admission Committee. Any meeting at which a quorum is present shall be competent to exercise all the functions and powers conferred upon the Admission Committee.
(iii) The Chairman may exercise a casting vote at any meeting at which no majority can be obtained.
(iv) The Secretary of the Admission Committee shall be provided by the ORO.
(v) Simple and straightforward applications for admission may be dealt with by written circulation instead of a physical meeting, provided that a physical meeting shall be convened if a request for such meeting is made by any member. Where an application does not clearly meet all the requirements of these Rules, a physical meeting should be convened.
17. The Admission Committee shall notify each applicant and any firm or member on the APIPCW of its decisions in writing.
 

V. Application Procedures

18. Every firm which wishes to join the APIPCW shall submit an Application Form A and Form B (a copy of which is attached at Annex B) to the ORO.
19. The ORO will invite the HKICPA or other relevant professional bodies as the case may be to verify the information declared in the application forms with its membership records to the extent of information held in those records and advise the ORO of any discrepancy.
20. The ORO may request the applicant to provide any further information that he may reasonably require, and shall place the application before the Admission Committee for its consideration.
21. If an application is not approved by the Admission Committee or the Appeal Panel, the applicant may submit a fresh application at any time.
 

VI. Remuneration of Provisional Liquidators, Liquidators and Special Managers

22. (i) Where there is a Committee of Inspection, the liquidator appointed according to the APIPCW roster list will be remunerated on such basis and at such rates as may be agreed between the liquidator and the Committee of Inspection [section 196(2)(a) (Cap. 32)]. If the agreement is for remuneration on a time-cost basis, the rates applied shall not be higher than the standard rates as at the date of the appointment as liquidator unless the Committee of Inspection or the Court agrees to different rates.
(ii) Where there is no Committee of Inspection or the liquidators and the Committee of Inspection fail to agree, the liquidator appointed according to the APIPCW roster list will be remunerated on such basis and at such rates as may be directed by the Court [section 196(2)(b) (Cap. 32)]. If the remuneration is on a time-cost basis, the rates applied shall not be higher than the standard rates as at the date of the appointment as liquidator unless the Court agrees to different rates.
(iii) The standard rates are the rates set out at Annex C. The standard rates of fees may be adjusted by the ORO where appropriate. APIPCW firms will be advised of the adjusted rates of fees as soon as practicable.
 

VII. Performance of the Firm, AT or IP

23. (i) (a) If any firm, AT or IP on the APIPCW fails to carry out to the best of the ability of the firm, AT or IP in any insolvency case allocated to the firm according to the roster system; or
(b) If the quality of the work carried out by any firm, AT or IP on the APIPCW is considered by the ORO as unsatisfactory; or
(c) If there is any breach of any provision of these Rules by any firm, AT or IP on the APIPCW as determined by the Admission Committee; or
(d) If any information provided by the firm or its ATs or IPs in their application for admission to the Scheme is found to be false in any material particular;
the Admission Committee may reprimand the firm, AT or IP, or suspend or remove them from the APIPCW where appropriate.
(ii) In the event of any change in a firm, AT or IP which would result in the firm, AT or IP not being able to meet any of the criteria set out in paragraphs 2, 3 and 6 (other than sub-paragraph 6(i)) hereof and :
(a) the firm fails to inform the ORO of such change within 14 days of the change; or
(b) such firm, AT or IP remains unable to meet the criteria for a period of not less than 6 months;
the Admission Committee may suspend or remove such firm from the APIPCW.
24. Firms which have ceased to be on the APIPCW should not hold themselves out as being currently registered APIPCW firms, and practitioners who are registered ATs and/or IPs of a firm should not hold themselves out as being currently registered ATs and/or IPs after they have left the firm or after that firm has ceased to be an APIPCW firm.
 

VIII. Appeal Panel

25. An Appeal Panel, comprising the OR (as the Chairman), two members to be nominated by the HKICPA (at least one of whom shall be a member of the HKICPA Council or permanent staff) and two other members who are independent lay persons to be determined by the OR, will be set up to consider any appeal against the decision of the Admission Committee to reject application for admission, reprimand, suspend or remove any firm, AT or IP from the APIPCW. The Appeal Panel shall be constituted and shall operate in accordance with the Appeal Rules, which is set out in Annex D.
 

IX. Effective Date and Transitional Arrangement

26. These Rules will be effective on 23 August 2012.
27. (i) All firms, ATs or IPs which have been admitted to the APIPCW under the Rules that were in force from time to time before 23 August 2012 (“the previous Rules”) and remained to be on the APIPCW immediately before 23 August 2012 are required to satisfy all requirements as stipulated in these Rules. A grace period of six months up to 22 February 2013 will be given to such firms, ATs or IPs to demonstrate that they can satisfy all the requirements as stipulated in these Rules. During this grace period, new cases would continue to be allocated under the roster in the normal way. After the end of the grace period, any such firm or AT that cannot meet the new requirements will cease to be allocated any new cases or will not be appointed as liquidator or special manager, while remaining on the APIPCW (i.e. it will be by-passed on the roster if a new case comes up for allocation). At the expiration of two years after 23 August 2012, if any such firm, AT or IP still failed to satisfy the requirements under these Rules, it will be removed from the APIPCW and will need to apply afresh if it wishes to re-join in the future.
(ii) (a) Notwithstanding the provision contained in paragraph 27(i) above, for those IPs and those ATs (who are also IPs) that were unable to meet all the admission criteria under the previous Rules but were admitted to the APIPCW on or before 30 April 2012 on the basis of a waiver of admission criteria under the previous Rules, insofar as those waived admission criteria remain to be applicable under these Rules, such admission criteria would continue to be waived and to this extent only, these ATs and IPs would be deemed to have satisfied such admission criteria under these Rules. For the avoidance of doubt, the grace period referred to in paragraph 27(i) above will continue to apply to all other requirements under these Rules.
(b) The waiver under sub-paragraph (a) above does not apply to future applications by such ATs and IPs under these Rules.
 
Annex A - Undertaking
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(91KB)
Annex B - Application for Admission as APIPCW Firm (Form A) / Application Form B Application for Appointment Taker and Insolvency Practitioner
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(198KB)
Annex C - Standard Rates of Fees Approved by the Official Receiver in consultation with the Hong Kong Institute of Certified Public Accountants in 2012
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(19KB)
Annex D - Appeal Panel
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(89KB)
Annex E - Statutory Investigation into the Affairs of an Insolvent Company Wound-Up by the Court
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(147KB)
Full PDF
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(348KB)

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13 February 2017