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Simple Guide on Compulsory
Winding-up of Companies

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Rights of Creditors and Contributories



7.1

After the making of the winding-up order, creditors must  complete  a Proof of Debt Form in order to prove for any debt contracted by the company and submit it to the provisional liquidator or liquidator together with any documentary evidence and a non-refundable filing fee of $35. The filing fee is waived for claims for wages/salary by employees. It is also waived for any other debts not exceeding $250.

 
[Note
For consumer creditors who have prepaid for goods or services by credit card (other than by credit card instalment payment plan) to a wound up company, apart from filing a Proof of Debt Form, they may also consider enquiring with the card issuer about the possibility of submitting a chargeback claim for reimbursement of the sum prepaid. The likelihood of a successful chargeback depends on the circumstances of each individual case and the decision whether to raise a chargeback claim rests with the card issuer. For further information on the chargeback mechanism, the consumer creditors may contact the card issuer. In case the consumer creditors subsequently get reimbursement of the sum prepaid through the chargeback mechanism after filing of a Proof of Debt Form, they should inform the provisional liquidator or liquidator and withdraw the Proof of Debt.]

 
Chargeback is a consumer protection mechanism provided by credit card associations to cardholders. Where retailers, for whatever reasons, fail to provide services or goods that are paid by credit cards, the card issuer may raise a chargeback claim against the acquirer (i.e. the business operator collecting payment on the retailer’s behalf) to reverse the relevant transaction. If the acquirer accepts the claim, it would pay back the card issuer the transaction amount and then the card issuer would reimburse it to the cardholder. This mechanism is provided by the contractual arrangements among the credit card association, card issuers and card acquirers.

7.2

The Protection of Wages on Insolvency Fund Board (the Fund Board) administers the Protection of Wages on Insolvency Fund (the Fund). When a winding-up petition is filed against a company, the employees who are owed wages and salaries etc. may apply to the Fund Board for ex-gratia payments from the Fund subject to the relevant rules and regulations. Creditors who have received payments from the Fund must provide full details of the payments in their Proof of Debt Forms to be filed with the provisional liquidator or liquidator. Creditors may contact the Labour Department for any enquiry on the Fund Board or the Fund.

7.3

Any creditor or contributory may request the provisional liquidator or liquidator to summon  general meetings of creditors and contributories subject to the relevant winding-up provisions in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32).

7.4

Creditors and contributories are entitled to obtain a copy of the statement of affairs and any supplementary affidaviton on payment of the prescribed fee.

7.5

If any person is aggrieved by any act or decision of the liquidator, that person may apply to the court for the reversion or modification of such act or decision.

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Distribution of Dividend



8.1

If, after deduction of all fees and expenses, there are funds remaining in the estate of the company, the liquidator will distribute this sum to creditors whose claims have been admitted. 

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Release of Liquidators and Dissolution of Company



9.1

Once all the assets of the company have been realized, investigation completed and a final dividend , if any, has been paid, the liquidator will send notices,  together with a summary of his receipts and payments in the liquidation, to the creditors and contributories of the company of his intention to apply to the court for his release as liquidator. Any creditor or contributory may raise objection to the intended release within 21 days from the date of the notice.

9.2

If there is no objection to the intended release, the liquidator will proceed to apply to the court for his release as liquidator of the company.

9.3

After obtaining the order for release, the liquidator will file with the Registrar of Companies the "Certificate of Release of Liquidator". On the expiration of two years from the filing of the “Certificate of Release of Liquidator", the company shall be dissolved.

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Prosecution of Directors and Officers



10.1

The Official Receiver acts under the authorization of the Secretary of Justice to prosecute the directors and officers of wound up companies who are in breach of certain insolvency related offences. Some common insolvency related offences and their penalties are summarized in Schedule 1.

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Disqualification of Directors



11.1

The Official Receiver may make application to the court for a disqualification order against any director of a wound up company if the director's conduct makes him unfit to be concerned in the management of a company.


11.2

The court may make a disqualification order forbidding a person to act as a director of any company for a period up to 15 years.

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Reference Materials



12.1 For further information, please refer to:
  • Winding-up of a Company by the Court: The Main Processing Stages

  • Winding-up of a Company by the Court: Your Duties as a Company Director

  • Winding-up of a Company by the Court: Your Rights as a Creditor


    12.2

    These documents can be obtained from the Official Receiver's Office free of charge, from the website http://www.oro.gov.hk or by fax-on-demand through telephone number 2867 2448.

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    Enquiries/Complaints



    13.1 If further information/complaint is required, please contact us:
    Mail
    : The Departmental Secretary
    Official Receiver's Office
    10/F-12/F, High Block
    Queensway Government Offices
    66 Queensway, Hong Kong
    Telephone
    : 2867 2448
    Fax
    : 3105 1814
    E-mail
    : oroadmin@oro.gov.hk

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    SCHEDULE 1
    SOME COMMON INSOLVENCY RELATED OFFENCES AND PENALTIES


    Some common offences and penalties under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) and Companies Ordinance (Cap. 622):
     


    Companies (Winding Up and Miscellaneous Provisions) Ordinance
    (Cap. 32)
    Section


    Description of the Offence


    Penalty

    190(5)

    Person failing to comply with requirements to submit a statement of affairs or a supplementary affidavit.

    Liable to a maximum fine of $50,000 and daily default fine of $300

    271(1)(o)

    Officers disposed any property of the company which had been obtained on credit and had not been paid for within 12 months next before the commencement of the winding-up or at any time thereafter.

    On indictment : liable to imprisonment up to a maximum of 5 years.

    Summary prosecution : liable to a maximum of 2 years.

    271 (1)
    [relating to all paragraphs except (o)]

    Officers failing to comply with section 271, including :
    (i)

    Officers failing to deliver to the liquidator all the property, books and papers or disclose their information; and

    (ii)

    Officers concealed or fraudulently removed any part of the property or the books of the company within 12 months next before the commencement of winding-up or at any time thereafter.


    On indictment : liable to a maximum fine of $150,000 and imprisonment up to a maximum of 2 years.

    Summary prosecution : liable to a maximum fine of $50,000 and imprisonment up to a maximum of 6 months.



    Companies (Winding Up and Miscellaneous Provisions) Ordinance
    (Cap. 32)
    Section


    Description of the Offence


    Penalty

    272

    Officers falsifying books.

    On indictment : liable to a maximum fine of $150,000 and imprisonment up to a maximum of 2 years.

    Summary prosecution : liable to a maximum fine of $50,000 and imprisonment up to a maximum of 6 months.

    273

    Officers acting with intent to defraud creditors by giving, or concealing property of company. 

    On indictment : liable to a maximum fine of $150,000 and imprisonment up to a maximum of 2 years.

    Summary prosecution : liable to a maximum fine of $50,000 and imprisonment up to a maximum of 6 months.

    274(1)

    Officers failing to keep accounting records that comply with section 373(2) and (3) of the Companies Ordinance (Cap. 622) for the 2 years prior to winding-up of company.

    On indictment : liable to a maximum fine of $150,000 and imprisonment up to a maximum of 2 years.

    Summary prosecution : liable to a maximum fine of $50,000 and imprisonment up to a maximum of 6 months.

    275(3)

    Person being a party to carrying on the business of a company with intent to defraud creditors.

    On indictment : liable to unlimited fine and imprisonment up to a maximum of 5 years.

    Summary prosecution : liable to a maximum fine of $150,000 and imprisonment up to a maximum of 1 year.



    Companies Ordinance
    (Cap. 622)
    Section


    Description of the Offence


    Penalty

    373(5)&(6)
    374(4)&(5)
    377(3)&(4)

    Director failing to take reasonable steps to ensure that accounting records that comply with section 373(2) and (3) of the Companies Ordinance (Cap. 622) are kept and preserved.

    Liable to a maximum fine of $300,000 and imprisonment up to a maximum of 1 year.

    429(3)&(4)

    Director failing to take reasonable steps to ensure that financial statements are tabled at the Annual General Meeting.

    Liable to a maximum fine of $300,000 and imprisonment up to a maximum of 1 year.



    The following offences and penalties of the Companies Ordinance (Cap. 32) as in force from time to time before 3rd March 2014 were repealed by the Companies Ordinance (28 of 2012) with effect from 3rd March 2014. These offences and penalties in the pre-amended Companies Ordinance (Cap 32), as in force immediately before their repeal may continue to apply by virtue of Schedule 11 of the Companies Ordinance (Cap. 622):


    Pre-amended Companies Ordinance
    (Cap. 32)
    Section


    Description of the Offence


    Penalty

    121(4)
    (repealed)

    Director failing to take reasonable steps to ensure that proper books of account are kept and preserved

    Liable to a maximum fine of $300,000 and imprisonment up to a maximum of 1 year.

    122(3)
    (repealed)

    Director failing to take reasonable steps to ensure that accounts are tabled at the Annual General Meeting.

    Liable to a maximum fine of $300,000 and imprisonment up to a maximum of 1 year.


    The Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) were amended by the Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 (14 of 2016) with effect from 13th February 2017. The following offences and penalties in the pre-amended Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32), as in force immediately before that date may continue to apply or have effect by virtue of Schedule 26 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32):


    Pre-amended Companies (Winding Up and Miscellaneous Provisions) Ordinance
    (Cap. 32)
    Section


    Description of the Offence


    Penalty

    190(5)

    Person failing to comply with requirements to submit a statement of affairs

    Liable to a maximum fine of $50,000 and daily default fine of $300

    274(1)

    Officers failing to keep proper books of account for the 2 years prior to winding-up of company

    On indictment : liable to a maximum fine of $150,000 and imprisonment up to a maximum of 2 years.

    Summary prosecution : liable to a maximum fine of $50,000 and imprisonment up to a maximum of 6 months.


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