Hong Kong Ordinances

COMPANIES ORDINANCE - SECT 124

Obligation to lay group accounts before holding company

(1) Where at the end of its financial year a company has subsidiaries,
accounts or statements (in this Ordinance referred to as

"group accounts") dealing as hereinafter mentioned with the state of affairs
and profit or loss of the company and the subsidiaries shall, subject to
subsection (2), be laid before the company in general meeting when the
company's own balance sheet and profit and loss account are so laid.

(2) Notwithstanding anything in subsection (1)-

   (a)  group accounts shall not be required where the company is at the end
        of its financial year the wholly owned subsidiary of another body
        corporate; and (Amended 6 of 1984 s.88)

   (b)  group accounts need not deal with a subsidiary of the company if the
        company's directors are of opinion that-

        (i)    it is impracticable, or would be of no real value to members of
               the company, in view of the insignificant amount involved, or
               would involve expense or delay out of proportion to the value
               to members of the company; or

        (ii)   the result would be misleading, or harmful to the business of
               the company or any of its subsidiaries; or

        (iii)  the business of the holding company and that of the subsidiary
               are so different that they cannot reasonably be treated as a
               single undertaking; and, if the directors are of such an
               opinion about each of the company's subsidiaries,
               group accounts shall not be required: Provided that the
               approval of the Financial Secretary shall be required for not
               dealing in group accounts with a subsidiary on the ground that
               the result would be harmful or on the ground of the difference
               between the business of the holding company and that of the
               subsidiary.

(3) If any person being a director of a company fails to take all reasonable
steps to secure compliance as respects the company with the provisions of this
section, he shall, in respect of each offence, be liable to imprisonment and a
fine: (Amended 7 of 1990 s. 2) Provided that-

   (a)  in any proceedings against a person in respect of an offence under
        this section, it shall be a defence to prove that he had reasonable
        ground to believe and did believe that a competent and reliable person
        was charged with the duty of seeing that the requirements of this
        section were complied with and was in a position to discharge that
        duty; and

   (b)  a person shall not be sentenced to imprisonment for an offence under
        this section unless, in the opinion of the court dealing with the
        case, the offence was committed wilfully.

(4) For the purposes of this section a body corporate shall be deemed to be
the wholly owned subsidiary of another if it has no members except that other
and that other's wholly owned subsidiaries and its or their nominees.
(Replaced 80 of 1974 s. 12) [cf. 1948 c. 38 s. 150 U.K.]