Hong Kong Ordinances

COMPANIES ORDINANCE - SECT 28A

Membership of holding company

(1) Subject to the provisions of this section, a body corporate cannot be a
member of a company which is its holding company, and any allotment or
transfer of shares in a company to its subsidiary shall be void.

(2) Nothing in this section shall apply where the subsidiary is concerned as
personal representative, or where it is concerned as trustee, unless the
holding company or a subsidiary thereof is beneficially interested under the
trust and is not so interested only by way of security for the purposes of a
transaction entered into by it in the ordinary course of a business which
includes the lending of money.

(3) This section shall not prevent a subsidiary which was, at the
commencement* of the Companies (Amendment) Ordinance 1984 (6 of 1984), a
member of its holding company, from continuing to be a member.

(4) This section shall not prevent a company which at the date it becomes a
subsidiary of another company is a member of that other company, from
continuing to be a member.

(5) This section shall not prevent a subsidiary from becoming a member of its
holding company, or prevent an allotment to a subsidiary of shares in its
holding company, by or by virtue of the exercise by the subsidiary of any
rights of conversion attached to any shares in its holding company or under
any debentures thereof held by the subsidiary at the commencement* of the
Companies (Amendment) Ordinance 1984 (6 of 1984).

(6) This section shall not prevent a subsidiary which is a member of its
holding company from accepting and holding further shares in its holding
company if such further shares are allotted to it as fully paid up in
consequence of a capitalization of reserves or profits by such holding
company.

(7) Subject to subsection (2), a subsidiary which is a member of its holding
company shall have no right to vote at meetings of the holding company or any
class of members thereof.

(8) Subject to subsection (2), this section shall apply in relation to a
nominee for a body corporate which is a subsidiary, as if references therein
to such a body corporate included references to a nominee for it.

(9) Where a holding company makes an offer of shares to its members it may
sell, on behalf of a subsidiary, any such shares which the subsidiary could,
but for this section, have taken by virtue of shares already held by it in the
holding company, and pay the proceeds of the sale to the subsidiary.

(10) In relation to a company limited by guarantee or unlimited which is a
holding company, the reference in this section to shares, whether or not it
has a share capital, shall be construed as including a reference to the
interest of its members as such, whatever the form of that interest. (Added 6
of 1984 s. 17) [cf. 1984 c. 38 s. 27 U.K.]
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* Commencement date: 31 August 1984.