Hong Kong Ordinances

COMPANIES ORDINANCE - SECT 47C

Transactions not prohibited by section 47A

(1) Section 47A(1) does not prohibit a company from giving
financial assistance for the purpose of an acquisition of shares in it or its
holding company if-

   (a)  the company's principal purpose in giving that assistance is not to
        give it for the purpose of any such acquisition, or the giving of the
        assistance for that purpose is but an incidental part of some larger
        purpose of the company; and

   (b)  the assistance is given in good faith in the interests of the company.

(2) Section 47A(2) does not prohibit a company from giving
financial assistance if-

   (a)  the company's principal purpose in giving the assistance is not to
        reduce or discharge any liability incurred by a person for the purpose
        of the acquisition of shares in the company or its holding company, or
        the reduction or discharge of any such liability is but an incidental
        part of some larger purpose of the company; and

   (b)  the assistance is given in good faith in the interests of the company.

(3) Section 47A does not prohibit-

   (a)  a distribution of a company's assets by way of dividend lawfully made
        or a distribution made in the course of the company's winding up;

   (b)  the allotment of bonus shares;

   (c)  a reduction of capital confirmed by order of the court under
        section 60;

   (d)  a redemption or purchase of shares made in accordance with sections 49
        to 49S; <* Note - Exp. X-Ref.: Sections 49, 49A, 49B, 49BA, 
 49C, 49D, 49E, 49F, 49G, 49H, 49I, 49J, 49K, 49L, 49M, 49N,
        49O, 49P, 49Q, 49R, 49S *>

   (e)  anything done in pursuance of an order of the court under section 166;

   (f)  anything done under an arrangement made in pursuance of section  237 ;
        or

   (g)  anything done under an arrangement made between a company and its
        creditors which is binding on the creditors by virtue of section 254.

(4) Section 47A does not prohibit-

   (a)  where the lending of money is part of the ordinary business of the
        company, the lending of money by the company in the ordinary course of
        its business;

   (b)  the provision by a company in accordance with any scheme for the time
        being in force, of money for the purchase of, or subscription for,
        fully paid shares in the company or its holding company, being a
        purchase or subscription by trustees of or for shares to be held by or
        for the benefit of employees of the company or of any subsidiary of
        the company, including any director holding a salaried employment or
        office in the company or any subsidiary of the company;

   (c)  the making by a company of loans to persons (other than directors)
        employed in good faith by the company with a view to enabling those
        persons to acquire fully paid shares in the company or its holding
        company to be held by them by way of beneficial ownership.

(5) References in subsection (4)(c) to a director shall include references to-

   (a)  the spouse or any child or step-child of such director;

   (b)  a person acting in his capacity as the trustee (other than as trustee
        under an employee's share scheme or a pension scheme) of any trust the
        beneficiaries of which include the director, his spouse or any of his
        children or step-children or the terms of which confer a power on the
        trustees that may be exercised for the benefit of the director, his
        spouse or any of his children or step-children; and

   (c)  a person acting in his capacity as partner of that director or of his
        spouse, child or step-child, or of any trustee referred to in
        paragraph (b).

(6) References in subsection (5) to the child or step-child of any person
shall include a reference to any illegitimate child of that person, but shall
not include a reference to any person who has attained the age of 18 years.
(Added 77 of 1991 s. 3) [cf. 1985 c. 6 s. 153 U.K.]