Under the Companies Ordinance for setting up a company in HK, various rules and regulations have been improvised for the registration of specific charges created by the company. The following sections put a light on the definition of specified charge, policies for specified charges registration created by the companies located in Hong Kong, outside of Hong Kong and a set up company in HK and the consequences of violation of registration rules under the Companies Ordinance Act.

Specified Charge

According to Companies Ordinance in regarding to the set up of a company in HK, specified charge can be referred to be a charge associated with the company’s uncalled share capital, instrument created charge and execution of which by a person would require bill of sale for registration, charge imposed on land and it’s associated interest apart from rent or any other periodical sum issuing out of land but one thing regarding land charge is that the loans hold by holder which  allow him/her to have a charge on land are not considered as interest, charge associated with book debts of company, charge on unpaid calls, charge on unpaid installments, charge on ship and aircraft and their associated shares, charge on goodwill, patent and a license under a patent, trademark, copyright and a license under a copyright, a charge on company’s undertaking and property. Three things concerning with the charge on book debts are:

• The payments of book debts by a negotiable instrument is not considered to be a charge on book debts.
• If a company deposits debt by assistance of another person, charge on company’s right to repayment of money to that person is not considered to be the charge on book debts.
• For a chartered ship, ship owner’s lien on sub-freights for amounts due is not taken as a charge on book debts or as a floating charge on company’s undertaking or property.

Registration of Specified Charge

Charge Registration by Local Company

Every Company must submit a statement containing details of each specified charge accompanied by an instrument (if any) to the Registrar for registration within a designated time. A specified charge can be given in a debenture forming part of a series by reference to any other instrument containing the charge or is contained in a debenture forming part of a series but not in debenture by reference to any other instrument. Every debenture should be given equal chance to get benefits of charge. Any person who is interested in specified charge can submit statement of details of specified charge supported by an instrument to the Registrar within an allocated time. The instrument is by reference to which specified charge is given or any one debenture of the series.

Registration Period

The registration period is:

• One month after the creation date of charge where charge is created in company located in Hong Kong and the property is outside of Hong Kong and the certified copy of instrument has been received in Hong Kong within the time span of one month or if there is no instrument available than one month after the execution of first debenture of series.

A statement of particulars should be in a prescribed pattern and should be accompanied with the prescribed fee. The fee is refundable from the company creating the charge. For charge creation of property outside of Hong Kong copy of certified instrument can be submitted to the Registrar but further proceeding can be necessary to make a valid charge according to the law of the place in which property is located.

Charge Registration by Non-Hong Kong Company

Every Non- Hong Kong Registered Company must submit a statement containing details of each specified charge accompanied by an instrument (if any) to the Registrar for registration within a designated time. A specified charge can be given in a debenture forming part of a series by reference to any other instrument containing the charge or is contained in a debenture forming part of a series but not in debenture by reference to any other instrument. Every debenture should be given equal chance to get benefits of charge. Any person who is interested in specified charge can submit statement of details of specified charge supported by an instrument to the Registrar within an allocated time. The instrument is by reference to which specified charge is given or any one debenture of the series.

Registration Period

The registration period is:

• One month after the creation date of charge and one month after the execution of instrument by reference on which specific charge is created or if there is no instrument available than one month after the execution of first debenture of series.

A statement of particulars should be in a prescribed pattern and should be accompanied with the prescribed fee. The fee is refundable from the registered non-Hong Kong company creating the charge.

Consequences of Violation

This section discusses the consequences which a company or a person may face if a registered local or registered non-Hong Kong company is not abide by charge creation rules and an interested person has not registered the charge. According to the Companies Ordinance a person who commits an offence is liable to fine at level 5 and if he/she continues to commit offence he/she may be fine $1000. The specified charge is null against any liquidator and creditor of both local and non-Hong Kong Companies so far as any security on its undertaking or property is conferred by the charge. At the lender’s side money secured by a specified charge have to be returned immediately as soon as a charge becomes void.