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HKJA strongly opposes withholding of company directors' personal data from public


HKJA strongly opposes withholding of company directors' personal data from public

 

The government will soon table the Companies (Residential address and identification numbers) Regulation prohibiting public scrutiny of directors’ identity in the records of the Company Registry. HKJA strongly opposes this, considering it a serious limitation on investigative reporting, restricting media from disclosing any illegal or immoral activities, and an infringement of the public interest. This is unquestionably a retrogressive development in the free flow of information. It also weakens protection for minority shareholders, and represents an infringement of justice. HKJA strongly requests the government to withdraw this Regulation.

 

According to the Government’s proposal, ordinary people will no longer be allowed to inspect the identification numbers and residential addresses of the directors in order to protect their privacy.  In order to maintain a balance in the public interests HKJA believes that keeping the current mechanism of disclosure of company directors’ personal data intact is a vital necessity.

 

Allowing the public to examine the identity of a director has long been a sound common practice. No abuse of the system has been encountered. Instead, through inspection of directors' identity, the general public, including journalists, have been able to uncover illegal and/or immoral activities perpetrated by government officials, politicians and/or business people.  Instances such  as the revelation of the Secretary for Development , Paul Chan Mo Po’s involvement in running businesses on illegally sub-divided flats; allegations against Mr Franklin Lam Fan-keung, a member of the Executive Council, of taking advantage from a sale of flats before a policy announcement; the exposë of Lau Wong Fat’s failure to disclose an interest in a policy matter while being a member of the Executive Council; ballot stuffing during the District Council Election of 2011; the scandal of Henderson Land 39 Conduit Road incident; the revelation of failure to declare an interest by Mr. Wong ho-sang, former Commissioner of Inland Revenue, who finally got fired: all these disclosures pointed to infringements of the public's interest. Without the report of media, the public would never have known of such malpractices.

 

As we are all aware, the market share in Hong Kong of companies with Mainland China background is growing rapidly. In recent years, significant foreign media reports on assets of Chinese leaders’ family members were possible only after initial information was acquired by the search of company directors’ identity through the Company Registry Records in Hong Kong.

 

In fact, the main objective of the current public inspection arrangement is to ensure that the interests of minority shareholders are protected, that is, the general interests of the public. It is common knowledge to financial journalists that major shareholders of an entity may collaborate with people closely related to them to secure questionable advantage by establishing another company to bid for a contract or purchase/sell assets. It would be difficult to inspect the links of such third parties if the new regulation is in place. The interests of minority shareholders will, thus,  be left totally unprotected.

In view of this, the Hong Kong Association of Banks has expressed their opposition to the proposed amendment, regarding such disclosure of information as important to monitoring money laundering and increasing the sense of responsibility among directors. It is equivalent to saying that any restriction on public inspection of such information would create obstacles to monitoring money laundering activities which would, in turn, create a hotbed of corruption. Additionally, the labour industry is also opposed to the amendment as they are afraid that the amendment will enable recalcitrant employers to abdicate responsibility by registering operations under different companies.

 

The free flow of information and high transparency has provided a solid base for Hong Kong to develop and consolidate as a regional information hub and financial centre. The current proposal to amend this law does not meet with these needs.  More importantly, it goes against the international trend towards more openness and transparency in governance. HKJA urges the Government to withdraw the amendment. HKJA will not ask for exemption for journalists because this would not help to protect those who are powerless of their right of access to public information.

 

09/01/2013 16:30   updated more
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