The Hawaiian gazette., 1916-03-31
HONGkONG PUTS
. RESTRICTIONS ON
TRADE IN ORIENT
American Interests Involved In
New Laws Concerning Opera
tons Of British Corporations
ORDINANCE HARM0NIzES
WITH 0RDER-IN-C COUNCIL
Object Is To Increase Control
Over Companies Doing Bust
ness In China .

1900 w SiiIliQ
The foreign and domestic trade bu.
reau of the department of commerce in
Washington is authority for the state
ment that the operation of British
corporations in China, involving the
business of most Of the companies trad.
ing in China and to some extent all
over the far east, and involving like
wise agencies and other interests Of
American exports, has been greatly
modified by a Hongkong ordinance re.
Gently passed.
The Hongkong ordinance is in ,har.
mony WITH and in support of, an order
mcconnell of the British government
effcctinG new control Of British corpor
ations organized in various colonies or
in Great Britain itself for operation in
China under extra-territorial iurisdic,
ton, and applies to corporations organ.
lied in Hongkorg for operation in va.
rious parts of China.
Yhe situation in general mcv be I'M
der-stood from the fact that since there
is, in China, no incorporation law Of
which foreigners could take advantage
in the organization of a company for
the transaction of corporate business, il
has been necessary for the commercial
interests of various nations to organize
such corporations in their own country
or in far eastern countries other than
China. As a result of liberal rules gov
erning the formation of these compan--
los large number--the larger numbers,
in fact-of these corporations operat-
ing in China are organized in Hong
kong under the British colonial acts
Definite Action Necessary
Because of this lihrrality AMI the
peculiar conditions arising from extra.
territOriality in China, however. cor
porations could be organized in Hong
kong with ,nOn-British capital and nou-
British offices and, transferring their
work to China, could there operate
Prnc tically without. let or hintFanrr.
Since each director would be subject
only to the laws of his own country
while in China. Serious abuses have
crept into all lines Of business Efforts
have been made during several years
past to draft laws that would cover the
resulting abuses without putting undue
restrictions upon proper trade, but this
has been found difficult
With the war bringing about a con.
dition Of affairs where, for example,
non British interests could do business
as British corporation in China, def,
mite action has been found necessarv.
The first legislation was certain Crlers
in-cOuncil of the British government
is sued several months ago. pruviding
restrictions in China and especially for
the registration of British and British
colonial corporations at Shanghai, and
otherwise providing legal machinery
designed to make possible rnstrictirr
legislation in Hongkong. This legs
latiOn in lIongkong, designed to fit in
with the legislation at London, is re-.
presented by the ordinance just adopt
ed
Complimentary to Orders
The new IIongk ong law il compile
mentary to the orders in council, the
joint object of these two ena"tmcntS
being to increase the control over Hong
kong companies carrying on business in
China. These companies fall into two
classes, those managed from Hougko ng
and those managed from some place in
China. In the case of companies man
aged from Hongkong, the government
and courts enables an effertiNc control
to be exercised over the company
the persons of its directors auI
officers here, whatever their nationality.
In the ease, however, of companies
of the serOnd class, the directors and
officers of which are resident outside
the British duminiOns, there is no eff
fective control over the cCm any unless
some of, the directors and officers are
of British nationality, because the iu.
T'sdictlOn of the supreme court for
China. lOratcd at Shanghai. is, in gene,
raj, confined to British subjects and
protected persons. To secure jurisdir-
tion over these cOmnanios doing bust
ness outside of the territorial u isdir,
tiOn of the supreme court for China,
located at Shanghai, is, in general, con
fined to British subjects and protected
persons. To secure jurisdiction over
these companies doing business outside
Of the territorial jurisdiction Of Hong
kong or the British government, the
new law requires that Hongk Ong com
panics managed from some place in
China shall have connected with them
a certain number of British sub eets on
whom a personal control can be exer-
cised, Farther, shares in any com
panies must be fully paid up within
three months after allotment
Regarding Share Companies
The exact provisions relative to share
companies, as set forth in the onlrui
statement are that the me- JOIitY' f the
directors, and 'hr auditors must lie
British subjects; that no person other
than Il British Sul'r.' shall he ari,"Ilt
ed to act within III, liniry of tnv order.
mcconnell as HquidatOr Of sucn com
NAVY, or as receiver or manager on he
half of the debenture holdetS, except
with the sanction of the court; and that
no shares shall be issued CNrep: either
as fully paid mp or upon the tenn Ihnt
the shares shall he full paid up within
three months after allotment.
in regard TO the comparatively few
nias Initial l,y Tr,to hn