Legislative Council

LC Paper No. CB(1) 975/98-99
(These minutes have been seen
by the Administration)

Ref: CB1/BC/6/98/2

Bills Committee on
Business Registration (Amendment) Bill 1998

Minutes of meeting
held on Tuesday, 24 November 1998, at 2:30 pm
in Conference Room A of the Legislative Council Building

Members present :

Hon SIN Chung-kai (Chairman)
Hon HO Sai-chu, JP
Hon Albert HO Chun-yan
Hon Ronald ARCULLI, JP
Hon Jasper TSANG Yok-sing, JP

Members absent :

Hon Eric LI Ka-cheung, JP

Public officers attending :

Miss Amy TSE
Principal Assistant Secretary for the Treasury (Revenue)

Mrs Alice LAU
Assistant Commissioner of Inland Revenue

Mr Frederick KUNG
Senior Assessor (Business Registration)
Inland Revenue Department

Mr Frederick CHUNG
Senior Government Counsel
Department of Justice

Miss Vivian SUM
Assistant Secretary (Treasury) (Revenue)

Clerk in attendance :

Ms LEUNG Siu-kum
Chief Assistant Secretary (1)2

Staff in attendance :

Ms Bernice WONG
Assistant Legal Adviser 1

Miss Becky YU
Senior Assistant Secretary (1)3

I Election of Chairman

At the request of members, Mr SIN Chung-kai chaired the meeting for the election of Chairman.

2. Nominated by Mr Albert HO and seconded by Mr Ronald ARCULLI, Mr SIN Chung-kai was elected Chairman of the Bills Committee.

II Meeting with the Administration
(Legislative Council Brief (Ref: FIN CR 3/2311/90), LC Paper Nos. LS 60/98-99 and CB(1) 501/98-99(02) and (03))

3. At the invitation of the Chairman, the Assistant Commissioner of Inland Revenue (AC of IR) briefed members on the Administration's response to questions raised by the Assistant Legal Adviser 1 (ALA1) circulated vide CB(1) 501/98-99(03).

Business names

4. In response to Mr HO's enquiry about the proposed section 5 on business names, AC of IR explained that under the current Business Registration Ordinance (the Ordinance), if a person wished to use different business names in respect of the same business he carried on, he had to make separate applications for registration of these names as if they were the names of different branches of the business and separate business registration fees were required. The proposed section 5 made it clear that each business was allowed to register a Chinese name, or an English name, or one Chinese name and one English name as its business name(s). If more business names were desired, such additional names would have to be registered as if they were branch names.

5. AC of IR further advised that under the proposed section 6, a limited company could not be registered under a business name which might mislead the public that it was a different limited company. However, this was not applicable to unincorporated businesses given their different set-ups. As regards business names used by overseas-incorporated businesses, AC of IR remarked that the Business Registration Office would require these companies to include their origins of registration in the business names to avoid confusion.

Removal of a business registration from the Business Register

6. Members noted that under the proposed section 6(4B), the Commissioner of Inland Revenue was empowered to remove a business registration from the Register if it appeared to him that such a business or a branch of the business was unlawful. However, as the term "unlawful" was not defined in the Ordinance, members expressed concern that the Commissioner would be entrusted with excessive discretionary power to determine whether a business was unlawful. In response, AC of IR clarified that since the enactment of the Ordinance in 1959, the Commissioner had not been required under section 6(4)(a) to register any unlawful business or branch. The proposed section aimed to ensure the integrity of section 6(4)(a) by providing a remedy to the Commissioner to remove the registration of an unlawful business or branch which had been inadvertently registered and to publish a notice of removal in the Gazette. She emphasized that the power under the proposed section 6(4B) would only be exercised when it appeared to the Commissioner that a business or branch should not have been registered because it was unlawful at the time of registration. The decision on whether a registered business or branch was unlawful or not rested with the court or other competent authorities.

7. Mr ARCULLI asked if there were many cases of inadvertent registration of unlawful businesses which prompted the introduction of the proposed section 6(4B). AC of IR advised that so far, IRD had not come across any business or branch which should not have been registered by virtue of section 6(4)(a). The proposed amendment was purely technical to enhance the operation of the Ordinance.

8. As the proposed section 6(4B) did not provide for a notice to be issued by the Commissioner to the concerned business owner informing him of the removal of his business registration from the Register, ALA1 pointed out that it would contravene the rule of natural justice if such a notice was not given prior to the de-registration, or before publication in the Gazette. Expressing similar concern, Mr HO cautioned that as business registration was required in many business related activities, including the opening of bank accounts, the sudden de-registration without prior notice to the concerned business owner might cause unnecessary disruptions to his business, such as bouncing of cheques. He considered that opportunity should be given for the owner to show cause against the Commissioner's decision of de-registration. In reply, AC of IR emphasized that business registration was merely a registration of the commencement of a business or branch and did not confer the business or branch any legal status. Therefore, the removal of an entry from the register should not affect the normal activities of the business or branch concerned. She nevertheless undertook to consider the suggestion of issuing a notice of the Commissioner's de-registration action to the owner of a business or branch concerned. Mr ARCULLI was of the view that apart from publication in the Gazette, a notice should also be published in newspapers to inform other relevant parties of the de-registration. Mr HO stressed that a wide publicity on the de-registration would have great impact on the concerned business owner. He therefore insisted on providing an opportunity for the owner to show cause before de-registration.

Streamlining the operation of the business registration system

9. AC of IR advised that in order to provide timely and quality services to the business community and the public at large, IRD had reviewed the operation of the business registration system. One of the major improvement measures was the establishment of an Open Business Index which would be accessible to the public for the search of business registration numbers of businesses on a self-service basis. This would enable the public to obtain the required information in a timely manner and reduce the workload of IRD. Another important measure was the provision of extracts of business particulars in uncertified form. The dispensation with the certifying process which had to be done manually would enable full automation of extraction of information from the Register. It would also enable the particulars to be transmitted to information seekers electronically such as through the Internet when the Index was published in electronic form by the year 2000. These measures, taken together, would be able to shorten the processing time for enquiries from four to two working days.

10. As to why an extract of information from the Register would still take two days with the provision of the Open Index, AC of IR explained that at present, not all information was recorded on a computer. As some of the information was contained in microfilms, extra time had to be taken to transform such information into hard copies. Consideration was being given to replace the microfilms with optical discs to expedite retrieval of information, subject to the availability of resources. In reply to a related question on secrecy of information, AC of IR confirmed that the proposed index would only include minimal particulars of the registered businesses to facilitate identification of a required business, and that release of information other than those related to a required business was prohibited under the existing Ordinance.

11. While appreciating the Administration's intention to streamline the operation of the business registration system, Mr HO considered that more efforts should be made to alert the business community the need to report to IRD any changes of business particulars. AC of IR took note of Mr HO's concern and advised that IRD had published pamphlets and uploaded information onto the Internet explaining the business registration system.

III Any other business

12. Members agreed that the next meeting would be held on Thursday, 10 December 1998, at 8:30 am.

13. There being no other business, the meeting ended at 3:45 pm.

Legislative Council Secretariat
12 March 1999