Hong Kong: Court Confirms that Corporate Creditors can be Appointed to a Committee of Inspection

Last Updated: 16 March 2004
Most Read Contributor in Hong Kong, September 2016

Written by Tom Vaizey, Partner, Johnson Stokes & Master


In a recent case, Re Asean Interests Limited [2004] HKEC 184 (decision 19 December 2003), the Court of First Instance has confirmed that, where corporations wish to be members of a committee of inspection in a liquidation, they should be members in their own right rather than having natural persons appointed to represent them.

Full Update

The Issue

The committee of inspection can play an important role in the administration of a court ordered liquidation.  The liquidators must report regularly to the committee, and certain powers of the liquidators are only exercisable with the sanction of either the court or the committee.  These powers include the power to bring legal proceedings, to carry on the company's business, and to make arrangements or compromises with creditors. 

Section 207 of the Companies Ordinance specifies the categories of persons who may be appointed to a committee: they must be creditors or shareholders or persons authorised by them though powers of attorney.  In recent years, the court has interpreted section 207 to mean that only natural persons can sit on committees of inspection, so where a creditor or shareholder is a corporation, an individual must be nominated to represent it. This can cause practical problems : liquidations can last for several years and an individual who is acting as the representative of a corporation might leave his or her employment, or be moved to a different position, so he or she would need to resign from the committee.  Further creditors' and shareholders' meetings would then need to be convened to replace the member.

In Asean, a committee consisting of three corporations and one individual, all creditors, had been appointed.  The liquidators sought confirmation from the court as to the validity of the appointment of the corporations themselves as members.

The Statutory Provision

Section 207(1) states that:

"A committee of inspection appointed in pursuance of this Ordinance shall consist of creditors and contributories of the company or persons holding general powers of attorney from creditors or contributories in such proportions as may be agreed on by the meetings of creditors and contributories, or as, in case of difference, may be determined by the court."

Section 207(5) provides that:

"If a member of the committee becomes bankrupt, or compounds or arranges with his creditors, or is absent from 5 consecutive meetings of the committee without the leave of those members who together with himself represent the creditors and contributories, as the case may be, his office shall thereupon become vacant."

The Prevailing View Prior To Asean

Most recently, the policy of the Official Receiver and judges and masters of the High Court appears to have been guided by a leading commentary on the Companies Ordinance.  This commentary refers to an Australian case, Re Testro Bros Consolidated Limited [1965] VR 18, as authority for the proposition that only natural persons can be appointed to a committee.

In Testro, a provision equivalent to section 207 came under consideration. References, in the equivalent of section 207(5), to bankruptcy (which is a term generally taken to apply to individuals only) led the judge to conclude that the whole provision applied to natural persons only, and so it followed that only natural persons could sit on a committee. 

The Court's Decision In Asean

The decision of Madam Justice Kwan in Asean rests on a broader statutory interpretation than that applied in Testro.  In rule 2 of the Companies (Winding-Up) Rules, a creditor is defined to include both a corporation and a partnership. "Contributory", under section 171 of the Companies Ordinance, covers "every person liable to contribute to the assets of a company in the event of its being wound up...". Finally, the term "person", under section 3 of the Interpretation and General Clauses Ordinance, "includes any public body and any body of persons, corporate or unincorporate...". 

Applying these definitions to section 207, and with reference to section 115 of the Companies Ordinance, which provides for a mechanism through which corporations may be represented in a meeting of creditors by natural persons, her Ladyship concluded that a body corporate which is a creditor or contributory is entitled to be appointed to a committee of inspection; indeed, when a corporation is nominated to serve on a committee, it should be appointed in its own name.

Her Ladyship therefore declined to follow Testro.  She observed that an explanation for the wording of section 207(5) of the Companies Ordinance was that provision is needed to provide for a natural person's bankruptcy because a bankrupt's assets vest in a trustee, and the individual loses capacity except in certain instances.  There is no need to deal with what happens in a corporate liquidation, however, because the company remains the same entity, able to deal with its own assets, albeit through a liquidator rather than the board.  In any event, there was no reason why the wording of section 207(5) should influence the interpretation of the other parts of the section.

The Way Forward

The provision of a fully reasoned decision will provide welcome certainty and guidance to liquidators and institutional creditors where, in the past, the policies of the court and the Official Receiver as to the nature of corporate representation has fluctuated.  Parties can now be sure that the nomination of corporate creditors in their own right to committees of inspection will be ratified by the court.

The original email legal update is copyright Johnson Stokes & Master at the date written first above. All rights reserved. This publication provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is intended to provide a general guide to the subject matter and is not intended to provide legal advice or a substitute for specific advice concerning individual situations. Readers should seek legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.