Registration of Charges in Hong Kong
What is a Charge?
In Hong Kong, a charge is a security interest granted by a company to secure a debt or obligation. It essentially gives the lender (chargee) the right to take possession of the company's assets if the debt is not repaid.
Types of Charges
Fixed Charge: This is a charge on specific assets, such as land, buildings, or machinery.
Floating Charge: This is a charge on a company's general assets, which allows the company to continue using and dealing with the assets until the debt is due.
Registration Requirements
Under the Companies Ordinance of Hong Kong, certain charges must be registered with the Companies Registry. Failure to register a charge within the prescribed time can result in penalties and may affect the rights of the chargee.
Documents Required for Registration
Form NM1: A prescribed form containing details of the charge.
Certified Copy of the Charge Instrument: A certified copy of the document creating the charge.
Prescribed Fee: A government fee.
Timeframe for Registration
Specified Charges: These must be registered within one month of their creation.
Charges on Acquired Property: If a company acquires property subject to a charge, it must register the charge within one month of the acquisition.
Electronic Registration
The Companies Registry offers an electronic service for submitting charge documents. This can streamline the registration process.
Discharge of Charges
When a debt is repaid or a charge is released, a notification must be filed with the Companies Registry.
Importance of Registration
Public Record: Registration provides public notice of the charge, protecting the interests of creditors and potential investors.
Priority: Registration determines the priority of charges in the event of insolvency.
Enforcement: A registered charge can be enforced against the company's assets.
Charge Registration Process in Hong Kong
1. Preparation of Documents:
Form NM1: Complete the prescribed form with accurate details of the charge.
Certified Copy of Charge Instrument: Obtain a certified copy of the document creating the charge.
Prescribed Fee: Prepare the necessary government fee.
2. Submission of Documents:
Electronic Submission: You can submit the documents electronically through the Companies Registry's online platform.
Physical Submission: Alternatively, you can submit the documents in person or by post to the Companies Registry.
3. Review and Processing:
The Companies Registry will review the submitted documents for completeness and accuracy.
If there are any deficiencies, they will notify you and request the necessary corrections.
Once the documents are deemed satisfactory, the Registry will process the registration.
4. Registration and Issuance of Certificate:
Upon successful registration, the Registry will issue a certificate of registration.
This certificate serves as proof of the registered charge.
Additional Considerations:
Timeframe: Ensure that you register the charge within the prescribed time limit (usually one month from creation or acquisition).
Priority: The priority of your charge among other creditors will be determined by the date of registration.
Discharge: When the debt is repaid or the charge is released, you must notify the Registry and request a discharge certificate.
Prescribed Fee
The prescribed fee for registering a charge in Hong Kong depends on the type of charge and the value of the assets secured. The exact fee can be found on the website of the Companies Registry or by contacting them directly.
Here are some general guidelines:
Specified Charges: For charges on specific assets, the fee is calculated based on the value of the assets.
Floating Charges: The fee for floating charges is typically lower than for specified charges.
How Bestar Can Help with Charge Registration in Hong Kong
Bestar can provide invaluable assistance throughout the charge registration process in Hong Kong. Here are some ways we can help:
Advise on Legal Requirements:
Ensure compliance with all relevant laws and regulations.
Explain the different types of charges and their implications.
Advise on the appropriate type of charge based on your specific circumstances.
Draft Necessary Documents:
Prepare the required documents, such as the charge instrument and Form NM1.
Ensure that the documents accurately reflect the terms of the charge.
Assist with Registration Process:
Guide you through the registration process, including electronic submission or physical filing.
Help you address any queries or issues that may arise during the registration.
Provide Advice on Priority:
Explain the factors that determine the priority of a charge among other creditors.
Help you take steps to ensure that your charge has the desired priority.
Advise on Discharge of the Charge:
Assist in the process of discharging the charge when the debt is repaid or the obligation is fulfilled.
Ensure that the discharge is properly registered with the Companies Registry.
By engaging Bestar, you can benefit from our expertise and avoid potential legal pitfalls, ensuring a smooth and successful charge registration process.
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