Agreement Under Section 359(1)(B)

Section 359 sets out the conditions that a business must meet to be covered by the exemption from reporting. In particular, Section 359(1) (the `business base`) deals with cases in which the undertaking concerned is an undertaking, while Section 359(2) and (3) (the `group base`) applies to cases where the undertaking is the holding company of a group of undertakings. Intuitively, behind the intention of law between companies with or without subsidiaries, there is a concept of dichotomy, since it is more difficult to fulfill the conditions of the base of the group (for reasons of simplicity, ignores the way of Article 141D advanced by the predecessor HKCO). Unfortunately, the legislation does not reflect this intention. Article 359(1) provides that `for the purposes of that Party, an undertaking shall be covered by the exemption from reporting for a financial year …… ». It is interesting to clarify Article 359(2) and (3): `For the purposes of this Part, an undertaking shall also be covered by the exemption from reporting for a financial year if… ». The word “also” emphasizes the absence of a mutually exclusive relationship between (A) of the company base and (B) of the group base – although the interpretation is no different, even without it. HKICPA`s guidance for Business Review: [Guidance for the Preparation and Presentation of a Business Review under the Hong Kong Companies Ordinance Ordinance Cap. 622] The following types of businesses are not eligible for exemption from notification under the new Companies Ordinance and therefore cannot establish their accounts in accordance with SME-FRF &SME-FRS: there is no clear link in the new CO between the requirements of Article 379(3) (for eligibility) B. for non-creation of consolidated financial statements) and section 359 (concerning the admissibility of the exemption from reporting).

However, it seems reasonable to assume that a correlation is being considered. the entity is a company authorised under Part V of the Securities Regulation and forward (Cap. 571) for the carrying on of an undertaking in a regulated activity within the meaning of this Regulation; or the holding company is not eligible for the exemption from notification provided for in the new Companies Regulation and therefore cannot establish its accounts in accordance with SME-FRF &SME-FRS where the group of which it is a holding company includes a type of enterprise referred to in the above-mentioned paragraph or includes a non-Hong Kong entity: groups that contain such companies are also not eligible for the exemption from reporting and therefore cannot not: to draw up consolidated accounts by means of the EMS-FRF and the EMS-FRS. DECIDED that, in accordance with Article 359 (1) (b) of the Cap 622 Enterprise Regulation, the enterprise will be exempt from reporting for the financial year ending in TT MMMM DDD. . . .

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