TRANSFER OF BUSINESSES (PROTECTION OF CREDITORS) ORDINANCE (CHAPTER 49) Whole document:To protect creditors on the transfer of businesses, to provide for theliability of transferees of business, the manner in which such liabilitymay be avoided and for matters incidental thereto and connected therewith,and to repeal the Fraudulent Transfers of Businesses Ordinance.[27 June 1980] 1. Short titleThis Ordinance may be cited as the Transfer of Businesses (Protection ofCreditors) Ordinance. 2. Interpretation(1) In this Ordinance, unless the context otherwise requires--"appeal" includes a motion for a new trial or to set aside a verdict,finding or judgment;"business" means a business, or any part thereof, consisting of a trade oroccupation (other than a profession) whether or not it is carried on witha view to profit; "charge" means--(a) a debenture within the meaning of the Companies Ordinance (Cap. 32);(b) a mortgage;(c) a bill of sale;(d) a lien; or(e) any document,under or pursuant to which a business or any assets thereof are charged assecurity for the payment of money or the performance of an obligation, andincludes an equitable charge;"charge-holder" means a person who, under or pursuant to a charge, and forthe purpose of enforcing payment of any money or for the performance ofany obligation, may sell any business;"date of transfer" means the date on which a transfer takes effect or isintended to take effect;"notice of transfer" means a notice of transfer in accordance with section5; "registered charge" means a charge which is registered under--(a) the Land Registration Ordinance (Cap. 128);(b) the Companies Ordinance (Cap. 32);(c) the Bills of Sale Ordinance (Cap. 20); or(d) any other enactment;"transfer" means the transfer or sale of a business, but does not include-(a) the sale of the stock-in-trade of a business in the ordinary course ofits trade;(b) the creation of a charge;(c) the transfer of land or any share or interest therein; or(d) the transfer of a vessel (or the transfer of any interest or sharetherein), other than--(i) a vessel to which Part IV of the Shipping and Port Control Ordinance(Cap. 313) applies; or(ii) a trawler to which Part XII of the Merchant Shipping Ordinance (Cap.281) applies; "transferee" means the person to whom a business istransferred by a transferor; "transferor" means--(a) in the case of the sale of a business under or pursuant to a charge,the person whose business has been or is intended to be sold;(b) in every other case, the person by whom or on whose behalf thetransfer has been or is intended to be made.(2) For the purposes of this Ordinance "transferor" and "transferee"respectively include a sub-transferor and a sub-transferee. 3. Transferee of business to be liable for liabilities of trans- feror(1) Subject to this Ordinance, whenever any business is transferred, withor without the goodwill thereof, the transferee shall, notwithstanding anyagreement to the contrary, become liable for all the debts andobligations, including liability for tax charged or chargeable under theInland Revenue Ordinance (Cap. 112), arising out of the carrying on of thebusiness by the transferor.(2) Notwithstanding subsection (1), where a part of a business istransferred (other than the goodwill thereof) and in any proceedings--(a) the transferee would, but for this subsection, be adjudged liableunder this Ordinance for any debts and obligations arising out of thecarrying on of the business by the transferor; and(b) it is shown to the satisfaction of the court hearing the proceedingsthat--(i) the transferee purchased such part of the business in good faith andfor value; and(ii) at the date of transfer of such part of the business, the transfereehad no knowledge (whether actual, constructive or imputed)that what he was acquiring formed part of a business,the transferee shall not be liable under this Ordinance for the debts andobligations arising out of the carrying on of the business by thetransferor. 4. Circumstances in which the transferee's liability ceases(1) A transferee shall not become liable under section 3 if a notice oftransfer has been given not more than 4 months, and not less than 1 month,before the date of transfer and has become complete at the date oftransfer.(2) Where a notice of transfer has been given but the notice has notbecome complete at the date of transfer, the liability of the transfereeunder section 3 shall cease with effect from the date on which the noticeof transfer becomes complete.(3) Where a notice of transfer has not been given before or at the date oftransfer, the liability of the transferee under section 3 shall cease witheffect from the date on which a notice of transfer, which is given afterthe date of transfer, becomes complete.(4) A notice of transfer shall, subject to subsections (5) and (6), becomecomplete upon the expiration of 1 month after the date of the lastpublication of the notice in accordance with section 5.(5) Subject to subsection (6), in the case of a notice of transferreferred to--(a) in subsection (1), if proceedings are instituted against thetransferor in respect of any liability of the transferor arising beforesuch notice has become complete and out of the carrying on of hisbusiness; or(b) in subsection (2) or (3), if proceedings are instituted against thetransferee in respect of any liability of the transferee under section 3arising before such notice becomes complete,the notice of transfer shall (for the purposes of such proceedings only)be deemed incomplete pending the final determination of such proceedings,including all possible appeals, and pending the expiration of all periodsduring which such appeals may be brought.(6) Where proceedings are instituted, a notice of transfer shall not bedeemed incomplete under subsection (5) unless within 1 month of theproceedings being instituted--(a) they are served on the transferor or transferee, as the case may be;or(b) written notice that they have been instituted is sent by registeredpost to the last known address of such transferor or transferee. 5. Contents of notice of transfer and manner of giving notice(1) Except in the case of a transfer by way of sale under or pursuant to acharge, a notice of transfer shall contain the following particulars--(a) the full name and address of the transferor;(b) the nature of the business and the name or style under which, and thefull address at which, it has been carried on during the period of 6months immediately preceding the date of transfer;(c) the date of transfer;(d) the full name and the residential and business addresses of thetransferee;(e) if the transferee--(i) intends to carry on or is carrying on the business, the full addresswhere, and the name and style under which, he is carrying it on or intendsto carry it on; or(ii) is not carrying on the business and does not intend to carry it on, astatement to that effect; and(f) a statement that at the expiration of 1 month after the date of thelast publication of the notice pursuant to subsection (3), the liabilityof the transferee for all the debts and obligations arising out of thecarrying on of the business by the transferor shall cease by virtue ofthis Ordinance unless proceedings are instituted prior to such expiration.(2) In the case of a transfer by way of sale under or pursuant to acharge, a notice of transfer shall contain the following particulars--(a) the nature of the business, and the name or style under which, and thefull address at which, it has been carried on during the period of 3months immediately preceding the date of transfer;(b) the full name and address of the person whose business has been, or isintended to be, transferred by way of sale under or pursuant to thecharge;(c) details of the charge under or pursuant to which the transfer by wayof sale has been or is to be made, sufficient to enable any documentcreating or evidencing the charge to be readily identified and, withoutlimiting the generality of the foregoing, such details shall include--(i) the date when the charge was made, given, executed or came intoexistence;(ii) the consideration for which the charge was executed, made or givenor, if there was no such consideration, the circumstances in which it cameinto existence;(iii) in the case of a registered charge, the date of the registration ofthe charge, the title of any enactment under which it was registered andany number or other means of identifying the charge assigned to it uponregistration;(d) the date of transfer; and(e) the amount of money, payment of which has been secured by the chargeand which was owing--(i) at the date of the publication of the notice of transfer; or(ii) if the transfer has already taken effect, at the date of the transferso taking effect.(3) Every notice of transfer shall be signed--(a) by both the transferor and the transferee, in the case of a transferto which subsection (1) applies; or(b) by the charge-holder and the transferee, in the case of a transfer towhich subsection (2) applies,and shall be given by publication in--(i) the Gazette;(ii) any 2 of such Chinese language newspapers circulating in Hong Kong asmay be approved for the purpose by the Chief Secretary; and (Amended L. N.67 of 1985; L. N. 242 of 1989)(iii) 1 English language newspaper circulating in Hong Kong which has beenso approved. 6. Right of transferee to indemnity(1) The transferee shall be entitled to be indemnified--(a) by the transferor, except in the case of a transfer by way of saleunder or pursuant to a charge; or(b) by the charge-holder, if the transfer is by way of sale under orpursuant to a charge,for all amounts for which the transferee is made liable under thisOrdinance and for which he would not otherwise be liable.(2) The amount of such an indemnity may be recovered by civil proceedingsas a debt or liquidated demand. 7. Liability of parties not affectedNothing in this Ordinance shall relieve or be deemed to relieve atransferor or transferee, or any person who sells a business under orpursuant to a charge, from any liability to which he would otherwise besubject. 8. Limitation of liability of transferee(1) A transferee who in good faith and without preference has paid indischarge or partial discharge of any liability for which he became liableunder this Ordinance, and for which he would not otherwise have beenliable, an amount which is equal to the value of the business acquired byhim, at the date on which the transfer took effect, shall not be liablefurther under this Ordinance.(2) The value of a business acquired by a transferee at the date on whichthe transfer takes effect shall, until the contrary is proved, be presumedto be an amount equal to the amount paid or agreed to be paid (whether interms of money or by means of any other consideration) for the acquisitionof the business. 9. Limitation of time for institution of proceedingsSubject to section 6, no action shall be instituted to recover any debtfrom or to enforce any obligation against any person liable therefor underthis Ordinance, and for which he would not otherwise have been liable,more than 1 year after the date on which the transfer in respect of whichthe liability arose took effect. 10. SavingThis Ordinance shall not apply to any transferee where the transferis effected--(a) by the Official Receiver or a trustee in bankruptcy;(b) by the liquidator of a company in liquidation other than voluntaryliquidation;(c) by the Financial Secretary Incorporated; (Amended L. N. 369 of 1989)(d) by the Director of Education Incorporated;(e) by the Director of Social Welfare Incorporated;(f) by a person selling under or pursuant to a charge which has beenregistered for not less than 1 year at the date when the transfer takeseffect;(g) pursuant to any order or direction of any court;(h) by an executor or administrator; or(i) by operation of law. 11. Repeal and saving(1) The Fraudulent Transfers of Businesses Ordinance (Cap. 49, 1964 Ed.)is repealed.(2) Notwithstanding subsection (1), the Fraudulent Transfers of BusinessesOrdinance (Cap. 49, 1964 Ed. ) shall continue to apply with respect to atransfer--(a) which took effect; and(b) in respect of which notice was given under section 3 of thatOrdinance, before the coming into operation of this Ordinance, as if thisOrdinance had not been passed.