Wang Chien Chih also known as Mickey Wang v. The Registrar of Companies
Read the full judgment text of HCMP 1382/2018 on BabelCite. This High Court CFI judgment was delivered on 10 December 2018.
1. This is an application by Wang Chien-Chih, (the “ Applicant ”), pursuant to sections 765(1) and 765(4) of the Companies Ordinance, Cap 622 (“ the Ordinance ”), to have Win Land Estate Limited (旺星地產有限公司) (Company No 347295) (the “ Company ”) restored to the Companies Register.
Cited by 2 cases · Cites 1 case
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HCMP 1382/2018 [2018] HKCFI 2717 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 1382 OF 2018 ________________
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________________________ REASONS FOR DECISION ________________________ 1.This is an application by Wang Chien-Chih, (the “Applicant”), pursuant to sections 765(1) and 765(4) of the Companies Ordinance, Cap 622 (“the Ordinance”), to have Win Land Estate Limited (旺星地產有限公司) (Company No 347295) (the “Company”) restored to the Companies Register. 2.The Originating Summons was taken out on 31 August 2018. The Registrar of Companies takes a neutral stance to this application. In the event that the court is minded to grant the relief pursuant to the Originating Summons, the Registrar would seek to include the following terms in the order to be made:
MATERIAL FACTS 3.The Company was incorporated in accordance with the laws of Hong Kong on 10 March 1992. On 8 April 1992, the Applicant became one of the directors and a 30% shareholder of the Company prior to its dissolution by being struck off the Companies Registrar on 8 October 2004. 4.The other shareholders were, and still are, Newtower Development Limited (now in liquidation) (“NDL”) and Chang Roa‑long, also known as Lanly Chang (“CRL”), who respectively held 4,000 and 3,000 of the 10,000 shares. The Company had four directors prior to its dissolution. The other three directors were Dong Zhihuang (“DZH”), CRL and Huang Xungeng (“HXG”). 5.From 1992 to 2008, it is alleged that the Applicant had left the routine operation of the Company in Hong Kong to the other three directors and he concentrated in managing the Company’s business affairs in Mainland China, mainly, the affairs of its subsidiary in Wuhan. He said that he did not know that DZH and HXG had purportedly resigned from theirdirectorship in August 1993 and November 2000 respectively. Further, the Applicant had not heard from the remaining director, CRL, since 1992. 6.I have to say that I find this surprising because it was the Applicant’s duty as a director of the Company to prepare annual financial statements of the Company. Mr Ma for the Applicant confirmed to the court that in fact no financial statements were prepared and no annual general meetings were held by the Company from 1992 to 2008. As a director of the Company, the Applicant has already breached his statutory duties in failing to hold annual general meetings and tabling annual financial statements for approval. It is not right to have a company incorporated in Hong Kong and then leave it unattended. Even if the Applicant did rely on his fellow directors to attend to the operation of the Company, he still had an independent duty to supervise and make sure that his own statutory duties had been discharged. I do not see how the Applicant can satisfy himself that the Company had complied with its statutory obligations if he had not heard from CRL since 1992, the very year the Company was incorporated. 7.In fact, one day before the hearing, the court received a fax from CRL which expressed his surprise that there was a hearing scheduled at 9:30 am on 11 December 2018. The court then directed CRL to state his position in relation to this application and to attend and/or send a representative to attend this hearing. CRL did not attend the court hearing. At the hearing, Mr Ma for the Applicant produced an email dated 9 October 2018 from CRL’s Taiwan lawyers which stated, inter alia, that:
8.Further, in July 2008, the Applicant found out about the purported resignations of DZH and HXG and that the Company had moved from its original registered address to another unit within the same building in 1998 and of course, significantly, as a result of the Company’s failure to comply with the filing requirement for several years, it was struck off the Companies Register on 8 October 2004. 9.However, instead of applying to restore the Company in 2008, it is alleged that on the advice of an unknown accountant, the Applicant proceeded to incorporate a new company by the same name, i.e., Win Land Estate Limited (the “New Company”) on 14 October 2008. The New Company was assigned the company number of 1279207, a number which is different from that of the Company. On 9 November 2011, the New Company changed its name to Win Nano International Limited. 10.It is alleged that the Applicant was under the impression which turned out to be wrong that by incorporating the New Company with the same name, the assets of the Company would be transferred to the New Company automatically. I have not seen any advice from any accountant to that effect. I do not even know whether such advice existed or not. I find it somewhat odd that the unknown accountant could have given such a wrong legal advice and the Applicant actually acted upon it. 11.What actually prompted this application is that the Company’s wholly owned Wuhan subsidiary (the “Wuhan Subsidiary”) still owns certain pieces of land in Wuhan (the “Land”). Between 1993 and 1997, the Wuhan Subsidiary developed the Land, incurring costs (of approximately RMB 70 million by 1998) which the Applicant said he contributed solely as the legal representative of the Wuhan Subsidiary. 12.In 2003, the Wuhan City Planning Bureau authorised the Wuhan Subsidiary to further redevelop the Land with an additional gross floor area of 24,000 square meters by building an 18-storey block of commercial and residential units. Recently, the Wuhan City Planning Bureau also authorized the Wuhan Subsidiary to develop further on another area within the Land. 13.The Applicant then had proceeded to register the New Company as the shareholder of the Wuhan Subsidiary. It is said that upon clarification with the Wuhan Administration for Industry and Commerce, the Company is now re-registered as the shareholder of the Wuhan Subsidiary rather than the New Company, with the original management reinstated. 14.It is the Applicant’s evidence that these latest changes were the result of his clarification with the Wuhan Administration for Industry and Commerce after obtaining proper legal advice. No explanation was given as to why legal advice was obtained again at that stage. 15.But, it is now said that if the Company is not restored, the Wuhan Subsidiary runs the risk of being deregistered by the Wuhan Administration for Industry and Commerce which may in turn affect the Company’s indirect interest in the Land via the Wuhan Subsidiary. 16.As stated above, the Company has not produced any audited financial statements, but this court is being told that save and except the Wuhan Subsidiary and a sum of HK$15,124.78 currently held by the Government of the Hong Kong Special Administrative Region as bona vacantia, the Company has no other assets or immovable property. 17.In order to obtain written consent from all directors and shareholders of the Company to this application, the Applicant has instructed his solicitors, Messrs Sun Lawyers LLP to issue letters to the following parties:
18.In the said letters it is stated, inter alia, that “[I]f we do not hear from you by then, we shall consider that you do not consent to the Application.” None of the recipients of the said letters replied. Hence, the Registrar of Companies rightly observed that as none of the recipients signed and returned their consent letters, they are deemed not to have consented to this application. Applicable Legal Principles 19.Sections 765(1) and (4) of the Ordinance provide:
20.Section 766(1) of the Ordinance provides:
21.Sections 767(1) and (3) of the Ordinance provide:
22.In Eastwin Properties Ltd & Anor v Registrar of Companies & Ors (No 2) [2004] 4 HKC 547 at 552G, Tang J (as he then was) said:
ANALYSIS 23.I am of the view that the Applicant was a member and a director of the Company, hence he has the relevant locus standi to make this application. The application is also made within the 20 years period. The real question is whether it is just in the circumstances of the present case that the Company be restored to the Companies Register. 24.First, Mr Ma for the Applicant submitted that the Applicant, being preoccupied with the business operation of the Company’s wholly‑owned subsidiary, the Wuhan Subsidiary, and using his own resources to inject capital into the Wuhan Subsidiary, during the period when the striking off occurred is a person who feels aggrieved by the striking off within the meaning of section 765(1) of the Ordinance. The Applicant might well have felt aggrieved by the striking off, but I am of the view that there were no legitimate reasons for the Applicant to allow the Company to be struck off. The Applicant is the author of his own misfortune. His failures to discharge his statutory duties are inexcusable. His preoccupation with the business operation of the Wuhan Subsidiary was not a good reason for ignoring to attend to his statutory duties as a director of the Company from 1992 to 2008. This court distinctly disapproves such behaviour. 25.Secondly, it was submitted that the Applicant was wrongly advised to incorporate the New Company. As stated above, this court has not been shown any written advice by the unknown accountant. It is not up to an accountant to give legal advice in any event. 26.It is the Applicant’s evidence that he was under the wrong impression that the incorporation of the New Company followed by a change of the New Company’s name would make the Company compliant with conditions imposed by the PRC authorities. Accordingly, the Applicant changed the corporate information of the Wuhan Subsidiary in July 2017 which resulted in a need for the Applicant to clarify with the Wuhan Administration for Industry and Commerce as to what had happened to the Company. 27.I am of the view that wrong legal advice is not a legitimate reason for his failure to apply to restore the Company for 10 years. If the Applicant feels aggrieved, the remedy lies somewhere else. The duty rests squarely on the Applicant to seek proper legal advice. It is somewhat surprising that the Applicant as a seasoned businessman could have been under the impression that by incorporating the New Company, the assets of the Company would have transferred to the New Company by the mere act of incorporation. 28.However, Mr Ma for the Plaintiff forcefully submitted that it is highly likely that the Company’s dissolution would be treated as a fundamental non‑compliance with the conditions of approval as imposed by the PRC authorities and the Wuhan Subsidiary would be de-registered in the Mainland with the relevant approvals and contracts invalidated. 29.The de-registration of the Wuhan Subsidiary will inevitably cause substantial loss to the investments on the redevelopment of the land project in Wuhan at US$5 million with US$2.5 million paid up front by the Company. 30.On the facts of the present case, it is clear that the Company has more than a shadowy prospect of establishing anything of value. Therefore, most reluctantly, I make an order to restore the Company to the Companies Registry although I find it most unsatisfactory that the Applicant and the Company’s directors had allowed the Company to be struck off the Companies Register which was the result of serious dereliction of duties by the directors of the Company. Also, the incorporation of the New Company was a very wrong move. 31.As to the consent from other shareholders, as I set out in Re Man Fung Land Investment Company Limited HCMP 2490/2017, unreported, 4 October 2018 at paragraph 22, there is no strict legal or formal requirement that consent from all shareholders of the company to be ‘reactivated’ must be obtained before such ‘reactivation’. In any event, it is to the benefit of all shareholders and directors that the Company be restored to the Companies Registry. CRL also appears to have consented to the application. Disposition 32.For the reasons stated above and subject to an undertaking from the Applicant that he, qua director, will personally see to it that the Company do comply with its statutory duties and rectify its former breaches of such duties, I make the following orders:
33.Finally, it remains for me to thank Mr Ma for his helpful assistance rendered to this court.
Mr Jimmy Ma, instructed by Sun Lawyers LLP, for the applicant Attendance of the respondent be excused | |||||||||||||||||||||||||||||
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