Re China Agri-industries Holdings Ltd

HCMP 128/2020

[2020] HKCFI 750

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANOUS PROCEEDINGS NO 128 OF 2020

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D E C I S I O N

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1.This is the hearing of the Company’s Petition seeking the court’s sanction of a scheme of arrangement pursuant to sections 673 and 674 of the Companies Ordinance (Cap 622). The purpose of the Scheme is to privatise the Company which has been listed on the main board of the Hong Kong Stock Exchange. It has been listed since 21 March 2007.

2.On 27 November 2019, COFCO (Hong Kong) Limited    (the “Offeror”), a shareholder of the Company, requested the Board of the Company to put forward a proposal for the privatisation of the Company by way of a Scheme of Arrangement (the “proposal”).

3.At the meeting ordered by the court on 6 February 2020, which took place on the 6 March 2020, along with a general meeting to consider and vote on the necessary special resolution to affect the reduction of capital, which is a necessary component of the scheme, a substantial majority voted both in favour of the scheme and the special resolution: 98.84% of the scheme shares voted, were cast in favour of the scheme and 1.16% of the disinterested voting rights, voted against it.

4.The function of the court at the hearing of a petition to sanction a scheme of arrangement, including a scheme between a company and its shareholders intended to effect a privatisation, are as follows [1]:

“4.  I have most recently considered the function of the court at the hearing of petition to sanction a scheme in my decision in Re Enice Holding Co Ltd [2018] 4 HKLRD 736:

‘37.  The function of the court at the hearing of a petition to sanction a scheme is to consider:

(a)  whether the scheme is for a permissible purpose;

(b)  whether members who were called on to vote as a single class had sufficiently similar legal rights that they could consult together with a view to their common interest at a single meeting;

(c)  whether the meeting was duly convened in accordance with the court’s directions;

(d)  whether members have been given sufficient information about the scheme to enable them to make an informed decision whether or not to support it;

(e)  whether the necessary statutory majority has been obtained; and

(f)  whether the court is satisfied in the exercise of its discretion that an intelligent and honest man acting in accordance with his interests as a member of the class within which he voted might reasonably approve the scheme.

See Re Dorman, Long & Co Ltd;[2] Re China Light & Power Co Ltd;[3] Re Cable & Wireless HKT Ltd;[4] Re PCCW Ltd;[5] Re Wheelock Properties Ltd;[6] Re Cheung Kong Holdings Ltd;[7] and Re China Assets (Holdings) Ltd.[8]

38.  First, it is well-established that privatising a listed company is a permissible purpose for a scheme of arrangement: see Re Wheelock Properties Ltd [9] and Re China Assets (Holdings) Ltd.[10]’

As is apparent from the above passage, privatising a listed company is a permissible purpose for a scheme of arrangement and many such schemes have been sanctioned by this court.”

5.Privatising a listed company is a permissible purpose of a scheme of arrangement and there have been many in the last few years in Hong Kong.  Many of them, like the Company, are incorporated in Hong Kong.  I understand that there are now only a handful of companies listed on the Hong Kong Stock Exchange which are incorporated here.

6.I am satisfied that the criteria that I have referred to above are satisfied in the present case.  No dissenting shareholder has attended court and raised any objection to the Scheme being sanctioned.

7.COFCO agreed to be bound by the Scheme by a letter to the Court dated 6 March 2020.

“We undertake to the High Court to be bound by the Scheme and to execute and do and procure to be executed and done all such documents, acts and things as may be necessary or desirable to be executed and done by us for the purpose of giving effect to the Scheme.”

8.I will, therefore, make an order in the terms of the draft that has been presented to the Court sanctioning the scheme, and confirming the technical reduction of share capital which is a necessary part of the mechanism of the Scheme and the normal ancillary orders.

Mr José Maurellet SC and Ms Jasmine Cheung, instructed by Reed Smith Richards Butler, for the applicant