Yeung Mei Lee, in Her Capacity As the Joint and Several Receiver and Manager Over Entire Issued Shares of Forever Winner International Development Limited Who Acts Without Personal Liability v. Forever Winner International Development Ltd

HCMP 2181/2020

[2020] HKCFI 3114

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2181 OF 2020

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Before: Hon Harris J in Chambers

Date of Hearing:  16 December 2020

Date of Decision:  16 December 2020

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D E C I S I O N

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1.On 25 November 2020 Yeung Mei Lee in her capacity as receiver and manager over the entire issued shares of Forever Winner International Development Limited (the “Company”) issued an originating summons for an order directing the Company, which is the defendant, to enter in the share register 1,534,825,952 shares as held by Shandong Ruyi Technology Group Company Limited which the Company has declined to do so, although it has not given any reasons and has not attended at today’s hearing.

2.The relevant factual background is conveniently summarise in [2] of Mr Lee’s skeleton argument which I shall quote:

“(1) On 26^th November 2018, Sino Power Resources Inc (‘Sino Power’), as lender, made available a term loan facility of up to US$140,000,000, to Ruyi International Fashion (China) Financial Investment Holding Group Limited (‘Ruyi International’), as borrower (the ‘Facility Agreement’).

(2) On the same day, Shandong Ruyi (the sole shareholder of the Company), as chargor, charged by way of first fixed charge the entire issued shares of the Company (the sole shareholder of Ruyi International) in favour of Sino Power, as chargee, as continuing security for the payment or discharge of Ruyi International’s liabilities under the Facility Agreement (the ‘Share Charge’).

(3) Pursuant to Clause 13.1 of the Share Charge, Sino Power and any Receiver (with full power of substitution) was appointed as attorney to, inter alia, execute transfers and exercise rights and powers conferred on Sino Power as chargee.

(4) On 28^th February 2020, Sino Power appointed and the Plaintiff as one of the Receivers pursuant to Clause 8.1 of the Share Charge by way of the Deed of Appointment. No question has ever been raised as to the validity of the appointment.

(5) On 12^th June 2020, the Shares were transferred by Shandong Ruyi to the Plaintiff (‘Share Transfer’), the Instrument of Transfer for which was duly stamped by the Inland Revenue Department on 22^nd June 2020.

(6) On 14^th July 2020, the Plaintiff tendered the requisite documents to the Company for registration, requesting registration for the Share Transfer and issuance of a new share certificate in the Plaintiff’s name. No reply was received.

(7) As a result, the Plaintiff tried again and issued another letter to the Company on 29^th July 2020 making the same requests. Again, no reply was received.

(8) In fact, as of the date of this Skeleton and after a lapse of more than 2 months, the Company has still failed, neglected and/or refused to provide any reply or give effect to the registration of the Share Transfer, contrary to the requirements set out in s.151(2) of CO. The Company and its responsible persons have therefore all committed an offence under s.151(5) of CO.

(9) In the premises, there is clearly no lawful or bona fide basis, reason or ground for the Company’s persistent refusal. In light of the board’s inexplicable and unjustifiable inaction, it is respectfully submitted that this is clear case for registration and rectification pursuant to ss.152 and 633 of CO.”

3.Section 152 of the Companies Ordinance, Cap 622 gives the court a discretionary repower to order that a transfer of shares be registered if a company refuses to do so.  We are not here concerned with the circumstances in which a company can legitimately refuse, such an application. As I have already explained the Company has given no reason for failing to comply with the receiver’s request and none is apparent to me from the papers that I have read.  It, therefore, follows that an order should be granted directing the Company to register the share transfer.  In addition, I accept that the receiver properly seeks orders pursuant to section 633 of the Companies Ordinance for the rectification of the register and incidental orders which may be required to facilitate the registration in the event that the Company fails to comply with the court order.

4.I will, therefore, make an order in the terms of the draft that has been presented to me and I will order that the Company pays the costs of the application which I assess on a summary basis at HK$140,000.

Mr Jonathan Lee, instructed by Wilkinson & Grist, for the plaintiff

The defendant was not represented and did not appear