Re Tian Shan Development (Holding) Ltd

HCCW 484/2021

[2022] HKCFI 781

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO. 484 OF 2021

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Before: Hon Cheng J in Chambers (by Paper Disposal)

Date of Written Submissions of the Company: 3 March 2022

Date of Decision: 21 March 2022

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D E C I S I O N

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1.By a summons of 22 February 2022, Tian Shan Development (Holding) Limited (“the Company”) has applied for a validation order in respect of the transfer of issued and fully paid up shares in the Company since the date of the Petition filed on 28 December 2021 (presented on the grounds that the Company has failed to satisfy a statutory demand). I have ordered that the application be determined on the papers by reason of public health considerations arising from the COVID-19 pandemic.

2.The Petitioner and the Official Receiver take a neutral stance to the application. The issue is therefore whether the Company has shown that the application is justified.

3.The correct approach to determining whether or not to grant an application for validation of a share transfer is to ask whether the creditors would be better or worse off in the event of a winding-up order being made, and the transfer not having been sanctioned. Generally, a transfer of fully paid up shares is not objectionable. See Re Belgravia Properties Ltd [2015] 1 HKLRD 509 at [6] to [8].

4.In the case of a company whose shares are traded on the Hong Kong Stock Exchange, if the validation order is not granted, the Hong Kong Stock Exchange Limited may suspend the trading of the Company’s shares and ultimately cancel the Company’s listing status, which is an important asset of a listed company. See Re China Ocean Industry Group Ltd [2019] HKCFI 2363 at [4] to [6].

5.In the present case, the evidence is that all the issued shares of the Company traded on the Hong Kong Stock Exchange are fully paid up. In the event that a winding up order is made, the creditors of the Company would not be worse off if the validation order is granted.

6.I therefore make an order in terms of the draft exhibited as SJX-4 to the Affirmation of Si Jingxin filed on 22 February 2022.

Terrence Tai, instructed by Watson Farley & Williams LLP, for the Company

The Attendance of Chungs Lawyers for the Petitioner, and the Official Receiver were excused