Lam Bing Kwan v. Sino-i Technology Ltd

HCMP 806/2022

[2022] HKCFI 2325

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 806 OF 2022

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Before:  Hon Harris J in Chambers

Date of Hearing:  19 July 2022

Date of Decision:  19 July 2022

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D E C I S I O N

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1.I have before me an originating summons dated 23 June 2022 seeking the following orders:

(1)  A general meeting of the Defendant be held on or before 31 December 2022 and such general meeting shall be regarded as the annual general meeting of the Defendant in respect of the financial year ending on 31 December 2021;

(2)  The requirements for the Defendant’s directors to lay reporting documents for the financial year ending on 31 December 2021 be substituted with a requirement to lay the said reporting documents at the general meeting referred to in paragraph 1 above, and that the period of six-month as referred to in section 431(1)(b)(i) of the Companies Ordinance (Cap 622) be extended accordingly;

(3)  No order as to the costs of this application.

2.The Company is listed on the Hong Kong Stock Exchange, its financial year ends on 31 December. Its auditors, BDO Limited, have requested information regarding the appraised value of security provided by the Company’s immediate holding company, Nan Hai Corporation Limited, which is also listed and its subsidiaries for certain loans owing to the Company’s group.

3.As a consequence it has not been possible to hold the annual general meeting and put before shareholders for their consideration the audited financial statements for the year ending 31 December 2021, within the six-month period required by the Companies Ordinance. The Company, therefore, seeks a six-month extension in order for the audit to be completed and for the financial statements to be ready to be put before shareholders.

4.I will grant an order in the terms of the originating summons as I am satisfied that a reason has been given for the inability of the Company to comply with the Companies Ordinance and the application was issued within the six-month period. The criteria that the court applies when considering applications of this sought are well-known.

5.The court’s discretion to extend time is unfettered. The following (non-exhaustive) factors would be taken into account, though the court will not necessarily refuse to extend time even if some of these are not satisfied:

(1)  Whether the shareholders were aware of the financial position of the Company in question and thus were not prejudiced by non-compliance;

(2)  Whether the default was inadvertent; and

(3)  Whether the court is satisfied that the Company will comply with its obligation in the future.

See: Re GT Group Holdings Ltd[1]; Re Kidsloop Ltd[2]; Re Goldbond Group Holdings Ltd[3].

6.The court’s discretion ought to be exercised for some discernible legitimate purpose: Re GT Group Holdings Ltd[4]; Re Goldbond Group Holdings Ltd[5].

7.The criteria are met in the present case.

8.If, however, the Company is unable to complete the audit within the six-month extension, the court would expect a full explanation of the underlying cause of the problem if a further extension of time is sought.

Mr Victor C I Lui, instructed by Eversheds Sutherland, for the plaintiff

The defendant was not represented and did not appear