Re Dexin China Holdings Company Ltd

HCCW 164/2024

[2024] HKCFI 1455

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING UP PROCEEDINGS NO 164 OF 2024

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D E C I S I O N

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1.This is the application of Dexin China Holdings Company Limited (“the Company”) for a validation order.

2.The Company is a Cayman Islands’ company whose shares have been listed on the Stock Exchange of Hong Kong Limited since 2019.

3.The Company failed to make payment of the principal due on 3 December 2022, and accrued and unpaid interest due and payable under the Notes and Indenture.

4.On 23 February 2024, China Construction Bank (Asia) Corporation Limited (“the Petitioner”), as Trustee of 9.95% Senior Notes due 2022 (“the Notes”) under any Indenture dated 3 December 2020 (“the Indenture”) served a statutory demand in the sum of just over US $410 million on the Company. It went unmet, culminating in the presentation of a petition on 20 March 2024 (“the Petition”) for a winding up order.

5.The Company made an announcement in relation to the Petition on 21 March 2024 (“the Announcement”).

6.On 25 March 2024, the Listing Division of the Stock Exchange requested that the Company publish an announcement (no later than 28 March 2024) to disclose whether or not the Company would apply for a validation order in respect of the transfer of its shares

7.On 28 March 2024, the Company announced, inter alia, that legal advisors had been engaged to apply to the High Court for a validation order.

8.On 2 April 2024, the Company made an announcement dated 28 March 2024 that

(i)  the Listing Rules required that the annual results of the Company and its subsidiaries (“the Group”) for the year ended 31 December 2023 be published on or before 31 March 2024;

(ii)  the Company required additional time before it could publish the 2023 Annual Results;

(iii)  the Listing Rules required that trading in the shares of the Company would be suspended until the publication of the 2023 Annual Results; and

(iv)  at the Company’s request, trading in its shares would be suspended until the 2023 Annual Results are published by the Company.

9.Trading resumed on 26 April 2024 following the publication of the 2023 Annual Results on 25 April 2024.

10.On 8 May 2024, the Company issued the summons seeking an order that

(1)  notwithstanding the presentation of the Petition, all transfers of issued and fully paid-up shares of the Company since the date of the Petition’s presentation shall not be void by virtue of section 182 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) (“the Ordinance”); and

(2)  costs be in the cause of the Petition.

11.A CCASS Shareholding Search conducted on 8 May 2024 show a total shareholding of 2,969,341,000 in CCASS. That number corresponds to number of issued shown in the 2023 Annual Report.

12.The Petitioner and the Official Receiver take a neutral stance on the Company’s application as stated in their respective letters.

13.This is a straightforward application. A transfer of fully paid-up shares will generally be unobjectionable since the object of section 182 of the Ordinance - to prevent a shareholder from evading his liability to contribute by transferring his shares to an impecunious party - can have no application to shares that are fully paid-up: see Re Belgravia Properties Ltd [2015] 1 HKLRD 509 at §§6 and 9.

14.Where the evidence shows that all the issued shares of the Company are fully paid-up, the granting of a validation order would not prejudice the creditors of the Company in the event a winding up order. They would not be worse off as a result. In such circumstances, it would be appropriate to grant the validation order: see Re Alco Holdings Limited [2024] HKCFI 73 at §5; and Re XJ International Holdings Co Ltd [2024] HKCFI 1378 at §4.

15.Accordingly, I make an order in terms of the summons.

Mayer Brown, for the Petitioner, attendance was excused.

Mr Anson Wong Yu Yat, instructed by Jun He Law Offices, for the Company.

The Official Receiver was absent.