Zhu Bin v. Thousand Vantage Investment Ltd and Others

HCCW 552/2023

[2026] HKCFI 5525

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 552 OF 2023

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BETWEEN

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BETWEEN

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JUDGMENT

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A. INTRODUCTION

1.This was the trial of a petition presented by Mr Zhu Bin (“Mr Zhu” or “the Petitioner”) in respect of the affairs of Thousand Vantage Investment Limited (“TV” or “the Company”). Mr Zhu invokes sections 723 to 725 of the Companies Ordinance (Cap 622) and section 177(1)(f) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32).

2.Mr Zhu holds 35% of the shares in TV. The remaining 65% is held by PT OBOR Financial Holdings Limited (“PT OBOR”) and, as to a small number of shares on trust for PT OBOR, HK United Investment Holdings Limited ("HK United"). They are respectively the 2^nd and 3^rd Respondents. TV is the 1st Respondent, but has taken no active part in the contest between its shareholders.

3.Mr Zhu’s primary case is that TV should be wound up. In the alternative, he asks to purchase the 2^nd and 3^rd Respondents’ shares at a fair value. Mr Zhu’s contention is that the majority has excluded him from management, denied him the information required to act as a director, approved two rights issues without proper consideration of TV’s interests, and allowed the financial affairs of the TV group of companies to deteriorate in circumstances calling for investigation.

4.The essential answer of the 2^nd and 3^rd Respondents (together, “the Respondents”) is that the parties entered into an arm’s-length commercial transaction governed by a detailed shareholders’ agreement; that Mr Zhu received the information to which he was entitled; that the rights issues were bona fide attempts to preserve TV’s principal assets; and that Mr Zhu himself, directly or through persons and entities over whom he retained influence, materially contributed to the financial pressure of which he now complains.

5.The expression “the Respondents” is used as convenient shorthand for their common forensic position. It does not attribute every act to both of them. PT OBOR was the contracting and controlling shareholder; HK United held a small number of shares on trust for PT OBOR; and the Listco-TV Directors were the individuals who took the relevant board decisions. Where more specific attribution matters, I identify the particular party involved.

6.There is force in parts of each case, but neither party’s account can be accepted in its entirety. For the reasons to be elaborated below, I consider that there had indeed been failures insofar as the provision of information to Mr Zhu was concerned, and a limited procedural discrepancy in the manner in which the proposed rights issue of May 2023 was brought before the board. However, there are a number of crucial aspects of Mr Zhu’s case which do not withstand scrutiny. I do not find that TV was a quasi-partnership; that the rights issues were promoted for an improper purpose; that the affairs of TV were mismanaged or conducted with a want of probity; or that the complaints Mr Zhu has partially established justify either of the remedies which Mr Zhu has asked the Court to grant. For the reasons which follow, the Petition stands to be dismissed.

B. THE PARTIES AND CORPORATE STRUCTURE

7.The following background matters are agreed or not readily disputable.

8.TV was incorporated in Hong Kong on 5 May 2008. Mr Zhu was its sole director between 13 July 2009 and 16 April 2018, and its sole shareholder between May 2015 and 16 April 2018.

9.TV’s principal asset is a 75% interest in Guangxi Guangming Warehouse Storage Limited ("GX Guangming"), a company incorporated in the Mainland which operates port and storage facilities in Guangxi. The remaining 25% of GX Guangming is held by Shanghai Jianchen Industrial Development Co Ltd ("SH Jianchen").

10.PT International Development Corporation Limited ("Listco") is listed on the Main Board of the Hong Kong Stock Exchange. PT OBOR is its wholly-owned subsidiary. In April 2018, it subscribed for preference shares in TV. On 29 March 2021, PT OBOR, TV and Mr Zhu entered into a further subscription agreement under which PT OBOR agreed to subscribe for new shares in TV. Completion took place on 11 October 2021. Ultimately, PT OBOR acquired 65% of TV and Mr Zhu’s holding was reduced to 35%.

11.On the same day, PT OBOR, TV and Mr Zhu entered into a shareholders’ agreement ("the SHA"). The SHA is central to the dispute.

12.Clause 2.2 gives PT OBOR the right to nominate and appoint five directors of TV, and gives Mr Zhu the right to nominate and appoint two directors while his shareholding remains at or above 30%. One of Mr Zhu’s nominees must be Mr Zhu himself. Clause 2.3 provides that the quorum for a board meeting includes at least one director nominated by each shareholder.

13.Clause 2.11 provides, in substance, that the directors and officers whom TV is entitled to nominate to GX Guangming and the other Mainland subsidiaries are to be nominated and appointed by PT OBOR. The allocation is important. It placed control of the operating subsidiary with PT OBOR while preserving for Mr Zhu participation at the TV board level.

14.Clause 4.1 requires the parties to perform the SHA in a spirit of mutual co-operation, trust and confidence, with the intention that the business, profitability and reputation of the TV group be extended and maximised by reasonable and proper means. Clause 4.2 requires prompt notification of specified matters affecting the title to or enjoyment of material group assets and of significant governmental notifications, orders or demands relating to group business or property.

15.Clause 6.2 requires the shareholders jointly to procure TV to prepare and submit to each other, as soon as practicable, quarterly unaudited consolidated management accounts of the TV group, including a profit and loss account, balance sheet and cash flow statement.

16.Clause 12.6 states that nothing in the SHA constitutes or is deemed to constitute a partnership or agency between the shareholders and that neither shareholder has authority to bind the other.

17.Following completion, Mr Louis Ching, Mr Paul Ching and Ms Xu Wei were appointed to the board of TV. Mr Heinrich Grabner had already been a director since April 2018. Over the material period, the various directors appointed through PT OBOR are referred to collectively, where convenient, as the "Listco-TV Directors". Mr Zhu remained a director.

18.The management arrangements at GX Guangming did not change overnight. Mr Grabner was its legal representative. Mr Paul Ching was involved in its operations. However, until March 2022 a number of persons closely connected with Mr Zhu remained on its board or in material positions. These included Mr Zhu’s personal assistant, his nephew and relatives or associates of members of his family. The significance of these connections is considered later.

C. THE DEVELOPING DISPUTE

19.The parties’ relationship deteriorated soon after completion. In December 2021 Mr Zhu sought to appoint Ms Chen Kui as a director of TV. Documents had been signed on the footing that she would be appointed after leaving her then employment. Mr Zhu later inserted a date and caused the appointment to be filed without further agreement. I deal below with the further characterisation of that incident.

20.By March 2022, the Listco interests had obtained their nominated positions on the board of GX Guangming. At about the same time, a series of disputes arose concerning the corporate seal, the constitutional arrangements of GX Guangming, the repayment of construction costs for projects in which GX Guangming was developing to China Communications Construction Company No 5 ("CCCC No 5"), a facility with Guilin Bank, and liabilities under finance leases with an entity named Lian Wei (Shanghai) Finance Lease Limited ("Lian Wei").

21.By reason of a project for the construction of a new berth, GX Guangming had incurred substantial construction costs to CCCC No 5. A settlement agreement dated 6 March 2023 required payment on a staged basis. The ability to meet that liability became the immediate reason advanced for raising funds at TV level.

22.There were also material liabilities under finance leases with Lian Wei. The leases contained cross-default provisions. SH Jianchen challenged aspects of the management of GX Guangming and wrote to Guilin Bank in May 2022, with consequences for the availability of bank funding. Proceedings were brought in the Mainland by SH Jianchen, Lian Wei and Mr Zhao Hai Tao.

23.I do not propose to determine every dispute arising from these various matters. Some have been the subject of Mainland proceedings. Others were explored at trial principally because of the Respondents’ contention that Mr Zhu retained influence over the relevant actors. What is material is that by 2023 GX Guangming faced serious and immediate funding pressure, and the parties were in acute disagreement about both its causes and the proper response.

D. THE RIGHTS ISSUES AND INFORMATION PROCEEDINGS

24.On 24 May 2023, notice was given of a TV board meeting to be held on 31 May 2023. A draft offer letter for a proposed rights issue was attached. This was the first formal document received by Mr Zhu which identified a rights issue at TV level.

25.Mr Zhu commenced HCMP 829/2023 on 30 May 2023 seeking to restrain the proposal. The board meeting nevertheless proceeded on 31 May 2023. It lasted a little over 20 minutes. Mr Zhu objected that he had not been consulted and did not have the financial information necessary to assess either the need for funding or the proposed mechanism. The Listco-TV Directors approved the proposal.

26.On 2 June 2023, Hon Linda Chan J adjourned Mr Zhu’s application and gave directions concerning the provision of documents. On 5 June 2023, the Respondents’ solicitors sent a two-page document described in the covering email as TV’s management account. It comprised an unconsolidated balance sheet and income statement. It did not explain the financial position of GX Guangming or demonstrate the need for the proposed rights issue. Mr Grabner accepted in cross examination that it would not have assisted Mr Zhu in assessing the proposal.

27.On 16 June 2023, Hon Linda Chan J made an order restraining the May proposal. Her Ladyship’s decision was interlocutory and based on the material then before the Court.

28.From June to August 2023, extensive correspondence followed concerning access to financial documents.

29.On 5 July 2023, a board meeting was attended by the Listco-TV Directors, representatives of Deloitte and Ample Capital Limited (“AmCap”), and Ms Rosenna Mak of Briscoe Wong Advisory Limited (“BW”) as Mr Zhu’s alternate director. Ms Mak attended remotely. She was not given electronic copies of the draft audit reports and was required to view them through a camera.

30.At the meeting, it was requested and agreed that Mr Zhu’s side would be included in relevant communications with AmCap, which was appointed to advise on fundraising methods. That did not occur to the extent reasonably contemplated. The substantive work with AmCap, Deloitte and the valuer, Jones Lang LaSalle Corporate Appraisal and Advisory Limited (“JLL”), remained largely within the Listco group and the Listco-TV Directors.

31.On 7 July 2023, Mr Wong of BW (appointed as director by Mr Zhu for a short period in 2023) attended TV’s registered office to review financial statements and documents.

32.On 14 August 2023, a further board meeting approved the financial statements for 2022 and 2023 over the objection of Ms Nichole Chan of BW, then Mr Zhu’s alternate director. Requests for supporting information continued.

33.On 21 August 2023, Mr Louis Ching stated that Mr Zhu was required to attend the registered office personally and that accountants and lawyers would not be permitted to inspect TV’s accounting records.

34.On 29 August 2023, Mr Zhu and his advisers attended. After an initial refusal of entry, a limited body of documents was produced.

35.AmCap issued its letter of opinion on 14 September 2023. A board meeting was convened on 28 September 2023 to consider a further rights issue. The transcript runs to more than 170 pages in the bundle. Ms Chan questioned the need for TV to fund GX Guangming, the possible contribution of SH Jianchen, alternative sources of finance, the practicality of remittance, and whether liquidation analysis should be undertaken, but these questions ultimately did not sway the direction of the meeting. The proposal was approved by majority vote (carried by the Listco-TV Directors).

36.On 3 October 2023, Mr Zhu commenced HCMP 1673/2023 to restrain the September rights issue. Separately, he had also brought HCMP 1627/2023 on 25 September 2023 seeking disclosure of various documents. On 30 October 2023, Hon Linda Chan J ordered the relevant directors to procure TV to cause Deloitte to provide the accounting records of TV which Deloitte had inspected and copied for the audits of the 2022 and 2023 financial statements. Deloitte subsequently produced a list of 17 documents on 28 November 2023 (a few weeks after the original date of Hon Linda Chan J’s specified deadline of 13 November 2023).

37.On 1 November 2023, Hon Harris J declined to restrain the September proposal. His Lordship’s reasons were delivered on 5 January 2024: Zhu Bin v Ching Man Chun Louis [2024] HKCFI 70. That decision, too, was interlocutory. The observations there made about the apparent commercial purpose of the proposal and possible collateral motivations were based on a different evidential state and at a different procedural stage. I have considered the relevant interlocutory judgments as part of the history, but not as findings binding upon the present trial.

38.Mr Zhu subscribed under protest. The September rights issue therefore caused no dilution of his proportional shareholding.

E. THE PETITION, EVIDENCE AND ISSUES

39.The Petition was presented in December 2023 and amended on 21 February 2024. By order dated 7 March 2024 it stands as Mr Zhu’s Points of Claim. The Respondents served Points of Defence on 5 April 2024 and Mr Zhu served Points of Reply on 19 April 2024.

40.The agreed issues may be grouped as follows:

(1) whether there was a “Common Agreement and Understanding” and whether TV was a quasi-partnership;

(2) whether Mr Zhu was stonewalled or excluded from TV’s financial affairs and management;

(3) whether the May and September 2023 rights issues were unfairly prejudicial;

(4) whether Mr Zhu was denied inspection rights, whether TV failed to keep accounting records, and the effect of PRC law;

(5) whether TV’s affairs were mismanaged in circumstances calling for investigation;

(6) whether the Listco-TV Directors breached their duties or the SHA; and

(7) what relief, if any, should be granted.

41.The Court heard evidence from Mr Zhu, Ms Chan, Mr Peter Glanville (a forensic accountant), Mr Premjit Dass (a valuation adviser), Mr Louis Ching, Mr Grabner, Mr Paul Ching, Mr Gary Yeung, and Professor Robin Huang (the single joint expert on PRC law). During and following the trial, I have considered the parties’ filed materials, the evidence tendered, the contemporaneous documents and other materials as referred to in the parties’ pleadings and submissions.

42.At the beginning of trial the Respondents objected that parts of the evidence exceeded or advanced matters not pleaded in the Petition and sought for those aspects to be expunged. At the time, I received the disputed materials de bene esse and reserved the question of use. Having done so, and with the benefit of parties’ submissions on this, I consider that the proper course is to admit and consider them only insofar as they support contentions already appearing in the pleaded case or bear upon relief. They do not constitute standalone grounds of complaint: In re Fildes Bros Ltd [1970] 1 WLR 592 at 597G-H; Re Harsen (China) Ltd [2022] HKCFI 3806 at §21(1).

43.Consistently with concessions made for Mr Zhu at the opening, the challenged financial figures, accounting differences and impairment evidence are not relied upon as themselves proving mismanagement. I have taken these items of evidence as possible indicia explaining why information was sought or why investigation was said to be necessary. Further, whilst there had been proposed complaints concerning the splitting of Listco’s holding to manipulate quorum and the alleged edging out of Ms Xu Wei, these were not ultimately pursued and form no part of the reasons for this decision.

44.I would also note that the Petitioner’s closing submissions appear to place somewhat greater emphasis than his opening submissions on the issues as to information asymmetry, exclusion from the development of advice and the processes surrounding the two rights issues. They also advanced the broader theme, as was developed during trial, that the Listco parties treated TV as though it were wholly owned. I have noted this as a shift in emphasis, rather than a general abandonment of pleaded complaints which were maintained and developed.

F. RELEVANT LEGAL PRINCIPLES

45.The following principles and propositions are uncontroversial and well settled.

46.Under sections 724 and 725 of the Companies Ordinance, the Court may grant relief where a company’s affairs are or have been conducted in a manner unfairly prejudicial to the interests of members generally or of one or more members. Unfairness is assessed in the context of the legal and equitable understandings upon which the members associated. The starting point is ordinarily the company’s constitution and any shareholders’ agreement: O’Neill v Phillips [1999] 1 WLR 1092 at 1098; Re Charterhouse Capital Ltd [2015] BCC 574 at §46.

47.Prejudice is not confined to proved financial loss. A material disregard of governance or membership rights may suffice. It does not follow, however, that every breach of contract, every failure in corporate administration or every disagreement between directors is unfairly prejudicial. The Court must identify both the unfairness and the prejudice in the practical setting of the company.

48.A company may be treated as a quasi-partnership where equitable considerations make it unfair for members to insist upon their strict legal rights. The commonly recurring features identified in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 at 379 are a personal relationship involving mutual confidence, an understanding that all or some shareholders will participate in management, and restrictions upon the transfer of interests. These are guides rather than rigid preconditions.

49.The description “quasi-partnership” is not established merely because shareholders know one another, agree to co-operate in good faith, or provide for minority board representation. Nor is a contractual disclaimer of partnership necessarily conclusive: Dodson v Shield [2022] EWHC 1751 (Ch) at §156. The whole relationship and the bargain actually made must be examined. Faulkner v Vollin Holdings Ltd [2022] EWCA Civ 1371 is a useful warning against converting a contractual duty of good faith into an undefined “contractual quasi-partnership”.

50.A director’s right to inspect company documents exists to enable the performance of the office. A director is not ordinarily required to demonstrate a special reason for inspection and may, where appropriate, act through professional advisers or agents. The right may be restrained upon clear proof that it is sought for an improper purpose involving abuse of confidence and material injury to the company: Ng Yee Wah v Lam Chun Wah [2012] 4 HKLRD 40 at §29; Re Tanyuen Investments Ltd, HCCW 375/2008, 28 October 2009, at §20.

51.The right is nevertheless a right in relation to the company’s documents. It does not make a director of a holding company a director of its subsidiary or give a direct and unqualified right to every document belonging to the subsidiary. Whether subsidiary records must be reflected in, or obtained for, the holding company’s accounting records depends upon the statutory requirements, the business and corporate structure, and the particular records concerned.

52.Directors owe duties to act in good faith in what they consider to be the interests of the company, to exercise powers for proper purposes, and to exercise reasonable care, skill and diligence. Although a non-executive director’s practical role may differ from that of an executive director, all directors must be sufficiently informed to perform the functions which their office requires: Equitable Life Assurance Society v Bowley [2004] 1 BCLC 180 at §§35-41; Bishopsgate Investment Management Ltd v Maxwell (No 2) [1994] 1 All ER 261 at 264.

53.The Court does not substitute its own commercial judgment for that of the board. Where directors have addressed the company’s interests, the question is not whether the Court would have made the same decision. In a challenge to the issue of shares, however, the Court must identify the substantial purpose for which the power was exercised: Howard Smith Ltd v Ampol Petroleum Ltd [1974] AC 821 at 837.

54.Winding up on the just and equitable ground is a discretionary remedy and ordinarily a remedy of last resort. Loss of confidence must be grounded in the conduct of the company’s affairs and, where reliance is placed upon lack of probity, it must be a justifiable lack of confidence: Loch v John Blackwood Ltd [1924] AC 783 at 788. The existence of unfair prejudice does not compel winding up; nor does the absence of a quasi-partnership necessarily exclude it. The Court considers the circumstances existing at the time of decision and the practical consequences of the proposed order.

55.The Court’s remedial power under section 725 is broad: Wong Man Yin v Ricacorp Properties Ltd (2003) 6 HKCFAR 265 at §61. Breadth of jurisdiction does not dispense with pleadings and procedural fairness. The relief must respond to the case which the opposing parties were called upon to meet.

56.Finally, findings of serious misconduct must be supported by cogent evidence. Inferences must arise reasonably and definitely from proved primary facts rather than conjecture: Nina Kung v Wong Din Shin (2005) 8 HKCFAR 387 at §§185 and 187. A failure to give evidence on a matter within a party’s knowledge may strengthen an otherwise established prima facie case, but cannot create a case for which the primary foundation is absent: Pacific Electric Wire & Cable Co Ltd v Texan Management Ltd, CACV 90-91, 93-96/2012, 17 September 2013, at §§106-107.

G. WITNESSES

57.I have assessed credibility of the witnesses by reference principally to contemporaneous documents, the agreed chronology, internal consistency and inherent probabilities. Demeanour has formed part of the overall assessment, but is not treated as decisive: Wing Lung Bank Ltd v King Arnold Theo [2020] HKCFI 911 at §49; Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135. What follows are general observations on the key witnesses, including brief comments on particularly notable aspects of their evidence which relate to the issues to be discussed. Ultimately, the position as to their evidence is discussed within the context of the issues to be determined.

58.For reasons that are expanded upon below, I consider that Mr Zhu was not a reliable witness on a number of material matters. His evidence that he had been wholly uninvolved in, and ignorant of, GX Guangming’s affairs from April 2018 was inconsistent with the prior existing state of affairs, the composition of its management, his continuing relationships with relevant personnel, his role in the Guilin Bank facility dealings, and the representation letter which he and Ms Amy Kan signed for the purposes of Listco’s acquisition. His evidence frequently understated his continuing knowledge and influence.

59.That conclusion does not mean that Mr Zhu was wrong about every instance in which information was withheld. Some of those matters are proved objectively by the correspondence, meeting transcripts and documents produced. I therefore treat his evidence issue by issue rather than decide upon it globally.

60.I found Mr Louis Ching to be a strongly partisan witness. His tendency was to attribute every difficulty to Mr Zhu and to use descriptions such as fraud, forgery, blackmail and threat more readily than the underlying documents justified. His inability to identify precisely the correction he wished to make to his witness statement concerning the appointment of Ms Chen Kui reduced the assistance of his evidence on that incident.

61.Conversely, Mr Grabner was somewhat more measured. He properly withdrew the suggestion that the original appointment document was forged. As will be explored below, I accept the evidence of Mr Grabner and the other Listco witnesses as to the existence of genuine and pressing funding concerns, but not their broader assertion that Mr Zhu had all necessary information or that the restrictions upon inspection were justified.

62.Ms Chan’s evidence was consistent with the transcript of the 28 September 2023 meeting. In particular, she did raise the question of liquidation analysis and whether TV should provide further funds to GX Guangming. Her evidence does not, however, establish that the board failed to consider TV’s interests. The transcript shows that those questions were engaged with, albeit she (and Mr Zhu, presumably) remained dissatisfied with the answers.

63.Mr Glanville identified a number of matters which warranted inquiry. On the whole, I do not consider that his evidence on how matters had been handled demonstrated that accounting treatments were improper or that TV’s affairs had been mismanaged. Mr Dass explained the difficulties he faced in valuing TV on the materials provided to him. I do not understand him to have said that no valuation could ever be undertaken if the necessary information and assumptions were made available.

64.Professor Huang’s evidence demonstrated both that routes existed under PRC law for authorised inspection and copying of company materials and that the removal or export of certain accounting archives and data was subject to formalities and restrictions. Having heard his evidence, I do not think that it supports either extreme position advanced by the respective parties.

65.Finally, I note that there had been an ongoing objection taken at trial (but not earlier) to Mr Dass’ and Mr Glanville’s evidence as being expert evidence without leave having been sought or given. I have treated their evidence as evidence of fact as they were Mr Zhu’s advisers at the material times. I have not taken their evidence as being expert opinion evidence, and insofar as those aspects may be engaged, I have not given those aspects any weight.

H. WAS TV A QUASI-PARTNERSHIP?

Mr Zhu’s case

66.Mr Zhu’s pleaded case is that, when PT OBOR became the majority shareholder, there was a Common Agreement and Understanding that both shareholders would participate through their nominees in TV’s management; that he would be informed, updated and consulted on material management and investment decisions; and that TV’s directors would have access to its information and documents and would comply with the Companies Ordinance, the articles, the SHA and their legal and equitable duties. He submits that the understanding is not an oral side agreement divorced from the written bargain, but is evidenced by, and gives equitable content to, the SHA.

67.Factually, he relies on clauses 2.2 and 2.3: his personal seat and right to nominate a second director were protected while he held at least 30%, and no board meeting could be quorate without a nominee of each shareholder. He couples those provisions with clause 4.1, requiring performance in a spirit of mutual co-operation, trust and confidence, clause 4.2, requiring prompt notification of material matters, and clause 6.2, requiring quarterly consolidated management accounts. In his submission those provisions contemplated substantive participation, not the bare right to attend meetings at which decisions had already been made.

68.He also relies on the parties’ pre-existing relationship. Mr Zhu and Mr Louis Ching had been business partners since 2015 and were respectively the second-largest and largest shareholders of Listco. The Respondents themselves said that Mr Zhu’s relationships with GX Guangming’s business partners formed part of the attraction of the acquisition. The stipulation that Mr Zhu personally remain a director was said to show reliance on his continued participation and knowledge.

69.Insofar as relevant legal principles, Mr Zhu invokes the features identified in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 at 379E-G and the approach in Re Lao Xue Yang Holdings Ltd [2025] HKCFI 3837 at §49. He submits that no single feature is indispensable; minority management participation and mutual confidence may attract equitable restraints even though the company is not an equal partnership. His factual case in closing rested on those two features. Although restriction on transfer is the third recurring feature identified in Ebrahimi, he did not rely on any transfer restriction as a separate basis for characterising TV as a quasi-partnership. He relies on Dodson v Shield [2022] EWHC 1751 (Ch) at §156 for the proposition that a no-partnership clause is relevant but not conclusive.

The Respondents’ case

70.The Respondents deny both the pleaded Common Agreement and the characterisation of TV as a quasi-partnership. Their starting point is that PT OBOR’s acquisition was a negotiated, arm’s-length commercial transaction by a listed group and that the parties’ rights and obligations were exhaustively recorded in detailed agreements. Mr Zhu accepted in cross-examination, they submit, that both sides’ conduct was governed by the SHA.

71.They further stress the asymmetrical allocation of control. PT OBOR acquired 65%, obtained five of the seven board seats under clause 2.2 and, under clause 2.11, alone nominated the directors and officers whom TV was entitled to appoint to GX Guangming and the other Mainland subsidiaries. Mr Zhu’s board representation and the quorum provision gave him participation in deliberation, but not a veto over properly convened majority decisions or any entitlement to manage GX Guangming.

72.As a matter of construction, the Respondents say clause 4.1 is an express contractual duty of good faith, not an invitation to superimpose indeterminate equitable expectations. Clause 4.2 specifies the matters requiring prompt notification and clause 6.2 specifies the financial information to be provided. Clause 12.6 expressly disclaims any partnership or agency. Relying on O’Neill v Phillips, Re Charterhouse Capital Ltd and Faulkner v Vollin Holdings Ltd [2022] EWCA Civ 1371, they submit that the Court should hold the parties to the commercial bargain made with open eyes and should not create a ‘contractual quasi-partnership’.

73.They further dispute the necessary personal relationship. Prior dealings and Mr Zhu’s commercial connections did not transform the acquisition into an association analogous to partnership. The documentation recorded a transfer of control, and the continuation of Mr Zhu as a substantial minority shareholder with negotiated protections was commercially explicable without any wider equitable compact.

Discussion

74.I accept that the SHA preserved substantial rights for Mr Zhu. His position as a director was entrenched while he retained at least 30% of the shares. He could nominate a second director. A board meeting required the presence of at least one of his nominees. The SHA imposed real information obligations. Those provisions were not empty formalities.

75.However, in the circumstances of this case, they do not establish a quasi-partnership. An objective reading of the contemporaneous documentation shows that the transaction was a negotiated commercial acquisition by a listed group of a 65% controlling interest. The parties knew that control would pass to PT OBOR. Clause 2.2 allocated five board seats to PT OBOR and two to Mr Zhu. Clause 2.11 assigned the nomination of GX Guangming’s directors and officers to PT OBOR. Those are deliberate allocations of control, not arrangements for equal management.

76.The rights conferred upon Mr Zhu are more naturally understood as contractual protections negotiated by a substantial minority shareholder. The existence of such protections does not itself show that the parties intended their strict legal rights to be subject to wider equitable restraints.

77.Clause 4.1 is significant as a contractual obligation of co-operation, trust and confidence. It cannot be read in isolation from the detailed governance machinery and clause 12.6. The latter is not conclusive by itself, but it confirms the commercial character of the bargain and weighs against the importation of partnership-like obligations not expressed in the SHA.

78.Nor does the prior relationship establish the necessary personal association. Mr Zhu and the Listco interests had commercial dealings and each brought knowledge and resources to the venture. The acquisition documents and allocation of control show an arm’s-length restructuring, not the continuation of a business on the footing that all shareholders would manage as equals.

79.Dodson demonstrates that a no-partnership clause does not answer the question as a matter of law. On the facts of this case, however, the clause forms part of a coherent agreement which expressly defines the parties’ respective roles. Faulkner is not applied mechanically; its warning is nevertheless apposite.

80.I therefore have come to the conclusion that there was no freestanding Common Agreement and Understanding beyond the SHA and the constitutional arrangements, and that TV was not a quasi-partnership. This does not deprive Mr Zhu of the participation and information rights which the SHA expressly conferred. It means that those rights are enforced according to the contractual bargain, without the wider equitable overlay for which he contended. The fairness of the parties’ conduct is to be assessed principally against the rights and obligations they actually agreed.

I. INFORMATION, INSPECTION AND ACCOUNTING RECORDS

Mr Zhu’s case

81.Mr Zhu pleads that, from October 2021, he was stonewalled from TV’s financial and operational affairs and thereby prevented from participating meaningfully in management. He says the complaint is cumulative: the non-provision of quarterly consolidated management accounts, the manner in which draft audited accounts were handled, his exclusion from dealings with various advisors such as Deloitte, JLL, and AmCap, and the restrictions imposed on the August 2023 inspection all created an information asymmetry at the very time when he was asked to approve and fund major decisions.

82.He places heavy reliance on the 5 June 2023 two-page document. It was sent as TV’s ‘management account’ following the hearing before Hon Linda Chan J, but contained only an unconsolidated balance sheet and income statement and said nothing useful about GX Guangming’s financial position or the asserted need for funding. He says the 5 July meeting was emblematic: although Deloitte had emailed electronic drafts to Mr Louis Ching and Mr Grabner, Ms Mak, attending as his alternate, was refused an electronic copy and required to view papers through a camera. The explanation that only hard copies existed was, on his case, contradicted at the meeting and in the oral evidence.

83.Mr Zhu further says that, after the board agreed on 5 July that his side would be included in communications with AmCap, the Listco-TV Directors continued substantive discussions with AmCap without him. Likewise, Listco had commissioned JLL and supplied forecasts affecting the impairment exercise, while discussions with Deloitte about going concern and the disclaimer were conducted on the Listco side. His case is that these were not merely advisers’ working arrangements: they shaped material judgments which the TV board was later asked to adopt.

84.As to inspection, he relies on Re Tanyuen Investments Ltd and Ng Yee Wah v Lam Chun Wah. A director need not show special cause, may ordinarily inspect through professional advisers and can be restrained only upon clear proof of an intention to abuse confidence and materially injure the company. He says the 21 and 28 August correspondence wrongly imposed personal attendance without lawyers or accountants; on 29 August his advisers were initially refused entry, only limited material and 14 Excel files were produced, and TV would not confirm whether those were its complete records.

85.On the statutory case, Mr Zhu invokes sections 373, 374 and 377 of the Companies Ordinance (Cap 622) and submits, by reference to Re Alvarez & Marsal Asia Ltd [2009] 4 HKLRD 727 (CA) and Re ZPMC-Red Box Energy Services Ltd [2021] HKCFI 618, that the content of a holding company’s accounting records depends on its business. Since TV’s business and value lay almost entirely in its 75% interest in GX Guangming and its accounts were consolidated, sufficient GX Guangming material had to be available to enable TV’s transactions and financial position to be explained. He relies on Deloitte’s production of only 17 documents under the 30 October 2023 order as demonstrating the inadequacy of TV’s records.

86.Mr Zhu answers the PRC-law defence in two ways. First, he says that Hong Kong law governs TV’s statutory duties and his rights as a TV director. Secondly, he relies on Professor Huang’s evidence to point out routes by which authorised inspection and copying could occur in the Mainland, subject to corporate approval, registration and appropriate undertakings. He says the Respondents cannot rely on restrictions upon removing archives from the Mainland to justify refusing any meaningful inspection there or professional assistance.

The Respondents’ case

87.The Respondents deny stonewalling and say Mr Zhu’s account depends on the false premise that he had been wholly ignorant of GX Guangming since April 2018. They rely on the presence until March 2022 of his personal assistant, nephew and other relatives or associates in GX Guangming’s management; his role in the RMB300 million Guilin Bank facility and construction matters; the September 2021 representation letter; and his continuing relationships with counterparties. They also rely on his absences from meetings and his use of alternates. In that context, they say, he had far more knowledge than he was willing to admit to.

88.Contractually, the Respondents submit that clause 6.2 required quarterly consolidated management accounts but did not confer a general right to every underlying document of every group company. They say TV was a holding company with no separate operating business, that no quarterly accounts in the form now demanded had historically been prepared, and that Mr Zhu did not make a clause 6.2 request until April 2024, after which accounts were provided. Clause 2.11, in their submission, confirms that he had no role in the day-to-day management of GX Guangming.

89.They characterise the extensive requests as disproportionate and as an attempt to re-audit Deloitte rather than obtain information reasonably required by a non-executive director. Relying on Equitable Life v Bowley and Bishopsgate v Maxwell, they submit that the content of a director’s duty depends upon the company’s organisation and the part he was reasonably expected to play; a director may rely upon executive management and professional auditors absent a red flag. They also contend, by reference to Oxford Legal Group Ltd v Sibbasbridge Services Plc [2008] EWCA Civ 387, [2008] BCC 558, that the timing and breadth of the requests supported an improper purpose to obstruct urgently needed fundraising.

90.On the facts, they say physical copies were available before and at the 5 July meeting, Ms Mak’s remote attendance had not been notified in sufficient time, Deloitte answered questions at that meeting and again at the 14 August meeting, and TV made available on 29 August all documents then in its possession. Confidential and price-sensitive material justified controlled access. They also submit that the disclosure proceedings were concluded by Hon Linda Chan J’s order and Deloitte’s production; dissatisfaction with that production should have been pursued there rather than recycled as unfair prejudice.

91.The Respondents distinguish TV’s records from GX Guangming’s records. The latter were historically maintained at the operating company’s office in the Mainland, including when Mr Zhu controlled TV. A director of TV had no direct inspection right against GX Guangming merely by reason of that office. They say PRC archival, data and confidentiality rules required the records to remain in the Mainland and made the legal position sufficiently complex to negative bad faith even if their understanding were wrong. At most, they submit, any record-keeping contravention was an isolated technical matter of the kind insufficient to ground unfair prejudice: Re Sunrise Radio [2009] EWHC 2893 at §7.

92.Finally, they point to the GX Guangming board resolution of 29 November 2023 and later correspondence offering inspection in the Mainland. In their submission, workable inspection was available with appropriate authorisation, while Mr Zhu sought a wider right—including unrestricted access by advisers and removal or copying of source materials—which neither Hong Kong nor PRC law conferred.

Discussion

93.The parties again advance positions which are too absolute. Mr Zhu was not kept wholly in the dark. Equally, he was not given all information reasonably necessary to perform his role at the material times.

94.Mr Zhu retained substantial historical knowledge of GX Guangming. Until at least March 2022 persons closely connected with him occupied important roles. He had negotiated or been materially involved in financing and construction matters. The September 2021 representation letter is inconsistent with his claim that he knew nothing of the business after April 2018. His attendance record and use of alternate directors also bear upon the practical extent of his participation.

95.However, historical familiarity with the terminal was not a substitute for current financial information. By mid-2023 the board was asking Mr Zhu to make decisions about substantial funding and, in practical terms, to contribute capital or accept dilution. He was entitled to sufficient and timely information to make an independent assessment and carry out his role.

96.The two-page document sent on 5 June 2023 was inadequate for that purpose. It was unconsolidated and did not explain the financial need at GX Guangming. The inconsistent descriptions of that document—first as a management account and later as something less than a comprehensive management account—underline the unsatisfactory treatment of the request.

97.Clause 6.2 required the shareholders jointly to procure TV, as soon as practicable, to prepare and submit to each shareholder quarterly unaudited consolidated management accounts of the TV group, including a profit and loss account, balance sheet and cash flow statement. The obligation rested on both shareholders, but PT OBOR controlled the board machinery by which TV could be procured to perform it. It was not conditional upon Mr Zhu first asking for the accounts. The accounts provided after his request in April 2024 do not answer the earlier non-performance. I find that clause 6.2 was breached during the preceding period.

98.The conduct surrounding the July meeting and the August inspection was also unjustifiably restrictive. There was no satisfactory reason why an electronic draft in existence could not be provided to an alternate director who was participating remotely, subject to appropriate confidentiality protections. The explanation that the board dealt only in hard copies was not borne out by the evidence. Mr Louis Ching told Ms Mak “all we have are hard copies”. Deloitte on the other hand said it had emailed drafts to him and Mr Grabner. His explanation rang hollow in light of the numerous requests that had been made previously.

99.Nor was it proper to insist, as an absolute condition, that Mr Zhu inspect personally and without accountants or lawyers. Ng Yee Wah makes clear that professional assistance is ordinarily permissible. The Respondents did not establish by clear proof that the particular requests were made for the purpose of abusing confidentiality and materially injuring TV.

100.That does not mean that every request made by or for Mr Zhu had to be met in full. Some requests were extremely broad and approached a demand to re-perform the audit or obtain every underlying document of GX Guangming. The Respondents were entitled to impose reasonable arrangements to protect confidential information and to distinguish documents belonging to TV from documents belonging to its subsidiary.

101.I also find that the failure to include Mr Zhu’s side in the substantive AmCap communications, after the agreement reached at the 5 July meeting, contributed to a material information imbalance. It deprived his representatives of a fair opportunity to understand the development of the advice before the September board meeting.

102.I do not accept, however, that every accounting record of GX Guangming necessarily became an accounting record of TV which had to be kept physically at TV’s registered office. TV was required to keep records sufficient to show and explain its transactions and financial position and to prepare consolidated accounts. That obligation did not collapse the separate corporate personality of GX Guangming.

103.The production of only 17 documents by Deloitte under the disclosure order does not prove that TV possessed only 17 accounting records or that its records were in wholesale disarray. The order identified records inspected and copied by Deloitte for the particular audits; it was not an inventory of every record maintained by TV or GX Guangming.

104.Professor Huang’s evidence establishes that inspection and copying could be arranged in the Mainland with the necessary corporate authorisation, registration and undertakings. Whilst the Respondents point to the 29 November resolution offering inspection, this was in fact not disclosed until the Points of Defence that were filed in these proceedings on 5 April 2024. Moreover, the agreement to adviser inspection was proffered and then withdrawn in April 2024. Overall, I consider that the Listco-TV Directors did not do enough to facilitate a workable inspection with professional assistance. Conversely, his evidence does not establish an unrestricted right to remove, export or deliver copies of all GX Guangming records to Hong Kong.

105.I therefore find material but limited obstruction of Mr Zhu’s information and inspection rights, together with breach of clause 6.2. I reject both the allegation of a wholesale failure under section 373 and the Respondents’ assertion that Mr Zhu had all information reasonably required.

106.Those findings do not by themselves suffice to establish a separate ground of unfair prejudice. The inspection right was asserted principally as an incident of Mr Zhu’s office as a director, while clause 6.2 conferred an express shareholder right. On the case advanced in closing, their statutory significance lies in the information available when Mr Zhu was required to consider the various tasks before the board in the conduct of the Company’s affairs. Insofar as the various instances of information imbalance are concerned, they were present but not of the scale or of such significance as to establish Mr Zhu’s wider case as pleaded or argued for. Faulkner v Vollin Holdings Ltd makes clear that a breach does not dispense with the need to establish both unfairness and prejudice, and Re Sunrise Radio illustrates that an isolated departure will not suffice.

J. THE MAY 2023 RIGHTS ISSUE

Mr Zhu’s case

107.Mr Zhu pleads that the purported approval of the May 2023 rights issue was unfairly prejudicial and involved breaches of duty. His factual case is that the first formal proposal arrived with the notice of meeting on 24 May, already embodied in a draft offer letter for HK$57 million. He had not been consulted, was given no consolidated financial statements and was required to address, at a meeting lasting only about 20 minutes, both the asserted urgency and the choice of a rights issue over other forms of finance.

108.He submits that the two-page unconsolidated document later supplied could not cure the informational defect and that Mr Grabner’s evidence confirmed its lack of utility. The board did not adequately examine why TV alone should bear the funding burden for a 75%-owned subsidiary, whether SH Jianchen should contribute, or whether bank finance, asset finance, shareholder loans or other means were available. The fact that the proposal had been developed before Mr Zhu was informed was said to show that the TV meeting was a ratification of a Listco decision rather than a genuine TV decision.

109.Legally, Mr Zhu relies on the duties to act in TV’s interests, avoid conflict, exercise powers for proper purposes and exercise reasonable care and diligence, citing Re HLC Environmental Projects Ltd [2013] EWHC 2876 (Ch), [2014] BCC 337, China Metal Recycling (Holdings) Ltd [2021] HKCFI 378 and Re Long Success International (Holdings) Ltd [2021] HKCFI 624. He alleges that the Listco-TV Directors failed to consider TV’s interests separately from Listco’s, and that dilution and the possible loss of his clause 2.2 board threshold were at least substantial purposes of the proposal.

110.He accepts that a pro rata offer permitted him to subscribe, but says this did not remove prejudice. Without adequate information, he was put to the coercive choice of committing further capital, being diluted, or—if reduced below 30%—losing the contractual right to nominate two directors. The injunction granted in June 2023 is relied on as part of the history demonstrating the seriousness of the informational and procedural defect, not as a binding trial finding.

The Respondents’ case

111.The Respondents say the proposal was a bona fide commercial response to a pressing liability. GX Guangming had agreed to make staged payments to CCCC No 5, the first payment was imminent, construction of the New Berth and the value of TV’s principal asset were at risk, bank support had been impaired by disputes and litigation, and SH Jianchen had not paid all of its registered-capital contribution. Preserving GX Guangming therefore directly served TV’s interests.

112.They dispute any conflict between Listco’s and TV’s interests. Listco’s interest in preserving a principal subsidiary was aligned with TV’s interest in preserving its 75% holding. The rights issue was offered pro rata, did not alter voting control if Mr Zhu subscribed, and was not structured to transfer value to PT OBOR. They rely on Howard Smith Ltd v Ampol Petroleum Ltd and submit that the substantial purpose was funding, not the creation or destruction of a voting majority.

113.As to process, the Respondents say the need for funding and the CCCC liability were not new to Mr Zhu, whose own prior involvement gave him detailed knowledge. They say his questions were considered, the commercial urgency did not permit indefinite delay, and directors were not obliged to accept his preferred funding route. It is noted that Hon Linda Chan J’s interlocutory order was made on a different and incomplete record and cannot of itself establish breach at trial.

114.They add that the May proposal was never implemented. There was no actual dilution, no loss of office and no diversion of funds. In their submission, a complaint about the quality of a preliminary board process, absent bad faith, improper purpose or resulting financial prejudice, could not sustain the relief the sought in the Petition.

Discussion

115.The May proposal must be separated into its commercial purpose and the process by which it was brought before the board.

116.The evidence establishes a genuine need to address the liability to CCCC No 5 and the associated risk to GX Guangming. Preserving GX Guangming was plainly capable of serving TV’s interests: it was TV’s principal asset. The fact that the same course also served Listco’s interests does not create an impermissible conflict where those interests were aligned.

117.I do not find that the substantial purpose of the proposal was to dilute Mr Zhu, remove him from the board or transfer value to Listco. A pro rata rights issue allowed him to maintain his proportionate holding by subscribing. The evidence does not go sufficiently far to establish that the amount or structure was contrived for a collateral purpose.

118.There was nevertheless a degree of procedural unfairness. The SHA did not confer a general right to advance consultation on every proposal, and I do not base the finding on the absence of consultation alone. The May proposal reached Mr Zhu in a developed form; he was not supplied with the consolidated financial material which the draft offer letter itself suggested existed; notice was short; and the meeting lasted little more than 20 minutes. In that combination of circumstances, his questions about the need for funding and alternative methods could not be meaningfully addressed before the vote.

119.The practical choice presented to him was to subscribe, suffer dilution, or—if his shareholding fell below 30%—lose the contractual threshold supporting his board rights. The availability of subscription therefore does not make the potential prejudice illusory. A shareholder may be financially able to subscribe and yet be unfairly required to decide whether to do so without adequate information.

120.I thus find that the conduct of TV’s affairs in bringing the May proposal to a vote in that manner was unfair to Mr Zhu’s interests as a member. What he was effectively presented with was an imbalanced choice: to subscribe blindly with little information, be diluted, or risk falling below the 30% threshold. Whilst the injunction meant that the proposal was not implemented and no dilution occurred, this consequence was entirely of Mr Zhu’s own making and does not negate the steps taken by the Respondents in arranging matters as they did.

121.The above finding is, however, relatively standalone and the unfairness is narrowly confined. It does not extend to improper purpose, want of probity or a conclusion that the underlying funding decision was contrary to TV’s interests.

122.In coming to the above view, I have taken into account the particular concerns that are referenced in Faulkner v Vollin Holdings Ltd [2022] EWCA Civ 1371 at §§315–319, as well as Re Sunrise Radio [2009] EWHC 2893 (Ch) at §7. The circumstances of this case mean that whilst there was indeed some prejudice qua shareholder, this was ultimately a relatively limited instance.

K. THE SEPTEMBER 2023 RIGHTS ISSUE

Mr Zhu’s case

123.Mr Zhu’s pleaded case is that the September approval repeated the substance of the May unfairness despite the intervening proceedings. Although audited accounts and AmCap’s letter were then available, he says the accounts materially altered the picture: they recorded cash-flow insolvency, large net current liabilities, impairment and a going-concern disclaimer. Those matters required the board to revisit the anterior question whether TV should put more money into GX Guangming at all.

124.He criticises AmCap’s retainer as addressing how funds might be raised rather than whether TV should fund GX Guangming. The substance of AmCap’s work and the information supplied to it had been developed without his side notwithstanding the 5 July assurance. He says this deprived Ms Chan of the opportunity to test the premises of the advice before the 28 September meeting.

125.At the meeting, Ms Chan raised issues and questions as to: future funding needs, the prospects of GX Guangming, a contribution by the 25% shareholder SH Jianchen, bank finance and other alternatives, and whether a liquidation analysis should be undertaken. Mr Zhu’s case is not that the words were never spoken, but that the Listco-TV Directors had already decided in May that TV would fund GX Guangming and dismissed the alternatives without adequate analysis. Statements referring to Listco’s status and shareholders were said to reveal that Listco’s listing interests predominated over the distinct interests of the 65:35 company.

126.Mr Zhu also relied on the later routing and timing of the proceeds as ultimately used. He contended that uncertainty over whether and when the full HK$51 million reached GX Guangming, and the proposed use of intermediate subsidiaries, undermined the asserted urgency. He subscribed under protest only to avoid dilution and the possible loss of his clause 2.2 rights; in his submission, absence of actual dilution did not validate an unfair process or improper purpose.

The Respondents’ case

127.The Respondents say September was materially different. By then the board had the audited accounts, AmCap’s written opinion and the benefit of several months of correspondence and discussion. The 28 September meeting extended over a transcript exceeding 170 pages. Ms Chan participated fully, questioned AmCap and the directors, and placed the proposed alternatives and liquidation analysis before the board.

128.They say the board addressed both whether and how TV should fund GX Guangming. The operational terminal remained valuable; the immediate obstacle was the CCCC settlement payment. SH Jianchen had failed to meet its own unpaid capital and was unwilling to assist; banks would not lend amid litigation and the withdrawal of support; assets were already encumbered; an external placement was difficult; and a forced sale or liquidation risked destroying value. AmCap regarded a pro rata rights issue as comparatively fair, flexible, timely and economical.

129.The Respondents rely on the board’s detailed discussion as reflected in the transcript and on the commercial-judgment principle. They say that a formal liquidation valuation was not a legal precondition to funding an operating subsidiary. They further say that Ms Chan did not propose a defined liquidation exercise or seek an adjournment to obtain one. The fact that Listco’s and TV’s interests converged in preserving GX Guangming did not amount to a conflict or show that TV’s interests were ignored.

130.They rely also on implementation: Mr Zhu subscribed, retained his 35% and suffered no dilution, and approximately RMB30 million was used to reduce the CCCC No 5 liability. Use of registered-capital channels and intermediate group entities was said to reflect the corporate and remittance structure, not a collateral purpose. Hon Harris J’s refusal of interlocutory restraint is relied upon as contextual support for the apparent commercial rationality of the transaction, while the Respondents accept that the trial Court must decide the issue on the fuller evidence.

Discussion

131.It is true and due note is made that various witnesses had given evidence along the lines that by September, a position had been taken commercially by the Respondents that funding was required to “save the [GX Guangming] terminal” (Mr Louis Ching), that they were “very adamant that possible liquidation of GX Guangming is not an option” (Ms Chan), and that TV’s interests could be very different from Listco’s (Mr Grabner).

132.Nonetheless, objectively assessed by reference to the contemporaneous documentation, the position in September was materially different from the prior situation in May. Audited financial statements had become available. AmCap had been appointed and had produced written advice. Moreover, the 28 September meeting permitted extensive questioning and discussion.

133.Mr Zhu submits that AmCap had been instructed only to advise how funds should be raised, not whether TV should fund GX Guangming at all. There is some force in that criticism of the original framing of the retainer. It does not circumscribe what the board actually considered at the meeting.

134.The failure to include Mr Zhu’s side in the development of AmCap’s advice, despite the assurance given on 5 July, remained a procedural shortcoming. It did not, however, make the September decision unfair in itself. AmCap’s written opinion was available for the meeting, Ms Chan was able to question both its premise and its recommended method, and the board addressed the anterior question whether TV should fund GX Guangming. Those later safeguards did not undo the earlier information failures, but they materially altered the fairness of the September process.

135.The transcript of the relevant meeting shows that Ms Chan raised whether TV should fund GX Guangming, whether SH Jianchen should contribute, whether bank finance, asset sales or an external placement were practicable, and whether liquidation analysis should be obtained. The answers were not always expressed with the precision which were necessarily framed with litigation in mind, but the questions were not ignored.

136.The board explained the pressing CCCC liability, the difficulty of obtaining co-operation from SH Jianchen, the encumbrance of available assets, the banks’ unwillingness to lend amid litigation, and the likely loss of value in a forced sale. AmCap explained why a pro rata rights issue was considered the fairest and most practicable available method.

137.Ms Chan did raise the issue of a liquidation analysis. However, the board was not necessarily obliged to obtain a formal liquidation valuation before deciding whether to meet an urgent liability of an operating subsidiary. It was entitled to conclude that preservation of the terminal was commercially preferable to risking a forced sale.

138.The 2022 and 2023 accounts, including the going-concern disclaimer and impairment, made the decision difficult. They did not compel liquidation or establish that further funding was irrational. The Court must not substitute hindsight for a commercial judgment reached after genuine consideration.

139.Ultimately, it would appear that whilst the Respondents came in with a position of considerable commercial conviction as to which course ought to be taken, the transcript shows the board did in fact engage with the questions posed and the alternatives raised.

140.Moreover, from the evidence as tendered, at least a good proportion of the funds raised were in fact applied, including approximately RMB30 million which reduced GX Guangming’s liability to CCCC No 5. The description of the remittance as registered capital does not establish that the rights issue served an improper purpose.

141.In the end, Mr Zhu subscribed and his holding was not diluted. In the circumstances, taking the fuller information, the length and substance of the meeting, the advice received, the proper funding purpose and the absence of actual dilution together, I do not find that the September rights issue was unfairly prejudicial.

L. MISMANAGEMENT AND THE NEED FOR INVESTIGATION

Mr Zhu’s case

142.Mr Zhu pleads that the management of TV’s affairs disclosed circumstances calling for investigation. He relies on the marked deterioration after PT OBOR obtained control: reduced revenue, substantial operating losses, negative cash flow, the increase in net current liabilities from about HK$70.9 million in FY2022 to about HK$575.5 million in FY2023, and Deloitte’s repeated going-concern disclaimers.

143.His accounting concerns include the HK$280.461 million impairment of property, plant and equipment and right-of-use assets in FY2023; differences between the JLL inputs, TV’s consolidated accounts and GX Guangming’s own accounts; a variance between consolidated and individual management accounts; a substantial increase in administrative and consultancy expense; corrections in GX Guangming’s audited reports; and the treatment of government compensation. Mr Glanville’s evidence was relied upon to identify questions which the material produced did not answer.

144.Mr Zhu also relies on the two Mainland judgments concerning the corporate seal and attempted amendment of GX Guangming’s articles, continuing creditor claims, and the lack of a clear explanation for the use of the September proceeds. He submits that, viewed together with the information deficit, these matters show that the Listco-TV Directors treated TV as an appendage of Listco and that the financial management of the group had broken down in the sense discussed in Thomas v Dawson [2015] BCC 603.

145.At the same time, Mr Hollander accepted at the opening that the disputed figures, accounting differences and impairment material did not themselves prove mismanagement. The case advanced was that they explained the requests for information and, in combination with the other pleaded conduct, supported the need for investigation and the asserted loss of confidence. The de bene esse material was not advanced as creating new freestanding complaints.

The Respondents’ case

146.The Respondents deny any identified act of mismanagement. They submit that deterioration in the accounts is a financial condition, not proof of breach, incompetence or want of probity. No expert established that Deloitte’s approach was wrong, that the JLL valuation or impairment methodology was manipulated, or that a particular decision of the Listco-TV Directors caused the alleged loss. Differences between local and consolidated accounts may reflect different accounting frameworks, dates, forecasts and consolidation adjustments.

147.They say the largest components of the FY2023 current liabilities were explicable: approximately HK$397 million related to the Lian Wei leases, HK$121 million to the Guilin Bank facility affected by cross-defaults and litigation, and about HK$70 million to CCCC No 5 construction costs. Those arrangements and much of the underlying debt pre-dated PT OBOR’s controlling acquisition and were matters of which Mr Zhu had intimate knowledge.

148.The Respondents’ further factual case is that acts of SH Jianchen, Lian Wei, Mr Zhao and persons connected with Mr Zhu precipitated the credit squeeze by interfering with the seal, withdrawing or undermining bank support and pursuing claims. They rely on those matters not only as a discretionary defence but to rebut causation: financial distress generated by inherited liabilities and hostile counterparties did not demonstrate mismanagement by the Listco-TV Directors.

149.They say the CCCC settlement and later payment of approximately RMB30 million were steps to reduce, not increase, the group’s exposure. The Mainland judgments resolved discrete corporate disputes and did not adjudicate the competence or probity of TV’s board. Given Mr Zhu’s concession as to the limited use of the accounting material, there was no evidential platform for the broad investigation case pleaded.

Discussion

150.Mr Zhu relies upon the rapid deterioration in TV’s reported financial position, substantial impairment losses, discrepancies between the TV and GX Guangming accounts, going-concern disclaimers and continuing creditor claims. These matters understandably caused concern and justified requests for explanation.

151.They do not, without more, prove mismanagement. As clarified for Mr Zhu at the opening, the figures were relied upon for the limited purpose of showing why information or investigation was sought, not as proof that a particular accounting treatment was improper.

152.Neither Mr Glanville nor the other factual witnesses established that the impairment was manipulated, that Deloitte’s treatment was wrong, or that the Listco-TV Directors caused loss through an identified breach. Changes in valuation inputs and forecasts may affect impairment. The evidence does not permit the Court to reconstruct the technical accounting exercise or infer misconduct merely because GX Guangming’s own accounts and TV’s consolidated accounts adopted different treatments.

153.Nor do the outstanding judgments and liabilities prove that management acted improperly. Several liabilities arose from arrangements made before PT OBOR acquired its controlling interest. The later disputes with SH Jianchen, Lian Wei and connected actors materially affected liquidity and the availability of finance.

154.I do not accept the Respondents’ contention that Mr Zhu was the sole cause of TV’s financial difficulties. Pre-existing debt, business performance and decisions of the Listco-TV Directors were also part of the history. I do find, for reasons addressed below, that conduct which Mr Zhu influenced or supported, whether directly or indirectly, likely made a material contribution to the financial pressure.

155.The payment of approximately RMB30 million from the September proceeds reduced the CCCC No 5 liability. It is not evidence of diversion or misapplication. There is no sufficient evidential foundation for a finding of want of probity, dishonest accounting, incompetence of the board or a breakdown in financial management of the character considered in Thomas v Dawson [2015] BCC 603.

156.The mismanagement and investigation complaints therefore fail.

M. EXCLUSION, THE SHA AND DIRECTORS’ DUTIES

Mr Zhu’s case

157.Mr Zhu pleads both exclusion from management contrary to the Common Agreement and Understanding and failure by the Listco-TV Directors to comply with their duties and the SHA. His case is that exclusion consisted not merely of being outvoted, but of the majority making substantive decisions at Listco or GX Guangming level, withholding the information and advice on which those decisions rested, and then presenting them to TV’s board as accomplished positions.

158.He relies on the failure to provide clause 6.2 accounts and to include his side in the Deloitte, JLL and AmCap work. Together with the manner in which material decisions were developed outside the TV board, he says this deprived his entrenched board representation and the clause 2.3 quorum protection of practical value. The closing case therefore focused on the actual flow of information and the decision-making processes examined above.

159.The appointment of Ms Chen is relied upon as a specific example. Mr Zhu says the Listco-TV Directors had signed an undated board resolution approving her appointment after completion but then alleged fraud or forgery when he sought to give effect to it. His developed case in closing concerned that original incident. The later nomination in June 2024 and registration in February 2025 were not developed as a distinct ground of unfair prejudice.

160.He also relies, de bene esse, on the November 2025 announcement of a non-binding MOU which contemplated a state-owned investor subscribing into GX Guangming and reducing TV’s interest from 75% to about 51%. In closing, he relied on it as a further illustration of the pleaded information imbalance and exclusion. It was not advanced as a new complaint about a completed disposal or developed as a separate breach of clause 4.2 or the directors’ duties.

161.Legally, Mr Zhu invokes the duties to act in good faith for TV’s benefit, avoid conflicts, use powers for proper purposes and exercise reasonable care and diligence. He submits that once a prima facie breach is shown the directors must explain the propriety of their decision-making, relying on Re Hong Kong Agricultural Special Zone Ltd, unreported judgment, HCMP 729/2012, HCA 1441/2012, HCA 126/2013 and HCA 2147/2013, 28 April 2017, and that disregard of governance rights may be prejudicial even without immediate financial loss.

The Respondents’ case

162.The Respondents deny general exclusion. They distinguish participation from control: Mr Zhu remained a director, could and did appoint alternates, was present or represented at material meetings, asked questions and voted. PT OBOR was entitled to exercise its five-seat majority, and clause 2.11 deliberately excluded Mr Zhu from nominating the management of GX Guangming. The SHA did not require every executive discussion or adviser communication to include him.

163.They say a non-executive director could properly discharge his role by receiving board papers, questioning management and relying on competent executives, auditors and advisers. Mr Zhu’s absences and the diffuse, repetitive nature of his requests contributed to any practical difficulty. Sensitive or privileged information concerning litigation with entities said to be under his influence could legitimately be withheld from him as a conflicted director.

164.As to Ms Chen, the Respondents say the original documents were signed on the express footing that appointment would take effect only after she left her employment. Mr Zhu inserted a date and filed the document unilaterally without renewed consent. Their objection was therefore directed to an irregular filing, not to the abstract existence of his clause 2.2 nomination right.

165.The Respondents also rely on the commercial character of the MOU. It was preliminary and non-binding, and any implementation would require further approvals. In their submission, exploration of a rescue investment did not establish bad faith, improper purpose or sacrifice of TV’s interests. Any administrative lapse was discrete and could not sustain the wider directors’ duties case.

Discussion

166.The rejection of a quasi-partnership does not render the contractual governance rights immaterial. Mr Zhu was entitled to the benefit of clauses 2.2, 2.3, 4.2 and 6.2 and to perform his office as a director on a properly informed basis.

167.I do not find a general exclusion from management. Mr Zhu remained a director, appointed alternates and representatives, attended or was represented at material meetings, and exercised his vote. PT OBOR was contractually entitled to majority control. Mr Zhu was not entitled to equal control of TV or participation in the day-to-day management of GX Guangming.

168.There were, however, specific departures from the agreed arrangements. The information restrictions and failure to provide quarterly consolidated management accounts have already been addressed.

169.The Petition and opening submissions also referred to proposals in late 2022 and early 2023 said to suspend or remove Mr Zhu’s SHA rights, and to proceedings commenced against him. Those matters were not developed in closing as distinct grounds of unfair prejudice or breach of duty. In keeping with the parties’ closing cases, I do not make separate findings upon them.

170.Mr Zhu again nominated Ms Chen as a director on 11 June 2024 and provided her acceptance and a filing form. Mr Tsang refused the June 2024 nomination of Ms Chen, and she was not appointed until 19 February 2025. The later nomination was not developed in closing as a distinct ground, and the parties did not address the legal significance of the registration date or the steps required to give effect to the nomination. I therefore make no independent finding of a breach of clause 2.2 or exclusion from the interval between those dates. The sequence forms part of the background.

171.The original January 2022 filing presents a different issue. The relevant document had been signed on a conditional footing and was later dated and filed unilaterally by Mr Zhu. That was irregular and explains why the Listco directors objected. I do not find that the signatures were forged. Nor do I accept the broader allegation that the Listco directors fabricated the incident in its entirety.

172.In November 2025, Listco announced a non-binding memorandum of understanding with a potential state-owned investor concerning a subscription for an interest in GX Guangming. If completed, the transaction would reduce TV’s interest from 75% to about 51%. Mr Zhu and Ms Chen were not informed before the announcement.

173.The MOU was non-binding and further corporate decisions would have been required before implementation. It does not prove that the Listco-TV Directors had finally disposed of or diminished TV’s asset. In closing, Mr Zhu used it as corroboration of his pleaded information and exclusion case. He did not develop the matters necessary for a separate finding under clause 4.2, including when the contractual obligation arose and how the relevant conduct was attributable to TV or the Respondents. Consistently with the ruling admitting the material de bene esse, I take it no further than its limited contextual use.

174.I make no separate finding of breach of the duty of care and diligence on the basis of the MOU. That was not the way the point was developed in closing nor how the case had been first presented. I do not find breach of the duty to act in good faith, improper purpose, or sacrifice of TV’s interests to Listco. The wider directors’ duties case fails.

N. MR ZHU, THE CONNECTED ACTORS AND RELIEF

The Respondents’ case

175.The Respondents place Mr Zhu’s conduct at the centre of both causation and discretion. They allege that SH Jianchen, Lian Wei, Mr Zhao Hai Tao and persons connected with Mr Zhu acted under his influence in a co-ordinated course designed to create a credit squeeze, obstruct the Listco-appointed management and enable him ultimately to recover control of GX Guangming. They rely on the composition of GX Guangming’s board before March 2022, family and employment connections, communications passing through Mr Zhu, the seal dispute, SH Jianchen’s letter to Guilin Bank, the finance-lease claims and related Mainland proceedings.

176.They submit that the Court may draw the inference from the cumulative primary facts notwithstanding the absence of a written instruction from Mr Zhu. They invoke the approach in Nina Kung v Wong Din Shin and Pacific Electric Wire & Cable Co Ltd v Texan Management Ltd: an inference must be reasonably and definitely supported, while the absence of an explanation on matters within a party’s knowledge may strengthen a prima facie case. They say Mr Zhu’s denials and selective lack of recollection were contradicted by documents and commercial probability.

177.On relief, the Respondents rely on the clean-hands principle as explained in Hollington on Shareholders’ Rights (10^th ed, Sweet & Maxwell, 2024), para 7-84, Re Simply Alarming Security Ltd [2020] EWHC 2263 (Ch), at [16] and Chu v Lau (British Virgin Islands) [2020] UKPC 24; [2020] 1 WLR 4656, at [19]. Their case is not merely that Mr Zhu also behaved badly. It is that his conduct had an immediate and necessary relation to the equity asserted: it helped cause the financial distress, need for fundraising and collapse of trust which he relies upon to obtain winding up. On that footing, they say relief should be refused even if some unfair prejudice were otherwise found.

Mr Zhu’s case

178.Mr Zhu denies controlling the independent commercial decisions of SH Jianchen, Lian Wei or the other actors. He points out that family or historic business connections do not prove legal control; the entities had genuine contracts and causes of action; the finance leases and their cross-defaults were known before PT OBOR’s acquisition; and the Mainland courts upheld aspects of SH Jianchen’s complaints. He says hostility followed genuine disputes over the seal and management, not a covert campaign directed by him.

179.He further submits that the Respondents’ allegations do not justify withholding TV information or excluding him from adviser communications. His expressed willingness to consider funding once properly informed is said to be inconsistent with an intention simply to destroy the group. Even if some connected persons acted adversely to GX Guangming, that did not relieve the Listco-TV Directors of their independent duties to TV.

180.Legally, Mr Zhu says the clean-hands doctrine is not a general balancing of faults. The misconduct must have the immediate and necessary relation to the relief claimed. In particular, alleged conduct by counterparties could not answer objective breaches of clause 6.2, inspection rights or the obligation to notify him. He also rejects as commercially irrational the suggestion that winding up TV was designed to permit Lian Wei to acquire GX Guangming cheaply.

Discussion

181.Taken together, the surrounding circumstances support an inference of substantial continuing influence on the part of Mr Zhu. The contemporaneous corporate records show that Mr Zhu’s personal assistant, nephew and other relatives or associates occupied positions at GX Guangming or within relevant entities. Mr Zhu had longstanding relationships with Lian Wei and SH Jianchen. The timing and practical effect of the corporate-seal dispute, the withdrawal or freezing of financing support and the related proceedings were consistent with a degree of co-ordinated pressure upon GX Guangming.

182.A recurring refrain in Mr Zhu’s evidence was to refer to his apparently acrimonious divorce in order to distance himself from these various actors. He says that the business was previously run by himself and his (now ex) wife, and that owing to the divorce, the parties to whom he had been previously connected essentially no longer maintained such close bonds. That explanation was not contained in his June 2024 witness statement or supported by contemporaneous documentary evidence identifiable at trial. When the Court asked where the evidence of an acrimonious divorce was to be found, his legal team was unable to point to any contemporaneous documentation within the trial bundles. What is left is essentially just a bare assertion as to the supposed extent of acrimoniousness and thus his changed level of influence or knowledge.

183.In those circumstances, I do not accept that there is sufficient evidence to demonstrate Mr Zhu’s case that the divorce severed his practical influence over the relevant actors, or that he was wholly ignorant of what had occurred within GX Guangming after April 2018. The more coherent and rational explanation of the events as they unfolded is that Mr Zhu retained substantial influence over relevant persons and knowingly supported or facilitated at least parts of the pressure placed upon GX Guangming and TV within the relevant period. The primary facts and absence of proper explanation support such an inference.

184.I do not go so far as to find that Mr Zhu controlled every act of every entity, that every Mainland proceeding was a sham, or that he was solely responsible for TV’s financial position. Indeed, the evidence from the contemporaneous documentation is consistent with the position that the Respondents had management control over the TV Group since November 2020, as well as oversight of the payments in and out of GX Guangming. Further, the corporate-seal agreement and the finance leases were substantive arrangements that had subsisted for a period of time and the Mainland courts have dealt with aspects of them. The Guilin bank facility had not been fully utilized in any event. And the liability to CCCC No 5 was also known before completion. It would be unsafe and is in any event unnecessary to determine, on this Petition, the legality or commercial wisdom of each transaction or proceeding at such level of granularity. Rather, what is of significance is whether Mr Zhu was involved and in the know enough in order to continue applying pressure whilst simultaneously playing up his supposed lack of information.

185.The finding is thus nevertheless directly relevant to relief. It undermines Mr Zhu’s portrayal of himself as wholly excluded from all knowledge of the operating business. It also bears upon the causes of the financial pressure and the breakdown of relations on which he relies.

186.The expression “unclean hands” should not obscure the required analysis. Mr Zhu’s conduct does not erase objective breaches of the SHA or his inspection rights. It is relevant because it has an immediate connection with the financial distress, loss of confidence and practical breakdown said to make winding up just and equitable. It weighs strongly against discretionary relief.

O. UNFAIR PREJUDICE IN THE ROUND

187.I have found a narrow instance of unfairness in May 2023. I have also found limited obstruction of information and inspection rights and a breach of clause 6.2. For the reasons already given, those information findings are not sufficient to support the relief Mr Zhu seeks.

188.Those findings should not be minimised. A majority shareholder which has negotiated minority board and information rights must honour them in substance. It is no answer that the minority cannot outvote the majority. Participation and information may be valuable even where control is unequal.

189.Equally, the breaches must be kept within their proper bounds. There was no quasi-partnership, no general right to equal management, no improper-purpose rights issue, no proved mismanagement, no wholesale failure to keep accounting records, no want of probity and no actual dilution. Mr Zhu also materially contributed to the circumstances of financial pressure and distrust.

190.Taking matters in the round, I do not accept that the majority treated TV simply as its own property or that the affairs of TV were conducted with the sustained lack of impartiality or probity alleged. The established wrongs are specific governance and information failures within an otherwise genuine effort to preserve TV’s principal asset.

191.The contrast between May and September is also important. The May finding concerns a proposal which was restrained and never implemented. By September, the board had fuller financial material, AmCap’s written advice and an extensive meeting at which the central alternatives were raised and answered. The limited information and process failures therefore do not establish a continuing course by which the majority imposed its will without genuine consideration of TV’s interests.

192.Finally, I note that even if I am wrong about the sufficiency as to grounds of unfair prejudice (i.e. if it were to be determined that there was sufficient basis to allege unfair prejudice leading to the relief sought), I would nevertheless find against Mr Zhu by reason of his conduct as considered in Section N above (as discussed below).

P. RELIEF

Mr Zhu’s case

193.Mr Zhu’s primary pleaded relief is a winding-up order; his alternative is an order requiring him to purchase the Respondents’ combined 65% holding. He relies on the breadth of section 725 and Wong Man Yin v Ricacorp Properties Ltd, and submits that the Court may select relief which brings an end to the unfairness even if responsibility for the breakdown cannot be apportioned precisely.

194.For winding up, he relies on the asserted irretrievable breakdown of trust, exclusion, information asymmetry, financial uncertainty and justifiable loss of confidence in management. Citing Financial Technology Ventures II (Q) LP v ETFS Capital Ltd [2021] JCA 176, he submits that just and equitable winding up is not confined to quasi-partnerships: a controlling shareholder’s treatment of the business as its own, or a want of impartiality or probity, may suffice even without a separately actionable breach.

195.He says winding up is practically preferable because TV is a holding company and a liquidator could investigate, ascertain the group’s true financial position and realise its 75% interest in GX Guangming. He relies on Re South Asia Group (HK) Ltd for the relevance of serious valuation uncertainty, uncertainty over funding a buyout and the possibility of selling an operating subsidiary as a going concern. Mr Dass’s inability to value TV on the available material is said to illustrate those difficulties.

196.As to the alternative reverse buyout, Mr Zhu relies on Re a Company (No 00789 of 1987), ex p Shooter [1990] BCLC 384 (Ch) and says such an order is available where the majority is unfit to retain control or has been responsible for serious impropriety. He says he is willing and able to purchase, although such a transaction may engage Listco’s connected-transaction or major-transaction requirements.

197.Mr Zhu answers the allegation of a depressed acquisition by saying a liquidator would market TV’s interest and that Listco itself could bid. Lian Wei, as a creditor of GX Guangming, would have no obvious reason to pay TV for an equity interest merely to recover a debt. He maintains that a clean break, by winding up or reverse buyout, is the only realistic answer to the relationship’s collapse.

The Respondents’ case

198.The Respondents’ pleaded position is that no order should be made in respect of TV. They submit that winding up is a last resort and that the pleaded wrongs, even if some limited breach were found, do not establish the want of probity, deadlock or management breakdown needed to destroy an operating investment. The absence of actual dilution or proved financial loss is said to weigh heavily against drastic relief.

199.They contend that winding up would compel a distressed realisation of TV’s 75% interest in a Mainland operating company with a 25% outside shareholder and substantial creditor disputes. Re South Asia is distinguished because the company there owned 100% of the operating subsidiary and the evidence concerning valuation and funding was different. Mr Dass’s inability to value on the documents given to him did not prove that a court-directed valuation with disclosure and assumptions was impossible.

200.A reverse buyout is, they say, exceptional and requires very serious misconduct or unfitness of the majority to control the company. The Listco-TV Directors’ funding decisions were bona fide, the principal allegations fail, and the possible application of Listing Rules cannot itself justify compelling the majority to sell. The non-binding MOU was relied on as showing a possible recapitalisation route and as a reason not to impose liquidation while the company’s future remained capable of preservation.

201.The Respondents also rely on Mr Zhu’s contribution to the financial pressure and breakdown as a discretionary bar. They say the petition was a further attempt to use corporate proceedings as leverage to regain GX Guangming, and that relief should not enable him to benefit from circumstances which he helped create.

202.Neither side’s pleaded case or closing submissions identified a narrower governance or information order. Although the Court’s statutory jurisdiction is broad, the Court will not fashion an order after trial which was not sought by the pleadings.

Discussion

203.The remedy must be proportionate to the wrong proved. The primary instance of unfair prejudice established concerns the process for the unimplemented May proposal. The related information failures were material, but limited; they do not establish improper purpose, want of probity, mismanagement, actual dilution or an enduring exclusion from the board. The September proposal was considered through a materially fuller process, and Mr Zhu retained his 35% holding. Those findings fall short of the basis advanced for either winding up or compelling the majority to sell.

204.Mr Zhu’s primary remedy is winding up. That would require TV’s 75% interest in GX Guangming to be realised, with the attendant risk of a forced or distressed sale. GX Guangming is an operating company with a 25% outside shareholder and substantial creditor disputes. It cannot be assumed that liquidation would produce the substantial surplus asserted in Mr Zhu’s closing submissions.

205.Re South Asia Group (HK) Ltd [2024] HKCFI 2070 does not dictate a different result. There, the considerations included a holding company’s 100% ownership of an operating subsidiary and the particular evidence concerning valuation and funding. TV owns 75% of GX Guangming. The uncertainties here make a forced realisation more, not less, potentially destructive.

206.Mr Dass’s inability to value TV on the materials supplied to him does not establish that valuation is intrinsically impossible. A valuer can be given disclosure, assumptions and directions. Nor does uncertainty concerning the ability of a party to fund a buyout make winding up appropriate where the underlying grounds for such a drastic remedy are not established.

207.The MOU is non-binding and does not prove that GX Guangming’s difficulties have been cured. It is nevertheless part of the circumstances existing at trial and shows that a possible recapitalisation route was being explored. It reinforces the conclusion that the Court should not impose liquidation on the basis of speculation about future outcomes.

208.The alternative order sought is that Mr Zhu purchase the Respondents’ 65% holding. An order compelling the majority to sell to the minority is exceptional and ordinarily requires serious misconduct or unfitness to control the company. No such case has been proved. The possible operation of the Listing Rules does not supply the missing substantive basis for the order.

Q. CONCLUSION AND COSTS

209.For the reasons given above, the Petition is dismissed.

210.Although Mr Zhu has established limited information and procedural failures, he has failed on the Petition and on both remedies which he asked the Court to grant. The 2^nd and 3^rd Respondents have therefore succeeded. I make a costs order nisi that the costs of the Petition be to the 2^nd and 3^rd Respondents, to be taxed if not agreed.

211.I thank counsel for their assistance.

Mr Charles Hollander and Mr Byron Chiu, instructed by Eric Chow & Co., for the Petitioner

Mr Ambrose Ho SC and Mr Bryan Lee, instructed by CLKW Lawyers LLP, for the 2^nd and 3^rd Respondents