Read the full judgment text of HCMP 003504/1994 on BabelCite. This High Court CFI judgment was delivered on 22 May 1995 before The Hon. Mr. Justice Rogers.
Securities and futures regulation – Securities and Futures Commission Ordinance (Cap 24) s.37A(2) – unfairly prejudicial conduct – petition by SFC – listed company with broad range of activities – restraint orders against former management – Criminal law – Companies law – unfairly prejudicial conduct – statutory interpretation – Securities and Futures Commission Ordinance s.37A(2) – 1st Respondent Chesterfield Ltd. (formerly Rose International Ltd.) engaged in diverse activities – 4th Respondent Ip Chi Keong was general manager from 1 May 1993 – two share issues October 1993 for $67m and April 1994 for $52m – funds raised for working capital and to reduce borrowings but channelled to MKI Ltd. – MKI Ltd. used funds to subscribe for shares of 1st Respondent – aim was to keep MKI's shareholding above 20% to avoid revaluation losses at market price – 4th Respondent caused 1st Respondent to enter into $130m obligations for 8 blocks of flats in Fa Yuen Gardens, PRC, through companies Buolo and Good Faith under his effective control – investment written down to $1,000 – 5th Respondent Wong Kim Chau became director in September 1994 – caused 1st Respondent to pay approximately $62m for property and golf course investments through Zhongshan Fong Tat Property Development Company Ltd. – investments written down substantially – consent orders made against 2nd, 3rd, and 6th Respondents – Whether conduct of 4th and 5th Respondents was unfairly prejudicial to members under s.37A(2) – test is whether conduct results in harm to members in their capacity as members, harm that could have been avoided or ameliorated without harming legitimate interests of others – range from fraud to neglect or inaction – Re H.R. Harmer Ltd. [1958] 3 All E.R. 689 considered on meaning of 'oppressive' as burdensome, harsh and wrongful – court found conduct closer to fraud than negligence – 4th and 5th Respondents did not appear or contest allegations – petition granted – restraint orders made against 4th and 5th Respondents restraining them from advising on or managing the 1st Respondent's business or the business of any of its subsidiaries or otherwise intermeddling in the 1st Respondent's business or the management of its affairs.
Legal issues: Whether the 4th and 5th Respondents' conduct was unfairly prejudicial to the interests of members under s.37A(2) SFC Ordinance
Outcome: Petition granted; restraint orders made against the 4th and 5th Respondents restraining them from advising on or managing the 1st Respondent's business or the business of any of its subsidiaries.
Cited by 2 cases