Re S.M. Entertainment Asia Ltd
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HCMP 2495/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO. 2495 OF 2008 ----------------------
---------------------- Before: Hon Kwan J in Court Date of Hearing: 16 January 2009 Date of Judgment: 16 January 2009 Date of Handing Down of Reasons for Judgment: 20 January 2009 ------------------------------------------------------ REASONS FOR JUDGMENT --------------------------------------------------- 1.This is a petition presented by S.M. Entertainment Asia Limited (“the Company”) pursuant to section 59 of the Companies Ordinance, Cap. 32 for confirmation of the reduction of its share capital. 2.The Company was incorporated on 9 August 2006 with an authorised capital of HK$160,000,000 divided into 160 million shares of HK$1 each. The Company has issued 8 million shares, all of which were fully paid. Its principal activities are investment holding. Its ultimate holding company is S. M. Entertainment Co. Ltd., incorporated in the Republic of Korea. 3.There is provision in the articles of association that the Company may by special resolution reduce its share capital, subject to any incident authorised and consent required by law. 4.By a resolution of the Company dated 28 October 2008 duly signed by all its members, it was resolved that the authorised capital be reduced from HK$160,000,000 divided into 160 million shares of HK$1 each to HK$800,000 divided into 800,000 shares of HK$1 each, and that such reduction of capital be effected by returning issued and paid-up capital of HK$7,200,000 representing 7,200,000 shares of HK$1 each to members on a pro-rata basis and cancelling the same. 5.The directors considered that capital to the extent of HK$7,200,000, which is unexpended, is considerably in excess of the wants of the Company and cannot be employed any longer in the business of the Company. This is because at the time of incorporation of the Company, it was initially determined by the subscribers that the Company would explore business opportunity in Mainland China. As it transpired subsequently, the business opportunity is no longer viable in the near future. The Company has not commenced its business and generated any turnover since the date of its incorporation. 6.The proposed reduction of capital does not involve the diminution of any liability in respect of unpaid capital. 7.Save and except an amount due to the ultimate holding company of HK$96,240, the Company does not have any other creditor. 8.As at 31 August 2008, the cash at bank and on hand stood at about HK$8,071,806 and there have not been any outstanding debts or liabilities due to creditors other than the daily accrued expenses of HK$24,990. As such, even if share capital of HK$7,200,000 is to be returned to members out of cash with the Company's bankers, the Company would still be left with bank balances and cash of about HK$870,000 after the repayment of capital. This should be more than sufficient to enable the Company to pay all its liabilities in the foreseeable future. The directors are satisfied that the amount proposed to be reduced and repaid to members will not have any adverse effect on the management or financial position of the Company or the proportionate interests of the members. 9.The Company has made a further affirmation on 9 January 2009 to confirm that there has not been any material change in its financial position since the latest audited accounts as at 31 August 2008 and that the cash standing to its credit with its bankers exceeds its debts and the amount of capital proposed to be returned in cash. 10.At the hearing of the summons for directions on 23 December 2008, an order was made that the settlement of a list of creditors be dispensed with. Directions for the advertisement of a notice of the presentation of the petition have been complied with. 11.Members of the Company have been treated equitably in the proposed reduction. The reasons for the reduction have been sufficiently explained to members in a circular of the board dated 8 October 2008. I am satisfied that the interests of creditors would not be prejudiced. I have therefore confirmed the proposed reduction of capital and made an order in terms of the draft submitted.
Miss Bonnie Tam, instructed by Messrs Chiu, Szeto & Cheng, for the Petitioner |