Re Public Futures Ltd

HCMP 2472/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2472 OF 2008

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And

HCMP 2473/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2473 OF 2008

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(Heard together)

Before: Hon Kwan J in Court

Date of Hearing: 17 February 2009

Date of Judgment: 17 February 2009

Date of Handing Down of Reasons for Judgment: 19 February 2009

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REASONS   FOR   JUDGMENT

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1.I have before me two petitions for confirmation of reduction of capital presented by two companies, Public Futures Limited (“PFL”) and Public Investments Limited (“PIL”).

2.PFL was incorporated under a former name on 10 September 1992.  Its present share capital is $20 million divided into 20 million ordinary shares of $1 each, all of which have been issued and are fully paid up.

3.PIL was incorporated under a former name on 28 January 1983.  Its present share capital is $5 million divided into 50,000 ordinary shares of $100 each, all of which have been issued and are fully paid up.

4.Both companies are the subsidiaries of Public Bank (Hong Kong) Limited, which is held by Public Financial Holdings Limited, a listed company in Hong Kong.  73.2% of Public Financial Holdings Limited is owned by Public Bank Berhad, a company incorporated in Malaysia.  In May 2006, Public Financial Holdings Limited acquired the ownership of PFL and related companies in the group from the predecessor.  After the change of ownership, Public Financial Holdings Limited restructured the businesses of the group companies.  As a result, PFL has not engaged in business and has been dormant since May 2006.  In 2007, the investment properties of PIL were transferred to Public Bank (Hong Kong) Limited at the consideration of $58,930,000 and since then PIL has not engaged in business.

5.The management of Public Financial Holdings Limited is desirous of streamlining the businesses of PFL and PIL under itself or its subsidiaries.  As it is not intended that PFL and PIL would carry on business in the near future, there would be no need for them to retain substantial surplus share capital for operational purposes.  The share capital proposed to be returned to the shareholders cannot be usefully employed in business for the two companies and are in excess of their wants.

6.There is provision in the articles of association of PFL and PIL for the reduction of share capital by special resolution in any manner subject to any incident authorised, and consent required by law.

7.By a written resolution of PFL passed on 25 November 2008, it was resolved that its share capital be reduced from $20 million divided into 20 million shares of $1 each to $2 divided into 20 million shares of $0.0000001 each, and such reduction be effected by paying off to the shareholders the paid-up share capital to the extent of $19,999,998 upon the 20 million shares of $1 each.

8.By a written resolution of PIL passed on 25 November 2008, it was resolved that its share capital be reduced from $5 million divided into 50,000 shares of $100 each to $200 divided into 50,000 shares of $0.004 each, and that such reduction be effected by paying off to the shareholders the paid-up capital to the extent of $4,999,800 upon the 50,000 shares of $100 each.

9.The bank balance to the credit of PFL as at 30 April 2008 amounted to $6,096,266.02 and as at 13 January 2009 amounted to $20,096,266.02.  It does not have any liability to any creditor, as shown in the latest audited accounts as at 31 December 2007 and the management accounts as at 31 October 2008.  It does not rent any premises nor does it have any outstanding fees payable to any service provider as at the end of December 2008. 

10.The bank balance to the credit of PIL as at 13 January 2009 stood at $5 million.  It does not have any liability to any creditor as shown in the latest audited accounts as at 31 December 2007 and the management accounts as at 31 October 2008.  Its position is similar to PFL.

11.At the hearing of the summons for directions for each of the petitions on 20 January 2009, an order was made that the settlement of a list of creditors be dispensed with and that section 59 of the Companies Ordinance, Cap. 32 shall not apply as regards any class of creditors of PFL or PIL.  Directions given for the advertisement of the petitions have been complied with.

12.Evidence has been filed a week before the hearing of the petitions to confirm that the bank balances standing to the credit of the two companies have remained unchanged and that the companies do not have any liability to any creditor or any outstanding fees payable to any service provider.  I understand expenses in future of both companies will be paid by their parent company, Public Bank (Hong Kong) Limited.

13.The requirements of the law have all been complied with.  I am satisfied that the shareholders of each company are treated equitably in the proposed reduction.  The shareholders being the parent company and a nominee company were fully aware of the reasons for the proposed reduction.  The reduction is for a discernible purpose and it does not appear that the interest of creditors of each company would be prejudiced.  I have therefore made an order in terms of the draft submitted as amended in each petition.

Miss Ivy Cheung, instructed by Messrs. Charles Yeung Clement Lam Liu & Yip, for the Petitioner in each petition