Hai Hiu Chu and Another v. Bamboos Professional Nursing Services Ltd

HCMP 112/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 112 OF 2013

____________

____________

BETWEEN

____________

______________

D E C I S I O N

______________

1.I have an originating summons before me seeking an order under section 122(1B) of the Companies Ordinance that the period for laying the profit and loss accounts before the members of Bamboos Professional Nursing Services Limited (“the Company”) be extended and that the balance sheets for two previous years be laid before the Company in a general meeting to be convened.

2.The application is brought by two applicants who are the only shareholders and directors of the Company, and is not being opposed by the respondent which is the Company. 

3.The Company was incorporated on 11 March 2009 and acquired by the applicants in May 2009.  It has been carrying on the business of providing qualified nursing and healthcare personnel in Hong Kong since.

4.The position with respect to the Company’s previous financial statements is that the audited financial statements for the period of about 15 months from the date of incorporation to 30 June 2010 were laid before the third annual general meeting of the Company held on 12 March 2012 but not before, since they had only been prepared by early 2012.  The audited financial statements of the Company for the year ended 30 June 2011 were not available until June 2012 with the result that they were not laid before the members in the annual general meeting held in March 2012.

5.Section 122(1) of the Companies Ordinance read together with section 122(1A) mean that the profit and loss account of a company must be laid before the company at an annual general meeting held, in the case of a private company, not more than 9 months after the period covered by the account.  In addition, section 122(2) means that the balance sheet as at the date to which the profit and loss account is made up must also be laid before the company at its annual general meeting held not more than 9 months of that date.  Section 122(1B) gives the Court the power to extend the specified period of time.

6.By virtue of section 129C, the financial statements that are required to be laid before the company in general meeting have to be audited.  Section 129D requires the directors’ report to be attached to the balance sheet. 

7.These provisions together seek to ensure that there is a timely opportunity for the members of a company to be provided with and consider audited financial statements and the directors’ report showing the relatively recent financial performance and position of the company, including matters that are required to be stated in the directors’ report.

8.These provisions have not been complied with in the case of the Company in relation to the accounts mentioned.  No doubt it was because of the proposal for the listing of the Company that these infringements have come under focus.  I take into account the fact that not only are the applicants the only two members of the Company, but they were also its only two directors and thus likely to have been familiar with its financial affairs at the material times.  In the affirmations filed they have confirmed that the non-compliance was inadvertent and caused in part by their ignorance of the relevant requirements and by the absence of advice from the auditors and company secretary.  They also assure the Court that they will take all reasonable steps in future to secure compliance with the relevant statutory requirements and are now looking for a new company secretary and accountants in that regard.

9.I am satisfied that it is an appropriate case in which to exercise the discretion conferred on the Court by section 122(1B) and I shall make an order accordingly.  Since there is a proposed listing of the Company, the applicants have offered and I consider it proper to accept an undertaking, as required by Harris J in Head Park Group Limited v Asiafair International Limited, HCMP 1435/2010, 31 August 2010, to the effect that they will procure that the order herein and the reasons for seeking it are brought to the attention of The Stock Exchange of Hong Kong, Limited in connection with the proposed listing of the Company and are referred to in any prospectus for such listing.

Mr Isaac Chan, instructed by Troutman Sanders, for the 1^st and 2^nd Plaintiff

The Respondent was not represented and did not appear