Wu Kai Char and Others v. J & H Company Ltd
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HCMP1627/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 1627 OF 2013 --------------------------
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---------------------- J U D G M E N T ---------------------- 1.The plaintiffs are the current directors of the defendant. By an Originating Summons dated 3 July 2013, the plaintiffs seek an order from the court to rectify the non-compliance of sections 122(1), (1A) and (2) of the Companies Ordinance, Cap 32 in connection with the laying of the profit and loss accounts and balance sheets of the defendant for the years ended 30 June 2007 to 30 June 2011 (“Non-compliance”). 2.The defendant has not appeared today. 3.The defendant is part of a group of companies (“Group”) the principal business of which is the operation of a chain of restaurants in Hong Kong. The Group is undergoing a corporate reorganisation for the purpose of applying for listing on the Growth Enterprise Market of The Stock Exchange of Hong Kong Ltd. In the course of a due diligence exercise related to the listing application, the Non-compliance was discovered. 4.The evidence before the court is that the Non-compliance was inadvertent and arose out of two reasons – the ignorance of the directors over the relevant legal requirements and the failure of the defendant’s auditors and corporate secretary to properly advise the directors. The situation is quite unsatisfactory. It must be understood by those who take up a directorship that such a position comes with various responsibilities, and one such responsibilities is to familiarise themselves and comply with all the applicable legal obligations. However, although unfortunate, there is no reason for the court to doubt that the Non-compliance was unintentional. 5.The defendant was incorporated in March 2006. Over the years, the compositions of its shareholders and directors have undergone a fair amount of changes. However, during the relevant period, with one exception all the shareholders were also directors of the defendant. For that reason, the shareholders must have been aware of the finance of the defendant. 6.Further, the Non-compliance has been brought to the notice of all the past and present shareholders of the defendant (with the exception of Knight Glory Holdings Ltd) and they have agreed to the ratification of the accounts and balance sheets in question. In respect of Knight Glory Holdings Ltd, its shares in the defendant were sold in December 2008. 7.In the premises, I am satisfied that the Non-compliance did not cause any prejudice to the shareholders of the defendant. 8.I accept the assurance of the plaintiffs that there will not be similar infringements in the future. They have put in place a number of measures to improve the corporate governance of the defendant. 9.Finally, I accept the undertakings offered by the plaintiffs as embodied in the draft order. 10.For these reasons, I grant the relief as per the amended draft order.
Ms Mak Ka Ping Judy of Adrian Yeung & Cheng, for the plaintiffs The defendant was not represented and did not appear | |||||||||||||||||||||||||||||