Re Econtext Asia Ltd

HCMP 1957/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1957 OF 2013

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J U D G M E N T

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1.There is before this court a petition of econtext Asia Ltd (“Company”) for the sanction of the court pursuant to s 59 of the Companies Ordinance, Cap 32 in respect of the reduction of its share capital.

2.I am satisfied that the directions of the court made on 9 September 2013 on, inter alia, advertisement of this application and today’s hearing have been complied with.  No creditor of the Company has appeared today.  Indeed, each one of the identified creditors of the Company has given a written consent to this application.

3.The Company was only incorporated in Hong Kong on 10 September 2012.  The reason for this application is that on 22 July 2013, the Company made an application for listing to The Stock Exchange of Hong Kong Ltd.  As its net asset value is below the value of its issued share capital, if the listing is approved the shares of the Company are likely to be priced below their current nominal value.  The reduction of the nominal value of the shares will enable the Company to issue shares to potential investors at a price which is equivalent to or higher than their nominal value.

4.I am satisfied on the evidence that the Company is financially sound.  According to its management accounts as at 30 June 2013, the current assets of the Company had a monetary value of a little over HK$80m of which over HK$70m were in cash or cash equivalents.  The Company’s current payables were below HK$12m.

5.The latest position is that the Company’s cash and cash equivalents have deceased to just over HK$50m as a result of payments made to settle its debts.  Hence, the current payables have been reduced to less than HK$700,000.

6.In the circumstances, I am satisfied that the interests of the Company’s creditors would not be prejudiced in any way by this application – see Miles (Hong Kong) Ltd, HCMP 5854/2001 at para 13.

7.Equally, I am satisfied that the 4 requirements as set out in Re Lippo China Resources Ltd [1998] 1 HKC 161 at 164G have been satisfied.  I am content with the undertakings offered to this court by the Company.  In addition to the undertaking set out in the draft order placed before me, Mr Maurellet who appears for the Company has offered an additional undertaking in terms similar to that set out in Miles (Hong Kong) Ltd, supra at p 8S – V.

8.In these circumstances, I make an order in terms of the draft order with appropriate amendment to reflect the additional undertaking.

Mr Jose-Antonio Maurellet, instructed by Skadden, Arps, Slate, Meagher & Flom, for the petitioner