Ccc Holdings Group (Bvi) Ltd v. City Credit Capital (HK) Ltd

HCMP 3473/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3473 OF 2013

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BETWEEN

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J U D G M E N T

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1.This is an application pursuant to s 122(1B) of the Companies Ordinance, Cap 32 (“Ordinance”) for rectification in respect of irregularities (“Irregularities”) in the laying of accounts of City Credit Capital (HK) Ltd (“Company”).  The applicant is the sole shareholder of the Company.

2.The Company does not contest these proceedings and has not entered an appearance.

3.Like so many cases which had come before the court, the Irregularities were discovered in the course of preparing a listing application.  In this case, the Company belongs to the City Credit Capital Group of companies (“Group”) which engages in the online provision of trading services for leveraged financial derivatives.  One of the companies in the Group, City Credit Capital (Bermuda) Ltd, is the listing candidate. 

4.The Company was incorporated on 25 July 2011. Until 29 September 2011, its sole shareholder was Mr Thomas H W Fung (“Fung”), who is the founder of the Group.  Fung’s shares in the Company were transferred to the applicant on 29 September 2011, who has since remained the sole shareholder of the Company.  The Company has 3 directors, namely, Fung, Mr Raymond Yip and Mr Cheng Keung. 

5.Pursuant to s 122(1), (1A) and (2) of the Ordinance, in simple terms, the directors of every company are required to lay the profits and loss account and the balance sheet of the company at its AGM. Such accounts are required to be made up to a date not more than 9 months before the date of meeting. 

6.What transpired in this case is that the Company’s accounts (including the profit and loss account and balance sheet) from its date of incorporation to 31 December 2011 were laid at its first AGM on 24 January 2013.  Hence, the accounts were not made up to a date not exceeding 9 months before the AGM. 

7.The Company purported to hold another AGM on 30 April 2013 during which the accounts for the year ended 31 December 2012 were presented.  It is accepted by the applicant that the 30 April 2013 meeting, having taken place within the same year as the Company’s first AGM, cannot be a proper AGM.   

8.Under s 122(1B) of the Ordinance, the court may extend the period of 9 months prescribed under s 122(1A), and substitute the requirement for laying of account at an AGM under s 122(1) with a requirement to lay the same at a different general meeting. 

9.The law on how the court should exercise its discretion under s 122(1B) is well-established.  The considerations being (a) whether the shareholders were aware of the financial position of the company and thus were not prejudiced by the non-compliance; (b) whether the default was inadvertent; and (c) whether the court is satisfied that the company would comply with its statutory obligations in the future. 

10.I am satisfied on the evidence that both Fung and the applicant were at all material times aware of the financial position of the Company by reason of their participation in the running of the same.  Fung is also a shareholder and director of the applicant.  I see no prejudice to the shareholder (past and present) of the Company arising from the Irregularities.

11.The Irregularities were caused by the ignorance on the part of the directors as to their duties under s 122 and the failure on the part of the company secretaries to properly advise them of such matters.  I accept that the defaults were inadvertent.

12.As regards future compliance, the evidence is that the Group will establish an audit committee with special responsibility over the preparation of accounts and related matters of the companies within the Group, including the Company.  Each of the directors of the Company has filed an affidavit in these matters.  I accept that they are now alive to their duties under s 122 and will do what they can to ensure compliance therewith in the future. 

13.In these circumstances, subject to an “Asiafair” undertaking (see Head Park Group Ltd v Asiafair International Ltd [2011] 1 HKC 63), I grant an order in terms of the draft order before the court as amended.

Mr Julian Yeung, instructed by Robertsons, for the applicant