China Guangzhou International Economic & Technical Cooperation Co Ltd v. Official Receiver and Another

HCMP 907/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 907 OF 2015

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D E C I S I O N

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1.This is an application under section 290(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 for an order declaring the dissolution of China Ample Development Ltd (“the company”) to have been void and for an extension of time under section 290(1A) for making the application. The applicant, a PRC company, is the majority shareholder of the company which was set up as its Hong Kong representative office.

2.Since 2003 the company had been left largely dormant, even though it still had liabilities to creditors including the Bank of China and Nanyang Commercial Bank.  It was eventually wound up on the petition of the Bank of China in October 2008 and was ordered to be dissolved in February 2011.  The shareholders and directors, in my view quite irresponsibly, took no part in the winding up and did not file any statement of affairs.  It was said that they were ignorant of the claim by the bank and of the winding-up proceedings, but this really is not acceptable because it is the duty of directors to run the company and to know what is going on about it.

3.It appears that after the winding up of the company in October 2008, and after July 2010 when the directors and shareholders admittedly came to know of the winding up, and probably even after the dissolution of the company in February 2011, steps were taken by the people concerned in the Mainland for pursuing legal proceedings there for recovery of sums due to the company under a contract.  That would of course be quite improper since the affairs of the company should, after the winding up, be conducted solely by the liquidators, a matter which would not have escaped the notice of the Official Receiver.

4.Be that as it may, the fact now is that there is an offer by the debtor who is being sued by the company in the Mainland to settle the dispute by paying the company the sum of RMB 4 million.  This settlement could only be finally achieved if the company is revived.  Once implemented it would enable the company’s creditors to be paid with an apparent surplus for the shareholders.

5.Although the 2-year period specified in section 290(1) has expired, the court has power under section 290(1A) to extend it.  I think the emergence of assets in the form of a potential settlement sum of RMB 4 million, hitherto unknown to the liquidators, which would enable the creditors to be repaid, is sufficient reason in the circumstances of this case to extend the time limit.  My sympathy lies with the creditors who had lost their money and now have a chance to be repaid.  Had the company been solvent and the application been made for the purpose of benefitting the shareholders only, I would have had much more hesitation in granting it because they only had themselves to blame for having in effect “deserted” the company and left it to die.

6.As it is, however, I think there are grounds for the order to be made.  No prejudice appears to have been caused by the delay in the making of this application.  The Registrar of Companies has taken a neutral stance on the application, though she has made comments on the terms of order if the application is acceded to.  Neither the Official Receiver nor the former liquidators of the company – who would resume their office upon the revival of the company – have any objection to the application. 

7.I shall therefore make an order under section 290 extending the period of 2 years and declaring the dissolution of the company to have been void.

Mr Lam Siu Wah Joseph, instructed by Yaddy Cheung & Co, for the applicant

The 1^st respondent was not represented and did not appear

The 2^nd respondent was not represented and did not appear

Mr Ng Kwok Wai and Mr Lui Chi Kit, the former joint and several liquidators of the Company, were not represented and did not appear