RE ING INVESTMENTS ASIA LTD

HCMP 1833/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1833 OF 2005

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REASONS FOR JUDGMENT

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1.  This is a petition presented by ING Investments Asia Limited (“the Company”) for confirmation of reduction of capital.  The application was made on the basis that the Company’s capital is in excess of its needs.

2.  The Company was incorporated as a private company under its former name on 14 January 1975 with an authorised share capital of US$7.7 million, divided into 7,700 ordinary shares of US$1,000.00 each. Its present authorised share capital is US$20 million, divided into 20,000 ordinary shares of US$1,000.00 each, of which 12,000 shares have been issued and are fully paid up and 8,000 shares have been issued and are partially paid up as to US$250.00 on each such share.  The total paid up value of the share capital therefore stands at US$14 million.

3.  There are only two shareholders.  ING Bank NV holds 11,999 fully paid shares and the 8,000 partially paid shares.  ING Nominees (Hong Kong) Limited holds 1 share in trust for ING Bank NV.  The ultimate holding company is ING Groep NV incorporated in the Netherlands.

4.  The Company was engaged in the business of investment services and securities financing.  In 1981, it was additionally capitalised to prepare for the application of the appropriate deposit-taking licence from the Hong Kong government.  In June 1982, the Company was registered as a Licensed Deposit-taking Company.  Following the consolidation of the laws on banking and deposit-taking business in 1986 into the Banking Ordinance, Cap. 155, the Company’s licensing status was transferred from a Licensed Deposit-taking Company to that of a Restricted Licensed Bank.  In addition, the Company was an Exempt Dealer and a registered Investment Adviser under the Securities Ordinance, Cap. 333.

5.  Since December 1999, the Company’s board has made various decisions which have rendered the Company practically dormant.

6.  On 3 December 1999, the board noted that since the primary business focus of the Company was investment advisory and capital markets transactions, it was not necessary for the Company to retain its Restricted Banking Licence and on 31 December 1999 it surrendered its licence to the Hong Kong Monetary Authority.  The Company has since ceased to carry on restricted banking business and is not required to maintain the minimum amount of capital under the Banking Ordinance.

7.  With effect from the close of business on 30 June 2001, the Company transferred its investment banking business and corporate finance services to ING Bank NV.  As a result, it was no longer necessary for the Company to maintain its Exempt Dealer status and its registration as an Investment Adviser.  The Company revoked its Investment Adviser’s licence on its own accord and relinquished its Exempt Dealer status on 30 June 2001.

8.  Since 1 July 2001, the Company has from time to time been used as a booking entity for certain intra group activities.  Some of these activities were able to utilise the Company’s tax losses brought down from previous years.  Apart from that, the Company does not carry on any meaningful trading or business activities nor is it expected to do so in the foreseeable future.

9.  In such circumstances, the paid-up capital is in excess of the needs of the Company and cannot in the opinion of the directors be usefully employed in its business.

10.  On 23 August 2005, a special resolution was signed by all the members of the Company resolving to reduce its share capital from US$20 million to US$2,000.00 and that the Company should distribute the credit arising from the capital reduction in the amount of US$13,998,000.00 to the members by way of return of capital, in accordance with the amount respectively paid up on their shares.

11.  There is provision in the articles of association for reduction of the share capital.

12.  The Company has adduced evidence on its financial position by its audited financial statements for the periods ending 31 December 1999 to 31 December 2004 and its management accounts and balance sheet for the period ending 30 September 2005.  It has no liabilities as at 30 September 2005.

13.  The Company has placed a one-month fixed deposit with ING Bank NV in the principal sum of US$14,974,358.08 to mature on 30 November 2005 and has JPY 409,500 standing to its credit at its Japanese Yen savings account as at 1 November 2005.  The cash standing to the credit of the Company at its bank accounts exceeds the capital proposed to be returned by a reasonable margin.

14.  The Company has been free of debt since 31 December 2002.  From 2003 onwards, the Company’s turnover has remained extremely low.  The Company has confirmed to its auditors that it had no contingent liabilities as at 31 December 2004 and this continues to be the position.  The profits generated for the periods ending 31 December 2003 and 31 December 2004 were not subject to Hong Kong taxation.  Even if the profits generated for the period ending 31 December 2005 were subject to Hong Kong taxes, the surplus after the return of capital would be more than adequate to cover such payments.

15.  At the hearing of the summons for directions, an order was made to dispense with the settlement of a list of creditors.  The direction for advertisement of a notice of the presentation of the petition has been complied with.

16.  There is no question that the shareholders are not treated equitably in the proposed reduction or that the proposals had not been properly explained.  The reduction is for a discernible purpose and I am satisfied that the interests of creditors are safeguarded.

17.  I have therefore made an order as per the draft submitted confirming the reduction of capital and approved the form of the minute for registration with the Registrar of Companies.