XCHRX NG HOK YIN, DAVID v. LAU PING YEE

HCMP 2646/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2646 OF 2000

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D E C I S I O N

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1. This is an application made pursuant to Section 114B of the Companies Ordinance, Cap. 32. Further, an application was made today for leave to amend the Originating Summons herein. The amendment sought is as follows:-

(1) a court order be made (in the alternative to the original relief) that an annual general meeting may be convened by the Court;

(2) the resolutions which may be passed at the said meeting are as set out in Schedule 2 attached to the draft amended Originating Summons which read:

"(1) That Madam Koh Mok-mui (HKID No. XXXXXXX(X)) be appointed as an additional director of the Company;

(2) That the profit and loss account alternatively the income and expenditure account for the period since a preceding account as laid by the director(s) of the Company be approved and passed;

(3) That the balance sheet as at the date to which the profit and loss account or the income and expenditure account is made out as laid by the director(s) of the Company be approved and passed; and

(4) That the Meeting be treated as the annual general meeting for the years in which the default in holding the Company's annual general meetings occurred."

2. The original application seeks a Court order that an extraordinary general meeting may be convened pursuant to Section 114B, Cap. 32 for the purpose of considering and, if thought fit, to pass the following resolutions:-

"(1) That Madam Koh Mok-mui (HKID No. XXXXXXX(X)) be appointed as an additional director of the Company;

(2) That the board of directors of the Company be authorised to allot one ordinary share of the Company to the Plaintiff;

(3) That the board of directors of the Company be authorised to allot one ordinary share of the Company to the said Madam Koh Mok-mui who holds the same on trust for the Defendant."

3. The draft amended Originating Summons was not served on the Defendant and it has not been shown that it has otherwise come to his notice. Further, as will be explained below, I have reservations about the propriety of the proposed resolutions in Schedule 2. In these circumstances, I do not think that it is appropriate to give leave to amend the Originating Summons.

4. The only directors and shareholders of the Company are the Plaintiff and the Defendant each holding one share in the Company. The Plaintiff has adduced evidence that since about October 1998, the Defendant has disappeared and cannot be located up to now dispute due diligence.

5. The need for this application arises as follows. The articles of association of the Company provide that the quorum for any general meeting shall be two members present personally. In the Defendant's absence the Company's business cannot be properly transacted because meetings cannot be convened. The Company's asset is a shop at Belcher's Street, Hong Kong. The shop was originally run by the Plaintiff as a hair salon. Since about February 1998, it was let out. The Plaintiff's 2nd affidavit dated 29 September 2000 stated that the Company needed to:

(a) negotiate with the tenant for a renewal of the tenancy agreement of the shop;

(b) liase and/or discuss with the other owners and/or the manager of the building in which the shop is located regarding a notice dated 24 January 2000 served by the Director of Fire Services under Section 5, Fire Safety (Commercial Premises) Ordinance, Cap. 502.

6. I do not doubt the jurisdiction to grant, and the appropriateness of granting, an order permitting a general meeting to be properly constituted by the presence of one member of the Company, namely, the Plaintiff. However, I do not see the need for some of the proposed resolutions in Schedule 1 (or Schedule 2) in the factual context of this case, such as the appointment of a new director or the allotment of a new share.

7. I have already raised this question with the Plaintiff's legal representatives at the hearings on 25 July and 29 November 2000. It appears to be an easy matter for the proposed resolutions to be suitably worded so as to enable the Company to take care of the matters which need to be attended to, namely, the tenancy matter and the fire safety notice. Instead, the proposed resolutions rather unnecessarily go beyond these matters.

8. Mr Kwan, who appears for the Plaintiff today, handed in an "Amended Schedule". The resolutions which may be passed are set out in paragraphs 1 to 5 of the "Amended Schedule":-

"AMENDED SCHEDULE

1) Considering and Passing the Company's accounts since the last account;

2) Authorising the Plaintiff to file the Company's Annual Returns for the years ['since the last Annual Return was filed' amended by the Court at the hearing to read 'up to and including 2001'];

3) Authorising the Plaintiff to carry out all necessary actions on behalf of the Company to comply with the relevant provisions of Companies Ordinance (Cap. 32) and the Inland Revenue Ordinance (Cap. 112);

4) Authorising the Plaintiff to renew the tenancy agreement in relation to the Company's property known as Shop No. 29, Ground Floor, Jade Court, No. 36A Belcher's Street, Hong Kong; and

5) Authorising the Plaintiff to deal with all matters arising from the Director Fire Services [sic] notice to install fire service equipment."

9. For the reasons stated above, I consider that it is appropriate to order that one member of the Company be deemed to constitute a general meeting of the Company but the resolutions which may be passed at that meeting should be limited to those set out in paragraphs 2, 4 and 5 of the Amended Schedule (as amended). Paragraph 3 of the "Amended Schedule" is too wide in terms. As regards paragraph 1 of the "Amended Schedule", there is as yet no account placed before the Court and the matter cannot therefore be properly dealt with now.