PANG KAM CHUEN AND ANOTHER v. VANSEUK INVESTMENTS LTD

HCMP 856/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 856 OF 2017

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REASONS FOR JUDGMENT

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1.  This was the 1^st and 2^nd plaintiffs’ application for an order that the register of members of the defendant be rectified. The papers have been served on the defendant and I proceeded in its absence. At the end of the hearing, I gave judgment to the plaintiffs. Here are my reasons.

Background

2.  The 1^st and 2^nd plaintiffs are the only shareholders of the defendant, namely, Vanseuk Investments Limited (“the Company”).  The 1^st plaintiff holds 1 share while the 2^nd plaintiff holds 29,999 shares.

3.  The Company was incorporated under the laws of Hong Kong with limited liability on 24 October 1986.  Its authorized share capital then was HK$10,000.00 divided into 10,000 ordinary shares each.

4.  Since the resolution dated 18 February 1987 to increase the share capital, the Company’s authorized share capital has stood at HK$30,000.00, divided into 30,000 ordinary shares each. 

5.  By a provisional agreement for sale and purchase dated 9 December 2016, the shares of the plaintiffs were sold to one person called Lam Wai Shan or his nominee (“the purchaser”).  The completion date is on 30 June 2017.

6.  The purchaser’s solicitors had requisitioned for provision of the shareholders’ register of the Company.

7.  Unfortunately, the register of members was lost and could not be located despite all efforts made.  Without the register of members, the sale of the shares of the Company cannot be completed, hence the present application.

8.  The plaintiffs are the only shareholders of the Company.  The Company has passed a board resolution dated 11 April 2017 resolving not to dispute this application.

The law on rectification of register of members

9.  Section 633 of the Companies Ordinance, Cap 622 provides as follows:

“(1) If—

(a) the name of any person is, without sufficient cause, entered in or omitted from the register of members of a company; or

(b) default is made or unnecessary delay takes place in entering in the register the fact of any person having ceased to be a member,

a person aggrieved, or any member of the company, or the company, may apply to the Court for rectification of the register.

...

(3) Subject to section 167 [which applies to listed companies], on an application under subsection (1), the Court—

...

(b) generally may decide any question necessary or expedient to be decided for rectification of the register.

(4) In the case of a company required by this Ordinance to deliver particulars relating to its members to the Registrar for registration, the Court, when making an order for rectification of the register, must by its order direct notice of the rectification to be given to the Registrar.” (emphasis added)

10.  In Re CBS Investment Ltd, HCMP 1651/2007, 7 November 2007, the register of members, common seal, rubber stamp, share certificate and all other relevant company documents were lost.  One of the new shareholders applied (as a person aggrieved) to rectify the register of members of the company under section 100 of the then Companies Ordinance, Cap 32 (predecessor of section 633 of Cap 622).  Kwan J (as she then was) held in §18 that:

“18. The register of members cannot be located despite the exercise of reasonable efforts by the applicant. For all intents and purposes, it may be regarded as lost. In this situation, the new register of members, which is blank, may be rectified by inserting the names of the shareholders, ....”

11.  In the present case, the register of members could not be located despite the exercise of reasonable efforts by the plaintiffs. The plaintiffs are the only members of the Company as reflected in the latest annual returns of the Company filed with the Companies Registry.

12.  As the register was lost, the plaintiffs’ names have been “omitted from the register of members of a company” and accordingly had locus to make an application under section 633.

13.  The draft register of members produced to me was consistent with the contents of all the annual returns of the Company.

14.  This was a proper case for exercise of the court’s discretion to grant a rectification order so that the plaintiffs could proceed to complete the sale of the shares.

15.  I made the following orders pursuant to section 633 of Cap 622:

(1)  the new blank register of members be rectified by inserting the names of the shareholders as follows:

(i) the name of the 1^st plaintiff as the holder of one of the 30,000 issued shares;

(ii) the name of the 2^nd plaintiff as the holder of 29,999 of the 30,000 issued shares;

(2)  the Company was to issue forthwith and deliver to each plaintiff a share certificate in respect of the share/shares held by him/it;

(3)  the plaintiffs be authorised to rectify the register of members for carrying this order into effect;

(4)  a declaration be made that the share certificates issued by the Company previously were null and void;

(5)  notice of such rectification be given to the Registrar of Companies pursuant to section 633(4) of Cap 622; and

(6)  no order as to costs.

16.  I thank Mr Lam for his assistance.