YUEY KONG BROTHERS INVESTMENT LTD v. LI TINA AND ANOTHER

HCMP 2096/2024

[2025] HKCFI 1776

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2096 OF 2024

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D E C I S I O N

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1.  This is the application by originating summons filed on 21 October 2024 (“OS”)  by Yuey Kong Brothers Investment Limited (the “Company”)  for the following relief pursuant to section 42 of the Companies Ordinance Cap 622 (the “Ordinance”):

(1)  an order to “vacate” the document ND2A filed on 13 May 2024 (the “Impugned ND2A”)  from the Companies Register (the “Register”); and

(2)  directions that a new ND2A be filed within 14 days from the date of the Order solely to record the resignation of Mr Li Po Yuey David (“David”)  as director of the Company.

Relevant background

2.  The Company is a family company incorporated on 8 August 1975 as a private company limited by shares.

3.  Li Po Kong (“LPK”)  and the late Ms Chan Jo Tai (“CJT”)  were the original shareholders each holding 1 share. On 28 August 1975 additional shares were allotted to LPK and his 2 brothers, namely, David and the late Li Po Min Paul (“Paul”)  as shown below: 

Name of shareholders	Number of shares and shareholding
LPK	999 shares (33.30%)
David	1,000 shares (33.33%)
Paul	1,000 shares (33.33%)
CJT	1 share (0.0333%)

4.  From its incorporation until 1 October 2022, LPK, David and Paul were the only directors of the Company, being the first directors and also the Permanent Directors[1].

5.  The Company’s key asset is a commercial building of 14 storeys (the “Building”)  situated in Hung Hom and its primary business was and is the leasing and management of units within the Building.

6.  LPK died in the US on 1 October 2022. At the date of his death, LPK was the holder of 699 shares in the Company, having on 30 November 2009 transferred 300 of his shares to his daughter, Gina. Gina inherited LPK’s remaining shares on the latter’s death.

7.  Gina was appointed a director on 21 October 2022 at a general meeting held in New York attended by Paul and Gina[2].

8.  On 14 October 2023, Paul also passed away. He left his shares to his widow Mrs Lau Li Wi Kam (“Madam Li[3]”).

9.  On 23 April 2024, David caused a notice (the “Notice”)  to be delivered to Gina to call a board meeting to be held on 26 April. Enclosed with the notice were draft written resolutions for (a)  the appointment of Madam Li as a director to succeed Paul; (b)  David’s resignation as a director and the appointment of his daughter Tina Li (“Tina” or “D1”)  as his successor director; and (c)  the transfer of 285 shares of David’s shareholding to Tina.

10.  The proposed meeting did not take place because of Gina’s absence. Instead, David received a notice of a board meeting to be held on 6 May 2024.

11.  David responded by letter dated 2 May 2024 (the “May Letter”)  referring to his old age and his need of Tina’s assistance in handling important matters especially those relating to the Company. He also referred to his Notice with the draft resolutions that reflected his wishes and intentions. As Tina (who was in New York)  could not attend the meeting online given the time difference, he gave notice that Mr Daniel Tang of Withers would assist him.

12.  At the 6 May board meeting (the “6 May Meeting”), the Board appointed Madam Li a director in place of Paul. While there were discussions relating to David’s intention to resign to be replaced by Tina as director, the Board did not pass any resolution in that regard.

13.  David did not attend another board meeting convened for 13 May 2024 (the “13 May Meeting”). As there was a quorum of directors present (being Gina and Madam Li), the meeting took place. The directors present “accepted” David’s resignation as director.

14.  On the same day, Withers presented the Impugned ND2A that reported David’s resignation and the appointment of Tina as a director to the Companies Registry (“CR”)  for registration. The Impugned ND2A bore David’s signature as director.

15.  On 16 May 2024, Gina presented another ND2A (reporting David’s resignation)  to the CR for registration. Given the registration of the Impugned ND2A on 13 May 2024, the CR returned the same to Gina the following day.

Applicable legal principles

16.  The legal requirements for a director’s resignation are set out in Zhang Allie v Kim David Nam & Ors [2025] HKCFI 1471 at §§18 and 20:

“18. Section 464 of the Ordinance governs the resignation of directors. In pertinent part, it provides as follows:

464. Resignation of director

(1)  A director of a company may, unless it is otherwise provided in the articles of the company or by any agreement with the company, resign as director at any time.

...

(5)  If notice of the resignation of a director of a company is required to be given by the articles of the company or by any agreement with the company, the resignation does not have effect unless the director gives notice in writing of the resignation –

(a)  in accordance with the requirement;

(b)  by leaving it at the registered office of the company; or

(c)  by sending it to the company in hard copy form or in electronic form.

...

20. The following passage from Halsbury’s Laws of Hong Kong (at §95.0702)  encapsulates the legal position in relation to the resignation company directors:

‘A director can resign at any time, unless it is otherwise provided in the articles of the company or by agreement with the company. Where notice of the resignation of a director of a company is required to be given by the articles of the company or by any agreement with the company, the resignation has no effect unless the director gives notice in writing either in accordance with such requirement or by sending it by post to, or by leaving it at, the registered office of the company, or by sending it to the company in hard copy form or in electronic form. A resignation once tendered cannot be withdrawn, except with the consent of the company.’

17.  Article 10 of the Company’s Articles provides:

“10. The office of Director shall be vacated if the director:-

(a)  ceases to hold the number of shares required to qualify him for office or fails to acquire the same within two months after his election or appointment; or

...

(d)  resigns his office by notice in writing to the Company.

18.  Further, even where the company is a quasi-partnership, an effective resignation does not require the consent of the remaining director(s). There is also no requirement for any board approval or resolution accepting the director’s resignation: see Zhang Allie at §§28- 29.

19.  Division 5 of the Ordinance governs the Registrar’s powers in keeping the Register. The Registrar’s powers to rectify information in the Register is confined to “typographical or clerical error”: see section 41 of the Ordinance. However, he must rectify information on the Register on order of the Court.

20.  The relevant provisions concerning rectification of information are set out in section 42 of the Ordinance[4].

21.  The relevant principles are summarised in Chan Ting Fo v Wong Tsz Hong & Ors [2023] 3211 at §§8-10[5] as follows:

“8. The principles governing Section 42(1)  and (4)  of CO[6] have been summarised by Linda Chan J in Wang Zhihua v Registrar of Companies [2020] HKCFI 2873 at para. 22:

‘(1)  Section 42 (4)  prescribes and restricts how the court’s power to order removal of information may be exercised. Removal is to be ordered only if (i)  the plaintiff has shown that registration of a document showing the rectification is not good enough; the continuing presence of the incorrect information will cause material damage to the company; and (ii)  the company’s interest in removing the information outweighs the interest of other persons in the information continuing to appear on the register.

(2)  The fact that the information is incorrect, or relates to an invalid or ineffective transaction, or has been filed without proper authority of the company in question or that a document is a nullity or is one that should never have been registered, is not in itself a sufficient reason for removing it as opposed to rectifying it.

(3)  The order made by the court is to be registered, so that the basis of rectification or removal ought to be apparent from an inspection of the record.’

9. If there is a prospect of damage being caused to the company by the information on the register, that in itself would justify removal:Forever Up Holdings v Tong Yan Wa [2018] HKCFI 2775 [2019] 5 HKC 478 per DHCJ William Wong SC at para. 16.

10. In Cheung Wai Man Elmo v Ko Hok Shing and Others [2022] HKCFI 3668 Harris J. made a s.42 order stating at para. 5:

‘Given the fact that it would appear the 1^st Defendant for unexplained reasons has filed falsified documents in the Companies Registry which necessarily might lead to the confusion in the mind of anybody inspecting it, I accept the Plaintiff’s argument that this is an appropriate case in which to order that the documents which should never had been filed are removed from the Companies Registry, rather than that the Companies Registry are required to alter what is already filed.’

The issues

(A)  Whether David’s “resignation” was effective

22.  An effective resignation as director of the Company requires the resigning director to give notice in writing to the Company of his resignation. While Article 10 (b)  did not specify any further requirements beyond that, compliance with either section 464 (5)  (b)  or (c)  of the Ordinance would suffice.

23.  Mr Gary C.C. Leung, Solicitor Advocate for D1, referred to David’s intention expressed in the form of the Notice and the May Letter. The Notice enclosed a draft of “Written Resolutions” which, in pertinent part, provides as follows:

“2.2 It is noted that the Company has always been a family enterprise, and Mr David Li, a Director, being elderly, intends for his daughter Tina Li to succeed his directorship. Hence Mr David Li has proposed that (i)  he resigns as a director, and (ii)  concurrent with such resignation, Ms Tina Li be appointed as Director to succeed his directorship.”

24.  Section D of Mr Leung’s written submissions reads:

“D. DAVID’S RESIGNATION AS DIRECTOR IS CONDITIONAL UPON D1’S CONCURRENT APPOINTMENT”

25.  The Notice was but an expression of David’s intention that may or may not happen rather than a resignation that takes immediate effect. The fact that it was presented as a package to take effect concurrently with Tina’s appointment as director meant that his ‘resignation’ was qualified in that it was conditional on Tina’s appointment as director. Neither Article 10 (2)  nor section 464 (5)  of the Ordinance provide for qualified or conditional resignations.

26.  In my view, David’s purported resignation was ineffective and that he was and remains a director of the Company.

(B)  Whether the directors approved D1’s appointment as director

27.  The evidence of Gina and Madam Li, 2 of the directors of the Company is that they never agreed to D1 being appointed director whether on 6 May or 13 May 2024.

28.  It is D1’s case[7] that her appointment was approved in substance although not in form at the 6 May Meeting.

29.  Mr Timothy Lam, counsel for the Company, observed that although it is David’s evidence[8] that his legal adviser was present at the 6 May Meeting and prepared contemporaneous notes, those notes are not in evidence nor is there an affidavit from David’s legal adviser concerning what transpired at that meeting if different from what is recorded in the Company’s minutes of the 6 May Meeting.

30.  Relevantly, D1 accepts that although the proposal was discussed at length at the 6 May, no resolution was reached.

31.  It is thus common ground that there was no resolution approving D1’s appointment as director at the 6 May Meeting.

32.  Mr Leung’s primary stance is that Gina and Madam Li effectively approved D1’s appointment at the 13 May Meeting because they could not approve David’s resignation without also approving D1’s concurrent appointment as director.

33.  The premise of the submission is that David’s resignation required the approval of Gina and Madam Li. As explained above, that is a fallacy. Their approval is irrelevant as it is not a requirement. It can have no bearing on the effectiveness or otherwise of David’s resignation.

34.  In any event, as David and D1 did not attend the 13 May Meeting, they are not in a position to dispute the evidence of Gina and Madam Li that D1’s appointment as director was never discussed. A board resolution is required for the appointment of the new director but no such resolution was ever passed to appoint D1 as director.

Disposition

35.  David caused the Impugned ND2A to be filed without the knowledge and approval of the Company.  The information contained in the Impugned ND2A concerning David’s resignation and D1’s appointment as director is plainly incorrect and false.

36.  As earlier noted, the principal business of the Company is leasing and management of the units within the Building.

37.  Rectification of the information contained in the Impugned ND2A would involve deleting all the salient information appearing in it which relates to the identity of the directors of the Company.

38.  In To Sai Tak & Anor v Registrar of Companies & Ors [2020] HKCFI 1615 in exercising the discretion under section 42 (4)  of the Ordinance, Linda Chan J reasoned as follows:

“(1)  The Impugned Documents were filed by D3 without the authority of the Company and, as such, are null and void.

(2)  All the salient information contained in the Impugned Documents is false. If the Impugned Documents were allowed to remain in the Companies Registry, even with the false information crossed out or rectified, there is a real risk that the persons dealing with the Company may question the identity of the shareholders and directors and insist that the Company should provide further evidence to put the matter beyond doubt. This will only impede the normal operation of the Company and add to the time and expenses of Ps in dealing with the Company’s affairs.

(3)  The Company holds all the equity in the Subsidiary, which has ongoing business in Dongguan City. There are bound to be persons and entities dealing with the Subsidiary, such as tenants and the Mainland authorities, who may need to ascertain the identity of the shareholders and directors of the Company so as to satisfy themselves that they are dealing with the right persons. The continuing presence of the incorrect information in the Impugned Documents will create uncertainty and confusion over the identity of the shareholders, directors and secretary of the Company as well as the location of the registered office. It is not in the Company’s interest to be left in such a confusing and uncertain state.

(4)  There is a real risk that D3 may use the Impugned Documents to mislead others into believing that he has been reinstated as the sole shareholder and sole director of the Company and, hence, has the authority to deal with the Company’s assets including the Subsidiary. It will cause material damage to the Company if the Subsidiary is disposed of by D3 who, as matter now stands, is neither a shareholder nor director and has no right or power in the Company.”

39.  The Company submits that this reasoning is equally applicable here since the Company is an operating company.

40.  I accept that the continued existence of the Impugned ND2A could confuse 3^rd parties dealing with the Company as to who is actually a director. Any such confusion could cause material damage to the Company.

41.  In so far as D1 submits that the Court should not order the removal of the Impugned ND2A because there is no evidence of material damage, the prospect of damage being caused to the Company by the information on the Register, in itself, would justify removal: see Forever Up at §16 citing Re China Nice[9]. The recent decision of Cheng J in Noble Crest Limited v Chau Yuet Ching Brenda [2023] HKCFI 115 at § 23 is to the same effect. Further, the threshold for removal rather than rectification is not high:see Forever Up and Noble Crest.

42.  I have no doubt that this an appropriate case for the Court to exercise its discretion to order the removal of the Impugned ND2A from the Register.

43.  I should mention that the Company did not pursue paragraph (2)  of the OS.

44.  In so far as D1 seeks to rely on the Duomatic principle on the basis that the absence of a formal resolution approving D1’s appointment as director was a procedural irregularity that could be ratified, it has not been shown that her appointment will inevitably be confirmed by the majority (who are Gina and Madam Li): see Re Dalny Estates Limited, CACV 105/2017 at §§22-24. It is therefore not a sufficient reason for the Court not to interfere.

Order

45.  Accordingly, I order that the Impugned ND2A be removed from the Register.

46.  I also order that there be an order nisi of costs in favour of the Company certificate for counsel, such costs to be summarily assessed and payable forthwith.

47.  Directions for summary assessment will be given if the costs order becomes absolute.