RE FULLY INDUSTRIAL CO LTD

HCCW 123/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 123 OF 2006

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D E C I S I O N

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1.  This is an application issued by the petitioner on 10 June 2006 to strike out the notice of intention to appear on a winding-up petition filed by solicitors for Fully Industrial Company Limited (“the Company”) on 8 June 2006, on the ground that the solicitors did not have authority to act for the Company.

2.  I understand that yesterday an application was made to a Master for the solicitors to cease to act for the Company and an order was made.

3.  Thereafter, there was an application to the Practice Master for leave to be given to a director to represent the Company.  That application was not successful.

4.  No one has appeared for the Company today.

5.  Mr Ma Tin Ho, the other 50% shareholder of the Company, and who used to be represented by the same firm of solicitors until yesterday, appeared in person today.  He has made submissions to the court.

6.  I will briefly set out the relevant background matters to this application.

7.  At all times, there are only 2 registered shareholders of the Company.  The petitioner, Madam Sung Man, and her former husband Mr Ma, each holds 50% of the shares.  They were and are the only 2 directors.  Although Mr Ma has alleged that the petitioner had retired from the Company in August 2003, I am satisfied that the petitioner remains to this day a director.

8.  The petitioner has petitioned to wind up the Company as a creditor on the ground that she is owed a debt of about $1.6 million.

9.  It is clear from the evidence filed on both sides that this is essentially a shareholders’ dispute.

10.  It is not in dispute that as a contributory, Mr Ma has locus to appear on the petition and take whatever position he wishes or file evidence in opposition.

11.  The petitioner objects to the notice of intention to appear filed on behalf of the Company.  Her position is that if Mr Ma should wish to oppose the petition, he should do so on his own behalf and with his own funds, not with the Company’s funds.

12.  For the authority to use the Company’s name, this must be obtained either from the board of directors as provided by article 18(4) of the Articles of Association or from the general meeting of shareholders.  According to articles 11 and 23, the quorum of meeting of directors and shareholders is two.  I am satisfied on the evidence that no notice had ever been given to the petitioner to convene a board meeting or a shareholders meeting for this purpose.

13.  Mr Ma has alleged that ever since the establishment of the Company in 1992, it was agreed that the quorum of meeting of directors should be 1 instead of 2.  He has contended that this is permitted by article 11 which reads:

“The Directors may meet together for the dispatch of business, adjourn and otherwise regulate their Meetings as they think fit and determine the quorum necessary for the transaction of business.  Until otherwise determined, two Directors shall constitute a quorum.”

14.  I do not agree with his contention.  What is permitted by this article is that when a board meeting has been properly convened, the board can then determine the quorum necessary for the transaction of specific business.  There is no evidence to show that such a proper board meeting had been held.

15.  The reliance of Mr Ma on his ability to exercise a casting vote as chairman of the board is misconceived.  I also reject his contention that he was not required to give notice of the meeting to the petitioner as she was for the time being absent from Hong Kong, by relying on article 100 in Table A which was adopted by the Company.  As submitted by the petitioner’s counsel, there is no evidence showing that the petitioner was absent from Hong Kong at the time when Mr Ma purportedly held a board meeting to appoint solicitors to act for the Company.  The board resolution, which was signed by Mr Ma alone, was undated and Mr Ma never mentioned in any of his affirmations when the meeting was held.

16.  I am satisfied there was no authority for the solicitors to act for the Company when the notice of intention to appear for the Company was filed on 8 June 2006 or subsequently.

17.  I strike out the notice of intention to appear filed on behalf of the Company.  I order no affirmation filed on behalf of the Company should be read on the hearing of the petition.  It is open to Mr Ma to file an identical affirmation to depose to matters in those affirmations he has made on the Company’s behalf, if he has not already done so.

18.  For the petitioner’s costs of this application including the costs reserved on 12 June 2006, I order these costs to be borne by Mr Ma in any event.