RE PRESIDENT SECURITIES (HONG KONG) LTD

HCMP 1153/2023

[2023] HKCFI 2212

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1153 OF 2023

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J U D G M E N T

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1.  The Applicant (“President Securities”) was licensed to carry on types 1, 4, 6 and 9 regulated activities and has ceased business on 31 December 2022. Before cessation of its business, President Securities had between April and November 2022 made efforts (including placing advertisements in newspapers) to contact its clients. Those clients have addresses in Hong Kong, PRC, Taiwan, and Singapore. Despite those efforts, there remains unclaimed cash, securities and bonds held by President Securities for those clients.

2.  This is an ex parte application by President Securities for payment in of unclaimed assets of its clients pursuant to sections 62 and 56 of the Trustee Ordinance, Cap 29. At the start of this hearing, I have granted leave to amend the originating summons to reflect updates since its issue.

3.  Section 62(1) of the Trustee Ordinance, provides that:

“Trustees, or the majority of trustees, having in their hands or under their control money or securities belonging to a trust, may pay the same into court, and the same shall, subject to the rules of court, be dealt with according to the orders of the court.”

4.  Section 56(1) of the Trustee Ordinance provides that:

“Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release, or other disposition, or any purchase, investment, acquisition, expenditure, or other transaction, is in the opinion of the court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument, if any, or by law, the court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions, if any, as the court may think fit and may direct in what manner any money authorized to be expended, and the costs of any transaction, are to be paid or borne as between capital and income.”

5.  An applicant for an order under section 62 of the Ordinance has to establish that:

(1)  The assets in question are held by the applicant as trustee; and

(2)  Despite reasonable efforts, the beneficiaries cannot be contacted or unresponsive, or the trustee is otherwise unable to obtain instructions as to how to deal with, dispose of or return the trust assets.

6.  There have been past instances when the Court makes orders to enable securities companies to pay unclaimed assets into Court upon cessation of business.

7.  I am satisfied from reading the Hong Kong Cash Account Agreement (in particular clauses 3.1, 5.1 and 6) that President Securities holds the unclaimed assets as trustee on behalf of its clients.

8.  I am also satisfied on the evidence that despite endeavours of President Securities to contact its clients, the clients have not been responsive and President Securities is unable to obtain instructions on how to deal with the unclaimed assets.

9.  The unclaimed assets fall into the following Parts:

A.  Cash;

B1.  Securities;

B2.  Securities of companies which have been delisted;

C.  Securities of a Taiwan company which has been delisted and wound up;

D1.  Bonds; and

D2.  Bonds of which the issuers have defaulted.

10.  I give leave to pay the cash (Part A) into Court and deposit the bond certificates (Part D1) into Court.

11.  President Securities should seek to withdraw the share certificates (Parts B1 and B2) and deposit them into Court. As a fallback, if the share certificates cannot be obtained within one month, President Securities may sell or dispose of the shares within 2 months thereafter and pay the proceeds into Court. If and only if it is not possible to sell or dispose of the shares, President Securities may forfeit the shares. These fallback provisions will obviate the need for a further application to the Court, thereby saving time and costs: Re KVB Kunlun Asset Management (HK) Ltd [2023] HKCFI 907, at §17, DHCJ Suen SC.

12.  I give leave to President Securities to forfeit Parts C and D2, as those securities or bonds have little or no value. See an example in Re Gold Fund Securities Company Ltd [2020] HKCFI 2884, §§15(c) and (18), K Yeung J.

13.  President Securities also seeks an order to pay dividends, bond shares and/or rights shares it may receive with respect to the unclaimed securities in Parts B1, B2 and D1 into Court. It is reasonable and I grant the same.

14.  For the reasons given, I give an order in terms of the originating summons as amended in accordance with §§11 and 12 above and with other consequential amendments made by me at this hearing.

15.  I thank Mr Ken Lee for his assistance.