KIN TING CHOY v. ACTIVISION BLIZZARD SERVICES HONG KONG LTD

HCMP 1560/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1560 OF 2013

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J U D G M E N T

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1.  This is an application under section 122(1B) of the Companies Ordinance for extension of time for compliance with statutory obligations.

The non-compliance

2.  Section 122 of the Companies Ordinance provides as follows:

“(1) Subject to subsection (1B), the directors of every company shall lay before the company at its annual general meeting a profit and loss account … for the period, in the case of the first account, since the incorporation of the company, and, in any other case, since the preceding accounts.

(1A)  The accounts referred to in subsection (1) shall be made up to a date falling not more than 6 months, or, in the case of a private company (other than a private company which at any time during the period to which the said accounts relate was a member of a group of companies of which a company other than a private company was a member) and a company limited by guarantee not more than 9 months, before the date of the meeting.”

3.  The non-compliance of the defendant Company were:

(i)  Failure to lay its profit and loss accounts for the financial period from 7 June 2010 to 31 December 2011 (“the subject financial statements”) before its 2011 AGM.

(ii) Profit and loss accounts having been made up to a date falling more than 9 months from its AGM.

The legal principles

4.  The factors to which the court generally has regard in applications of this sort have been summarized in Yu Sun Say v HKI Properties Limited HCMP 2556-2561, 2563, 2565-2568/2007, 29 January 2008, per Deputy Judge Harris (as he then was) and adopted by Kwan J (as she then was) in Re Sanliuyidu (Hong Kong) Sports Goods Co. Limited [2009] 4 HKLRD 708:

(i) Whether the shareholders were aware of the financial position of the company in question and thus were not prejudiced by the non-compliance (“the 1^st factor”);

(ii) Whether the default was inadvertent (“the 2^nd factor”); and

(iii) Whether the court is satisfied that the company would comply with the obligation to lay its profits and loss accounts or income and expenditure statements before general meetings in future (“the 3^rd factor”).

Application of the legal principles

5.  The Company’s legal compliance matters were used to be handled by its then sole director Trendline Limited with advice from the then company secretary Secreco Ltd. 

6.  After the applicant and another director were appointed on 26 November 2012, they were advised by the new company secretary (appointed on the same date) of the non-compliance.

7.  The applicant confirms that the only shareholder, past and present directors of the Company have had access to all financial documents and were at all times informed of the financial position of the Company.  The Company is solvent and has sufficient assets to meet its liabilities as they fall due.  No prejudice has been caused to the only shareholder and director as a result of the non-compliance.  The 1^st factor is satisfied.

8.  The Company had wanted to comply with the law and thus relied on professional services.  There was no reason to doubt that they would not be familiar with corporate compliance under Hong Kong law.  There had been no non-compliance in the past. The default was inadvertent.  Once given the correct advice by the Company’s secretary, the Company had passed a resolution at their AGM on 21 June 2013 to receive and adopt the subject financial statements.  The 2^nd factor is satisfied.

9.  The 2 directors and another have been assigned responsibility to work on company compliance matters.  The court is satisfied, from the assurance of the deponent that the Company will comply with its statutory obligations to lay its financial statements before shareholders in AGM in future.  The 3^rd factor is satisfied. 

10.  I therefore grant an order that the time for the Company to lay the subject financial statements at its AGM for the period from 7 June 2010 to 31 December 2011 be extended to 21 June 2013. 

11.  I thank Mr To for his assistance.