WONG KWONG MIU v. PEPPER BLOSSOM LTD AND OTHERS

HCCW 202/2025

[2026] HKCFI 3577

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 202 OF 2025

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D E C I S I O N

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1.  By Petition presented on 8 April 2025 the petitioner, Mr Wong Kwong Miu (“Petitioner”), seeks a buy-out order against the respondents, alternatively, an order to wind up Huafang Group Inc. (花房集团公司) (“Company”) on the “just and equitable” ground.

2.  By summons issued on 14 April 2026 (“Strike out Summons”), the Company applies for an order to strike out the Petition on the grounds that it discloses no reasonable cause of action, is frivolous or vexatious and/or is otherwise an abuse of process of the court, alternatively an order to strike out §§51-67 of the Petition and the prayer for winding-up relief on the same grounds.

3.  The substantive grounds for striking out, as stated in the 4^th affirmation of Mr Zhao Dan (a director of the Company) filed in support of the Strike out Summons (“Zhao 4^th”) are as follows:

(1)  On the date the Petition was presented, the Petitioner was not (and has not been since 7 March 2023) a registered member and, therefore, did not have standing to present the Petition, whether for “unfair prejudice” or “just and equitable” ground (Locus Ground).

(2)  Alternatively, it is plain and obvious that the Petitioner is acting unreasonably in seeking winding-up relief when there is alternative remedy available to him and the Petitioner failed to explain why he prefers winding-up relief or why it might be the only appropriate or practical relief, contrary to the guidance in Re Sun Light Elastic Ltd [2013] 5 HKLRD 1 §§9-10 (Harris J). This is a particularly glaring omission given that the Petitioner admits that the Company is solvent[1] and seeks a buy-out order as his primary relief (Alternative Remedy Ground).[2]

4.  The Strike out Summons is listed to be heard at the 1^st CMC of the Petition. Prior to that, the parties have pursuant to the directions given by this Court[3] filed their respective pleadings and completed discovery (except the Company). With the consent of the parties, leave was given to the Company to take steps in the Petition[4].

Factual background

5.  The Company was incorporated in the Cayman Islands on 1 June 2021 and engages in the business of offering online social entertainment platforms through its subsidiaries and affiliated companies (together “Group”).[5]

6.  The Company is an investment holding company and its shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (“HKEx”) between 12 December 2022 and 16 December 2024.[6]

7.  Amongst the shareholders of the Company:

(1)  The 1^st respondent, Pepper Blossom Limited (“R1”), is a company incorporated in the BVI. It held 38.21% issued capital in the Company prior to its listing, and remains a controlling shareholder after listing, holding 34.7% shareholding. R1 is controlled by Mr Zhou Hongyi (周鴻禕), who was and still is the chairman of the board and a non-executive director of the Company[7].

(2)  The 2^nd respondent, Global Bacchus Limited (“R2”), is a company incorporated in the BVI. It held 37.06% issued capital in the Company prior to its listing, and remains a controlling shareholder holding over 30% issued shares after listing. R2 is wholly owned by Songcheng Performance Development Co., Limited (宋城演藝發展股份有限公司), a company established in Mainland China whose shares are listed on Shenzhen Stock Exchange (stock code 300144)[8].

(3)  The Petitioner acquired 41,778,636 shares (“Shares”) in the Company from Sun Link Trade Limited (“Sun Link”), a company wholly owned by him, on 1 February 2023.[9]  Sun Link in turn was the affiliated designee of shares allotted to the original shareholders of the Company at nominal consideration in the lead up to the Company’s listing.[10] 

Parties’ respective pleaded cases

8.  It is the Petitioner’s case that he acquired the Shares in the Company after it was listed on the “premise and understanding and implied agreement between the Company and the shareholders that the Company’s shares will remain listed” (“Common Understanding”).[11]  In breach of the Common Understanding, the Company failed to take the necessary action to maintain its listing on HKEx:[12]

(1)  The Company failed to provide the relevant documents required by its former auditors, KPMG, which related to “certain bank accounts which have been frozen” (“Frozen Accounts”) by the Mainland authorities following an investigation into an investee company of the Group (“Investigation”).[13]  The Company did not publish its audited consolidated financial statement for the year ended 31 December 2022 (“2022 AFS”), resulting in breach of the Listing Rules and suspension of trading of the Company’s shares from 3 April 2023.[14]

(2)  The Company failed to fulfil the resumption conditions by the deadlines (19 June 2023 and 6 May 2024), which resulted in HKEx’s decision to delist the Company’s shares).[15]

(3)  The Company failed to apply for review of the delisting decision, and the Company was delisted on 16 December 2024.[16]

9.  The failure to maintain its listing status constituted a breach of fiduciary duty on the part of the directors,[17] which caused loss to the Petitioner.[18]

10.  R1’s case is that it did not have knowledge of the subject matter of the Investigation or control over the Company’s acts in connection with the Investigation.[19]  Nor did it have any knowledge of or involvement in the events leading up to the delisting.[20]

11.  R2 contends that the matters raised by the Petitioner relate to the Company and should be responded to by the Company.[21]

12.  As stated above, the Company obtained leave from this Court to participate in the Petition.

13.  Mr Danny Tang, counsel for the Company, submits that notwithstanding the well-established principle in Re C G & L & Investment Ltd and Wyatt Estates Ltd [1993] 1 HKLR 107, 111-112 (Penlington JA), the reasons for the Company’s participation in these proceedings are as follows:[22]

(1)  Contrary to the usual case, the Common Undertaking which underpins the Petition is alleged to be between shareholders and the Company.[23]  The Company needs to defend the allegations in its own capacity: see by analogy Re Contingent and Future Technologies Ltd [2024] BCC 223 §96, where it was held that the company is likely to have a compelling reason to actively participate in proceedings where claims are advanced directly against it, outside the scope of the English equivalent of s.724 of the Companies Ordinance (Cap. 622) (“CO”) but within the same proceedings.

(2)  This is a fortiori where (a) all the complaints in the Petition are directed at the Company (and its board) – there are no specific pleas in relation to R1 or R2, save for the pleas that they are controlling shareholders of the Company and have nominee directors and/or affiliated directors on its board[24] (the latter plea are denied by R1 and R2[25]) and (b) little substantive response was offered by R1 or R2 in their respective PODs.

14.  The Company’s responses to the Petitioner’s complaints are as follows.

15.  As regards failure to publish its 2022 AFS and resignation of KPMG:

(1)  KPMG only informed the Audit Committee of its inability to complete the audit 2 days prior to the deadline for publishing the 2022 AFS (31 March 2023), despite having been aware of the Frozen Accounts since early October 2022.[26]  To keep the public informed about the Group’s operations, the Company announced its unaudited annual results on 30 March 2023.[27]

(2)  On 24 July 2023, KPMG requested the Company to produce inter alia an independent investigation report and conclusion of the Investigation in 6 days (by 30 July 2023), which was clearly unrealistic.[28]

16.  The Company took steps to fulfil the resumption conditions imposed by HKEx:[29]

(1)  Following KPMG’s resignation on 3 August 2023, the Company appointed Mazars CPA Ltd as auditors on 17 August 2023.[30]  The Company successfully published its 2022 AFS and 2023 audited annual results.[31]

(2)  The Company appointed AOGB Professional Consultancy Services Co Ltd (“AOGB”) to conduct an independent investigation and independent internal control review on 31 August 2023,[32] both of which were completed on 19 February 2024.[33]

(3)  The investigation uncovered that the “then management team of the Company” (which included Ms. Yu Dan (“Yu Dan”), the CEO and executive director of the Company), became aware of the Frozen Accounts in as early as August 2022, but did not disclose the matters to the other members of the board.[34]

(4)  In response to the additional resumption conditions imposed by HKEx on 6 May 2024, the Company engaged AOGB to conduct a further forensic investigation on the internal and external communications concerning the Frozen Accounts,[35] which was completed on 17 September 2024.[36]

(5)  The Company also engaged AOGB to carry out a further review on the Group’s internal control systems, which was completed on 18 September 2024 (“Supplemental Review”).[37]  The Company adopted all improvement measures recommended by AOGB,[38] as confirmed by the Supplemental Review.[39]

(6)  On 29 September 2024, the Company submitted its resumption proposal to HKEx.[40]

(7)  As at mid-October 2024, HKEx remained concerned that the Company did not have adequate internal controls.[41]  This issue was further complicated when the board became aware of matters which caused it to lose trust and confidence in Yu Dan and the management team responsible for the Company’s daily operations.[42]

(8)  The board has not been able to resolve the situation. Yu Dan refused to resign and the board was concerned that any attempt to forcibly remove her would adversely impact the Group’s operations due to Yu Dan’s control over a number of operating subsidiaries.[43]

(9)  Upon taking legal advice, the Company considered that it did not have sufficient basis to apply for a review of the delisting decision.[44]

Locus Ground

17.  The question as to who has locus to present a petition is prescribed by statute:

(1)  Section 179(1)(a)(ii) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (“CWUMPO”) provides that only a “contributory” who held shares registered in his name for at least 6 months during the 18 months before the presentation of a petition has locus to present a winding-up petition against the company. The same requirement applies to a petition seeking to wind up an “unregistered company” under s.327(3) of the CWUMPO. An “unregistered company” includes a registered non-Hong Kong company, see s.326(2) of CWUMPO.

(2)  Section 724(1) of the CO provides that a “member” may present a petition and seek remedies on the ground that the affairs of the company have been conducted in an unfairly prejudicial manner. The meaning of “member”, as defined in s.2 of the CO, is a founder member or “a person who agrees to become a member of the company and whose name is entered, as a member, in the company’s register of members”.

18.  The requirement of registration was described by the Court of Final Appeal in Ng Yat Chi v Max Share Ltd (1997-98) 1 HKCFAR 155, 165E in this way:

“A shareholder must be registered in order to be a member or contributory and to exercise the rights attached to that status under the articles and the Companies Ordinance”

19.  Where a petitioner was not a “member” at the time the petition was presented (or had not held the shares for 6 months when the winding-up petition was presented), the petition would be struck out for lack of locus. This is supported by a long line of authorities cited by Mr Tang, which concerned with unfair prejudice petition, just and equitable petition and other statutory remedies available to a “member”:

(1)  In Re China Ground Source Energy Ltd, HCMP 1196/2012, 31 October 2012, DHCJ Le Pichon struck out an unfair prejudice petition for lack of locus because the petitioner was not a member. Her Ladyship rejected the contention that the court should adopt a more flexible approach to the definition of “member” to include beneficial owner of listed shares registered in the name of nominees such as securities firms as having “no foundation in law” and “unsupported by authority” (§§5-9).

(2)  In the context of a contributory’s winding-up petition, in In re Gattopardo Ltd [1969] 1 WLR 619, the Court of Appeal upheld the trial judge’s decision to dismiss the petition on the basis that the shares had not been registered in the petitioner’s name for more than 6 months during the 18 months before the commencement of the winding up (621A-B). The Court rejected submission that the requirement can be “brushed aside on the ground that it was a pure or mere technicality” (622A-D, 623A-C).

(3)  Similarly, in In re JN2 Ltd [1978] 1 WLR 183, Brightman J held that “entry on the register is an essential qualification for a contributory who desires to present a petition”, and that “it would not seem to be an answer that he ought to have been on the register, unless, perhaps, the company has been ordered to place him on the register and has disobeyed that order” (186H-187B).

(4)  In Chen Pei Xiong v Convoy Global Holdings Ltd [2024] HKCFI 1568, Coleman J dismissed an application for leave to commence a statutory derivative action under ss.732-733 of CO on the basis that the plaintiff was not a registered member of the company (§§65-68).

(5)  In Chen Ming v Chen Jiagan [2025] 2 HKLRD 66, this Court dismissed an application for a statutory injunction under s.729 of CO on the basis that the applicant was not a member of the Company (§§31-35).

20.  Mr Tang very fairly draws to the attention of the court that there are authorities which, at first blush, might go against the above position in the context of other provisions in the CO:

(1)  In Re Luen Fat Paint Co Ltd, HCMP 1791/2009, 11 February 2010, Lam J (as he then was) held that a person who was not a registered member could make an application to commence a statutory derivative action so long as he was able to satisfy the court that he had become a registered member of the company by the time the court makes the order to grant leave (§§38-48).

(2)  Re Luen Fat was applied in the context of applications for injunctions in Re Tysan Holdings Ltd [2013] 4 HKC 425 §§81-82 (Mimmie Chan J) and Re Astron Corporation Ltd [2022] HKCFI 3426 §§27-29 (Lisa Wong J), citing Re Tysan.

(3)  In Ng Wai Ling v Chan Ping Fai Ricky [2009] 2 HKC 514 (cited in Re Luen Fat §43), Kwan J (as she then was) declined to strike out a winding-up petition when the petitioner had not obtained probate (and thus did not have the requisite locus) because “it is only a question of time when probate would be granted to her” (§§17-18).

21.  I note that in Ng Wai Ling, Kwan J refused to strike out the petition on the basis that the executrix appointed under the will made by the deceased member had locus to present an unfair prejudice petition under s.168A(5) of the former Companies Ordinance[45] (Cap. 32) and a just and equitable winding-up petition under s.179(1) of the same Ordinance[46] before probate was granted as her title and authority derived from the will (§§8-9, 11, 16).

22.  Mr Tang submits that these authorities are distinguishable and are reconcilable with the general position discussed in §20 above for the following reasons:

(1)  First, these authorities are distinguishable in light of their different statutory context:

(a)  Re Luen Fat concerned an application for leave to commence statutory derivative action. In so holding, Lam J in fact accepted that a person must be a member of the company to commence the derivative action (§§36, 39), but drew a distinction between application for leave and the derivative action itself, so long as the applicant is a member by the time leave is granted, the requirement will be satisfied (§§36, 38-39). On true analysis, Re Luen Fat supports the existence of a locus requirement but disapplied the same at the leave stage.

(b)  Both Re Tysan and Re Astron concerned applications for injunctions under both statute and the court’s inherent jurisdiction (§§1 and 3). The injunction in Re Astron was only granted pursuant to the latter basis because the former basis was only available to members of the company (§§28-29).[47]  In contrast, there is no scope for the Petitioner to invoke inherent jurisdiction for the relief sought in the Petition.

(2)  Second, these authorities were all decided on the premise that the applicant would satisfy the locus requirement at the time of the substantive hearing:

(a)  In Re Luen Fat, it was held that “it was only a matter of time and formality” that the applicant’s status as members was registered (§45).

(b)  In Re Astron, it was observed that the process of transferring the applicant’s interests in CHESS (Australian version of CCASS) into ordinary shares of the company had been initiated (§27).

(c)  Re Tysan where the applicant had become a registered shareholder by the time of the hearing (§81).

23.  I agree that for the reasons submitted by Mr Tang, Re Luen Fat, Re Astron and Re Tysan are distinguishable.

24.  There is another reason why the holding in these cases do not apply to an unfair prejudice petition and a just and equitable winding-up petition. Unlike an application for leave to commence a statutory derivative action and an application for injunction under the CO where the requirement of locus may be satisfied at the stage of the hearing:

(1)  a substantive order made by the court under an unfair prejudice petition may relate back to the date of the petition. For eg., where the court makes a buy-out order on the basis that the shares should be valued as at the date of the petition; and

(2)  a winding-up order made on a just and equitable petition will relate back to the date of the petition by virtue of s.184(2) of CWUMPO.

25.  In my judgment, it is indisputable that the Petitioner was not a member of the Company when the Petition was presented on 8 April 2025, contrary to his averment in §9 of the Petition. This can be seen from the latest version of the Company’s register of members (“ROM”) dated 13 December 2024.[48]  In fact, the Petitioner had not been a registered member of the Company since 7 March 2023, more than 2 years before the Petition was presented:

(1)  On 1 February 2023, Sun Lik transferred the Shares to the Petitioner. On 6 February 2023, the Shares were registered in the Petitioner’s name on the ROM.[49]

(2)  On 6 March 2023, the Petitioner transferred the Shares to HKSCC Nominees Limited (“HKSCC”), which became the registered shareholder of the Shares from 7 March 2023.[50]  HKSCC deposited the Shares in the Central Clearing and Settlement System (“CCASS”) Depository on behalf of CCASS participants to facilitate electronic clearing and settlement of trades executed on HKEx.[51]

(3)  Upon delisting, CCASS participants were required to withdraw the Company’s shares from the Depository.[52]

(4)  No attempt has been made by the Petitioner to register the Shares (or any part thereof) in his name.[53]  This is despite the fact that the Company has specifically raised the issue in its POD.[54]

26.  In his skeleton dated 16 April 2026, Mr Charlie Liu, counsel for the Petitioner, states that the Petitioner is “actively considering its [sic] stance in respect of the application” and “may seek to put in evidence or further submissions before the Court specifically on the strike out application”.

27.  In his supplemental skeleton dated 23 April 2026, Mr Liu confirms that the Petitioner “will no longer pursue the winding up relief sought in the Petition” but seeks to rely on an affirmation filed on behalf of the Petitioner[55] and contends that the beneficial ownership of the Shares at all times remained with the Petitioner, and the Petitioner “is actively taking steps to withdraw the physical share certificate and to procure registration of the Shares in his name in the [ROM]”.

28.  On the basis of Kwok 1^st, Mr Liu argues that “the basis upon which the Company seeks a wholesale striking out of the Petition is no longer sustainable on the present evidence”; and the court should not strike out the remaining part of the Petition which is premised on unfair prejudice remedy under s.724 of the CO. Further:

(1)  In Dickson Holdings Enterprise Co Ltd v Moravia CV [2019] 3 HKLRD 210, §§26-28, Godfrey Lam J (as he then was) dismissed an application to strike out an unfair prejudice petition even though the petitioner was not a registered member when the petition was presented, holding that it was “highly unattractive” to deny standing to a party whose very complaint was that it had been deprived of its membership by the respondents’ conduct.

(2)  Although Dickson Holdings is not on all four with the present case, it illustrates that “even in the unfair prejudice context, the question of locus is not governed by a single bright-line rule and that the court will examine the circumstances with some care before shutting out a petitioner on the basis of a registration defect”.

(3)  “The law in this area is not as clear-cut as the Company’s submissions suggests, and it is not plain and obvious to determine the matter at this stage. Further, no evidence has been put forward by any party as to whether Cayman Islands law permits rectification of the ROM, or any retrospective rectification, in circumstances such as these”.

(4)  It would be “disproportionate” to deprive the Petitioner the opportunity to pursue his case on the basis of a registration defect which is in the course of being rectified.

29.  I am unable to agree with Mr Liu’s submissions.

30.  As submitted by Mr Tang, Dickson Holdings does not assist the Petitioner as the factual context was different - the very conduct complained of by the petitioner was that he had been deprived of its membership by the respondents. The locus requirement was disapplied because the company could not take advantage of its own wrong.

31.  Smilarly, in In Re Gattopardo, 622A-D, Russell LJ referred to In re Patent Steam Engine Co. (1878) 8 Ch.D. 464 and held that the court was prepared to treat what should have been done by the company, which was taking the point, as having been done. In other words, the court treated the petitioner as a registered member and thus had locus to present a just and equitable petition.

32.  In the present case, there is no basis to invoke the equitable maxim discussed in Re Gattopardo or the public policy reason discussed in Dickson Holdings:

(1)  It was the Petitioner’s own decision to leave the Shares registered in the name of HKSCC. Even after the Company has pleaded the locus point in its POD filed on 13 February 2026, the Petitioner still did not take any steps to cause the Shares be transferred to and registered in his name.

(2)  In the Points of Reply filed on 20 April 2026 (“POR”), the Petitioner pleads that he became the holder of the Shares on 6 February 2023[56] but insinuates that the Company failed to register his Shares.

(3)  As pointed out by Mr Tang, the insinuation is plainly false as the Shares were in fact registered in the Petitioner’s name but were subsequently transferred to and registered in the name of HKSCC on 6 March 2023.

(4)  At the hearing, Mr Liu (rightly) does not contend that the Company was in any way at fault in depriving the Petitioner of, or failing to register, the Shares in his name in the ROM.

(5)  Although Mr Liu refers to “rectification of the ROM”, when asked by this Court, he is unable to articulate the basis for seeking rectification of the ROM, let alone one which requires backdating the Petitioner’s registered shareholding to the date of the Petition.

33.  As the Petitioner was not a registered shareholder when the Petition was presented, and the exceptions discussed in §§30-32 above has no application to him, he had no locus to present the Petition, whether under s.724 of the CO or s.327(3) of CWUMPO. It follows that the Petition should be struck out.

34.  I would add this. In considering whether a petitioner has locus to present a petition, the court would only consider whether the petitioner is a “contributory” within the meaning of ss.2 and 179(1) of CWUMPO and ss. 2 and 723 of the CO unless the lack of locus was the result of the respondent’s conduct. Other than this exception, it is neither necessary nor relevant to consider why the petitioner was not a registered shareholder at the time the petition was presented. It is incumbent upon the petitioner to ensure that he has locus before invoking the statutory remedies for unfair prejudice or just and equitable winding-up.

35.  I do not think that striking out the Petition for lack of locus is disproportionate as it is open to the Petitioner to have the Shares be registered in his name and then present a petition. Where a petitioner acted on erroneous legal advice, he may look to the legal advisers to recover the legal costs occasioned by the striking out of the petition.

36.  Even if, contrary to my view, it is necessary for the court to consider why the Petitioner did not have locus when he presented the Petition, it is clear from the evidence adduced by the Petitioner that he was aware that he was not a registered shareholder but chose to present the Petition.

37.  In Kwok 1^st filed on 23 April 2026, the Petitioner claims that his physical share certificates were held with DBS Bank Ltd (“DBS”), he has now taken to obtain the same[57]; and at the time the Petition was presented, he held a mistaken but honest belief that the lack of registration was not an issue[58] (“New Ground”).

38.  Mr Tang submits, and I agree, that the New Ground should be rejected for 3 main reasons.

39.  First, the New Ground has not been pleaded in the Petition (or the POR for that matter). A petitioner cannot rely on unpleaded matters to sustain winding-up relief (Re Harsen (China) Ltd [2022] HKCFI 3806 §24). The same principle applies to locus as a petitioner is required to plead his status as a member in an unfair prejudice petition.

40.  Second, the New Ground is inconsistent with the Petitioner’s pleaded case that he is a registered shareholder. It is an abuse for the Petitioner to take inconsistent positions on the issue of locus with full knowledge of the relevant facts and with no reasonable explanation (Chu Yue Bun v Lai Shiu Woon [2021] HKCA 1929 §§35(2)-(3) (Kwan VP); Re Minloy Ltd [2020] HKCFI 2215 §31). Inconsistency abuse applies to seeking to put forward “diametrically contrary cases on oath” (Chen Hongqing v Asia Cement Corp [2023] HKCFI 2769 §§12, 17).

41.  Third, the assertion that the Petitioner honestly believed that registered shareholding was unnecessary when the Petition was presented is contradicted by the contemporaneous documents:

(1)  Prior to presenting the Petition, the Petitioner had enquired with DBS about withdrawing his physical share certificates[59], and was told that “the physical cert can only be withdrawn in HKSCC Nominees names” and the Petitioner “will have to do the re-registration by themselves”. Having been told that the certificate could only be withdrawn in HKSCC’s name and re-registration was necessary, the Petitioner (who had been under legal advice) must knew that the Shares were not registered in his name.

(2)  The issue of locus was not new to the Petitioner:

(a)  On 4 December 2024, 9 minority shareholders, including the Petitioner, claimed to hold 16.62% shareholding in the Company and requested the Company to convene an EGM. On 6 December 2024, the Company responded stating, inter alia, that according to the ROM, of the 9 minority shareholders, only one (not the Petitioner) was a registered shareholder holding 2.51% shareholding, which fell short of the 10% requirement for requisitioning an EGM under article 12.3 of the articles of association[60].

(b)  On the Petitioner’s own evidence[61], further inquiries were made in September 2025 (before the directions made by consent on 16 September 2025). This reinforces the fact that the Petitioner knew about the locus requirement but chose not to procure the Shares to be registered in his name.

Alternative Remedy Ground

42.  In view of my conclusion that the Petitioner does not have locus to present the Petition, whether on unfair prejudice ground or just and equitable ground, it is unnecessary to consider the Alternative Remedy Ground.

43.  Nevertheless, in case this matter goes further, I shall explain why the pleas seeking to justify and the prayer for winding-up relief should be struck out.

44.  The principles governing an application for striking out a winding-up petition are well established and are summarised in Re Harsen:

(1)  The allegations in the petition will be resolved in favour of the petitioner (§16(1)).

(2)  A contributory’s winding-up petition is a remedy of last resort and would not be granted if the petitioner was acting unreasonably in insisting upon it instead of pursuing an available alternative remedy (§17(1)).

(3)  If it is clear that there is no real possibility or prospect of a winding-up order being made at trial, it cannot be just for a company to have the threat of a winding-up order hanging over its head (§17(3)).

(4)  Winding up a solvent and profitable company is not in the interests of any its members. It may result in the sale of assets at break up value, without regard to goodwill and the “know-how” of the company (§17(4)).

(5)  There would be no real prejudice to the petitioner by striking out the claim for winding-up order if (a) there is no ground or basis which would entitle the petitioner to a winding-up order only, but not an order under s.724; and (b) no substantive benefit that a petitioner would gain from a winding-up order which he would not from a buy-out order (§17(5)).

45.  In the Petition, the only ground put forward by the Petitioner for seeking a just and equitable winding-up is the need for investigation due to (1) inconsistency in the Company’s accounts to the tune of RMB154 million, (2) lack of transparency, and (3) lack of probity in the management of the Company[62].

46.  In my judgment, the need for investigation is not a valid ground for seeking a winding-up order against the Company. The matters complained of by the Petitioner will be investigated at trial and findings will be made on those matters. If the court finds in favour of the Petitioner, a buy-out order will be made against the respondents and adjustments can be made to the valuation of the Company for the purpose of the buy-out order. There is no separate basis for winding up a company simply to investigate the same complaints, which is a much lower standard (Re Sang Kee Restaurant Ltd [2021] HKCFI 1817 §§15, 33-35; Re M Kirpalani (HK) Ltd, HCCW 618/2009, 23 June 2010, §§29-30 (Barma J, as he then was); Re Canadian Education Foundation (China) Ltd [2024] HKCFI 3167 §§55-56 (Anthony Chan J, as he then was); Re Victory Trenchless Engineering Co Ltd [2025] HKCFI 4949 §§50-51 (DHCJ Le Pichon)).

47.  Where a company is a going concern and holds valuable assets, a buy-out order would normally be sufficient to redress the wrongs done to the petitioner unless there is evidence to suggest that the respondents may not be able to comply with the buy-out order. The court is “unlikely to the extreme” to grant the winding-up relief as it would not be in the interests of the petitioner or the respondents to wind up a company which is a going concern and holds valuable assets (Re Victory Trenchless §16, citing Re Harsen §17(5); Re Sang Kee §36(3)). 

48.  In the present case, there is no prospect of the court making a winding-up order against the Company, having regard to the following facts and matters:

(1)  There is no dispute that the Company is solvent. The Petitioner has not identified, let alone demonstrated by evidence, that it would be in the interests of the Petitioner or any shareholders for the court to wind up the Company (Re Harsen §25; Re Sang Kee §36(2)-(3)).

(2)  Whilst the court may be “more receptive” to making a winding up order in respect of a holding company which holds a single subsidiary (Re South Asia Group (HK) Limited [2024] HKCFI 2070 §§156(3), 157), where as here the Company holds a significant number of subsidiaries,[63] the sale of these subsidiaries (even on a going concern basis), would still be less favourable than if the Company remains a going concern due to the loss of goodwill arising from business combination.[64]

(3)  The Petition with a prayer for winding-up has hampered the normal operations of the Company. Even after the Company has sought and obtained a validation order dated 16 October 2025, the Company’s banks have refused to unfreeze the accounts as they were concerned about the need to verify whether the payments are in the ordinary course of the Company’s business.[65]

Disposition & Costs

49.  For the reasons set out above, the Petition is struck out.

50.  As for costs, Mr Tang seeks indemnity costs in respect of the costs of the Strike out Summons on the grounds that (1) locus is a basic requirement which should have been addressed before the Petitioner embarked on presenting the Petition; (2) the Petitioner only had himself to blame for failing to become a registered shareholder when the Company had already taken the locus point in the context of the requisition issued in December 2024; and (3) there is no basis to seek the alternative winding-up relief.

51.  Mr Liu on the other hand submits that costs of the Strike out Summons should be awarded against the Petitioner on a party and party basis because the locus point was raised by the Company when the POD was filed in 13 February 2026, and as soon as the Petitioner has seen the written submissions of Mr Tang, Mr Liu immediately indicates to the Company that the Petitioner will not contest striking out the pleas and prayer relating to the winding-up relief.

52.  R1 and R2 do not seek costs of the Strike out Summons.

53.  In respect of the costs of the Strike out Summons, I make a costs order nisi that:

(1)  The Petitioner do pay 50% of the costs of the Strike out Summons, including the costs of this hearing, to the Company on an indemnity basis, to be taxed if not agreed; and

(2)  There be no order as to costs as between the Petitioner and R1 and R2.

54.  The reason for awarding part of the costs against the Petitioner on a higher scale is to reflect the fact that the Petitioner was well aware of the locus issue but chose to contest the same even after the Company had issued the Strike out Summons. Worse still, the Petitioner filed Kwok 1^st seeking to raise the New Ground which is not only inconsistent with his pleaded case but also inconsistent with contemporaneous documents, as I so find.

55.  As for the costs of the Petition, I make a costs order nisi that:

(1)  The Petitioner do pay the costs of and occasioned by the Petition, including the costs of the application for validation order and all costs reserved, to R1, R2 and the Company on a party and party basis, to be taxed if not agreed; and

(2)  The Petitioner do pay the costs of and occasioned by the Petition to the Official Receiver, in the amount of HK$4,100, to be paid out of the deposit.