TAGUCHI SHINICHI v. THE REGISTRAR OF COMPANIES AND ANOTHER

HCMP 1180/2023

[2023] HKCFI 3153

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1180 OF 2023

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REASONS FOR DECISION

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Introduction

1.  This is an application made by Taguchi Shinichi (“the Applicant”) pursuant to s.765(4) of the Companies Ordinance (Cap. 622) (“the CO”) for:

a.  an order to restore Rainbow Links Limited (“the Company”) to the Companies Register and

b.  a declaration that the issued shares of the Company are wholly and beneficially owned by the Applicant,

c.  along with ancillary relief.

2.  The application was first heard on 6 November 2023.  It was adjourned for further supporting evidence to be filed.

3.  The application by way of Originating Summons (“the OS”) is now supported by the affirmations of the Applicant dated 21 July 2023 (1^st affirmation) and 29 November 2023 (2^nd affirmation).

4.  The position was as follows at the first hearing of the OS:

a.  The 1^st respondent to the application is the Registrar of Companies.  They were excused from attendance at the 1^st hearing and provided a letter dated 19 October 2023 setting out their position, which was essentially to take a neutral stance.

b.  The 2^nd respondent is IP Telecom & Technology Limited (“IPTT”).  IPTT did not attend the 1^st hearing but by letter to the Court dated 3 November 2023 stated that it is currently inactive and effectively took no position on the application.

5.  Unfortunately, at this second hearing on Monday 4 December, I was informed that the 2^nd affirmation had only been served on the respondents on Friday 1 December, (it was unclear whether that was before or after 4pm), and there had been no contact with the respondents to elicit their uptodate position.  I was not satisfied that the respondents had been given sufficient time to consider the evidence and their positions.  After standing down the matter for 15 minutes, I was informed that the Registrar of Companies had confirmed by telephone that they remained neutral, and no substantive response had been received from the IPTT.

6.  In order to avoid wasting further costs and Court time, I made an order on the OS on terms that it would not be perfected for 48 hours, and that IPTT be informed that that was the case, and evidence of service and communications with the respondents must be filed with the Court.

7.  Evidence of service was filed on 5 December 2023, and evidence of communications was filed on 6 December 2023. I am now satisfied that both respondents have had a reasonable opportunity to consider the 2^nd affirmation, and that neither respondent wishes to object to the proposed order.

8.  Subject to that, I made an order at the hearing in the terms of the OS save that paragraph (1) was amended to refer to s.767(3), paragraphs (9) and (10) were deleted; and costs were summarily assessed at HK$60,000.

9.  I now give my reasons.

Background

10.  The Applicant is Japanese and does not speak English.  In about 2014, he sought to incorporate a Hong Kong company to obtain and hold IP addresses for use in Hong Kong and elsewhere.  The Applicant was introduced by another Japanese man Mr Yossie to a Mr Andy Ngan of Sincere Secretaries and Nominees Limited (“SSNL”).  The Applicant wished to appoint SSNL as company secretary.  Mr Yossie served as translator between the Applicant and Mr Ngan.

11.  The Company was incorporated on 2 September 2014, with founder member Comkit Limited (a shelf company provider) holding 1 share.

12.  On 24 September 2014:

a.  9,999 shares in the Company were allotted to the Applicant;

b.  The Applicant was appointed director of the Company;

c.  SSNL of Suite 1019, 10^th Floor, Chinachem Golden Plaza, 77 Mody Road, Tsimshatsui East, Kowloon (“the Mody Road address”) was appointed company secretary of the Company.

13.  On 3 October 2014, Comkit Limited transferred its single share in the Company to the Applicant.

14.  The Applicant states that in December 2014, he decided that it would be easier to conduct business by using a local nominee company to hold the shares in the Company.

15.  On 14 January 2015, the 10,000 shares in the Company were transferred by the Applicant to IPTT, also of the Mody Road address.  The Applicant believes that IPTT is operated by SSNL.

16.  Mr Yossi provided the Applicant in February 2023 with what he described as all the documents he had.  These included a raft of unsigned documents, including an unsigned letter from the Applicant to IPTT appointing them as his nominee shareholder in respect of the entire shareholding of the Company and unsigned transfer instruments both from the Applicant to IPTT and from IPTT to the Applicant.  These documents (without any evidence to the contrary) tend to indicate the creation of a nominee arrangement between the Applicant and IPTT.

17.  The Company acquired internet IP address rights (“the three Netblocks”) from Asia-Pacific Network Information Centre (“APNIC”).

18.  In late 2015, the Applicant changed his plans and decided to close the Company.

19.  On 8 April 2016, the Applicant applied for deregistration of the Company.

20.  On 10 June 2016, the Company entered into a Sale and Purchase Agreement (“SPA”) to sell the three Netblocks to Golden Point Technology Limited (“Golden Point’).  The Applicant is also the beneficial owner of Golden Point.  The SPA provided that the purchase price would be decided upon mutual consultation between the parties.

21.  The Company was deregistered on 19 August 2016 pursuant to s.751 of the CO.

22.  The Applicant states that:

a.  APNIC wrote to the Applicant in February 2023 stating that they would shut down the three Netblocks unless the Company was restored.

b.  The purchase price for the three Netblocks has not been agreed as at July 2023; as the Company had been deregistered there was no bank account to which any money could be paid.

c.  He believes that it would be a breach of the SPA by the Company if the three Netblocks cannot be accessed by Golden Point.  Further the use of the three Netblocks has been licensed to a third party, and there would be a significant potential claim by that third party if the three Netblocks are shut down.

d.  Golden Point has for the last 7 year-period been paying APNIC the annual fees associated with the three Netblocks, although they were issued to the Company.

e.  He therefore wishes to seek restoration of the Company in order that the Company may resolve matters with APNIC and Golden Point in respect of the three Netblocks.

23.  In a meeting between the Applicant, Mr Yossi, Mr Ngan and lawyers on 14 March 2023, where Mr Ngan represented IPTT, the Applicant asked Mr Ngan to consent to an application for restoration of the Company on the basis that IPTT was the Applicant’s nominee.  Mr Ngan stated that there was no record now.

24.  Beyond that evidence of Mr Ngan’s enigmatic statement, there is no evidence before the Court as to IPTT’s position.

Applicable principles for restoration of a company

25.  Where a company has been deregistered pursuant to s.751 of the CO, an application for restoration may be made pursuant to s.765(4) of the CO by a director of the Company: s.765 of the CO.

26.  S.766 of the CO provides that an application for restoration under s.765(4) must be made within 20 years of the date of dissolution.

27.  S.767(3)(b) of the CO provides that “The Court may grant an application under s.765(4) if satisfied that-…, in the case of a company that has been deregistered—

(i)  any of the requirements specified in section 750(2)(a), (b), (c), (d) or (e) was not met; or

(ii)  it is otherwise just that the company be restored to the Companies Register.”

28.  There is no suggestion that any of the identified requirements of s.750 were not met on the deregistration application.  The application is made on the basis that it is otherwise just that the Company be restored.

29.  In respect of the old s.297(1) Companies Ordinance (Cap. 32) jurisdiction to restore a company to the register on the grounds that it was “otherwise just that the company be restored”, the test used by Tang J in Easewin Properties Ltd (No. 2) [2004] 4 HKC 547 at para. 22 was (by consensus) whether or not the Company had more than a shadowy prospect of establishing anything of value. 

30.  That test continues to be applied under the new s.765(4) jurisdiction eg. See Re Win Land Estate Ltd[2018] HKCFI 2717 at para. 22.

Should the Company be restored to the register?

31.  In light of the 2^nd affirmation which has supplemented the factual picture, I am satisfied that the Company has assets, i.e. the three Netblocks, whose disposal was not effectively completed by the SPA or subsequent events.

32.  I am therefore satisfied that it is just that the Company be restored.

Beneficial ownership of the Company’s shares

33.  I am prepared to accept that upon the available evidence, and where IPTT has had every opportunity to provide evidence to the contrary, IPTT was at all material times holding the shares of the Company as a nominee for the Applicant.