RE SUN HUNG KAI BANK LIMITED

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS NO. 1343 OF 1985

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JUDGMENT

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1. By this petition confirmation is sought of a special resolution reducing the share capital in Sun Hung Kai Bank Limited. I am entirely satisfied about the matter of which I ought to be satisfied, and which have been most helpfully drawn to my attention by Mr. Wright. They are in the first place, that the special resolution was intra vires. Secondly, I am satisfied by the use made of a relatively new provision in the Companies Ordinance allowing for consent by signature that the shareholders approve. Thirdly, that the creditors of the company have been protected. That was done by an earlier order for directions. Fourthly, that the petitioner has complied with the directions.

2. I only give this very short judgment because of two matters which have arisen, one of which, I am told, is quite unusual. I am told the practice not only in Hong Kong, but also in England and in other parts of the Commonwealth, is for the court on occasion to confirm a reduction which is not necessarily pro rata as between nominal and paid-up capital which is the proposal here. Well, I had been shown authority to support that proposition. I entirely accept Mr. Wright's submission that it would be proper in this case and it is not necessary for me to say more.

3. The second matter which Mr. Wright very helpfully drew to my attention was this. It appears that the special resolution was contingent upon an allotment of shares provided for by ordinary resolution. The allotment of shares came after the special resolution. So the question arises as to whether it was proper for the special resolution to precede the allotment or for the special resolution to be made contingent upon the allotment, and out of an abundance of caution, Mr. Wright, or rather those instructing him, took the opinion of the leading counsel in London. His opinion coincides with that of Mr. Wright, not surprisingly perhaps. That is that it is not improper and indeed on being referred to the relevant section I can see no objection to it either. And since I am told that the practice is followed on occasion in England, I have no difficulty in accepting that it is proper for it to be done here in the way that it has been done. Consequently, I do confirm the reduction, and I make an order in terms of the draft order which has been handed up.