RE LED INTERNATIONAL HOLDINGS LTD

HCMP 21/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 21 OF 2013

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J U D G M E N T

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1.  The plaintiff applies under sections 111 and 122 of the Companies Ordinance, Cap 32 (“the Ordinance”) for extension of time to hold its AGM and lay its accounts before its shareholders at the AGM.

2.  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, 29.1.2008, 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”).

3.  The applicant is a public company admitted to the Alternative Investment Market (“AIM”) of the London Stock Exchange (“LSE”) and is thus subject to the AIM Rules.

4.  The applicant has obtained a prior order from Mr Justice To on 6 January 2012 to hold its 4^th AGM on 20 January 2012 out of time.  It was for the calendar year of 2011.

5.  The financial year end of the applicant is 30 June. Pursuant to sections 111 and 122(1A) of the Ordinance, Article 155(C) of the applicant’s Articles of Association and Rule 19 of the AIM Rules, the applicant must hold its 5^th AGM on or before 30 December 2012; and the AGM notice and the profit and loss accounts (“the annual report”) must be issued to its shareholders within 21 days, ie on or before 9 December 2012. 

6.  Rule 19 of the AIM Rules requires the annual report to be released and sent to the shareholders by 7 am on 30 December 2012.  The annual report was signed by the board of directors and sent to each of the shareholders on 2 January 2013 and uploaded to the applicant’s website. It would have been more than 21 days before the 5^th AGM if I grant the extension of time sought. 

7.  The shareholders were not denied timely information of the finance of the applicant.  There would only be a postponement of the AGM at which the financial statements would be formally received and considered by the shareholders.  The 1^st factor has been satisfied.

8.  The reason the annual report could not be prepared on time was that the applicant and its former auditors had a dispute over audit fees and the scope of the engagement for the 2011 audit.  It was only on 5 October 2012, ie 3 months after the end of the financial year, that new auditors were appointed.  The former auditors had withheld material documents and so transition to the new auditors was impeded.  It also took time for the new auditors to settle in and prepare the audited accounts. I accept the explanation.  The delay was not deliberate.  To the contrary, the applicant has been trying to comply with the obligation to prepare the annual report.  The 2^nd factor has been satisfied.

9.  This is the 2^nd application of its kind made by the applicant.  The applicant’s Finance Manager deposed to the fact that the board recognized the importance of strong corporate governance, underwent a re-organization and made some key appointments, which included experienced accountants in the senior management.  The board is well aware of its obligations under the Ordinance and will comply with them in the future.  I accept the evidence.  The 3^rd factor has been satisfied.  The applicant is, however, warned not to take this kind of application lightly.

10.  I therefore grant an order that the 5^th AGM be held on 6 February 2013 and that the period for laying the accounts for the year ended 30 June 2012 before an AGM be extended to a period expiring on 6 February 2013 as well.

11.  I thank Mr Chin for his assistance.