RE CWT INTERNATIONAL LTD

HCMP 1000/2023

[2023] HKCFI 2033

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1000 OF 2023

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JUDGMENT

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1.  This is the ex parte Originating Summons filed on 28 June 2023 by CWT International Ltd (“CWT”) for extension of time to hold its AGM for the financial year ended 31 December 2022 (“2023 AGM”) and to lay the reporting documents at the 2023 AGM pursuant to ss.431(1)(b)(i) and 610(5) of the Companies Ordinance, Cap 622.

2.  CWT is a listed Hong Kong company. The 2023 AGM, with the laying of the reporting documents, was due to be held by 30 June 2023. It was not held due to issues raised by CWT’s auditors, KPMG, in March 2023 in the course of conducting the annual audit of the consolidated financial statements of CWT and its subsidiaries (“Group”) for the financial year ended 31 December 2022.

3.  In April 2023, an Independent Investigation Committee comprised of all the independent non-executive directors of CWT was set up and Grant Thornton Advisory Services Ltd was engaged to conduct an independent investigation over the issues identified by KPMG.

4.  The unaudited consolidated interim results of the Group for the 6 months ended 30 June 2022 were published in August 2022. The issues raised by KPMG were the subject matters of announcement by CWT dated 31 March 2023. Trading of CWT’s shares has been suspended since 3 April 2023 pending the publication of the 2022 final results. There were a number of other announcements made by CWT with the aim to informing its shareholders and interested parties of the progress of the investigation and other developments.

5.  As of the date of the latest affirmation filed by CWT, 27 July 2023, the Investigation of Grant Thornton has not been concluded and consequently the audit exercise of KPMG cannot be completed. Hence, the need for this application.

6.  The applicable principles are trite: see Wong Michelle Yatyee v Goldbond Group Holdings Ltd [2021] HKCFI 1129, [25].

7.  On the evidence before the court, I do have misgivings on the progress of the investigation and the lack of a clear picture over the same. However, on a fine balance, it appears that CWT has done what it can to inform its shareholders of the financial position of the Group and the shareholders are kept informed as best CWT can. There is no suggestion in the evidence that the shareholders have or will suffer prejudice by reason of the non-compliance in question.

8.  The delay caused by the investigation is unexpected. I accept that the default in question is inadvertent.

9.  CWT has no history of non-compliance in respect of the holding of AGM or the laying of reporting documents at AGM. There is no reason to believe that CWT would not comply with these obligations in the future.

10.  In the premises, I grant the order sought in the draft order before the court with amendments to extend the period for holding the 2023 AGM and the laying of reporting documents thereat to 31 December 2023.

11.  It should be made clear that in the event that the 2023 AGM is not held by 31 December 2023 CWT can expect the Court to require cogent and detailed evidence (on relevant matters) to justify any further extension of time.