RE GLORY LINE CONSULTANTS LTD

HCMP 256/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 256 OF 2005

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D E C I S I O N

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1.  This is an originating summons issued ex parte by the liquidator of Glory Line Consultants Limited (“the Company”), one Ho Pak Ming, under section 255(3) of the Companies Ordinance, Cap. 32.

2.  Mr Ho seeks an order that all further proceedings in the winding up of the Company be stayed.

3.  Mr Ho is also a director and shareholder of the Company.  The reason for making the application is that at all material times, it was the intention of all the directors and shareholders of the Company that the Company should be wound up by members’ voluntary winding up, but due to a procedural slip, the proceedings have been converted to a creditors’ voluntary winding up.

4.  The Company is a shelf company acquired in 1993 by Mr Ho, his wife and another couple as a vehicle for property investment.  Only 4 ordinary shares of HK$1.00 each were issued to the four individuals.  Mr Ho and his wife are the directors.  The only business of the Company was to acquire and hold a property in Sands Street, Hong Kong from November 1994 to July 1997.  All the money for paying the deposit and mortgage loan repayment instalments was provided by way of shareholders’ loans to the Company.  In July 1997, the property was sold and the outstanding mortgage loan fully repaid, as appeared from a memorandum of satisfaction registered in the Companies Registry. The net proceeds of sale were applied to repay the shareholders’ loans and outgoings and liabilities of the Company in full.  Thereafter, the Company has no other assets and liabilities.

5.  In a special resolution dated 1 August 1999, the shareholders resolved that the Company be wound up voluntarily and that Mr Ho be appointed liquidator.  The special resolution was filed with the Companies Registry on 5 August 1999.  On 4 August 1999, Mr Ho and his wife as the directors made a declaration of solvency declaring that the Company would be able to pay its debts in full within a period not exceeding 12 months from the commencement of the winding up, and appended thereto a statement of the Company’s assets and liabilities as at 1 August 1999.  The declaration of solvency was filed with the Companies Registry on 5 August 1999.

6.  By a letter of the Companies Registry to the Company dated 9 August 1999, it was pointed out that by virtue of section 233(2) a declaration of insolvency shall have no effect unless made within 5 weeks immediately preceding the date of the passing of the special resolution for winding up or on that date but before the passing of the resolution.  As the declaration of solvency was made after the special resolution, the winding up of the Company had to proceed as a creditors’ voluntary winding up, and the provisions of sections 241 to 248 would apply.  The Companies Registry also pointed out that as an alternative, the Company might apply to court to stay the creditors’ voluntary winding up under section 255(3) and commence a members’ voluntary winding up afresh.

7.  The matter was left in abeyance for over 5 years due to ‘personal reasons’ not explained in the supporting affirmation.  However, Mr Ho confirmed that since the commencement of the winding up, the Company has not acquired any assets or incurred any liability and that all costs and expenses for the winding up, including the costs of these proceedings, are paid by him personally, and he has waived all his rights to claim reimbursement from the Company.

8.  It is regrettable that the liquidator should have done nothing for so long either to proceed with the creditors’ voluntary winding up or seek a stay of the creditors’ voluntary winding up so as to commence afresh a members’ voluntary winding up.

9.  I do not think in the present circumstances anyone would be prejudiced, as there are no creditors and I note from the statement of assets and liabilities of the Company as at 1 August 1999 that the only assets of the Company are cash of HK$500.00, financed by the share capital of HK$4.00 and a director’s loan of the balance.

10.  I therefore make the following orders:

(1)	all further proceedings in the winding up of the Company be stayed;
(2)	the Company is to deliver a sealed copy of this order to the Companies Registry for registration within 7 days hereof; and
(3)	there be no order as to costs for this application.