GOLDEN PLANET INVESTMENTS LTD v. TIANSHAN GOLD SECURITIES (HONG KONG) LTD

HCMP 2375/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2375 OF 2013

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J U D G M E N T

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1.  This is an application for relief under ss 111(2) and 122(1B) of the Companies Ordinance, Cap 32 arising from the failure of the directors of Tianshan Gold Securities (Hong Kong) Ltd (“Company”) to discharge their statutory duties in relation to proper corporate governance.

2.  The Company was incorporated in April 2008.  It has only 1 issued share of HK$1 in nominal value.  That 1 share went through three transfers in June 2008, November 2009 and June 2012 and is now held by the applicant.  There were originally 2 directors of the Company.  They ceased to be so in January and November 2009.  In November 2009, two new directors, Mr X Ke and Mr Chen, were appointed.  In January 2010 a third director, Ms L Ke, was appointed.  They remain the only directors of the Company to date.

3.  The Company is an investment holding vehicle and does not engage in any active business.

4.  Recently, in the course of a due diligence exercise carried out for the purpose of an intended listing of the ultimate holding company of the Company, various non-compliances with statutory duties have been discovered:

(1)   No AGM was held for the Company in the year 2012;

(2)   The audited financial statements of the Company (including its profit and loss account and balance sheet) for the period from 16 April 2008 (dated of incorporation) to 30 June 2009 were laid before the Company at an EGM held on 5 November 2009 instead of its AGM for 2009 held on 30 September 2009;

(3)   The audited financial statements of the Company (including the profit and loss accounts and balance sheets) for (a) the period from 1 July 2009 to 31 December 2010 and (b) the year ended 31 December 2011 were only laid before the Company by way of written resolution of the sole shareholder of the Company dated 26 August 2013 passed in lieu of the AGM for 2013.  Those statements should have been laid before the Company in its AGMs for the years 2010 to 2012.  Further, the profit and loss accounts and balance sheets in question were not made up to a date falling not more than 9 months before 26 August 2013.

5.  Under ss 111(2) and 122(1B) of the Ordinance, the court has a wide power to substitute the relevant statutory requirements so as to allow the infringements to be remedied.  The principles upon which such power should be exercised is well-established – see Re Sanliuyidu (Hong Kong) Sports Goods Co Ltd [2009] 4 HKLRD 708 at §5.

6.  The infringements have been explained in an affirmation of Mr X Ke filed on 16 September 2013.  I am satisfied that the Company has only 1 shareholder throughout its corporate history, the shareholder has always been represented on the board of directors, it was at all material times aware of the Company’s financial position and has not suffered any prejudice by reason of the non-compliances.

7.  As regards the reason for non-compliance, it is attributable to the ignorance of the directors and their reliance on the company secretary.  I regret to say that such reasons are too familiar to the court.  With a very young company and in light of the modern ethos on corporate governance, such reasons can only become less convincing.  I say again that people who assume the office of a director must recognise the responsibilities which come with the same.

8.  However, I accept with the evidence before the court that the infringements were inadvertent.

9.  I also accept the evidence that with this experience for the directors, they are now alive to their corporate duties and it is unlikely for them to fail such duties again in the future.  Nevertheless, I believe that these matters should be brought to the attention of The Stock Exchange of Hong Kong Ltd.

10.  In the premises, I make an order in terms of paras 1 to 4 of the originating summons filed on 16 September 2013 as amended.  I make no order as to costs.  In addition, there shall be an undertaking in terms similar to those set out in para 6 of the judgment in Head Park Group Ltd v Asiafair Intl Ltd, unrep, HCMP 1435/2010, 31 August 2010.