XFMRS HOLDINGS, INC v. REGISTRAR OF COMPANIES AND OTHERS

HCMP 1088/2021

[2021] HKCFI 3706

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1088 OF 2021

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REASONS FOR DECISION

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1.  By an originating summons dated 3 August 2021, the Applicant, XFMRS, Holdings, Inc, seeks an order under section 42 of the Companies Ordinance in relation to 17 amended annual returns of XFMRS Limited (“the Company”).  These 17 annual returns were for the years 2004 to 2020, the bulk of which were filed on 17 March 2021 (but a number of which were filed on 3 May 2021) ("the Subject Documents").

2.  At the hearing, the Applicant was represented by Counsel Ms Jasmine Cheung. The attendance of the 1^st, 3^rd and 4^th Respondents was excused.

3.  The Applicant seeks orders that the offending annual returns be removed from the Companies Register.  The reason is that the Subject Documents were unauthorised and filed unilaterally by the 3rd Respondent.  It is said that the Subject Documents create the false appearance that since 2004, the Company has been 50 per cent owned by the Applicant, 25 per cent owned by the 3rd Respondent and 25 per cent owned by the 4th Respondent.  It is said that this is not the correct state of affairs. 

4.  The relevant principles in relation to applications of this sort are well settled:

(1)  Reference may made to Re China Nice Education Research Publishing Investment and Management Company Limited [2016] 3 HKLRD 525 at §§11-18.

(2)  Under s.42(1) of the Companies Ordinance, to invoke the Court’s power to order rectification or removal, (a) the Court should be satisfied that the information derives from anything that is invalid or ineffective, or has been done without the company’s authority, or (b) is factually inaccurate or derived from anything that is factually inaccurate or forged.

(3)  Removal as opposed to rectification is only ordered if the two additional conditions set out at s.42(4) of the Companies Ordinance are satisfied.

(4)  First, the Court must be satisfied that even if a document showing the rectification in question is registered, the continuing presence of the information on the Companies Register will cause material damage to the company. The threshold is fairly low and is satisfied where there is a prospect that damage may be caused to the company, and the Court is entitled to consider a wide range of factors: see Forever Up Holdings Ltd v Tong Yan Wa [2019] 5 HKC 478 at §16.

(5)  Second, the Court must be satisfied that the company’s interest in removing the information outweighs the interest of other persons in the information continuing to appear on the Companies Register.

5.  Having reviewed the relevant authorities as helpfully summarised by Ms Cheung, I am satisfied, firstly, that the continuing presence of the information on the Companies Register will cause material damage to the Company.  I am also satisfied, secondly, that the Company’s interest in removing the information outweighs the interest of other persons in the information continuing to appear on the Companies Register. The 3^rd and 4^th Respondents had, in seeking to be excused from attending the hearing, also indicated that they consented to the orders being made.

6.  Accordingly, I have made an order in terms of the draft order as handed up by Ms Cheung at the hearing, with costs summarily assessed at $150,000 to be paid by the 3rd and 4th Respondents to the Applicant.

7.  I thank counsel for her able assistance.