TOP PEACE INTERNATIONAL INDUSTRIAL LTD v. C.B.S. INVESTMENT LTD AND ANOTHER

HCMP 1651/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1651 OF 2007

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D E C I S I O N

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1.  This is an originating summons to rectify the register of members of C.B.S. Investment Limited (“the Company”) under section 100 of the Companies Ordinance, Cap. 32 and to convene a general meeting of the Company to appoint directors pursuant to section 114B.

2.  The applicant is Top Peace International Industrial Limited.

3.  The matter arose in this way.

4.  The Company was incorporated on 31 July 1987 with a nominal capital of $10,000 divided into 10,000 shares of $1 each.  Only 2 shares were issued and credited as fully paid up.  They are held by Tang Pok Man (“Tang”) and Chan Siu Ying Jo (“Chan”).  Chan is the 2^nd respondent in these proceedings, the Company is the 1^st respondent.  Tang and Good Concept Enterprises Limited (“Good Concept”) were appointed directors.  The latest annual return was filed on 3 August 1998.

5.  On 21 June 2001, Tang was adjudged bankrupt and the Official Receiver was appointed his trustee in bankruptcy.  On 19 August 2005, Good Concept was dissolved under section 291(6).  The bankruptcy of Tang and the dissolution of Good Concept left the Company without officers to run the Company.

6.  The Company owns a property at Shop 20 on 1^st floor, Mirador Mansion, No. 58 Nathan Road, Kowloon.  It is presently unoccupied and is producing no rental income.  The property is encumbered by various judgments and orders.

7.  On 10 September 2004, the Registrar of Companies published a notice under section 291(5) in the gazette, stating that at the expiration of three months from the notice, the name of the Company would be struck off the register of companies and be dissolved.

8.  The applicant believes there are potential tenants interested in renting the property.  An associated company of the applicant runs a travel agency business at a shop directly below the property and has been looking for shop space nearby to expand its business.  On 11 September 2006, the applicant acquired for good consideration one share in the Company registered in the name of Tang from the Official Receiver.  At the request of the applicant, the Registrar of Companies withheld action to strike off the Company.

9.  Being the beneficial owner of 50% of the issued shares in the Company, the applicant would like to restore the board of directors so that the Company could function and the rental potential of the property realised, and generate income for the benefit of the shareholders and creditors.

10.  The applicant has attempted to locate the register of members, the common seal, the rubber stamp, the share certificates and all relevant documents regarding the Company by writing to the Company, the Registrar of Companies, Chan, the Official Receiver, and the company that was responsible for filing the latest annual return.  No response was received.

11.  On 1 August 2007, the applicant placed an advertisement in a local newspaper requesting Chan to contact the applicant or its solicitors regarding the Company.  There was no response.

12.  Despite the legal entitlement of the applicant to be registered in the register of members, it is not possible to do so without an order of the court.

13.  Under the articles of association, the quorum of general meeting is two members and the quorum of directors’ meeting is two directors.  It is also provided that the office of a director shall be vacated if he should become bankrupt.

14.  By reason of Tang’s bankruptcy, no general meeting or directors’ meeting has been validly held ever since June 2001.

15.  The applicant wishes to convene a general meeting so that two directors might be appointed and the Company could effectively function.

16.  The originating summons was served on the Company at its registered office, and on the 2^nd respondent at the last known address in the annual return filed in August 1998.  None of the respondents have filed an acknowledgement of service.

17.  The court has jurisdiction under section 100 to rectify the register of members.  There is no doubt that the applicant has locus to apply under this provision as a “person aggrieved”.  I am satisfied that the applicant is entitled to be registered as a member, having acquired Tang’s share from his trustee in bankruptcy.  This would be an appropriate case to exercise my discretion to order rectification of the register.

18.  The register of members cannot be located despite the exercise of reasonable efforts by the applicant.  For all intents and purposes, it may be regarded as lost.  In this situation, the new register of members, which is blank, may be rectified by inserting the names of the shareholders, see the decision of Vinelott J in In re Data Express Limited on 7 April 1987, reported in The Times on 27 April 1987.

19.  I make the following orders pursuant to section 100:

(1)	the new blank register of members be rectified by inserting the names of the shareholders as follows:
	(i)	the name of the applicant as the holder of one of the two issued shares; and
	(ii)	the name of the 2nd respondent as the holder of the other issued share;
(2)	the Company is to issue forthwith and deliver to the applicant or its nominee a share certificate in respect of the said one share in the Company;
(3)	the applicant be authorised to rectify the register of members for carrying the order into effect;
(4)	a declaration be made that the share certificate issued by the Company held in the name of Tang is null and void; and
(5)	notice of such rectification be given to the Registrar of Companies.

20.  I am also satisfied that it would be appropriate to order a general meeting of the Company to be convened.  It is clearly impracticable for a meeting to be called without the intervention by the court.  The meeting would allow the Company to appoint directors and to effect a change to article 23 of the articles of association so that the quorum for general meetings in future would be one member instead of two.

21. I make the following orders under section 114B:

(1)	the applicant be at liberty to convene a meeting of the Company for the purpose of considering and if thought fit passing the resolutions set out in the schedule to the originating summons; and
(2)	one member of the Company present in person or by proxy at the said meeting shall constitute a sufficient quorum.

22. I give liberty to apply generally in respect of the orders made above.  I order the costs of this application be paid by the Company to the applicant.