RE SEAWILH LTD

HCMP 929/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 929 OF 2008

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REASONS   FOR   JUDGMENT

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1.  This petition was presented by Seawilh Limited (“the Company”) seeking an order for confirmation of the proposed reduction of its share capital.

2.  The Company was incorporated on 24 December 2002 under its former name, which was changed to its present name in May 2003.  Its present authorised capital is HK$7,800,000.00 divided into 7.8 million ordinary shares of HK$1.00 each, all of which have been issued and were fully paid up.  All the shares are held equally by two members, Seabulk India Pvt. Limited and Wilh. Wilhelmsen (Hong Kong) Limited.

3.  Since its incorporation, the Company has conducted business connected with the acquisition of vessels and the conversion of such vessels into transhippers for resale purpose.  The last business transaction conducted by the Company was completed in 2005 and it has since remained dormant.

4.  As there is no business transaction in the pipeline, the directors are of the view that the issued and paid-up capital is in excess of the wants of the Company and can no longer be usefully employed in its business.  Accordingly, a special resolution was passed on 22 April 2008 at an extraordinary general meeting of the Company, that pursuant to article 52 of the articles of association the issued and paid-up capital be reduced to HK$2.00 divided into two ordinary shares of HK$1.00 each by returning to the shareholders HK$7,799,998.00 of the paid-up capital by way of cancelling the debts to the extent of the same amount owed by the shareholders to the Company.

5.  According to the latest audited accounts, as at 31 December 2007, the Company had cash and bank balances of approximately US$124,169.00 and had incurred liabilities of approximately US$56,087.00.  The liabilities consisted of accounts payable and accrued charges, a breakdown of which was provided in the evidence filed by the Company.

6.  Other than the cash and bank balances, the only other substantial asset of the Company consisted of loans to shareholders, which stood at US$1,190,000.00 as at 31 December 2007.

7.  There is also produced the management accounts of the Company as at 31 October 2008.  There was no change in the loans to shareholders, whilst cash and bank balances were reduced to US$67,497.00.  Liabilities were reduced to US$7,846.00, which was largely made up of audit fee, tax fee and professional fee due to its solicitors.

8.  The proposed manner in which paid-up capital is to be returned to the shareholders does not involve utilisation of the cash and bank balances.  The shareholders’ loans, which are owed by both shareholders in equal proportions, would be more than sufficient to cover the amount of the paid-up capital proposed to be returned to each shareholder.  The capital of US$500,000.00 to be returned to each would be repaid by setting off the same against the respective loans to them.  After netting off the total sum of US$1 million, there would still be a balance of US$190,000 being loans to shareholders.  The Company is apparently able to pay all its liabilities in hand from the cash and bank balances, with a comfortable margin to spare, so creditors’ interest should not be affected or prejudiced by the proposed reduction of capital.

9.  At the hearing of the summons for directions on 22 January 2009, an order was made that section 59(2) of the Companies Ordinance, Cap. 32 shall not apply as regards any class of creditors and that the settlement of a list of creditors is dispensed with.  Directions given for the advertisement of a notice of the presentation of the petition have been complied with.

10.  The Company has adduced the latest management accounts as at 31 January 2009.  There is no material change in its financial position.

11.  The shareholders are treated equitably in the proposed reduction.  They have made an informed decision in approving the reduction.  There is a discernible purpose for this exercise and I am satisfied the interest of creditors would be safeguarded.  I have therefore confirmed the proposed reduction of capital and made an order in terms of the draft submitted.