LEUNG CHI KIN JOSEPH AND ANOTHER v. MAJOR AIM LTD

HCMP 1325/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1325 OF 2013

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J U D G M E N T

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1.  There are before me two originating summonses relating to two companies respectively, namely, Major Aim Limited and Major Cellar Company Limited.

2.  Major Aim Limited was incorporated on 22 October 2009.  The applicants in relation to that company, Leung Chi-kin, Joseph and Shum Man‑kit, are equal shareholders of the company, although Leung holds the shares registered in his name on trust for Major Cellar. 

3.  Major Cellar is co-owned by Leung and Cheung Chun-to as to 49 per cent and 51 per cent respectively, who are the applicants in relation to Major Cellar Company Limited.

4.  For Major Aim Limited, written resolutions were passed on 30 December 2010, 30 December 2011 and 10 November 2012, in lieu of AGMs.

5.  Section 111(6) of the Companies Ordinance provides:

“A company is not required to hold a meeting in accordance with subsection (1) if-

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(b) a copy of each document (including any accounts or records) which under this Ordinance would be required to be laid before the company at the meeting or otherwise produced at the meeting is provided to each member of the company-

(i) by whom or on whose behalf the resolutions or resolutions, as the case may be, is or are required to be signed under that section; and

(ii)   before or at the same time as the resolution or resolutions, as the case may be, is or are provided to the member.”

6.  However, in the case of Major Aim Limited, the accounts were not provided to each member of the company as required.

7.  Moreover, the accounts for the period from date of incorporation to 31 March 2011 were not laid before the company in general meeting within the prescribed period in section 122 of the Ordinance.

8.  The applicants who are the shareholders now seek orders to rectify the non-compliance with the statute.

9.  Major Cellar Company Limited was incorporated on 25 September 2009.  However, the accounts for the period from incorporation to 31 March 2011 and for the financial year ended 31 March 2012 were not prepared until January 2012.  As a result, section 122 was not complied with.  Further, the written resolutions in lieu of AGMs were signed without copies of the accounts having been provided to the members of the company as required by section 111(6).  Hence the present application by the shareholders to regularise the non-compliance with the statute.

10.  The cases show that the court takes into account, in deciding whether to exercise the discretionary power under sections 111 and 122, whether the members were aware of the financial position of the company in question, whether the non-compliance was inadvertent, and whether the court is satisfied that there will be proper compliance with the relevant statutory requirements in future.

11.  In the present case, I take account of the fact that the members of the companies were fully conversant with the position of the companies and not prejudiced.  The non-compliance appears to have been inadvertent and caused in part by the directors’ misplaced reliance on the persons or firms who were responsible for providing the secretarial and auditing services.

12.  The applicants, who are also directors of the companies, also assure the court that they will ensure future compliance with the relevant statutory requirements.

13.  An undertaking has been given that the third director of Major Cellar, who is not an applicant in these proceedings and who has thus far not filed an affidavit, will file an affidavit to give similar assurance to the court.

14.  In these circumstances, I am satisfied that it is an appropriate case in which to exercise my discretion under section 111 and section 122 and I make an order accordingly.