SASCO INTERNATIONAL, LTD v. SASCO ASIA, LTD

HCMP 3217/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3217 OF 2013

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J U D G M E N T

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1.  I have before me two originating summonses issued by the shareholder of the respondent company for orders under section 111 and 122 of the Companies Ordinance. The application is straightforward and I do not need to go into the relevant facts in any great detail. However, the application does raise a highly technical point.

2.  The company was incorporated on 5 April 2012.  For reasons which had to do with changes of directors of the company, the company was not able to finalise its audited financial accounts for its first accounting period, which ended on 31 December 2012, before December 2013 when it held a paper annual general meeting.  As a consequence, the company failed to comply with section 111 by virtue of not holding its first annual general meeting within 18 months of the date of its incorporation, or section 122 which requires a financial statement put before a company in annual general meeting to relate to a financial period ending not more than nine months before the date of the meeting. 

3.  As the simple facts suggest, this is a particularly benign case and the directors are behaving responsibly in trying to regulate what is a technical breach of the relevant sections.

4.  Mr Lau, who appeared for the applicant, submitted that although it might initially appear surprising, it was necessary to remedy the breach of section 111, for the court to grant orders which extended time for convening an annual general meeting for the calendar year 2012 and also for the calendar year 2013. I initially queried whether it was necessary for an order to be granted in respect of the calendar year 2013 because it seemed initially to me that if I granted an order which cured the failure to convene an annual general meeting within 18 months of the date of incorporation of the company, it necessarily followed that it was not necessary for there to have been an annual general meeting in both 2012 and 2013.  Mr Lau submitted, however, that the second paragraph of section 111(1) contains a proviso.  It reads as follows:

“Provided that, so long as the company holds its first annual general meeting within 18 months of its incorporation, it need not hold it in the year of its incorporation or in the following year.”

Mr Lau submitted that the better view is that if the proviso is not taken advantage of, the result is that any application to cure a breach of section 111 should proceed on the basis that the company was required to hold an annual general meeting in the calendar year of its incorporation and in the following calendar year. 

5.  On balance, this does seem to me to be the better view.  As a result, the order that the applicant seeks is the appropriate order and I will grant an order in those terms.