TANG WAI TING SAMSON AND OTHERS v. CENTRAL PACIFIC INTERNATIONAL GROUP LTD

HCMP 2862/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2862 OF 2013

____________

____________

_________________________________

REASONS FOR DECISION

_________________________________

1. On 2 December 2013 I granted the application herein and made an order extending time pursuant to s 122(1B) of the Companies Ordinance to lay the financial statements of Central Pacific International Group Ltd (“the company”) before the company in general meeting. These are the reasons for my decision.

2. The company was incorporated in Hong Kong on 14 January 2000.  Since 9 February 2000, all the issued shares of the company have been held by the 1^st and 2^nd applicants who are husband and wife and who were also the only two directors of the company until 1 February 2012 when the 3^rd applicant was appointed as an additional director.

3. The company was dormant during the first few years of its incorporation.  It started to carry on business in 2004 in the design, manufacture and trading of GPS navigation system products, but reported a loss for that year.  It began to have a profit in 2005.  The evidence shows that the 1^st and 2^nd applicants did not know that the company had to prepare financial statements which had to be laid before the company in general meeting even though it was dormant in the first few years of its existence.  They genuinely believed to the contrary.

4. Once the company started to have a profit, the applicants instructed the auditors to prepare the financial statements for the year ended 31 December 2005, whereupon the financial statements for the previous years of 2001 to 2004 were also prepared and eventually signed off on 28 October 2006.  The financial statements for the year 2005 were ready by 15 August 2006, ie within 9 months of the year end date but they were not laid before the company in general meeting until 29 October 2006 as the applicants were not aware of the requirement of s 122.  The financial statements for 2006 were properly laid pursuant to s 122.  As for the financial statements for the year 2007, they were laid before the annual general meeting of the company on 2 October 2008 – just two days later than the deadline specified in s 122(1A). 

5. To rectify such non-compliance, application was therefore made to the court under s 122(1B) to extend time for the 2001, 2002, 2003, 2004, 2005 and 2007 accounts to be laid before the company in general meeting to the dates when they had in fact been laid.

6. The 1^st and 2^nd applicants who were the only two shareholders of the company at the material times – indeed its only two directors – have confirmed that they were fully aware of the financial position of the company.  It seemed to me that in keeping with the approach of the court in previous cases, this case might properly be regarded as one in which the non-compliance was inadvertent.  The failure was relatively inconsequential.  The audited financial statements that have since been prepared for the years 2001, 2002 and 2003 show that the company was indeed dormant during those years.  In fact the company could have passed a special resolution of dormancy and delivered it to the Companies Registrar following which the company would have been exempt from the obligation to comply with the requirements of, inter alia, s 122: see s 344A of the Ordinance.  I was also satisfied that measures had been put in place to ensure future compliance with s 122 of the Companies Ordinance.  In these circumstances I considered it an appropriate case in which to make the order sought.