CAI ZHENRONG v. THE STOCK EXCHANGE OF HONG KONG LTD

HCAL 2337/2020

[2021] HKCFI 1899

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 2337 OF 2020

________________________

________________

______________

D E C I S I O N

______________

A. Introduction

1.  This is another case in which a judicial review challenge is sought to be brought against a decision of the Listing Review Committee (“LRC”) of the putative respondent, The Stock Exchange of Hong Kong (“Exchange”).

2.  The particular decision the subject of the intended challenge in this case is the LRC’s decision dated 16 November 2020 (“LRC Decision”), in which the LRC upheld the decision (“LC Decision”) of the Listing Committee to cancel the listing of Blockchain Group Company Limited (in liquidation) (“Company”) under Rule 6.01A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”).

3.  The Applicant is a shareholder holding (directly and indirectly) an aggregate of 25.13% of the Company’s shares.  The Applicant’s Notice of Application for Leave to Apply for Judicial Review (“Form 86”) was filed by the Applicant on 30 November 2020.

4.  On the same day, Chow J (as Chow JA then was) granted an ex parte interim injunction prohibiting the Exchange from acting upon and/or taking any steps to carry out the LRC Decision, until a fixed return date on 4 December 2020.  The return date hearing was vacated, because the Exchange gave an undertaking not to take any steps to cancel the listing of the Company until the latter of the determination of the Applicant’s application for leave to apply for judicial review, or the determination of the substantive application if leave were granted.

5.  Along with various directions in relation to the filing of evidence, Chow J ordered an inter partes oral hearing of the application for leave to apply for judicial review.  That hearing was fixed to be heard by me on 30 June 2021.

6.  At the hearing, the Applicant was represented by Mr Tony Ko of Counsel.  The Exchange was represented by Mr Victor Dawes SC leading Mr Joshua Chan of Counsel.

7.  At the beginning of the hearing, Mr Ko advanced an adjournment application, though argument on it was addressed as part of the overall submissions.  I dismissed the adjournment application, for reasons which I said I would hand down later, within my reserved decision on the actual application for leave to apply for judicial review.

8.  This is my Decision.  For the reasons which follow, I refuse the Applicant’s application for leave to apply for judicial review.

9.  This Decision is being handed down at the same time as my decision on a ‘rolled-up’ hearing in HCAL 3809/2019, [2021] HKCFI 1883. This is because of some degree of overlap or inter-relationship in the matters raised by and falling for consideration in the two sets of proceedings.

B.     Essential Background

10.  The Company has been listed on the Main Board of the Exchange since 30 August 2002.

11.  By order of Anthony Chan J made on 19 November 2018, the Company was wound up on the ground of insolvency.  Liquidators were appointed on 21 November 2018, although they were subsequently replaced by different Liquidators seven months later, on 4 June 2019, following the discharge of the original Regulating Order.

12.  Also on 19 November 2018, the Company’s shares were suspended from trading.  Hence, in accordance with the regulatory framework – as to which, see below – the Company was required to resume trading within 18 months, namely by 19 May 2020 (“Resumption Deadline”).

13.  On 22 November 2018 and 3 April 2019, the Exchange set certain resumption guidance (“Resumption Guidance”) for the Company being:

 (1)  publish all outstanding financial results and address all audit modifications (“RG1”);

 (2)  demonstrate sufficiency of operations and assets as required by Rule 13.24 (“RG2”);

 (3)  have the winding up petition against it withdrawn or dismissed and the appointment of liquidators discharged (“RG3”); and

 (4)  inform the market of all material information for the Company’s shareholders and other investors to appraise its and the Group’s position (“RG4”).

14.  On 18 May 2020, namely only one day before the 18-month Resumption Deadline, the Company’s legal representatives submitted what has understandably been described as a ‘last-minute’ resumption proposal.  That proposal involved:

 (1)  an intended capital restructuring (“Restructuring”) involving (a) a scheme of arrangement, (b) a subscription of new shares by a new investor, (c) an open offer to existing shareholders, and (d) a capital reorganisation; and

 (2)  the continuation of the existing business after the Restructuring with key products comprising raw tea leaves and refined oolong tea.

15.  The Company said that it would be able to fulfil the Resumption Guidance upon completion of the Restructuring.  Amongst other things, it submitted in particular that:

 (1)  the outstanding annual results for the financial years 2018 and 2019 would be published in or around July 2020;

 (2)  the implementation of the Restructuring would restore the Group’s financial position; and

 (3)  the Liquidators would then be able to apply for a stay of the winding up proceedings against the Company, and the discharge of the Liquidators upon approval of the scheme of arrangement by creditors.

16.  Necessarily, given the undisputed failure to comply with the Resumption Guidance before the Resumption Deadline, the Company sought an extension of the remedial period to 31 December 2020.  The reason given for the requested extension was the outbreak of Covid-19 in Hong Kong and the PRC.

17.  On 12 June 2020, the Listing Committee made the LC Decision to cancel the Company’s listing under Rule 6.01A, on grounds including that (a) the Company had failed to fulfil the Resumption Guidance and resume trading in its securities by the Resumption Deadline, and (b) its situation did not fall within the exceptional circumstances in which an extension of time may be given, as it had not demonstrated that it had substantially implemented the steps leading to resumption of trading so as to provide sufficient certainty that it would resolve the substantive issues.

18.  As to each of part of the Resumption Guidance, the Listing Committee pointed out:

 (1)  RG1: The Company was yet to resolve the substantive regulatory issue about its continued failure to publish the outstanding financial statements since 2018 and address any audit qualifications, because:

 (a)  The basis or underlying assumptions for the Company’s claim that it would publish all outstanding financial results in July 2020 was unclear.  The Liquidators were still taking steps to ascertain the Company’s business affairs and financial position, and no comfort or assurance was given that the timeline would be met.

 (b)  Even if the outstanding results were published in July 2020, it remained unclear whether there might be other audit qualifications, whether they could be addressed and when.  Regarding the FY 2018 audit, a number of outstanding audit procedures remained to be performed. Regarding the FY 2019 audit, the Company did not provide any update on the progress.

 (c)  The intended capital restructuring designed to address the audit issue for FY 2018 was still preliminary, without certainty as to whether it would materialise and, if so, when.

 (2)  RG2: The Liquidators had not demonstrated that the Company had substantially implemented all relevant steps to re-comply with Rule 13.24.  The intended capital restructuring was still preliminary and subject to uncertainties.  Even if the capital restructuring were to proceed, it was still questionable whether the restructured Group would be able to comply with Rule 13.24.  It was also questionable whether the pro forma financial information provided truly and fairly reflected the proposed Restructured Group’s affairs and financial position.  Nor was there a credible (or any) profit forecast to support the viability and sustainability of the proposed restructured business.

 (3)  RG3: the proposed scheme of arrangement was still very preliminary, the terms of the scheme had yet to be fixed, and the amount of total indebtedness and the proceeds available to settle the debts had not been confirmed.  The impact of certain claims not covered by the scheme was uncertain.  The Liquidators had not demonstrated that the winding up order would be dismissed and that the Liquidators would be discharged within a short period of time or at all.

 (4)  RG4: Compliance with RG4 was subject to the Company’s disclosure demonstrating its fulfilment of all the other Resumption Guidance and compliance with the Listing Rules.  For the reasons already identified, RG4 had not been fulfilled.

19.  Following a review hearing on 28 October 2020, the LRC made the LRC Decision on 16 November 2020, upholding the LC Decision to cancel the Company’s listing under Rule 6.01A.  Though I shall return to more of the detail of the LRC Decision below, the LRC’s broad grounds were that (a) the Company had failed to fulfil all the resumption conditions even by the date of the LRC hearing, and it was unclear how and when those conditions would be fulfilled, and (b) the Company’s situation did not fall within exceptional circumstances justifying an extension of the remedial period in light of the range of issues that remained to be addressed and resolved as well as the length of the further extension sought to June 2021.

20.  By letter from the Exchange dated 17 November 2020, the Company was informed that its listing status would be cancelled with effect from 27 November 2020.

21.  As already pointed out, these proceedings were then commenced by the Applicant.  The Company itself has taken no steps to challenge the LRC Decision.

22.  Prior to the ex parte application on 30 November 2020, the Liquidators wrote to the Applicant’s solicitors informing them that, with the view of saving time and costs, the Liquidators did not intend to participate in the proceedings relating to the application for the interim injunction and the subsequent application for leave to apply for judicial review taken out by the Applicant.  The Liquidators did not say that they supported the application.  Further, though there was a reference to saving time and costs, the Liquidators did not say that they had no or insufficient funds, nor did they say that they would themselves have brought the application had they been in possession of more funds.  Yet further, and in line with the previous notification, the Liquidators have not sought to take part in the oral leave hearing, despite being served with all relevant materials.

C.     Regulatory Framework

C.1    Overview of the Exchange’s Role

23.  In light of the nature of the intended challenge to the LRC Decision in this case, it may be helpful to set out in some detail the key provisions of the Listing Rules, and the policy objectives underpinning the delisting framework.

24.  These relevant statutory provisions and regulatory rules, within which the delisting framework itself is to be found, have been considered in the recent decisions of Chow J (as he then was) in Bolina Holding Co Ltd (in liquidation) v Stock Exchange of Hong Kong [2021] HKCFI 460 at §§16-42, and by me in Brightoil Petroleum (Holdings) Ltd v The Stock Exchange of Hong Kong Ltd [2020] HKCFI 1601 at §§46-55, 66-71 and 76-80.  For present purposes, the relevant context and detailed principles can be identified as follows.

25.  The Exchange operates the stock market in Hong Kong pursuant to the Securities and Futures Ordinance Cap 571 (“SFO”), and acts as the frontline regulator of listed companies and their directors.

26.  Section 21 of the SFO imposes a duty on the Exchange to ensure, so far as reasonably practicable, an “orderly, informed and fair market”.  In discharging its duty, the Exchange is further required to act in the interest of the public, having particular regard to the interest of the investing public, and to ensure that the interest of the public prevails where it conflicts with the interest of the Exchange.

27.  Section 23 of the SFO empowers the Exchange to make rules for such matters as are necessary or desirable for the proper regulation and efficient operation of the stock market.  The Exchange is specifically authorised to make rules for, amongst other things, the cancellation and withdrawal of the listing of, and the suspension and resumption of dealings in, securities listed on the recognized stock market operated by the Exchange.

28.  The Listing Rules are made by the Exchange pursuant to section 23 of the SFO.  The Listing Rules impose requirements on listed companies and their directors to ensure that investors have and can maintain confidence in the market.  Each company listed on the Main Board of the Exchange must undertake to comply with the Listing Rules when the company submits its application for listing.

C.2    Suitability for Listing

29.  The Listing Rules provides that, in order to be listed on the Main Board of the Exchange, issuers must be suitable for listing (Rules 2.03 and 8.04).  The Listing Rules set out certain specific requirements which must be met in order for a new applicant to be qualified for listing.

30.  Suitability for listing is not, however, simply a matter of compliance with quantitative requirements; it also involves a qualitative assessment of the new applicant by the Exchange.  Thus, Rule 2.06 states:

Suitability for listing depends on many factors. Applicants for listing should appreciate that compliance with the Exchange Listing Rules may not of itself ensure an applicant’s suitability for listing. The Exchange retains a discretion to accept or reject applications and in reaching their decision will pay particular regard to the general principles outlined in rule 2.03. Prospective issuers (including listed issuers) are therefore encouraged to contact the Exchange to seek informal and confidential guidance as to the eligibility of a proposed application for listing at the earliest possible opportunity.

31.  Once a new applicant is listed and becomes a listed issuer, it must continue to be suitable for listing in order to maintain its listing status, including by the operation of a substantial business.  In particular, Rule 13.24(1) provides:

An issuer shall carry out, directly or indirectly, a business with a sufficient level of operations and assets of sufficient value to support its operations to warrant the continued listing of the issuer’s securities.

Note: Rule 13.24(1) is a qualitative test. The Exchange may consider an issuer to have failed to comply with the rule in situations where, for example, the Exchange considers that the issuer does not have a business that has substance and/or that is viable and sustainable.

The Exchange will make an assessment based on specific facts and circumstances of individual issuers…

Where the Exchange raises concerns with an issuer about its compliance with the rule, the onus is on the issuer to provide information to address the Exchange’s concerns and demonstrate its compliance with the rule.

32.  According to Ms Bonnie Yiting Chan (“Ms Chan”), Head of Listing of the Exchange, who has filed evidence in these proceedings, if an issuer is insolvent and has been placed into liquidation by the court, the intention is that the issuer will be delisted.  This, amongst other things, would preserve the quality and reputation of the Main Board, which is essential to maintaining Hong Kong’s role as a leading financial centre.

C.3    Suspension of Trading under the Listing Rules

33.  Where the Exchange considers it necessary for the protection of investors or the maintenance of an orderly market, the Exchange is empowered by the Listing Rules to suspend trading in, and cancel the listing of, a listed issuer’s securities in such circumstances and subject to such conditions as the Exchange thinks fit.  The Exchange may also suspend trading in, and cancel the listing of, a listed issuer’s securities where the Exchange considers that the issuer does not carry on a business as required under Rule 13.24, or the issuer or its business is no longer suitable for listing.

34.  Rule 6.01 states as follows:

Listing is always granted subject to the condition that where the Exchange considers it necessary for the protection of the investor or the maintenance of an orderly market, it may at any time direct a trading halt or suspend dealings in any securities or cancel the listing of any securities in such circumstances and subject to such conditions as it thinks fit, whether requested by the issuer or not. The Exchange may also do so where:

(2)  the Exchange considers there are insufficient securities in the hands of the public (see rule 8.08(1)); or

(3)  the Exchange considers that the issuer does not carry on a business as required under rule 13.24; or

(4)  the Exchange considers that the issuer or its business is no longer suitable for listing.

35.  Rules 6.04 and 6.05 further provide that the procedure for lifting suspension will depend on the circumstances and the Exchange reserves the right to impose such conditions as it considers appropriate.  It is also stated as follows:

The continuation of a suspension for a prolonged period without the issuer taking adequate action to obtain restoration of listing may lead to the SEHK cancelling the listing.

C.4    Delisting of Long-Suspended Issuers

36.  In the period leading up to September 2017, prolonged suspensions of trading became a significant issue for the Exchange. The then delisting procedures did not facilitate prompt action to delist long-suspended issuers, with the consequence that there had built up a very large number of issuers whose shares had been suspended for more than a year, with no certainty as to when the suspension would be lifted or the issuer delisted (because, for example, the issuer’s financial position remained uncertain and the Exchange did not have a clear basis for delisting under Rule 6.01). This was thought to prevent proper functioning of the market, and to undermine the quality of the market and its reputation, as well as undermining the objective of maintaining a fair, orderly and informed market.

37.  In September 2017, the Exchange commenced a market consultation exercise on the introduction of a prescribed period for issuers to resolve issues which had led to a suspension and to satisfy any resumption conditions imposed by the Exchange, failing which the issuers would be delisted.  The purpose of the proposed rule amendments and the objectives of the consultation were set out in the “Consultation Paper – Delisting and Other Rule Amendments” published by the Exchange in September 2017:

5.  As at 30 June 2017, there were 56 issuers whose securities had been suspended for three months or more. They included 25 issuers that did not have sufficient operations or assets of sufficient value to meet the continued listing criteria (PN17 companies), 3 issuers that did not have sufficient public float, and 28 issuers that failed to announce financial results and/or inside information (a majority of which had alleged accounting irregularities or corporate misconduct issues). 40 issuers had been suspended for over a year.

6.  Whilst trading suspension gives an issuer the opportunity to remedy the issues causing the suspension with a view towards trading resumption, a prolonged suspension prevents the proper functioning of the market.

7.  In 2015, the Listing Committee reviewed the delisting policy and considered it necessary to adopt a more robust delisting policy in the interest of maintaining the reputation of the Hong Kong market. The existence of long suspended issuers in persistent breach of the Rules in a material manner, or suspected of illegal or improper activities, undermines the quality of our market and its reputation. A robust delisting policy with an effective delisting procedure will facilitate an orderly exit of poor quality issuers, incentivize suspended issuers to act promptly towards resumption and provide a deterrent effect against issuers committing material breaches of the Rules. This will also provide more certainty to the market on how the Exchange handles suspended issuers and brings its practice more in line with other major markets.

8.  This paper proposes Listing Rule amendments to improve the effectiveness of the delisting framework applicable to Main Board issuers and GEM issuers (Chapter 2)…

38.  After the consultation, the Exchange decided to implement the proposal (with minor modifications in response to market comments).  In particular, the Exchange resolved (a) to add a separate delisting criterion to allow the Exchange to delist an issuer after its continuous suspension for a prescribed period; and (b) to allow the Exchange to publish a delisting notice and give the issuer a period of time to remedy the issues or be delisted.  For issuers whose securities are listed on the Main Board, the prescribed period is 18 months.

39.  The Exchange’s rationale for the 18-month period (called the prescribed remedial period) for an issuer whose securities are listed on the Main Board to comply with the resumption conditions imposed by the Exchange, and the intention that the period would only be extended in exceptional circumstances, are explained in §§23-25 of the Exchange’s “Consultation Conclusions: Delisting and Other Rule Amendments” (“DORA ConsultationConclusions”) published on 25 May 2018:

23.  As noted in the Consultation Paper, the fixed period delisting criterion is aimed at delisting issuers which remain unable to resolve the issues requiring their suspensions after a continuous period of suspension. It would give suspended issuers a clear deadline, incentivizing them to look into the issues and to develop a viable action plan to ensure that it will have remedied the relevant issues to the Exchange’s satisfaction and resumed trading before the end of the prescribed fixed period.

24.  With this additional criterion, the Exchange will be able to delist an issuer where it does not have a clear basis to do so under MB Rule 6.01. This will provide certainty for the delisting process and address the issue of prolonged suspension in the interests of market quality and reputation, while reasonable opportunities are given to suspended issuers to take remedial actions with a view to resuming trading.

25.  The Listing Committee may only extend the prescribed fixed period in exceptional circumstances to ensure the effectiveness and credibility of the delisting framework and prevent undue delay of the delisting process. It may do so where an issuer has substantially implemented the steps that, it has shown with sufficient certainty, will lead to resumption but, due to factors outside its control, it becomes unable to meet its planned timeframe and requires a short extension of time to finalize the matters. Guidance on the circumstances when an extension of time may be given is set out in the new Guidance Letter on Long Suspension and Delisting, which is published together with this consultation conclusions paper.

40.  It was also considered appropriate that there may be cases where an issuer may be delisted, even though the listed issuer is taking steps to facilitate resumption (§28). 

41.  In the DORA Consultation Conclusions, the Exchange also considered a proposal that special arrangements should be made for an issuer in financial distress where a liquidator or provisional liquidator had been appointed by the court and was working on a resumption plan for the issuer, having regard to the fact that the liquidator was an officer of the court and could not fully control the time required for a restructuring process which was often complex and would likely involve local and/or foreign court proceedings.  The prescribed remedial period, it was argued, might not be sufficient to allow the successful completion of a scheme of arrangement (§18).  That proposal was, however, not adopted by the Exchange.

42.  The Exchange also made it clear that the new delisting framework was not intended to promote resumption of trading.  Instead, it was intended to be an effective delisting framework to enable the Exchange to meet its statutory obligation to maintain a fair, orderly and informed market for the trading of securities, by delisting issuers that no longer meet the continuing listing criteria in a timely manner, incentivizing suspended issuers to act promptly towards resumption and deterring issuers from committing material Rule breaches (see §28 of the DORA Consultation Conclusions).

43.  On 1 August 2018, the Exchange introduced Rule 6.01A(1).  It states as follows:

Without prejudice to its power under rule 6.01, the Exchange may cancel the listing of any securities that have been suspended from trading for a continuous period of 18 months.

44.  The Exchange also published a Guidance Letter (HKEX-GL95-18) in May 2018, which has since been updated in September 2019, on the subject of ‘Guidance on long suspension and delisting’ (“Guidance Letter”). That document provides guidance to long suspended issuers on the operation of the amended delisting Rules, their general obligations and the Exchange’s regulatory actions during the resumption process.  The Guidance Letter makes clear that the Exchange’s powers under Rule 6.01A(1) may be exercised without prejudice to the rights under Rules 6.01 and 6.10.  The following provisions are of particular relevance (bold in original):

8.  The objective of the amended delisting Rules is to keep the necessary trading suspension to the minimum, by facilitating timely delisting of issuers that no longer meet the continuing listing criteria. This, in turn, provides certainty to the market on the delisting process. The delisting Rules are also aimed at incentivizing suspended issuers to act promptly towards resumption and deterring issuers from committing material breaches of the Rules.

…

12.  Under the Rules, the Exchange would cancel the listing of a long suspended issuer upon the expiry of the remedial period (prescribed or specific) if the issuer has not remedied the issues causing the suspension and re-complied with the Rules. This remedial period sets a deadline referenced to the resolution of the relevant issues and resumption of trading, as opposed to submission of a resumption proposal as in the previous regime.

13.  Accordingly, the issuer must devise its own resumption plan setting out the actions that it considers appropriate to remedy the issues, announce such resumption plan, work according to that plan, and announce regular updates on its resumption progress and business developments. Based on these announcements, the Exchange will monitor the issuer’s resumption status and, where appropriate, give guidance to the issuer. While the Exchange may give guidance to assist the issuer, it is the issuer’s primary responsibility to devise its own resumption plan in order to ensure that it will remedy the relevant issues and re-comply with the Rules before the end of the remedial period to avoid delisting. The issuer may also consult the Exchange at any stage. When the issuer considers that it has remedied the issues and re-complied with the Rules, it must then seek a confirmation from the Exchange that this is the case. Trading will resume after the Exchange gives the confirmation.

14.  In light of the above, the steps that a suspended issuer should take include:

(a)  promptly after trading is suspended, review the matter giving rise to the suspension and identify the relevant issues;

(b)  devise a resumption plan with actions that it intends to take to remedy the issues and re-comply with the Rules. The resumption plan should be accompanied with a clear timeframe in respect of each stage of work under the plan to ensure that the relevant issues can be remedied and the Rules can be re-complied as soon as practicable and, in any event, before the remedial period ends. The timeframe should take into account not only the time required by it to implement the resumption plan, but the time that may be reasonably required by the Exchange to be satisfied that the issues have been remedied and the Rules re-complied;

(c)  work diligently towards resumption in accordance with the resumption plan.  In case of any delay, it should promptly assess its impact and make appropriate adjustments to the timetable but, in any event, continue to ensure trading to resume before the remedial period ends;

(d)  timely announce the resumption plan and its timetable, any material change in the plan and timetable, and any material developments to the fulfilment of the resumption conditions/guidance (for example, the outcome of any forensic investigation or internal control review);

…

(i)  where it considers that it has remedied the issues and re-complied with the Rules, seek the Exchange’s confirmation that this is the case.  It must ensure that it provides the Exchange with sufficient information to properly assess the situation, avoiding the risk of the Exchange not being satisfied with the issuer’s position for lack of information.  When seeking the Exchange’s confirmation, the issuer should also provide the Exchange with a draft resumption announcement for pre-vetting.

15.  Trading can resume only after the Exchange has confirmed that the issuer has remedied the issues and re-complied with the rules to its satisfaction.  Before such confirmation is given, the issuer must state in each of its announcements that trading will remain suspended with an explanation of the reasons for the continued suspension.

16.  During a suspended issuer’s remedial period, the Exchange will:

(a)  issue resumption conditions/guidance to the issuer, setting out the requirements that the issuer must have fulfilled before trading can resume. These conditions/guidance are primarily based on the issuer’s announcement(s) about the matter giving rise to the suspension and the issues identified by the issuer, and are generally issued within the first three months of the suspension of trading. The Exchange may revise these resumption conditions/guidance from time to time as the issuer’s circumstances change (for example, a suspended issuer subsequently found to be involved in fraudulent activities will be required to conduct a forensic investigation);

…

17.  the Exchange will respond to a suspended issuer’s request for confirmation about its resumption status … or guidance as soon as practicable, and generally not more than 10 business days after receipt of the issuer’s written request and the relevant information.

18.  If the issuer fails to fulfil the resumption conditions/guidance before the remedial period ends, the Listing Department will take the matter to the Listing Committee for consideration and recommend the Listing Committee to delist the issuer.

19.  To ensure the effectiveness and credibility of the delisting framework and prevent undue delay of the delisting process, the Listing Committee may only extend the remedial period in exceptional circumstances. It may do so where:

(a)  an issuer has substantially implemented the steps that, it has shown sufficient certainty, will lead to resumption of trading; but

(b)  due to factors outside its control, it becomes unable to meet its planned timeframe and requires a short extension of time to finalize the matters. The factors outside the issuer’s control are generally expected to be procedural in nature only.

This may happen where, for example, an A1 application has been approved by the Exchange but, due to a delay in the court hearing for approving a scheme of arrangement, the issuer requires additional time to implement the relevant transactions. The Exchange envisages that if an extension of time is given on the expiry of the remedial period, the Listing Committee would not normally extend the remedial period for a second time.

45.  It seems to me that the approach to delisting in cases of long suspended issuers as set out in the Guidance Letter can be summarised as follows:

 (1)  First, the Exchange will generally cancel the listing of a long suspended issuer upon the expiry of the remedial period if the issuer has not remedied the issues leading to suspension.  The remedial period sets a deadline for resolution of the relevant issues and resumption of trading, as opposed to submission of a resumption proposal.

 (2)  Second, the issuer bears the responsibility to devise a resumption plan accompanied with a clear timeframe in respect of each stage of work to ensure that the relevant issues can be remedied before the end of the remedial period.

 (3)  Third, the issuer bears the responsibility to assess the impact of any delay, and to make appropriate adjustments to the timetable, nevertheless to ensure trading to resume before the end of the remedial period.

 (4)  Fourth, the issuer may consult the Exchange at any stage, and in particular when it considers it has remedied the issues and re-complied with the Rules.  In such circumstances, the Exchange will swiftly respond to a request for consultation or confirmation that the remedy has been achieved.

 (5)  Fifth, a failure by the issuer to fulfil the resumption conditions/guidance before the remedial period ends will result in a recommendation to the Listing Committee to delist the issuer.

 (6)  Sixth, to ensure the effectiveness and credibility of the delisting framework and prevent undue delay of the delisting process, the Listing Committee may only extend the remedial period in “exceptional circumstances”.  It may do so where:

 (a)  an issuer has substantially implemented the steps that, it has shown with sufficient certainty, will lead to resumption of trading, but

 (b)  due to factors outside its control, it becomes unable to meet its planned timeframe and requires a short extension of time to finalise the matters.  The factors outside the issuer’s control are generally expected to be procedural in nature only.

 (7)  Seventh, the Exchange envisages that if an extension of time is given on the expiry of the remedial period, the Listing Committee would not normally extend the remedial period for a second time.

46.  Further, whether the circumstances are “exceptional” for the purpose of extending the remedial period is primarily a matter for the Exchange, not the court, to decide.

C.5    The Exchange’s Decision-Making Process

47.  Rule 2A.01 provides that the Board of the Exchange has arranged for all of its powers and functions in respect of all listing matters to be discharged by the Listing Committee and/or its delegates, subject to the review procedure set out in the Listing Rules.

48.  Rule 2A.17 provides that the Listing Committee shall consist of 28 members or such greater number as the Board of the Exchange may from time to time agree, comprising at least 8 individuals who represent the interests of investors, 19 individuals who will be a suitable balance of representatives of listed issuers and market practitioners including lawyers, accountants, corporate finance advisers and Exchange Participants or officers of Exchange Participants, with the Chief Executive of the Hong Kong Exchanges and Clearing Limited acting as ex officio non-voting member.  The composition of the Listing Committee is intended to ensure that it is made up of persons who are independent and have specialist expertise in relation to listing-related matters including business, accounting, finance and legal/regulatory aspects, and are well placed to determine currently acceptable standards in the marketplace.

49.  The Listing Committee, whose members serve on a part-time basis and only meet to make decisions periodically, delegates the day-to-day administration of the Listing Rules to the Listing Division, which is made up of full-time employees of the Exchange.  Subject to certain specific exceptions (eg the power to cancel the listing of a listed issuer), the Listing Committee has arranged for most of its powers under the Listing Rules to be discharged by the Listing Division in the first instance (Rule 2A.02). The Listing Division will also interpret, administer and enforce the Listing Rules subject to the review procedures set out in Chapters 2A and 2B of the Listing Rules.

50.  Under Rule 2A.08, the Listing Committee has reserved to itself the power to cancel the listing of a listed issuer.  It is the first instance decision-maker in respect of all cancellation decisions.  Rule 2A.08 provides as follows:

The Listing Committee has reserved to itself the power to cancel the listing of a listed issuer. This means that a listed issuer will not have its listing cancelled unless the Listing Committee has considered the matter.

51.  Rule 2A.27 of the Listing Rules provides for the functions and powers of the Listing Committee as follows:

The Listing Committee shall exercise all the powers and functions of the Board in relation to all listing matters. The Listing Committee’s exercise of such powers and functions is only subject to the powers of review in the Listing Review Committee.

52.  Rule 2A.28 of the Listing Rules provides for the conduct of meetings of the Listing Committee as follows:

The Listing Committee shall meet for the despatch of business, adjourn and otherwise regulate its meetings in accordance with the provisions of the rules made by the Board for this purpose, including rules governing members’ conflicts of interest, subject to the provisions of this rule 2A.28. The quorum necessary for the transaction of any business by the Listing Committee shall be five members present in person. The Chief Executive of the HKEC will not attend meetings of the Listing Committee at which the Listing Committee is determining a matter in the first instance or on review.

53.  The Listing Rules, however, provide for a process of review.  Rule 2B.06 of the Listing Rules provides:

(1)  Where the Listing Division [ie. the Listing Department] makes a decision on the listed issuer, the listed issuer may request the decision be referred to the Listing Committee for a review by the Listing Committee.

(2)  Subject to rule 2B.04, where the Listing Committee endorses, modifies or varies the Listing Division’s decision or makes its own decision, the listed issuer may request the decision be referred to the Listing Review Committee for a further and final review.

(3)  Subject to rule 2B.16, the decision of the Listing Division or the Listing Committee, as the case may be, shall be conclusive and binding on the listed issuer if the listed issuer does not seek review of the decision of the Listing Division or the Listing Committee, as the case may be; otherwise, the decision of the Listing Review Committee shall be conclusive and binding on the listed issuer.

C.6    Composition of the LRC

54.  In August 2018, the Exchange published a consultation paper on proposals to enhance governance within the Exchange’s structure for reviewing Listing Committee decisions and to promote transparency, accountability and consistency in decision-making.  Following the conclusion of the consultation period, and its consideration of market feedback, the Exchange published its ‘Consultation Conclusions: Review Structure in Relation to Listing Committee Decisions’ (“RS Consultation Conclusions”).

55.  The major changes proposed to be adopted included revision of the then extant review structure so that decisions of “material significance” made by the Listing Committee would be subject to only one level of review.  That review would be by an independent review committee – the LRC – consisting entirely of outside market participants with no current Listing Committee members or representatives of the SFC or the Exchange.  The RS Consultation Conclusions included that:

47.  … All review hearings of the new Listing Review Committee will take the form of a hearing de novo.  The Listing Review Committee will rehear the case and decide it afresh, after considering all the relevant evidence and arguments made at the earlier hearings and any additional evidence or information which may be adduced in accordance with the procedures and regulations for review hearings and any directions made by the Listing Review Committee.  The Listing Review Committee will consider the decision of the previous decision making body and state the reasons for its own decision.  The Listing Review Committee will also address the prior decision (and the basis therefor) in its own decision, whether it is upholding or overturning that prior decision.

56.  As regards the response and conclusions on the size and composition of the new LRC, the RS Consultation Conclusions stated as follows (italics in original):

48.  We note the suggestions for expanding the size of the new Listing Review Committee.  We recognise the importance of ensuring a sufficient number of members to be drawn from the new Listing Review Committee for any particular case, and have considered (i) our practical experience regarding convening a meeting in light of members’ of availability and conflict; and (ii) the possibility that the new Listing Review Committee may be required to hear a further and final review sought by the relevant party after an SFC-initiated review against a Listing Committee decision …  We therefore believe expanding the size to at least 20 members would ensure that there are sufficient members to efficiently discharge the review matters.

49.  At least four members of the Listing Review Committee (nominated by the Listing Nominating Committee and appointed by the Board of the Exchange) will form a chairmen pool.  Any review hearing by the new Listing Review Committee will ordinarily be chaired by a member from such chairmen pool.  In the unusual event that members of the chairmen pool have a conflict of interest in a case or are otherwise unavailable to act as chairman for the case, an acting chairman may be chosen from the remaining Listing Review Committee members on an ad hoc basis.  Members in the chairmen pool are also allowed to participate as members in review hearings of the Listing Review Committee.

50.  In response to a respondent’s view that the new Listing Review Committee should not be confined to former Listing Committee members, we clarify that, the Consultation Paper stated that “members of the new Listing Review Committee are expected to be former Listing Committee members, however, persons with experience and expertise in Listing Rules matters, or are familiar with the work of the Listing Committee, will also be appointed”.  We have made it clear in the Rules that an individual who was a member of the Listing Committee may be eligible for appointment as a member of the Listing Review Committee.

51.  While we recognise that the members of the new Listing Review Committee may be less familiar with the objectives, policy and approach of the Listing Committee (as they are not current Listing Committee members), we are confident that such concerns can be managed by appointing members who are experienced market participants that are close to and under the market, as well as by providing briefings to the new Listing Review Committee members to update them on the latest policy and approach of the Listing Committee.

52. To ensure that the composition of the new Listing Review Committee will achieve the right balance in public interest representation, knowledge, experience and technical skills appropriate for the role of [sic] the new Listing Review Committee is to play, the new Listing Review Committee will comprise at least six investors representatives and the remaining members representing a suitable balance of representatives of listed issuers and market practitioners (including lawyers, accountants, corporate finance advisers and Exchange participants (or their officers)), and who have experience and expertise in Listing Rule matters, or are familiar with the work of the Listing Committee. No current Listing Committee members or representatives of the SFC or [the Exchange] shall be members of the Listing Review Committee.

53.  We note the comment that the former Listing Committee members sitting on the new Listing Review Committee should not have just stood down from the Listing Committee and the rationale.  We believe such concern can be addressed by imposing a cooling off period of two years before a former Listing Committee [member] can be appointed to the new Listing Review Committee.  This is in line with the period for a former Listing Committee member to be eligible for re-appointment to the Listing Committee.

54.  Similar to Listing Committee members, members of the Listing Review Committee will normally be appointed for a term of approximately 12 months and may only remain in office for a maximum of six consecutive years.  The Exchange expects that members of the new Listing Review Committee will not serve on the Committee for a full term of six consecutive years in most cases.  The Exchange has been and will continue to encourage more frequent turnover of members to ensure refreshing of ideas and perspectives.  With respect to the inaugural Listing Review Committee, as all members will be appointed at the same time, it is contemplated that some members will retire after two years of serving on the Committee.  This is to create vacancies for new members and to ensure continuity and consistency in decision-making, i.e. the arrangement will avoid the situation where a large number of members will retire from the Listing Review Committee at the same time at the expiry of the first six-year period.

55.  As the proposal is to enhance governance within the Exchange’s structure for reviewing Listing Committee decisions, we will not adopt the suggestion to include existing Listing Committee members or [Exchange] board members in the new Listing Review Committee.

57.  Also relevant to the systemic challenge made in this case is another paragraph of the RS Consultation Conclusions, which stated that:

23.  The Exchange is a public body and the decisions of its review committees are amenable to judicial review.  The Exchange aims to meet the highest standards in its governance structure and decision-making processes.  A party appearing before a decision-making body of the Exchange has a right to a fair hearing properly conducted before a competent, independent and impartial committee.  It is well recognised that a decision-maker that follows a fair procedure is more likely to reach a fair decision.  For these reasons, the Exchange strives to ensure that the procedures used by its review committees to reach their decisions are fair and proper, and that the public perceives its procedures as such.

58.  The relevant parts of the Listing Rules were amended accordingly in July 2019.

59.  Under Rule 2A.37A, the LRC shall consist of 20 members or such greater number of members as the Board may from time to time agree.  Under Rule 2A.37B, the LRC shall comprise: (1) at least six individuals who represent the interest of investors; and (2) the remaining members who represent a suitable balance of representatives of listed issuers and market practitioners, including lawyers, accountants, corporate finance advisers and Exchange Participants (or their officers), and who have experience and expertise in Listing Rule matters, or are familiar with the work of the Listing Committee.  No current Listing Committee members or representatives of the SFC or Hong Kong Exchanges and Clearing Limited shall be members of the Listing Review Committee.

60.  Rule 2A.37K of the Listing Rules provides for the function and powers of the LRC as being the review body in respect of any decision of the Listing Committee.

61.  Rule 2A.37L provides for the conduct of meetings of the LRC as follows:

The Listing Review Committee shall meet for the despatch of business, adjourn and otherwise regulate its meetings in accordance with the provisions of the rules made by the Board for this purpose, including rules governing members’ conflicts of interest, subject to the provisions of this rule 2A.37L. The quorum necessary for the transaction of any business of the Listing Review Committee shall be five members present in person. All review hearing shall be heard de novo. The Listing Review Committee will rehear the case and decide it afresh, after considering all the relevant evidence and arguments made at the earlier hearings and any additional evidence or information which may be adduced in accordance with the procedures and regulations for review hearings and any directions made by the Listing Review Committee. The Listing Review Committee will consider the decision of the previous decision making body and state the reasons for its own decision. The Listing Review Committee will also address the prior decision (and the basis therefore) in its own decision, whether it is upholding or overturning that prior decision.

C.7    Overview of Regime

62.  Hence, the Listing Rules are intended to be administered primarily by the Listing Committee, which is made up of investors and representatives of listed companies and market practitioners, who are well-placed with their relevant knowledge and experience to determine currently acceptable standards in the marketplace.  Those members act on a part-time basis and meet only periodically to make decisions.  The day-to-day administration is delegated to the Listing Division, which is made up of full-time employees of the Exchange.  But in certain cases of significant decision, such as possible cancellation of listing status, the Listing Committee has reserved to itself the relevant power.

63.  In exercising that power, the Listing Committee considers and decides matters administratively, without conducting an adversarial hearing.  This assists in promoting an effective and expeditious determination of whether a listing should be cancelled.  But, the non-adversarial and administrative nature of the Listing Committee’s process is subject to the safeguard of a de novo adversarial hearing on the merits by the LRC.  Should the listed issuer require such a form of hearing, it may request one.

64.  That request will be met by the review process. There will be an oral hearing, and the listed issuer is entitled to attend the hearing and to make written and oral submissions.  Whatever decision is made by the LRC will supersede the previous decision by the Listing Committee.

65.  As I held in the Brightoil case, this two-tier approach (with one level of review) strikes a fair balance between administrative efficiency and fairness.  However, if the LRC were to make a decision in breach of administrative law requirements for fairness and procedural propriety, such decision might be amenable to judicial review.  Whilst the Court is not tasked with the merits of delisting decisions, it remains open to act in a supervisory role to ensure the integrity of the decision-making process.

D.     The LRC Decision

66.  In accordance with the procedure identified above, the review of the LC Decision in this case took place before the LRC on 28 October 2020, with the benefit of prior written submissions as well as the oral submissions made at the review hearing.  The Company filed written submissions dated 31 August 2020, together with supplementary written submissions dated 25 September 2020.  The Listing Division’s submissions were contained in its report dated 25 September 2020. All the submissions, and the relevant appendices, were contained in the hearing bundle for the review hearing.

67.  The transcript of the hearing shows that it commenced by each of the members of the LRC introducing themselves, and confirming that he or she had no conflict of interest on the matter.  After the introduction of other persons present, the chairman of the LRC sought confirmation from the parties whether they had any objection to the presence of any members of the LRC, and no objection was raised.

68.  The representative of the Company then made oral submissions to supplement the written submissions already filed and read, using a PowerPoint presentation.  Similarly, oral submissions were made on behalf of the Listing Division.  Then followed some questions by members of the LRC, after which the parties were given an opportunity to make a final short oral submission.  Only the representative of the Company took that opportunity, and a short submission was made to highlight a few points.  Of passing interest – in light of one of the submissions made by Mr Ko on this application – is that the Company suggested to the LRC that its case was very similar to another case in which the LRC had overturned a decision of the Listing Committee, so that the LRC should do so again.

69.  The LRC Decision is dated 12 November 2020. After setting out the background and a summary of the submissions, the LRC expressed its views and decision as follows:

33.  Trading had not resumed by 19 May 2020 or by the date of the hearing, so the Company’s listing could be cancelled under Rule 6.01A.

34.  The Company had furthermore failed to fulfil all the resumption conditions whether as at the date of Listing Committee’s hearing or the date of the Listing Review Committee’s hearing.  The Company had yet to public its audited financial statements for FY2018 and FY2019 and address the audit modifications.  It was unclear how the Company might resolve the audit issues arising from the lack of sufficient books and records.  Further, the Undisclosed Acquisition had caused a significant impairment in FY2018.  This further raised questions about the management integrity.

35.  Regarding the Company’s compliance with Rule 13.24, the Company was still insolvent and subject to winding up order.  Certain material operating assets of the Company had also been frozen by the PRC court.  The Company would be at the risk of losing these major assets if the revenant liabilities were not repaid. This would have further adverse impact on the Company’s business operation. The Listing Review Committee noted the Company’s submission that the Investor had been in active negotiation with such creditors in the PRC with a view to discharging all such liabilities with a fraction of the owed amounts.  The fact remained that such liabilities were still not discharged as at the date of the Listing Review Committee’s hearing.

36.  In the Company’s submission dated 25 September 2020, the Company sought an extension of the remedial period to 31 December 2020 to fulfill the resumption guidance.  At the hearing, the Company revised its request and asked for a further extension to June 2021.  The Company however had not demonstrated to the Listing Review Committee that its situation fell within the “exceptional circumstances” justifying an extension of the remedial period.  In particular, the Listing Review Committee noted that the Restructuring, which appeared to be central to any possibility of fulfilling the resumption guidance, remained subject to significant uncertainties including, amongst other things, the signing of an underwriting agreement, approval by shareholders, creditors and the courts in Cayman Islands and Hong Kong and a whitewash waiver to be sought from the Securities and Futures Commission and the discharge of certain liabilities in the PRC (as referred to in paragraph 35 above).  The Listing Review Committee did not consider that the Company had made substantial progress towards addressing the resumption guidance, notwithstanding that the current Liquidators had been appointed for almost 17 months. In any event, the extension of time being sought by the Company was a period of over eight months and accordingly not a short extension as prescribed under GL95-18.

37.  Given the range of issues that remained to be addressed and resolved, the Listing Review Committee considered the Company’s situation did not fall within the exceptional circumstances in paragraph 19 of GL95-18, and that the grant of an extension of the remedial period was not warranted in this case.

Decision

38.  The Listing Review Committee therefore decided to uphold the Listing Committee’s decision that the Company’s listing should be cancelled under Rule 6.01A.

70.  One point to note is that between the date of the Company’s supplemental submissions dated 25 September 2020 and the hearing just one month or so later on 28 October 2020, the Company changed its request for an extension of the remedial period from an extension until 31 December 2020 to an extension until June 2021.

E.     Adjournment Application

71.  By summons dated 28 June 2021, namely just one clear day before the oral leave hearing on 30 June 2021, the Applicant sought an order that the application for leave to appeal for judicial review be adjourned to a date to be fixed.

72.  The application was supported by a solicitor’s affidavit exhibiting a finalised and signed, but not formally affirmed, affirmation of the Applicant dated 25 June 2021.  In the affirmation, the Applicant produces email correspondence between the Liquidators and a potential tea leaf buyer together with a draft contract.  The Applicant refers to (a) an email on 11 June 2021, in which the potential buyer’s representative sent an email showing the purchase price offered by the potential buyer as HK$140 million, and (b) an email of 23 June 2021 sent by the Liquidators to the potential buyer’s representative, showing the Liquidators urging the potential buyer to review the purchase agreement and to consider the possibility of increasing the purchase price.

73.  On the basis of those documents, the Applicant suggests it can be seen that negotiation for the Company’s sales process of the tea leaf is near the completion stage, and the expected minimum income would be HK$140 million.  Then the Applicant says that after completion of such a sale, the Liquidators could further organise the restructuring scheme, and to continue negotiation with all creditors.  However, I am afraid I do not think that a near complete sale with a ‘minimum income’ is the necessary inference to be drawn from the correspondence.  At best, it merely shows negotiation, and there does not even seem to have been an agreed price.  Indeed, as the Applicant himself goes on to state, negotiation and business takes time to communicate, and deadlines cannot be set unilaterally to compel the other side to complete.

74.  Further, what the Liquidators might do with any sales income is a matter of speculation, absent clear evidence from the Liquidators themselves as to what they might intend.  The Liquidators have not filed evidence, and I note there is no suggestion that the Liquidators in any way support the application for the adjournment.

75.  The Applicant also states in his affirmation his expectation that the auditor could commence the audit work of the Company for the financial year 2020 by mid-July this year and complete it at the earliest by the end of September this year, as well as commencing audit work for the interim report for the six months to 30 June 2021 by the end of August 2021. Against the previous chronology, those assumptions (the real basis for which is not clearly stated) are not convincing.

76.  But, in any event, I entirely agree with Mr Dawes’ submission that it is in principle wrong to be inviting the Court in the context of the current application for leave to apply for judicial review now to look at and weigh what is said to be the Company’s progress on various potential trading and/or restructuring matters.  Further, as Mr Dawes points out, the application is for an adjournment to “a date to be fixed”, but neither the summons nor the Applicant’s affirmation suggest what date might be fixed, nor any period after (or only after) which that new date might be fixed. That is also telling.

77.  In my view, the adjournment application was in fact abusive.  It is wholly inappropriate for there to be any attempt to derail or delay these proceedings by an application such as the adjournment application made by the Applicant here.  This is an application for leave to apply for judicial review, seeking to challenge the LRC Decision made in November 2020.  The relevant question is whether there is any basis upon which to impugn the LRC Decision, which necessarily considered matters by reference to events up to the date of the hearing before the LRC.  Further, the challenge is to a decision, upholding the prior LC Decision, that the Company should be delisted for failing to have complied with the Resumption Guidance before the expiry of the remedial period.  That period expired in May 2020. The LC Decision was in June 2020.  The LRC Decision was in November 2020. Even at that point, there had been a failure of compliance with the Resumption Guidance, a yet further extension was being sought, and the LRC took the view there was no sufficient certainty as to when compliance might ever occur.  Even now, on the last day of June 2021, no specific dates as to when possible compliance were even offered.

78.  Granting an adjournment of the sort pursued by the Applicant would be to give licence to companies (or, if relevant, related applicants) in future to seek to delay further a delisting decision already made, in the hope of arguing the merits of the delisting decision in proceedings actually looking at the decision-making process, on evidence not available to and irrelevant to the original decision, and on a basis entirely contrary to the underlying policy objective in the revised delisting regime which I have set out in detail above.

79.  For these various reasons, I had no hesitation in dismissing the adjournment application.

F.     Intended Grounds for Review

80.  The intended Grounds for Review identified in the Form 86 might be split into two parts: (1) alleged inadequate reasons and failure to take into account relevant matters; and (2) a challenge to the fairness of the delisting procedure.

81.  In the hearing, Mr Ko focused his oral submissions on the second point, essentially based upon Article 10 of the Hong Kong Bill of Rights Ordinance Cap 383 (“BORO”).  However, the oral submissions were a substantial expansion upon – possibly, a departure from – the way the point was ‘trailed’ in the Form 86, where there was only one paragraph which simply stated:

31.  The Applicant further contends that the delisting procedure adopted by the [Exchange] is unfair, particularly in view of (1) the broad-brush nature of the review conducted, as revealed by the extremely brief analysis in the LRC Decision letter (2) the LRC is not an independent review body, but exists as a committee under the [Exchange] and (3) the [Exchange] has expressly made it a policy that members of the LRC are expected to be past members of the [Listing Committee] (see Consultation Conclusions on Review Structure in Relation to Listing Committee Decisions, January 2019, §34 and §50).

82.  In my view, that paragraph would not ordinarily be regarded as sufficient to raise a constitutional and systemic challenge to the whole process of delisting decisions.  On its face it appears more to be an allegation of procedural unfairness based upon the other factual criticisms, namely the alleged inadequate reasons and failure to take into account relevant matters.  Nevertheless, I shall accept for present purposes that the point which Mr Ko wishes to submit on Article 10 is somehow encompassed by that paragraph.  Therefore, I shall deal with the systemic challenge, and then with the factual challenges.

G.     Standing

83.  But, before dealing with the intended grounds for review, it is first necessary to address the question of standing.  This is because – unlike in the numerous other cases of challenge to delisting decisions made by the LRC – the Applicant is not the affected company itself, but is a shareholder (and not even a member of the Board).

84.  In support of his submission that the Applicant has the necessary standard to make the proposed challenge in this case, Mr Ko relied on a passage from ‘De Smith’s Judicial Review’ 8^th Ed at §2-032:

If the decision which the claimant wishes to challenge interferes directly with the claimant’s personal or public rights or has adverse financial consequences for him then this will be an obvious case in which he will have standing.  But as the Court of Appeal has made plain, the relevance of a claimant’s personal rights is not that without them there would be no claim for judicial review.  Any person or body with a sufficient interest can seek judicial review.  The claimants’ interest is that they say they were among those who suffered violations of their right not to be inhumanely degradingly treated; but there is no requirement of law that there claim for judicial review must be confined to their private law or personal interests.

85.  Mr Ko also referred to in Kwok Cheuk Kin v Commissioner of Police [2017] 6 HKC 93 at §34, where Chow J (as he then was) set out what he considered the applicable principles in determining the question of standing in judicial review.  At §34(1), it was stated:

Where the decision affects the applicant’s personal right or interest over and above that of the general public or a section of the public, the applicant should have little difficulty in showing a sufficient interest in the matter to which the application relates.

86.  So, Mr Ko submitted, the Applicant’s position clearly meets these tests, since the decision concerns cancelling the Company’s listing, and this denies shareholders an effective channel to sell their shares and brings about adverse financial consequences to the Applicant specifically, over and above that of the general public.  Mr Ko also referred to The Association of Expatriate Civil Servants of Hong Kong v The Secretary for the Civil Service (CACV 260/1995, 22 November 1996), where at §§177-178 it was stated that it was an accurate statement of the law that a court ought not to decline jurisdiction to hear an application for judicial review on the ground of lack of standing to any responsible person or group seeking, on reasonable grounds, to challenge the validity of governmental action.

87.  In response, Mr Dawes submitted that the fact that an applicant has some financial or other interest in the challenged decision is necessary but not sufficient for him to have standing for the purposes of judicial review.  That is because an applicant may lack standing if a better placed challenger who is directly affected by the decision chooses to accept it.  Reference was made to Durayappah v Fernando [1967] 2 AC 337 at 352G-353C, where the Privy Council raised and addressed the question of some general importance about the then appellant’s entitlement to maintain the action and appeal.  The case involved a decision by a Minister to dissolve a municipal council, which the Privy Council considered was avoidable and not a nullity, stating:

Though the council should have been given the opportunity of being heard in its defence, if it deliberately chooses not to complain and takes no step to protest against its dissolution, there seems no reason why any other person should have the right to interfere.  To take a simple example to which their Lordships will have to advert in some detail presently, if in Ridge v Baldwin the appellant Ridge, who had been wrongly dismissed because he was not given the opportunity of presenting his defence, had preferred to abandon the point and accept the view that he had been properly dismissed, there Lordships can see no reason why any other person, such, for example, as a ratepayer of Brighton should have any right to contend that Mr Ridge was still the Chief Constable of Brighton.  As a matter of ordinary common sense, with all respect to other opinions that have been expressed, if a person in the position of Mr Ridge had not felt sufficiently aggrieved to take any action by reason of the failure to afford him his strict right to put forward a defence, the order of the watch committee should stand and no one else should have any right to complain.

88.  Mr Dawes also referred to R (on the application of Grierson) v OFCOM [2005] EMLR 37 at §§16-25, which he said supports the proposition that the fact that the company decides not to institute judicial review proceedings is a factor which is of substantial importance when determining whether individual shareholders have standing to apply for judicial review against the same decision.  In the particular case, the company had decided not to challenge Ofcom’s decision.  The court (Stanley Burnton J) recognised that Mr Grierson could not be castigated as a busybody, as he clearly had a real interest in Ofcom’s decision, and stood to gain financially from a different decision.  But, nevertheless it remained the fact that neither the company nor any unsuccessful applicant for the relevant licence had sought to challenge the decision.  It was also felt to be of substantial importance in the decision whether he had sufficient standing that Mr Grierson had only a derivative interest.  Further, it was not right to divorce standing at the permission (leave) stage from standing for the grant of the relief claimed.

89.  Stanley Burnton J also said at §23, referring to the two preliminary issues of standing and delay:

In my judgment, making the assumption I have referred to about Durayappah v Fernando [namely that the decision of the Privy Council has been overtaken by subsequent developments in administrative law], both of these preliminary issues should be considered flexibly.  The more important an arguable issue, the stronger its apparent merits, the more ready should the court be [to] grant standing and the less strict should it be in its application of the requirement that proceedings be commenced promptly.  So far as standing is concerned this approach is consistent with statement made in Wade and Forsyth, Administrative Law (9^th ed.) at para.2-036:

“‘Sufficient interest’ should therefore be regarded as being an extremely flexible test of standing. The more important the issue and the stronger the merits of the application, the more ready will the court be to grant leave …”

90.  I accept, as Mr Dawes submitted, that what was said in Grierson broadly accords with the well-established principle – most recently authoritatively stated in Marex Financial Ltd v Sevilleja [2021] AC 39 at §§35-37 – that management of the company is entrusted to its Board of Directors (and for companies subject to a winding up order, to its liquidators) so that, where the company management decides not to institute legal proceedings against the third party, individual shareholders cannot institute proceedings either on the company’s behalf or in respect of the same loss.  As Marex and earlier authorities identify, the principles have developed not as a matter of merely theoretical concern, but at least in part as to recognition of the unity of economic interests which bind a shareholder and his company.

91.  But, depending on the case, it may not help to take the analogy too far, and the court should adopt an appropriate degree of flexibility for each case.  Nevertheless, whatever flexibility is brought to bear will be with the recognition that individual shareholders should unlikely be able to challenge regulatory decisions on behalf of the company even if the company management, acting in the best interests of the company, has decided to accept the regulatory decision.  As Mr Dawes submitted, ordinarily it would not be right to allow individual shareholders to subvert the allocation of powers under the company’s articles of association.

92.  In this case, the Company has not sought to challenge the LRC Decision.  Nor has it sought to intervene in these proceedings brought by the Applicant.  There is no suggestion that the decision neither to challenge nor join in another challenge was not a decision made in good faith, or that there was any fraud on the shareholders.  As I have pointed out in the introduction, the Liquidators have not stated that they support the application.  Nor have they stated that, but for lack of funds, they would themselves have made the application.  Indeed, it might be thought that if the Liquidators lacked funding, but were of the view that the application had merit and should be pursued, they would simply have asked for funding and Mr Ko would have acted on the instructions of the Company (albeit funded by someone else, perhaps the Applicant himself) – or they would at least have clearly aligned themselves with the Applicant.  They have done none of these things.

93.  I note Mr Ko’s submission that greater flexibility should be applied in particular where a systemic challenge is intended and there may be many potential applicants lining up to pursue similar changes by way of judicial review.  Thus, he says it would not be appropriate to refuse leave simply on standing.  Nevertheless, in the particular circumstances of this case, and even adopting some possible flexibility in approach, I do not think that the Applicant has standing to bring this application.  I would also add that I have factored into the flexibility my view on the merits of the intended grounds for review, to which I now turn.

H.     Systemic Challenge

94.  Article 10 of BORO materially provides as follows:

All persons shall be equal before the courts and tribunals.  In the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law …

95.  As Mr Ko submitted, Article 10 of BORO is identical to Article 14.1 of the International Covenant on Civil and Political Rights, and resembles Article 6(1) of the European Convention on Human Rights.

96.  Mr Ko submitted – not least by reference to the Exchange’s own apparent views, to be found in §23 of the RS Consultation Conclusions (see above), where there is an echo of the wording of Article 10 in the reference to “a right to a fair hearing properly conducted before a competent, independent and impartial committee” – that the LRC is a “tribunal” for the purposes of Article 10, and that proceedings before the LRC clearly fall under Article 10.

97.  Further, amongst the various authorities relied on by him, Mr Ko placed significant weight on the Court of Appeal’s decision in New World Development Co Ltd v The Stock Exchange of Hong Kong Ltd [2005] 2 HKLRD 612 at §§41-48 and 58-60, as well as on my own decision in the Brightoil case at §80.

98.  Whilst I firmly tend to the view that the LRC is a tribunal falling within the terms of Article 10, I have not heard full argument on the point, and I do not need to decide that matter for present purposes.  This is because, although reserving the Exchange’s position as to whether the LRC review process involves a determination of the Company’s rights and obligations in a suit at law, Mr Dawes was prepared to argue the point on the merits because, he said, there can be no doubt about the independence and impartiality of the LRC itself.

99.  Mr Ko’s focus in submission was on whether hearings before the LRC can be said to be before a competent, independent and impartial tribunal.  He submitted that they cannot, because:

 (1)  First, for a tribunal to be considered as independent, the court has to consider the appointment of its members and their term of office, the existence of guarantees against outside pressures and the question whether the body presents an appearance of independence.  Reference can be made to Wong Tak Wai v Commissioner of Correctional Services [2010] 4 HKLRD 409 at §38.

 (2)  Secondly, as to the question of impartiality, the tribunal must be (a) subjectively free from personal prejudice or bias and (b) impartial from an objective viewpoint, offering guarantees to exclude any legitimate doubt in this respect: see Wong Tak Wai at §39.

 (3)  The concepts of independence and objective impartiality are closely linked, and the Court will generally consider them together: see Findlay v United Kingdom (1997) 24 EHRR 221 at § 73.

 (4)  A tribunal cannot be regarded as independent if any of its members is appointed by, or is subordinate to, the parties to the dispute: see Lam Siu Po v Commissioner of Police (2009) 12 HKCFAR 237 at §136, and Runa Begum v Tower Hamlets London Borough Council [2003] 2 AC 430 at §§95-97.

100.  But, Mr Ko submitted that the LRC does not fulfil these requirements because:

 (1)  The LRC is not an independent review body, but exists as a committee under the Exchange, and its members can be appointed and re-appointed only by the Board of Directors of the Exchange.

 (2)  Members of the LRC are expected to be former Listing Committee members: see the RS Consultation Conclusions at §§34 and 50.

 (3)  A former Listing Committee member may be eligible for appointment as a member of the LRC as soon as two years after vacating office from the Listing Committee.

 (4)  Potential LRC members must first be nominated by the Listing Nominating Committee, comprising (amongst others) three non-executive directors of the Exchange.

 (5)  At least four members of the LRC nominated and appointed will form a chairmen pool, one of whom would ordinarily chair any review by the LRC.

101.  Whilst Mr Ko accepted that the fact that LRC members are appointed by the Exchange, of itself, may be cured by the availability of judicial review proceedings, he submitted that the unfairness in the present case stems cumulatively from the facts that:

 (1)  The Listing Rules are administered primarily by the Listing Committee, which makes the decision whether to cancel a listing or not.

 (2)  Members of the Listing Committee act on a part-time basis and therefore delegate the day-to-day administration of the Listing Rules to the Listing Division, which is made up of full-time employees of the Exchange.

 (3)  The Listing Division will, amongst other things, provide guidance to, and review and monitor the compliance of, issuers, and make recommendation to the Listing Committee for delisting of issuers.

 (4)  Upon the recommendation of the Listing Division, the Listing Committee is the first instance decision maker in respect of all cancellation decisions.

 (5)  If the Listing Committee makes a decision to cancel the listing, the issuer can request the LRC for a review, and the LRC decision shall be final and binding, after a rehearing of the case and a decision afresh.

 (6)  The LRC members are mostly part-time, and amongst the number of reviews conducted, it is an onerous requirement on the LRC to prepare a lengthy written decision for each review which exhaustively addresses every argument presented, which would render the review process unworkable.

 (7)  The expressly stated purpose of publishing decisions of the LRC is “to promote consistency in decision-making and better understanding of the interpretation and application of the relevant rules”, but that is inconsistent with the argument that it is not inappropriate for a written decision of the LRC not to reflect every argument put forward.

 (8)  The Exchange has also stated expressly a policy that the LRC is expected to decide issues “consistently” with the Listing Committee.

102.  Whatever the gaps of logic in this reasoning, Mr Ko really focused on the last point, which is capable of standing alone.  His submission was that the Exchange’s policy is that the LRC is expected to decide issues “consistently” with the Listing Committee (which is achieved by the expectation that LRC members would be former Listing Committee members), and the Listing Committee has in turn delegated the day-to-day administration to the Listing Division made up of full-time employees of the Exchange.

103.  Therefore, on the question as to whether the regime complies with the requirements of Article 10 of BORO, Mr Ko submitted that the point is at least an issue that merits further and more mature consideration.  He also referred to the significant number of similar cases that is expected to come before the courts, so that it is desirable for the position to be clarified as soon as possible, and for any deficiency (if found) to be cured.

104.  I agree with the last point.  It is desirable for the position to be clarified as soon as possible.  But I do not agree that it is reasonably arguable that there is a systemic deficiency.  That statement provides now the necessary or requested clarification.

105.  First, I agree with Mr Dawes that, although framed in different terms, the requirement of independence and impartiality under Article 10 of BORO are the same as the test against bias at common law, namely whether the tribunal would be considered by a fair-minded and informed member of the public to be independent and impartial: see Wong Tak Wai at §37.  Secondly, the mere fact that the members of a tribunal are appointed by the executive or public authority in question does not, by itself, infringe the requirement of independence and impartiality, not least if the appointment mechanism is justified in light of the functions of the tribunal under the relevant statutory scheme: see Campbell and Fell v United Kingdom (1985) 7 EHRR 165 at §79-80; Building Authority v Business Rights Ltd [1994] 2 HKLR 341 at 344-5; and R v Town Planning Board, ex parte Real Estate Developers Association of Hong Kong [1996] 2 HKLR 267 at 273A-275C.

106.  Further, in Stock Exchange of Hong Kong v Onshine Securities [1994] 1 HKC 319 at 328D-E, the Court of Appeal had “no hesitation in rejecting” a submission similar to that offered in this case.  That was a case challenging the independence of the Exchange’s Disciplinary Committee, which consisted of members of the Council of the Exchange.  The Court pointed out that a professional body such as the Exchange must act through its appointed committees, and that self-regulation is best and necessarily done by its own members.  The fact that the members of particular committees were also elected members of the Council was said to fall “far short of any appearance of bias”.

107.  It seems to me that the challenge in this case is even weaker than in the Onshine case.

108.  Under the LRC review regime which I have detailed above, neither the Listing Committee nor the LRC consists of any representatives of the SFC or the Exchange.  Both committees are comprised of various individuals representing the various interests of investors, representatives of listed issuers and market practitioners such as lawyers, accountants, corporate finance advisers and exchange participants.  All of them are appointed because of their experience in the market.  Therefore, Mr Dawes is correct when he said that given the diversity, expertise and professional experience of these individuals, it is highly unlikely that the tribunal acting collectively would be biased (or be perceived to be biased) towards one side or the other.

109.  It is also of some importance that the current rules were put in place following a public consultation, where the proposals received support from the majority of respondents representing all aspects of market participation.  I do not think it can be reasonably argued that the members of the LRC are subordinate to one of the interested parties.

110.  As shown by the transcript of the review hearing in this case, there is also the safeguard in the individual members of the relevant LRC identifying themselves (names and positions held) at the start of the hearing, declaring a lack of any conflict, and inviting the parties to confirm whether they have any objection to any individual member or not.  I take Mr Ko’s point that the fact that there was no objection to the individual members comprising the LRC who gave the LRC Decision in this case, and that there is still no suggestion that any of them were biased (apparently or otherwise), may not of itself be an answer if there is a valid systemic concern.  But the process adopted must reduce both the risk of bias and any potential appearance of bias.

111.  I also think Mr Ko’s attempt to use the reference to “consistency” in decision-making is untenable.  If the submission was intended to suggest that the encouragement to “consistency” somehow amounted to encouragement to the LRC simply to uphold decisions of the Listing Committee, it is a suggestion without any proper basis.  Indeed, as I have indicated, at the review hearing in this case the Company specifically referred to and relied upon a previous decision in which the LRC had overturned the Listing Committee.  In any event, as that submission implicitly recognised, the relevant “consistency” to which reference is made in the consultation documents is to a consistent application of similar principles to similar sets of facts. There is not only nothing inherently wrong with such an approach, it is an approach – dare I say it – consistently promoted by courts as a facet of the proper and fair administration of justice.  Consistency is a badge of fairness, not unfairness.

112.  There is also nothing in the complaint that a number of the members appointed to the LRC are expected to have acted previously as members of the Listing Committee.  Rather, that simply reflects the understandable desire to have LRC members, amongst whom are those with specific knowledge and experience of the sort which qualifies a person to act, and which is also gained from acting, as a member of the Listing Committee. The two-year gap, or ‘cooling off’ period, before a former member of the Listing Committee can be appointed as a member of the LRC is another procedural safeguard.

113.  Further, in light of the structure of the regime, which I have detailed above, there is also nothing in the reference to, and complaint about, the delegation by the Listing Committee to the Listing Division of day-to-day matters in the administration of the Listing Rules. That cannot possibly give rise to any actual or perceived risk of bias, where the Listing Committee has specifically reserved to itself all decisions on potential delisting of an issuer.  Whilst the Listing Committee may consider that question on the recommendation of the Listing Division, plainly the Listing Committee is not bound by the recommendation and may disregard it. Further, any dissatisfaction with a decision to delist an issuer can be reviewed, at the issuer’s request, by the LRC.  The LRC is also expressly bound to conduct the review hearing de novo, that is to consider the Listing Committee’s decision and its reasoning, to look at all materials placed before the LRC (whether or not they were before the Listing Committee), to read written and hear oral submissions, and the LRC is free to decide whether or not to uphold the Listing Committee’s decision.

114.  The LRC must also provide reasons for its own decision, though its written decision will not be in the nature of a legal judgment exhaustively setting out the facts and addressing all of the arguments presented.  The express purpose of publishing decisions of the LRC so as to promote consistency in decision-making and a better understanding of the interpretation and application of the relevant rules seems to me to be a further manifestation of the fairness flowing from consistency, that I have canvassed above.  For the sake of completeness, I do not think there is any force in Mr Ko’s, admittedly fairly gentle, musing whether relatively short reasoning in written decisions, in part necessitated by the part-time nature of membership of the LRC, raises the question whether the LRC is a competent tribunal at all despite their experience and expertise.

115.  The intended constitutional/systemic challenge – based on the suggested lack of independence and impartiality – has no merit and is not reasonably arguable.

I.     Challenge on Adequacy of Reasons / Matters Taken into Account

116.  In his written and oral submissions, Mr Ko essentially relied only on the argument set out in the Form 86 to traverse this area of the intended challenge to the LRC Decision.

117.  By way of overview, it is suggested in the Form 86 that the analysis in the LRC Decision is limited to §§33-37, but the analysis and reasons given are wholly inadequate in the face of the voluminous documents and the arguments raised by the Company that ought to have been considered on a review by way of a hearing de novo.

118.  Of course, I accept the trite proposition that procedural fairness will often require the decision-maker to give reasons for decision, but reasoning is required for the LRC in any event, if requested.  I also accept that reasons provided must be intelligible and adequate, and where no reasons are given or the reasons given are plainly inadequate or unintelligible, it is open to the court to infer that the decision is unlawful.  Part of the requirement for reasoning in a decision is to identify that the tribunal has relevantly engaged with the issues and the arguments presented to it.

119.  On the other hand, it is also trite that in the absence of statutory prescription, the factors to be taken into account and the scope of the investigation required are matters for the regulator to decide, subject only to the challenge on Wednesbury grounds.  Further, I do not think it is fair to suggest the analysis is limited only to the words in §§33-37, when there are references to the various submissions and other documents, and the context of the arguments was well-known to the parties.  In my view the LRC clearly focused on the correct question for the review, and had given adequate reasons from a public law point of view based on the relevant test (to be found in, for example, Ng Shek Wai v Hong Kong Institute of Certified Public Accountants [2019] HKCFI 2439 at §41).

120.  In this case, the Form 86 raises seven points of criticism of the LRC in failing to take into account relevant matters, or failing to take steps to equip itself with the necessary relevant information to enable itself to make an informed decision.

121.  The first point is that it is unclear how the LRC took into consideration and assessed the “harm to the persons the Rules are intended to protect, i.e. the investors” when looking at the failure to meet the Resumption Deadline, particularly in the midst of the unprecedented Covid-19 pandemic.  But I think Mr Dawes is correct when he says that the weighing and balancing exercise based on factors such as potential harm to investors has been taken into account in the process of amendment to the Listing Rules, following industry-wide consultation.  Part of the consideration necessarily takes into account the position of investors in any particular company as well as investors in the wider market.  In any event, the effect of delisting is so obvious to everyone involved in the process (including that of review), I doubt it is something that would need to be expressly mentioned. The LRC was also subject to the public law duty to follow the Listing Rules as well as the Guidance Letter.

122.  The second point in the Form 86 is that although submissions were made both by the Company and the Listing Division as to the impact of Covid-19, the LRC has not addressed them in its reasoning.  In my view, that is simply not correct.  For example, in §36 of the LRC Decision, specific reference was made to the Company’s submission dated 25 September 2020 (which itself included references to its written submissions dated 31 August 2020) and the request for the extension of the remedial period.  The request for extension was based on two reasons which were said to fall within the “exceptional circumstances” justifying the extension; one was the seven-month period between the appointment of original liquidators and their replacement, and the other was the suggested impact of Covid-19.  In §36, the LRC found that the Company had however not demonstrated that its situation fell within the “exceptional circumstances” justifying an extension of the remedial period, and expanded on why it held that view.  Further, the Company was not seeking a short extension, and even at the LRC hearing was seeking a further six months beyond that which it had requested just one month beforehand.

123.  There was also little more than a bare assertion as to the impact of Covid-19 on the resumption timetable.  In this respect, I might also echo what Chow J said in the Bolina case at §48, which seems equally apposite here:

48.  In my view, the claim that the COVID-19 pandemic constituted an exceptional circumstance justifying an extension of time for the Company to comply with the Resumption Guidance has no substance whatsoever.  There was no duty on the Listing Review Committee to expressly reject it in the Review Committee Decision, which ought to be read together with the Listing Committee Decision. In any event, even if the Listing Review Committee ought to have expressly addressed this argument in its decision and the matter is now remitted to the Listing Review Committee for reconsideration, I consider it to be inevitable that the Listing Review Committee would reject the contention that the COVID-19 pandemic constitutes an exceptional circumstance for the purpose of §19 of the Guidance Letter.

124.  The third point made in the Form 86 is the suggestion that the LRC failed to take into account at all the complications created by the Regulating Order, which was discharged only some seven months after the suspension of trading of the Company’s shares and the notification of the Resumption Guidance.  That criticism does not seem to be fair in the light of the LRC Decision, not least at § 36, where the LRC expressed its view that the Company had not made substantial progress towards addressing the Resumption Guidance, notwithstanding that the current Liquidators had been appointed for almost 17 months.  This implicitly recognised the relevant period is that since the appointment of the current Liquidators.  Further it was pointed out that the extension of time being sought was not a short extension (and though the LRC Decision referred to a period of “over 8 months”, in fact by the time of the LRC Decision the new request was for an extension of over 12 months to June 2021 as the same paragraph noted).

125.  The fourth point made in the Form 86 is the suggestion that the LRC completely ignored §43 of the Guidance Letter.  But I agree with Mr Dawes that that paragraph applies to issuers suspended under Listing Rules 13.50A, which was not the case here.  That rule relates to where trading has been suspended because an issuer publishes preliminary results announcements for financial year and the auditor has issued, or has indicated that it will issue, a disclaimer of opinion or an adverse opinion on the issuer’s financial statements.  The suspension will normally remain in force until the issuer has addressed the issues giving rise to the disclaimer or adverse opinion.  The Guidance Letter at §43 specifically references that, where an issuer is suspended under Rule 13.50A, but the issuer has satisfied the Exchange that it is made all reasonable efforts to resolve the issues but, due to reasons outside its controls, such underlying issues remain unresolved upon expiry of the 18-month period, the Exchange would consider allowing a longer remedial period, with the duration of the period to be determined case by case.  The paragraph emphasises that the issuer must demonstrate to the exchange’s satisfaction that it reasonably expects to resolve all underlying audit issues within the proposed extended remedial period. Therefore, in my view the paragraph is irrelevant on the basis that this Company was not suspended under Rule 13.50A, but in any event the LRC Decision shows that the LRC was not satisfied as to how the Company might resolve the various audit issues faced by it.

126.  The fifth and sixth points raised by the Form 86 – which can be taken together – are that the LRC had not considered the fact that more than half of the Company’s creditors had already indicated support for the Restructuring scheme, nor mentioned the numerous letters written by the Company’s creditor is expressing their support of the restructuring, so that the shareholders are likely to approve the scheme, so as to save the listing status of the Company.  The quick answer to these points is that the LRC expressly noted at §36 that the Restructuring, which appeared to be central to any possibility of fulfilling the Resumption Guidance, remained subject to significant uncertainties including amongst other things, the signing of an underwriting agreement, approval by shareholders, creditors and the courts in Cayman Islands and Hong Kong and a whitewash waiver to be sought from the SFC and the discharge of certain liabilities in the PRC (to which it had made reference at §35), so that the LRC did not consider that the Company had made substantial progress to addressing the Resumption Guidance and it was still requesting extension of time, and not a short one.

127.  Mr Dawes is also correct when he says as regards these two points that it should be remembered that the objective of the current regime under the Listing Rules is not to facilitate resumption of trading.  So a listed issuer is not entitled to an extension of time merely if it is able to demonstrate that it is likely to fulfil the resumption guidance at some point in time after the deadline.

128.  The seventh point raised in the Form 86 is that the LRC did not take into account the fact that the group generated substantial revenue and profit for the financial year ended 31 December 2018 (when the former liquidators were in charge) and 31 December 2019 (when the current Liquidators were in charge).  But I agree with Mr Dawes that this fact is plainly irrelevant, as it has no connection with either whether the Company has fulfilled the Resumption Conditions, or whether there were exceptional circumstances as envisaged in the Guidance Letter.

129.  None of the proposed aspects of criticism or challenge to the LRC Decision regarding inadequacy of reasons or a failure to take into account relevant matters is reasonably arguable.

J.     Result

130.  The result is that the application for leave to apply for judicial review stands to be dismissed.

131.  I so order.

K.     Costs

132.  As to an award of costs in an unsuccessful application for leave to apply for judicial review, the governing principles are well-settled: see Leung Kwok Hung v President of the Legislative Council (No 2) (2014) 17 HKCFAR 841, at §17.  In this case, I consider that the Company should pay the costs of the Exchange, because (a) the Exchange attended the oral hearing upon the court’s direction, (b) the Exchange filed evidence, and provided substantial and helpful assistance to the court; (c) the Company has effectively had a hearing on the merits of its intended application for judicial review; and (d) those merits have included consideration of a systemic criticism which was only lightly trailed in the Form 86, but sought to be significantly expanded in oral argument and the skeleton submissions filed for that purpose.

133.  Mr Dawes has fairly not made any application for the Exchange’s costs to be taxed on the indemnity basis.  Therefore, I make an order that the Company shall pay the Exchange’s costs of this application, including the costs of the hearing on 30 June 2021, to be taxed if not agreed, with certificate for two Counsel.

134.  But, to the extent that the adjournment application caused the Exchange any additional costs (though that may be unlikely), and in light of the fact that I view that application as having been utterly without merit and an abuse, I would order those costs to be paid by the Applicant on the indemnity basis.