RE UNI-ALPHA SECURITIES LTD AND ANOTHER

HCMP 714/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 714 OF 2006

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J U D G M E N T

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1.  This is an application by the 1st and 2nd applicants for an order under section 62 of the Trustee Ordinance, Cap. 29 and Order 92 of the Rules of the High Court, Cap. 4A.

2.  The 1st applicant is a licensed securities dealer and carried on the business as a securities broker.  The 2nd applicant is a licensed futures contracts dealer and carried on the business of dealings in futures contracts under the Securities and Futures Ordinance, Cap. 571.

3.  Both applicants are wholly-owned subsidiaries of Uni-Alpha Holdings Limited.  The 1st applicant had previously acquired Century City Brokerage Limited, and the 2nd applicant acquired the Century City Futures Limited, and they had also taken over their respective clients. 

4.  The applicants have a common management team.  One of the two responsible officers of the applicants resigned on 31 January 2006, leaving only one director behind.  The applicants thus could not comply with the requirements of section 125(1) of the Securities and Futures Ordinance and had to cease business.  Section 125(1) provides:

“(1) A corporation licensed under section 116 shall not carry on any regulated activity for which it is licensed unless :

(a) every executive director of the licensed corporation who is an individual is approved by the Commission as a responsible officer of the corporation in relation to the regulated activity; and

(b) not less than 2 individuals, at least one of whom shall be an executive director of the licensed corporation, are approved by the Commission as the responsible officers of the corporation in relation to the regulated activity.”

5.  In order to arrange for the cessation of their business, the applicants had sent out notices in English on 30 December 2005 to those of their clients whose addresses they had and asked them to get back their shares and moneys from the applicants.  Regarding the 2nd applicant, it only holds moneys for its clients. 

6.  Unfortunately, the applicants did not have the addresses of some of the clients which they had taken over from the two Century City companies because those two companies had lost the contact information of some of their clients before they were acquired by the applicants. 

7.  On 1 February 2006, the applicants again sent out cessation notices to those of their clients whose addresses they had and these notices were in both Chinese and English. 

8.  Despite these notices, there were some clients who did not respond and their securities and moneys are still held by the applicants.  These securities and moneys are in addition to those that belong to the clients whose contact information had been lost.

9.  The total value of the securities now held by the 1st applicant is at $3,935,595.56.  There are included in this $3,935,595.56 the value of some suspended shares of a total worth of $1,699,284.15 and some deleted shares of no value.  The total amount of cash held by the 1st applicant is $11,227.60 and the total amount of cash held by the 2nd applicant is $69,935.53.

10.  Notices of these proceedings have been given to the top 8 clients of the 1st applicant in terms of value of shares and cash deposited.  For those clients of the 1st applicant who had not been notified about these proceedings, one of them has deposited a total value of shares and cash below $2,750 and the others have deposited shares and cash of values ranging from a few hundred dollars to a few cents.

11.  Notice of these proceedings has also been given to a client of the 2nd applicant who has deposited about $13,700 with it.  There is another client who has deposited $47,652 with the 2nd applicant but has not been notified about these proceedings because the 2nd applicant does not have his contact information.  There are three other clients of the 2nd applicant who have deposited a total of less than $9,000 and they have also not been given notice of these proceedings.

12.  By reason of the service of cessation notices on all those clients whose contact information is known and the service of notices of proceedings to those clients who have significant values of securities and cash deposited with the applicants, I am willing to hear this ex parte application without further directions on service of notice of proceedings. 

13.  I refer to Re Peregrine Brokerage Limited,HCMP 2736 of 2003 and hold that the cash and securities held by the 1st and 2nd applicants as detailed in Schedules A and B appended to the Amended Originating Summons are held by them on trust for their respective clients. 

14.  In the premises, I make the declarations and orders in terms of the Amended Originating Summons as follows :

(1) a declaration that the persons particularised in Schedule A attached to the Amended Originating Summons of the addresses shown therein are clients of the 1st applicant;

(2) a declaration that the persons particularised in Schedule B attached to the Amended Originating Summons of the addresses shown therein are clients of the 2nd applicant;

(3) a declaration that the items of unclaimed cash and unclaimed securities noted against the names of the clients of the 1st and 2nd applicants respectively in the said Schedules A and B are beneficially owned by these clients and are trust properties held by the 1st and 2nd applicants for them;

(4) the 1st and 2nd applicants do pay into court the abovementioned unclaimed cash and unclaimed securities, the same having been unclaimed since 30 December 2005;

(5) notification of this order and the rights of the clients of the 1st and 2nd applicants to apply for payment-out of their respective unclaimed cash and unclaimed securities under Order 92 of the Rules of the High Court be given by way of advertisements in a Chinese-language and an English-language daily newspaper within 7 days from the date of this order and thereafter on the 1st day of each month in the next 2 consecutive months;

(6) in the absence of payment-out, the unclaimed cash and unclaimed securities shall be dealt with in accordance with Rule 23 of the High Court Suitors Fund Rules, Cap. 4B.

15.  I further order that a copy of the sealed order be served on all those clients of the 1st and 2nd applicants whose addresses are known to them.  I make no order as to costs for this application.