LAU SHAK WAH AND ANOTHER v. THE REGISTRAR OF COMPANIES

HCMP 1433/2018

[2018] HKCFI 2397

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS 1433 OF 2018

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D E C I S I O N

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1.  The application today only concerns an order under section 209(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 for a permanent stay of the winding up of the company. 

2.  The present situation is not an unusual one.  It is simply to revive a dissolved company so that it can continue to operate a business project which prior to its dissolution was once aborted. 

3.  The company was incorporated in 2011 and engaged in the business of investing in overseas property and the provision of consultancy services.  It also had an agent in Dubai to facilitate its business.  In September of 2015, it entered into an agreement with a company by the name of “Trilogy Global General Trading LLC” incorporated in Dubai, whereby the company agreed to look for investors for Trilogy in return for a 20-per-cent commission of the investment amount.

4.  However, soon after the signing of the agreement, the deteriorating business environment, especially for investment, was down and Trilogy decided to decline investments for the time being and, with the company’s agreement, the September agreement was suspended or held at abeyance.  By this time, the company’s own business was winding down and the last of its properties had been sold.  In those circumstances, by early 2016, not having heard anything further, the company decided it would cease to carry on its business activities. 

5.  So by 18 March 2016 the board resolved that an EGM be held to pass the special resolution required for winding up the company voluntarily and for Lau Shak Wah, a senior partner of Lau, Wong & Chan, to be the liquidator.  All the required steps were taken, such as the filing of a certificate of solvency, the holding of the EGM for passing the special resolution and for the appointment of the liquidator.  This was completed by 21 March 2016 and, six months later, the former liquidator, who was the first-named applicant, made a return of final winding-up meeting of the company with liquidator’s statement filed with the Companies Registry on 20 September 2016.

6.  Recently, which is two years later, Mr Chiu (who was one of two directors of the company) has been informed by his former Dubai agent that Trilogy was once again active and would like to reactivate the agreement with the company.  This agent still has access to potential investors, so potentially substantial income could be generated for the company if it were revived.  The former liquidator of the company and Mr Chiu confirm that there is no irregular matter or transaction in relation to the company that requires investigation nor any misconduct on the part of the applicants or any former officers of the company.

7.  The applicable principles are helpfully summarised in paragraph 6 of the judgment of Her Ladyship Kwan J (as she then was) in Re Outboard Marine Corp Asia Limited [2003] 1 HKLRD 585.  I only need to mention the more significant of the considerations.  As the exercise of the discretionary power is involved, the burden is on the applicant to make out a sufficient case for a stay that carries conviction.

8.  This is a case where there are sufficient assets to pay all the creditors and expenses of liquidation.  The overriding considerations are whether the stay is conducive or detrimental to commercial morality and to the interest of the public at large.  I am satisfied that the company is solvent and has genuine commercial reasons for seeking a stay of the winding up on a permanent basis and it would be an appropriate case for the court to exercise its discretion in favour of the applicant.