RE PIPER JAFFREY ASIA SECURITIES LTD (in Members’ Voluntary Liquidation)

HCMP 437/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 437 OF 2013

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REASONS FOR JUDGMENT

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1.  This is an application by the liquidators of a share broking company to dispose of some unclaimed shares held by the company on trust for its customers. It is made under section 251 of the Companies Ordinance, Cap. 32 and section 56 of the Trustee Ordinance, Cap. 29. The shares are of 13 delisted companies. These companies have either been compulsorily wound up, ceased business in Hong Kong or been dissolved or struck off. Their shares are not being traded in the market and of little or no monetary value.

2.  I have given judgment in HCMP 2569/2012 on 19 December 2012 ordering the company to pay into court unclaimed shares and moneys held by it on trust for its customers.  The customers of such shares and moneys did not make any claim for their return or direct their disposal and did not respond to the requests for instructions by the company; hence, I ordered that they should be paid into court.  The liquidators of the company now seek in these proceedings an order that they be at liberty to deal with the unclaimed shares of the delisted companies.  These shares cannot be deposited with the court.

3.  There are two ways to deposit shares with the court.  One way is to register the Registrar of the High Court as the new shareholder in the share register of the company concerned and to have new share certificates issued to the Registrar.  This is not feasible for the shares in question as enquiries by the liquidators reveal that the former share registrars of these delisted companies are not providing any more service to these companies.  Hence, it is not possible to effect a change of shareholder in the register of shareholders and to issue new share certificates to the new shareholder.

4.  It is also not possible to record the Registrar of the High Court as the shareholder of the relevant shares in the records of the Central Clearing and Settlement System of Hong Kong Exchanges and Clearing Ltd. (“CCASS”) as the Registrar does not have an account with CCASS.

5.  The other way is to withdraw the share certificates from Hong Kong Securities Clearing Company Limited (“HKSCC”) and deliver the same to the Registrar.  However, these shares are no longer traded in the market and HKSCC only has a limited amount of the share certificates available for withdrawal.  HKSCC is also unable to provide certificates that would match the exact quantities of shares held by individual customers of the company. HKSCC can only provide certificates for the aggregate holdings of the customers.  If such aggregate share certificates should be deposited with the court, they cannot not be withdrawn by individual customers who only own part of the aggregate.

6.  If the customer should still be in touch with the share broker, the customer would usually waive such delisted shares and no problem would arise.  However, in the present case, the customers in question have not responded to the repeated requests of the company for instructions.

7.  Since these shares of delisted companies have little or no monetary value, I order that the liquidators be at liberty to deal with them as they see fit including the forfeiture thereof and the liquidators be discharged from any obligations or claims in respect of such shares.

8.  I further grant the liquidators liberty to apply and make no order as to costs on this application.