RE BBI ASIA LTD

HCMP 3200/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3200 OF 2014

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DECISION

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1.  I have before me an originating summons dated 22 December 2014 by which the Applicants seek extensions of time to put the company’s audited financial statements before the company in annual general meeting for the accounting periods ending 31 December 2011 and 2012. It is not necessary for me to go into the details about the law as it is recorded in a large number of authorities which the court has handed down during the course of last three years concerning application of this sort.

2.  Suffice it to say that it can be seen from the evidence filed by the two directors who made this application that the reason why the company failed to comply with the provisions of the Ordinance cannot fairly be categorised as inadvertence.  In paragraph 14 of the affirmation of Wang Luqjia, Ms Wang explains as follows:

“14. At the time of the Non-compliance, and prior to the Proposed Listing, the Company's principal business activity was investment holding. As such, the Company did not, and currently does not, have any senior management in Hong Kong. I was, and still am, primarily domiciled in Shanghai. The 1st Applicant was, and still is, domiciled in Canada. The Company did not properly engage a Hong Kong accountant or a Hong Kong legal advisor until shortly before the Proposed Listing and, as a result, preparation of the Company's financial accounts was delayed. As explained in paragraph 6 of the 1st Affidavit of Wang Jin, and as evidenced at page 23 of WJ-1, LY Venture, as the then sole member of the Company, had confirmed in a written resolution dated 19 September 2013 that no accounts had been drawn up since the date of incorporation to the date of that resolution,”

3.  Something similar appears in the affirmation filed by the other director.  As I have explained on previous occasions, it is not sufficient for directors simply to claim ignorance of the requirement of the Companies Ordinance in order to satisfy the court that they had made an inadvertent mistake.  Inadvertence arises where it can be shown that the directors took steps appropriate for a director of a Hong Kong company to satisfy themselves of the regulatory requirements in which the company was to operate.  Sometime directors do this but for reasons discussed in various authorities it is not made clear to them, for example, that although the company has no active business in Hong Kong and does not have to file a tax return, it is necessary to prepare audited financial statements.  This is not such a case.  It appears clear that the directors made no effort to get any kind of advice in respect of their obligations.  In the circumstances it seems to me clear there are no matters upon which the court could reasonably exercise its discretion and grants the application that has been made.  I therefore dismiss the originating summons with no order as to costs.