RE WORLDCO INTERNATIONAL LTD

RE WORLDCO INTERNATIONAL LTD

The petition was granted because the proposed reduction was for the clear purpose of extinguishing accumulated losses and aligning capital with assets, the directors provided sufficient explanation of the nature of the losses and offered a formal undertaking including a special reserve to protect creditors for amounts that might not be permanent, procedural requirements were satisfied and there was no unfair treatment of shareholders; accordingly the court approved the draft order and minute for reduction of capital.

Citation
RE WORLDCO INTERNATIONAL LTD
Parties
Petitioner (company): Worldco International Limited; Sole Shareholder: TTY Biopharm Company Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
19 September 2007
Case Number
HCMP382/2007
Procedural Posture
Petition for Reduction of Capital (companies Ordinance Ss58 59) / Judgment and Order Made
Outcome
Petition granted; order made confirming reduction of capital and minute approved.
Legal Topics
Reduction of Capital, Share Capital, Undertaking for Creditors, Accumulated Losses
Source Language
EN
Company Law Corporate Finance Creditor Protection Reduction of Capital Share Capital Undertaking for Creditors Accumulated Losses

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Parties

Worldco International Limited

Petitioner (company)

TTY Biopharm Company Limited

Sole Shareholder

Procedural Posture

Petition for Reduction of Capital (companies Ordinance Ss58 59) / Judgment and Order Made

Legal Issues

  1. 1 Whether the proposed reduction of capital is for a discernible purpose
  2. 2 Whether adequate protection is provided for creditors given accumulated losses and their permanence
  3. 3 Whether procedural requirements (shareholder consent, advertisement) are satisfied

Ratio Decidendi

The petition was granted because the proposed reduction was for the clear purpose of extinguishing accumulated losses and aligning capital with assets, the directors provided sufficient explanation of the nature of the losses and offered a formal undertaking including a special reserve to protect creditors for amounts that might not be permanent, procedural requirements were satisfied and there was no unfair treatment of shareholders; accordingly the court approved the draft order and minute for reduction of capital.

Court Disposition

Petition granted; order made confirming reduction of capital and minute approved.

Orders

  • Order made in terms of the draft order as amended confirming the reduction of capital to $0.50 per share and cancelling paid-up capital of $0.50 per share (total $18,250,000)
  • Minute for reduction of capital approved