RE SHIROKIYA HONG KONG LTD

RE SHIROKIYA HONG KONG LTD

The Court confirmed the reduction of share capital because the reduction served a bona fide corporate purpose, involved no distribution to or diminution of liability of the sole shareholder, the company provided an undertaking to set aside $2,000,000 and maintain it for two years which, together with parent company support and current asset coverage of current liabilities, adequately protected creditors, and formal requirements including advertisement had been satisfied.

Citation
RE SHIROKIYA HONG KONG LTD
Parties
Petitioner / Company: Shirokiya Hong Kong Limited; Sole Shareholder / Interested Party: Monteroza Co., Ltd.
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
28 July 2009
Case Number
HCMP1176/2009
Procedural Posture
Application Under Companies Ordinance (cap.32) for Confirmation of Reduction of Share Capital (s58) / Reasons for Judgment / Order Confirming Reduction of Capital
Outcome
Reduction of share capital confirmed; order made in terms of the draft submitted.
Legal Topics
Reduction of Capital, Creditors Protection, Special Resolution, Court Discretion on Creditor Lists
Source Language
EN
Company Law Corporate Finance Reduction of Capital Creditors Protection Special Resolution Court Discretion on Creditor Lists

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Parties

Shirokiya Hong Kong Limited

Petitioner / Company

Monteroza Co., Ltd.

Sole Shareholder / Interested Party

Procedural Posture

Application Under Companies Ordinance (cap.32) for Confirmation of Reduction of Share Capital (s58) / Reasons for Judgment / Order Confirming Reduction of Capital

Legal Issues

  1. 1 Whether the proposed reduction of capital under s58 Cap.32 should be confirmed by the Court
  2. 2 Whether the interests of creditors would be adequately protected by the undertaking and other measures
  3. 3 Whether the Court should dispense with the settlement of a list of creditors

Ratio Decidendi

The Court confirmed the reduction of share capital because the reduction served a bona fide corporate purpose, involved no distribution to or diminution of liability of the sole shareholder, the company provided an undertaking to set aside $2,000,000 and maintain it for two years which, together with parent company support and current asset coverage of current liabilities, adequately protected creditors, and formal requirements including advertisement had been satisfied.

Court Disposition

Reduction of share capital confirmed; order made in terms of the draft submitted.

Orders

  • Order confirming the reduction of issued share capital from $54,983,900 to $1,500,000 and cancelling $53,483,900 and 53,483,900 shares
  • Order that the company shall, within 14 days of the order, set aside HKD 2,000,000 in a designated bank account and maintain that account for two years to guarantee claims (other than debts owed to the Group) from 31 March 2009 to 31 December 2009