GE QINGFU AND OTHERS v. L & A INTERNATIONAL HOLDINGS LTD AND OTHERS

GE QINGFU AND OTHERS v. L & A INTERNATIONAL HOLDINGS LTD AND OTHERS

The court concluded that the Disputed Options were not validly granted in accordance with the Share Option Scheme and applicable GEM Listing Rules, and that the directors' conduct evidenced improper exercise of power and breaches of fiduciary duties; accordingly the grants and resultant allotments were void or voidable and plaintiffs were entitled to relief under the Companies Ordinance.

Citation
[2018] HKCFI 2742
Parties
1st Defendant (the Company): L&A International Holdings Limited; 2nd Defendant: Yang Si Hang; 3rd Defendant: Ng Ka Ho; 4th Defendant: Wong Chiu Po; 6th Defendant: Kwong Lun Kei Victor; 7th Defendant: Leung Tze Wai Brian; 12th Defendant: Lee Wing Yin; 13th Defendant: Pang Ho Man Catalina; 14th Defendant: Tong King Tim; 15th Defendant: Tsun Tracy Chui Shan
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
17 December 2018
Case Number
HCMP2222/2016
Procedural Posture
Application Under Companies Ordinance Ss.728 730 (company/shareholder Relief) / Judgment (court of First Instance)
Outcome
Judgment for the plaintiffs: grants of Disputed Options and related allotments declared void/voidable; directors found in breach of duties; relief granted under Companies Ordinance
Legal Topics
Share Option Scheme, Breach of Fiduciary Duty, GEM Listing Rules (blackout and Disclosure), Takeovers Code Compliance, Validity of Share Allotments
Source Language
EN
Company Law Securities Regulation Directors' Duties Takeovers Law Share Option Scheme Breach of Fiduciary Duty GEM Listing Rules (blackout and Disclosure) Takeovers Code Compliance +1 more

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Parties

L&A International Holdings Limited

1st Defendant (the Company)

Yang Si Hang

2nd Defendant

Ng Ka Ho

3rd Defendant

Wong Chiu Po

4th Defendant

Kwong Lun Kei Victor

6th Defendant

Leung Tze Wai Brian

7th Defendant

Lee Wing Yin

12th Defendant

Pang Ho Man Catalina

13th Defendant

Tong King Tim

14th Defendant

Tsun Tracy Chui Shan

15th Defendant

Procedural Posture

Application Under Companies Ordinance Ss.728 730 (company/shareholder Relief) / Judgment (court of First Instance)

Legal Issues

  1. 1 Whether the Disputed Options were validly granted under the Share Option Scheme and company's articles
  2. 2 Whether the grants were for a proper corporate purpose or for improper purposes benefiting grantees and frustrating shareholders
  3. 3 Whether the grants/allocations complied with GEM Listing Rules (including blackout period) and Takeovers Code disclosure obligations

Ratio Decidendi

The court concluded that the Disputed Options were not validly granted in accordance with the Share Option Scheme and applicable GEM Listing Rules, and that the directors' conduct evidenced improper exercise of power and breaches of fiduciary duties; accordingly the grants and resultant allotments were void or voidable and plaintiffs were entitled to relief under the Companies Ordinance.

Court Disposition

Judgment for the plaintiffs: grants of Disputed Options and related allotments declared void/voidable; directors found in breach of duties; relief granted under Companies Ordinance

Orders

  • Declaration that the Disputed Options and any resultant allotments of Shares are void or voidable and not binding on the Company
  • Relief granted to the plaintiffs under Companies Ordinance ss.728–730 (including declaratory and ancillary relief)