RE COSMOS INSURANCE MANAGEMENT LTD

RE COSMOS INSURANCE MANAGEMENT LTD

The court confirmed the reduction because the losses to be written off were realised and permanent, the reduction would eliminate equivalent accumulated losses and better reflect the company's financial position for its new business, statutory procedures had been complied with, the only identified creditor had been informed and raised no objection, and the interests of creditors would not be prejudiced.

Citation
RE COSMOS INSURANCE MANAGEMENT LTD
Parties
Petitioner (company): Cosmos Insurance Management Limited; Shareholder / Acquirer: Cosmos Services Company Limited; Creditor / Trading Partner: The Tokio Marine & Fire Insurance Co. (HK) Ltd; Former Shareholder and Lender: Itochu Hong Kong Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
9 June 2006
Case Number
HCMP652/2006
Procedural Posture
Application for Confirmation of Reduction of Share Capital Under the Companies Ordinance, Cap. 32 / Judgment Confirming Reduction (reasons for Judgment Handed Down)
Outcome
Order confirming the proposed reduction of share capital as drafted
Legal Topics
Share Capital Reduction, Confirmation of Capital Reduction, Creditors' Protection, Companies Ordinance S.59(1) and S.116 B
Source Language
EN
Company Law Corporate Law Insolvency Civil Procedure Share Capital Reduction Confirmation of Capital Reduction Creditors' Protection Companies Ordinance S.59(1) and S.116 B

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Parties

Cosmos Insurance Management Limited

Petitioner (company)

Cosmos Services Company Limited

Shareholder / Acquirer

The Tokio Marine & Fire Insurance Co. (HK) Ltd

Creditor / Trading Partner

Itochu Hong Kong Limited

Former Shareholder and Lender

Procedural Posture

Application for Confirmation of Reduction of Share Capital Under the Companies Ordinance, Cap. 32 / Judgment Confirming Reduction (reasons for Judgment Handed Down)

Legal Issues

  1. 1 Whether the court should confirm the reduction of share capital under s.59(1) of the Companies Ordinance
  2. 2 Whether the reduction is bona fide for the benefit of the company and not prejudicial to creditors
  3. 3 Whether statutory procedures and notices have been complied with

Ratio Decidendi

The court confirmed the reduction because the losses to be written off were realised and permanent, the reduction would eliminate equivalent accumulated losses and better reflect the company's financial position for its new business, statutory procedures had been complied with, the only identified creditor had been informed and raised no objection, and the interests of creditors would not be prejudiced.

Court Disposition

Order confirming the proposed reduction of share capital as drafted

Orders

  • Order confirming reduction of share capital from HK$6,766,100 divided into 67,661 shares of HK$100 each to HK$1,393,891 divided into 67,661 shares of HK$20.60 each
  • Order that the reduction be effected by cancelling paid-up capital of HK$79.40 on each of the 67,661 issued shares