KING FUNG CONSTRUCTION WORK CO LTD v. YIP KWAI CHOR AND ANOTHER

KING FUNG CONSTRUCTION WORK CO LTD v. YIP KWAI CHOR AND ANOTHER

The court held that the correct valuation date is the petition date, 29 July 2004; the valuer must be a certified public accountant to value the 3,000 shares by reference to assets, profitability and future prospects without discount for minority holding; the valuer must account for the petitioners entitlement to 50% of profits and specified repayments/diversions; interest on the purchase price is awarded from valuation date at specified rates; and specified orders for purchase, provision of documents, costs and liberty to apply were made.

Citation
KING FUNG CONSTRUCTION WORK CO LTD v. YIP KWAI CHOR AND ANOTHER
Parties
Petitioner / 1st Defendant: Yip Kwai Chor; 1st Respondent / Plaintiff: King Fung Construction Work Company Limited; 2nd Respondent: Lau Kai Yan; 2nd Defendant: Sing Yip Construction Engineering Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
18 October 2007
Case Number
HCA2183/2004
Procedural Posture
Company Petition Under S.168 a Companies Ordinance and Related Civil Action (hca 2183/2004) / Judgment Determining Relief, Valuation Directions and Consequential Orders
Outcome
Petition allowed in part; orders made for compulsory purchase of petitioners shares at a valuation dated 29 July 2004; related judgment in HCA 2183/2004 for repayment by Sing Yip and dismissal of claim against Yip.
Legal Topics
Share Valuation, Buyout of Minority Shareholder, Fiduciary Duties of Directors, Appointment of Valuer, Interest on Purchase Price, Allocation of Costs
Source Language
EN
Company Law Equity Civil Procedure Commercial Law Share Valuation Buyout of Minority Shareholder Fiduciary Duties of Directors Appointment of Valuer +2 more

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Parties

Yip Kwai Chor

Petitioner / 1st Defendant

King Fung Construction Work Company Limited

1st Respondent / Plaintiff

Lau Kai Yan

2nd Respondent

Sing Yip Construction Engineering Limited

2nd Defendant

Procedural Posture

Company Petition Under S.168 a Companies Ordinance and Related Civil Action (hca 2183/2004) / Judgment Determining Relief, Valuation Directions and Consequential Orders

Legal Issues

  1. 1 Appropriate date for valuing petitioners shares
  2. 2 Appropriate professional to act as valuer
  3. 3 Whether to discount minority shareholding

Ratio Decidendi

The court held that the correct valuation date is the petition date, 29 July 2004; the valuer must be a certified public accountant to value the 3,000 shares by reference to assets, profitability and future prospects without discount for minority holding; the valuer must account for the petitioners entitlement to 50% of profits and specified repayments/diversions; interest on the purchase price is awarded from valuation date at specified rates; and specified orders for purchase, provision of documents, costs and liberty to apply were made.

Court Disposition

Petition allowed in part; orders made for compulsory purchase of petitioners shares at a valuation dated 29 July 2004; related judgment in HCA 2183/2004 for repayment by Sing Yip and dismissal of claim against Yip.

Orders

  • 2nd Respondent to purchase 3,000 ordinary $1 shares registered in name of Petitioner at price fixed by a valuer (certified public accountant) agreed within 14 days or appointed by HKICPA president on application
  • Valuer to value shares by reference to assets, profitability and future prospects of 1st Respondent as at 29 July 2004 and without discount for minority holding