LUCK CONTINENT LTD v. CHENG CHEE TOCK THEODORE AND OTHERS

LUCK CONTINENT LTD v. CHENG CHEE TOCK THEODORE AND OTHERS

The court held that CYF was obliged under the Listing Rules to ensure its articles conformed to Appendix 3 para 4(3); Bermuda law did not 'provide otherwise' because it merely permitted companies to set the voting threshold but did not require a higher threshold; the failure of shareholders to pass the amendment resulted in the company remaining in breach and that company-level inaction was unfairly prejudicial under s.168A because it risked prolonging suspension of trading and prejudiced shareholders. Accordingly the court ordered amendment of Bye-law 86(4) to substitute 'ordinary' for 'special'.

Citation
LUCK CONTINENT LTD v. CHENG CHEE TOCK THEODORE AND OTHERS
Parties
Petitioner: Luck Continent Limited; 1st Respondent: Mr Cheng Chee Tock Theodore; 2nd Respondent: Madam Leonora Yung; 3rd Respondent: 3rd Respondent (company controlled by Madam Yung); 4th Respondent: Super Crown Venture Inc; 5th Respondent: Golden View Worldwide Limited; 6th Respondent: Treasure Mark Profits Corporation; 7th Respondent: Super Mark Profits Corporation; 8th Respondent: Pacific Equity Development Corp; 9th Respondent (subject Company): C Y Foundation Group Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
25 April 2012
Case Number
HCMP702/2010
Procedural Posture
Petition Under Section 168 a Companies Ordinance (unfair Prejudice) / Trial Judgment (high Court, Court of First Instance)
Outcome
Petition allowed in part; court ordered amendment of Bye-law 86(4) to permit removal of directors by ordinary resolution
Legal Topics
Amendment of Articles, Removal of Directors, Listing Rules Compliance, Section 168 a Companies Ordinance, Breach of Listing Rules, Legitimate Expectation
Source Language
EN
Company Law Securities Regulation Equity Unfair Prejudice Amendment of Articles Removal of Directors Listing Rules Compliance Section 168 a Companies Ordinance Breach of Listing Rules +1 more

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Parties

Luck Continent Limited

Petitioner

Mr Cheng Chee Tock Theodore

1st Respondent

Madam Leonora Yung

2nd Respondent

3rd Respondent (company controlled by Madam Yung)

3rd Respondent

Super Crown Venture Inc

4th Respondent

Golden View Worldwide Limited

5th Respondent

Treasure Mark Profits Corporation

6th Respondent

Super Mark Profits Corporation

7th Respondent

Pacific Equity Development Corp

8th Respondent

C Y Foundation Group Limited

9th Respondent (subject Company)

Procedural Posture

Petition Under Section 168 a Companies Ordinance (unfair Prejudice) / Trial Judgment (high Court, Court of First Instance)

Legal Issues

  1. 1 Whether a listed issuer is obliged to amend its articles to conform with Appendix 3 of the Listing Rules (para 4(3))
  2. 2 Whether Bermuda law (Bermuda Companies Act s.93(1)) provides an exception 'where otherwise provided by law'
  3. 3 Whether the failure of shareholders to pass an amendment is an act/inaction of the company for s.168A purposes

Ratio Decidendi

The court held that CYF was obliged under the Listing Rules to ensure its articles conformed to Appendix 3 para 4(3); Bermuda law did not 'provide otherwise' because it merely permitted companies to set the voting threshold but did not require a higher threshold; the failure of shareholders to pass the amendment resulted in the company remaining in breach and that company-level inaction was unfairly prejudicial under s.168A because it risked prolonging suspension of trading and prejudiced shareholders. Accordingly the court ordered amendment of Bye-law 86(4) to substitute 'ordinary' for 'special'.

Court Disposition

Petition allowed in part; court ordered amendment of Bye-law 86(4) to permit removal of directors by ordinary resolution

Orders

  • Order under Companies Ordinance s.168A amending Bye-law 86(4) by substituting the word 'special' with 'ordinary'
  • Parties to restore matter for a 30 minute appointment to obtain directions for a hearing to determine costs