LI XIAO YUN AND ANOTHER v. CHINA GAS HOLDINGS LTD

LI XIAO YUN AND ANOTHER v. CHINA GAS HOLDINGS LTD

Court held that options were granted to plaintiffs in their capacity as directors and that they remained Eligible Persons when they exercised on 24 March 2011; clause 8(g) did not cause lapse prior to exercise; Restriction 9 constituted a material amendment not validly approved and was therefore ineffective; Circular 78 applied to plaintiffs as PRC domestic individuals, plaintiffs had not established SAFE approval and under clause 15.07 and bye‑law 12(1) the Board was entitled to refuse to issue shares; accordingly plaintiffs' claims were dismissed.

Citation
LI XIAO YUN AND ANOTHER v. CHINA GAS HOLDINGS LTD
Parties
1st Plaintiff: Li; 2nd Plaintiff: Xu; Defendant: Company
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
25 September 2013
Case Number
HCCL18/2011
Procedural Posture
Share Option Dispute / Company Law / Contract / Trial Judgment (court of First Instance, Judgment Delivered)
Outcome
Plaintiff claims dismissed
Legal Topics
Share Option Scheme, Eligibility to Grant and Exercise Options, Lapse and Termination of Options, Incorporation of Supplemental Restrictions, Board and Shareholder Resolutions, Compliance With PRC SAFE Circular 78, Bye‑laws Interpretation, Pleadings Requirement
Source Language
EN
Company Law Contract Law Employment Law Foreign Exchange Law Equity Share Option Scheme Eligibility to Grant and Exercise Options Lapse and Termination of Options +5 more

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Parties

Li

1st Plaintiff

Xu

2nd Plaintiff

Company

Defendant

Procedural Posture

Share Option Dispute / Company Law / Contract / Trial Judgment (court of First Instance, Judgment Delivered)

Legal Issues

  1. 1 Were the options granted to plaintiffs in their capacity as Chairman and Vice‑Chairman or as directors?
  2. 2 Did plaintiffs cease to be Eligible Persons before exercise of options?
  3. 3 Did clause 8(g) cause automatic lapse of the options prior to exercise?

Ratio Decidendi

Court held that options were granted to plaintiffs in their capacity as directors and that they remained Eligible Persons when they exercised on 24 March 2011; clause 8(g) did not cause lapse prior to exercise; Restriction 9 constituted a material amendment not validly approved and was therefore ineffective; Circular 78 applied to plaintiffs as PRC domestic individuals, plaintiffs had not established SAFE approval and under clause 15.07 and bye‑law 12(1) the Board was entitled to refuse to issue shares; accordingly plaintiffs' claims were dismissed.

Court Disposition

Plaintiff claims dismissed

Orders

  • Plaintiffs' claims are dismissed
  • Costs to be paid by the plaintiffs to the Company with certificate for two counsel