Relevant employees whose shares in China Shanshui Investment Company Limited held by ZHANG CAIKUI on trust (Please refer to Schedule 1 attached to the Writ of Summons for names of the relevant employees) AND ANOTHER v. ZHANG CAIKUI AND ANOTHER

Relevant employees whose shares in China Shanshui Investment Company Limited held by ZHANG CAIKUI on trust (Please refer to Schedule 1 attached to the Writ of Summons for names of the relevant employees) AND ANOTHER v. ZHANG CAIKUI AND ANOTHER

The application was dismissed because the applicants failed to meet the high threshold required to justify court intervention in receivers' commercial decisions: there was no evidence of bad faith or legal error by the receivers, the grant of a general mandate is routine and does not itself cause dilution, the receivers had undertaken not to vote to dilute CSI, and there were adequate shareholder remedies available; therefore no direction to the receivers was warranted.

Citation
Relevant employees whose shares in China Shanshui Investment Company Limited held by ZHANG CAIKUI on trust (Please refer to Schedule 1 attached to the Writ of Summons for names of the relevant employees) AND ANOTHER v. ZHANG CAIKUI AND ANOTHER
Parties
Applicants: Five Plaintiffs; Respondents: Receivers; First Defendant: First Defendant; Plaintiffs: Plaintiffs (K&L Gates)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
14 June 2017
Case Number
HCA2191/2014
Procedural Posture
Urgent Chamber Application (direction to Receivers) / Decision on Interim Application
Outcome
Application dismissed with costs; certificate for two counsel for the receivers.
Legal Topics
Directors' Powers, Shareholder Rights, Share Allotment Mandate, Conflict of Interest, Removal of Receivers, AGM Resolutions
Source Language
EN
Company Law Equity Corporate Governance Receivership Directors' Powers Shareholder Rights Share Allotment Mandate Conflict of Interest +2 more

Case Brief

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Parties

Five Plaintiffs

Applicants

Receivers

Respondents

First Defendant

First Defendant

Plaintiffs (K&L Gates)

Plaintiffs

Procedural Posture

Urgent Chamber Application (direction to Receivers) / Decision on Interim Application

Legal Issues

  1. 1 Whether the court should direct receivers how to vote at a related company AGM
  2. 2 Whether the receivers have a conflict of duties in acting as board members of CSCG while holding shares in CSI
  3. 3 Whether the grant or exercise of a general mandate to allot shares justifies urgent court intervention to prevent dilution and loss of control premium

Ratio Decidendi

The application was dismissed because the applicants failed to meet the high threshold required to justify court intervention in receivers' commercial decisions: there was no evidence of bad faith or legal error by the receivers, the grant of a general mandate is routine and does not itself cause dilution, the receivers had undertaken not to vote to dilute CSI, and there were adequate shareholder remedies available; therefore no direction to the receivers was warranted.

Court Disposition

Application dismissed with costs; certificate for two counsel for the receivers.

Orders

  • Application dismissed
  • Costs awarded to the receivers with a certificate for two counsel