WONGS INVESTMENT DEVELOPMENT HOLDINGS GROUP LTD (In Liquidation) v. CHINA KINGSTONE MINING HOLDINGS LTD AND ANOTHER

WONGS INVESTMENT DEVELOPMENT HOLDINGS GROUP LTD (In Liquidation) v. CHINA KINGSTONE MINING HOLDINGS LTD AND ANOTHER

On the interim application the court concluded there was a strongly arguable (prima facie) binding contract arising from the petitioner's valid acceptance of the open offer under the terms of the prospectus and Listing Rules; the petitioner would likely suffer irreparable harm not adequately compensable by damages; no sufficient explanation justified the board's discretionary refusal to allot; accordingly the interim injunction continuing the order restraining allotment to the underwriter and preserving the petitioner's entitlement was appropriate and was continued.

Citation
WONGS INVESTMENT DEVELOPMENT HOLDINGS GROUP LTD (In Liquidation) v. CHINA KINGSTONE MINING HOLDINGS LTD AND ANOTHER
Parties
Petitioner: WONGS INVESTMENT DEVELOPMENT HOLDINGS GROUP LIMITED (In Liquidation); 1st Respondent: CHINA KINGSTONE MINING HOLDINGS LIMITED; 2nd Respondent (underwriter): ROYAL MOON INTERNATIONAL LTD
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
8 July 2015
Case Number
HCMP1472/2015
Procedural Posture
High Court HCMP 1472/2015 Company Law / Equity (urgent Injunction) / Interim Application / Return Date for Continuation of Injunction (interim Relief)
Outcome
Interim injunctions continued in favour of the petitioner; order nisi for costs awarded to petitioner with a certificate for two counsel.
Legal Topics
Open Offer, Share Allotment, Underwriting, Liquidators' Powers to Raise Money, Specific Performance, Interim Injunction, Misfeasance, Directors' Discretion Under Articles, Takeover Code Implications
Source Language
EN
Company Law Equity Injunctions Securities Regulation Insolvency / Liquidation Open Offer Share Allotment Underwriting +6 more

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Parties

WONGS INVESTMENT DEVELOPMENT HOLDINGS GROUP LIMITED (In Liquidation)

Petitioner

CHINA KINGSTONE MINING HOLDINGS LIMITED

1st Respondent

ROYAL MOON INTERNATIONAL LTD

2nd Respondent (underwriter)

Procedural Posture

High Court HCMP 1472/2015 Company Law / Equity (urgent Injunction) / Interim Application / Return Date for Continuation of Injunction (interim Relief)

Legal Issues

  1. 1 Whether a valid acceptance of an open offer created a binding contract obliging allotment of shares to the petitioner
  2. 2 Whether the company directors had a discretionary right under the articles to refuse allotment to the petitioner
  3. 3 Whether the petitioner would suffer irreparable harm if injunction refused and damages would be inadequate

Ratio Decidendi

On the interim application the court concluded there was a strongly arguable (prima facie) binding contract arising from the petitioner's valid acceptance of the open offer under the terms of the prospectus and Listing Rules; the petitioner would likely suffer irreparable harm not adequately compensable by damages; no sufficient explanation justified the board's discretionary refusal to allot; accordingly the interim injunction continuing the order restraining allotment to the underwriter and preserving the petitioner's entitlement was appropriate and was continued.

Court Disposition

Interim injunctions continued in favour of the petitioner; order nisi for costs awarded to petitioner with a certificate for two counsel.

Orders

  • Continuation of the urgent injunctions granted on 28 June 2015 restraining respondents from allotting the relevant offer shares to Royal Moon and preserving the petitioner's entitlement to allotment
  • Order nisi that China Kingstone do pay the petitioner forthwith the costs of and occasioned by the petitioner's ex parte application and inter partes summons dated 30 June 2015 with a certificate for two counsel