張才奎所託管中國山水投資有限公司股份 AND ANOTHER v. 張才奎 AND ANOTHER

張才奎所託管中國山水投資有限公司股份 AND ANOTHER v. 張才奎 AND ANOTHER

The court directed the receivers to exercise the rights attached to the 45.63% CSI shares in receivership to seek a four-week adjournment (or longer if necessary) of CSCG's EGM to ascertain plaintiffs' positions and, if adjournment could not be obtained, to vote against the proposed placement and related resolutions. The direction rested on evidence that both the 1st defendant and prima facie a large number of plaintiffs opposed the resolutions and on the principle that receivers, as interim custodians, should preserve the subject matter for those entitled to it. The court refused the 1st defendant's application for a direction that the receivers abstain from voting.

Citation
張才奎所託管中國山水投資有限公司股份 AND ANOTHER v. 張才奎 AND ANOTHER
Parties
Plaintiffs: Plaintiffs; 1st Defendant: 1st Defendant (Mr Zhang Snr); Receivers: Receivers; Shareholder: Tianrui Group Co Ltd; Shareholder: Asia Cement Corp (ACC); Shareholder: China National Building Material Co Ltd (CNBM)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
20 February 2017
Case Number
HCA1766/2014
Procedural Posture
Consolidated Civil Proceedings (company/trust/receivership) / Chambers Hearing for Interim Directions Prior to Extraordinary General Meeting (urgent/interim)
Outcome
Court gave directions to the receivers to seek adjournment and to vote against the resolutions if adjournment not obtained; refused 1st defendant's prayer for receivers to abstain; noted but did not resolve solicitor authority dispute at hearing
Legal Topics
Receivership, Shareholder Voting, Constructive Trust, Adjournment, Share Placement/dilution, Public Float Restoration
Source Language
EN
Company Law Trusts Receivership Equity Civil Procedure Shareholder Voting Constructive Trust Adjournment +2 more

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Parties

Plaintiffs

Plaintiffs

1st Defendant (Mr Zhang Snr)

1st Defendant

Receivers

Receivers

Tianrui Group Co Ltd

Shareholder

Asia Cement Corp (ACC)

Shareholder

China National Building Material Co Ltd (CNBM)

Shareholder

Procedural Posture

Consolidated Civil Proceedings (company/trust/receivership) / Chambers Hearing for Interim Directions Prior to Extraordinary General Meeting (urgent/interim)

Legal Issues

  1. 1 Whether receivers should be directed to exercise voting rights attached to shares in receivership to seek adjournment of an EGM and/or vote against proposed resolutions
  2. 2 Whether receivers should be directed to abstain from voting on CSI resolutions affecting board composition
  3. 3 Whether and how the receivers must ascertain and follow the wishes of plaintiffs given disputed solicitor authority and alleged transactions transferring beneficial interests

Ratio Decidendi

The court directed the receivers to exercise the rights attached to the 45.63% CSI shares in receivership to seek a four-week adjournment (or longer if necessary) of CSCG's EGM to ascertain plaintiffs' positions and, if adjournment could not be obtained, to vote against the proposed placement and related resolutions. The direction rested on evidence that both the 1st defendant and prima facie a large number of plaintiffs opposed the resolutions and on the principle that receivers, as interim custodians, should preserve the subject matter for those entitled to it. The court refused the 1st defendant's application for a direction that the receivers abstain from voting.

Court Disposition

Court gave directions to the receivers to seek adjournment and to vote against the resolutions if adjournment not obtained; refused 1st defendant's prayer for receivers to abstain; noted but did not resolve solicitor authority dispute at hearing

Orders

  • The Receivers be directed to exercise the rights attached to the shares in receivership in China Shanshui Investment Company Limited (CSI) to seek an adjournment of the Extraordinary General Meeting of China Shanshui Cement Group Limited scheduled for 17 February 2017 for 4 weeks or such longer period as is...
  • If the Receivers fail to obtain such adjournment, the Receivers are directed to vote against the resolutions at the EGM