CHAN SEUNG BUN v. WONG KING FAI JOE AND ANOTHER

CHAN SEUNG BUN v. WONG KING FAI JOE AND ANOTHER

The court determined fair value using the market/earnings approach as the appropriate method, accepted the expert’s market approach but rejected the application of a key person discount while accepting a 20% small size discount; directed distribution of accumulated and interim profits to shareholders before transfer; fixed company value at HKD 37,315,473 and price for 50% shares at HKD 18,657,737 and ordered transfer and payment under specified terms.

Citation
[2021] HKCFI 3572
Parties
Petitioner: Chan Seung Bun; 1st Respondent: Wong King Fai Joe; 2nd Respondent: Top “E” Trading (HK) Company Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
25 November 2021
Case Number
HCCW227/2018
Procedural Posture
Companies (winding Up) Proceedings / Substantive Hearing to Determine Market Value and Effect Buy Out of Shares
Outcome
Court directed sale of petitioner’s 250,000 shares to personal representatives at determined price; refused winding up; made ancillary procedural and distribution directions; no order as to costs.
Legal Topics
Share Valuation, Buy Out Mechanism, Just and Equitable Winding Up, Expert Evidence, Distribution of Accumulated Profits, Share Transmission
Source Language
EN
Company Law Probate and Administration Civil Procedure Valuation Law Share Valuation Buy Out Mechanism Just and Equitable Winding Up Expert Evidence +2 more

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Parties

Chan Seung Bun

Petitioner

Wong King Fai Joe

1st Respondent

Top “E” Trading (HK) Company Limited

2nd Respondent

Procedural Posture

Companies (winding Up) Proceedings / Substantive Hearing to Determine Market Value and Effect Buy Out of Shares

Legal Issues

  1. 1 Appropriate basis of valuation for a private going concern (market/earnings vs NAV)
  2. 2 Appropriate application of discounts and premiums (DLOM, SSD, KPD, control premium)
  3. 3 Date of valuation and treatment of accumulated and interim profits

Ratio Decidendi

The court determined fair value using the market/earnings approach as the appropriate method, accepted the expert’s market approach but rejected the application of a key person discount while accepting a 20% small size discount; directed distribution of accumulated and interim profits to shareholders before transfer; fixed company value at HKD 37,315,473 and price for 50% shares at HKD 18,657,737 and ordered transfer and payment under specified terms.

Court Disposition

Court directed sale of petitioner’s 250,000 shares to personal representatives at determined price; refused winding up; made ancillary procedural and distribution directions; no order as to costs.

Orders

  • Personal representatives to pay HKD 18,657,737 to petitioner by banker’s draft within 60 days of judgment
  • Petitioner to execute all transfer documents and assist replacement of director contemporaneously with payment