Hong Kong Case Law: Decisions & Judgments

Topic

Court sanction of schemes

Legal area

Court

19 Jul 2022

RE AKM INDUSTRIAL CO LTD

Citation

[2022] HKCFI 2321
Court

Court of First Instance
Case number

HCMP525/2022

Applying established principles the court found the scheme to privatise lawful, the convening order and explanatory statement compliant and satisfactory, the single class voting appropriate given cancellation of ordinary shares, and the cancellation consideration fair as reflected in 99.88% approval; accordingly the court sanctioned the scheme under s673 and confirmed the reduction of capital under s229 and ordered in terms of the draft consent order.
18 Oct 2021

RE CHONG HING BANK LTD

Citation

[2021] HKCFI 3091
Court

Court of First Instance
Case number

HCMP968/2021

Rule 2.10 must be construed prohibitorily: the required approval must be obtained at a meeting constituted as a meeting of holders of disinterested shares only; concert parties should not attend or vote for the purpose of Rule 2.10. In this case the court was satisfied that the concert parties gave irrevocable undertakings not to vote and did not vote at the Court Meeting, the statutory and Takeovers Code thresholds were met, the scheme was properly convened and the court therefore sanctioned the scheme and confirmed the reduction of capital under s.229.
10 Jan 2019

RE SINOTRANS SHIPPING LTD

Citation

[2019] HKCFI 323
Court

Court of First Instance
Case number

HCMP2240/2018

The court sanctioned the scheme because it was for a permissible privatisation purpose, the meeting was properly convened, shareholders were given sufficient information, the statutory majorities under s674(2)(a) were obtained and no opposition appeared at the hearing; the obsolete headcount test does not defeat compliance with the statutory voting thresholds.
2 Dec 2013

RE THE PRUDENTIAL ASSURANCE COMPANY LTD

Citation

RE THE PRUDENTIAL ASSURANCE COMPANY LTD
Court

Court of First Instance
Case number

HCMP2027/2013

The court found the statutory preconditions under s24 satisfied, gave decisive weight to the independent actuaries' report and the Insurance Authority's non‑objection, concluded objections did not show any material adverse effect or unfairness to any class of policyholders, and held that amendment mechanisms consistent with s25(1)(e) were permissible; accordingly the scheme was fair and sanctioned.
11 May 2009

RE PCCW LTD

Citation

RE PCCW LTD
Court

Court of Appeal
Case number

CACV85/2009

The Court of Appeal allowed the SFC appeal, holding that where there is evidence that a substantial number of votes in favour were obtained by share‑splitting or other forms of vote manipulation the court cannot be satisfied that the statutory majority fairly represented the class; the court must and may disregard or discount such votes when exercising its discretion under s.166, and on the facts here (significant manipulation and weak commercial rationale) the scheme sanction must be refused.
3 Dec 2001

UDL ARGOS ENGINEERING & HEAVY INDUSTRIES CO. LTD. v. LI OI LIN

Citation

UDL ARGOS ENGINEERING & HEAVY INDUSTRIES CO. LTD. v. LI OI LIN
Court

Court of Final Appeal
Case number

FACV11/2001

The Court held that classes must be constituted by reference to the similarity of legal rights affected by the scheme; preferential creditors and internal creditors could sensibly be included in a single class where their legal rights were not so dissimilar as to prevent them consulting together; internal creditors special interests do not automatically require separate meetings and may be addressed by the Courts discretion when sanctioning; accordingly the scheme meetings were properly constituted and the sanction was lawful, so the appeals were dismissed.

Hong Kong Case Law

RE AKM INDUSTRIAL CO LTD

RE CHONG HING BANK LTD

RE SINOTRANS SHIPPING LTD

RE THE PRUDENTIAL ASSURANCE COMPANY LTD

RE PCCW LTD

UDL ARGOS ENGINEERING & HEAVY INDUSTRIES CO. LTD. v. LI OI LIN