Hong Kong Case Law: Decisions & Judgments

Topic

Share options

Legal area

Court

31 Aug 2022

HONG KONG ZHIXIN FINANCIAL NEWS AGENCY LTD v. CHINA MAPLE LEAF EDUCATIONAL SYSTEMS LTD

Citation

[2022] HKCFI 2653
Court

Court of First Instance
Case number

HCA2973/2016

The court held the option was granted and irrevocable under the agreement (or by 30 September 2015), the only contractually relevant conditions were shareholder specific mandate and HKEx non‑objection which were satisfied, the defendant breached by refusing the exercises, the plaintiff validly elected damages instead of specific performance, and damages are assessed by the normal rule as market price at the dates of breach less the exercise price totalling HK$70,840,000; counterclaims dismissed.
14 Nov 2019

COMMISSIONER OF INLAND REVENUE v. POON CHO-MING, JOHN

Citation

[2019] HKCFA 38
Court

Court of Final Appeal
Case number

FACV1/2019

Applying the Fuchs analysis and the statutory language of the Inland Revenue Ordinance, both Sum D and the Share Option Gain were not chargeable to salaries tax because they were given as part of a settlement to induce the taxpayer to desist from litigation and to leave (i.e. to make him 'go away quietly'), not as rewards for past, present or future employment services; acceleration of vesting was part of that settlement and did not convert the benefits into taxable remuneration.
1 Jun 2018

POON CHO-MING, JOHN v. COMMISSIONER OF INLAND REVENUE

Citation

[2018] HKCA 297
Court

Court of Appeal
Case number

CACV94/2016

Applying the Fuchs purpose test to the facts found by the Board of Review, the Court held that Sum D and the accelerated vesting that produced the Share Option Gain were not payments made as a reward for employment or pursuant to an accrued entitlement under the Service Agreement or option grants but were consideration to secure the taxpayer's agreement to resign, give covenants and avoid litigation; accordingly they were not income 'from' employment and not chargeable to salaries tax.
24 Mar 2016

POON CHO-MING, JOHN v. COMMISSIONER OF INLAND REVENUE

Citation

POON CHO-MING, JOHN v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCIA2/2015

Applying the Fuchs test the court concluded Sum D and the accelerated share option gains were, in substance, income from the appellant's employment. The employer lawfully terminated under contractual rights; payments were effectively replacements for bonuses and incentives earned or provided for services, not compensation for abrogation of contractual rights, and therefore chargeable to salaries tax.
15 Oct 2015

LI XIAO YUN AND ANOTHER v. CHINA GAS HOLDINGS LTD

Citation

LI XIAO YUN AND ANOTHER v. CHINA GAS HOLDINGS LTD
Court

Court of Appeal
Case number

CACV215/2013

The Court held Circular 78 and related SAFE controls did not apply to the plaintiffs’ exercise because the transactions were overseas foreign exchange transactions (funds lawfully located and paid in Hong Kong) and the defendant failed to establish the transactions were domestic or cross-border transactions within the Regulations; accordingly the defendant’s defence that the exercises were unlawful under Circular 78 failed, the defendant could not rely on an unpleaded fourth limb of clause 8(g), and the plaintiffs were entitled to the agreed damages awarded.
31 Aug 2015

CHINA SHANSHUI INVESTMENT CO LTD v. ZHANG CAIKUI AND OTHERS

Citation

CHINA SHANSHUI INVESTMENT CO LTD v. ZHANG CAIKUI AND OTHERS
Court

Court of First Instance
Case number

HCMP593/2015

Although there is a serious question to be tried about purpose of the share options, the petitioner has not shown a sufficiently strong case; the likely irremediable prejudice of granting an injunction to employees and the commercial harm and the availability of damages to restore petitioner justify refusing interlocutory relief; balance of convenience favours dismissal of the injunction application.
12 Dec 2014

LAU TIN CHEUNG v. TIANJIN DEVELOPMENT HOLDINGS LTD

Citation

LAU TIN CHEUNG v. TIANJIN DEVELOPMENT HOLDINGS LTD
Court

Court of First Instance
Case number

HCA422/2011

Clause 8 created an express contractual obligation to grant the plaintiff 600,000 share options upon completion of the three month probation; the Share Option Scheme governed procedural matters but was not incorporated so as to leave substantive discretion to refuse grant. The defendant breached that obligation by withholding the grant and plaintiff proved loss; damages assessed by reference to market price on termination date (29 Nov 2010) less the proper subscription price ($2.44) produced an award of $2,046,000 plus interest and costs nisi.
17 Apr 2013

HKSAR v. CHIANG LILY AND OTHERS

Citation

HKSAR v. CHIANG LILY AND OTHERS
Court

Court of Appeal
Case number

CACC238/2011

On the facts the Court of Appeal found no merit in challenges to the trial judge’s factual and credibility assessments: the judge was entitled to accept Iris's core account notwithstanding inconsistencies and ICAC procedures, corroboration existed, and documentary and circumstantial evidence supported findings that Chiang orchestrated dishonest schemes, Hussain participated in drafting and concealing false option grants and made misrepresentations to regulators, and Pau knowingly arranged for shares to be held in another's name and authorised a prospectus containing untrue statements; therefo…
8 Mar 2013

LI XIAO YUN AND ANOTHER v. CHINA GAS HOLDINGS LTD

Citation

LI XIAO YUN AND ANOTHER v. CHINA GAS HOLDINGS LTD
Court

Court of First Instance
Case number

HCCL18/2011

Leave to adduce further expert evidence was properly refused because the proposed evidence was of dubious and at best slight relevance (Circular 7 post-dated the events), the plaintiffs knew the issues since October 2011 and failed to comply with directions, the application was made at the eve of trial and would prejudice case management and trial efficiency; no demonstrable error of law or misapplication of relevant factors by the trial judge justified appellate interference.
14 Apr 2011

RAJ KUMAR MAHAJAN v. HCL TECHNOLOGIES (HONG KONG) LTD AND OTHERS

Citation

RAJ KUMAR MAHAJAN v. HCL TECHNOLOGIES (HONG KONG) LTD AND OTHERS
Court

Court of First Instance
Case number

HCA954/2005

The court found that the Amsterdam meeting produced binding terms which were formally recorded in the 12 March 1999 letter but did not include any guarantee of a minimum annual bonus of US$200,000 nor any one-year notice term; bonuses were contractual and payable only by reference to the Amsterdam/12 March formula based on actual billings; HCL Technologies (Hong Kong) Limited alone was the employer; plaintiff was entitled to specified bonus sums for FY1999-2002 and a assessed further bonus to Feb 2004, payment in lieu of 3 months' notice, and miscellaneous sums; Shiv Nadar was not personally…