Hong Kong Case Law: Decisions & Judgments

Topic

Directors' powers

Legal area

Court

8 Apr 2020

LAM KWOK KAI v. ORIENT VENTURE INVESTMENT LTD AND ANOTHER

Citation

[2020] HKCFI 576
Court

Court of First Instance
Case number

HCCW419/2019

Given the company is solvent and the directors have provided reasons which an intelligent honest person could hold, the court will grant a validation order for ordinary course payments with safeguards (monthly schedules and inspection) because the petitioner failed to adducing compelling evidence of likely injury or bad faith; the court will not order the proposed automatic set-off against JHK nor impose a fixed cap on legal costs but will validate reasonable legal expenses and set practicable procedural safeguards (timing of schedules and inspection rights).
14 Jun 2017

Relevant employees whose shares in China Shanshui Investment Company Limited held by ZHANG CAIKUI on trust (Please refer to Schedule 1 attached to the Writ of Summons for names of the relevant employees) AND ANOTHER v. ZHANG CAIKUI AND ANOTHER

Citation

Relevant employees whose shares in China Shanshui Investment Company Limited held by ZHANG CAIKUI on trust (Please refer to Schedule 1 attached to the Writ of Summons for names of the relevant employees) AND ANOTHER v. ZHANG CAIKUI AND ANOTHER
Court

Court of First Instance
Case number

HCA2191/2014

The application was dismissed because the applicants failed to meet the high threshold required to justify court intervention in receivers' commercial decisions: there was no evidence of bad faith or legal error by the receivers, the grant of a general mandate is routine and does not itself cause dilution, the receivers had undertaken not to vote to dilute CSI, and there were adequate shareholder remedies available; therefore no direction to the receivers was warranted.
14 Feb 2017

HARBOUR FRONT LTD v. MONEY FACTS LTD AND OTHERS

Citation

HARBOUR FRONT LTD v. MONEY FACTS LTD AND OTHERS
Court

Court of First Instance
Case number

HCCW116/2015

The court granted validation for renewal of the lease because the company was shown to be solvent, letting the property is within its ordinary course of business, the directors' reasons were such that an intelligent and honest person could reasonably hold them, and the petitioner failed to produce compelling evidence that the transaction would injure the company; the retainer of Savills was conditionally validated limited to advisory and marketing roles subject to a formal agreement or deferment to the receivership hearing.
22 Oct 2015

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

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
Court

Court of First Instance
Case number

HCMP2498/2015

The Court refused the interim injunction because the 1st defendant failed to show a real prospect of success on appeal: the apparent bias and inadequate reasons grounds lacked sufficient merit when viewed by a fair-minded informed observer in context, the substantive complaints about the receivers' appointment were unproven and face jurisdictional and discretionary hurdles, and the 1st defendant's conduct justified an award of indemnity costs to the opponents.
16 Dec 2013

FANCYMIND INC v. FAKO INTERNATIONAL CORPORATION AND OTHERS

Citation

FANCYMIND INC v. FAKO INTERNATIONAL CORPORATION AND OTHERS
Court

Court of First Instance
Case number

HCCW373/2011

The court ordered distribution of the sale proceeds in accordance with the shareholding structures because the companies are solvent, the directors' proposed disposition was within their powers and an intelligent and honest person could view it as necessary or expedient in the companies' interests, and no compelling evidence was shown that the distribution would injure the companies.
21 Sept 2012

CHENG ERIC TAK KWONG v. EMAGIST GROUP LTD AND OTHERS

Citation

CHENG ERIC TAK KWONG v. EMAGIST GROUP LTD AND OTHERS
Court

Court of First Instance
Case number

HCCW306/2012

Because the company is solvent and carries on an active business, and the directors have shown reasons an intelligent and honest man could reasonably hold, the court will grant validation for payments made in the ordinary course and for the company's reasonable legal costs in HCA 1659/2012; a petitioning contributory must adduce compelling evidence of likely injury to the company to defeat such an order.
1 Mar 2010

SIU PING v. CHAN WAI CHI LOUIS AND OTHERS

Citation

SIU PING v. CHAN WAI CHI LOUIS AND OTHERS
Court

Court of First Instance
Case number

HCCW82/2010

The court held that the company was solvent on the facts (prepaid customer coupons comprise the main liabilities but are matched by ongoing service obligations and trading), and that payments of rent and employee salaries/commissions were necessary and expedient to enable the company to continue trading and protect the interests of the general body of unsecured creditors; accordingly a validation order under s182 was granted, subject to capping the disputed salary increases for the 1st and 2nd Respondents at pre-increase levels.
8 May 2008

CHAN SUM TAI AND OTHERS v. CHAN SHIU KAU ANTHONY AND OTHERS

Citation

CHAN SUM TAI AND OTHERS v. CHAN SHIU KAU ANTHONY AND OTHERS
Court

Court of First Instance
Case number

HCCW373/2007

The court validated the interim special dividend of HK$102,000,000 because directors had authority and reasons an intelligent honest man could hold; validated only specified ledger amounts recorded as dividends since 2001 for four shareholders (total HK$605,455.90) because post‑2001 entries identified as dividends were provable; declined to validate pre‑2001 deposits, interest, director's bonuses or other amounts due to insufficient evidence and legal rule that unclaimed dividends do not bear interest and are not treated as debts without clear conversion to loan.
6 Jun 2002

WONG KWOK SUN, ERNEST v. TONG YING YUNG, JAMES AND ANOTHER

Citation

WONG KWOK SUN, ERNEST v. TONG YING YUNG, JAMES AND ANOTHER
Court

Court of Appeal
Case number

CACV1564/2001

The Court upheld the trial judge's factual findings that the October agreement bound the company and shareholders, that the 1st and 2nd respondents diverted market allowances and altered commission terms to the complainants' prejudice, and that such conduct was unfairly prejudicial under s.168A; accordingly the relief ordering the 1st and 2nd respondents to purchase the petitioner's shares at a valuation as at the date of the order (on the footing the complained conduct had not occurred) was correct and the appeal was dismissed.
26 Feb 2001

WONG WAN HUEN FREDERICK AND OTHERS v. W HAKING ENTERPRISES LTD. AND OTHERS

Citation

WONG WAN HUEN FREDERICK AND OTHERS v. W HAKING ENTERPRISES LTD. AND OTHERS
Court

Court of First Instance
Case number

HCCW1166/2000

The court granted the s 182 validation order without imposing an escrow condition because the company was shown (or not disputed) to be solvent, the board had reasonably concluded the dispositions were expedient to discharge borrowings and restore working capital, and under In re Burton & Deakin the court should normally sanction such dispositions absent compelling evidence they would injure the company.