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Absolute Skill Holdings Ltd v Kim Jun Yeob And Others

Judgment Cited authorities 21 Cited in 1 Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date28 October 2022
Neutral Citation[2022] HKCFI 3328
Year2022
Subject MatterMiscellaneous Proceedings
CourtCourt of First Instance (Hong Kong)
Judgement NumberHCMP526/2022
HCA641/2022 PENG YINGZHEN v. ABSOLUTE SKILL HOLDINGS LTD AND OTHERS

HCA 641/2022
HCMP 526/2022
[2022] HKCFI 3328

HCA 641/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 641 OF 2022

________________________

BETWEEN

PENG YINGZHEN (彭英臻)
(SUING FOR AND ON BEHALF OF HIMSELF AND OTHER INTENDED
BENEFICIAL OWNERS OF THE SHAREHOLDING
OF ZIONCOM HOLDINGS LIMITED (STOCK CODE 08287)
REGISTERED IN THE NAME OF ABSOLUTE
SKILL HOLDINGS LIMITED AS PER THE ANNEX TO
THE WRIT OF SUMMONS) 		Plaintiff
and
ABSOLUTE SKILL HOLDINGS LIMITED 1st Defendant
SUI XIAOHE (隋曉荷) 2nd Defendant
ZIONCOM HOLDINGS LIMITED
(百家淘客股份有限公司)		 3rd Defendant

________________________

AND

HCMP 526/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 526 OF 2022

________________________

IN THE MATTER of sections 728 to 730 of the Companies Ordinance, Chapter 622 of the Laws of Hong Kong
and
IN THE MATTER of Zioncom Holdings Limited

________________________

BETWEEN

ABSOLUTE SKILL HOLDINGS LIMITED Plaintiff
and
KIM JUN YEOB 1st Defendant
KOO JA CHUN 2nd Defendant
XIAO JINGEN 3rd Defendant
SIN PUI YING 4th Defendant
CHENG KWAN YU 5th Defendant
TSANG CHUNG YU 6th Defendant
PANG KAM WING 7th Defendant
ZIONCOM HOLDINGS LIMITED 8th Defendant

________________________

Before: Hon Linda Chan J in Chambers

Dates of Hearing: 14 – 15 September 2022

Date of Decision: 28 October 2022

________________________

D E C I S I O N

________________________


1. There are 3 applications before the court:

(1) The originating summons dated 4 May 2022 in HCMP 526/2022 (“OS”) issued by Absolute Skill Holdings Ltd (“Absolute”) against the 1st to 7th defendants (“D1-D7”) and Zioncom Holdings Ltd (“Company”) for declaratory and injunctive relief in relation to the resolutions passed at the 1st extraordinary general meeting held on 29 April 2022 at 8am (“1st EGM”) and the 2nd extraordinary general meeting held on 29 April 2022 at 9am (“2nd EGM”);

(2) The summons dated 7 June 2022 in HCA 641/2022 (“HCA”) issued by Mr Peng Yingzhen (“Peng”) (on behalf of himself and 23 beneficial owners of the shares held by Absolute in the Company) (together “Ps”) for continuation of the interlocutory injunction granted by Keith Yeung J on 10 June 2022 (“10 June Injunction”); and

(3) The summons dated 18 July 2022 issued by Absolute and Ms Sui Xiaohe (“Sui”) in HCA for discharge or variation of the 10 June Injunction.

2. Although extensive submissions have been made by counsel for Absolute, D1-D7 and Ps, their arguments may be summarised as follows:

(1) Absolute contends that (a) as the legal owner of the “Shares” (as defined in §10(1) below), it was entitled to and did exercise the voting right on such Shares at the 1st EGM. It was wrongful for D7 to disallow Absolute from voting at the 1st EGM. If D7’s decision was invalid, the resolutions to remove D1-D6 as directors and to appoint the “Proposed Appointees” (as defined in §22 below) as directors would have been passed. (b) In any event, resolutions were passed at the 2nd EGM to remove D1-D6 as directors and to appoint the Proposed Appointees as Independent Non-Executive Directors (“INEDs”).

(2) D1-D7 argue that (a) D7’s decision to disallow Absolute from voting at the 1st EGM was made in good faith as there was “significant doubt” over the true legal and beneficial ownership of the Shares in view of the allegations then made by 3 persons claiming to be victims of a fund-raising scam (“3 Claimants”). (b) The 2nd EGM and the resolutions passed thereat were invalid as notice of meeting as required by the Amended and Restated Memorandum Articles of Association of the Company (“AA”) was not given. (c) In any event, at the annual general meeting held on 30 June 2022 (“AGM”), the board was re-constituted by re-electing D1, D4-D6 as directors and not re-electing the Proposed Appointees as directors.

(3) Ps contend that they are the beneficial owners of, and have a proprietary claim over, the Shares. They never authorised Absolute to exercise the voting right on the Shares, whether at the 1st EGM, the 2nd EGM or the AGM. The court should continue the 10 June Injunction which gives effect to their proprietary right over the Shares.

3. Accordingly, the issues which require determination of the court are as follows:

(1) whether D7’s decision to disqualify Absolute’s exercise of voting right in respect of the Shares at the 1st EGM (“Decision”) was valid;

(2) whether the 2nd EGM and the resolutions passed thereat were valid;

(3) whether the AGM and the resolutions passed thereat were valid and, if so, whether they have the effect of ratifying the appointment of D1, D4-D6 as directors of the Company and superseding the resolutions appointing the Proposed Appointees as directors; and

(4) whether the 10 June Injunction should be discharged or continued pending determination of Ps’ claim in HCA.

A. BACKGROUND

4. Save otherwise stated, the following facts and matters are not in dispute or are indisputable.

A1. Parties

5. The Company was incorporated in the Cayman Islands and its shares have since 18 January 2018 been listed on the GEM board of The Stock Exchange of Hong Kong Limited (“SEHK”). The Company engages in manufacturing and sale of wired and wireless networking products for home use and small scale commercial applications and its operations are mainly based in the Mainland and Vietnam[1].

6. D1-D7 were directors of the Company at the time the 1st EGM and 2nd EGM were held.

7. Ps are residents in the Mainland and each of them claims to have entered into an “股票投资代持协议书” (translated as Share Investment Holding Agreement) (“SIHA”) with Sui whereby Sui agreed to acquire shares in the Company and to hold such shares on trust for each of Ps.

8. Absolute is a Samoa company incorporated on 12 October 2018 and is wholly owned by Sui. Absolute has 4 directors namely, Sui, Mr Mao Jie (“Mao”), Mr Zhao Xiuming (“Zhao”) and Mr Wu Jun (“Wu”), the latter 2 having been appointed on 4 February 2022[2]. Mao has since July 2019 been dealing with the Company as director and authorised representative of Absolute in that:

(1) The joint announcement made by the Company and Absolute dated 22 July 2019 and all subsequent announcements in relation to the general offer to acquire all the shares held by the other shareholders during the period from July 2019 to October 2019 (“GO”) were made by Mao on behalf of Absolute; and

(2) According to the record kept by the Company’s share registrar in Hong Kong, Mao was listed as the authorised signatory of Absolute.

9. In September 2019, Absolute acquired 264 million shares in the Company (equivalent to 40% shareholding) from Lincats (BVI) Ltd (“Lincats”) for HK$73.2 million. In October 2019, Absolute acquired a further 37,180,000 shares (equivalent to 5.63% shareholding) pursuant to the GO, thereby increased its shareholding to 45.63%. In November 2019, Absolute disposed of 4.2 million shares (0.63% shareholding) so as to maintain the 25% public float requirement[3].

10. Following completion of the aforesaid sale and disposal:

(1) Absolute held 296.98 million shares (“Shares”) representing 45% of the Company’s issued shares. At the date of the 1st EGM and the 2nd EGM, 100 million shares were held in the name of Absolute and 196.98 million shares were held by HKSCC Nominee Ltd (“HKSCC”) on behalf of Absolute[4];

(2) Lincats held 198 million shares representing 30% issued shares in the Company. Lincats has 3 directors and shareholders, who are Mr Kim Byung Kwon (“Kim”), D1 and D2, holding 81.8%, 9.1% and 9.1% respectively[5].

(3) The Company’s board comprised of 3 INEDs (including D6 appointed on 24 September 2021) and 5 executive directors (“EDs”) namely, Kim, D1, D2, D3 and Zhao[6].

(4) D7 is and has since April 2018 been the compliance director, in-house counsel and assistant company secretary of the Company[7].

11. In early September 2021, Lincats disposed of all the shares in the Company[8] and ceased to have any interests in the Company.

12. The financial state of the Company was not strong inasmuch that Absolute had to advance an unsecured interest free loan of HK$10 million to the Company for 12 months pursuant to a loan agreement dated 27 February 2020. The loan agreement was later amended by a supplemental loan agreement dated 12 January 2022 whereby Absolute agreed to allow the Company to repay the loan in 2 tranches of HK$5 million on 31 January 2022 and 28 February 2022[9]. Both agreements were signed by D1 on behalf of the Company and Mao on behalf of Absolute.

A2. 1st Requisition

13. In the end of December 2021, Absolute (through Mao) became aware of the board’s proposal to approve at the meeting of 3 January 2022 (1) the sale of part of the Company’s interest in an operation in Vietnam at what it considered to be an unreasonably low price; (2) the resignation of Kim as ED; (3) the appointment of D5 as ED whom Absolute considered to be not qualified; and (4) the voluntary announcement on the strategic cooperation with an entity in the Mainland which Absolute considered would give a wrong impression to the public on the Company’s business development (“Voluntary Announcement”). The proposed board meeting was later cancelled[10].

14. By requisition notice dated 14 January 2022 (signed by Mao) issued pursuant to Article 64 of the AA, Absolute requested the board to convene an...

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  • Peng Yingzhen v Absolute Skill Holdings Ltd And Others
    • Hong Kong
    • Court of First Instance (Hong Kong)
    • 28 October 2022
    ...td { padding:3px 5px; border: 1px solid #111; font-size: 17px; } table.content.noborder td { border: none } HCA 641/2022 HCMP 526/2022 [2022] HKCFI 3328 HCA 641/2022 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 641 OF 2022 ______________......

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