hong kong court jurisdiction
Number 1426
12 November 2012
Client Alert
Latham & Watkins
Litigation Department
Jurisdiction of the Hong Kong Courts re
Winding Up and Unfair Prejudice Petitions
— Are Offshore Companies Safe?
Hong Kong law contains a number of provisions designed to protect the interests of minority shareholders, including the “unfair prejudice” remedies under section 168A of the Companies Ordinance (the Ordinance) and the
Ordinance’s “just and equitable” winding-up provisions. These protections can, in some cases, also be invoked by shareholders of non-Hong Kong companies.
However, as the Hong Kong Court’s recent judgment in Re Yung Kee Holdings
Limited1 demonstrates, a minority shareholder of a non-Hong Kong company would be wise to proceed cautiously before seeking to avail itself of these provisions. “A minority shareholder of a non-Hong
Kong company would be wise to proceed cautiously before seeking to avail itself of the
‘unfair prejudice’ remedies and the ‘just and equitable’ winding-up provisions under the Companies
Ordinance.”
This Client Alert analyses the circumstances in which the Hong Kong Court might allow minority shareholders of non-Hong Kong companies to make use of these protections, following the Re Yung Kee Judgment.
Background
The Yung Kee restaurant is a well-known icon in Hong Kong, visited by many locals on a regular basis, and seen as an enticing pit stop for tourists, who come to savour its famous roasted goose. As are many businesses in Hong Kong it is family owned, having been established by a Mr. Kam in the early 1930s. Over the years the business (the restaurant, associated businesses and property) became very valuable. Upon his death in 2004, ownership of the business was divided amongst Mr. Kam’s family members.
Unfortunately, disputes arose. Ultimately one of the family members (the minority shareholder, Kam Kwan Sing) (the Petitioner) determined to use the
Hong Kong law provisions
12 November 2012
Client Alert
Latham & Watkins
Litigation Department
Jurisdiction of the Hong Kong Courts re
Winding Up and Unfair Prejudice Petitions
— Are Offshore Companies Safe?
Hong Kong law contains a number of provisions designed to protect the interests of minority shareholders, including the “unfair prejudice” remedies under section 168A of the Companies Ordinance (the Ordinance) and the
Ordinance’s “just and equitable” winding-up provisions. These protections can, in some cases, also be invoked by shareholders of non-Hong Kong companies.
However, as the Hong Kong Court’s recent judgment in Re Yung Kee Holdings
Limited1 demonstrates, a minority shareholder of a non-Hong Kong company would be wise to proceed cautiously before seeking to avail itself of these provisions. “A minority shareholder of a non-Hong
Kong company would be wise to proceed cautiously before seeking to avail itself of the
‘unfair prejudice’ remedies and the ‘just and equitable’ winding-up provisions under the Companies
Ordinance.”
This Client Alert analyses the circumstances in which the Hong Kong Court might allow minority shareholders of non-Hong Kong companies to make use of these protections, following the Re Yung Kee Judgment.
Background
The Yung Kee restaurant is a well-known icon in Hong Kong, visited by many locals on a regular basis, and seen as an enticing pit stop for tourists, who come to savour its famous roasted goose. As are many businesses in Hong Kong it is family owned, having been established by a Mr. Kam in the early 1930s. Over the years the business (the restaurant, associated businesses and property) became very valuable. Upon his death in 2004, ownership of the business was divided amongst Mr. Kam’s family members.
Unfortunately, disputes arose. Ultimately one of the family members (the minority shareholder, Kam Kwan Sing) (the Petitioner) determined to use the
Hong Kong law provisions