In a judgment handed down on 6 March 2013, the Hong Kong High Court elaborated on the guiding principles the court will follow when determining whether or not it should exercise its 'exorbitant' jurisdiction to wind up an unregistered overseas company 'which prima facie is beyond the limits of territoriality'.

Changes to the Listing Rules and further consultation on enhancing the effectiveness of the regime

This is the twenty-ninth in our series of General Counsel Updates which aim to summarise major developments in key areas.

The Hong Kong Government has recently released the conclusions to its public consultation on the proposed corporate rescue procedure and insolvent trading laws. The consistent theme throughout the conclusions paper is that the Government will propose practical compromises in order to overcome the contentious issues that have stalled previous efforts to introduce a statutory regime to facilitate corporate restructurings.

Hong Kong's highest court has considered for the second time in recent years the conduct of examinations under section 221 of the Companies Ordinance. That section enables (amongst other things) a court to compel any persons whom it believes may have information concerning the affairs or dealings of a company in liquidation to be examined in private under oath.

Hong Kong's highest court has recently considered the extent of the court's sweeping jurisdiction under section 221 of the Companies Ordinance, which enables it (amongst other things) to compel companies in liquidation to produce documents and for individuals to be examined on oath. The case will be welcomed by liquidators given that the court unanimously confirmed that it has jurisdiction to make such orders under this "extraordinary" section.

After abortive attempts in 2000-2001, 2008-2009, and 2014 to introduce a statutory corporate rescue procedure, the Hong Kong Government has recently announced in a paper submitted to the Legislative Council that it will present the Companies (Corporate Rescue) Bill (the “Bill”) to the Legislative Council in early 2021. Once enacted, the Bill will introduce a corporate rescue procedure and insolvent trading provisions in Hong Kong.

In Swiss Cosmeceutics (Asia) Ltd [2019] HKCFI 336, Mr Justice Harris of the Hong Kong Court of First Instance declined to wind up a company despite it failing to establish a bona fide defence on substantial grounds. Mr Justice Harris commented on the difficulties presented by sporadic record keeping, and reiterated the principle that the burden of proof lies with the company to demonstrate a bona fide defence on substantial grounds, despite the existence of anomalies in the petitioner’s claim.

Facts

Alstom v Insigma, the (in)famous SIAC arbitration administered under ICC rules, was recently up for yet another round of judicial sparring following years of proceedings in several fora, which left Alstom Technology Limited (“Alstom”) with a HK$261 million award but limited assets against which to execute.

On 6 June 2022, Mr Justice Harris sanctioned a Hong Kong scheme of arrangement for Rare Earth Magnesium Technology Group (the Company) in re Rare Earth Magnesium Technology Limited [2022] HKFCI 1686 (Rare Earth).