18 May 2018
When and how can aggrieved shareholders petition the court for relief when affairs are considered unfairly prejudicial? What elements does one need to satisfy to invoke the relevant statutory provision?
On 8 May, Yang-Wahn Hew and Stephanie Wong delivered a compelling in-house presentation on Unfair Prejudice and Shareholders' Winding-Up. This was a lunchtime CPD accredited seminar held at Des Voeux Chambers before an intimate audience of solicitors made up of partners, associates and trainees from Anthony Siu & Co.
After a brief introduction to both speakers' backgrounds, Stephanie took the participants through an explanation of the "unfair prejudice" regime, including an explanation of the necessary elements. Noting that the Company law ecosystem was changing for the better in terms of clarity and delineation of provisions, she then filled the audience in on the new requirements under the Companies regime for reporting beneficial and ultimate owners, including how even solicitors might have to disclose information relating to the beneficial ownership of a company. This prompted an interesting question about whether a solicitor could rely on legal professional privilege, which Stephanie deftly dealt with.
Drawing on her experience of cases by way of reference points, Stephanie then went on to distinguish between shareholders' private acts and shareholders' private dealings with their shares, summarised the various remedies available under section 725 of the Companies Ordinance, and discussed the interplay between unfair prejudice petitions and derivative actions.
Yang took the audience through the factors that a Court will consider when deciding whether to wind up a company on the ground that it is just and equitable to do so. Apart from citing various examples, Yang also highlighted the facets that needed to be adduced or addressed, and discussed the relevant factors to be considered when seeking a winding-up order, or conversely applying to dismiss or strike out a winding-up petition.
He then went to explain what other remedies a shareholder might consider before seeking to winding-up a company in comparing and contrasting the advantages of winding-up petitions versus unfair prejudice petitions. In doing so, he analysed the benefits of being able to appoint liquidators, and other factors that might be relevant depending on the petitioner's motives and goals.
Yang and Stephanie concluded with some helpful takeaways which inspired some practical questions from the audience.