Chin Choon Onn and Jong Yai Kit v Lai Sum Hung & Ors

[2026] HKCFI 695, the High Court granted summary judgment in favour of P (the Committee of the estate of a mentally incapacitated person, Madam Ng) for declarations that (1) D1 had never been validly appointed as a director of D4 (Company), and (2) two purported allotments of shares by the Company in favour of D1 and D2 (and which substantially diluted the shares of Madam Ng) and a purported amendment to the Company’s articles were void.

Regarding the purported appointment of D1 as director, D1 contended that because his appointment was approved by all shareholders at an EGM, the 

principle applied such that a requirement in the Company’s articles that directors must hold qualification shares had been impliedly waived or removed.

DHCJ Alan Kwong rejected this submission. He held that for the 

principle to apply, it must be shown that the shareholders must have full knowledge before they can be said to have “assented” to the informal act in question. The objective circumstances however suggested that the shareholders were not aware of the qualification requirement in the articles. Accordingly, D1’s appointment as director was invalid.

As to the first purported allotment, because D1 was not properly appointed as a director, the board meeting effecting the allotment was inquorate (the requisite quorum was two). D1 relied on the irregularity principle and contended that the defect could be cured because all shareholders approved of the allotment. This was rejected by DHCJ Alan Kwong. The irregularity was not one which could have been cured by the majority as the Company only had one validly appointed director, who was incapable of constituting a quorum for a board meeting. The requirement that the same result would inevitably be reached was also not satisfied.

DHCJ Kwong also held that the second purported allotment and the purported amendment to the articles were invalid because D1/D4 had not shown that the relevant shareholders’ resolutions existed or that the Company’s shareholders had validly consented.

, instructed by Freda Lim & Co, acted for the Plaintiff.

Members

Recruitment

Latest News

Appointment of director and allotment of shares found to be invalid

Recent Judgments

PRACTICE AREAS

About

Members

Recruitment

What's New