Yeung Bing Kwong Kenneth v Mount Oscar Ltd

COMPANY LAW

Yeung Bing Kwong Kenneth v Mount Oscar Ltd
[2019] 3 HKLRD 575, [2019] HKCA 688, [2019] HKEC 2006
Court of Appeal
Civil Appeal No 26 of 2019
Kwan V-P, Yuen and Au JJA
11, 26 June 2019

Company law — directors — removal — under s.463 no requirement to provide director with reasons for removal — Companies Ordinance (Cap.622) ss.462, 463

[Companies Ordinance (Cap.622) s.463]

Under s.462 of the Companies Ordinance (Cap.622), shareholders have the right to remove a director by an ordinary resolution. Section 463 headed “Director’s right to protest against removal”, provides “… (2) The director … is entitled to be heard on the resolution at the meeting at which the resolution is voted on …”. A director argued that under s.463 there was a requirement that he be provided with reasons for his removal. This was rejected at first instance and the director appealed. 

Held, dismissing the appeal, that there was no requirement that a director be provided with reasons for his removal under s.463 of the Ordinance. Given that a director could be removed by the s.462 statutory power without cause, a “very strong provision”, it was not apposite to invoke the principles of construction in respect of overriding fundamental principles of natural justice and/or audi alteram partem. Section 463 gives the director the right to be heard regarding his proposed removal. This was the balance that had been struck by the legislature between the interests of the shareholders and the affected director. If the legislative intent had been to give the director the further protection of requiring reasons for his removal this could easily have been written into the statute (Town Planning Board v Town Planning Appeal Board (2017) 20 HKCFAR 196 applied; Asia Television Ltd v Communications Authority (No 2) [2013] 3 HKLRD 618, Re Kam Lan Koon [2015] 5 HKLRD 79 considered; Furber v Royal New South Wales Canine Council Ltd (20416/98, Supreme Court of New South Wales) explained; R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 AC 563,  Johannes Jacobus Pretorius v Steven Edward Timcke (15479/2014, High Court of South Africa (Western Cape Division, Cape Town), 2 June 2015) distinguished). (See paras.21–36.)

Appeal

This was an appeal by the applicant against a judgment of Peter Ng J dismissing his application for a declaration that the ordinary resolution passed at the extraordinary general meeting of the respondent company to remove him as a director was invalid (see [2019] 1 HKLRD 572). The facts are set out in the judgment.

Jurisdictions: 

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