(A)
Introduction
The dispute in Oriental Textile Products Ltd v. Asia Television Holdings Ltd and others, HCMP 1572/2025, date of judgment: 7 November 2025, [1] concerned the validity of rival shareholder meetings convened during a power struggle between a major shareholder and the board of directors.
The Court addressed two issues: (1) whether the board of the 1st
Defendant (the “ListCo”) had proceeded to convene an EGM as
requisitioned by the board meeting of 17 July 2025 to convene an EGM as
requisitioned and the ListCo issuing a public announcement on 18 July 2025 that
an EGM would be held on 27 August 2025; and (2) Whether the adjournment of the
27 August EGM (the “Adjournment”) was valid. [2]
Ultimately, the Court held that the ListCo had not validly proceeded to convene the EGM and the Adjournment was invalid.
This judgment provides valuable
guidance on the interpretation of “proceed to convene” in the context of a
shareholder requisition for an EGM and on the validity of meetings as well as adjournments.
It underscores the Court’s role in ensuring strict adherence to a company's
constitutional documents and in upholding shareholders' statutory and
contractual rights.
(B)
Facts
The Plaintiff is a
shareholder of the ListCo, which is incorporated under the laws of Cayman
Islands and is registered as a non-Hong Kong company under the Companies
Ordinance (Cap. 622) (the “CO”). [3] The 2nd to 6th
Defendants were directors of the ListCo at all the material times at least up
until 12 August 2025. [4]
The dispute began on 27
June 2025. The Plaintiff, holding over 10% of the voting rights, submitted a
requisition (the “Requisition”) to the then Board for an EGM (the “Requisitioned
EGM”) to be held on 25 July 2025, proposing ordinary resolutions (the “Requisitioned
Resolutions”) for the removal of the 2nd to 6th
Defendants. [5] As the Requisition was issued on 27 June 2025, the Board should “proceed
to convene” the Requisitioned EGM by 18 July 2025 and call an EGM, not less than
14 clear days’ notice under article 59 of the M&A. [6]
On
17 July 2025, the Board approved a draft announcement to the public in response
to the Requisition. [7] On 18 July 2025, the ListCo issued the said announcement: [8]
“The board of directors (the “Board”)
of the [ListCo] announces that it received a written requisition (the “Requisition”)
dated 27 June 2025 from a shareholder, [the Plaintiff], which holds 248,592,000
shares in the [ListCo], representing not less than one-tenth of the paid-up
capital of the Company carrying the right of voting at general meetings.
[setting out the
Requisitioned Resolutions]
The Board is proceeding to convene the EGM,
which will be held on 27 August 2025 (i.e. within two months from the date of
the Requisition), in accordance with the relevant provisions of the Articles
for the shareholders to consider the proposed resolutions specified in the
Requisition. The Company will despatch a circular… as soon as practicable. The
Board is also in the course of seeking professional advice as to the
Requisition and appropriate course of action.”
Only the date was
specified. No notice for calling the EGM was issued. It did not mention that
there had been a board resolution on 17 July 2025 to convene an EGM on 27
August 2025. What was stated in the announcement is that “the Board is
proceeding to convene the EGM”. [9]
On 23 July 2025, the
Plaintiff issued a Notice of EGM (the “Plaintiff’s Notice of EGM”) to convene an EGM to consider the Requisitioned Resolutions
at 9am on 12 August 2025, and advertised the Plaintiff’s Notice of EGM in Sing
Tao Daily and The Standard. [10]
On 24 July 2025, the Board
appointed the 6th Defendant as an executive director and Chairman of
the Board and issued a “Clarification Announcement” stating that the Board had
validly proceeded to convene the EGM on 17 July 2025 and the Plaintiff’s Notice
of EGM was invalid. [11]
Subsequently, on 6 August 2025, the ListCo issued Notice of
EGM for an EGM to be held on 27 August
2025 on the Requisitioned Resolutions. [12]
This
led to two competing EGMs:
(1) At the Plaintiff’s EGM
on 12 August 2025, the Plaintiff’s Requisitioned Resolutions were all passed to
removed the 2nd to 6th Defendants as directors. [13]
(2) At the Defendants’ EGM
on 27 August 2025 (the “27 August EGM”), the 6th Defendant adjourned
the meeting indefinitely pending the outcome of related legal proceedings,
without setting a date for the resumption. [14]
After that, the
Plaintiff filed an Originating Summons seeking declarations that the 12 August
EGM and the removal of the directors were valid and that the adjournment of the
27 August EGM was invalid.
(C)
Decision
Issue 1: Whether the
ListCo had proceeded to convene an EGM as requisitioned by the Board Meeting of
17 July 2025 to convene an EGM as requisitioned and the ListCo issuing a public
announcement on 18 July 2025 that an EGM would be held on 27 August 2025
The Court held that the
ListCo had not validly proceeded to convene the EGM. The main issue was the
interpretation of the phrase “proceed to convene” in Article 58 of the Articles
of Association. [15]
The
Court’s reasonings are as follows:
(1) Meaning of “Convene”: The
ordinary meaning of “convene” is to “cause to come together”. Interpreting this
within the context of the articles, “convening” a meeting entails more than
just “calling” or “holding” it. It is the entire process, for which “issuing a
formal notice” is the essential first step. [16]
(2) Meaning of “Proceed to”:
The phrase “proceed to” implies a step that moves forward substantively in the
convening process. Given the 21-day timeframe for the Board to act, this step
must be concrete enough for a requisitionist to know whether they need to
convene the meeting themselves. [17]
(3) The Legal Test: The
Court established that for a board to “proceed to convene”, it must manifest a
clear intention to the members to issue a notice of meeting. This requires
specifying the essential details that would be in a formal notice, at a minimum
the date, time and venue. [18]
(4) Rationale for the Test: This
interpretation is sound because (i) it identifies the act of giving formal
notice as the first substantial step in the convening process; (ii) “proceed to
convene” means “proceed to issue a notice”; (iii) it provides a clear signal to
the requisitionist about the board’s actions; and (iv) it preserves the
protective mechanism for shareholders under Article 58. [19]
(5) Application to the Present
Case: The Board’s resolution of 17 July and the announcement of 18 July only
specified the meeting date but omitted the time and venue. The Court found that
this was insufficient to constitute “proceeding to convene” under Article 58. As
such, the EGM held on 12 August 2025 was validly convened, and the resolutions
passed there removing the 2nd to 6th Defendants were valid. [20]
Issue 2: Whether the Adjournment was valid
The Court held that the Adjournment was invalid on
the following ground:
(1) Failure to Comply with Article 64: The
Court found that the power to adjourn under Article 64 of the Articles of
Association requires that the time, place, and/or form of the adjourned meeting
be specified. The Adjournment to an unspecified future date failed to meet this
requirement. The Court explained that an indefinite adjournment would deprive the
members of a chance to consider and vote on the relevant resolution in the
light of the development (or non-development) of the matter. [21]
As the Adjournment did not
comply with Article 64, the 6th Defendant’s decision was ultra vires
and in breach of the Articles of Association. [22]
Obiter Dictum on
Statutory Remedies
The Court added that this invalid Adjournment constituted a continuing breach. As such, it would have provided a perquisite for the Plaintiff to seek relief under Sections 728-730 of the CO. To stop this breach, the Court would have the power under Section 729(1) to restrain this further breach, or in mirror, to require the resumption of the 27 August EGM. However, as the Court granted relief 1-4 (validating the 12 August EGM and the removal of the directors), it was unnecessary to consider how the resumed meeting should be conducted. [23]
(D) Key Takeaways
In conclusion, this judgment serves as a crucial reminder for corporate governance on the following grounds:
(1) Interpretation of Constitutional Documents: This case centered on the interpretation of the terms in the article of associations. Companies should proactively and carefully define all the key terms in their constitutional documents to avoid ambiguity and costly litigation.
(2) Strict Compliance with Constitutional Documents: The Court highlighted that all parties (including directors and shareholders) must strictly comply with the company’s constitutional documents. Failure to comply with the requirements for meetings and adjournments may invalidate resolutions passed and/or constitute a breach of the articles.
(3) Statutory Remedies for Shareholders: The Court affirmed that a breach of the articles of association can establish the necessary ground for an affected member or creditor to seek remedies under Sections 728-730 of the CO.
[1] https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=174187
[2] Oriental Textile Products Ltd v. Asia Television Holdings Ltd and others, HCMP 1572/2025, date of judgment: 7 November 2025, §35
[3] Ibid, §4-5
[4] Ibid, §7
[5] Ibid, §9
[6] Ibid, §11
[7] Ibid, §14
[8] Ibid, §15
[9] Ibid, §16
[10] Ibid, §17
[11] Ibid, §18-19
[12] Ibid, §26
[13] Ibid, §28
[14] Ibid, §31
[15] Ibid, §38[16] Ibid, §40-45
[17] Ibid, §46-48
[18] Ibid, §52
[19] Ibid, §51
[20] Ibid, §55
[21] Ibid, §59
[22] Ibid, §62
[23] Ibid, §63-64
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