IN THE SUPREME COURT OF HONG KONG
and IN THE MATTER of the Companies Ordinance (Chapter 32) ——————-
IN THE MATTER of the Companies Ordinance (Chapter 32)
Coram: Hon. Jones J. in Court
Date of hearing: 26 March 1991
Date of delivery of judgment: 26 March 1991
J U D G M E N T
1. I have before me a petition that was presented on behalf of the Hongkong and Shanghai Banking Corporation Limited (the Bank) on the4th March 1991 that seeks the sanction of the court to a scheme of arrangement dated the 1st February 1991 under s.166 of the Companies Ordinance. The principal object of the scheme is for the Bank to become a wholly owned subsidiary of HSBC Holdings plc. (Holdings), a publiccompany that is registered in England and also in Hong Kong under Part XI of the ordinance. If the scheme is approved, the shareholdersof the Bank will become shareholders of Holdings. The scheme is to be effected by a transfer of the issued shares of the Bank toHoldings or its nominees. It is intended that the shares will be listed on the Stock Exchange of Hong Kong, the International StockExchange of the United Kingdom and the Republic of Ireland Limited, whilst the present listings of the Bank on those exchanges willbe withdrawn.
2. At the court meeting held by the Bank on the 26th February to consider the proposals, pursuant to the order that I made on the 21stJanuary, the scheme of arrangement was approved by an overwhelming majority of 98.78% of the shareholders who voted in person orby proxy and by 99.65% in value.
3. My attention has been drawn today by Mr Sykes, counsel who appeared for the Bank, to the matter of the court’s jurisdiction for thisis the first scheme in Hong Kong relating to a transfer rather than through a reduction of capital. He cited in support of his submissionIn re Savoy Hotel Ltd.  1 Ch.351. From this authority I am satisfied that the scheme constitutes an arrangement in respect of which the court hasjurisdiction, for the Bank is directly concerned with the scheme.
4. My attention was also drawn to the various conditions that are required to be complied with before the scheme can become operative,including the requirements of the Securities and Exchange Commission in the United States, the Hong Kong Stock Exchange and the LondonStock Exchange. Apart from a meeting of the London stock Exchange, which I am told is fixed for tomorrow for an application for formallisting, all these conditions have been fulfilled.
5. Mr Sykes referred to In re Dorman, Long and Company, Limited  1 Ch.635 where it was held that in determining whether a compromise or arrangement should be sanctioned, the Court must besatisfied that the resolutions in favour of it are passed by the statutory majority in value and number and in accordance with theprovisions of the Companies Act, and that the proposal is such as intelligent and honest members of the classes concerned, actingin respect of their own interests, would approve.
6. The scheme in this case is set out in a very comprehensive document that was sent to all the shareholders. The Board and two independentfinancial advisers, Schroders and Wolfensohn, have recommended approval of the scheme. The shareholders who cannot be traced areadequately protected under a trust deed, whilst appropriate undertakings have been given on behalf of Holdings and the National WestminsterInternational Trust Corporation (Jersey) Limited, the trustee.
7. Having considered the submission made by Mr Sykes to whom I am most grateful for taking me through the papers and the relevant authoritiesso clearly, and after due consideration of the scheme, I am quite satisfied that it is in the interests of all the shareholders ofthe company for the court’s sanction to be given. I shall therefore make an order in terms of the application and grant liberty toapply to the Bank in the event that it is necessary for further directions to be sought.
Mr Richard Sykes, Q.C. and Mr D.A.L. Wright (Norton Rose) for Applicant