Hong Kong: Unravelling The Legal Landscape: Key Highlights Of Company Litigation Developments In Hong Kong In 2023

Here we present a concise summary of significant cases and developments in company litigation in Hong Kong in 2023.

Highlights include:

1. Subject company's participation in unfair prejudice proceedings: The Court once again confirmed its "distaste" for a subject company seeking to enter the arena in unfair prejudice proceedings between shareholders.
2. New Practice Direction 3.4: The Court set out various standard case management directions for the conduct of unfair prejudice and just and equitable winding-up proceedings, reflecting its active case management role in such proceedings.
3. Rule against reflective loss: The Court of Appeal explained the rule against reflective loss and considered a recent UK Supreme Court decision.
4. Principles of unfair prejudice petitions: The Companies Court stressed the need to properly consider whether the circumstances show any equitable constraint on the exercise of strict legal rights and ordered a non-shareholder to buy out the petitioners' shares.
5. Valuation in unfair prejudice petitions: The Companies Court clarified its approach to valuing shares in unfair prejudice petitions, specifically addressing deduction of notional expenses in the valuation of shares of property-holding companies.
6. Implication of exclusive jurisdiction clause in insolvency: It is now clear that where there is an exclusive jurisdiction clause, the Court will generally hold the parties to their bargain and stay or dismiss the winding-up petition. But it's not as clear whether the same approach applies to arbitration agreements.