COMPANIES – SCHEME OF ARRANGEMENT – MAJORITY IN NUMBER – COUNTING CUSTODIAN VOTES
The Company, listed on the main board of the Hong Kong Stock Exchange, sought to privatize by way of a scheme of arrangement under Section 86 of the Companies Law. Under that section, a scheme becomes binding only if (a) it is approved by a majority in number representing seventy-five percent in value of the Company’s members and (b) it is sanctioned by the Court.
An application for directions was brought to the Court on the question of how to calculate the statutory majority requirement in the context of a company whose shares are held primarily through a single custodian or clearing house. It was acknowledged that the phrase “majority in number” implies a simple head-count. However, the Court noted that in this context it was perfectly entitled to take notice of the fact that custodians and clearing houses are not the beneficial owners of the shares registered in their names.