We are delighted that Sammy Koo, former seasoned insolvency practitioner, has given an insightful presentation on third party funding approaches and litigation funding arrangements in arbitrations and insolvency practice at our firm.
Third party funding has emerged as a crucial element in significant litigations and arbitrations worldwide. It has a longer history in insolvency practice, and has been a useful tool since February 2019. A well-structured funding arrangement offers numerous advantages including:-
- Independent health assessment of case merits and enforcement capabilities
- Mitigation of financial risks associated with disputes
- Access to specialized expertise from funders and introducers
- Flexible funding solutions, including hybrid fee models
- Availability of after-the-event insurance
As we look forward to the gradual integration of third party funding into Hong Kong’s mega dispute resolution framework, it is essential for practitioners to stay updated of industry developments. We stand ready to collaborate effectively with funders, introducers, insurers and other experts to safeguard the best commercial interests of clients in arbitrations and stakeholders in insolvency matters.
We celebrated the impressive achievements of our Conveyancing Department at a wonderful dinner. The tireless efforts and dedication of every colleague have made a remarkable success on our various real estate projects.
We heartily welcome the visit of Mr. Francisco Leitão and Ms. Angela Wong of MdME. We exchanged on legal and economic developments between Macau and Hong Kong.
We are delighted to be named as Finalist in 7 categories of ALB Hong Kong Law Awards 2025 by Thomson Reuters.
Law firm categories:
- GBA Law Firm of the Year (Hong Kong)
- Civil Litigation Law Firm of the Year
- Real Estate Law Firm of the Year
- Restructuring and Insolvency Law Firm of the Year
Individual categories:
- Peter Sit, Managing Partner of the Year
- Roy Leung, Dispute Resolution Lawyer of the Year
- Jenny Wong, Young Lawyer of the Year (Law Firm)
We are honoured by this recognition, and remain committed to excellence in serving clients and society.
We hosted an inter-departmental session on search warrant execution by the Securities and Futures Commission (SFC).
It is part of our regulatory and enforcement practice to advise corporate clients in ensuring compliance and dealing with regulators.
Apart from SFC, we frequently act in relation to investigations by the ICAC, the Customs and the Police.
At Sit, Fung, Kwong & Shum, we feel obliged to keep abreast of latest legal developments to serve professionally and practically as a team.
To embrace collective and continuous learning, lawyers across departments and levels would sit together to exchange thoughts and experiences.
In a Decision for our client concerning a mega cross-border commercial dispute involving a Mainland restructuring plan, the High Court reaffirmed the antecedence of the issue of a solicitor’s authority to act, over other procedural or substantive issue including an issue of locus.
In Tu Jianhua v USUM Investment Group Hong Kong Limited [2025] HKCFI 2782, our client as the Plaintiff applied by an Originating Summons (the “OS”) for leave to commence a statutory derivative action on behalf of the subject Respondent company (the “Company”).
A firm of solicitors (the “Firm”) filed an acknowledgement of service on behalf of the Company (the “AS”). Our client filed a summons for an order that the AS be struck out on the ground that the Firm had no authority to act for the Company (the “Authority Summons”). The Firm filed a summons for striking out the OS on the ground that our client has no locus to seek the Leave on behalf of the Company (the “Locus Summons”).
There was effectively a procedural contest between the Authority Summons and the Locus Summons. Deputy High Court Judge Maria Yuen held that the Authority Summons shall be heard first, before the Locus Summons. The legal analysis is threefold, summarized as follows.
First of all, it is well established that where the solicitors’ authority to act for that litigant is challenged, that challenge should be raised at the outset and determined by the court at the earliest opportunity.
Secondly, comparing the two summonses, the learned Judge found that the Authority Summons was filed in good time and supported by PRC legal opinion, whereas the Locus Summons should not be heard first before determining whether the Firm even has authority to issue it on the Company’s behalf.
Thirdly, the learned Judge refused to hear two summonses together, as hearing an authority challenge together with substantive issues shall be discouraged.
The question of a solicitor's authority to act in legal proceedings is not just procedural, but goes in the heart of public interests in maintaining confidence in the judicial system.
This case is conducted by our Partner Mr. Sidney Ho.
In extension of our expertise in advising educational institutions, and in dedication of our service to 10 schools sponsored by The Evangelical Lutheran Church of Hong Kong, our Partner Mr. Mathew Liu gave a seminar talk to teachers at one of the member schools, titled ‘Professionalism and Legal Responsibilities of Teachers’, followed by a roundtable with Senior Graduate Masters/Mistresses (SGM) with fruitful exchange on practical legal questions in school contexts.
We welcome Mr. Qi-Yang Chang and Mr. Frank Oh, Partners of Wong Partnership LLP from Singapore. We enjoyed a valuable exchange on the developments across jurisdictions and dispute resolution practices.
Mr. Tam Wai Choi, Tommy, has retired as Partner and remained as Consultant of the firm from 1 July 2025.
Mr. Tam has dedicated his whole legal career to the firm since joining as a trainee solicitor in 1987. The Partners extend their heartfelt thanks to Tommy for his invaluable contribution to the success of the firm throughout the years.
Our Senior Partner hosted a memorable private dinner for Mr. and Mrs Tam. Please see photo below.
Our Partners Jenny Wong and Mathew Liu have been admitted as Fellow Members of Hong Kong Institute of Arbitrators (HKIArb).
We advised a very famous Hong Kong entrepreneur on a consignment agreement in respect of an artwork worth of over USD 25 million. Our corporate & commercial partner Joseph Wong handled the work.
Art and cultural property law is receiving huge attention in recent years due to the quick appreciation in investment value of art work and the coming on board of famous modern mainland Chinese painters. There are legal intricacies surrounding the acquisition of arts, financing, intellectual property protection, distributions of art legacies within high-net-worth families and family offices, and the resolution of potential disputes. In this regard, we have inter-disciplinary expertise and provide practical, solution-oriented advice.
We have recently successfully resisted an application for setting aside an allotment of company shares of a family asset-holding vehicle (the “Company”) in HCMP 1408/2024.
By way of case background, upon the father’s direction and unanimous approval of surviving shareholders of the Company, shares were allotted to a family member as a new shareholder. One of the existing shareholders retracted his position 3 years after the event, accusing that the allotment was without consideration and against the Company's interests and hence liable to be set aside for it was an exercise of the Company’s powers for an improper purpose.
The Judgment, delivered by Deputy High Court Judge Gary C C Lam, contains a multifaceted analysis on the prevailing law of allotment of shares under the Companies Ordinance (Cap. 622) (“CO”) and the Articles of Association of the company (the “Articles”), particularly in a family context. For practitioners’ easy reference, the following is a nutshell summary of how each legal proposition is analyzed and rejected.
Allotment at a discount prohibited?
1. As the Judge put it, after CO has abolished the nominal or par value attached to shares, there cannot be any discount as such because there is no longer any reference value for considering whether or not an allotment is at a discount.
2. The Judge also rejected the Plaintiff’s submission that section 147 of the CO prohibits allotment at a discount generally.
3. Further, section 170 of CO allows bonus shares to be allotted with or without increasing share capital.
Bonus shares for existing shareholders only?
4. The Plaintiff alleged that bonus shares can only be allotted to existing shareholders. However, the Judge noted that there is nothing in CO which supports this proposition. Rather, bonus shares are frequently issued to employees who are not necessarily existing shareholders.
5. The Plaintiff then tried to rely on section 280 of CO which allegedly deals with bonus shares to employees. This was again rejected, as section 280 is an exemption from prohibition of financial assistance, while section 277(b) states that the prohibition does not apply to the allotment of bonus shares.
6. The Plaintiff also attempted to rely on various provisions in the Articles. Upon a detailed review, none of the provisions take effect to alter the position that the allotment of shares at nil considerable is permissible so long as all existing shareholders and directors agree.
Resolutions Binding
7. The starting point is that the Plaintiff, as both director and shareholder of the Company, signed the relevant resolutions approving the allotment. This is reinforced by contemporaneously recorded conversations.
8. When a person signs a document purporting to have legal effect, he is held to the document even not knowing the contents and terms, and is estopped from denying his approval of the resolutions.
9. The Plaintiff accused that the late father i.e. one of the then existing shareholders and directors was mentally incapable of signing the resolutions. This was rejected as the evidence relied on by the Plaintiff could bring the Plaintiff nowhere in discharging his evidential burden.
10. The Plaintiff also accused that the resolutions were invalid as one of the existing shareholders i.e. the mother had passed away. As the evidence unveils, all the beneficiaries of the mother’s estate assented to the resolutions, hence the Duomatic principle applies. Alternatively, the irregularity principle applies as the surviving shareholders who gave approval accounted for 75% of the shareholding.
Nil Consideration = Improper?
11. As peripheral arguments, the Plaintiff tried to invalidate the resolutions saying it was approved after the allotment of shares, and without a physical meeting.
12. These bring the Plaintiff to his last key allegation, that is, the allotment of shares at nil consideration would be to destroy the pre-existing shareholding proportions by making our client the majority shareholder, hence for an improper purpose.
13. In a family context, the best interest of the Company is determined by the family. In this regard, the Judge finds our client’s evidence overwhelming, that the late Father had the final say and all existing shareholders consented to the allotment. Even in a pure commercial context, if all shareholders agree to have their shareholdings altered, the Court would not invalidate the resolution.
As illustrated above, this is a classic situation where the retracting shareholder desperately exhausted all possible excuses, which are held unsustainable.
We assisted our client and witnesses to put forward evidence spanning decades on how decisions were made within the family and the Company, how the allotment was in line with the family's interests especially the intent of the late father. Leveraging from our experience in shareholder and board disputes in both commercial and family contexts, we also worked closely with Counsel team in formulating legal submissions against the Plaintiff's legal propositions. These efforts bear fruit as the Judge dismissed the application and rejected all legal and factual arguments raised by the Plaintiff. The father’s wish was upheld; the family’s decision remained intact.
This case was led by our Senior Partner Mr. Peter Sit, assisted by Partner Mr. Mathew Liu, Senior Associate Ms. Theresa Law and Associate Ms. Shirley Yu.
Please refer to the full judgment at https://legalref.judiciary.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=168899&QS=%2B&TP=JU.
