Re Clarity Medical Group Holding Ltd (清晰醫療集團控股有限公司) [2026] 3 HKLRD 507, [2026] HKCFI 3274 (Donald TIng)

Anson Wong Yu Yat and Donald Ting represented the plaintiff in Re Clarity Medical Group Holding Ltd (清晰醫療集團控股有限公司) [2026] 3 HKLRD 507, [2026] HKCFI 3274.

P, the founder and former executive director of the defendant company (C), applied for leave to bring a statutory derivative action on behalf of C under s.732(1) and 733 of the Companies Ordinance (Cap.622) (the CO). Prior to P’s bankruptcy in November 2025, he owned 478,750 shares in C through a personal account held with a Central Clearing and Settlement System (CCASS) participant. In September 2025, P gave instructions to have the shares transferred to and registered in his personal name, but this did not take place at the time. P was not a registered shareholder at the time of bankruptcy and the beneficial interest in the shares vested in the Official Receiver immediately upon P’s bankruptcy. Since P’s shares were held through a CCASS participant, the legal title was held by HKSCC Nominees Ltd. In March 2026, 478,750 shares in C were withdrawn from the CCASS system and HKSCC Nominees Ltd transferred the shares to P. P then applied to be registered as a member of C. C instructed the Registrar not to proceed with the request pending legal advice. C opposed the application, submitting that, among other reasons, P lacked standing since he had never been a registered member of C, and as a result of the bankruptcy order P was no longer entitled to call for the legal title of the shares to be transferred to him and registered in his name.

Held, dismissing the application, that:

• (1) Under s.732(1) of the CO, it was incumbent upon an applicant for leave to establish that he was a “member” of the company and had the requisite standing. A member was defined in s.2 as either a founder member or a person who agreed to become a member of the company and whose name was registered, as a member, in the company’s register of members. A person who was not yet a registered member was entitled to apply so long as he was able to satisfy the Court subsequently that he had become a registered member by the time leave was granted. The general rule was that the Court would examine the register to determine whether a person qualified as a “member” for the purpose of seeking leave to commence a statutory derivative action (Chen Pei Xiong v Convoy Global Holdings Ltd [2024] HKCFI 1568 applied). (See paras.12-15.)
• (2) On the facts, P could not rely on the exception where it would be unjust to refuse recognition of the parties’ status as members even though the person did not appear on the register. C had not acted in a manner which rendered it unjust or inequitable for it to raise P’s lack of standing as a ground to defeat the application as P had no valid entitlement to be registered as a member in the first place. P was not validly entitled to request the transfer of the shares to his own name after his bankruptcy. That entitlement arose from the beneficial ownership of the shares, which was no longer vested with P and instead vested with the Official Receiver upon P’s bankruptcy (Kitnasamy v Nagatheran [2000] 2 SLR 598, Re Mak Shing Yue Tong Commemorative Association Ltd [2005] 4 HKLRD 328 applied). (See paras.16-18.)
• (3) The Court also rejected P’s argument that his acquisition of the legal title of the shares in March 2026 amounted to after-acquired property which did not immediately vest in the trustee in bankruptcy under s.43A of the Bankruptcy Ordinance (Cap.6) (the BO). It was artificial to view the transfer in isolation from the beneficial ownership of the shares. Under s.2 of the BO, any things in action “arising out of or incidental to” the beneficial ownership of the shares fell within the definition of “property” which vested in the Official Receiver upon bankruptcy. This clearly included the right to call for the transfer of legal title of the shares in question. By the bankruptcy order, all of P’s rights arising out of or incidental to the shares constituted “property” and had already vested in the Official Receiver. Further, P’s entitlements over the shares existed at the time of bankruptcy (Re Palmer [2025] 1 All ER (Comm) 637 distinguished). (See paras.19-23.)
• (4) C’s board was entitled under C’s articles to decline to recognise any instrument of transfer unless it was accompanied by such other evidence that the board may reasonably require to show the right of the transferor to make the transfer. C correctly formed the view that there was no evidence that P could produce which could demonstrate his entitlement to be registered as a member. It was not unjust to allow C to deny P’s standing to pursue the intended action by reason that his name did not appear on the register of members. (See paras.28-30.)

[The above is excerpted from the headnote to the report in HKLRD.]