Allied Properties Privatization: The Court of Appeal Sanctioned the Scheme and Reversed the Lower Court’s Decision

Sullivan & Cromwell LLP - December 23, 2020
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On November 23, 2020, the Hong Kong Court of Appeal (the “Court of Appeal”) reversed the ruling of the Court of First Instance (“HKCFI”) and exercised its discretion to sanction the proposed privatization of Allied Properties (H.K.) Limited (“APL”) by way of a scheme of arrangement. The Court of Appeal clarified that, in lieu of the headcount test, “the 75% test” and “the negative 10% test” under section 674(2) of the Companies Ordinance (Cap. 622) should be applied in schemes of arrangements to implement takeover cases. Further, the Court of Appeal was of the view that the HKCFI judge was wrong to ignore the contents of the Composite Document and substitute the judge’s own views on dividend policy for APL’s dividend policy, and that the Composite Document provided adequate explanation to the scheme shareholders who were given the information of the total price they would get for the cancellation of their shares under the proposed scheme, and the market value of their shares.

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