In the interest of minority shareholders in Hong Kong : case study on the privatisation of PCCW via a scheme of arrangement : part 1

The share ownership structure in Hong Kong is highly concentrated. This increases the risk of minority shareholders' interested being sidelined. The recent decision made by the Hong Kong Court of Appeal on PCCW's privatisation case is a victory for minority shareholders. It also established a new precedent in the interpretation of s.166 of the Companies Ordinance (Cap 32), where the court has to consider whether there was vote manipulation at the EGM which leads to an outcome that does not represent the interest of the voting shareholders as a whole. As well, the court would need to take into account whether the scheme was substantively unfair to the shareholders who were voting on it. The appeal decision was so instrumental it prompted the Hong Kong Government to put forward proposals to reform the law.