01 April 2026
Defanged: Curtailing company participation in winding up proceedings
Exploring Offshore Litigation
About
Koa Capital LP and 507 Summit LLC (together, the Petitioners) presented a winding up petition on 16 January 2024 in respect of Fang Holdings Limited (the Company), a Cayman-incorporated entity. The petition was directed principally at the conduct of Tianquan Mo (Mr Mo), listed as the First Respondent, who the Petitioners alleged had engaged in wrongdoing that benefited him personally at the expense of the Company. The Company itself was named as the Second Respondent.
Progress was slow. The Petitioners had difficulty effecting service on Mr Mo, and the matter did not come on for a directions hearing until 25 November 2025. By that stage, the Company had engaged separate counsel and wished to participate in the proceedings beyond simply providing discovery.
The hearing concerned three questions:
1. Should the proceedings be treated as inter partes between the Petitioners and Mr Mo in his capacity as a member of the Company?
2. To what extent should the Company be permitted to participate?
3. What procedural directions should be given for the future conduct of the petition, including timetabling for defences, reply, discovery, and evidence?
The Petitioners argued that the dispute was properly between them and Mr Mo, and that the Company's role should therefore be confined to giving discovery. The Company, on the other hand, contended that the serious allegations against its board necessitated its separate and independent representation, and that its wider shareholder base would be prejudiced if it could not defend the proceedings. The Company invited the Court to permit it to participate and indicated (without supporting evidence) that it would establish a litigation committee for that purpose, to be comprised of independent directors.
Mr Mo did not appear.
The Court applied Order 3, rule 12(1) of the Companies Winding Up Rules and the established authorities, including the decisions of Justice Foster in Freerider Ltd, Justice Segal in China Shanshui, Justice Richards in Madera Technology Fund CI Ltd, and Justice Segal in Uphold Ltd. Those authorities recognise a "rebuttable distaste" for company participation in shareholder petitions brought on just and equitable grounds, the underlying rationale being that such disputes are typically between shareholders, and the company's involvement risks one faction using corporate funds to fight what is essentially a private battle.
The Court characterised the real dispute as one between the Petitioners and Mr Mo. The allegations were that Mr Mo had acted in his own interests at the Company's expense. The Company had not demonstrated that it held a separate and independent position requiring protection.
The Company's offer to establish a litigation committee was found to be insufficient. In Uphold, Justice Segal had set out in some detail what the Court expects where a company seeks to participate through a litigation committee: the committee must be able to act independently and without improper interference from the respondent shareholders; the committee members must confirm that they are not conflicted; and the committee must not overstep its remit, leaving the accused shareholders to take the lead in (and bear the cost of) defending the allegations against them. Even in Uphold, where the company had already established a litigation committee and put evidence before the Court going "a long way towards providing the court with the assurances that it needs", Justice Segal still required further evidence of independence.
In the present case, by contrast, the Company had provided no evidence at all: no evidence of proposed committee members, no safeguards, and no articulated defence strategy. The Company had also failed to provide a draft order setting out the directions it actually sought, which the Court noted was unhelpful.
On the question of Mr Mo's membership, the Court considered section 48 of the Companies Act (2025 Revision), which provides that the register of members constitute...
Progress was slow. The Petitioners had difficulty effecting service on Mr Mo, and the matter did not come on for a directions hearing until 25 November 2025. By that stage, the Company had engaged separate counsel and wished to participate in the proceedings beyond simply providing discovery.
The hearing concerned three questions:
1. Should the proceedings be treated as inter partes between the Petitioners and Mr Mo in his capacity as a member of the Company?
2. To what extent should the Company be permitted to participate?
3. What procedural directions should be given for the future conduct of the petition, including timetabling for defences, reply, discovery, and evidence?
The Petitioners argued that the dispute was properly between them and Mr Mo, and that the Company's role should therefore be confined to giving discovery. The Company, on the other hand, contended that the serious allegations against its board necessitated its separate and independent representation, and that its wider shareholder base would be prejudiced if it could not defend the proceedings. The Company invited the Court to permit it to participate and indicated (without supporting evidence) that it would establish a litigation committee for that purpose, to be comprised of independent directors.
Mr Mo did not appear.
The Court applied Order 3, rule 12(1) of the Companies Winding Up Rules and the established authorities, including the decisions of Justice Foster in Freerider Ltd, Justice Segal in China Shanshui, Justice Richards in Madera Technology Fund CI Ltd, and Justice Segal in Uphold Ltd. Those authorities recognise a "rebuttable distaste" for company participation in shareholder petitions brought on just and equitable grounds, the underlying rationale being that such disputes are typically between shareholders, and the company's involvement risks one faction using corporate funds to fight what is essentially a private battle.
The Court characterised the real dispute as one between the Petitioners and Mr Mo. The allegations were that Mr Mo had acted in his own interests at the Company's expense. The Company had not demonstrated that it held a separate and independent position requiring protection.
The Company's offer to establish a litigation committee was found to be insufficient. In Uphold, Justice Segal had set out in some detail what the Court expects where a company seeks to participate through a litigation committee: the committee must be able to act independently and without improper interference from the respondent shareholders; the committee members must confirm that they are not conflicted; and the committee must not overstep its remit, leaving the accused shareholders to take the lead in (and bear the cost of) defending the allegations against them. Even in Uphold, where the company had already established a litigation committee and put evidence before the Court going "a long way towards providing the court with the assurances that it needs", Justice Segal still required further evidence of independence.
In the present case, by contrast, the Company had provided no evidence at all: no evidence of proposed committee members, no safeguards, and no articulated defence strategy. The Company had also failed to provide a draft order setting out the directions it actually sought, which the Court noted was unhelpful.
On the question of Mr Mo's membership, the Court considered section 48 of the Companies Act (2025 Revision), which provides that the register of members constitute...