Reference no: EM133811063

Question

Charterhouse Limited (the "Company") is a Hong Kong private limited company which specializes in the sale of expensive handbags and accessories. Betty, Melody and Ann are the shareholders of the Company and their respective shareholdings are 40%, 40% and 20%. In addition, Elephant Courier, which is owned by Eddie, is responsible for delivering goods for the Company. Since Eddie has never entered into any contract, written or oral, with the Company for providing the delivery services for the Company, in order to safeguard Eddie's interests as well as the shareholders' interest in the Company, the following clauses were inserted into the Company's articles: (i) Elephant Courier is to be the sole courier for delivering goods for the Company. (ii) In the event of a shareholder wishing to leave the Company, such shareholder should first offer her shares to the other shareholders who are bound to purchase the shares at such sum to be determined by the auditors of the Company. By early 2020, due to a decreasing number of tourists, the Company's business started to deteriorate. In order to save costs, all shareholders agreed and instructed a cheaper delivery and courier service provider to provide courier services for the Company. Recently, Ann has opened a retail outlet in Hong Kong selling lady accessories including handbags. Betty is extremely angry about this and she believes that this is the main reason why Ann is no longer interested in the affairs of the Company and blames the deterioration of the Company's business on Ann. Betty has since become frustrated with Ann and intends to evict her from the Company. Betty attempts to incorporate into the Company's articles, a clause that any shareholder who competes with the Company could have her shares acquired by the majority. Alternatively, Betty wants to quit and sell all her shares in the Company to Ann and Melody. However, both Ann and Melody have refused to take up Betty's shares. Advise the parties. (do not discuss any action for unfair prejudice under s. 724 of the Companies Ordinance).