The Companies Act (2025 Revision) and NaaS Technology Inc.

• Jurisdiction: Cayman Islands
• Judge: Justice David Doyle
• Judgment Date: 15 April 2025
• Docket Number: CAUSE NO: FSD 0080 OF 2025 (DDJ)
• Court: Grand Court (Cayman Islands)

In the Matter of the Companies Act (2025 Revision)

And in the Matter of NaaS Technology Inc

Neutral Citation Number: [2025] CIGC (FSD) 28

Before:

The Hon. Justice David Doyle

CAUSE NO: FSD 0080 OF 2025 (DDJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

Determination of an application in respect of a statutory demand — whether the presentation of a winding up petition would be an abuse of process — filing of notice of arbitration — whether the debt is bona fide disputed on substantial grounds — indemnity costs

Appearances:

Marcus Staff, Charlotte Walker and Jaemin Shin of Appleby (Cayman) Ltd for NaaS Technology Inc

Tom Lowe KC instructed by Paul Smith, Sarah McLennan and Moesha Ritch of Forbes Hare for LMR Multi—Strategy Master Fund Limited

The Summons

1 NaaS Technology Inc (the “Company”) in an originating summons dated 3 April 2025 (the “Summons”) seeks the following relief:

• (1) a declaration that there is a genuine and substantial dispute concerning the debt claimed in a statutory demand (the “Alleged Dispute”) served by LMR Multi-Strategy Master Fund Limited (“LMR”) on the Company on 5 February 2025 (the “Statutory Demand”);

• (2) a declaration that the Statutory Demand is not in conformity with the requirements of law and an order that it be set aside;

• (3) an order that LMR be restrained from advertising and/or presenting any petition to wind-up the Company on the sum claimed in the Statutory Demand;

• (4) further, or in the alternative, an order that LMR be restrained from advertising and/or presenting any petition to wind up the Company until such time as the Alleged Dispute is resolved by way of arbitration.

2 The Company no longer pursues paragraph (2) of the Summons.

Mr Dai's evidence

3 The Summons is supported by an 18 page signed (but not yet notarised) affirmation of Zhen Dai (“Mr Dai”) dated 3 April 2025.

4 Mr Dai says he is a director of the Company which is listed on the Nasdaq Stock Market. He describes LMR as “a purported creditor of the Company”. At paragraph 5 he states:

“The Company's firmly-held belief is that parties connected to and/or directed by LMR have coordinated the short-selling of the Company's stock …”

5 Mr Dai accepts at paragraph 7 that in “early 2025, the Company failed to make an interest payment of US$364,583.33 and a cash consideration payment of US$537,581 …”. On 5 February 2025 LMR served the Statutory Demand claiming that the Company owed LMR the total sum of US$35,960,497.66 (the “Alleged Disputed Debt”). Mr Dai says (at paragraph 8) that the Alleged Disputed Debt is the subject of a genuine and substantial dispute, which is governed by New York law and subject to arbitration before a tribunal administered by the Hong Kong International Arbitration Centre (“HKIAC”). He says that a notice of arbitration has been filed but does not refer to its date at paragraph 8 or paragraphs 49 to 51 of his affirmation but does at paragraph 32. At paragraph 45 of the Company's skeleton argument dated 7 April 2025 it is stated that the Notice of Arbitration was filed on 3 April 2025 (the same day as the Summons was dated and nearly 2 months after the Statutory Demand was served). On 13 January 2025 LMR had served an Acceleration Notice and a Demand Notice on the Company.

6 At paragraph 22 Mr Dai uses the wording “what I suspect was a coordinated practice of short-selling of the Company's stock.”

7 At paragraph 24 Mr Dai says that the share price collapse from the strike date set under the First PSRA to the time that the Statutory Demand was served “caused the Company to investigate the trading pattern of its stock and led to its belief that LMR is directing and/or coordinating the short-selling of the Company's stock.”

8 At paragraph 28 Mr Dai says:

“I believe that LMR has coordinated the short-selling of the Company's stock with the intention of benefiting itself …”

9 Mr Dai adds that “If this belief is ultimately found to be true, the Company (and, by extension, its public shareholders) have been enormously harmed by LMR's conduct.”

10 Mr Dai says he intends to cause the Company to pursue claims of a breach by LMR of the implied covenant of good faith and fair dealing which he says form an integral part of each of the agreements between the parties. He says at paragraph 29 that these are New York law governed claims which are “fully articulated in the HKIAC Notice of Arbitration” and must be resolved in that forum.

11 Mr Dai at paragraph 57 says that there is a genuine and substantial dispute between the parties and LMR's continued threats in respect of a winding up petition constitute an abuse of the process of the court.

The Notice of Arbitration

12 Mr Dai refers at paragraph 49 of his affirmation to the Notice of Arbitration. It is dated 3 April 2025 and runs to some 15 pages.

13 At paragraph 2 of the Notice of Arbitration it is stated that the parties' dispute arises from a Convertible Note Exchange Agreement entered into by the Company and LMR on 4 October 2024 (the “CNEA”) and a Convertible Note dated 16 October 2024 (“New Note”) stated to be issued pursuant to the CNEA.

14 At paragraph 3 it is stated that the Company believes that “LMR, or parties connected to or controlled by LMR, have coordinated the short-selling of the [Company's] stock, benefiting LMR to the [Company's] significant detriment and amounting to a breach of the implied covenant of good faith and fair dealing contained within the New York law-governed New Note and CNEA.”

15 In a very generalised and ambitious plea, but perhaps reflecting the regret of the Company at entering into the agreements with LMR, it is stated at paragraph 4 that:

“high-hand tactics had been deployed by [LMR] against the [Company] during the process of contractual formation. The [Company] was effectively coerced into signing these documents, which contain terms that are grossly unfavourable to it and unconscionable. It is the [Company's] case that these agreements are illegal, and formed under coercive and unconscionable circumstances and thus unenforceable and liable to be set aside.”

16 At paragraph 14 it is stated that the “CNEA and the New Note arose out of and formed part of a complicated scheme designed by LMR starting from around June 2023 (the “Scheme”). Pursuant to the Scheme, the [Company] was made to borrow a significant sum of money from [LMR] with exorbitant “interest”. It was further made to redeem or repurchase its own shares using the loan it borrowed from [LMR].”

17 I note in particular paragraphs 14 to 20 of the Notice of Arbitration as the Company at paragraph 46 of its skeleton argument says that these set out the “supporting facts” of its relevant claims. Paragraphs 15–16 simply refer to the June 2023 Agreements and the Convertible Note dated 6 July 2023. Paragraphs 17–18 simply refer to the August 2023 Agreements and the Convertible Note dated 5 September 2023 and paragraphs 19–20 simply refer to the CNEA and the New Note.

18 At paragraph 21 it is stated that various agreements “are grossly unfair and unconscionable and entered into at a time when the [Company] had little bargaining power and with no meaningful alternative.”

19 At paragraph 22 it is stated that because of that “undue burden” the Company “became embroiled in increasing cash flow difficulties” and the “difficulties were escalated by the unusually steep decline of the share price of the [Company]”

20 At paragraph 23 it is stated:

“By the time the CNEA and the New Note were entered into in 2024, the [Company] was in an even worse position than that in mid-2023 and practically had no alternative but to concede to those agreements to avoid the dire consequences threatened by [LMR] such as a winding-up petition and the total collapse of the share price of the [Company].”

21 At paragraph 24 it is stated that in those circumstances the Scheme is “invalid and unenforceable” in that:

• (1) it constitutes a share redemption or repurchase scheme which may contravene the requirement of section 37 of the Companies Act of the Cayman Islands;

• (2) it is unenforceable “when [LMR's] conduct allowed it to take advantage of an artificially lower market value of the [Company] to the prejudice of the [Company] in breach of the implied covenant of good faith and fair dealing under New York law;

• (3) it is unenforceable “because of the coercive and/or unconscionable foundation of the Scheme.”

22 At paragraph 29 of the Notice of Arbitration, the Company seeks the following relief against LMR:

• (1) a declaration and/or order that the CNEA and the New Note are unenforceable;

• (2) alternatively, an order that the CNEA and the New Note be set aside;

• (3) a declaration and/or order that LMR is not entitled to any payment under the CNEA and/or the New Note;

• (4) damages to be assessed; and

• (5) costs.

Mr Wong's evidence in response

23 In her first affidavit sworn on 7 April 2025 Moesha Ritch of Forbes Hare exhibits various documents including the affirmation of Wong Hung Hing (“Mr Wong”) signed on 7 April 2025. The sworn affirmation was filed on 8 April 2025.

24 In his 8-page affirmation Mr Wong (also known as Kane Wong) says that he is a portfolio manager employed by LMR and that he is authorised to swear the affirmation on behalf of LMR.

25 At paragraph 12 Mr Wong says that LMR's overall position was always a “long” position. In other words, LMR stood to make more money from a rise in the price of the stock of the Company.

26 Mr Wong at paragraph 15 rejects “absolutely the implicit and negative connotations of the “firmly-held belief” of the Chairman [Mr Dai] about the activities of LMR in relation to the Company”. He also rejects the suggestion at paragraph 4 of the Notice of Arbitration about alleged coercion or unconscionable conduct by LMR.

27 Mr Wong at paragraph 16 says that there is “absolutely nothing...