Dispute concerning Hong Kong International School (HKIS) and possible eviction of HKIS from the Repulse Bay Campus
Background
The Lutheran Church – Missouri Synod (LCMS) is a global Christian charity that currently educates over 175,000 school-age students (preK-12) through its international schools in Shanghai and Hanoi and the schools of its US member congregations.
Over the past years, the LCMS, as the founder of Hong Kong International School (HKIS) and the registered owner of the Repulse Bay Campus, has sought to address what it believes are repeated and material breaches of the Operating Agreement (OA), the contract by which the LCMS appointed Hong Kong International School Associated Limited (HKISAL) to operate HKIS.
LCMS concerns and allegations
Following a thorough investigation from 2022 to 2024, the LCMS alleges that HKISAL is acting:
- in repeated, ongoing, material breach of the Operating Agreement (OA)
- in breach of HKISAL’s own Memorandum and Articles of Association (Articles)
- in breach of the Companies Ordinance
- in breach of EDB guidelines and circulars
- in breach of HKISAL’s contract with the EDB
Some of the LCMS’ concerns and allegations are below, but please see further details in the FAQ, in particular question 4 (about the LCMS’ concerns with HKIS’ governance) and full details in our Statement of Claim.
Financial mismanagement
The LCMS alleges that HKISAL’s management of its finances, as described below, is contrary to the OA, the Articles and EDB circulars / guidelines (No. 14/2015 and No. 5/2025).
Despite HKIS’ website stating that HKIS “sustains its operations through tuition fees”, HKISAL, the company that operates HKIS, oversaw cumulative net operating surpluses of almost HK$800m (approx. US$97m) over the five years up to and including FY24 and a net operating surplus of almost HK$300m (approx. US$37m) in FY24 alone.
As of 30 June 2024, according to the audited financial statements of HKISAL, HKISAL had:
- financial reserves of more than HK$2.8 billion (approx. US$360m)
- current assets of more than HK$2.45 billion (approx. US$315m), being:
- HK$1.28 billion (approx. US$164m) in cash reserves; and
- HK$1.11 billion (approx. US$142m) in investments (including significant investments in private equity)
Notwithstanding these immense financial reserves, the LCMS alleges that HKISAL continuously demands more payments from parents, including regularly increasing school fees, selling priority access debentures, repeatedly seeking funding and donations (even in cryptocurrency) and charging student training and competition fees.
The LCMS argues that HKIS funds should be used to reduce school fees, expand the HKIS student population and/or provide significantly more scholarships and financial aid, all with the goal of sharing an HKIS education with a wider section of Hong Kong.
At a cost of over HK$1 billion (US$ 128m), HKISAL is currently building a new “Student Activity Center” including two gymnasiums, four tennis courts, a fitness center, an indoor golf simulator, a dance studio, indoor rock-climbing facilities and HKIS’ third indoor swimming pool.
Leadership
Nearly half of the HKISAL board of directors work in private equity, and a majority of them possess finance or legal backgrounds. There are no educators on the HKISAL board.
Pursuant to the Articles, approval from the LCMS is required for appointment of any HKISAL director.
The LCMS alleges that HKISAL has not sought approval from the LCMS for any of the recently-appointed HKISAL directors.
Transparency
The LCMS claims that HKISAL is legally required to provide the LCMS with information pursuant to the OA.
The LCMS alleges that HKISAL has consistently failed to supply required and requested information, and when information is supplied, it is frequently more than 18 months old or so brief that it is insufficient to allow proper oversight.
HKISAL’s actions undermine the LCMS’ authority and trust, compromising the LCMS’ ability to oversee and supervise HKIS.
The LCMS also claims that HKISAL directors have also signed and filed one or more documents on behalf of the LCMS without authority or approval.
HKIS contract with EDB
The LCMS alleges that HKISAL has breached its contract with the EDB by failing to grant sufficient contractually-required scholarships.
The litigation and next steps
The LCMS believes that in recent years under current HKISAL management, HKIS has lost its way and no longer resembles the equitable, compassionate, supportive and generous school the LCMS originally established for the Hong Kong community.
Accordingly, the LCMS has made the difficult decision to start litigation after years of sustained efforts to resolve its serious concerns with HKISAL so that the LCMS can keep the promise it made to the government and people of Hong Kong when it founded HKIS almost 60 years ago: to operate a world-class, competitive, not-for-profit school open to all for the benefit of Hong Kong on the Repulse Bay Campus.
That litigation may result in the eviction of HKIS from the Repulse Bay Campus, if HKISAL does not rectify the situation and operate HKIS according to the Operating Agreement.
Accordingly, subject to the outcome of that litigation and the approval of the Education Bureau (EDB), the LCMS is preparing to establish and make Hong Kong Pacific School (HKPS) a new world-class beacon of educational excellence in Hong Kong if HKISAL is unable to satisfactorily address the LCMS’ concerns with the current management and operation of HKIS.
The LCMS believes this is the most responsible path forward in the best interests of Hong Kong, its students, families and the community.
The LCMS is not pursuing monetary damages or seeking to extract any payment from HKIS or HKISAL (other than reimbursement for a relatively small amount of third party costs the LCMS believes it is owed by pursuant to the Operating Agreement).
Instead, the LCMS is prepared to make a significant investment in Hong Kong with the establishment of HKPS, should this be necessary.
If HKIS is evicted from the Repulse Bay Campus, the LCMS is committed to ensuring minimal disruption to current HKIS students and their families.
Please see further details in the FAQ. In particular, please see question 1 (about what HKPS is), question 15 (about how HKPS is not linked to HKIS) and question 16 (about the opening of HKPS).
The following materials are provided for information regarding The Lutheran Church – Missouri Synod (the LCMS), Hong Kong International School (HKIS) and Hong Kong International School Association Limited (HKISAL), the operator of HKIS:
Please visit our FAQ for additional information.