HKU space day 2 Company

Question 1

Common forms of business Vehicles

Answer 1

• Sole Proprietor
• Partnership
• Limited Company

GCSE Business

Question 2

Become the Bridge for clients

Question 3

Partnership

Answer 3

Form a group with multiple people making them liable for losses

Same legal entity, joint liability for profits and losses

Partnership agreement

Limited partnership, only responsible for their own cases

Question 4

Sole Proprietor

Answer 4

Some Companies have only one member, Unlimited personal liability

Question 5

Limited Company

Answer 5

Share holders protected from debts coming from provisions and ordinances protecting the intreast of the creditors

• Most Common for Businesses
• Seperate legal entity, can enter into contracts using the name of the company
• has perpetual succesion company continues to exists even wthout its current members
• They have no personal liabilites

Question 6

Subsidary

Answer 6

Meaning other company typically in a different juristidction to the main company

Question 7

Governance Strucutre of Companies

Answer 7

Company - Seperate Legal entity

Articles of Association
Contracts between the company and its members and as betwen each of the members
Boards of Directors having power of management of companies business

Shareholders Agreements, Contract between the members

(Companies ordinances)
(CWUMPO Ordinance)

Question 8

Liabilites of directors

Answer 8

• Subject to fiduciary duties, such as
• Must act in best interests of the company
• Excersice care, skill and dilegence
• Avoid conflict between personal and compnay interests

If these duties are not followed, one is liable to civil or criminal proceedings and disqualfied from acting as a director

Question 9

Listed Companies

Answer 9

Securities and futures ordinance Cap 571
Listing rules / GEM listing rules

Subject to these ordinaces

Question 10

Fiducary Duties

Answer 10

1. Duty to act in good faith for the benefit of the company
2. Duty to use powers for proper purpose
3. Duty to avoid conflict of interests
4. Duty not to make unauthroised profits

Question 11

Breach of Jiducary duties

Answer 11

“A Guide on Directors’ Duties”

Question 12

Liabilites of directors and shareholders of a limited company

Answer 12

• Not responsible for company’s acts
• Normally, no personal liability to companies liabilites
• Parent companies is not liable for the debt of its subsidiarys
• its liability is limited to the amount of any unpaid share capital

Question 13

Shareholder remedies

Answer 13

• Inspect Company Documents
• Derivative action
• Unfair prejudice remedy
• Injunctions, meaning court proceedings to stop something
• Interim recievers
• Winding up

Question 14

Lifting Corporate Veil

Answer 14

• General Principle, seperate legal entity of a limited company and its shareholders, imposing only limited liability
• Following this principle, the court refuses to go behind the veil to find shareholders personally liable to their company

Question 15

Lifiting corporate veil

Answer 15

However, if fraud is found the court may lif t the corporate veil, making shareholders personally liable to the company’s act

Eg; the company is used as a veichle for the shareholders to do fraud or improper conduct

Question 16

S&S [1897]

Answer 16

Example

Question 17

Modes of exit

Answer 17

Deregistration of defunct private companies

Voluntary winding up
- by members
- by directors
- by creditors

Compulsary winding up petiton
- Commenced by creditor, shareholder or the company itself
- Common grounds for petiton
- Court order

Question 18

Rescue Options

Answer 18

Currently, there is no statutory provisions for corporate rescue in Hong Kong

However, Corporate rescues may be carreid out indirectly through

• voluntary restructuring
• Formal scheme of arrangement
• Appointment of provisonal liquidator