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    Tutorial Questions For Week 3: Nature and Types of Companies

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    HYC J
    Peggy runs a successful gift shop and wants to expand by opening two more shops. She is concerned about risks of loans and her cousin suggests incorporating her business. Peggy seeks advice on: (1) remaining sole controller of an incorporated business; (2) how to incorporate in Hong Kong; (3) consequences of incorporation; and (4) transferring her business to the company. A manufacturing business was transferred to company X Ltd. X Ltd set up subsidiary Y Ltd for retail. Premises for Y Ltd caught fire, damaging property and causing losses for X Ltd. Advice is sought on who can claim insurance - the original owner or X Ltd. Also, a contractor was not paid for fitting out Y Ltd's

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    Tutorial Questions For Week 3: Nature and Types of Companies

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    Peggy runs a successful gift shop and wants to expand by opening two more shops. She is concerned about risks of loans and her cousin suggests incorporating her business. Peggy seeks advice on: (1) remaining sole controller of an incorporated business; (2) how to incorporate in Hong Kong; (3) consequences of incorporation; and (4) transferring her business to the company. A manufacturing business was transferred to company X Ltd. X Ltd set up subsidiary Y Ltd for retail. Premises for Y Ltd caught fire, damaging property and causing losses for X Ltd. Advice is sought on who can claim insurance - the original owner or X Ltd. Also, a contractor was not paid for fitting out Y Ltd's

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    Peggy runs a successful gift shop and wants to expand by opening two more shops. She is concerned about risks of loans and her cousin suggests incorporating her business. Peggy seeks advice on: (1) remaining sole controller of an incorporated business; (2) how to incorporate in Hong Kong; (3) consequences of incorporation; and (4) transferring her business to the company. A manufacturing business was transferred to company X Ltd. X Ltd set up subsidiary Y Ltd for retail. Premises for Y Ltd caught fire, damaging property and causing losses for X Ltd. Advice is sought on who can claim insurance - the original owner or X Ltd. Also, a contractor was not paid for fitting out Y Ltd's

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    23 views1 page

    Tutorial Questions For Week 3: Nature and Types of Companies

    Uploaded by

    HYC J
    Peggy runs a successful gift shop and wants to expand by opening two more shops. She is concerned about risks of loans and her cousin suggests incorporating her business. Peggy seeks advice on: (1) remaining sole controller of an incorporated business; (2) how to incorporate in Hong Kong; (3) consequences of incorporation; and (4) transferring her business to the company. A manufacturing business was transferred to company X Ltd. X Ltd set up subsidiary Y Ltd for retail. Premises for Y Ltd caught fire, damaging property and causing losses for X Ltd. Advice is sought on who can claim insurance - the original owner or X Ltd. Also, a contractor was not paid for fitting out Y Ltd's

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    LW3902 Law Relating to Companies School of Law

    City University of Hong Kong

    Tutorial Questions for Week 3: Nature and Types of Companies

    Question 1

    Peggy runs a gift shop in Central. She works hard and is friendly to her customers. Her business
    is becoming more and more successful and she decides to expand her business and open two more
    gift shops in Kowloon and the New Territories. To do this Peggy will need to raise finance and
    she is a little concerned about the risks associated with taking loans. Her cousin, June, told her that
    it might be an idea for Peggy to incorporate her business.

    Peggy seeks your advice on:


    (a) whether she could incorporate her business and remain as the sole person in control of the
    business;
    (b) the way in which a company can be incorporated in Hong Kong;
    (c) the consequences of incorporation; and
    (d) how her business can be transferred to the company.

    Question 2

    A number of years ago, Cheung had set up and operated a garment manufacturing business as a
    sole trader out of factory premises in Kwai Chung. The premises were insured against fire under a
    policy in his own name. Subsequently Cheung established a company, X Ltd, and transferred his
    business to the company. Cheung and his former employee Mui were the two subscribers to the
    company, and they were also the directors. Recently, Cheung and Mui decided to expand their
    company’s business into retailing as well, and for that purpose they set up a subsidiary Y Ltd. X
    Ltd held 100% of the shares of Y Ltd. Cheung and Mui were also the directors of Y Ltd. Mui found
    retail premises in Cheung Sha Wan for the retail operations, and obtained the services of Designs
    Ltd to fit out those premises.

    (a) A fire occurred in the premises in Kwai Chung. This caused significant damage to the
    property, and lead to significant losses for X Ltd. Advise as to whether Cheung or X Ltd may claim
    under the insurance policy.

    (b) Designs Ltd has not been paid for the work done on the Cheung Sha Wan shop premises.
    Jack and Jill are the shareholders and directors of Designs Ltd, and they wish to sue in contract for
    the amounts owed. Advise Jack and Jill as to as to which party should be the plaintiff in court
    proceedings, and which party or parties should be the defendant(s) in this action. Would your
    answer differ if Y Ltd does not have any assets or funds to satisfy any claim made against it?

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