Company Law II

Welcome to LAW B334 Company Law II.

LAW B334 is a five-credit course in the Bachelor of Business Administration programme. It will take you one semester to complete the course. You are expected to have taken LAW B333 Company Law I before taking this course. LAW B333 Company Law I, together with this course, will give you a thorough introduction to Hong Kong company law.

Purpose of this Course Guide

This Course Guide briefly explains to you what the course is about, and how you can work your way through the course materials. It suggests the amount of time you will likely need to spend to complete the course, and it will give you a general idea of when your assignments are due. For detailed information on assignments, however, please refer to the Assignment File, and for information concerning due dates and cut-off dates for work to be submitted please refer to the Presentation Schedule (which is available on the OLE).

Course aims

The main purpose of this course is to introduce you to the legal concepts and principles of company law in Hong Kong in respect of public companies. As many large corporations are publicly-listed, investors, managers and indeed anyone aspiring to be a player in the business world must be aware of the legal principles governing listed companies. Understanding these legal principles helps you make more efficient and informed business decisions. It also helps you avoid conflict and personal liability in business.

LAW B334 Company Law II is designed to help you learn and master the key concepts of company law relating to listed companies, and to apply what you have learned in the business world. It not only helps you understand how the principles of company law are being used, but also tackles real-life legal problems.

Course learning outcomes

On completing this course, you should be able to:

• Interpret the rules and regulations governing the Hong Kong securities market.
• Identify and evaluate the licensing and compliance issues in the securities industry, and discuss the improper market practices.
• Discuss various rules governing takeovers and mergers, and apply the essential rules to real scenarios.

The following chart gives you a general overview of the course structure.

Custom textbook

A custom textbook will be provided to you as an integral part of your course package. The title of the custom textbook for this course is LAW B334 Company Law II. The chapters are selected from the following textbook.

Printed materials

The printed materials include this Course Guide and five study units. You will also be directed in the units to read specific pages in the custom textbook or other readings. Copies of the required readings will either be attached to the study units or provided online.

Additional assigned readings

In addition to the custom textbook, two units of LAW B334 will make use of chapters sourced from leading recent textbooks on company law in Hong Kong.

Websites

Useful materials can be found at the following websites:

Official sites

Bilingual laws information system, https://www.elegislation.gov.hk/

Hong Kong Judiciary, http://www.judiciary.gov.hk/tc/index/index.htm

Judgments of Hong Kong courts, http://www.judiciary.gov.hk/tc/legal_ref/judgments.htm

Legislative Council, http://www.legco.gov.hk/

Hong Kong Government, http://www.gov.hk/en/residents/

Department of Justice, https://www.doj.gov.hk/en/home/index.html

Companies Registry, http://www.cr.gov.hk/

Securities and Futures Commission, http://www.sfc.hk/

Hong Kong Exchanges and Clearing Ltd, http://www.hkex.com.hk/

Basic Law, http://www.basiclaw.gov.hk/tc/index/index.html

Bar Association, http://www.hkba.org/

The Law Society of Hong Kong, http://www.hklawsoc.org.hk/

Law Reform Commission, http://www.hkreform.gov.hk/

Hong Kong Legal Information Institute, http://www.hklii.org/ (a free, independent, non-profit Internet facility providing the public with legal information relating to Hong Kong)

Judgments of English courts, https://www.judiciary.gov.uk/judgments/

Judgments of the House of Lords, http://www.publications.parliament.uk/pa/ld/ldjudgmt.htm

Judgments of Australian courts, http://www.austlii.edu.au/au/cases/cth/HCA/

Legal firms

Some law firms offer legal materials or hyperlinks on their websites which may not be available on official sites. It should be noted, however, that these websites are designed for commercial purposes, and they unavoidably represent the firm's position only. The following addresses are listed in alphabetical order, and the names of the law firms are omitted.

https://www.allenovery.com/en-gb/global/publications?pageSize=0 (English)

https://www.charltonslaw.com/information-insights/hong-kong/ (English)

https://www.deacons.com/ (English)

http://www.gallantho.com/ (English and Chinese)

https://www.linklaters.com/en/insights (English)

https://www.mayerbrown.com/en (English)

http://www.slaughterandmay.com/what-we-do/publications-and-seminars.aspx (English)

Commercial information providers

https://www.lexisnexis.com/hk/legal/

http://westlawinternational.com/ (or http://lawschool.westlaw.com/)

Case studies are a useful and increasingly popular form of learning and assessment in HKMU's School of Business and Administration. In this section we will look at why case studies are used, and then suggest some learning strategies that you can use to approach case studies. We will also briefly discuss some problems that you may encounter as you learn from case studies.

What is a case study approach to learning?

One main purpose of a case study is to explore an issue or a number of issues in relation to an organization. The intention is to get you to carefully diagnose an organization; to focus on key problems, and to suggest how these might be resolved. Often the case is a real-life account of an organization which you are required to analyse in order to focus on a problem. Usually, the information that is provided is incomplete and you are often expected to observe developments in the organization over a period of time. The case study approach is an excellent opportunity to actively apply material that you have read and conceptual knowledge to the reality of an organization.

At HKMU, case studies may be used as part of assignments, exams, study units, or day- school exercises. You normally are given some information about a company (this could be both text and graphical information, such as figures and tables). You are then asked to think about some problems related to the company and to use concepts and apply theories that you have learned in your course to propose possible solutions for the company.

Let's have a look at two kinds of case study questions that you might be asked to work through in your courses. The first example is quite structured, while the second is much more open-ended.

Two examples of case study questions

1. Read the case study entitled 'ABC Consultants' and consider the following issues:
   • Using your understanding of the resource-based model, what measures could be taken to improve ABC's returns?
   • Drawing on your broad understanding of the consultancy industry, assess ABC's relative competitiveness and its profit potential.
   • To what extent do internal factors account for ABC's financial weaknesses?
   • Based on your assessment of ABC's financial weaknesses, formulate a new strategic intent and develop a mission statement for ABC.
2. Read the case study entitled 'XYZ Industries'.
   • Identify the key problems that are currently faced by XYZ's management.
   • Propose viable solutions to these problems.

Why case studies?

As you can see from the above examples, a case study approach to learning requires a great deal of thinking and often will not easily yield a quick 'wrong' or 'right' answer. However, case studies are also good preparation for dealing with real-life business problems. Cases may be short and relatively simple, or longer and complex. The purpose is the same for both types: to give you an opportunity to develop your skills in analysing the strengths and weaknesses of the organization under examination, to consider the processes at work within the organization, and to make decisions about future actions.

Case studies are not meant to replace textbooks, but rather to ask you to draw connections between theories and practice and to apply abstract ideas, concepts, and principles to specific concrete situations. Consequently, case analysis develops a number of skills that are crucial in business. In particular, they help you to:

• analyse complex, unstructured, sometimes ambiguous situations;
• identify critical issues and problems;
• question your own and others' assumptions;
• improve your problem-solving skills;
• develop your ability to find alternatives and make informed decisions;
• make decisions with incomplete information and think strategically;
• self-educate yourself and draw on a broad range of resources and knowledge; and
• present and justify recommendations in writing.

You may find that there are many possible 'right' answers to the questions in a case study. This illustrates that there is often no single best way to responsibly manage and solve real-life business problems.

Some guidelines for analysing case studies

The following strategies should help you to successfully analyse case studies:

1 Read the case and become familiar with the facts

First, skim read the case to obtain a general understanding of the main point(s). Highlight or underline the pertinent points as you read. Read the case again, and this time note down critical facts (such as names, time sequences, and where events occurred). Try to understand how events have influenced decisions. Identify the important individuals or stakeholders, and try to assess the importance of supporting information in the case. How reliable is this supporting information? Are there any gaps in the information that is given?

Make a note of any questions that you have as you read the case.

2 Assess the context of the case

Try to understand the environment of the organization and the wider context of the case. Ask yourself questions about:

• The state of the organization: What is the state of this organization: good, bad or in- between? Usually this involves thinking about interpersonal relationships, and assessing production or financial problems.
• Key players and systems: How do systems and people operate in this organization? Why do they operate like this? Are the systems undergoing change? How successful are the changes? Is there someone who could sabotage any future strategy? Is there someone who can ensure the success of a future strategy?
• Significant trends: How does this industry operate? What are the main or unique characteristics of the industry? What were they five or ten years ago, and what are they likely to be in the future? What impact are trends likely to have on the organization under investigation? How does this organization's performance compare with that of competitors?
• Constraints: Clearly identify all constraints in the case. A constraint may be viewed as anything (usually beyond the control of the organization) that may prevent an otherwise feasible course of action from becoming a success. What is outside the control of individuals in the case study? For example, it is unlikely that any company or individual in Hong Kong could prevent a foreign government from imposing tariff barriers on imports.

A SWOT analysis is a good way to get a better understanding of the organization and the context or environment in which it is operating. A SWOT analysis considers the Strengths and Weaknesses of the organization, and the Opportunities and Threats which the organization faces in the external environment.

3 Recognize the case's symptoms

Read the case again and as you read, try listing all the symptoms of the case. The symptoms of a case are not the problems, but they may help you to identify the problems. Symptoms are all the things that are undesirable or that are not as expected. For example, falling sales could be a symptom of several problems such as poor market segmentation, poor product quality, or problems in a supply chain. At this stage of your analysis, you should just try to observe all the symptoms, and avoid prematurely identifying problems or suggesting solutions. Like a doctor who consults a patient, you first need to observe and note all the symptoms before you can give a definite diagnosis of the problem. Think about how the symptoms may be interrelated. Relationship diagrams, like the one below, may help you to see the relationships between symptoms.

4 Diagnose the case's problems

After you have a good sense of the symptoms, you are ready to determine key issues that need to be analysed more closely. You are now diagnosing the situation, like a doctor diagnosing a patient's symptoms. Ask yourself 'what seems to be the trouble in this organization?' and make a list of what you now perceive to be the key problem(s). You will probably need to go back to the details of the case and as you do this, you may add to or refine your list of potential problems.

If there are several problems, you need to order and prioritize them. You might want to number problems according to how you perceive their importance, or make a matrix, like the one below, which shows relationships between various criteria and each problem.

Also try to establish if there are relationships or themes in common among the various problems. Perhaps different problems in your list are actually variations of a broader central problem.

Ask yourself what assumptions you have made about the case. Are these assumptions reasonable, and are they supported by the facts? Would other people objectively suggest the same problems, based on the facts that you have? Are you suggesting problems that are not supported by the facts of the case?

After you have considered and put into order the possible problems and questioned your assumptions relating to these problems, you should write a statement of the problems as you perceive them. Avoid suggesting solutions at this stage.

Once you have a problem statement, you need to find evidence in the case to support your problem diagnosis. Also, try to identify ideas, concepts and theories from your textbook and course units which help to explain what is happening in the case.

5 Formulate criteria for a 'good' solution and identify possible constraints to solutions

Before you propose a solution, you need to consider the characteristics of a 'good' solution. Obviously, your solution should bring benefits such as improved productivity, reduced costs or greater profits. However, it also needs to be viable and to accommodate the constraints that you have already identified, i.e. Is the solution legal? Is there a budget for this solution? Does it conflict with the organization's culture?

Try to brainstorm alternative solutions. Aim to generate a broad and creative range of options and then try to rate each according to various criteria.

The following matrix demonstrates how this can be done.

Also refer to ideas, concepts and theories from your course materials as you consider and assess each possible solution.

It's often wise to propose a solution that allows for plausible alternatives if it should fail. Managers use the term satisfice when they are considering acceptable alternative solutions, that is, the solution is able to satisfy the situation while also making some realistic sacrifices to existing constraints. Therefore, it is a satisficing rather than a maximizing solution.

Finally, don't forget to consider the possibility of taking no action. What will actually happen if no action is taken? Are any (or all) of the solutions less viable than taking no action at all?

6 Recommend a viable solution

After you have assessed the merits and pitfalls of each alternative solution, select the best solution for the situation.

Remember that the solution needs to be viable. Can the recommended solution be introduced? Are there the resources and the willingness to implement it? Be realistic about what may work. Explain why it is the best solution within the constraints of the existing context and explain how it can be applied to the organization. Suggest a time-frame for the solution's implementation.

Outline possible strategies for implementing your solution, either partially or completely. As many feasible courses of action as possible should be considered before you choose the one that seems the most likely to succeed. The more ideas you have, the greater your chance will be of finding a solution that will work well. The complexity of most organizational problems means that it is highly unlikely that one idea alone will correct the situation. Usually a combination of actions is required, and these need to be funded differently, timed carefully and staffed as necessary.

7 Present your solution as a written recommendation

Review your final solutions and then prepare a set of written recommendations. These should clearly outline your proposed solution in relation to the problems that you have identified. Your recommendations should also include details of why these solutions are the most appropriate given the circumstances and constraints of the case. Finally, you need to clearly state how and when your proposals will be implemented.

Your tutor and your course Assignment File can provide some guidelines on how to present your recommendations.

Some mistakes to avoid as you analyse cases

When you first tackle case studies, you should be careful to guard against the following mistakes:

1. One of the most common mistakes made in case analysis is repeating or simply summarizing the facts of the case. Your tutor is already very familiar with the case details, so you do not have to restate them. You are required to use and analyse the facts, not repeat them. Your analysis should contain only enough case material to support your arguments. Therefore, be analytical!
2. You may often be tempted to just deal with symptoms and ignore the causes of the problem. It is very important to analyse the background of the case (and the climate in which the events of the case unfold).
3. Avoid discussing problems in isolation and do not overlook their interrelatedness. If you try to think in terms of 'systems' rather than in terms of individual problems, you are more likely to avoid this pitfall.
4. Students often fail to state the assumptions underlying their analysis. If any important assumptions have been made, have you questioned them and are they reasonable and appropriate? Avoid selectively using and interpreting case material in order to justify a preconceived solution.
5. Practical limitations and constraints may sometimes be overlooked. For example, a recommendation that a whole team be fired is probably unrealistic.
6. A very common mistake is poor integration of the facts in the case with the concepts, principles, and theories in the textbook. Such integration is vital. Ask yourself if relevant theories from your course have been fully and constructively applied.
7. Finally, recommendations are too often not spelled out in detail or are unrealistic. A timetable for implementing them is also often not given.

Analysing cases poses many challenges, and this is one reason the case study method is so rewarding. It is a very active form of learning. It offers you a risk-free opportunity to gain managerial and organizational experience and should greatly increase your confidence to make informed decisions in the real world.

Good luck and we hope you enjoy working through the cases that you encounter!

The formal assessment for this course consists of assignments and a final examination.

Assignments

Assignment 1, worth 20% of the total marks for the course, evaluates material covered in Units 1 and 2.

Assignment 2, worth 20% of the total marks for the course, evaluates material covered in Units 3 and 4.

How to submit assignments

You must use word processing software (such as Microsoft Word) to prepare the assignments, and submit them via the Online Learning Environment (OLE). All assignments must be uploaded to the OLE by the due date.

Failure to upload an assignment in the required format to the OLE may result in the score of the assignment being adjusted to zero.

Assignment submission extension policy

The assignment policy of the University as stated in the Student Handbook should be observed. You are required to submit the assignments for this course in accordance with the dates communicated by your Course Coordinator. You may apply for a submission extension on the grounds of illness, accident, disability, bereavement or other compassionate circumstances.

Applications for extensions must be submitted online via the OLE. Please note the following:

• Supporting documents must be submitted to justify applications for extensions of over seven days.
• Applications for extensions should normally be lodged before or on the due date.
• Applications are considered by:
  
  • your tutor for extensions of up to seven days;
  • the Course Coordinator for extensions of 8 to 21 days; and
  • the Dean for extensions of over 21 days.

After an assignment is submitted via the OLE, it is your responsibility to check that the assignment has been successfully submitted. Extension applications due to any problem with uploading will not be accepted. The University cannot accept any responsibility for assignments that are not received by your tutor due to any problem with submission via the OLE. As a precaution, you are advised to keep a copy of each assignment you submit.

According to the University's policy, no extension of the due date will be allowed for the final assignment. This policy will be strictly enforced. Any late submission of the final assignment will result in the score of the assignment being adjusted to zero.

Final examination

The final examination for LAW B334 is of three hours' duration and is worth 60% of the total course grade. The examination consists of questions similar to those in the assignments.

A specimen examination paper will be provided before the examination for practice purposes. The format of the specimen examination will be similar to that of the final examination.

Assessment summary

The following table summarizes the assessment requirements for LAW B334.

As specified in the HKMU Student Handbook, in order to pass the course, you need to pass both the continuous assessment and the examination. For more information on the University's policies on assignments and examinations, please refer to the 'Assignments and examinations' section in the Student Handbook.

Tutors

Tutors conduct non-compulsory live online tutorial sessions with a group of students as per the tutorial schedule. At these sessions, key course concepts are reviewed and reinforced, group and individual exercises are conducted, problems are discussed, individual student questions are answered, and assistance is provided relative to assignments.

Tutors also mark your assignments according to the marking criteria provided by the Course Coordinator. Tutors are encouraged to provide you with comprehensive and timely feedback. The Course Coordinator is responsible for training the tutors, providing marking criteria, monitoring a sample of marked assignments and providing feedback to the tutors.

Live online tutorials

There will be four live online tutorials of three hours each. Attendance is strongly recommended, although not compulsory.

On-line support

This course will be supported by the Online Learning Environment (OLE). You can find course material and the latest course information from the OLE. Through the OLE, you can also communicate with your tutor, the Course Coordinator, and fellow students. For details about the OLE and how to access it, please refer to the Online Learning Environment User Guide.

Terry Wong graduated from the Chinese University of Hong Kong with a BBA, the University of Manchester with an LLB, and from the University of Hong Kong with an LLM. He has been admitted to practise as a solicitor in Hong Kong (practising) since 1994. He has worked in a number of law firms including, inter alia, F. Zimmern & Co., Robert Wang & Co., Gallant Y.T. Ho & Co., and Kao, Lee & Yip, and as an in-house lawyer in two listed companies. He has also taught in the Hong Kong Polytechnic University, the Graduate School of Law and Politics of the Dr Sun Yat Sen University in Guangzhou, China, and the United International College in Zhuhai, Guangdong, China, before joining HKMU (OUHK, as it then was) as a Senior Lecturer. He specializes in company law, commercial law, land, trademark, registered design, trust, and equity law. He has also written articles in these areas.

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