Hong Kong Corporate Law

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This Course Guide has been taken from the most recent presentation of the course. It would be useful for reference purposes but please note that there may be updates for the following presentation.

LAW B810

Hong Kong Corporate Law

Welcome to LAW B810 Hong Kong Corporate Law!

LAW B810 is a two-semester, ten-credit, postgraduate-level course. This course provides an overview of company and business law. Considerable emphasis is placed on the laws and regulations relating to companies, their management and corporate governance, together with practical and comprehensive training in the contracting process, the foundation of any commercial transaction and legal obligations.

By studying this course, students will be equipped with a sound foundation in the legal framework of creating business transactions, and incorporating, maintaining, and dissolving a company in Hong Kong. The course focuses on the key concepts of company and business law in Hong Kong, applications of relevant legal requirements and theories to practical issues faced by corporate leaders as well as management level staff.

 

Course aims

The course aims to prepare students to understand the legal framework within which commercial organisations operate; provide reasoned opinion on the legal structures available to a variety of types of organisations and their appropriateness; understand the internal rules and the external regulatory environment which companies are subject to; apply relevant legislation, case law, and best practice recommendations to legal and governance issues arising in complex scenarios; and exercise appropriate judgement when presenting advice on structural and legal issues in a relevant form.

 

Course intended learning outcomes

Upon completion of this course, students should be able to:

  • outline the legal system in Hong Kong, and critically evaluate the key elements of the  validity of a contract;
  • examine the general principles in the law of tort and the remedies for breach, and explain and discuss in detail the tort of negligence with application to real-life scenarios;
  • identify and compare the laws governing different types of commercial organisations in Hong Kong, and effectively interpret and apply the governing laws and best practice recommendations to legal and governance issues arising from complex scenarios relating to shares, capital maintenance, loans, liquidation and dissolution of companies; and
  • apply and evaluate the internal rules and external regulatory environment which companies are subject to regarding membership and protection and remedies for members and market misconduct, and critically discuss the interaction of corporate governance, competition law and the boardroom.

This course will be delivered primarily in blended learning mode, incorporating a custom textbook and online study materials, and supported by supplementary lectures (pre-recorded videos) and regular learning sessions.

In this blended learning approach, besides a custom textbook, online study materials from the Hong Kong Chartered Governance Institute (HKCGI) will be incorporated. Each unit will include a variety of guided activities and self-tests that will provide opportunities for you to engage in as you work your way through the course. You will be guided throughout the course using an HKMU-produced Study Guide that leads you through your study pathway unit by unit, providing guidelines on each chapter from the HKCGI.

You will also have access to a series of supplementary lectures (pre-recorded videos) organised by the Lee Shau Kee School of Business and Administration. These videos will assist you in learning the major concepts of this course.

In addition to watching the supplementary lecture videos, be sure that you work through all the assigned materials, in both the custom textbook and study units, as well as the materials provided on the HKCGI website, for more comprehensive coverage of the topics discussed in the supplementary lectures.

Another place you will need to refer to for learning resources during the course is HKMU's Online Learning Environment (OLE). There, you will have access to a rich array of multimedia materials such as video lectures and online questions, and you will be able to discuss topics with other students and your tutor on the course discussion board.

This course is further supported by regular live online tutorials through Zoom and a day school (in person).

 

Custom textbook

LAW B810 makes use of the custom textbook originally prepared for LAW B262/B262F Business Law I.

 

HKCGI online materials

In addition to the custom textbook, much of the content for this course comprises online study materials specially prepared by the Hong Kong Chartered Governance Institute (HKCGI). These study materials are tailored for the Hong Kong context, so they should be directly relevant to you. The materials will be available at the Wolters Kluwer Prime website: http://wkprime.com/.

 

The Study Guide

The Study Guide sets out your study pathway through the HKCGI online study materials and other course learning resources, and provides supplementary material and additional self- assessment opportunities. You'll therefore need to keep it by your side as you work through the course.

The Study Guide is divided into ten units. The titles of the units, the textbook chapters they cover as well as the associated HKCGI materials are set out in the following table. Note that the supplementary readings are not listed in the table.

To support and facilitate your learning, selected readings including book chapters and journal articles will be recommended under different study topics.

 

UnitHKMU custom textbook materials / HKCGI online study materials
1The Hong Kong legal systemHKMU LAW B262/B262F Unit 1
HKCGI CGQP: Hong Kong company law
Chapter 1 Source of company law and governance
1.1 Legislation and case law
2Contract law IHKMU LAW B262/B262F Unit 2
3Contract law IIHKMU LAW B262/B262F Unit 3
4Law of tortHKMU LAW B262/B262F Unit 4
5Sources of law, business structures and company formation

HKCGI CGQP: Hong Kong company law
Chapter 1 Source of company law and governance
Chapter 2 Business structures
Chapter 3 Incorporation and corporate personality
Chapter 4 Legally binding the company
CGI Study Text — Company Law 3rd Edition
Chapter 2 Business structures
Chapter 3 Incorporation and corporate personality
Chapter 4 Legally binding the company
Chapter 8 Membership

6Capitalisation, financing and capital reconstructionHKCGI CGQP: Hong Kong company law
Chapter 11 Shares and share capital
Chapter 12 Capital maintenance rules
Chapter 16 Corporate restructuring and takeovers
7Corporate management, transparency, membership, member protection and remediesHKCGI CGQP: Hong Kong company Law
Chapter 5 Role of directors
Chapter 6 Managing the company — Board and shareholders' meetings
Chapter 7 Directors' duties
Chapter 8 Membership
Chapter 9 Company meetings and decision making
Chapter 10 Members' remedies
Chapter 14 Corporate transparency
CGI Study Text — Company Law 3rd Edition
Chapter 6 Managing the company — Board and shareholders' meetings
8Raising loans, liquidation and dissolutionHKCGI CGQP: Hong Kong company law
Chapter 13 Loan capital
Chapter 17 Receivership
Chapter 18 Liquidation and dissolution
9Disclosure obligation and market misconductHKCGI CGQP: Hong Kong company law
Chapter 15  Market abuse
10Interaction of corporate governance, competition law and the boardroom

HKCGI CGQP: Boardroom dynamics
Chapter 1 The emergence of board dynamics in governance
Chapter 2 Governance structures
Chapter 3 Board director demographics and attributes|
Chapter 6 Stakeholder conversations
Chapter 7 Culture in the boardroom
Chapter 11 Effective talent management
Chapter 12 Board evaluation

 

The Online Learning Environment (OLE)

A dedicated area for LAW B810 students has been set up in HKMU's OLE. You will need to log on regularly to the OLE to access the course discussion board and online learning components such as PowerPoint slides and video lectures. You will also need to go online to access various videos that are referred to in the Study Guide.

 

Learning support

You will be supported throughout the course by regular learning sessions in the form of live online tutorials and a day school (in person). Details of the dates and times of these sessions can be found in the Presentation Schedule on the OLE.

 

UnitNo. of weeksLearning supportNo. of hours
12Live online tutorial 13
23Live online tutorial 23
33Live online tutorial 33
43Live online tutorial 43
53Live online tutorial 53
64Live online tutorial 63
74Live online tutorial 73
84  
93Day school (in person)6
102  
Total31 27

 

Assessment

During the course, your progress will be assessed both formally and informally.

Formative assessment includes various activities, self-tests and online discussions that you will undertake while working your way through the study units, textbook and HKCGI online readings.

Summative assessment consists of assignments and a final examination.

 

Assessment summary

The summative assessment items are outlined in the following table.

 

Assessment itemWeighting
Individual Assignment 1
(scenario / discussion type)
Covers Units 1 to 4
20%
Individual Assignment 2
(scenario / discussion type)
Covers Units 5 to 8
20%
Examination60%
Total100%

 

Assignments

There are two required assignments for the course. You will be expected to apply concepts and techniques acquired during the course when completing the assignments.

  • Assignment 1, worth 20% of the total marks for the course, evaluates material covered in Units 1 to 4.
  • Assignment 2, worth 20% of the total marks of the course, evaluates material covered in Units 5 to 8.

How to submit assignments

You must use word processing software (such as Microsoft Word) to prepare your assignments, and you must submit your assignments 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 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.

 

Examination

The final examination for LAW B810 Hong Kong Corporate Law will be of two hours' duration and have a value of 60% of the total course grade. The examination will consist of questions that reflect the types of practice exercises and assignments that you have previously experienced, achieving Learning Outcomes 1 to 4.

The following table gives a general overview of the course structure. It suggests the amount of time you should allow for completing each unit, and provides a broad schedule for you to plan your work. This estimation includes the time for reading the units and custom textbooks, completing activities, self-tests and assignments, attending live online tutorials, and preparing for your final examination.

 

UnitNo. of weeksAssessment
1. The Hong Kong legal system2Activities
Self-tests
2. Contract law I3Activities
Self-tests
3. Contract law II3Activities
Self-tests
4. Law of tort3Activities
Self-tests
Assignment 1
5. Sources of law, business structures and company formation3Activities
Self-tests
6. Capitalisation, financing and capital reconstruction4Activities
Self-tests
7. Corporate management, transparency, membership, member protection and remedies4Activities
Self-tests
8. Raising loans, liquidation and dissolution4Activities
Self-tests
Assignment 2
9. Disclosure obligation and market misconduct3Activities
Self-tests
10. Interaction of corporate governance, competition law and the boardroom2Activities
Self-tests
Revision1 

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 organisation. The intention is to get you to carefully diagnose an organisation; 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 organisation 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 organisation.

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 more 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 organisation under examination, to consider the processes at work within the organisation, 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 organisation and the wider context of the case.

Ask yourself questions about:

  • The state of the organisation: What is the state of this organisation: 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 organisation? 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 organisation under investigation? How does this organisation'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 organisation) 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.

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

 

case_study_Eng

 

4 Diagnose the case's problems

After you have a good sense of the symptoms, you're 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 organisation?' 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 prioritise 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.

 

CriteriaProblem #1Problem #2Problem #3
Importance: What will happen if the problem is not addressed?   
Urgency: How quickly must this problem be solved?   
Centrality: To what extent does this problem cause others?   
Solvability: Can this problem actually be solved?   

 

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 organisation'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.

 

 CostEase of implementationImpact on organization cultureImpact on profits
Option 1*******
Option 2*********
Option 3********

 

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 maximising 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 organisation. 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 organisational 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 summarising 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; 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 organisational 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!

You will be assigned a tutor for this course. Before the starting date for the course you will be advised by the HKMU Registry of the name, address and phone number of your tutor. Your tutor will:

  • conduct the tutorials for your group;
  • assess your assignments; and
  • be available at certain times to help you by phone. (You will be advised of these times separately.)

Your tutor is your first point of contact with HKMU. Please consult your tutor first about any problem you might have or advice you may need. Your tutor will advise you if you need to contact a senior tutor or the Course Coordinator.

Please note that it is not your tutor's role to give lectures on the course material. Your tutor is a helper (or facilitator) who can provide you with considerable assistance when you run into difficulties and to help you to see how well you understand the course material by encouraging you to express your ideas both verbally and in writing. HKMU urges you to make use of this assistance.

 

Tutorials and supplementary lectures

Regular tutorials will be held by your tutor. There are 18 tutorials spread throughout the course. In addition, there will be a total of four supplementary lectures to help your study. The time, dates and locations of these sessions will be sent to you separately.

We strongly recommend that you attend these sessions. Their purpose is not only to help with problems but also to give you the opportunity to practise communication skills. However, they are not compulsory and, if your work or domestic situation prevents you from attending, you can still complete the course satisfactorily. Let your tutor know if you are in this situation so that some mutually convenient tutoring by telephone can be arranged.

The tutorials for this course will be conducted in English. All the tutors have excellent English and will provide you with a good opportunity to communicate in English. If you are nervous about speaking in English, do not worry. Many other students feel the same way. Your tutor understands the problem and will help. Take advantage of this opportunity to improve your communication in English.

Please note that the function of these tutorials is to complement your distance learning material and not to replace it in the form of lectures. In this course, your primary means of learning is through your HKMU study materials.

 

Preparation for tutorials

To benefit fully from a tutorial, you must have completed the reading and various practice activities for the relevant units before you go to the tutorial.

 

Electronic support

 

Electronic mail

You may submit any study problems to your assigned tutor through email. This channel provides flexibility to both tutors and students in overcoming the limitations of telephone tutoring in solving more technical issues.

 

Online Learning Environment

This course is supported by HKMU's Online Learning Environment (OLE). You can find course materials and the latest course information from the OLE and use the discussion board to communicate with your tutor, the Course Coordinator and fellow students. You are encouraged to participate actively in the online conferencing relating to the course content and problems that you encounter in your study.

This course provides an overview of company and business law. Considerable emphasis is placed on the laws and regulations relating to companies, their management and corporate governance, together with practical and comprehensive training in the contracting process, the foundation of any commercial transaction and legal obligations.

The course will be presented through a blended learning approach, featuring the custom textbook and online study materials from the Hong Kong Chartered Governance Institute (HKCGI), supported by supplementary lectures (pre-recorded videos), live online tutorials and a day school (in person). As you work through LAW B810, you will need to refer to your Study Guide and the OLE. The course is assessed through two assignments and a final examination.

We hope you find LAW B810 stimulating and valuable for your professional development.

If you wish to defer your studies of this course until a later date, you should apply for deferment of studies. For regulations governing the deferment of studies, please refer to your Student Handbook. If you have applied for deferment of studies, you should continue with your studies of this course and submit the required assignments until formal approval is given by the University.

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