Questions-Answers on Company Law

Running head: COMPANY LAW
COMPANY LAW
Name of the Student
Name of the University
Author Note

COMPANY LAW1
Address of the client:
Dear (Name of the Client)
Question 1
Issue
The issue to be discussed in this present scenario, is what kind of structure would be
adopted for the business and the advantages as well as the disadvantages regarding it.
Rule
a)
In a sole proprietor form of business the business is considered to be owned by a single
person. The business is not considered to be a separate legal entity as the owner of the business
and the business is considered to be one. The primary legal requirement regarding sole proprietor
form of business is considered to be the registration for the establishment under Registration
Ordinance (Cap. 310) along with the IRD. These are applicable for other forms of business
structures as well. It is considered to be known for simple establishment and along with such
easy decision-making, with the sole beneficiary of the profits and ease of termination. The
disadvantages include no separate legal entity and it is unlimited personal liability. There is also
a limited life to the business along with low public perception.
b)
Partnership is considered to be the form of business structure which would be co-owned
by two or more than two individuals and they would be considered to share their profits. The
partners are considered to be joint owners in a business and in Hong Kong these are governed by
the Partnership Ordinance along with common law. General partners are considered to be liable

COMPANY LAW2
for profits as well as losses of the business whereas limited partners are not liable for the losses
incurred in this form of business. Section 3 (I) of the Ordinance is considered to provide a
definition of partnership. The partners are considered to raise capital easily than the sole
proprietor and they do not have to depend on personal sources for collecting and raising capital.
There are combined expertise in this form of business structure. It also attracts several employees
and there is flexibility in terms of profit sharing or any contributions between the general
partners. The disadvantages include unlimited liability and no protection regarding the personal
assets. It also divides the goals as well as the opinions and the profits are shared between the
partners. Lastly, the partners are considered to be liable for the actions of other partners.
c)
Company is considered to be created so that the company owners have their personal
assets protected through their personal liability for the debts relating to their business as such
would be limited to the assets which are owned by them in the business. A company, which is
considered to be limited by the shares, are considered to have a share capital which would be
divided into several shares. A limited liability company is considered to be incorporated in Hong
Kong by the registration with that of the Companies Registry under the Companies Ordinance.
(Cap 622). It is considered to be a separate legal entity and there are limited liability of the
shareholders. It also has perpetual succession and there is an ease on raising of capital. The
transfer of ownership is considered to be easier and there are various tax benefits along with
incentives. However, the limited liability companies are considered to be difficult to set up and
they have certain ongoing statutory compliance requirements. A company must also have certain
disclosure agreements and the winding up procedures are considered to be difficult and complex.