Company Law Assignment: Advice for Hong Kong Studios - BUSI3808

This assignment provides legal advice to a client, addressing key aspects of Hong Kong company law. The first question analyzes different business structures, comparing sole proprietorships, partnerships, and companies, with a focus on the advantages and disadvantages of each. It concludes that a partnership structure is suitable for the client's needs. The second question delves into the process of incorporating a company in Hong Kong, outlining the registration process and the legal implications of incorporation, referencing the Companies Ordinance. The third question examines the binding nature of a lease agreement entered into before the company's incorporation, determining the liability of the individual and the company, referencing relevant case law. The assignment demonstrates an understanding of key legal principles and their application to a given fact scenario, offering a comprehensive analysis of the legal issues presented.

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

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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

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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.

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Application
a)
In this particular scenario, it can be understood that A has an existing company BVI and
such cannot be used directly as such would have various issues relating to copyright and
ownership. Therefore, A’s BVI is a separate company it is considered to have a separate legal
entity and a foreign company can operate in Hong Kong as it is considered to be relatively easy
as well as cost effective. The individual in this scenario can be a shareholder of the company.
Since the company is considered to be a non Hong-Kong company it does not have any
established place of business for the objective of registration and therefore does not create any
legal obligations.
b)
As it has been mentioned in the above scenario that there are three forms of business
structures. It can be stated that the partnership form of business structure would be suitable
where all the partners can be general partners of the business. If BVI were a partnership firm
then such would not be able to be a partner as it is not a person. A company in this scenario can
be a partner as it enjoys a separate legal entity as it is considered to be a juristic person. As
mentioned in the above rule that the partnership form of business structure has its own
advantages as well as disadvantages therefore, this form of business structure would be suitable.
c)
A company which is considered to be limited by shares are considered to consist of share
capital which would be divided into several shares. These shares are considered to be held by the
shareholders in a company who are considered to be entitled to the profits. As mentioned in the
above rule the limited liability company is considered to be incorporated by the Companies
Ordinance.

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Conclusion
Therefore, it can be stated that the partnership form of business structure would be
suitable, as all the partners can become general partners along with the BVI.
Question 2
Issue
The issue to be discussed is the process of incorporating a company in Hong Kong.
Rule
A company is considered to be used to describe any types of business apart from sole
traders. It can be understood from the case of Salomon v Salomon and Co Ltd. (UK) [1897] AC
22. The company is considered to be a separate legal entity where when it had been formed had
a property sold but the property was considered to belong to that of the company and not to the
members or the creditors as it can be understood from the case of Macaura v Northern Assurance
Co Ltd [1925] AC 619.
Under the Hong Kong law, there are several method through which an incorporation of a
company can take place but the most common form of registration was through the Companies
Ordinance (Cap 622). Process of forming a company is considered to be incorporation and any
one or more companies are considered to establish a company if such is for a lawful purpose. In
order to incorporate a company there are certain processes first is the registration process, second
is considered to be the application process where the documents must be provided which are the
incorporation form, the signed copy of the articles as well as the business registration form and
such needs to be delivered to the Registrar. After 21st February 2011 any company applying for

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incorporation would be considered to simultaneously apply for business registration under the
Business Registration Ordinance (Cap 310). There are certain effects resulting from
incorporation and such are considered be broadly stated under Section 73 and Section 115 of the
Ordinance. The company is considered to be capable of performing certain functions of a
company which is incorporated. It has perpetual succession and along with such has a common
seal. It also has the power to acquire or obtain or hold as well as dispose the property and is
capable of being able to sue as well as be sued and has the responsibility as well as the liability
of paying the debts.
Application
In this particular scenario it can be understood that if the company is considered to go for
the incorporation then it needs to be registered as the company under the Company Ordinance
(Cap 622). A company is considered to be a separate legal entity and has its own perpetual
succession. The company is also considered to consist of shareholders and along with such is
liable or responsible to pay its own debts. Therefore, the company can be incorporated through
registration.
Conclusion
Thus, it can be understood from the above scenario, that a company can be incorporated
under the Company Ordinance in Hong Kong which would imply that the company should be
registered.

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Question 3
Issue
The issue to be discussed is whether the lease agreement entered by B is considered to be
binding on the Hong Kong Studios while the company has been incorporated.
Rule
Under the Company Ordinance (Cap 622) the company is considered to be a separate
legal entity and it can be incorporated through registration or several other methods. If there has
been a lease agreement signed then such would come into effect as the promoter can enter into
contracts before incorporation but the promoter would be personally liable as the company had
not been incorporated. If the lease agreement has been signed after the incorporation such would
remain binding. It can be understood from the case of Kelner v Baxter (1866) LR 2 CP 174.
Application
It can be understood from this particular scenario, that the lease agreement had been
entered into by B before the incorporation of the company. Therefore, B would be personally
liable for such due to its pre incorporation. It would be binding on the Hong Kong Studios as
such lease agreement had been on the name of the company and since it is considered to enjoy a
separate legal identity such would be binding on the company after the time of its incorporation.
Therefore, the lease agreement would be binding on the company since it had been assumed to
be incorporated.
Conclusion
Therefore, the lease agreement would be binding on Hong Kong Studios as it is an
incorporated company.

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Yours Sincerely,
Your name
Contact email and telephone number

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References
Companies Ordinance. (Cap 622).
Macaura v Northern Assurance Co Ltd [1925] AC 619.
Partnership Ordinance (Cap 38).
Registration Ordinance (Cap. 310).
Salomon v Salomon and Co Ltd. (UK) [1897] AC 22.