CITY UNIVERSITY OF HONG KONG

School of Law
LW3902 The Law Relating to Companies

Submission Deadline (to Turnitin): Friday, 1 March 2024, by 12:00 p.m. (noon)

This assignment is worth 20% of the total marks. The word limit is 1,000 words (excluding
footnotes). Use font size 12 with single line spacing. Please also note the following points:

• You are required to strictly adhere to the policy of City University of Hong Kong on
plagiarism. Do not discuss your answer with others and the use ChatGPT is strictly
prohibited.
• All materials m ust be footnoted (bibliography is not necessary). You must use appropriate
authorities (cases/ordinances) to support your answer.
• No extension will be granted. Late submission will result in a deduction of one sub-grade
per day.
• You must cite your 1) student number; 2) seminar section (tutorial group – e.g.: T01); AND 3)
your tutor’s name on the top left-hand corner of the first page of your answer. Do not include
a coversheet.
• Use your student number as the file name and save the document as a WORD file. You can
only submit your assignment to Turnitin once.

----------------------------------------------------------------------------------------------------------------
Assignment Question

Alison is thinking of setting up her own restaurant in Central. She feels that the business venture
would be risky, but she is confident that the business will prosper in the long run. Alison is a food
critic. She is also a famous YouTuber and has already produced hundreds of videos on YouTube. On
the other hand, Alison’s husband, Ben, is a partner of a law firm. He is not going to participate
directly in Alison’s business, but he is willing to help her financially.

Alison plans to invite Cara, her best friend to join her in this business venture. Cara is a former Public
Relations Executive. She can speak 4 languages and can assist Alison with promoting her business.
Alison, Ben and Cara will contribute $2 million each to the business, but they will obtain the initial
funds from Cara’s husband, Daniel. Daniel agreed to provide $8 million as the initial funds to help
start up the business. Like Ben, he has no plans to participate in the business. After initial discussion,
Alison and Cara decides to open two shops in Hong Kong - one in Central, the other in Kowloon
Tong. Cara is primarily responsible for the Central branch, and she will operate the restaurant out of a
property owned by Daniel (the property was insured against fire under a policy in his name). Alison is
thinking of leasing the second property in Kowloon Tong, probably in her own name. She also opened
a credit account with Restaurant Supplies Ltd (“RS”). Ella and Fred are the directors and shareholders
of RS. Alison made several purchases from RS. RS delivered the goods and invoice to Daniel’s
premises in Central.

i) Advise the parties as to the different forms of business vehicles they can adopt for their
business, discussing the advantages and disadvantages of each in light of the particular
circumstances (you do not need to include sole proprietorship in your answer).

ii) Now, assume a limited company was set up and Daniel’s property (in Central) was
transferred to the company. A fire broke out at the premises and the goods supplied by RS
(which had not been paid) were all destroyed by fire. Consider the potential legal issues
involved.