Legal Handbook for Start-Up Companies

1 Explain the nature of the legal system

2 Illustrate the potential impact of the law on a business

3 Examine the formation of different types of business organisations

4 Recommend appropriate legal solutions to resolve areas of dispute

You are working in a law firm advising new start-up companies on the legal system and key legislation that they are required to know and apply. You have been asked to produce a handbook for new companies in order to support your business advice and guidance.

The handbook must include the following sections:

1. An explanation of the legal system in the Hong Kong Special Administrative Region (HKSAR). A critical reflection of the legal system using examples to demonstrate strengths and weaknesses.

2. An overview of the sources of law in the HKSAR.

3. An explanation on the role of government in law-making.

4. An explanation of how statutory and common law is applied in the justice courts in the HKSAR.

5. An explanation of the key legislation, regulations and standards that a new business needs to be aware of. Analysis of the potential implications of law on a business. For example, copyright law, contract law, employment law etc.

Your client approaches you because they have the following disputes/problems. For each problem case presented, you must apply and justify a legal solution to the problem.

Problem A

Chan wants to start up a new business with his friend. Give an introduction to different types and classification of business organisations in Hong Kong in both the public and private sectors, providing specific examples to illustrate different legal structures.

Explain to Chan the advantages and disadvantages of 2 different legal structures.

Finally Chan decides to set up a private limited company with his friend. Advise Chan as to the procedures in setting up a private limited company. Assist Chan to complete the standard form required by the Companies Registry and attach it in the Appendix. Also advise Chan what other documents he needs to submit.

An evaluation of his new company is managed and funded.

Problem B

Grace runs a small flower shop in Central in the form of a private limited company. Grace is the sole member and director of the company. Fanny has been employed as Grace’s assistant for more than 3 years.

One day when Grace returned to her shop after the long weekend, she found that most of the flowers withered. This was because Fanny had forgotten to water all the plants and put sufficient water in the pots before the weekend.

Grace was furious and dismissed Fanny immediately. Fanny thought she would be entitled to have one month’s notice on termination as well as the long service payment.

(i) Apart from your law firm, where could Fanny obtain legal advice? Compare and contrast the different sources of legal advice.

(ii) Advise Fanny of her rights as an employee. Apply the law and justify your legal solution.

Problem C

Ms Law lived in Mainland China. When she visited Hong Kong one day, Ms Law opened an account in Bank X. She was also invited to subscribe to a financial product. She subscribed to it thinking that she could withdraw money from that financial product freely.

After 9 months, she visited Hong Kong again. She wanted to withdraw money from the financial product but was refused. It was because the financial product was an insurance plan with fixed investment tenure and therefore money could not be withdrawn freely.

She then requested a refund of her contributions from the financial product but again was refused because it was after the cooling off period and she did not have the right to cancel the investment.

(i) Assess three different ways to resolve the dispute including alternative dispute resolution. Evaluate the effectiveness of these three legal solutions.

(ii) Advise Ms Law of her rights, if any, under the contract. Apply the law and justify your legal solution.