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Corp Law

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Corporate Law EXAMINATION PAPER

SECTION A

This section consists of one compulsory question which carries 40 marks. Total marks for this section are 40 marks.

Question 1

(40 marks)

Read the following case. General Beauty Ltd. (“General Beauty”) is a company incorporated in 1999, well known for cosmetic products it manufactures and sells in Hong Kong. Moonlight Ltd. (“Moonlight”) is a company incorporated in 2000, producing face cream series of the General Beauty brands, and has 80% of its issued share capital held by General Beauty. Four senior managers of General Beauty form the board of directors of Moonlight. Amy suffered from facial injury as a result of using the newly marketed face cream manufactured by Moonlight. It was discovered that the face cream contained certain mercury component causing damage to human skin. Accidentally Moonlight became insolvent and went into liquidation before Amy started to take an action against it. Amy knows the corporate structure/relationship between the two companies and believes that General Beauty and Moonlight are actually the same single entity. She thinks that under present circumstance it will be fruitless to deal with Moonlight any more but General Beauty as the parent company of Moonlight shall be fully liable to her for compensation. She therefore decides to sue General Beauty claiming for damages. Amy has just graduated from university and she was employed in the Corporate Administration Department of Messy Land Limited („MLL‟) as a junior staff. MLL is a Hong Kong public company which has undertaken a large real estate development in Macao. To finance the construction contracts, MLL has issued a debenture series of 5,000 debentures, each with a par value of $200,000 secured by a floating charge over its entire assets and undertaking. The floating charge contains a negative pledge clause. Eight months later, in order to develop the land, MLL has borrowed $100 million from the Gold Sand Bank (Macao...