Answer To: SUNDERLAND BUSINESS SCHOOL BTEC Higher National in Business ASSESSMENT BRIEF Unit 7 Business Law...
Sourav Kumar answered on Dec 04 2020
Running Head: BUSINESS LAW
BUSINESS LAW
15
BUSINESS LAW
TASK 1
The rule of law in HK and the independence of judiciary forms the Hong Kong Special Administrative Region (HKSAR) legal system. The Basic Law are produced by the National People’s Congress of the PRC produces with respect to which the constitutional for the legal system is formed. Zhao (2017) opined that the HKSAR legal system is different from China and even the legislations falls under the principle of one country. The HKSAR legal system is supplemented by the written law and mostly based upon the common law.
HKSAR Law:
The enforced laws within the HKSAR are as follows:
· Basic law.
· National laws which are listed in the Annex III for the Basic Law as applied within HKSAR.
· Laws including the rules of equity as amended by the HKSAR legislature and the common law excluding contravenes of the Basic Law.
· The laws which are being enforced by the HKSAR legislature.
The national laws which are related to foreign affairs, defence which are excluded from the autonomy HKSAR limits are formed within the Basic Law Annex III for the application in HKSAR. Cameron III (2015) mentioned at the present situation Basic Law Annex III includes 12 National laws.
The fundamental of the legal system in Hong Kong’s is the judiciary where the members of judiciary are independent from the legislative and executive government branches. Justice courts in Honk Kong comprise of the Court of Final Appeal and the High Court which then includes the Court of First instance and the District court which includes family court, the lands tribunal, the competition tribunal and the court of magistrates which involve the coroner’s court, the juvenile court, the labour tribunal, the observer’s Articles Tribunal.
The major standards of the law which oversees the manner by which control is practiced in Honk Kong is alluded to as principle of law. There are a few distinct results and implications that are identified with the legal choice and enactments made by free courts. The foremost importance stands where the intensity of the administration and its hirelings are gotten from the law which are communicated in the legal and enactment choices made by autonomous courts (Samuel, 2017). The administration arrangement of Hong Kong lies the guideline where nobody is qualified to take a demonstration which would deliver a lawful wrong and influence the individual's freedom except if a lawful avocation is called attention to for that activity. This part of the laws rule are alluded to as the guideline of lawfulness. One of the conclusion rule of the legitimateness is outlined as the fairness under the steady gaze of the law. According to the law it is essential for all the individual paying little respect to rank, race, religion or legislative issues are oppressed towards the law of Honk Kong. Further the standard of law additionally expresses that courts are autonomous of the officials. This legal autonomy is urgent if the fair decisions are to be given when the lawfulness of the legislative demonstrations succumbs to basic leadership process.
The common law along with the rules of equity can be found as the primary documents within the judgements of the Honk Kong superior courts and other jurisdictions of common law. The judges which have hand of the report of judgments involves since the 15th century that are established along with the detail of the legal principles that are regulating between the citizen and citizen or citizen or state (Tyler, 2016). There are more than hundreds and thousands of reported case within the jurisdictions of common law which includes the common law. Rights related to the freedom of speech, freedom of assembly, and freedom from arbitrary imprisonment or arrest have been observed in the cases that were formed three centuries back. Now all these are underpinned by the provision of Basic Law.
The main sources of law in Honk Kong are as follows:
National law
Several of the national laws of the People’s Republic of China applies within the Honk Kong legislations by the virtue of Article 18 of the Basic Law (Ho, 2015). As per the Article 158 of the Basic Law, the interpretation of the Basic Law provision by the standing committee of the National People’s Congress which is to be followed by the courts of Hong Kong.
Basic Law
Basic law of the HKSAR were enacted by the National People’s Congress as per the Constitutions of the People’s Republic of China. It is considered to be the mini-constitution for the HKSAR.
Statute law enacted in Honk Kong
A vast majority of statute law enforced are made locally and constituted within the Laws of Hong Kong.
The rules of equity and common law
Within the judgements of the superior court in Honk Kong and other jurisdictions of common law, the rules of equity and common law are applied primarily.
Chinese customary law
Some of the aspects of Chinese customary laws are applied in Honk Kong. The Chinese custom and law is recognised within the Legitimacy ordinance (CAP 184).
International law
More than 200 international agreements and international treaties are been applied to Hong Kong (Vanhullebusch, 2016). However a treaty is not within the part of Honk Kong’s domestic law until given effect by the legislation but affect the development of common law.
The basic law allows the Legislative Council to use their powers and functions in order to bring any kind of modification in the laws in accordance with the basis of law and legal procedures. An elaborate discussion of the law making process is discussed in the below mentioned points:
Types of bills:
The article 62 (5) of the basic law helped in providing the government of Hong Kong Special Administrative Region the power to improvise. They are asked to draft and pass bills in motion and subordinate legislation. The bills introduced by the government themselves are known as the government bill (Cheng, 2016). According to the Article 74 of Basic Law the bills that are not related to the public interest, government expenditure or its operations can either be introduced by an individual or by joint effort by the Legislative council members. But for the bills that includes government policies and interests, the consent of the chief executive in the written form is mandatory before it can be passed by the members. The bills that are passed by the members are known as Members' Bill. The main objective of passing these bills are for the development of the citizens of the nation and for improvement of facilities provided to them.
Procedure before bill is introduced:
For the government to sanction the bill that is going to either propose a new law or make amendments to the old laws, the relevant policy bureau is the first one to know about this and they are the ones to talk about the changes with the people. At that point the bureau of equity will at that point be solicited to advance the movement from passing the bill. Next the bill will be submitted to the Executive committee and the assent of the administration for the purpose of the bill will be exhibited to the Clerk for the Legislative Council (Mansinghka, 2017). On the off chance that the bill is passed in the administrative committee, it is sent over to the official chamber and the bill will be distributed in the Gazette and presented in the authoritative gathering. An individuals' bill is should have been joined by the declaration that is issued by the law maker of DoJ and guarantees that the new bill is following the principles of method of the administrative gathering of Hong Kong Special Administrative Region.
After the bill is gazetted then the bill is made to pass through three levels of legislative council before the bill is enacted. Passing of the bill might take one week to one year of time depending upon the complexity of the proposed bill. The bill need to be passed unanimously and agreed upon by the members of the Legislative council. If the proposal turns up to be negative then nothing more is done on the bill. The bill that is passed by the Legislative council needs to be signed by the Chief Execute (Jiang, 2017). The ordinance commences on the day publication of the bill and if the day needs to be postponed then under the Article 17 of the Basic Law, the delay or postpone has to be reported to the Government’s Standing Committee of the Nation People's Congress.
Hong Kong law is different than other countries. The laws are majorly made locally with utmost importance and force. These are contained as a part of the HKSAR. Delegates are the main people who are responsible for the legislations to be made. The people who are authorized as a representative are also responsible for the decisions to be taken. Some parts of Hong Kong Chinese laws are also applicable and is also part of the legitimacy ordinance.
According to Lee (2015), common law basically indicates laws made by the judges in higher courts in accordance with the cases that come into light. Judgement passed down by the judges of historical times are still in action, and also describes the relationships and the method of living between citizens and state. It also describes how a citizen is related to other citizens. This way of passing down laws by the use of common cases have made up the common laws. All the rights relating to freedom or imprisonment have been coming down from the 15th century and as well as it is implemented.
Business can be of different types in Hong Kong, but there are some restrictions on the business one can run. Business run solely by a particular person can’t be done. There should be shareholders and other people who must be involved with the business.
The impact of the law is inevitable. The law is mostly 150-year-old that is run by England’s common law mostly. This has led to no new laws that might be applicable due to circumstances for the new world (Law, 2017). Restrictions created on business repels the business men to start over something new.
Contract law is totally dependent on the parties agreeing to terms of commitment towards a successful change in the future. This reduces the uncertainties of the outcome that can be avoided with contract. This is done on a temporary basis in accordance with both the parties and government has no hand in it.
Company law has some strict guidelines to which the businesses need to adhere to. The names of the company must be kept in such a way that it doesn’t clashes with other company in the registry. de Mitcheson et al. (2018) mentioned memorandum of association is necessary to start a company as it consist of all the information that is needed for a company to start its venture in the market.
Employment law mainly is governed by the Employment Ordinance which guarantees some benefits to the employees such as leaves during maternity or annual leaves. Foreign workers are mostly involved in contractual basis due to the laws in Hong Kong.
TASK 2
PROBLEM A
In the HKSAR partnerships of businesses are governed by Hong Kong Partnership Ordinance. They are generally categorised into two types, limited partnership and general partnership. When a partnership is registered by the Hong Kong Registrar of Companies a limited partnership is formed which is defined within the Honk Kong Limited Partnership Ordinance. However if it is not registered the status of the limited partnership is not attained and the law applicable for the general partnership is going to be applied. Within the terms of general partnership it requires each partner in the company are going to be held responsible for the liabilities and debts of the business (Andrews and Yang, 2016). Further each partner can also be held responsible for the actions of the other partner which are then taken in the service of or behalf of the business. The Honk Kong limited partnerships does not enjoy a separate legal entity status where the partnership is considered more of an extension of the partners. On the other hand there is personal legal identity for the Honk Kong limited liability companies which are then distinct from its members. This is going to enable the company for acquiring assets and entering into the contracts, into the debt or to be sued in its own name. As per the CAP 37 Limited Partnerships Ordinance Section 4, the registration of limited partnership are required to be in accordance with provision of the ordinance, or in default thereof it must be deemed for general partnership. Furthermore every limited partner is needed to be a general partner.
Some of the advantages associated with the HKSAR partnership of businesses are:
· Liability is limited for limited number of partners. The limited partners are not going to be personally liable for business liabilities or debts that comes from the actions of the partners.
· The limited partners enjoys a flexibility. There is a possibility of replacing limited partners without dissolving the existing partnership.
· Luping (2014) stated the investment are treated as separate from the management operations of the business. There is a delineation between the limited partners and general partners which allows capital to be raised without producing any harm to the business management.
For establishing new limited company the applicant have to visit the Inland Revenue Department and Companies Registry in Honk Kong or avail an online electronic service to submit their required documents and application form. The main document includes incorporation form, copy of the company’s association articles and notice to the business registration office (Ng, 2015). The step by step procedure are explained below:
Step 1: Conducting search over the name of the company.
Step 2: Preparing articles of the company and completing the incorporation form. The Notice to Business Registration Office is also made in this step.
Step 3: Approving the documents through signing by shareholders and directors.
Step 4: The important and mandatory document is going to be submitted to companies’ registry and pay relevant fees.
Step 5: Examination of the submitted application and issuance of Certificate of Incorporation by Companies Registry.
Step 6: Purchasing the statutory books for the company.
Step 7: Presenting the certified documents of the company or opening the bank account.
Step 8: Opening of the bank account by the signatories and duly authorised by the resolution of director.
The main documents that the newly forming companies need to submit are
· The copy of the company’s articles of association.
· Incorporation form.
· Notice to the registration office of the business.
The company will be registered under the private ownership. Being a private company it will have issue stock and three shareholders which will not trade on public exchanges and also not issue through initial public offering. There is no need for private firms to meet with strict filing requirements of the public companies (Chen, 2017). The share of the private company will be less liquid and therefore valuations would be difficult to estimate. Furthermore the company will be formed under limited liability corporations.
PROBLEM B
Evia is certainly confused for deciding which role and responsibilities she will be entitled to in the newly formed company. She either can be director of the new company or just registrar as a shareholder. But as per her given situation, she only agree to work as a part time employee. She needs to acknowledge all the duties and responsibilities of each job designation so that she can make right decision and contribute towards the company growth effectively. The organisation owes the first duties and responsibilities of the director. The duties of a director is distinguished into basic principles of stewardship, accountability and good faith (Jiang, 2017). Without limiting the flexibility of the director's principles, the opportunity of establishing parameters for the duty is sought by the requirements imposed by various statuses and common law. The role of a director is more of a stewardship. The role of the director is mainly to manage the corporation but in some cases a director also supervises the management of an organisation.
Although directors are the one who handles the management of an organisation but under some of the corporate statuses some aspects are considered to be so crucial and fundamental that they require the approval of the shareholders. The approval of a shareholder is needed when the organisation is affecting certain specific reorganization and amalgamation. When it comes to selling the organisation or selling a part of the organisation, it is necessary to have the approval of the shareholders. The approval of a shareholder is also necessary when it comes to adding or removing any restrictions of the company for long term uses. The shareholders have a significant say in increasing or decreasing the number of directors in the company (Jones, 2017). They also have a day in deciding the minimum and the maximum number of directors working for the company. It is a shareholder's responsibility to add or change restrictions in the restrictions of some issues transfers and ownership of stairs.
PROBLEM C
Starting up an IT firm is a not an easy task and at least needs 3 million to give the business a kick-start. But raising funds is one of the biggest challenge in starting up a business. However the following points will describe how to collect and raise funds to keep the business running:
Bootstrapping: The most common method entrepreneurs follow in starting up a business. It is done by scraping up person assets such as property mortgage, credit cards etc. So David has a home worth $10 million so he can pull out some cash by bootstrapping his home equity line.
Local investors: While starting up an IT farm it is advisable to consider the locals who are prior to business to provide them with funds (Fong, 2014). Small business administration does have connections with angels to provide capital for the business. Angles are basically those businessmen who are already established and is looking to invest in promising ideas.
Venture capitalists: They are typically there to provide entrepreneurs with loans at least of $1 million and in return expects to see profits from the investment. For this VC’s need an airtight business plan which they will scrutinize to see the future perspectives of the business and accordingly they will invest.
There are several drawbacks that entrepreneurs face while raising capitals and some of the major drawbacks are mentioned in the following points:
Too much debt: It is the common problem faced by majority of the entrepreneurs. They take too much loan and when the business doesn’t run as expected then it becomes very difficult to repay back the loan.
Can’t afford payment: When an investor invests in the business they expect a certain level of profit. Therefore after paying off the lenders and bearing the cost of running the business it becomes impossible to carry out the business.
Complexities: Often international business comes up with their own set of problems and complexities with legal issues and business tariffs (Luping et al. 2017).
The question lies in whether the law and principles of maintenance and champerty also apply to the third party funding for arbitration that is taking place in Hong Kong was clearly stated in the Court of Final Appeals in the year 2007. It happened during the case Unrugh Vs Seeberger (2007) 10 HKCFAR 31. According to this report third party funders funding arbitration should comply with a code of practice to be issued by a body authorized under Arbitration Ordination after consulting with the public. The terms and clause for the contract needs to read, agreed and signed by both the parties before the contract is done. Law (2017) justified that it is very important for the investor to have their own set of lawyers to analyse the legal steps involved while giving loan or lending to the particular organization. This report also recommended that whether consideration should be done to non-application of the common law principle of maintenance and champerty should be medicated within the score of Mediation Ordinance (CAP 602).
PROBLEM D
Fanny, for the last two years, has been working for David, as a personal secretary. The dismissal of Fanny although abrupt, is not unlawful, but definitely unreasonable. And since fanny was working there for the last two years she can make claims for remedies against the decision of David, only if she wants to. An employee under the contract can make claims for remedies against an employer for dismissals that are unreasonable like this one.
Fanny may be able to claim compensation against her dismissal if she feels that her dismissal is based on her conduct. Fanny just borrowed 200 dollars from David's box and has done the responsible thing in keeping a note. David's outburst was abrupt and shocking. Since David dismissed Fanny because of her behavioural reason Fanny will be able to claim remedies against her dismissal from David's company. One can understand that a dismissal is unreasonable if the employer dismisses the employee because of the employee's behaviour. Moreover, it is also unreasonable to dismiss an employee by judging them by their qualifications and performance for performing the taste of the employee (Samuel, 2017). Of Fanny feels that her dismissal was because of any redundancy or because of any operational requirements of the business of David. Fanny can apply for a remedy against David's decision in dismissing her, against the labour tribunal which may result to reinstatement and re-engagement of Fanny. Another outcome that can occur is that David is forced to allot termination payments. These termination payments may include the statutory entitlements mentioned in the contract, these entitlements which has been offered to Fanny in the time of signing a contract which fanny did not utilize it and neither has it been paid in her dismissal. These entitlements may just be wages, maternity leave payment, and payment in lieu of notice, severance payment, and end of year payment, bonuses, and payments for long time continuous serving, annual leave pay, sick leaves pay and more. Fanny can just as reasonably be expected to be entitled to being under a contract under the mutual agreement of both the parties and continue to improve upon her skills (Zhao, 2017). Fanny can also be entitled to other various payments since she was under a contract. These are the remedies that can be adopted by Fanny against the decision of David.
If Fanny feels that the dismissal that she had suffered by the hands of David is more of an unlawful dismissal then she may be entitled to get reinstated and re-engaged to David's company. One can understand that an employee’s dismissal is unlawful if she is dismissed because of her pregnancy and the notice she had provided to the employee base on her pregnancy. Fanny is also eligible for awards for termination payments against David. It is also true that unlawful dismissals are completely against the law and is considered as a criminal offence. If David is found guilty of unlawful dismissals then he might just face several fines and penalties.
PROBLEM E
In Hong Kong there are a number of organizations that provide the list of arbitrator and mediators. But the major providers are Hong Kong Bar Association, The law Society of Hong Kong and Hong Kong international arbitration centre (Jiang, 2017). Both the parties have to choose same set of arbitrator and mediators before the arbitrator and mediators can commence. In the hood proceedings the HKIAC has been given the power to carry out two important functions in relation to the arbitration and they are mentioned in the following points:
HKIAC has been given the power to hire arbitrator or umpire where either one of the party have failed to agree to appoint the same designated authority. In the above case it is seen that Johnson limited had given HKD the task of writing a software program. The contract that was made by both of the parties are based on that if HKD fails to finish the task in time then they have to give a penalty of $1000 per day. But according to the HKD management it was never their fault as Johnson limited was late in making them understand the needs of the software and what they are wanting from them (Andrews and Yang, 2016). As a result of that there was dilemma between the two parties of whose fault it is. HKD is not ready to pay for the late submission and is ready to fight for the legal battle to prove themselves.
Now it is the time of HKIAC to determine whether they should consider this to be a dispute under the international regime of UNCITRAL Model Law. When the arbitrator falls under the domestic regime. If both the parties agree that they are both at fault then the case is solved. But if any of them doesn’t agree that they are at fault then there will be only one arbitrator. The contract in which it was meant that if the work passes deadline then HKD has to pay $1000 for each day. The terms, clause, and the conditions that were mentioned while making the deal needs to be scrutinized. Then according to the HKD officials the late of work was basically due to Johnson limited as they were the ones who failed to share the idea of what they want from the software programs (Ng, 2015). Therefore it is important to show them the reason for the delay and proper reason why the work was not able to meet the deadline. However the process of mediation is a totally voluntary process and no party whether it be HKD or Johnson limited can be forced to go to mediation and neither one of them can be forced to appoint a particular mediator.
References
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