The University of Hong Kong

Key Legal Concepts &

The Hong Kong Legal System

Week 1

Company Law
 The University of Hong Kong

week 1 objectives
• course overview

• key legal concepts

• Hong Kong legal system

2018 Company Law 2

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so, what is the law?

what comes to mind when you think of the law?

2018 Company Law 3

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sometimes the law is entertaining…

“We hold these truths to be self-evident, that all

men are created equal, that they are endowed
by their Creator with certain unalienable Rights,
that among these are Life, Liberty, and the
Pursuit of Happiness.”
U.S. Declaration of Independence
2018 Company Law 4
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classifying legal systems

• common law
• uncodified
• focus on precedent (stare decisis; to stand by things decided)
• two points: 1) same legal question, applied to similar facts; 2) same level or higher court
• importance of judges
• historical roots in England
• courts of law and courts of equity

• civil law (“Roman law”, “continental law”)

• codified
• historical roots in Roman law

2018 Company Law 5

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classifying legal systems

2018 Company Law 6

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business & law: is law necessary?

2018 Company Law 7

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classifying the law

• public law: relationship between the state and its citizens or those
individuals that the state may exercise authority over
• administrative law
• constitutional law
• criminal law

• private (“civil”) law: relationship, rights, and obligations between individuals

• contract law
• family law
• property law
• tort law
• focus of business law

2018 Company Law 8

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legal background: civil vs. criminal liability

• O.J. Simpson

• legal distinctions
• civil
• $ and/or action
• criminal
• $ and/or jail
• administrative
• government bodies/”administrator”

• Volkswagen

2018 Company Law 9

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rule of law
• what is the rule of law? • if no rule of law
• process: due process • then rule of?
• application: no one is above the
law, including the state
• consistency of outcomes
• respect for the law
• law leads to justice
• judicial independence
• transparency

2018 Company Law 10

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is the rule of law important?

"Hong Kong's global success today … I can confidently say,

owes a lot to our fine tradition of the rule of law," he said. "I can
assure you … we will continue to uphold the rule of law with our
utmost effort.”

CY Leung (October 2015)

2018 Company Law 11

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rule of law rankings*

* The World Justice Project Rule of Law Index 2014

2018 Company Law 12

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Hong Kong sources of law

Basic Law (what is the Basic Law?)

+ international law?
sources of Law legislation
(Companies + PRC law?
(primary)
Ordinance)

case law (precedent)

What are secondary sources?
2018 Company Law 13
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case law: law is about life

• who is involved (the parties)?
• procedural background?
• what are the facts?
• what are the issues?
• law applied?
• court decision (the holding)?
• rationale for the decision (the reasoning)?

2018 Company Law 14

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legislation
• what is legislation?

• why is it necessary?

• creation

• codification

• consolidation

• what is the legislative body in Hong Kong?

2018 Company Law 15

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2018 Company Law 16

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Currently, 35 representatives of geographical constituencies and five “super seat” lawmakers in the 70-
member legislature were picked by more than three million voters, but the remaining 30 lawmakers –
representing 28 functional constituencies which operate on behalf of various trade sectors in the city –
were elected by just 230,000 voters.

Source: SCMP https://goo.gl/bZk9s6

2018 Company Law 17
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legislative process
• bill usually drafted by Secretary for Justice’s offices

• Government Gazette

• Legislative Council members (LegGo)

• readings
• first reading: title and date for second reading
• second reading: purpose and general principles, committee, public
consultation, approve/disapprove reading…
• third reading: if passed, will go Chief Executive
• may return to legislature for reconsideration
• 2/3 majority must sign or dissolve LegCo
2018 Company Law 18
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Hong Kong system of courts

2018 Company Law 19

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solicitor vs. barrister? (split profession model)

solicitor instruction/referral barrister (“counsel”)
• in the office, limited rights of • in court, unlimited rights of
audience in court, especially audience (wig and gown)
in higher courts • litigation specialist
• work on other matters beyond • sole proprietor, usually associated
litigation (e.g., drafting with chamber
contracts, wills)

2018 Company Law 20

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statutory interpretation: interpreting the law

a law trying to improve safety requires certain safety equipment in trucks, cars,
trains, and other vehicles…are airplanes included in the above?
• literal rule

• golden rule
• [I]n construing statutes, and all written instruments, the grammatical and ordinary sense of
the words is to be adhered to, unless that would lead to some absurdity or inconsistency with
the rest of the instrument, in which case the grammatical and ordinary sense of the words
may be modified, so as to avoid that absurdity or inconsistency, but not farther.
Gray v. Pearson (1857)

• mischief rule
• What was the law before the new law? What “mischief” was the new law intended to
address? (Heydon’s Case (1584))
2018 Company Law 21
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statutory interpretation: examples

use the rules (literal, golden, or mischief) to consider the following:

• Jon bites off Jenny’s nose. Jon goes to court. The law states it is
an offense “to stab, cut, or wound” another individual. Did Jon
violate the statute? (R v Harris (1836) 7C & P446)

• Jon is drunk while riding his bicycle on the highway. The law
states that is an offense to be drunk while in charge of a carriage.
Did Jon violate the statute? (Corkery v Carpenter (1951) 1 KB
102, (1956) 2 ALL ER 745)
2018 Company Law 22

corruption & AML/CTF
corruption
• Prevention of Bribery
Ordinance (Cap. 201)
• Independent Commission
Against Corruption Ordinance
(Cap. 204) (ICAC)
2018 Company Law
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anti-money laundering (AML) &
counter-terrorist financing (CTF)
• Anti-Money Laundering and
Counter-Terrorist Financing
Ordinance (Cap. 615)
G7: FATF background
23
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Hong Kong Regulatory Bodies

• Companies Registry

• Financial Reporting Council

• Hong Kong Monetary Authority

• Hong Kong Stock Exchange

• Insurance Authority

• Securities and Futures Commission

2018 Company Law 24
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Hurricane Charley
• 2004: Hurricane Charley hit the
state of Florida in the United States
resulting in 10 deaths and over $15
billion of damages
• selling a gallon of gas for $3 when
normally $1.78
• contractor offered to clear two
trees for $23,000
• stores selling $1 dollar bag of ice
for $5 dollars
• a person bought a $1 dollar bag of
ice from the store and started
selling a scoop of ice for $2 dollars
outside the store
Source: Michael Sandel, Justice: What’s the Right Thing to Do? (2009)
2018 Company Law 25
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legal vs. just

• is something legal always just (or fair, or ethical)?

• if something is legal does that mean it should always be done?

• if something is legal does it mean that it is a good business decision?

2018 Company Law 26

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cobra effect

2018 Company Law 27

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questions?

Company Law
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paths up the mountain

2018 Company Law 29

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Key Legal Concepts &

The Hong Kong Legal System

Week 1

Company Law