(Revised in August 2009)

  
HKICPA Aptitude Test – Syllabuses
(For Reference Only)  
   
HONG KONG LAW  
   
   
   
Aims  
   
This paper aims at testing candidates' awareness of the overall legal framework in which business in Hong Kong operates and their ability to apply the relevant legal rules and practices to business problems and practical situations.  
   
   
Contents  
   
Competence Required
Activity to Develop and Demonstrate Competence
Indicative Level
  
   
1.        Hong Kong legal system  

 
Knowledge of:
- the historical and formal sources of Hong Kong law;
- the system of courts and administration of justice;
- legislation and statutory interpretation;
- the work of solicitors and barristers.
Describe the different categories of law
1
  
       
    Demonstrate an awareness of why it is essential for business people to have a knowledge of law
1
  
       
    Describe the origin and development of the Hong Kong SAR legal system
1
  
       
    Describe the relationship between the constitution of the PRC, Basic Law and Hong Kong SAR law
1
  
       
  Describe the main provisions of the Hong Kong SAR Basic Law
1
  
       
  Distinguish between common law rules and rules of equity
1
  
       

Outline the main sources of law and show how each operate
1
 
       
Explain the doctrine of precedent and the role of the courts in the development of the common law
2
  
       
  Identify the unique nature of case law
2
  
       
  Describe the structure and jurisdiction of the courts and tribunals and explain the way disputes are resolved through the courts and through alternative means
1
  
       
  Outline how appeals may progress from one court to another
1
  
       
  Explain how the principles of interpretation apply to statutes
2
  
       
  Describe the main rules of statutory interpretation
2
  
         
   
2.       Legal personality and the nature of limited company  
   
Understanding of:
- the differences between a limited company and a partnership;
- the consequences of separate legal personality;
- the relationship of legal personality to limited liability and its implications in the business world
   
and ability to apply the above principles to problem situations.
Define partnership
2
     
Describe the nature and characteristics of partnership
2
     
Explain the advantages and disadvantages of forming a partnership
3
     
Compare a partnership with a company
3
     
Explain the advantages and disadvantages of incorporation
3
     
Recognise the different types of registered company
2
     
Explain veil of incorporation and the circumstances when the veil will be lifted
3
     
Explain the concept and the purpose of limited liability
3
     
   
3.       Company law  
   
Knowledge of:
- the formation of a company and its constitution;
- the formalities and the role of the Registrar;
- the registration of shares, charges, directors and their shareholdings;
- the contractual capacity of a company;
- the statutory books, records and returns.
   
Describe the procedures in the formation of a registered company
2
  
       
Describe a promoter and list his duties
2
  
       
Describe what is meant by a pre-incorporation contract and explain the problems of such a contract
2
  
       
Describe the memorandum of association and articles of association and explain their effects
2
  
       
List the typical contents of the memorandum of association and articles of association
2
  
       
Identify the restriction on its articles which a company can choose
2
  
       
Explain what is meant by Table A
2
  
       
State how articles and memorandum may be changed
2
  
       
Understand the functions and responsibilities of the Registrar of Companies
1
  
       
State the requirements for the registration of shares, charges, directors and their shareholdings
2
  
       
Explain the contractual capacity of a company
2
  
       
State the requirements for statutory books, records and annual return
2
  
       
   
4.       Capital and financing of companies  
   
Knowledge of:
- share capital of companies;
- loan capital of companies
   
and ability to apply the above knowledge to problem situations.
    Explain the meaning and purpose of capital and the nature of shares
2
  
       
Differentiate between the different classes of share capital
3
  
       
  Explain class rights and explain how a company can change its class rights
3
  
       
  Distinguish between the transfer and transmission of shares
1
  
       
  Explain how shares might be transferred from one person to another and state how a company can restrict the free transferability of shares
2
  
       
Explain the nature of dividends and the rules on their distribution
3
  
       
Describe how a company can alter its share capital
2
  
       
  Define a debenture and describe different types of debenture
1
  
       
  Explain the company's power to borrow
2
  
       
  Contrast the position of a shareholder with the position of a debenture holder
3
  
       
    Contrast the position of a secured creditor with that of an unsecured creditor
3
  
       
  Distinguish between a fixed and a floating charge
2
  
       
Explain the registration requirement for company charges
2
  
   
 
Outline the effect of a failure to register a charge
2
  
   
 
Explain the priority of different types of charges on a winding up of a company
2
  
   
 
  List the remedies available to loan creditors
2
  
       
 
5.       Management and administration of a company
 
Knowledge of:
- company directors;
- company secretary;
- auditors;
- companies meetings
 
and ability to apply the above knowledge to problem situations.
  Identify a director and explain what a shadow director is
2
     
  Describe how directors are appointed and removed
3
     
  Explain the powers and duties of directors
3
     
  Explain conflict of interests and the rules applicable when directors deal with their own company
3
     
  Explain how directors may avoid liability for breach of duty and outline the remedies available when a director breaches his duty
2
     
  Explain the various forms of protection available to minority shareholders
3
     
  Explain the role and duties of a company secretary and describe how a company secretary is appointed and how his contract may be terminated
3
     
  Explain the role and duties of an auditor and describe how an auditor is appointed and re-appointed and how his contract may be terminated
3
     
  Explain the differences between an annual general meeting and an extraordinary general meeting
2
     
  Distinguish between an ordinary resolution and a special resolution
3
     
  State the rules and procedures as to the voting rights of members including proxy voting
3
     
  State the quorum requirements in general meetings
2
     
 
6.       Company liquidation
 
Knowledge of:
- Compulsory winding up by the Court;
- Members' voluntary winding-up;
- Creditors' voluntary winding-up;
- Appointment, powers, duties, liabilities, removal and resignation of liquidator;
- Avoidance powers;
- Actions against delinquent officer;
- Proof of debt and priority;
- Appointment, powers, rights and duties of receivers
 
  Describes types of liquidation
2
  Explain the role of liquidators
3
  Explain the procedures for liquidation
3
  Explain avoidance powers, including unfair preference, extortionate transactions, fraudulent trading, etc
3
  Explain actions against delinquent officer
3
  Describe proof of debt and priority
3
  Describe appointment, powers, rights, duties, resignation and removal of receivers
3
     
     
     
     
     
 
7.       External regulatory bodies
 
Knowledge of:
The role, structure, duties, powers and procedures of important regulatory bodies, such as:
- The Hong Kong Monetary Authority;
- The Securities and Futures Commission;
- The Stock Exchange;
- The Insurance Authority
 
and ability to apply the statutory and non-statutory regulations administered by regulatory bodies to problem situations.
  Identify important external regulatory bodies in relation to the work of an accountant
2
  Explain the role, structure, duties, powers and procedures of the Hong Kong Monetary Authority
3
  Explain the role, structure, duties, powers and procedures of the Securities and Futures Commission
3
  Explain the role, structure, duties, powers and procedures of the Stock Exchange
3
  Explain the role, structure, duties, powers and procedures of the Insurance Authority
3
     
     
 
8.       Takeover
 
Knowledge of:
- Code on Takeovers and Mergers;
- Takeover by way of scheme of arrangement;
- General Offer;
- Provisions on compulsory acquisition in Companies Ordinance;
- Role of directors and accountants
 
and ability to apply the above knowledge to problem situations.
  Explain the application of the Code on Takeovers and Mergers
3
  Explain takeover by way of a scheme of arrangement or general offer
3
  Explain the provisions on compulsory acquisition in Companies Ordinance
3
  Explain the role of directors in a takeover
3
     
     

 

Reading list:

 

 

  

 

 

  

 

  

 

Author

  

Title

  

Publisher

 

 

 

 

 

Arjunan, K. and Majid, A.

 

Business Law in Hong Kong

 

LexisNexis

 

 

 

 

 

Chan, S.   Hong Kong Banking Law and Practice   Hong Kong Institute of Bankers

 

 

 

 

 

Cheng, P. W., Clementson, I., Ko, S. H. and Scott, P.

 

Hong Kong Business Law

 

HKAAT

 

 

 

 

 

Dobinson, I. and Roebuck, D.

 

Introduction to Law of HKSAR

 

Sweet & Maxwell

 

        
Goo, S.   Insurance Law and Practice in Hong Kong   Sweet & Maxwell Asia
         
Hsu, B.   Financial Markets in Hong Kong : Law and Practice   Oxford University Press

 

 

 

 

 

Kwan, Paul   Hong Kong Corporate Law   LexisNexis

 

 

 

 

 

Kwan, Y. K.

 

A Guide to the Securities and Futures Ordinance

 

Hong Kong Stockbrokers Association Ltd.

 

 

 

 

 

Sealy, L. S. and Worthington, S.   Cases and Materials in Company Law   Oxford University Press

 

 

 

 

 

Shum, C.

 

General Principles of Hong Kong Law

 

Longman

 

 

 

 

 

Srivastava, D. K. (e.d.)   Business Law in Hong Kong   Sweet & Maxwell Asia

 

 

 

 

 

Stott, V.

 

An Introduction to Hong Kong Business Law

 

Longman

 

 

 

 

 

Stott, V.

 

Hong Kong Company Law

 

Longman

 

 

 

 

 

E. Tyler

  

Hong Kong Company Law Handbook

  

LexisNexis


Legislation in various areas: HKSAR
   
 
 The Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China
 
 Companies Ordinance
 
 Partnership Ordinance
 
 Securities and Futures Ordinance
 
 Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited
 
 Rules Governing the Listing of Securities on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited
 
 The Codes on Takeovers and Mergers and Share Repurchases
 
 Banking Ordinance
 
 Insurance Companies Ordinance
   
Note: The above publications are subject to editorial amendments.

INDICATIVE LEVEL
 
The levels of competence that have been indicated are as follows:
 
Level 1 – Awareness
 
The candidate demonstrates familiarity with the concept in question, can define it in overview terms and can relate the importance or relevance of the concept to the activities of a certified public accountant.
 
Level 2 – Knowledge
 
This builds upon awareness.  The candidate is able to explain the concept; describe and discriminate between its component parts and describe their inter-relationships; recognise instances of the concept; describe processes, theories and judgement issues; without necessarily being able to perform in those areas with professional skill.
 
Level 3 – Skill
 
This builds upon knowledge.  The candidate is able to execute or implement knowledge; apply the knowledge to real world problems in real world situations.  In so doing, the candidate can display to a satisfactory degree the level of competence reasonably to be expected of a certified public accountant at career entrance level.
 
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