English HKSI Paper 2 Topic 1
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- Answered
- Review
- Question 1 of 513
1. Question
1 pointsQID780:Which of the following demands have to be satisfied by the wide range of financial products and services available in Hong Kong?
I. Meet demands for investmentII. Employment opportunities for locals
III. Employment opportunities for expatriates
IV. Capital and investment protection
CorrectHong Kong’s status as an international financial centre is reflected in the wide range of financial products and services available in Hong Kong, developed to meet demands for investment, capital and income formation and capital raising, the facilitation of cash and capital flows, capital and investment protection (for example, hedging), safe custody and security, speculation and insurance. The financial markets also provide an avenue for price discovery and liquidity of investments.
IncorrectHong Kong’s status as an international financial centre is reflected in the wide range of financial products and services available in Hong Kong, developed to meet demands for investment, capital and income formation and capital raising, the facilitation of cash and capital flows, capital and investment protection (for example, hedging), safe custody and security, speculation and insurance. The financial markets also provide an avenue for price discovery and liquidity of investments.
Hint
Reference Chapter:1.1.1
- Question 2 of 513
2. Question
1 pointsQID1:The existence of the financial markets in Hong Kong can satisfy which of the following demands?
I. Meet demands for investment, capitalization and risk management.
II. Meet demands for employment
III. Provide an avenue for price discovery
IV. Provide liquidity for investmentsCorrectThe demands for employment is not a function satisfied by financial market alone, thus is not a primary reason for the existence of the financial markets in Hong Kong.
IncorrectThe demands for employment is not a function satisfied by financial market alone, thus is not a primary reason for the existence of the financial markets in Hong Kong.
Hint
Reference Chapter:1.1.1
- Question 3 of 513
3. Question
1 pointsQID1658:Hong Kong Financial Regulatory Regime is
CorrectHong Kong Financial Regulatory Regime is able to address new and complex financial products.
IncorrectHong Kong Financial Regulatory Regime is able to address new and complex financial products.
Hint
Reference Chapter:1.1.1
- Question 4 of 513
4. Question
1 pointsQID1034:Globalisation and advances in technology have enabled investors to
I. Participate in different markets
II. Arbitrage between markets
III. Arbitrage between products
IV. Increase investment returns by diversifyingCorrectGlobalisation and advances in technology have enabled investors to move rapidly from one market to another, arbitraging between markets, products and transactions.
IncorrectGlobalisation and advances in technology have enabled investors to move rapidly from one market to another, arbitraging between markets, products and transactions.
Hint
Reference Chapter:1.1.1
- Question 5 of 513
5. Question
1 pointsQID781:The principal regulator of the securities industry in Hong Kong is the
CorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above.
IncorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above.
Hint
Reference Chapter:1.1.2
- Question 6 of 513
6. Question
1 pointsQID8:Which two of the following philosophies and systems of regulations are commonly used by financial regulators in Hong Kong?
I. Merit Based
II. Sanction Based
III. Disclosure Based
IV. Income BasedCorrectSanction Based regulations and Income Based regulations do not exist in Hong Kong. Merit Based regulations is to reduce access to unfavourable investment products or projects by investors. The interest of investors are protected by doing so. Disclosure Based regulations require investment products and projects disclose their strengths and weaknesses maximally, so that investors can make an informed decision.
IncorrectSanction Based regulations and Income Based regulations do not exist in Hong Kong. Merit Based regulations is to reduce access to unfavourable investment products or projects by investors. The interest of investors are protected by doing so. Disclosure Based regulations require investment products and projects disclose their strengths and weaknesses maximally, so that investors can make an informed decision.
Hint
Reference Chapter:1.1.2
- Question 7 of 513
7. Question
1 pointsQID783:What approach does the SFC take to regulate market intermediaries?
CorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
IncorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.2
- Question 8 of 513
8. Question
1 pointsQID786:Which of the following regulatory approaches adopted by the SFC is given more regulatory attention towards the areas where the SFC perceives the highest risks to lie?
CorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
IncorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.2
- Question 9 of 513
9. Question
1 pointsQID784:A risk-based regulatory system refers to a system in which:
CorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
IncorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.2
- Question 10 of 513
10. Question
1 pointsQID782:The SFC is a/an _______ in Hong Kong.
CorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above. It is considered the securities and futures market prime regulator.IncorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above. It is considered the securities and futures market prime regulator.Hint
Reference Chapter:1.1.2
- Question 11 of 513
11. Question
1 pointsQID787:Which of the following regulatory approach is adopted by the SFC?
CorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
IncorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.2
- Question 12 of 513
12. Question
1 pointsQID785:The SFC regime adopts which of the following regulatory approaches?
CorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
IncorrectAn expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.2
- Question 13 of 513
13. Question
1 pointsQID10:Which system or philosophy of regulations is adopted by the SFC to regulate securities and futures markets?
CorrectSFC adopts a“risk-based”approach towards regulations. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
IncorrectSFC adopts a“risk-based”approach towards regulations. This basically means that regulation is weighted towards the areas that pose the greatest risk to the markets and the participants.
Hint
Reference Chapter:1.1.2
- Question 14 of 513
14. Question
1 pointsQID172:Which of the following is an accurate description of Hong Kong’s financial regulatory structure?
CorrectThe broad points stated by the Securities Review Committee under Ian Hay Davison were
the need for:
(e) checks and balances on the system, with the exchanges being supervised by a
commission independent of the Government, with the Government only to intervene if
and when the Commission failed to regulate properlyIncorrectThe broad points stated by the Securities Review Committee under Ian Hay Davison were
the need for:
(e) checks and balances on the system, with the exchanges being supervised by a
commission independent of the Government, with the Government only to intervene if
and when the Commission failed to regulate properlyHint
Reference Chapter:1.1.3
- Question 15 of 513
15. Question
1 pointsQID1499:Which of the following are service providers of the Asset Management Industry in Hong Kong?
I. Fund houses
II. Auditors
III. Fund management companies
IV. StockbrokersCorrectTypical service providers include:
(a) fund houses; (b) fund management companies; (c.) stockbrokersIncorrectTypical service providers include:
(a) fund houses; (b) fund management companies; (c.) stockbrokersHint
Reference Chapter:1.1.4
- Question 16 of 513
16. Question
1 pointsQID5:Which of the followings is not a service provider in the asset management industry?
CorrectThe definition of asset management is to manage securities and futures portfolio or real estate investment trust for others. Auditors do not manage asset; they merely audit as their primary business. Fund managers manage Collective Investment Schemes; that is managing portfolios of securities and futures or real estate trust for a group of people. Therefore they are service providers in the asset management industry. Stockbrokers buy and sell Collective Investments Schemes on behalf of clients and may also manage securities portfolio for clients. Therefore they are service providers in the asset management industry. Independent Financial Advisers (IFA) provides advice on buying and selling Collective Investment Schemes. Therefore they are service providers of the asset management industry.
IncorrectThe definition of asset management is to manage securities and futures portfolio or real estate investment trust for others. Auditors do not manage asset; they merely audit as their primary business. Fund managers manage Collective Investment Schemes; that is managing portfolios of securities and futures or real estate trust for a group of people. Therefore they are service providers in the asset management industry. Stockbrokers buy and sell Collective Investments Schemes on behalf of clients and may also manage securities portfolio for clients. Therefore they are service providers in the asset management industry. Independent Financial Advisers (IFA) provides advice on buying and selling Collective Investment Schemes. Therefore they are service providers of the asset management industry.
Hint
Reference Chapter:1.1.4
- Question 17 of 513
17. Question
1 pointsQID1500:Which of the following are service providers in the asset management industry?
I. Banks
II. Trustees
III. Custodians
IV. Financial PlannersCorrectTypical service providers include:
(d) banks; (e.) trustees; (f) custodians; (g) financial plannersIncorrectTypical service providers include:
(d) banks; (e.) trustees; (f) custodians; (g) financial plannersHint
Reference Chapter:1.1.4
- Question 18 of 513
18. Question
1 pointsQID789:Which of the following are major financial services provided in Hong Kong?
I. Trading securities on behalf of clients on the Stock Exchange of Hong Kong (SEHK).
II. Providing margin financing and accommodation on securities trading
III. Acting as an “introducing agent”
IV. Conducting stock borrowing and lending transactions.CorrectAll of these services are provided by Hong Kong financial companies.
IncorrectAll of these services are provided by Hong Kong financial companies.
Hint
Reference Chapter:1.1.6
- Question 19 of 513
19. Question
1 pointsQID790:Which of the following is NOT a major financial service provided in Hong Kong?
CorrectThis service is not provided by any Hong Kong financial actor.
IncorrectThis service is not provided by any Hong Kong financial actor.
Hint
Reference Chapter:1.1.6
- Question 20 of 513
20. Question
1 pointsQID4:Which of the following is a financial service provided by a financial intermediary?
CorrectFinancial Intermediaries must be compensated in a financial transaction to be view as providing financial services. Setting up a tutorial company is not providing financial services to a third party because it is not a financial transaction. Managing assets for free is not a financial service since it is not compensated. Signing a rental agreement on behalf of a bank is not a financial service because rental agreement itself is not a financial instrument. Providing loans to others with interest is a form of financial service since it is a service in exchange for compensation in a financial transaction.
IncorrectFinancial Intermediaries must be compensated in a financial transaction to be view as providing financial services. Setting up a tutorial company is not providing financial services to a third party because it is not a financial transaction. Managing assets for free is not a financial service since it is not compensated. Signing a rental agreement on behalf of a bank is not a financial service because rental agreement itself is not a financial instrument. Providing loans to others with interest is a form of financial service since it is a service in exchange for compensation in a financial transaction.
Hint
Reference Chapter:1.1.6
- Question 21 of 513
21. Question
1 pointsQID791:Which of the following are major providers of securities investment and advisory service in Hong Kong?
I. An intermediary trading securities on the Stock Exchange of Hong Kong Limited (SEHK)
II. An intermediary acting on behalf of a foreign intermediary
III. An underwriter
IV. Insurance companiesCorrectTo conclude this initial definition section, the categories of persons conducting Type 1 regulated activity include:
(a) a participant of the SEHK, whether it engages in activities on the SEHK or outside it;
(b) another securities dealer carrying out dealing in securities in Hong Kong;
(c.) a licensed representative of the above;
(d) an AFI registered with the SFC for this activity (and its staff who deal with the public and are on a register maintained by the HKMA as engaged in such activity);
(e.) a portfolio manager who is licensed (as a securities dealer) for Type 1 regulated activity; and
(f) a securities introducing agent (see section 8.13 below).IncorrectTo conclude this initial definition section, the categories of persons conducting Type 1 regulated activity include:
(a) a participant of the SEHK, whether it engages in activities on the SEHK or outside it;
(b) another securities dealer carrying out dealing in securities in Hong Kong;
(c.) a licensed representative of the above;
(d) an AFI registered with the SFC for this activity (and its staff who deal with the public and are on a register maintained by the HKMA as engaged in such activity);
(e.) a portfolio manager who is licensed (as a securities dealer) for Type 1 regulated activity; and
(f) a securities introducing agent (see section 8.13 below).Hint
Reference Chapter:1.1.7
- Question 22 of 513
22. Question
1 pointsQID2674:Which of the following activity is subject to supervision by the financial regulators?
CorrectProviding a loan and charging interest is a financial actitiy that is subjected to supervision by the financial regulators.
IncorrectProviding a loan and charging interest is a financial actitiy that is subjected to supervision by the financial regulators.
Hint
Reference Chapter:1.1.7
- Question 23 of 513
23. Question
1 pointsQID792:Which of the following individuals/institutions is NOT a provider of securities investment and advisory services in Hong Kong?
CorrectInstitutional investors are actors but not providers.
IncorrectInstitutional investors are actors but not providers.
Hint
Reference Chapter:1.1.7
- Question 24 of 513
24. Question
1 pointsQID629:Under the SFO, the SFC has which of the following regulatory responsibilities in relation to asset management ?
I. Licensing intermediaries
II. Authorizing MPF Schemes
III. Authorizing CISs
IV. Vetting recognized InvestorsCorrectThe functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, including, for example, unit trusts, managed funds and retirement schemes, and supervises the marketing of these CISs; and
(b) it licenses and supervises intermediaries engaged in asset management (Type 9 regulated activity) as well as others engaged in providing advisory services in the industry (Type 4 and Type 5 regulated activities); if they choose to be licensed as dealing in securities and/or futures contracts (Type 1 and/or Type 2 regulated activities), the respective regulatory regime will be applied to them.
The first of these functions is derived from Part IV, SFO and the second from Part V, SFO.IncorrectThe functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, including, for example, unit trusts, managed funds and retirement schemes, and supervises the marketing of these CISs; and
(b) it licenses and supervises intermediaries engaged in asset management (Type 9 regulated activity) as well as others engaged in providing advisory services in the industry (Type 4 and Type 5 regulated activities); if they choose to be licensed as dealing in securities and/or futures contracts (Type 1 and/or Type 2 regulated activities), the respective regulatory regime will be applied to them.
The first of these functions is derived from Part IV, SFO and the second from Part V, SFO.Hint
Reference Chapter:1.10.11
- Question 25 of 513
25. Question
1 pointsQID350:Which of the following organizations does the SFC need to regulate?
CorrectThe functions of the SFC in relation to asset management are two-pronged: One of those functions is to authorise CISs, including, for example, unit trusts, managed funds and retirement
schemes, and supervises the marketing of these CISs.IncorrectThe functions of the SFC in relation to asset management are two-pronged: One of those functions is to authorise CISs, including, for example, unit trusts, managed funds and retirement
schemes, and supervises the marketing of these CISs.Hint
Reference Chapter:1.10.11
- Question 26 of 513
26. Question
1 pointsQID617:Which of the following entities regulates CISs and supervises the persons’ operating and advising activities?
CorrectPowers granted to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the public.
IncorrectPowers granted to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the public.
Hint
Reference Chapter:1.10.11
- Question 27 of 513
27. Question
1 pointsQID1243:The SFC performs its regulatory mandate to supervise the industry through which of the following means?
I. Regular inspections, including on-site inspections.
II. Unscheduled inspections, including on-site inspections.
III. Obtaining information from Licensed Corporations (LC)s.
IV. Obtaining information from the Registered Institutions (RI)s.CorrectIn furtherance of these aims, the SFC conducts regular inspections of licensed corporations which may be conducted either on-site or via a request for information to be provided. The maintenance of proper documentation is critical in this regard.
IncorrectIn furtherance of these aims, the SFC conducts regular inspections of licensed corporations which may be conducted either on-site or via a request for information to be provided. The maintenance of proper documentation is critical in this regard.
Hint
Reference Chapter:1.10.12
- Question 28 of 513
28. Question
1 pointsQID1508:The Securities and Futures Commission (SFC) uses which of the following general principles in regulating asset management?
I. It recognises overseas jurisdictions with acceptable regimes as domiciles for authorised collective investment schemes (CIS).
II. It recognises supervision by specified inspection regimes overseas of management companies located in the respective jurisdictions as acceptable for its purposes.
III. It employs a consultative process involving the industry before making significant regulatory changes.
IV. It seeks to protect the interests of all investors in authorised CIS in Hong Kong and overseas.CorrectCertain jurisdictions are deemed to have rules governing the operations of CISs which are comparable with those in Hong Kong; schemes domiciled in such jurisdictions are RJSs.
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern.IncorrectCertain jurisdictions are deemed to have rules governing the operations of CISs which are comparable with those in Hong Kong; schemes domiciled in such jurisdictions are RJSs.
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern.Hint
Reference Chapter:1.10.14
- Question 29 of 513
29. Question
1 pointsQID1244:In order to facilitate compliance with applicable legal and regulatory requirements in Hong Kong and overseas jurisdictions, which of the following measures can intermediaries take for better coordination?
I. Engage a dedicated compliance officer to oversee adherence to the compliance manual.
II. Appoint a director to serve as a Compliance Officer to oversee adherence to the compliance manual.
III. Maintain close contact with the regulators.
IV. Complement the manual with well defined operational procedures and practices.CorrectIn order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency to adopt a detailed compliance manual which sets out the securities dealer’s or adviser’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is engaged to oversee adherence to the manual, maintain close contact with the regulators and keep abreast of regulatory developments affecting the securities dealer’s or adviser’s business.
IncorrectIn order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency to adopt a detailed compliance manual which sets out the securities dealer’s or adviser’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is engaged to oversee adherence to the manual, maintain close contact with the regulators and keep abreast of regulatory developments affecting the securities dealer’s or adviser’s business.
Hint
Reference Chapter:1.10.14
- Question 30 of 513
30. Question
1 pointsQID1238:To promote, encourage and enforce good compliance practices. Senior management of Licensed Corporations (LC)s and Registered Institutions (RI)s must establish:
I. Good line and reporting structures.
II. Well defined functions and responsibilities.
III. Effective communications channels.
IV. Appropriate transparency and disclosure practices.CorrectSenior management must provide the leadership and drive to promote, encourage and enforce, if necessary, good compliance practices. It must establish:
(a) good line and reporting structures;
(b) clearly defined functions and responsibilities;
(c.) effective communications;
(d) appropriate transparency and disclosure practices.IncorrectSenior management must provide the leadership and drive to promote, encourage and enforce, if necessary, good compliance practices. It must establish:
(a) good line and reporting structures;
(b) clearly defined functions and responsibilities;
(c.) effective communications;
(d) appropriate transparency and disclosure practices.Hint
Reference Chapter:1.10.3
- Question 31 of 513
31. Question
1 pointsQID1237:Which of the following descriptions about corporate governance are correct?
I. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders.
II. The governance issue is also concerned with the system by which companies are directed and controlled.
III. The activities of intermediaries frequently concern listed corporations. Accordingly, in addition to considering their own regulatory and corporate governance position, intermediaries need to be aware of the wider impact of corporate governance on their clients and the market.
IV. Markets which exhibit a higher degree of good corporate governance are regarded as more competitive in the international arena.CorrectCorporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers). The governance issue is therefore also concerned with the system by which companies are directed and controlled.
The activities of intermediaries frequently concern listed corporations. Accordingly, in addition to considering their own regulatory and corporate governance position, intermediaries need to be aware of the wider impact of corporate governance on their clients and the market. It is now generally accepted that investors attach considerable importance to corporate governance when assessing the value of a stock, and that markets which exhibit a higher degree of good corporate governance are regarded as more competitive in the international arena.IncorrectCorporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers). The governance issue is therefore also concerned with the system by which companies are directed and controlled.
The activities of intermediaries frequently concern listed corporations. Accordingly, in addition to considering their own regulatory and corporate governance position, intermediaries need to be aware of the wider impact of corporate governance on their clients and the market. It is now generally accepted that investors attach considerable importance to corporate governance when assessing the value of a stock, and that markets which exhibit a higher degree of good corporate governance are regarded as more competitive in the international arena.Hint
Reference Chapter:1.10.5
- Question 32 of 513
32. Question
1 pointsQID1684:Good Corporate governance are not required to be responsible for the interest of which of the following
CorrectGood Corporate governance are not required to be responsible for the interest of Former Employees.
IncorrectGood Corporate governance are not required to be responsible for the interest of Former Employees.
Hint
Reference Chapter:1.10.5
- Question 33 of 513
33. Question
1 pointsQID509:Corporate governance refers to the system of by which companies are directed and controlled and concerns which of the following groups of people?
I. Company management.
II. Board of Directors.
III. Shareholders.
IV. Stakeholders.CorrectCorporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
IncorrectCorporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Hint
Reference Chapter:1.10.5
- Question 34 of 513
34. Question
1 pointsQID508:Which of the following is NOT included the set of core principles of corporate governance?
CorrectThe Organisation for Economic Co-operation and Development (“OECD”) has issued a set of core principles of corporate governance practices to include fairness, transparency, accountability and responsibility. Leadership is not one of those principles.
IncorrectThe Organisation for Economic Co-operation and Development (“OECD”) has issued a set of core principles of corporate governance practices to include fairness, transparency, accountability and responsibility. Leadership is not one of those principles.
Hint
Reference Chapter:1.10.5
- Question 35 of 513
35. Question
1 pointsQID2441:A good corporate-governance is not related to which of the following people?
CorrectA good corporate-governance is not related to former employees.
IncorrectA good corporate-governance is not related to former employees.
Hint
Reference Chapter:1.10.5
- Question 36 of 513
36. Question
1 pointsQID1239:Corporate governance describes which of the following relationship?
CorrectCorporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
IncorrectCorporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Hint
Reference Chapter:1.10.5
- Question 37 of 513
37. Question
1 pointsQID929:Which of the following are not examples of good corporate governance?
I. Set up remuneration committee to control the remuneration of management.
II. Assign the management to multiple roles to cut cost.
III. Offer high degree of discretionary powers to the management to allow them to enhance efficiency.
IV. Install check and balances to limited the power of the managementCorrectThe essence of corporate governance is to enhance transparency and check and balance. The powers of the management should be limited, therefore, installation of check and balances and limiting the management’s remuneration are good practices.
IncorrectThe essence of corporate governance is to enhance transparency and check and balance. The powers of the management should be limited, therefore, installation of check and balances and limiting the management’s remuneration are good practices.
Hint
Reference Chapter:1.10.9
- Question 38 of 513
38. Question
1 pointsQID1240:Which of the following is NOT a probable measure that can be taken to improve corporate governance?
CorrectIt’s not required to protect the interests of the management.
IncorrectIt’s not required to protect the interests of the management.
Hint
Reference Chapter:1.10.9
- Question 39 of 513
39. Question
1 pointsQID1242:A company may improve its corporate governance through the following means with the exception of:
CorrectHaving regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of the chairman and chief executive officer, appointment of independent non-executive directors, establishment of independent audit committees, and setting up committees to control the remuneration and benefits of directors and senior management;
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(d) installing strong protective structures for minority shareholders, creditors and other lendersIncorrectHaving regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of the chairman and chief executive officer, appointment of independent non-executive directors, establishment of independent audit committees, and setting up committees to control the remuneration and benefits of directors and senior management;
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(d) installing strong protective structures for minority shareholders, creditors and other lendersHint
Reference Chapter:1.10.9
- Question 40 of 513
40. Question
1 pointsQID2680:Which of the following description does not fit financial regulators in Hong Kong?
CorrectDecisions made by the regulators can be overturned or overruled.
IncorrectDecisions made by the regulators can be overturned or overruled.
Hint
Reference Chapter:1.10.9
- Question 41 of 513
41. Question
1 pointsQID2676:Whats the objective of SFC requiring the disclosure of rights?
CorrectDisclosure requiremetns are in place to enhance transperancy
IncorrectDisclosure requiremetns are in place to enhance transperancy
Hint
Reference Chapter:1.10.9
- Question 42 of 513
42. Question
1 pointsQID1241:The primary objective of good corporate governance is to:
CorrectA key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company.
IncorrectA key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company.
Hint
Reference Chapter:1.10.9
- Question 43 of 513
43. Question
1 pointsQID512:Good governance practices can include which of the following ways?
I. Installing appropriate checks and balances on the board of
directors and senior management.
II. Having sufficient transparency and disclosure of important facts and information to stakeholders.
III. Installing strong protective structures for majority shareholder.
IV. Identifying and penalizing corporate wrongdoing.CorrectA key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) installing strong protective structures for minority shareholders, creditors and other lenders.
(d) identifying and penalising corporate wrongdoing.IncorrectA key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) installing strong protective structures for minority shareholders, creditors and other lenders.
(d) identifying and penalising corporate wrongdoing.Hint
Reference Chapter:1.10.9
- Question 44 of 513
44. Question
1 pointsQID510:Corporate governance includes which of the following features?
I. The recruitment of experienced executive directors who are realistically rewarded to ensure that the business is run
efficiently.
II. The installation of a well regulated structure incorporating close and detailed top managerial supervision of day-to-day
operations of the business.
III. The recruitment of experienced non-executive directors with the objective of ensuring a good balance between executive
and non-executive directors.
IV. Installation of audit and remuneration committees who will ensure independent audits and fair performance geared reward structures.CorrectA key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of Chairman and CEO; appointment of independent non-executive directors; establishment of independent audit committees; setting up committees to control the remuneration and benefits of directors and senior management.IncorrectA key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of Chairman and CEO; appointment of independent non-executive directors; establishment of independent audit committees; setting up committees to control the remuneration and benefits of directors and senior management.Hint
Reference Chapter:1.10.9
- Question 45 of 513
45. Question
1 pointsQID762:The objectives of segregation of job functions include which of the followings?
I. Avoid conflict of interest.
II. Avoid the omission of errors.
III. Enhance efficiencies of all departments.
IV. Keeping the management power in check.CorrectIncompatible duties and functions should be segregated, particularly those which, when performed by the same person, may provide opportunities for abuse or result in the overlooking of errors, thereby exposing the intermediary and its clients to risks.
IncorrectIncompatible duties and functions should be segregated, particularly those which, when performed by the same person, may provide opportunities for abuse or result in the overlooking of errors, thereby exposing the intermediary and its clients to risks.
Hint
Reference Chapter:1.10.9
- Question 46 of 513
46. Question
1 pointsQID511:Which of the following measures reflect effective corporate governance?
I. Installing appropriate checks and balances.
II. Increasing transparency and disclosure to shareholders , stakeholders and the public.
III. Adopting international accounting and auditing standards.
IV. Installing strong protective structures for minority shareholders, creditors and other lenders.CorrectA key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) adopting international accounting and auditing standards;
(d) installing strong protective structures for minority shareholders, creditors and other lenders.IncorrectA key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) adopting international accounting and auditing standards;
(d) installing strong protective structures for minority shareholders, creditors and other lenders.Hint
Reference Chapter:1.10.9
- Question 47 of 513
47. Question
1 pointsQID971:Good corporate governance should separate the functions of
CorrectGood corporate governance should separate the functions of Chairman and CEO.
IncorrectGood corporate governance should separate the functions of Chairman and CEO.
Hint
Reference Chapter:1.10.9
- Question 48 of 513
48. Question
1 pointsQID82:Which of the following correctly describe the power of the SFC?
I. Breaches of the subsidiary legislations of the SFO are not criminal offences
II. Breaches of the subsidiary legislations of the SFO are criminal offences
III. The SFC may refer serious cases to law enforcement agencies such as the Commercial Crimes Bureau (“CCB”) of the Hong Kong Police Force or the Independent Commission Against Corruption (“ICAC”) for investigation and action.
IV. The SFC may also apply to the courts for an injunction to restrain a person from dealing with his assets, or from carrying on all or a part of his business, if the SFC can make a case to show that it is in the public interest to issue such an order.CorrectThe SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(a) Breaches of the SFO and subsidiary legislation are legal offences and will be investigated by the SFC and enforcement action taken; the SFC may refer serious cases to law enforcement agencies such as the Commercial Crimes Bureau (“CCB”) of the Hong Kong Police Force or the Independent Commission Against Corruption (“ICAC”) for investigation and action.
(b) The SFC may also apply to the courts for an injunction to restrain a person from dealing with his assets, or from carrying on all or a part of his business, if it can make a case to show that it is in the public interest to issue such an order.IncorrectThe SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(a) Breaches of the SFO and subsidiary legislation are legal offences and will be investigated by the SFC and enforcement action taken; the SFC may refer serious cases to law enforcement agencies such as the Commercial Crimes Bureau (“CCB”) of the Hong Kong Police Force or the Independent Commission Against Corruption (“ICAC”) for investigation and action.
(b) The SFC may also apply to the courts for an injunction to restrain a person from dealing with his assets, or from carrying on all or a part of his business, if it can make a case to show that it is in the public interest to issue such an order.Hint
Reference Chapter:1.11.
- Question 49 of 513
49. Question
1 pointsQID206:These are key provisions of the SFO that give the SFC considerable powers to investigate, among other things, possible breaches of the SFO, misfeasance and activities not in the public interest. The powers that SFC possesses include which of the followings?
I. SFC can only investigate licenced corporation
II. SFC can require an individual to provide evidence to an investigation, regardless of whether the individual is an intermediary or not.
III. SFC may apply to the court to order a person who does not comply with requirements made by the authorised person or investigator under relevant provisions to do so.
IV. SFC may require an individual under investigation to make a statutory declaration that he is unable to provide the evidence for reasons to be stated, if such is the case.CorrectThe SFC may authorise an employee (or another person with the consent of the Financial Secretary) to carry out an investigation. The person so authorised may investigate any person. A person under investigation is required to:
(a) provide documents and explanations;
(e.) make a statutory declaration that he is unable to provide the evidence for reasons to be stated, if such is the case.
The SFC may apply to the court to order a person who does not comply with requirements made by the authorised person or investigator under relevant provisions to do so (s. 185, SFO).IncorrectThe SFC may authorise an employee (or another person with the consent of the Financial Secretary) to carry out an investigation. The person so authorised may investigate any person. A person under investigation is required to:
(a) provide documents and explanations;
(e.) make a statutory declaration that he is unable to provide the evidence for reasons to be stated, if such is the case.
The SFC may apply to the court to order a person who does not comply with requirements made by the authorised person or investigator under relevant provisions to do so (s. 185, SFO).Hint
Reference Chapter:1.11.3
- Question 50 of 513
50. Question
1 pointsQID888:Can the SFC conduct supervisory inspections on the associated entity of an intermediary?
CorrectThe SFC can conduct supervisory inspections on an intermediary or an associated entity of an intermediary.
IncorrectThe SFC can conduct supervisory inspections on an intermediary or an associated entity of an intermediary.
Hint
Reference Chapter:1.11.3
- Question 51 of 513
51. Question
1 pointsQID205:The Securities and Futures Commission (SFC), is conducting an investigation on insider trading. Miss Ko, a retail investor, is required to provide information in the course of the investigation. While Miss Ko is not involved in insider trading, is she required to provide information to the SFC?
CorrectThere are a number of grounds under which the SFC may carry out an enquiry into a listed company. It has powers to obtain records and documents, explanations and statements on
oath as to why, if such is the case, the information cannot be produced.
The persons who may be subject to the enquiry include:
(e.) any person.IncorrectThere are a number of grounds under which the SFC may carry out an enquiry into a listed company. It has powers to obtain records and documents, explanations and statements on
oath as to why, if such is the case, the information cannot be produced.
The persons who may be subject to the enquiry include:
(e.) any person.Hint
Reference Chapter:1.11.7
- Question 52 of 513
52. Question
1 pointsQID1246:Kaohsiung Securities is a licensed corporation, it appears to the SFC that Kaohsiung may be unable to meet the requirements of the FRR. As a result, SFC has started to investigate Kaohsiung Securities, how should Kaohsiung Securities act in satisfying the investigative demands of the SFC?
I. Accept the SFC onsite inspection
II. Provide evidence that it can meet the requirement of the FRR in 5 days.
III. Provide documents and evidence if required by the investigators of the SFC
IV. Instruct the auditor to deal with the SFC on behalf of the companyCorrectSection 183, SFO requires the person under investigation to:
(a) provide documents and explanations;
(b) attend before the investigator at the time and place the investigator requires in writing and to answer questions;
(d) substantiate his answers, explanations or statements by making a statutory declarationIncorrectSection 183, SFO requires the person under investigation to:
(a) provide documents and explanations;
(b) attend before the investigator at the time and place the investigator requires in writing and to answer questions;
(d) substantiate his answers, explanations or statements by making a statutory declarationHint
Reference Chapter:1.11.7
- Question 53 of 513
53. Question
1 pointsQID219:Mdm. Liu is a senior citizen. She is a stock investment enthusiast but suffers losses often. The SFC recently conducted an investigation on a company called Sana Seoi Bean Curd and discovered that Mdm. Liu traded the company’s stocks frequently. Thus, the SFC suspected Mdm. Liu of being involved in acts of market misconduct such as the manipulation of the stock market and requested that she participate in the investigation process. Mdm. Liu had neither knowledge, nor intention of manipulating the stock market. As the SFC investigations were going on for a long time, Mdm. Liu wanted to end the meeting earlier and thus deliberately provided false information perfunctorily to the SFC so as to complete the investigation. Had Mdm. Liu committed an offence according to the Securities and Futures Ordinance?
CorrectA person commits an offence if he provides to the SFC (whether in applications or in other circumstances) false or misleading information as to a material particular knowingly or recklessly as to whether it is false or misleading (ss. 383 and 384, SFO).
IncorrectA person commits an offence if he provides to the SFC (whether in applications or in other circumstances) false or misleading information as to a material particular knowingly or recklessly as to whether it is false or misleading (ss. 383 and 384, SFO).
Hint
Reference Chapter:1.11.8
- Question 54 of 513
54. Question
1 pointsQID207:An employee of the SFC, an authorised person or an investigator may, under which of the following appropriate circumstances, apply to a magistrate for the issue of a warrant?
I. Authorizing specified persons, a police officer and such other persons as may be necessary to assist in the execution of the warrant to enter specified premises, if necessary by force, at any time within 7 days.
II. Requiring any person on the premises to produce any relevant documents.
III. Prohibiting any person to erase or alter or remove any relevant documents.
IV. Authorizing the specified persons to search for, seize and remove any relevant documents.CorrectAn employee of the SFC, an authorised person or an investigator may, in appropriate circumstances, apply to a magistrate for the issue of a warrant:
(a) authorising specified persons, a police officer and such other persons as may be necessary to assist in the execution of the warrant to enter specified premises, if necessary by force, at any time within seven days;
(b) requiring any person on the premises to produce any relevant documents;
© prohibiting any person to erase or alter or remove any relevant documents; and
(d) authorising the specified persons to:
(i) search for, seize and remove any relevant documentsIncorrectAn employee of the SFC, an authorised person or an investigator may, in appropriate circumstances, apply to a magistrate for the issue of a warrant:
(a) authorising specified persons, a police officer and such other persons as may be necessary to assist in the execution of the warrant to enter specified premises, if necessary by force, at any time within seven days;
(b) requiring any person on the premises to produce any relevant documents;
© prohibiting any person to erase or alter or remove any relevant documents; and
(d) authorising the specified persons to:
(i) search for, seize and remove any relevant documentsHint
Reference Chapter:1.11.9
- Question 55 of 513
55. Question
1 pointsQID208:The issue of warrant that SFC receives when it applies to the magistrate does NOT include which of the following items of power?
CorrectSix months is the longest period permitted for an order to retain documents established by a regular warrant. Any period beyond that must be requested.
IncorrectSix months is the longest period permitted for an order to retain documents established by a regular warrant. Any period beyond that must be requested.
Hint
Reference Chapter:1.11.9
- Question 56 of 513
56. Question
1 pointsQID794:Please rank the importance of the following in descending order
CorrectOrdinances are statutory, rules and guidelines are enforced.
Codes do not have the force of law in Hong Kong but only in other countries.IncorrectOrdinances are statutory, rules and guidelines are enforced.
Codes do not have the force of law in Hong Kong but only in other countries.Hint
Reference Chapter:1.2.
- Question 57 of 513
57. Question
1 pointsQID1035:The Securities and Futures Ordinance (SFO) is the principal legislative document governing which markets in Hong Kong?
CorrectThe SFO is the principal legislative document governing the securities market in Hong Kong.
IncorrectThe SFO is the principal legislative document governing the securities market in Hong Kong.
Hint
Reference Chapter:1.2.1
- Question 58 of 513
58. Question
1 pointsQID744:Which of the following individuals or entities should adhere to Securities and Futures (Accounts and Audit) Rules?
CorrectThe SFC has made the Accounts and Audit Rules specifying the form and contents of financial statements and other documents that licensed corporations and associated entities of intermediaries (both licensed corporations and registered institutions) should prepare and the content of auditors’ reports.
IncorrectThe SFC has made the Accounts and Audit Rules specifying the form and contents of financial statements and other documents that licensed corporations and associated entities of intermediaries (both licensed corporations and registered institutions) should prepare and the content of auditors’ reports.
Hint
Reference Chapter:1.2.1
- Question 59 of 513
59. Question
1 pointsQID221:What are the powers of the Financial Secretary in relation to securities and CISs?
CorrectPowers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)IncorrectPowers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)Hint
Reference Chapter:1.2.1
- Question 60 of 513
60. Question
1 pointsQID847:The rules issued by the SFC, such as Client Securities Rules, are
CorrectThese are some of the Major Subsidiary Legislation:
1.1 Securities and Futures (Financial Resources) Rules
1.2 Securities and Futures (Client Securities) Rules
1.3 Securities and Futures (Client Money) Rules
1.4 Securities and Futures (Keeping of Records) Rules
1.5 Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules
1.6 Securities and Futures (Accounts and Audit) Rules,
plus many others.IncorrectThese are some of the Major Subsidiary Legislation:
1.1 Securities and Futures (Financial Resources) Rules
1.2 Securities and Futures (Client Securities) Rules
1.3 Securities and Futures (Client Money) Rules
1.4 Securities and Futures (Keeping of Records) Rules
1.5 Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules
1.6 Securities and Futures (Accounts and Audit) Rules,
plus many others.Hint
Reference Chapter:1.2.2
- Question 61 of 513
61. Question
1 pointsQID1036:Which of the following are the power that the Securities and Futures Ordinance (SFO) empowers the SFC with?
I. The power to introduce subsidiary legislation.
II. The power to issue codes and guidelines.
III. The power to amend the Securities and Futures Ordinance.
IV. The power to revoke the Securities and Futures Ordinance.CorrectPart VII empowers the SFC to make subsidiary legislation (s. 168, SFO) and/or codes (s. 169, SFO).
IncorrectPart VII empowers the SFC to make subsidiary legislation (s. 168, SFO) and/or codes (s. 169, SFO).
Hint
Reference Chapter:1.2.2
- Question 62 of 513
62. Question
1 pointsQID179:The principal ordinance applicable to the asset management industry is the
CorrectThe principal ordinances applicable to the asset management industry are the SFO, the Mandatory Provident Fund Schemes Ordinance (“MPFSO”), the Occupational Retirement
Schemes Ordinance (“ORSO”), the Insurance Ordinance and, to a lesser extent, the Banking Ordinance, the Employment Ordinance, the Inland Revenue Ordinance and the Trustee
Ordinance.IncorrectThe principal ordinances applicable to the asset management industry are the SFO, the Mandatory Provident Fund Schemes Ordinance (“MPFSO”), the Occupational Retirement
Schemes Ordinance (“ORSO”), the Insurance Ordinance and, to a lesser extent, the Banking Ordinance, the Employment Ordinance, the Inland Revenue Ordinance and the Trustee
Ordinance.Hint
Reference Chapter:1.2.3
- Question 63 of 513
63. Question
1 pointsQID83:Which of the following correctly describes the status of SFC’s code of conducts and guidelines?
CorrectThe SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.IncorrectThe SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Hint
Reference Chapter:1.2.3
- Question 64 of 513
64. Question
1 pointsQID773:The SFC-issued codes, guidelines and guidance notes
CorrectCodes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.
IncorrectCodes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.
Hint
Reference Chapter:1.2.3
- Question 65 of 513
65. Question
1 pointsQID1037:Failing to follow SFC-issued codes, guidelines and guidance notes may result in which of the following?
I. Reflect adversely on the fitness and properness of licensed or registered persons to continue to be so licensed or registered.
II. Imprisonment.
III. Civil consequences.
IV. A higher tax bracket.CorrectThe SFO also empowers the SFC to issue codes, guidelines and guidance notes. These do not have the force of law and do not override the provisions of any applicable law. However, a
failure to follow the spirit of the codes, guidelines and guidance notes may reflect adversely on the fitness and properness of licensed or registered persons to continue to be so licensed or
registered.IncorrectThe SFO also empowers the SFC to issue codes, guidelines and guidance notes. These do not have the force of law and do not override the provisions of any applicable law. However, a
failure to follow the spirit of the codes, guidelines and guidance notes may reflect adversely on the fitness and properness of licensed or registered persons to continue to be so licensed or
registered.Hint
Reference Chapter:1.2.3
- Question 66 of 513
66. Question
1 pointsQID1038:The SFC-issued codes, guidelines and guidance notes are generally only subject to
CorrectPart XVI gathers together a number of provisions of common application as well as regulatory powers. It includes miscellaneous provisions that do not fit elsewhere and additional ones which relate to the increase in civil law applications.
IncorrectPart XVI gathers together a number of provisions of common application as well as regulatory powers. It includes miscellaneous provisions that do not fit elsewhere and additional ones which relate to the increase in civil law applications.
Hint
Reference Chapter:1.2.3
- Question 67 of 513
67. Question
1 pointsQID415:Codes and guidelines issued by the SFC which apply to licensed or registered persons in the Asset Management Industries includes
I. The Conduct Guidelines of Intermediaries
II. The Code of Conduct
III. The Internal Control Guidelines (ICG)
IV. The Prevention of Money Laundering and Terrorist Financing Guidance Note (“MLGN”)CorrectOption I included in the question is not a real code, the other three do exist and apply to asset managers.
IncorrectOption I included in the question is not a real code, the other three do exist and apply to asset managers.
Hint
Reference Chapter:1.2.3
- Question 68 of 513
68. Question
1 pointsQID87:Under the provisions of the Securities and Futures Ordinance (SFO), which of the following statements relating to rules and codes of conduct are correct?
I. Failure by a licensed person to comply with a material provision of a code of conduct will of itself make the person liable to judicial proceedings.
II. A code of conduct violation shall be admissible as evidence in court proceedings.
III. The Securities and Futures Commission (SFC) is empowered under the SFO to make rules or codes of conduct.
IV. A breach of a provision in a code of conduct by a licensed person may cast doubts on his fitness and properness to hold the licence.CorrectThe SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(c) Persons prejudiced by the perpetration of market misconduct may take civil action against the wrongdoer through the courts to obtain redress. The SFO has provisions for the findings of the Market Misconduct Tribunal to be admissible in evidence in private civil actions.
(d) Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.IncorrectThe SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(c) Persons prejudiced by the perpetration of market misconduct may take civil action against the wrongdoer through the courts to obtain redress. The SFO has provisions for the findings of the Market Misconduct Tribunal to be admissible in evidence in private civil actions.
(d) Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Hint
Reference Chapter:1.2.3
- Question 69 of 513
69. Question
1 pointsQID22:Which of the following are duties of the HKMA?
I. Protect the interest of insurance policies holder
II. Maintain currency stability
III. Enhance the efficiency and integrity of the financial system
IV. Ensure the safety and stability of the banking systemCorrectThe HKMA is required to maintain currency stability, ensure the safety and stability of the banking system, and promote the efficiency, integrity and development of the financial system.
IncorrectThe HKMA is required to maintain currency stability, ensure the safety and stability of the banking system, and promote the efficiency, integrity and development of the financial system.
Hint
Reference Chapter:1.2.3
- Question 70 of 513
70. Question
1 pointsQID190:The SFO has provided powers for the SFC to make detailed rules relating to which of the following?
I. Financial Resources
II. Handling of client money and other client assets
III. The keeping of accounts and records
IV. Auditing mattersCorrectThe SFO grants the SFC powers to make detailed
rules relating to:
(a) their financial resources;
(b) the handling of client money and other client assets;
© the keeping of accounts and records; and
(d) auditing matters.IncorrectThe SFO grants the SFC powers to make detailed
rules relating to:
(a) their financial resources;
(b) the handling of client money and other client assets;
© the keeping of accounts and records; and
(d) auditing matters.Hint
Reference Chapter:1.2.3
- Question 71 of 513
71. Question
1 pointsQID420:Which of the following codes specifies conduct requirements for SFC licensees involved in the discretionary management of CISs, and supplements the SFC’s codes and requirements for all licensees?
CorrectThe FMCC applies to intermediaries conducting discretionary management of CISs (whether or not the CISs are authorised by the SFC) and their representatives (“Fund Managers”).
IncorrectThe FMCC applies to intermediaries conducting discretionary management of CISs (whether or not the CISs are authorised by the SFC) and their representatives (“Fund Managers”).
Hint
Reference Chapter:1.2.3
- Question 72 of 513
72. Question
1 pointsQID85:What is the legal status of codes and guidelines issued by the SFC?
I. Codes of conduct are subsidiary legislation and have the force of law.
II. Guidelines are subsidiary legislation and have the force of law.
III. Codes of conduct do not have the force of law, a breach does not by itself render a person liable to any judicial or other proceedings.
IV. Guidelines do not have the force of law, a breach does not by itself render a person liable to any judicial or other proceedings.CorrectThe SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines: (d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.IncorrectThe SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines: (d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Hint
Reference Chapter:1.2.3
- Question 73 of 513
73. Question
1 pointsQID163:According to the NCO, which of the following methods of liquidation is accepted?
I. Compulsory Liquidation
II. Members’ Voluntary Winding-Up
III. Creditors’ Voluntary Winding-Up
IV. Director Compulsory LiquidationCorrectThese are the three ways for a liquidation to happen, according to the NCO:
1. A compulsory winding-up ordered by the court, and the liquidator is appointed by the court and acts under its control. A voluntary winding-up may be started by members or creditors. There are fewer formalities than with a compulsory liquidation and this route is far more popular.
2. Members’ voluntary winding-up (s. 233, CWUMPO)
This may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency” to the effect that they
have:
(a) made a full enquiry into the affairs of the company; and
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.
3. Creditors’ voluntary winding-up (ss. 241 to 243, CWUMPO)
The company shall arrange a meeting of the creditors to be summoned for the day when the resolution to wind up is proposed or for the next day. Advertisements must be run in the
Gazette and newspapers. A statement of the position of the company’s affairs, and a list of creditors and amounts due, will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.IncorrectThese are the three ways for a liquidation to happen, according to the NCO:
1. A compulsory winding-up ordered by the court, and the liquidator is appointed by the court and acts under its control. A voluntary winding-up may be started by members or creditors. There are fewer formalities than with a compulsory liquidation and this route is far more popular.
2. Members’ voluntary winding-up (s. 233, CWUMPO)
This may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency” to the effect that they
have:
(a) made a full enquiry into the affairs of the company; and
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.
3. Creditors’ voluntary winding-up (ss. 241 to 243, CWUMPO)
The company shall arrange a meeting of the creditors to be summoned for the day when the resolution to wind up is proposed or for the next day. Advertisements must be run in the
Gazette and newspapers. A statement of the position of the company’s affairs, and a list of creditors and amounts due, will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.Hint
Reference Chapter:1.3.
- Question 74 of 513
74. Question
1 pointsQID137:Model articles of private companies and public companies consist of which of the followings?
I. Capital
II. Members
III. Officers
IV. Miscellaneous provisionCorrectModel articles of association for private companies, public companies and guarantee companies are provided in the Companies (Model Articles) Notice. Model articles of private companies and public companies consist broadly of four parts including matters relating to:
(a) officers, including powers, duties, appointments and disqualifications of directors, appointments and removal of company secretaries;
(b) members, including meetings and voting procedures;
© capital, such as share capital, rights and dealings with shares and dividends; and
(d) miscellaneous provisions such as communications to and by the company and administrative arrangements.IncorrectModel articles of association for private companies, public companies and guarantee companies are provided in the Companies (Model Articles) Notice. Model articles of private companies and public companies consist broadly of four parts including matters relating to:
(a) officers, including powers, duties, appointments and disqualifications of directors, appointments and removal of company secretaries;
(b) members, including meetings and voting procedures;
© capital, such as share capital, rights and dealings with shares and dividends; and
(d) miscellaneous provisions such as communications to and by the company and administrative arrangements.Hint
Reference Chapter:1.3.10
- Question 75 of 513
75. Question
1 pointsQID1042:Which of the following are included and defined in the articles of association?
I. Members, including meeting and procedures
II. Officers, including powers, duties, appointments and disqualifications of directors, appointment of managing directors and company secretaries
III. Capital, such as dividends, reserves, accounts and audit.
IV. Miscellaneous provisions such as communications to and by the company and administrative arrangements.CorrectModel articles of association for private companies, public companies and guarantee companies are provided in the Companies (Model Articles) Notice. Model articles of private companies and public companies consist broadly of four parts including matters relating to:
(a) officers, including powers, duties, appointments and disqualifications of directors, appointments and removal of company secretaries;
(b) members, including meetings and voting procedures;
© capital, such as share capital, rights and dealings with shares and dividends; and
(d) miscellaneous provisions such as communications to and by the company and administrative arrangements.IncorrectModel articles of association for private companies, public companies and guarantee companies are provided in the Companies (Model Articles) Notice. Model articles of private companies and public companies consist broadly of four parts including matters relating to:
(a) officers, including powers, duties, appointments and disqualifications of directors, appointments and removal of company secretaries;
(b) members, including meetings and voting procedures;
© capital, such as share capital, rights and dealings with shares and dividends; and
(d) miscellaneous provisions such as communications to and by the company and administrative arrangements.Hint
Reference Chapter:1.3.10
- Question 76 of 513
76. Question
1 pointsQID1050:According to the new regulations of the New Company Ordinance (NCO), which of the following is NOT included in the articles of association?
CorrectModel articles of association for private companies, public companies and guarantee companies are provided in the Companies (Model Articles) Notice. Model articles of private
companies and public companies consist broadly of four parts including matters relating to:
(a) officers, including powers, duties, appointments and disqualifications of directors, appointments and removal of company secretaries;
(b) members, including meetings and voting procedures;
© capital, such as share capital, rights and dealings with shares and dividends; and
(d) miscellaneous provisions such as communications to and by the company and administrative arrangements.IncorrectModel articles of association for private companies, public companies and guarantee companies are provided in the Companies (Model Articles) Notice. Model articles of private
companies and public companies consist broadly of four parts including matters relating to:
(a) officers, including powers, duties, appointments and disqualifications of directors, appointments and removal of company secretaries;
(b) members, including meetings and voting procedures;
© capital, such as share capital, rights and dealings with shares and dividends; and
(d) miscellaneous provisions such as communications to and by the company and administrative arrangements.Hint
Reference Chapter:1.3.10
- Question 77 of 513
77. Question
1 pointsQID1048:General meetings of shareholders are very important as
CorrectCompany meetings of shareholders are very important as they provide the only opportunity for shareholders to exercise any control over the affairs of the company or take part in its operations.
IncorrectCompany meetings of shareholders are very important as they provide the only opportunity for shareholders to exercise any control over the affairs of the company or take part in its operations.
Hint
Reference Chapter:1.3.11
- Question 78 of 513
78. Question
1 pointsQID2422:Which of the following can call a meeting other than the annual general meetings?
I. Shareholders
II. Directors
III. Creditors
IV. CourtCorrectWhich of the following can call a meeting other than the annual general meetings?
I. Shareholders
II. Directors
III. CourtIncorrectWhich of the following can call a meeting other than the annual general meetings?
I. Shareholders
II. Directors
III. CourtHint
Reference Chapter:1.3.13
- Question 79 of 513
79. Question
1 pointsQID1054:Company meetings can be requested by which of the following
I. Directors
II. The court
III. Shareholders
IV. LiquidatorCorrectOther general meetings may be requested by directors, shareholders and the court.
IncorrectOther general meetings may be requested by directors, shareholders and the court.
Hint
Reference Chapter:1.3.13
- Question 80 of 513
80. Question
1 pointsQID1057:The AGM includes the presentation and approval of which of the following?
I. Annual accounts and audit reports
II. Declaration of dividends
III. Assignment of Directors
IV. Assignment of AuditorsCorrectThe business of an annual general meeting includes the consideration of the annual accounts, the declaration of dividends, the election of directors to replace retiring ones, and the appointment of auditors.
IncorrectThe business of an annual general meeting includes the consideration of the annual accounts, the declaration of dividends, the election of directors to replace retiring ones, and the appointment of auditors.
Hint
Reference Chapter:1.3.14
- Question 81 of 513
81. Question
1 pointsQID1055:Subsequent AGMs after the first AGM should be held within how many month-intervals thereafter?
CorrectA company is required to hold its first AGM within 18 months after its incorporation. Subsequent AGMs must be held every calendar year and the interval between AGMs should not be more than 15 months.
IncorrectA company is required to hold its first AGM within 18 months after its incorporation. Subsequent AGMs must be held every calendar year and the interval between AGMs should not be more than 15 months.
Hint
Reference Chapter:1.3.14
- Question 82 of 513
82. Question
1 pointsQID1053:Companies are required to held an annual general meeting of shareholders, unless
CorrectA company is required by the NCO to hold an annual general meeting of shareholders (s. 610, NCO). Companies are permitted to dispense with the requirement to hold annual general meetings by passing a written resolution or a resolution at a general meeting with unanimous shareholders’ consent.
IncorrectA company is required by the NCO to hold an annual general meeting of shareholders (s. 610, NCO). Companies are permitted to dispense with the requirement to hold annual general meetings by passing a written resolution or a resolution at a general meeting with unanimous shareholders’ consent.
Hint
Reference Chapter:1.3.14
- Question 83 of 513
83. Question
1 pointsQID1058:The first AGM should be held within how many months of incorporation?
CorrectA company is required to hold its first AGM within 18 months after its incorporation. Subsequent AGMs must be held every calendar year and the interval between AGMs should not be more than 15 months.
IncorrectA company is required to hold its first AGM within 18 months after its incorporation. Subsequent AGMs must be held every calendar year and the interval between AGMs should not be more than 15 months.
Hint
Reference Chapter:1.3.14
- Question 84 of 513
84. Question
1 pointsQID1059:What should an auditor do if he/she believes that there is something seriously wrong with a company’s financial position?
CorrectThe usual audit report does not give much opportunity for questions as it is normally in a standard format stating that the accounts present a “true and fair view” of the company’s financial position, unless something is seriously wrong, when the auditors will include a qualification in the report.
IncorrectThe usual audit report does not give much opportunity for questions as it is normally in a standard format stating that the accounts present a “true and fair view” of the company’s financial position, unless something is seriously wrong, when the auditors will include a qualification in the report.
Hint
Reference Chapter:1.3.14
- Question 85 of 513
85. Question
1 pointsQID1056:Which of the following may cast votes in company AGM that passes ordinary resolution and special resolutions?
CorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy).
IncorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy).
Hint
Reference Chapter:1.3.14
- Question 86 of 513
86. Question
1 pointsQID145:The majority of resolutions can be passed by which of the following methods?
CorrectUnder s.548, NCO, resolutions may be passed by circulation and signed by all members.
IncorrectUnder s.548, NCO, resolutions may be passed by circulation and signed by all members.
Hint
Reference Chapter:1.3.15
- Question 87 of 513
87. Question
1 pointsQID1604:Which of the following resolutions cannot be passed by circularisation and signed by all members?
I. The removal of a director before his term expires
II. Reduction of share capital
III. Alteration of objects and articles of association
IV. Issuance of additional stocksCorrectUnder s. 548, NCO, resolutions may be passed by circularisation and signed by all members except for:
(b) the removal of a director before his term expires.
A special resolution is one passed by at least 75% of members at a general meeting (voting in
person or, where proxies are allowed, by proxy), of which not less than 21 days’ notice
specifying the intention to pass the resolution has been given. Examples of matters which need
special resolutions are:
(a) reduction of share capital;
(c.) alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).The issuance of new shares are passed by the board of directors.
IncorrectUnder s. 548, NCO, resolutions may be passed by circularisation and signed by all members except for:
(b) the removal of a director before his term expires.
A special resolution is one passed by at least 75% of members at a general meeting (voting in
person or, where proxies are allowed, by proxy), of which not less than 21 days’ notice
specifying the intention to pass the resolution has been given. Examples of matters which need
special resolutions are:
(a) reduction of share capital;
(c.) alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).The issuance of new shares are passed by the board of directors.
Hint
Reference Chapter:1.3.15
- Question 88 of 513
88. Question
1 pointsQID1060:If the shareholder are not happy with the performance of the directors, how can they replace the directors?
CorrectUnder s. 548, NCO, resolutions may be passed by circularisation and signed by all members except for:
(b) the removal of a director before his term expires.IncorrectUnder s. 548, NCO, resolutions may be passed by circularisation and signed by all members except for:
(b) the removal of a director before his term expires.Hint
Reference Chapter:1.3.15
- Question 89 of 513
89. Question
1 pointsQID1061:Which of the following matters are passed by ordinary resolutions?
I. Dismissal of an auditor before his term of office expires.
II. Dismissal of a director before his term of office expires.
III. Dismissal of an auditor when his term of office expires.
IV. Dismissal of a director when his term of office expires.CorrectUnder s. 548, NCO, resolutions may be passed by circularisation and signed by all members except for:
(a) the removal of auditors before the expiration of their term of office; or
(b) the removal of a director before his term expires.IncorrectUnder s. 548, NCO, resolutions may be passed by circularisation and signed by all members except for:
(a) the removal of auditors before the expiration of their term of office; or
(b) the removal of a director before his term expires.Hint
Reference Chapter:1.3.15
- Question 90 of 513
90. Question
1 pointsQID1062:Which of the following descriptions about resolutions is correct?
CorrectUnder s. 548, NCO, resolutions may be passed by circularisation and signed by all members.
IncorrectUnder s. 548, NCO, resolutions may be passed by circularisation and signed by all members.
Hint
Reference Chapter:1.3.15
- Question 91 of 513
91. Question
1 pointsQID1066:Which of the following shall be passed under a special resolution?
I. Reduction of share capital
II. Winding up of the company voluntarily or by court
III. Alteration of objects, articles or conditions in the articles of association.
IV. Assignment and removal of DirectorsCorrectExamples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
(c) alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).IncorrectExamples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
(c) alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).Hint
Reference Chapter:1.3.17
- Question 92 of 513
92. Question
1 pointsQID1064:Which of the following matters are passed under special resolutions?
I. Reduction of share capital
II. Winding up of the company voluntarily or by court
III. Alteration of objects in articles of association
IV. Disposal of company assetsCorrectExamples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
(c) alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).IncorrectExamples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
(c) alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).Hint
Reference Chapter:1.3.17
- Question 93 of 513
93. Question
1 pointsQID1067:A printed copy of a special resolution must be lodged with the Company Registrar within how many days after being passed?
CorrectA copy of a special resolution must be lodged with the Registrar of Companies within 15 days of it being passed.
IncorrectA copy of a special resolution must be lodged with the Registrar of Companies within 15 days of it being passed.
Hint
Reference Chapter:1.3.17
- Question 94 of 513
94. Question
1 pointsQID1069:Which of the following matters need to be passed through special resolutions?
I. Reduction of share capital
II. Winding up of the company
III. Deletion, alteration, and addition to the company’s articles of association
IV. Replacement of directors and/or auditorsCorrectExamples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
(c) alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).IncorrectExamples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
(c) alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).Hint
Reference Chapter:1.3.17
- Question 95 of 513
95. Question
1 pointsQID1065:A special resolution requires how many days’ notice specifying the intention to pass the resolution to been given?
CorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy), of which not less than 14 days’ notice specifying the intention to pass the resolution has been given.
IncorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy), of which not less than 14 days’ notice specifying the intention to pass the resolution has been given.
Hint
Reference Chapter:1.3.17
- Question 96 of 513
96. Question
1 pointsQID1068:Which of the following descriptions about a special resolution is correct?
I. It may be passed by circularisation and signed by all members
II. It must be passed by at least 75% of members.
III. A notice period of not less than 14 days’ must be given.
IV. A printed copy of a special resolution must be lodged with the Registrar of Companies within 15 days of it being passed.CorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy), of which not less than 14 days’ notice specifying the intention to pass the resolution has been given. Examples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
© alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).
A copy of a special resolution must be lodged with the Registrar of Companies within 15 days of it being passed.IncorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy), of which not less than 14 days’ notice specifying the intention to pass the resolution has been given. Examples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
© alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in the articles of association (for existing companies).
A copy of a special resolution must be lodged with the Registrar of Companies within 15 days of it being passed.Hint
Reference Chapter:1.3.17
- Question 97 of 513
97. Question
1 pointsQID1063:What is the passing rate of a special resolution?
CorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy).
IncorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy).
Hint
Reference Chapter:1.3.17
- Question 98 of 513
98. Question
1 pointsQID144:Special Resolutions are passed by which of the following individuals or entities?
CorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy), of which not less than 14 days’ notice
specifying the intention to pass the resolution has been given.IncorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy), of which not less than 14 days’ notice
specifying the intention to pass the resolution has been given.Hint
Reference Chapter:1.3.17
- Question 99 of 513
99. Question
1 pointsQID141:Which of the following are required to pass a special resolution?
I. Reduction of share capital
II. Voluntary liquidation
III. Determining and declaring dividends and profits
IV. Alteration of objects and articles of associationCorrectExamples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
© alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in
the articles of association (for existing companies).IncorrectExamples of matters which need special resolutions are:
(a) reduction of share capital;
(b) winding up of the company voluntarily or by court; and
© alteration of objects, articles of association (for companies formed and registered under the NCO) and conditions in memoranda of association that could have been included in
the articles of association (for existing companies).Hint
Reference Chapter:1.3.17
- Question 100 of 513
100. Question
1 pointsQID140:Which of the following statements about special resolutions passed by the company are correct?
I. A special resolution is a resolution that is passed by at least 50% of members at a general meeting.
II. A special resolution is a resolution that is passed by at least 75% of members at a general meeting.
III. Not less than 14 days’ notice specifying the intention to pass the resolution has been given to members.
IV. Not less than 21 days’ notice specifying the intention to pass the resolution has been given to members.CorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy), of which not less than 14 days’ notice
specifying the intention to pass the resolution has been given.IncorrectA special resolution is one passed by at least 75% of members at a general meeting (voting in person or, where proxies are allowed, by proxy), of which not less than 14 days’ notice
specifying the intention to pass the resolution has been given.Hint
Reference Chapter:1.3.17
- Question 101 of 513
101. Question
1 pointsQID1070:What is the passing rate of an ordinary resolution?
CorrectAn ordinary resolution is a resolution which may be passed by a simple majority of those present and voting at a meeting of members. Notice must be given.
IncorrectAn ordinary resolution is a resolution which may be passed by a simple majority of those present and voting at a meeting of members. Notice must be given.
Hint
Reference Chapter:1.3.18
- Question 102 of 513
102. Question
1 pointsQID1071:An ordinary resolution is a resolution which may be passed by what percentage of voting at a meeting of members?
CorrectAn ordinary resolution is a resolution which may be passed by a simple majority of those present and voting at a meeting of members. Notice must be given.
IncorrectAn ordinary resolution is a resolution which may be passed by a simple majority of those present and voting at a meeting of members. Notice must be given.
Hint
Reference Chapter:1.3.18
- Question 103 of 513
103. Question
1 pointsQID1072:Which of the following are powers exercisable by members in general meeting?
I. Removal of directors
II. Disposal of assets
III. Approval of payments for loss of office
IV. Approval of payments for profit of officeCorrectThese include:
(h) removal of directors;
(i) disposal of company assets;
(j) approval of payments for loss of officeIncorrectThese include:
(h) removal of directors;
(i) disposal of company assets;
(j) approval of payments for loss of officeHint
Reference Chapter:1.3.19
- Question 104 of 513
104. Question
1 pointsQID1073:Which of the following are NOT powers exercisable by members in the general meeting?
CorrectThese include:
(a) changes to articles of association and company name;
© issue of shares at a discount;
(d) alteration of capital including reduction.IncorrectThese include:
(a) changes to articles of association and company name;
© issue of shares at a discount;
(d) alteration of capital including reduction.Hint
Reference Chapter:1.3.19
- Question 105 of 513
105. Question
1 pointsQID1039:What are the major features of the New Companies Ordinance?
I. The NCO permits the formation of a company by one or more persons (s. 67, NCO).
II. The NCO provides that one member constitutes a quorum for a meeting of a company having only one member.
III. The NCO permits the formation of a company by one or more companies.
IV. The NCO permits the permits the formation of a company by two or more persons (s. 67, NCO).CorrectThe NCO permits the formation of a company by one or more persons (s. 67, NCO). The NCO also provides that one member
constitutes a quorum for a meeting of a company having only one member.IncorrectThe NCO permits the formation of a company by one or more persons (s. 67, NCO). The NCO also provides that one member
constitutes a quorum for a meeting of a company having only one member.Hint
Reference Chapter:1.3.2
- Question 106 of 513
106. Question
1 pointsQID1075:If a variation of the rights of the holders of a class of a shares in a company occurs, shareholders who believe that such variation is against their interests may petition the court to have the variation cancelled. What is the threshold for such a petition to occur?
CorrectThere are provisions in the NCO and in Companies (Model Articles) Notice which enable a
company to vary the rights of the holders of a class of shares. However, if a variation is being processed, the holders of at least 10% of the total voting rights of the shares in that class may petition the court to have the variation cancelled if it is against their interests.IncorrectThere are provisions in the NCO and in Companies (Model Articles) Notice which enable a
company to vary the rights of the holders of a class of shares. However, if a variation is being processed, the holders of at least 10% of the total voting rights of the shares in that class may petition the court to have the variation cancelled if it is against their interests.Hint
Reference Chapter:1.3.20
- Question 107 of 513
107. Question
1 pointsQID1076:If a company is functional and can form resolutions through the AGM, the court will generally not interfere in its matters. This practice is based on which of the following principles?
CorrectThe court will not generally interfere in internal management matters or where the company can deal with the matter by calling a meeting. This is the principle of majority power.
IncorrectThe court will not generally interfere in internal management matters or where the company can deal with the matter by calling a meeting. This is the principle of majority power.
Hint
Reference Chapter:1.3.22
- Question 108 of 513
108. Question
1 pointsQID1077:The court will not generally interfere in internal management matters or where the company can deal with the matter by calling a meeting. This is the principle of
CorrectThe court will not generally interfere in internal management matters or where the company can deal with the matter by calling a meeting. This is the principle of majority power.
IncorrectThe court will not generally interfere in internal management matters or where the company can deal with the matter by calling a meeting. This is the principle of majority power.
Hint
Reference Chapter:1.3.22
- Question 109 of 513
109. Question
1 pointsQID1082:Vita Milk, a listed company is undergoing structural reform, which includes a series of share placing and new debt financing arrangements. Sharon Chan is a 1% stakeholder of Vita Milk and she believes such actions are against her rights. She can
I. Apply to court for an order if she considers that the affairs of the company are being conducted in a manner prejudicial to interest of member’s.
II. Solely request the directors to call for a meeting; if the directors will not, she may do so on her own.
III. Rally 100 shareholders or 10% of the holders of the issued shares and request the Financial Secretary to appoint an investigator to look into the company’s affairs
IV. Petition to the commercial crime Bureau of Hong Kong to establish a special unit to investigate such actions.CorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(c.) Dissenting members may appeal to the court to have certain resolutions cancelled.
(e.) 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.
On the other hand,
(d) Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
Sharon cannot call a meeting on her own.IncorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(c.) Dissenting members may appeal to the court to have certain resolutions cancelled.
(e.) 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.
On the other hand,
(d) Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
Sharon cannot call a meeting on her own.Hint
Reference Chapter:1.3.23
- Question 110 of 513
110. Question
1 pointsQID1081:Mr. Ko is a major stakeholder of Yellow River Trading Limited and owns 15% of outstanding shares of Yellow River Trading Limited. Yellow River Trading Limited plans to sell its shares to Mr. Wan and a number of high net worth individuals through a shares placement at a discount. Mr. Ko believes these actions are diluting his shares without his consent, what are the possible actions that can be taken by Mr Ko?
I. Appeal to the court to cancel such actions.
II. Petition to start an AGM immediately to stop the placement.
III. Request the financial secretary to appoint an investigator into the company’s affairs
IV. Request a special hearing from the ICAC.CorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(c.) Dissenting members may appeal to the court to have certain resolutions cancelled.
(d) Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
(e.) 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.IncorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(c.) Dissenting members may appeal to the court to have certain resolutions cancelled.
(d) Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
(e.) 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.Hint
Reference Chapter:1.3.23
- Question 111 of 513
111. Question
1 pointsQID1083:To ensure there is no abuse of majority power, which of the following safeguards are provided under the NCO to protect the interests of minority shareholders?
I. Dissenting members may appeal to the court to have certain resolutions cancelled.
II. Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
III. 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.
IV. A member may apply to the court for an order if he considers that the affairs of the company are being conducted in a manner prejudicial to the interests of the members generally or of some part of the members.CorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(c.) Dissenting members may appeal to the court to have certain resolutions cancelled.
(d) Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
(e.) 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.
(f) A member may apply to the court for an order if he considers that the affairs of the company are being conducted in a manner prejudicial to the interests of the members generally or of some part of the members.IncorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(c.) Dissenting members may appeal to the court to have certain resolutions cancelled.
(d) Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
(e.) 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.
(f) A member may apply to the court for an order if he considers that the affairs of the company are being conducted in a manner prejudicial to the interests of the members generally or of some part of the members.Hint
Reference Chapter:1.3.23
- Question 112 of 513
112. Question
1 pointsQID1084:The court, upon recognizing a petition from the minority shareholder of a company, will most likely
CorrectA member may apply to the court for an order if he considers that the affairs of the company are being conducted in a manner prejudicial to the interests of the members generally or of some part of the members.
IncorrectA member may apply to the court for an order if he considers that the affairs of the company are being conducted in a manner prejudicial to the interests of the members generally or of some part of the members.
Hint
Reference Chapter:1.3.23
- Question 113 of 513
113. Question
1 pointsQID1079:To ensure there is no abuse of majority power, which of the following safeguards are provided under the NCO to protect the interests of minority shareholders?
I. Dissenting members may appeal to the court to have certain resolutions cancelled.
II. Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
III. 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.
IV. A member may petition for a winding up.CorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(c.) Dissenting members may appeal to the court to have certain resolutions cancelled.
(d) Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
(e.) 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.
(g) A member may petition for a winding up.IncorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(c.) Dissenting members may appeal to the court to have certain resolutions cancelled.
(d) Members with 5% of the paid-up capital which carries voting rights may request the directors to call a meeting; if the directors will not, the members may do so.
(e.) 100 members or 10% of the holders of the issued shares may ask the Financial Secretary to appoint an investigator into the company’s affairs.
(g) A member may petition for a winding up.Hint
Reference Chapter:1.3.23
- Question 114 of 513
114. Question
1 pointsQID1078:Which of the following are safeguards provided under the NCO to protect the interest of minority shareholders?
I. The requirement of passing a special resolution for matters of great significance.
II. Court sanctions where the decision of the company will directly affect creditors.
III. Dissenting members may appeal to the court to have certain resolutions cancelled.
IV. A member may petition for a winding upCorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(a) As seen in section 3.17 above, a special resolution is required for certain matters.
(b) Court sanction is required where the decision of the company will directly affect creditors.
© Dissenting members may appeal to the court to have certain resolutions cancelled.
(g) A member may petition for a winding up.IncorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(a) As seen in section 3.17 above, a special resolution is required for certain matters.
(b) Court sanction is required where the decision of the company will directly affect creditors.
© Dissenting members may appeal to the court to have certain resolutions cancelled.
(g) A member may petition for a winding up.Hint
Reference Chapter:1.3.23
- Question 115 of 513
115. Question
1 pointsQID1080:Mr. Wan is a shareholder of Vita Milk, a company listed on the SEHK. Recently, Vita Milk issued a large number of convertible bonds without legitimate reasons. Mr. Wan believes that he can petition against such actions. Where and to whom should Mr Wan file a petition?
CorrectDissenting members may appeal to the court to have certain resolutions cancelled.
IncorrectDissenting members may appeal to the court to have certain resolutions cancelled.
Hint
Reference Chapter:1.3.23
- Question 116 of 513
116. Question
1 pointsQID1085:The court may NOT intervene to allow an individual to bring an action
CorrectThe court may intervene to allow an individual member or members to bring an action:
(a) to enforce some personal rights (a personal action);
(b) where a right has been infringed which affects all or a number of members in a similar way (a joint action); or
(c) on behalf of the company where misconduct has been committed against the company, for example by a director of the company or a third party (a derivative action).IncorrectThe court may intervene to allow an individual member or members to bring an action:
(a) to enforce some personal rights (a personal action);
(b) where a right has been infringed which affects all or a number of members in a similar way (a joint action); or
(c) on behalf of the company where misconduct has been committed against the company, for example by a director of the company or a third party (a derivative action).Hint
Reference Chapter:1.3.24
- Question 117 of 513
117. Question
1 pointsQID1087:Which of the following descriptions is an accurate representation of director under the NCO?
CorrectThe NCO merely defines a director as including a person who occupies the position of director, by whatever name he is called. The NCO itself refers very little to directors but there is more about them in Companies (Model Articles) Notice. The NCO says that every company (not being a private company) must have at least two directors (s. 453, NCO) and every private company must have at least one director (s. 454, NCO).
IncorrectThe NCO merely defines a director as including a person who occupies the position of director, by whatever name he is called. The NCO itself refers very little to directors but there is more about them in Companies (Model Articles) Notice. The NCO says that every company (not being a private company) must have at least two directors (s. 453, NCO) and every private company must have at least one director (s. 454, NCO).
Hint
Reference Chapter:1.3.25
- Question 118 of 513
118. Question
1 pointsQID1086:Which of the following descriptions are accurate representations of director under the NCO?
I. A director is a person who occupies the position of director and bears whatever title.
II. Guarantee Companies and Public Companies must have at least two directors.
III. Private Companies must have at least one director.
IV. Directors are appointed by the members acting in general meeting.CorrectThe NCO merely defines a director as including a person who occupies the position of director, by whatever name he is called. The NCO itself refers very little to directors but there is more about them in Companies (Model Articles) Notice. The NCO says that every company (not being a private company) must have at least two directors (s. 453, NCO) and every private company must have at least one director (s. 454, NCO). The directors must be appointed by the members acting in general meeting.
IncorrectThe NCO merely defines a director as including a person who occupies the position of director, by whatever name he is called. The NCO itself refers very little to directors but there is more about them in Companies (Model Articles) Notice. The NCO says that every company (not being a private company) must have at least two directors (s. 453, NCO) and every private company must have at least one director (s. 454, NCO). The directors must be appointed by the members acting in general meeting.
Hint
Reference Chapter:1.3.25
- Question 119 of 513
119. Question
1 pointsQID2686:Under the company ordinance regarding directors of a company, which of the following is true?
CorrectEach private company must have a least one director who is a natural person
IncorrectEach private company must have a least one director who is a natural person
Hint
Reference Chapter:1.3.26
- Question 120 of 513
120. Question
1 pointsQID1088:Every private company is required to have at least one director who is
CorrectEvery private company (other than one within the same group as a listed company) is required to have at least one director who is a natural person.
IncorrectEvery private company (other than one within the same group as a listed company) is required to have at least one director who is a natural person.
Hint
Reference Chapter:1.3.26
- Question 121 of 513
121. Question
1 pointsQID2579:Which of the following is correct based on the NCO regarding director(s) of private companies?
CorrectEvery private company is required to have at least one director, and at least one director must be a natural person.
IncorrectEvery private company is required to have at least one director, and at least one director must be a natural person.
Hint
Reference Chapter:1.3.26
- Question 122 of 513
122. Question
1 pointsQID147:Which of the following individuals is a shadow director?
CorrectShadow directors are “persons in accordance with whose directions or instructions (excluding advice given in a professional capacity) the directors, or a majority of the directors, of a body corporate are accustomed to act”.
IncorrectShadow directors are “persons in accordance with whose directions or instructions (excluding advice given in a professional capacity) the directors, or a majority of the directors, of a body corporate are accustomed to act”.
Hint
Reference Chapter:1.3.27
- Question 123 of 513
123. Question
1 pointsQID1089:Which of the following is an accurate representation of shadow directors?
CorrectShadow directors are “persons in accordance with whose directions or instructions (excluding advice given in a professional capacity) the directors, or a majority of the directors, of a body corporate are accustomed to act”.
IncorrectShadow directors are “persons in accordance with whose directions or instructions (excluding advice given in a professional capacity) the directors, or a majority of the directors, of a body corporate are accustomed to act”.
Hint
Reference Chapter:1.3.27
- Question 124 of 513
124. Question
1 pointsQID1091:Which of the following are officers of a company under the CO?
I. Managers
II. Company Secretary
III. Major Shareholders
IV. DirectorsCorrectAn officer, according to the NCO, includes a director, manager or company secretary.
IncorrectAn officer, according to the NCO, includes a director, manager or company secretary.
Hint
Reference Chapter:1.3.28
- Question 125 of 513
125. Question
1 pointsQID1092:Which of the following persons are not qualified to serve as a director?
I. Persons that are under the age of 18.
II. Persons that are undischarged bankrupts.
III. Persons disqualified by court.
IV. Persons who do not satisfy the statutory net worth requirement.CorrectPersons to be appointed directors must meet the following requirements:
(a) They must be at least 18 years of age.
(b) They must not be undischarged bankrupts.
(c.) They must not be disqualified by court order.IncorrectPersons to be appointed directors must meet the following requirements:
(a) They must be at least 18 years of age.
(b) They must not be undischarged bankrupts.
(c.) They must not be disqualified by court order.Hint
Reference Chapter:1.3.29
- Question 126 of 513
126. Question
1 pointsQID1093:Which of the following are principal grounds that a court may disqualify a person from becoming a director?
I. Conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies
II. Persistent default in relation to the NCO or in acting as a liquidator or receiver
III. Fraud in relation to company matters or fraudulent trading
IV. A finding of being unfit during directorship of an insolvent company.CorrectPersons to be appointed directors must meet the following requirements:
(c.) They must not be disqualified by court order.
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 3.5, Topic 7, which describes disqualification orders made by the Market Misconduct Tribunal (“MMT”) preventing persons committing market misconduct from being directors of companies).IncorrectPersons to be appointed directors must meet the following requirements:
(c.) They must not be disqualified by court order.
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 3.5, Topic 7, which describes disqualification orders made by the Market Misconduct Tribunal (“MMT”) preventing persons committing market misconduct from being directors of companies).Hint
Reference Chapter:1.3.29
- Question 127 of 513
127. Question
1 pointsQID1094:Which of the following criteria must be met before a person can be appointed as a director?
I. Must be at least 18 years of age.
II. Must not be undischarged bankrupts.
III. Must not be disqualified by court order.
IV. Must not be a shareholder of a liquidated company.CorrectPersons to be appointed directors must meet the following requirements:
(a) They must be at least 18 years of age.
(b) They must not be undischarged bankrupts.
(c.) They must not be disqualified by court order.IncorrectPersons to be appointed directors must meet the following requirements:
(a) They must be at least 18 years of age.
(b) They must not be undischarged bankrupts.
(c.) They must not be disqualified by court order.Hint
Reference Chapter:1.3.29
- Question 128 of 513
128. Question
1 pointsQID148:Which of the following actions may result in disqualification as director by court order?
I. Ms. Chung was found to be in persistent default in relation to the New Companies Ordinance or in acting as a liquidator or receiver.
II. Mr. Tse had committed fraud in relation to minor company matters including the preparation of false accounts.
III. Ms. Wang served as a director of an insolvent company last year. The company was liquidated due to poor management of other directors.
IV. Mr. Ng was convicted of an indictable offence for fraud or dishonesty or relating to forming or operating companies.CorrectPersons to be appointed directors must meet the following requirements:
(c) They must not be disqualified by court order; the four principal grounds for such an order being:
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 2.5, Topic 9, which describes disqualification orders made by the MMT preventing persons committing market misconduct from being directors of companies).IncorrectPersons to be appointed directors must meet the following requirements:
(c) They must not be disqualified by court order; the four principal grounds for such an order being:
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 2.5, Topic 9, which describes disqualification orders made by the MMT preventing persons committing market misconduct from being directors of companies).Hint
Reference Chapter:1.3.29
- Question 129 of 513
129. Question
1 pointsQID1090:Vita Milk is a private company engaging in dairy products trading, which of the following individual can act as a director of Vita Milk?
CorrectPersons to be appointed directors must meet the following requirements:
(a) They must be at least 18 years of age.
(b) They must not be undischarged bankrupts.
(c.) They must not be disqualified by court order.
There is Mr. Chan only who satisfies all the conditions above.IncorrectPersons to be appointed directors must meet the following requirements:
(a) They must be at least 18 years of age.
(b) They must not be undischarged bankrupts.
(c.) They must not be disqualified by court order.
There is Mr. Chan only who satisfies all the conditions above.Hint
Reference Chapter:1.3.29
- Question 130 of 513
130. Question
1 pointsQID1096:What are the necessary conditions for becoming a director in Hong Kong?
I. Be 18 years old and above.
II. Must not be an undischarged bankrupt.
III. Must not be disqualified by court order.
IV. Be a director of a recently wound up company.CorrectPersons to be appointed directors must meet the following requirements:
(a) They must be at least 18 years of age.
(b) They must not be undischarged bankrupts.
(c.) They must not be disqualified by court order.IncorrectPersons to be appointed directors must meet the following requirements:
(a) They must be at least 18 years of age.
(b) They must not be undischarged bankrupts.
(c.) They must not be disqualified by court order.Hint
Reference Chapter:1.3.29
- Question 131 of 513
131. Question
1 pointsQID149:Which of the following are potential barriers of becoming a director of a company?
I. Anyone aged 21 or below
II. Undischarged bankrupts
III. Persistent default in relation to the NCO
IV. A finding of being unfit during directorship of an insolvent companyCorrectPersons to be appointed directors must meet the following requirements:
© They must not be disqualified by court order; the four principal grounds for such an order being:
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 2.5, Topic 9, which describes disqualification orders made by the MMT preventing persons committing market misconduct from being directors of companies).IncorrectPersons to be appointed directors must meet the following requirements:
© They must not be disqualified by court order; the four principal grounds for such an order being:
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 2.5, Topic 9, which describes disqualification orders made by the MMT preventing persons committing market misconduct from being directors of companies).Hint
Reference Chapter:1.3.29
- Question 132 of 513
132. Question
1 pointsQID1095:Which of the following condition does not result in being disqualified by court order and the person is able to act as a director of a company?
CorrectPersons to be appointed directors must meet the following requirements:
(c.) They must not be disqualified by court order.
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 3.5, Topic 7, which describes disqualification orders made by the Market Misconduct Tribunal (“MMT”) preventing persons committing market misconduct from being directors of companies).IncorrectPersons to be appointed directors must meet the following requirements:
(c.) They must not be disqualified by court order.
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 3.5, Topic 7, which describes disqualification orders made by the Market Misconduct Tribunal (“MMT”) preventing persons committing market misconduct from being directors of companies).Hint
Reference Chapter:1.3.29
- Question 133 of 513
133. Question
1 pointsQID774:Which of the following descriptions about a limited company is NOT correct?
CorrectA company is a legal entity distinct from its members. It is a legal person and can make contracts, take legal action, sue and be sued, own property and commit crimes and torts. It also has perpetual succession and will only cease to exist if it is dissolved. It can be a limited company, the normal form of most companies, where the liability of its members is limited.
Answer A is not included in this definition.IncorrectA company is a legal entity distinct from its members. It is a legal person and can make contracts, take legal action, sue and be sued, own property and commit crimes and torts. It also has perpetual succession and will only cease to exist if it is dissolved. It can be a limited company, the normal form of most companies, where the liability of its members is limited.
Answer A is not included in this definition.Hint
Reference Chapter:1.3.3
- Question 134 of 513
134. Question
1 pointsQID1040:Which of the following descriptions about the New Companies Ordinance are correct?
I. A company is a legal entity distinct from its members and is a legal person.
II. The company can make contracts.
III. The company can be sued.
IV. The company can be involved in crime and torts.CorrectA company is a legal entity distinct from its members. It is a legal person and can make contracts, take legal action, sue and be sued, own property and commit crimes and torts.
IncorrectA company is a legal entity distinct from its members. It is a legal person and can make contracts, take legal action, sue and be sued, own property and commit crimes and torts.
Hint
Reference Chapter:1.3.3
- Question 135 of 513
135. Question
1 pointsQID1041:Which of the following descriptions of a company is NOT correct under the NCO?
CorrectA company can be a limited company, the normal form of most companies, where the liability of its members is limited.
IncorrectA company can be a limited company, the normal form of most companies, where the liability of its members is limited.
Hint
Reference Chapter:1.3.3
- Question 136 of 513
136. Question
1 pointsQID134:Which of the following descriptions about companies are correct?
I. An entity that is independent of its members (shareholder).
II. An entity that can sue.
III. An entity that can be sued.
IV. A company can appoint legal representatives.CorrectA company is a legal entity distinct from its members. It is a legal person and can make contracts, take legal action, sue and be sued, own property and commit crimes and torts. It also has perpetual succession and will only cease to exist if it is dissolved. It can be a limited company, the normal form of most companies, where the liability of its members is limited.
IncorrectA company is a legal entity distinct from its members. It is a legal person and can make contracts, take legal action, sue and be sued, own property and commit crimes and torts. It also has perpetual succession and will only cease to exist if it is dissolved. It can be a limited company, the normal form of most companies, where the liability of its members is limited.
Hint
Reference Chapter:1.3.3
- Question 137 of 513
137. Question
1 pointsQID1098:Shareholders can interfere and override management actions of the directors if:
I. the directors are unwilling to act
II. the directors’ actions result in operating losses
III. The directors are seeking approval to act beyond their powers
IV. The directors are acting in breach of their fiduciary dutiesCorrectDirectors in these circumstances are not bound by resolutions passed by members in a general meeting, nor can the members override future management actions of the directors. Members in general meeting may only intervene in the management if the directors are:
(a) unwilling to act;
(b) seeking approval to act beyond their powers (the members can approve such acts by ordinary resolution); or
(c.) acting in breach of their fiduciary duties (the members may ratify such breaches in general meeting).IncorrectDirectors in these circumstances are not bound by resolutions passed by members in a general meeting, nor can the members override future management actions of the directors. Members in general meeting may only intervene in the management if the directors are:
(a) unwilling to act;
(b) seeking approval to act beyond their powers (the members can approve such acts by ordinary resolution); or
(c.) acting in breach of their fiduciary duties (the members may ratify such breaches in general meeting).Hint
Reference Chapter:1.3.31
- Question 138 of 513
138. Question
1 pointsQID884:Members in general meeting may only intervene in the management if the directors are
I. Unwilling to act on behalf of the directorsII. Seeking approval to act beyond their powers
III. Acting in breach of their fiduciary duties
IV. Being removed decided by the members
CorrectMembers in general meeting may only intervene in the management if the directors are:
(a) unwilling to act;
(b) seeking approval to act beyond their powers (the members can approve such acts by ordinary resolution); or
(c.) acting in breach of their fiduciary duties (the members may ratify such breaches in general meeting).IncorrectMembers in general meeting may only intervene in the management if the directors are:
(a) unwilling to act;
(b) seeking approval to act beyond their powers (the members can approve such acts by ordinary resolution); or
(c.) acting in breach of their fiduciary duties (the members may ratify such breaches in general meeting).Hint
Reference Chapter:1.3.31
- Question 139 of 513
139. Question
1 pointsQID1097:Generally speaking, directors are not bound by resolutions passed by members in a general meeting, nor can the members override future management actions of the directors. Members in general meeting may NOT intervene in the management if:
CorrectDirectors in these circumstances are not bound by resolutions passed by members in a general meeting, nor can the members override future management actions of the directors. Members in general meeting may only intervene in the management if the directors are:
(a) unwilling to act;
(b) seeking approval to act beyond their powers (the members can approve such acts by ordinary resolution); or
(c.) acting in breach of their fiduciary duties (the members may ratify such breaches in general meeting).IncorrectDirectors in these circumstances are not bound by resolutions passed by members in a general meeting, nor can the members override future management actions of the directors. Members in general meeting may only intervene in the management if the directors are:
(a) unwilling to act;
(b) seeking approval to act beyond their powers (the members can approve such acts by ordinary resolution); or
(c.) acting in breach of their fiduciary duties (the members may ratify such breaches in general meeting).Hint
Reference Chapter:1.3.31
- Question 140 of 513
140. Question
1 pointsQID1099:Under common law, how should directors act and make decisions?
I. Exercise their power collaboratively by having meetings with a proper quorum, passing resolutions and have to be minuted.
II. Directors can act independently if the articles of association allow the board to delegate its power to its individual directors, to committees and to the managing director.
III. For private companies, a written record of a decision made by the sole director of a private company will prevail.CorrectUnder common law, directors should exercise their powers as a group by having meetings (board of directors’ meetings or board meetings) with a proper quorum, passing resolutions that have to be minuted. This can be avoided as usually the company’s articles of association allow the board to delegate its powers to individual directors, to committees and to the managing director. Under s. 483, NCO, a written record of a decision made by the sole director of a private company shall be sufficient evidence of that decision.
IncorrectUnder common law, directors should exercise their powers as a group by having meetings (board of directors’ meetings or board meetings) with a proper quorum, passing resolutions that have to be minuted. This can be avoided as usually the company’s articles of association allow the board to delegate its powers to individual directors, to committees and to the managing director. Under s. 483, NCO, a written record of a decision made by the sole director of a private company shall be sufficient evidence of that decision.
Hint
Reference Chapter:1.3.32
- Question 141 of 513
141. Question
1 pointsQID1101:Under common law, the directors have a fiduciary relationship with the company and they must:
I. Act with utmost good faith towards the company.
II. Act bona fide for the benefit of the company.
III. Exercise their powers for their proper purpose.
IV. Not allow any conflict of interest between their duties as directors and their personal interests.CorrectThe directors have a fiduciary relationship with the company. They must act with the utmost good faith towards their principal, i.e. the company; and:
(a) act bona fide for the benefit of the company;
(b) exercise their powers for their proper purpose; and
(c.) not allow any conflict of interest between their duties as directors and their personal interests.IncorrectThe directors have a fiduciary relationship with the company. They must act with the utmost good faith towards their principal, i.e. the company; and:
(a) act bona fide for the benefit of the company;
(b) exercise their powers for their proper purpose; and
(c.) not allow any conflict of interest between their duties as directors and their personal interests.Hint
Reference Chapter:1.3.33
- Question 142 of 513
142. Question
1 pointsQID1100:There is a fiduciary relationship between the directors of a company and the company itself, the directors should act with the utmost good faith towards their principals, which include which of the followings?
I. Determine appropriate remuneration for its directorship through a resolution.
II. Act bona fide for the benefit of the company;
III. Exercise their powers for their proper purpose; and
IV. Not allow any conflict of interest between their duties as directors and their personal interests.CorrectThe directors have a fiduciary relationship with the company. They must act with the utmost good faith towards their principal, i.e. the company; and:
(a) act bona fide for the benefit of the company;
(b) exercise their powers for their proper purpose; and
(c.) not allow any conflict of interest between their duties as directors and their personal interests.IncorrectThe directors have a fiduciary relationship with the company. They must act with the utmost good faith towards their principal, i.e. the company; and:
(a) act bona fide for the benefit of the company;
(b) exercise their powers for their proper purpose; and
(c.) not allow any conflict of interest between their duties as directors and their personal interests.Hint
Reference Chapter:1.3.33
- Question 143 of 513
143. Question
1 pointsQID151:Which of the following are fiduciary duties of the directors?
I. Act bona fide for the benefit of the company
II. Exercise their powers for their proper purpose
III. Not allow any conflict of interest between their duties as directors and their personal interests
IV. Not allow any conflict of interest between their duties as directors and the companies interestsCorrectThe directors have a fiduciary relationship with the company. They must act with the utmost
good faith towards their principal, i.e. the company; and:
(a) act bona fide for the benefit of the company;
(b) exercise their powers for their proper purpose; and
(c) not allow any conflict of interest between their duties as directors and their personal interests.IncorrectThe directors have a fiduciary relationship with the company. They must act with the utmost
good faith towards their principal, i.e. the company; and:
(a) act bona fide for the benefit of the company;
(b) exercise their powers for their proper purpose; and
(c) not allow any conflict of interest between their duties as directors and their personal interests.Hint
Reference Chapter:1.3.33
- Question 144 of 513
144. Question
1 pointsQID1102:Under common law, although the directors have a fiduciary relationship with the company, this does not mean they have to:
CorrectThe directors have a fiduciary relationship with the company. They must act with the utmost good faith towards their principal, i.e. the company; and:
(a) act bona fide for the benefit of the company;
(b) exercise their powers for their proper purpose; and
(c.) not allow any conflict of interest between their duties as directors and their personal interests.IncorrectThe directors have a fiduciary relationship with the company. They must act with the utmost good faith towards their principal, i.e. the company; and:
(a) act bona fide for the benefit of the company;
(b) exercise their powers for their proper purpose; and
(c.) not allow any conflict of interest between their duties as directors and their personal interests.Hint
Reference Chapter:1.3.33
- Question 145 of 513
145. Question
1 pointsQID1104:The NCO imposes on director’s requirement to exercise reasonable care, skill and diligence. To determine whether a director of the company has breached the duty of care, skill and diligence owed by him to the company, his conduct is compared to the standard that would be exercised by a reasonably diligent person with:
I. The general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company (objective test)
II. The general knowledge, skill and experience that the director has (subjective test)
III. The general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company (subjective test)
IV. The general knowledge, skill and experience that the director has (objective test)CorrectTo determine whether a director of the company has breached the duty of care, skill and diligence owed by him to the company, his conduct is compared to the standard that would be exercised by a reasonably diligent person with:
(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company (objective test); and
(b) the general knowledge, skill and experience that the director has (subjective test).IncorrectTo determine whether a director of the company has breached the duty of care, skill and diligence owed by him to the company, his conduct is compared to the standard that would be exercised by a reasonably diligent person with:
(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company (objective test); and
(b) the general knowledge, skill and experience that the director has (subjective test).Hint
Reference Chapter:1.3.34
- Question 146 of 513
146. Question
1 pointsQID152:To determine whether a director is diligent, skilful and accountable to the company, which of the following methods are utilized?
I. Qualifying Exam
II. Objective Test
III. Subjective Test
IV. Continuous Professional AssessmentCorrectThe NCO provisions set out a mixed objective and subjective test in the determination of the standard of directors’ duty of care, skill and diligence. To determine whether a director of the company has breached the duty of care, skill and diligence owed by him to the company, his conduct is compared to the standard that would be exercised by a reasonably diligent person.
IncorrectThe NCO provisions set out a mixed objective and subjective test in the determination of the standard of directors’ duty of care, skill and diligence. To determine whether a director of the company has breached the duty of care, skill and diligence owed by him to the company, his conduct is compared to the standard that would be exercised by a reasonably diligent person.
Hint
Reference Chapter:1.3.34
- Question 147 of 513
147. Question
1 pointsQID1103:A director is expected to perform under the following principles with the exception of
CorrectTo determine whether a director of the company has breached the duty of care, skill and diligence owed by him to the company, his conduct is compared to the standard that would be exercised by a reasonably diligent person with:
(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company (objective test); and
(b) the general knowledge, skill and experience that the director has (subjective test).IncorrectTo determine whether a director of the company has breached the duty of care, skill and diligence owed by him to the company, his conduct is compared to the standard that would be exercised by a reasonably diligent person with:
(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company (objective test); and
(b) the general knowledge, skill and experience that the director has (subjective test).Hint
Reference Chapter:1.3.34
- Question 148 of 513
148. Question
1 pointsQID153:Miss Ko, an employee of Hai Nei Company, who commits an act of market misconduct while handling the company’s business, is being charged. In which of the following situation would Mr. Wan, the director of Hoi Nei Company be liable and accountable?
CorrectDirectors are additionally subject to other, more specific duties
imposed upon them by particular statutory provisions. For example, Twelfth Schedule, the CWUMPO provides for a fine and/or imprisonment for a director that authorises the issue of
a prospectus containing an untrue statement. Where a director breaches strict requirements of the NCO, such as failing to prepare financial statements when required to do so, liability
will also arise. It is therefore important that directors understand both the general and the specific responsibilities imposed upon them, and how to properly discharge them, in order to fulfil their roles as directors and to address their exposure to directors’ liabilities.IncorrectDirectors are additionally subject to other, more specific duties
imposed upon them by particular statutory provisions. For example, Twelfth Schedule, the CWUMPO provides for a fine and/or imprisonment for a director that authorises the issue of
a prospectus containing an untrue statement. Where a director breaches strict requirements of the NCO, such as failing to prepare financial statements when required to do so, liability
will also arise. It is therefore important that directors understand both the general and the specific responsibilities imposed upon them, and how to properly discharge them, in order to fulfil their roles as directors and to address their exposure to directors’ liabilities.Hint
Reference Chapter:1.3.35
- Question 149 of 513
149. Question
1 pointsQID1105:According to the NCO which has defined the statutory liabilities of directors, directors may incur liabilities due to:
I. Breaches of fiduciary duties.
II. Failure to give continuous attention to the affairs of the company.
III. Failure to act with due care and skill.
IV. Breaches of statutory duties.CorrectWhere a director breaches strict requirements of the NCO,
such as failing to prepare financial statements when required to do so, liability will also arise. It is therefore important that directors understand both the general and the specific
responsibilities imposed upon them, and how to properly discharge them, in order to fulfil their roles as directors and to address their exposure to directors’ liabilities.
Any ratification by a company of conduct by a director in relation to negligence, default, breach of duty or breach of trust in relation to the company must be approved by resolution of the members of the companyIncorrectWhere a director breaches strict requirements of the NCO,
such as failing to prepare financial statements when required to do so, liability will also arise. It is therefore important that directors understand both the general and the specific
responsibilities imposed upon them, and how to properly discharge them, in order to fulfil their roles as directors and to address their exposure to directors’ liabilities.
Any ratification by a company of conduct by a director in relation to negligence, default, breach of duty or breach of trust in relation to the company must be approved by resolution of the members of the companyHint
Reference Chapter:1.3.35&37
- Question 150 of 513
150. Question
1 pointsQID885:Mr. Ko is a shareholder of Yellow River Trading. He believes Mr. David Wan, a director of Yellow River Trading, is breaching his statutory duties in recent electronics trading transactions. What are the actions that Mr Ko can take?
I. Obtain an injunction stopping such action.
II. If Mr. Wan has not disclosed a personal interest in a contract he has made on behalf of the company, the contract may be avoided at the option of the company.
III. All directors who have acted in breach of their duties will be jointly and severally liable to the company for damages.
IV. If they have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.CorrectThe company may have the following remedies for a breach of duty by directors:
(a) It may obtain an injunction stopping such action.
(b) If the directors have not disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company, i.e. rescission.
(c.) All directors who have acted in breach of their duties will be jointly and severally liable to the company for damages.
(d) If they have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.IncorrectThe company may have the following remedies for a breach of duty by directors:
(a) It may obtain an injunction stopping such action.
(b) If the directors have not disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company, i.e. rescission.
(c.) All directors who have acted in breach of their duties will be jointly and severally liable to the company for damages.
(d) If they have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.Hint
Reference Chapter:1.3.36
- Question 151 of 513
151. Question
1 pointsQID886:What are the possible remedies for a breach of duty by directors?
I. It may obtain an injunction stopping such action.
II. If the directors have disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company.
III. All directors who have acted in breach of their duties will be jointly and severally liable to the company for damages.
IV. If the directors have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.CorrectThe company may have the following remedies for a breach of duty by directors:
(a) It may obtain an injunction stopping such action.
(b) If the directors have not disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company, i.e. rescission.
(c.) All directors who have acted in breach of their duties will be jointly and severally liable to the company for damages.
(d) If they have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.IncorrectThe company may have the following remedies for a breach of duty by directors:
(a) It may obtain an injunction stopping such action.
(b) If the directors have not disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company, i.e. rescission.
(c.) All directors who have acted in breach of their duties will be jointly and severally liable to the company for damages.
(d) If they have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.Hint
Reference Chapter:1.3.36
- Question 152 of 513
152. Question
1 pointsQID883:What are the possible remedies for a breach of duty by directors?
I. It may obtain an injunction stopping such action.
II. If the directors have not disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company.
III. All directors who have acted in breach of their duties will be jointly and severally liable to the company for damages.
IV. If the directors have wrongfully profited by dealing with the company’s property, the directors must account to the members for such profits.CorrectThe company may have the following remedies for a breach of duty by directors:
(a) It may obtain an injunction stopping such action.
(b) If the directors have not disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company, i.e. rescission.
(c.) All directors who have acted in breach of their duties will be jointly and severally liable to the company for damages.
(d) If they have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.IncorrectThe company may have the following remedies for a breach of duty by directors:
(a) It may obtain an injunction stopping such action.
(b) If the directors have not disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company, i.e. rescission.
(c.) All directors who have acted in breach of their duties will be jointly and severally liable to the company for damages.
(d) If they have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.Hint
Reference Chapter:1.3.36
- Question 153 of 513
153. Question
1 pointsQID159:What are possible reliefs for directors for a breach?
I. The company can obtain an injunction, request for cancellation of contract or sue for damages
II. The company can submit the case to the SFC Fiduciary Committee.
III. The directors who are in breach should be accountable to the company for profits and damages.
IV. The directors who are in breach should be accountable to the company for profits and damages in addition to the interest owed.CorrectThe company may have the following remedies for a breach of duty by directors:
(a) It may obtain an injunction stopping such action.
(b) If the directors have not disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company, i.e. rescission.
(d) If they have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.IncorrectThe company may have the following remedies for a breach of duty by directors:
(a) It may obtain an injunction stopping such action.
(b) If the directors have not disclosed a personal interest in a contract they have made on behalf of the company, the contract may be cancelled at the option of the company, i.e. rescission.
(d) If they have wrongfully profited by dealing with the company’s property, the directors must account to the company for such profits.Hint
Reference Chapter:1.3.36
- Question 154 of 513
154. Question
1 pointsQID154:Millionaire Securities has recently been convicted of market misconduct. Millionaire Securities’ director – Mr. Ip, was unaware of the illegal acts and had tried to monitor and regulate the company’s operations to the best of his abilities. Is Mr. Ip guilty under such circumstance?
CorrectThe court may give relief to a director or directors if they have, in causing the breach, been shown to have acted honestly and reasonably.
IncorrectThe court may give relief to a director or directors if they have, in causing the breach, been shown to have acted honestly and reasonably.
Hint
Reference Chapter:1.3.38
- Question 155 of 513
155. Question
1 pointsQID1605:Mr. Liu is the only shareholder of Vitamilk and the director of Millionaire Financial Investment. Another director of Millionaire Financial Investment suggested to acquire some of Vitamilk real estates at the board of directors meeting. Does Mr. Liu have to declare to other directors the nature and extent of that interest?
CorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.IncorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.Hint
Reference Chapter:1.3.39
- Question 156 of 513
156. Question
1 pointsQID1108:Yellow River Trading is prepared to acquire a well know local website – Opennoodles.com. The director of Yellow River Trading, Mr. Wan, is the spouse of the owner of Opennoodles.com. Mr. Wan should:
I. Disclose his interest in the general meeting.
II. Take no action because it is his spouse’s interests that are involved in the deal
III. Ensure that the deal is proper, fair and in the interest of Yellow River Trading.
IV. Resign immediately.CorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.IncorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.Hint
Reference Chapter:1.3.39
- Question 157 of 513
157. Question
1 pointsQID155:If a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, what actions should he take?
I. Declare the nature and extent of the interest in conflict as soon as reasonably practicable.
II. No declaration is required if the transaction or arrangement was taken place outside of Hong Kong,
III. Declare the nature and extent of that interest before a transaction or arrangement has been entered.
IV. No actions are required if the transaction or arrangement has not yet taken place.CorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.IncorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.Hint
Reference Chapter:1.3.39
- Question 158 of 513
158. Question
1 pointsQID795:Mr. Ko is a director of a phone book printing company -Kaohsiung Printing. Mr Ko and Mr Wan jointly own British Construction Bank and are both directors of British Construction Bank. Kaohsiung Printing is going to print a lot of phone books and calendars for British Construction Bank as souvenirs for customers. Should Mr. Ko disclose his interest in Kaohsiung Printing to the board of directors of British Construction Bank?
CorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.IncorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.Hint
Reference Chapter:1.3.39
- Question 159 of 513
159. Question
1 pointsQID1107:If a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare the nature and extent of that interest:
I. Before the transaction and arrangement has been made.
II. After the transaction and arrangement has been made.
III. As soon as he can reasonably foresee such conflict of interest.
IV. As soon as the annual audit requires him to do so.CorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.IncorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.Hint
Reference Chapter:1.3.39
- Question 160 of 513
160. Question
1 pointsQID1106:If a director (or his connected entity) can reasonably foresee direct or indirect interest in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must:
I. For transaction or arrangements that has been entered, he must declare the nature and extent of that interest to other directors.
II. For transaction or arrangements that has been entered, he must declare the nature and extent of that interest to the members.
III. For transaction or arrangements being proposed, he must declare the nature and extent of that interest to other directors.
IV. For transaction or arrangements being proposed, he must declare the nature and extent of that interest to the members.”CorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.IncorrectIf a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(a) as soon as reasonably practicable for a transaction or arrangement that has been entered; or
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.Hint
Reference Chapter:1.3.39
- Question 161 of 513
161. Question
1 pointsQID778:In Hong Kong, registered companies can be classified into which of the following categories?
I. Private Company
II. Public Company
III. Non-Profit Company
IV. Guarantee CompanyCorrectUnder the NCO, a new category of company is added and now every Hong Kong company falls into one of three categories: private companies, public companies and guarantee companies.
IncorrectUnder the NCO, a new category of company is added and now every Hong Kong company falls into one of three categories: private companies, public companies and guarantee companies.
Hint
Reference Chapter:1.3.4
- Question 162 of 513
162. Question
1 pointsQID1074:Under the New Companies Ordinance, which of the following are correct categorization of companies?
I. Private Companies
II. Public Companies
III. Listed Companies
IV. Guarantee CompaniesCorrectUnder the NCO, a new category of company is added and now every Hong Kong company falls into one of 3 categories: private companies, public companies and guarantee companies.
IncorrectUnder the NCO, a new category of company is added and now every Hong Kong company falls into one of 3 categories: private companies, public companies and guarantee companies.
Hint
Reference Chapter:1.3.4
- Question 163 of 513
163. Question
1 pointsQID1110:Which of the following are correct descriptions of directors’ remuneration?
I. Authority for payment is provided in the articles
II. If a director holds some other position, such as Managing Director or an executive director, he can have a service contract parallel to his director’s remuneration.
III. The remuneration must include a set of stock options.
IV. The director of a company should treat his directorship as his sole profession.CorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
IncorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
Hint
Reference Chapter:1.3.40
- Question 164 of 513
164. Question
1 pointsQID1109:Who determines the directors’ remuneration?
CorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting.
IncorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting.
Hint
Reference Chapter:1.3.40
- Question 165 of 513
165. Question
1 pointsQID1111:Which of the following descriptions about directors’ remuneration are correct?
I. If the director is also having administrative roles, he does not need to have a separate service with the company. All directors’ fees should include all of his services.
II. The articles of association have designated the powers of determining such remuneration.
III. The articles of association states that director remuneration should be determined by the members in the general meeting.
IV. Directors remuneration usually covers directors’ fees.CorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
IncorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
Hint
Reference Chapter:1.3.40
- Question 166 of 513
166. Question
1 pointsQID156:Which of the following description about director remuneration is correct?
CorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
IncorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
Hint
Reference Chapter:1.3.40
- Question 167 of 513
167. Question
1 pointsQID157:In general, remuneration of which of the following individuals is determined by the company in general meeting?
CorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
IncorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
Hint
Reference Chapter:1.3.40
- Question 168 of 513
168. Question
1 pointsQID158:According to the provision of the model articles of association in the Companies (Model Articles) Notice, how should the remuneration of directors be determined?
CorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
IncorrectAuthority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.
Hint
Reference Chapter:1.3.40
- Question 169 of 513
169. Question
1 pointsQID1178:Mr. David Wan and his spouse are investing in real estate under the name of Yangtze River Investment and he is trying to apply for a loan for assignment. Mr. Wan and his spouse are the only directors and shareholders of Yangtze River Investment. Mr. Wan is also a director of a well-known electronics trading company, Yellow River Trading. To apply for the loan, Mr. Wan can:
I. Apply for a personal loan by assigning Yellow River Trading as the Guarantor.
II. Apply for a personal loan by assigning the subsidiaries of Yellow River Trading as the Guarantor.
III. Apply for a loan on behalf of Yangtze River Investment from Yellow River Trading.
IV. Apply for a personal loan using his director remuneration from Yellow River Trading as collateral.CorrectA company cannot directly or indirectly:
(a) make a loan to a director of the company or a body corporate controlled by such a director; or
(b) enter into a guarantee or provide security for such a loan
without the approval of its members.IncorrectA company cannot directly or indirectly:
(a) make a loan to a director of the company or a body corporate controlled by such a director; or
(b) enter into a guarantee or provide security for such a loan
without the approval of its members.Hint
Reference Chapter:1.3.41
- Question 170 of 513
170. Question
1 pointsQID161:Under normal circumstances, a company cannot directly or indirectly make a loan or guarantee to a director of its holding company or a body corporate controlled by such a director. However, which of the following are exceptions?
I. Making a loan of value not exceeding 5% of the company’s net assets.
II. The loan is made with the approval of the members of the company.
III. Expenditure on defending any proceeding, or investigation or regulatory action for misconduct of a director if such expenditure has to be repaid by the director to the company when he is convicted in the proceeding or has committed misconduct.
IV. The loan is made with the approval of the SFC.CorrectThere are exceptions, such as the following:
(a) making a loan of value not exceeding 5% of the company’s net assets; and
(b) expenditure on defending any proceeding, or investigation or regulatory action for misconduct of a director if such expenditure has to be repaid by the director to the company when he is convicted in the proceeding or has committed the misconduct. Similarly, a company cannot directly or indirectly make a loan or guarantee to a director of its holding company or a body corporate controlled by such a director without the approvals
of its members and the holding companies’ members.IncorrectThere are exceptions, such as the following:
(a) making a loan of value not exceeding 5% of the company’s net assets; and
(b) expenditure on defending any proceeding, or investigation or regulatory action for misconduct of a director if such expenditure has to be repaid by the director to the company when he is convicted in the proceeding or has committed the misconduct. Similarly, a company cannot directly or indirectly make a loan or guarantee to a director of its holding company or a body corporate controlled by such a director without the approvals
of its members and the holding companies’ members.Hint
Reference Chapter:1.3.44
- Question 171 of 513
171. Question
1 pointsQID1112:Which of the following are exceptions to prohibitions on loans to a director?
I. A de minimum threshold of 5% of the net assets of the company before a transaction is subject to the restriction.
II. Expenditure in connection with defending any proceeding or investigation or regulatory action for misconduct provided that the directors has to repay the company if he is found guilty or to have committed the misconduct.
III. Expenses that are incurred by the director in the ordinary course of business.
IV. If the director is the sole owner of the company and he agrees to such arrangements.CorrectThere are exceptions, such as the following:
(a) a de minimum threshold of 5% of the net assets of the company before a transaction is subject to the restriction; and
(b) expenditure in connection with defending any proceeding or investigation or regulatory action for misconduct provided that the directors has to repay the company if he is found guilty or to have committed the misconduct.IncorrectThere are exceptions, such as the following:
(a) a de minimum threshold of 5% of the net assets of the company before a transaction is subject to the restriction; and
(b) expenditure in connection with defending any proceeding or investigation or regulatory action for misconduct provided that the directors has to repay the company if he is found guilty or to have committed the misconduct.Hint
Reference Chapter:1.3.44
- Question 172 of 513
172. Question
1 pointsQID162:Which of the following entities can appoint investigators to investigate and report on the affairs of a company if the court declares that an investigation should be carried out?
CorrectThe Financial Secretary is required to appoint inspectors to investigate and report on the affairs of a company if the court declares that an investigation should be carried out (s. 841, NCO).
IncorrectThe Financial Secretary is required to appoint inspectors to investigate and report on the affairs of a company if the court declares that an investigation should be carried out (s. 841, NCO).
Hint
Reference Chapter:1.3.46
- Question 173 of 513
173. Question
1 pointsQID1113:If the court declares that an investigation on a company’s affairs should be carried out, which of the following organization should appoint inspectors to investigate and report on the company?
CorrectThe Financial Secretary is required to appoint inspectors to investigate and report on the affairs of a company if the court declares that an investigation should be carried out (s. 841, NCO).
IncorrectThe Financial Secretary is required to appoint inspectors to investigate and report on the affairs of a company if the court declares that an investigation should be carried out (s. 841, NCO).
Hint
Reference Chapter:1.3.46
- Question 174 of 513
174. Question
1 pointsQID1660:Under which of the following circumstances can the financial secretary investigate a listed issuer?
I. To clarify the ownership of the listed issuer.
II. To clarify the controller of the listed issuer.
III. Under the request of the SEHK
IV. Under the request of a prescribed amount of shareholders.CorrectThe financial secretary investigate a listed issuer?
I. To clarify the ownership of the listed issuer.
II. To clarify the controller of the listed issuer.
III. Under the request of a prescribed amount of shareholders.IncorrectThe financial secretary investigate a listed issuer?
I. To clarify the ownership of the listed issuer.
II. To clarify the controller of the listed issuer.
III. Under the request of a prescribed amount of shareholders.Hint
Reference Chapter:1.3.47
- Question 175 of 513
175. Question
1 pointsQID1114:The Financial Secretary is required to appoint inspectors under which of the following circumstances?
I. An application is made by the specified number of members.
II. The company passed a special resolution requesting such inspections.
III. He suspects fraud in the operations or formation of the company, or oppressive conduct, or an intent to defraud creditors.
IV. He suspects the persons concerned with the formation or management of the company have been guilty of fraud or other misconduct.CorrectThe Financial Secretary may also appoint inspectors if:
(a) an application is made by the specified number of members;
(b) the company passes a special resolution requesting such appointment;
(c.) he suspects fraud in the business or formation of the company, or oppressive conduct, or an intent to defraud creditors; or
(d) he suspects the persons concerned with the formation or management of the company to have been guilty of fraud or other misconduct (ss. 840 to 841, NCO).IncorrectThe Financial Secretary may also appoint inspectors if:
(a) an application is made by the specified number of members;
(b) the company passes a special resolution requesting such appointment;
(c.) he suspects fraud in the business or formation of the company, or oppressive conduct, or an intent to defraud creditors; or
(d) he suspects the persons concerned with the formation or management of the company to have been guilty of fraud or other misconduct (ss. 840 to 841, NCO).Hint
Reference Chapter:1.3.47
- Question 176 of 513
176. Question
1 pointsQID1115:When a company is under investigation, all present and past officers and agents of the company, including bankers, solicitors and auditors, are required to:
I. Produce all books and records that they have (this includes power given to the inspector to enter premises and conduct searches)
II. Attend before the inspector when required and answer questions (on oath if so required by him)
III. Provide information to investigators, but bankers are exempted from providing information other than that relating to the company under inspection.
IV. Provide investigators with all reasonable assistance.CorrectAll present and past officers and agents of the company, including bankers, solicitors and auditors, are required to:
(a) produce all books and records that they have (this includes power given to the inspector to enter premises and conduct searches);
(b) attend before the inspector when required and answer questions (on oath if so required by him); and
© otherwise give him all reasonable assistance.IncorrectAll present and past officers and agents of the company, including bankers, solicitors and auditors, are required to:
(a) produce all books and records that they have (this includes power given to the inspector to enter premises and conduct searches);
(b) attend before the inspector when required and answer questions (on oath if so required by him); and
© otherwise give him all reasonable assistance.Hint
Reference Chapter:1.3.48
- Question 177 of 513
177. Question
1 pointsQID776:A private company is a company that:
I. Has no restrictions in rights to transfer its shares.
II. May not have more than 50 members.
III. May not offer shares to the public.
IV. Is not limited by guarantee.CorrectA private company is a company that:
(a) restricts the right to transfer its shares;
(b) may not have more than 50 members (excluding present and past employees who are members and continue to be members respectively);
© may not offer shares (or debentures) to the public; and
(d) is not limited by guarantee.IncorrectA private company is a company that:
(a) restricts the right to transfer its shares;
(b) may not have more than 50 members (excluding present and past employees who are members and continue to be members respectively);
© may not offer shares (or debentures) to the public; and
(d) is not limited by guarantee.Hint
Reference Chapter:1.3.5
- Question 178 of 513
178. Question
1 pointsQID775:Which of the following are characteristics of a private company?
I. Restrictions on the rights to transfer it shares.
II. No more than 50 share holders.
III. May not offer shares to the public.
IV. Can be bought and sold OTC on the market.CorrectA private company is a company that:
(a) restricts the right to transfer its shares;
(b) may not have more than 50 members (excluding present and past employees who are members and continue to be members respectively);
(c.) may not offer shares (or debentures) to the public; and
(d) is not limited by guarantee.IncorrectA private company is a company that:
(a) restricts the right to transfer its shares;
(b) may not have more than 50 members (excluding present and past employees who are members and continue to be members respectively);
(c.) may not offer shares (or debentures) to the public; and
(d) is not limited by guarantee.Hint
Reference Chapter:1.3.5
- Question 179 of 513
179. Question
1 pointsQID777:Which of the following restrictions about a private company is incorrect?
CorrectA private company is a company that:
(a) restricts the right to transfer its shares;
(b) may not have more than 50 members (excluding present and past employees who are members and continue to be members respectively);
© may not offer shares (or debentures) to the public; and
(d) is not limited by guarantee.
A private company doesn’t have to be guarantee companies.IncorrectA private company is a company that:
(a) restricts the right to transfer its shares;
(b) may not have more than 50 members (excluding present and past employees who are members and continue to be members respectively);
© may not offer shares (or debentures) to the public; and
(d) is not limited by guarantee.
A private company doesn’t have to be guarantee companies.Hint
Reference Chapter:1.3.5
- Question 180 of 513
180. Question
1 pointsQID136:Which of the following description about private company is correct?
I. Must have more than 50 members
II. May not offer shares to the public
III. restricts the right to transfer its share
IV. is not limited by guaranteeCorrectA private company is a company that:
(a) restricts the right to transfer its shares; members and continue to be members respectively);
(b) may not have more than 50 members (excluding present and past employees who are members and continue to be members respectively);
© may not offer shares (or debentures) to the public; and
(d) is not limited by guarantee.IncorrectA private company is a company that:
(a) restricts the right to transfer its shares; members and continue to be members respectively);
(b) may not have more than 50 members (excluding present and past employees who are members and continue to be members respectively);
© may not offer shares (or debentures) to the public; and
(d) is not limited by guarantee.Hint
Reference Chapter:1.3.5
- Question 181 of 513
181. Question
1 pointsQID1117:Which of the following descriptions about compulsory liquidation is correct?
I. This is a compulsory winding-up ordered by the court.
II. The liquidator is appointed by the court and acts under its control.
III. The liquidator is appointed through a shareholders’ meeting and acts under the control of the directors.
IV. Liquidation is passed by a special resolution.CorrectThis is a compulsory winding-up ordered by the court, and the liquidator is appointed by the court and acts under its control.
IncorrectThis is a compulsory winding-up ordered by the court, and the liquidator is appointed by the court and acts under its control.
Hint
Reference Chapter:1.3.50
- Question 182 of 513
182. Question
1 pointsQID1116:Which of the following is a reason of compulsory liquidation?
CorrectA company may be wound up by the court if:
(a) it has by special resolution resolved that it shall be wound up by the court;
(c.) it has no membersIncorrectA company may be wound up by the court if:
(a) it has by special resolution resolved that it shall be wound up by the court;
(c.) it has no membersHint
Reference Chapter:1.3.50
- Question 183 of 513
183. Question
1 pointsQID2673:The SFC are not authorised to use its power to
CorrectOnly courst can windup companies.
IncorrectOnly courst can windup companies.
Hint
Reference Chapter:1.3.51
- Question 184 of 513
184. Question
1 pointsQID1118:Which of the following is NOT a possible reason for compulsory liquidation?
CorrectA company may be wound up by the court if:
(e) the event occurs on the occurrence of which the memorandum or articles of association provides that the company is to be dissolved; or
(f) the court is of the opinion that it would be just and equitable to wind up the company. Examples are where:
(ii) the company was formed for a fraudulent purpose; or
(iii) the basis of mutual trust, understanding and confidence on which the company was
formed no longer exists.IncorrectA company may be wound up by the court if:
(e) the event occurs on the occurrence of which the memorandum or articles of association provides that the company is to be dissolved; or
(f) the court is of the opinion that it would be just and equitable to wind up the company. Examples are where:
(ii) the company was formed for a fraudulent purpose; or
(iii) the basis of mutual trust, understanding and confidence on which the company was
formed no longer exists.Hint
Reference Chapter:1.3.51
- Question 185 of 513
185. Question
1 pointsQID1119:Petitioners of compulsory liquidation may be:
I. The Official Receiver.
II. The SFC, in lieu of public interest.
III. The Chief Executive.
IV. The Registrar of Companies.CorrectThe petitioners may be:
(e) the Registrar of Companies, if the company has breached provisions of the NCO or is being carried on for an unlawful purpose;
(f) the Official Receiver, where there is already a voluntary winding up (s. 179, CWUMPO); and
(g) the SFC, if it appears desirable in the public interest (SFO gives authority to the SFC).IncorrectThe petitioners may be:
(e) the Registrar of Companies, if the company has breached provisions of the NCO or is being carried on for an unlawful purpose;
(f) the Official Receiver, where there is already a voluntary winding up (s. 179, CWUMPO); and
(g) the SFC, if it appears desirable in the public interest (SFO gives authority to the SFC).Hint
Reference Chapter:1.3.52
- Question 186 of 513
186. Question
1 pointsQID1120:Petitioner(s) of compulsory liquidation may NOT be:
CorrectThe petitioners may be:
(a) the company;
(b) a creditor;
(d) the Financial Secretary, if he thinks it desirable in the public interest.IncorrectThe petitioners may be:
(a) the company;
(b) a creditor;
(d) the Financial Secretary, if he thinks it desirable in the public interest.Hint
Reference Chapter:1.3.52
- Question 187 of 513
187. Question
1 pointsQID146:According to the New Companies Ordinance, can shareholders/members petition to the court for a winding up of a company?
CorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(f) A member may apply to the court for an order if he considers that the affairs of the company are being conducted in a manner prejudicial to the interests of the members generally or of some part of the members.
(g) A member may petition for a winding up.IncorrectTo ensure that this principle is not abused, certain safeguards are provided under the NCO to protect the interests of minority shareholders:
(f) A member may apply to the court for an order if he considers that the affairs of the company are being conducted in a manner prejudicial to the interests of the members generally or of some part of the members.
(g) A member may petition for a winding up.Hint
Reference Chapter:1.3.52
- Question 188 of 513
188. Question
1 pointsQID1121:In the case of a compulsory liquidation, the liquidator should be appointed by:
CorrectThe court may appoint a liquidator.
IncorrectThe court may appoint a liquidator.
Hint
Reference Chapter:1.3.53
- Question 189 of 513
189. Question
1 pointsQID165:According the NCO, which of the following entities can start a voluntary liquidation?
I. Directors
II. Creditors
III. Members
IV. Financial SecretaryCorrectA voluntary winding-up may be started by members or creditors. There are fewer formalities than with a compulsory liquidation and this route is far more popular.
IncorrectA voluntary winding-up may be started by members or creditors. There are fewer formalities than with a compulsory liquidation and this route is far more popular.
Hint
Reference Chapter:1.3.54
- Question 190 of 513
190. Question
1 pointsQID1122:Voluntary liquidation can be initiated by which of the following parties?
I. Directors
II. Members
III. Creditors
IV. CourtCorrectA voluntary winding-up may be started by members or creditors.
IncorrectA voluntary winding-up may be started by members or creditors.
Hint
Reference Chapter:1.3.54
- Question 191 of 513
191. Question
1 pointsQID1123:Which of the following can start a Voluntary liquidation?
I. Members
II. Debtors
III. Creditors
IV. DirectorsCorrectA voluntary winding-up may be started by members or creditors.
IncorrectA voluntary winding-up may be started by members or creditors.
Hint
Reference Chapter:1.3.54
- Question 192 of 513
192. Question
1 pointsQID1124:Voluntary liquidation may be started by which of the following?
I. Shareholders
II. Creditors
III. Financial Secretary
IV. The Chief ExecutiveCorrectA voluntary winding-up may be started by members or creditors.
IncorrectA voluntary winding-up may be started by members or creditors.
Hint
Reference Chapter:1.3.54
- Question 193 of 513
193. Question
1 pointsQID1125:Which of the following is/are valid reason(s) for voluntary liquidation?
I. The period of the company’s planned existence as stated in its articles of association comes to an end.
II. A special resolution has been passed to wind up the company.
III. A passing of a resolution that it is advisable to wind up the company, as it cannot continue due to its liabilities.
IV. The directors of a company or, in a case of a company having more than 2 directors, the majority of the directors deliver a winding-up statement under section 228A that the company should be wound up after passing a resolution to that effect at a board meeting.CorrectA voluntary winding-up is started:
(a) when the period fixed for the company’s duration as stated in its articles of association
comes to an end;
(b) by the passing of a special resolution for winding up; or
(c) if the directors of a company or, in the case of a company having more than two directors, the majority of the directors deliver a winding-up statement under s. 228A, CWUMPO that the company should be wound up after passing a resolution to that effect at a board meeting. However, prior to no later than 28 days after the delivery of any winding-up statement to the Registrar of Companies to commence the winding-up, a meeting of the company must have been summoned and a provisional liquidator must have been appointed. In the case of a private company having only one director, the sole director may make the winding-up statement.IncorrectA voluntary winding-up is started:
(a) when the period fixed for the company’s duration as stated in its articles of association
comes to an end;
(b) by the passing of a special resolution for winding up; or
(c) if the directors of a company or, in the case of a company having more than two directors, the majority of the directors deliver a winding-up statement under s. 228A, CWUMPO that the company should be wound up after passing a resolution to that effect at a board meeting. However, prior to no later than 28 days after the delivery of any winding-up statement to the Registrar of Companies to commence the winding-up, a meeting of the company must have been summoned and a provisional liquidator must have been appointed. In the case of a private company having only one director, the sole director may make the winding-up statement.Hint
Reference Chapter:1.3.55
- Question 194 of 513
194. Question
1 pointsQID1127:Voluntary liquidation can take place if the directors of a company or, in the case of a company having more than two directors, the majority of the directors, can issue which of the following documents?
CorrectMembers’ voluntary winding up may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency”.
IncorrectMembers’ voluntary winding up may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency”.
Hint
Reference Chapter:1.3.56
- Question 195 of 513
195. Question
1 pointsQID1126:Which of the following are the necessary prerequisites for a member’s voluntary winding-up to be undertaken?
I. The majority of the directors has issued a “certificate of solvency”.
II. The directors have made a full enquiry into the affairs of the company.
III. The directors have formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.
IV. The company has not been able to make a profit, or has not commenced business for the past year.CorrectMembers’ voluntary winding up may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency” to the effect that they have:
(a) made a full enquiry into the affairs of the company; and
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.IncorrectMembers’ voluntary winding up may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency” to the effect that they have:
(a) made a full enquiry into the affairs of the company; and
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.Hint
Reference Chapter:1.3.56
- Question 196 of 513
196. Question
1 pointsQID1128:Which of the following are prerequisites to the issuance of Certificate of Solvency?
I. Agreed upon by a simple majority of directors.
II. Directors have made a full inquiry into the affairs of the company.
III. Directors have formed the opinion that the company will be able to pay its debts within 1 month from the commencement of the winding up as specified in the certificate of solvency.
IV. Directors have formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding up as specified in the certificate of solvency.CorrectMembers’ voluntary winding up may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency” to the effect that they have:
(a) made a full enquiry into the affairs of the company; and
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.IncorrectMembers’ voluntary winding up may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency” to the effect that they have:
(a) made a full enquiry into the affairs of the company; and
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.Hint
Reference Chapter:1.3.56
- Question 197 of 513
197. Question
1 pointsQID1129:If the directors believe that a company can repay its debt and obligations according to the certificate of solvency, within how long should the company repay all its outstanding obligations?
CorrectMembers’ voluntary winding up may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency” to the effect that they have:
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.IncorrectMembers’ voluntary winding up may be undertaken if the directors or, in the case of a company having more than two directors, the majority of the directors issue a “certificate of solvency” to the effect that they have:
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.Hint
Reference Chapter:1.3.56
- Question 198 of 513
198. Question
1 pointsQID166:Which of the following statements about the “certificate of solvency” is correct?
I. It must be issued within the 5 weeks preceding the resolution to winding-up.
II. It must be delivered to the Registrar of Companies for registration.
III. “Certificate of solvency” should form the opinion that the company will be able to pay its debts within 12 months
IV. If the company fails to repay to its creditor after the “certificate of solvency” has been issued, the director of the company will be liable for such shortfall and may face criminal prosecution.CorrectA member’s voluntary winding-up may be undertaken if the directors or, in the case of a company having more than two
directors, the majority of the directors issue a “certificate of solvency” to the effect that they have:
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.
The certificate of solvency must be issued within the five weeks preceding the resolution and be delivered to the Registrar of Companies for registration not later than when the copy of the winding-up resolution is delivered, and must include a statement of the company’s assets and liabilities at the latest practicable date.IncorrectA member’s voluntary winding-up may be undertaken if the directors or, in the case of a company having more than two
directors, the majority of the directors issue a “certificate of solvency” to the effect that they have:
(b) formed the opinion that the company will be able to pay its debts within 12 months from the commencement of the winding-up as specified in the certificate of solvency.
The certificate of solvency must be issued within the five weeks preceding the resolution and be delivered to the Registrar of Companies for registration not later than when the copy of the winding-up resolution is delivered, and must include a statement of the company’s assets and liabilities at the latest practicable date.Hint
Reference Chapter:1.3.57
- Question 199 of 513
199. Question
1 pointsQID1132:The certificate of solvency should be issued within how long preceding the winding-up resolution?
CorrectThe certificate of solvency must be issued within the 5 weeks preceding the resolution and be delivered to the Registrar of Companies for registration not later than when the copy of the winding-up resolution is delivered.
IncorrectThe certificate of solvency must be issued within the 5 weeks preceding the resolution and be delivered to the Registrar of Companies for registration not later than when the copy of the winding-up resolution is delivered.
Hint
Reference Chapter:1.3.58
- Question 200 of 513
200. Question
1 pointsQID1131:The issuance of the “Certificate of Solvency” should be done:
CorrectThe certificate of solvency must be issued within the 5 weeks preceding the resolution and be delivered to the Registrar of Companies for registration not later than when the copy of the winding-up resolution is delivered.
IncorrectThe certificate of solvency must be issued within the 5 weeks preceding the resolution and be delivered to the Registrar of Companies for registration not later than when the copy of the winding-up resolution is delivered.
Hint
Reference Chapter:1.3.58
- Question 201 of 513
201. Question
1 pointsQID1130:The certificate of solvency should be delivered to:
CorrectThe certificate of solvency must be issued within the 5 weeks preceding the resolution and be delivered to the Registrar of Companies for registration not later than when the copy of the winding-up resolution is delivered.
IncorrectThe certificate of solvency must be issued within the 5 weeks preceding the resolution and be delivered to the Registrar of Companies for registration not later than when the copy of the winding-up resolution is delivered.
Hint
Reference Chapter:1.3.58
- Question 202 of 513
202. Question
1 pointsQID1134:If the creditors decide to summon a meeting for the day when the resolution to wind up is proposed or for the next day, the company must arrange advertisements to be run in the Gazette and newspapers. This form of liquidation is likely to be:
CorrectWhere a resolution for voluntary winding-up has been proposed, the company must arrange a meeting of the creditors to be held within 14 days thereafter subject to a minimum notice period of 7 days. Advertisements must be run in the Gazette and newspapers. A statement of the position of the company’s affairs will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.
IncorrectWhere a resolution for voluntary winding-up has been proposed, the company must arrange a meeting of the creditors to be held within 14 days thereafter subject to a minimum notice period of 7 days. Advertisements must be run in the Gazette and newspapers. A statement of the position of the company’s affairs will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.
Hint
Reference Chapter:1.3.59
- Question 203 of 513
203. Question
1 pointsQID1133:The liquidator and committee of inspection of a creditors’ voluntary winding up may be appointed by:
CorrectWhere a resolution for voluntary winding-up has been proposed, the company must arrange a meeting of the creditors to be held within 14 days thereafter subject to a minimum notice period of 7 days. Advertisements must be run in the Gazette and newspapers. A statement of the position of the company’s affairs will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.
IncorrectWhere a resolution for voluntary winding-up has been proposed, the company must arrange a meeting of the creditors to be held within 14 days thereafter subject to a minimum notice period of 7 days. Advertisements must be run in the Gazette and newspapers. A statement of the position of the company’s affairs will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.
Hint
Reference Chapter:1.3.59
- Question 204 of 513
204. Question
1 pointsQID167:If a members’ voluntary winding-up is not applicable or practical, a creditors’ voluntary winding-up will take place. Which of the following entities will monitor such winding-up?
CorrectCommittee of inspection will be appointed to supervise the process.
IncorrectCommittee of inspection will be appointed to supervise the process.
Hint
Reference Chapter:1.3.59
- Question 205 of 513
205. Question
1 pointsQID164:Which of the following individuals cannot petition for a court winding-up?
CorrectThe petitioners may be:
(a) the company;
(b) a creditor;
(c) a contributory (i.e. every person liable to contribute to the assets of a company in the event of its being wound up);
(d) the Financial Secretary, if he thinks it desirable in the public interest;
€ the Registrar of Companies, if the company has breached provisions of the NCO or is being carried on for an unlawful purpose;
(f) the Official Receiver, where there is already a voluntary winding up (s. 179, CWUMPO); and
(g) the SFC, if it appears desirable in the public interest (SFO gives authority to the SFC).IncorrectThe petitioners may be:
(a) the company;
(b) a creditor;
(c) a contributory (i.e. every person liable to contribute to the assets of a company in the event of its being wound up);
(d) the Financial Secretary, if he thinks it desirable in the public interest;
€ the Registrar of Companies, if the company has breached provisions of the NCO or is being carried on for an unlawful purpose;
(f) the Official Receiver, where there is already a voluntary winding up (s. 179, CWUMPO); and
(g) the SFC, if it appears desirable in the public interest (SFO gives authority to the SFC).Hint
Reference Chapter:1.3.59
- Question 206 of 513
206. Question
1 pointsQID1136:Which one of the following are accurate representations of creditors’ voluntary winding up?
I. Creditors’ voluntary winding up may be a result of failure in compulsory liquidation.
II. The company arranges a meeting of the creditors to be summoned for the day when the resolution to wind up is proposed or for the next day.
III. Advertisements will have to be run in the Gazette and newspapers.
IV. A statement of assets and liabilities, and a list of creditors and amounts due, will be presented to the meeting at which a liquidator and a committee of inspection will be appointed.CorrectWhere a resolution for voluntary winding-up has been proposed, the company must arrange a meeting of the creditors to be held within 14 days thereafter subject to a minimum notice period of 7 days. Advertisements must be run in the Gazette and newspapers. A statement of the position of the company’s affairs will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.
IncorrectWhere a resolution for voluntary winding-up has been proposed, the company must arrange a meeting of the creditors to be held within 14 days thereafter subject to a minimum notice period of 7 days. Advertisements must be run in the Gazette and newspapers. A statement of the position of the company’s affairs will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.
Hint
Reference Chapter:1.3.59
- Question 207 of 513
207. Question
1 pointsQID1135:If the creditors decide to summon a meeting for the day when the resolution to wind up is proposed or for the next day, what kind of documents will be presented to the meeting?
I. Articles of Association
II. A statement of the position of the company’s affairs
III. List of Proof of Debt provided by Creditors
IV. Balance Sheet of the companyCorrectWhere a resolution for voluntary winding-up has been proposed, the company must arrange a meeting of the creditors to be held within 14 days thereafter subject to a minimum notice period of 7 days. Advertisements must be run in the Gazette and newspapers. A statement of the position of the company’s affairs will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.
IncorrectWhere a resolution for voluntary winding-up has been proposed, the company must arrange a meeting of the creditors to be held within 14 days thereafter subject to a minimum notice period of 7 days. Advertisements must be run in the Gazette and newspapers. A statement of the position of the company’s affairs will be presented to the meeting, at which a liquidator and a committee of inspection will be appointed to supervise the process.
Hint
Reference Chapter:1.3.59
- Question 208 of 513
208. Question
1 pointsQID135:Which of the following statements correctly describe public company under the new company ordinance?
I. It is a company that is not a private company.
II. It is a company that is not a guarantee company.
III. It must have more than 50 members.
IV. It restricts the right to transfer its shares.CorrectA public company is one that is not a private company, i.e. does not meet the requirements for a private company stated above, and is not a guarantee company. It also has more than 50 members, contrary to a private company.
IncorrectA public company is one that is not a private company, i.e. does not meet the requirements for a private company stated above, and is not a guarantee company. It also has more than 50 members, contrary to a private company.
Hint
Reference Chapter:1.3.6
- Question 209 of 513
209. Question
1 pointsQID1051:Which of the following descriptions about a public company is correct?
CorrectA public company is one that is not a private company, i.e. does not meet the requirements for a private company stated above, and is not a guarantee company.
IncorrectA public company is one that is not a private company, i.e. does not meet the requirements for a private company stated above, and is not a guarantee company.
Hint
Reference Chapter:1.3.6
- Question 210 of 513
210. Question
1 pointsQID1052:A public company is one that:
I. Is not a private company.
II. Is not a guarantee company.
III. Must be a listed company.
IV. May not be a listed company.CorrectA public company is one that is not a private company, i.e. does not meet the requirements for a private company stated above, and is not a guarantee company.
IncorrectA public company is one that is not a private company, i.e. does not meet the requirements for a private company stated above, and is not a guarantee company.
Hint
Reference Chapter:1.3.6
- Question 211 of 513
211. Question
1 pointsQID130:Which of the following is not a contract?
CorrectA contract is an agreement between two or more persons creating obligations that are enforceable or otherwise recognisable under law, for example:
(a) the purchase or sale of a security or futures contract;
(b) the acceptance by an investor of an initial public offer of securities made by an issuer;
© an undertaking to manage a mutual fund; and
(d) the purchase of a leveraged foreign exchange contract.
Case D doesn’t comply with these requirements.IncorrectA contract is an agreement between two or more persons creating obligations that are enforceable or otherwise recognisable under law, for example:
(a) the purchase or sale of a security or futures contract;
(b) the acceptance by an investor of an initial public offer of securities made by an issuer;
© an undertaking to manage a mutual fund; and
(d) the purchase of a leveraged foreign exchange contract.
Case D doesn’t comply with these requirements.Hint
Reference Chapter:1.3.60
- Question 212 of 513
212. Question
1 pointsQID1137:Which of the following is not an example of making a contract?
CorrectA contract is an agreement between two or more persons creating obligations that are enforceable or otherwise recognisable under law, for example:
(a) the purchase or sale of a security or futures contract;
(b) the acceptance by an investor of an initial public offer of securities made by an issuer;
(c.) an undertaking to manage a mutual fund.IncorrectA contract is an agreement between two or more persons creating obligations that are enforceable or otherwise recognisable under law, for example:
(a) the purchase or sale of a security or futures contract;
(b) the acceptance by an investor of an initial public offer of securities made by an issuer;
(c.) an undertaking to manage a mutual fund.Hint
Reference Chapter:1.3.60
- Question 213 of 513
213. Question
1 pointsQID1139:Which of the following conditions will make the contract void?
I. One party was forced into a contract under pressure.
II. A contract has illegal elements.
III. One or both parties are underage or mentally ill.
IV. The contract would result in financial damages to one party.CorrectThe elements of a legally binding contract are the following:
(d) the parties must have legal capacity, i.e. they must be at least 18 years of age and have no mental impairment; thus, if a securities dealer enters into a contract with a minor, the dealer may be at risk if the minor disclaims his commitments
(e) a contract may be unenforceable if it has an illegal element, and thus an intermediary may face legal risk; and
(f) the parties must have given their consent to the contract without any form of pressure; if a party was forced to enter into the contract under pressure, the contract will be void.IncorrectThe elements of a legally binding contract are the following:
(d) the parties must have legal capacity, i.e. they must be at least 18 years of age and have no mental impairment; thus, if a securities dealer enters into a contract with a minor, the dealer may be at risk if the minor disclaims his commitments
(e) a contract may be unenforceable if it has an illegal element, and thus an intermediary may face legal risk; and
(f) the parties must have given their consent to the contract without any form of pressure; if a party was forced to enter into the contract under pressure, the contract will be void.Hint
Reference Chapter:1.3.61
- Question 214 of 513
214. Question
1 pointsQID1138:Which of the following is NOT an element of a legal contract?
CorrectThe elements of a legally binding contract are the following:
(a) an intention to create legal obligations;
(c.) there is valuable consideration, which can include an agreement not to sue under the contract; a contract under deed does not need consideration;
(d) the parties must have legal capacity, i.e. they must be at least 18 years of age and have no mental impairment; thus, if a securities dealer enters into a contract with a minor, the dealer may be at risk if the minor disclaims his commitmentsIncorrectThe elements of a legally binding contract are the following:
(a) an intention to create legal obligations;
(c.) there is valuable consideration, which can include an agreement not to sue under the contract; a contract under deed does not need consideration;
(d) the parties must have legal capacity, i.e. they must be at least 18 years of age and have no mental impairment; thus, if a securities dealer enters into a contract with a minor, the dealer may be at risk if the minor disclaims his commitmentsHint
Reference Chapter:1.3.61
- Question 215 of 513
215. Question
1 pointsQID1140:Which of the following descriptions about contracts are correct?
I. Can be expressly agreed or implied.
II. Contracts must be a form of warranty.
III. A warranty is a term of a contract which is of considerable importance such that a breach of a condition might lead to repudiation by the innocent party or a claim for damage.
IV. There can be conditions precedent (which must be met) or conditions subsequent which, if they fail, may lead to repudiation of the contract.CorrectThe terms of the contract are important:
(a) They can be expressly agreed or implied (the terms may be implied by court or by common law).
(b) They can be conditions or warranties; a condition is a term of a contract which is of considerable importance such that a breach of a condition might lead to repudiation by the innocent party or a claim for damages; a warranty is a term of lesser importance such that a breach of a warranty may only lead to a claim for damages by an injured party.
(c.) There can be conditions precedent (which must be met) or conditions subsequent which, if they fail, may lead to repudiation of the contract.IncorrectThe terms of the contract are important:
(a) They can be expressly agreed or implied (the terms may be implied by court or by common law).
(b) They can be conditions or warranties; a condition is a term of a contract which is of considerable importance such that a breach of a condition might lead to repudiation by the innocent party or a claim for damages; a warranty is a term of lesser importance such that a breach of a warranty may only lead to a claim for damages by an injured party.
(c.) There can be conditions precedent (which must be met) or conditions subsequent which, if they fail, may lead to repudiation of the contract.Hint
Reference Chapter:1.3.62
- Question 216 of 513
216. Question
1 pointsQID1141:Which of the following descriptions about agency laws is correct?
CorrectAgency is a fiduciary relationship (see section 3.66 below) created by express or implied contract or by law, in which one party, the agent, may act on behalf of another, the principal, and bind the principal by those of his words or actions that are within the scope of his agency.
IncorrectAgency is a fiduciary relationship (see section 3.66 below) created by express or implied contract or by law, in which one party, the agent, may act on behalf of another, the principal, and bind the principal by those of his words or actions that are within the scope of his agency.
Hint
Reference Chapter:1.3.63
- Question 217 of 513
217. Question
1 pointsQID1142:Agency laws can be applied to which of the following cases?
I. A stock broker and his client.
II. A trustee and a beneficiary.
III. An auditor and a company.
IV. Solicitors and his clients.CorrectThe law of agency has an important impact on financial services. For example, a stockbroker can be an agent for his client, and an account executive may be considered the agent of his employer.
IncorrectThe law of agency has an important impact on financial services. For example, a stockbroker can be an agent for his client, and an account executive may be considered the agent of his employer.
Hint
Reference Chapter:1.3.64
- Question 218 of 513
218. Question
1 pointsQID907:Is the principal liable for the acts of wrongdoing of his/her/its agent?
CorrectThe principal liable for the acts of wrongdoing of his/her/its agent.
IncorrectThe principal liable for the acts of wrongdoing of his/her/its agent.
Hint
Reference Chapter:1.3.65
- Question 219 of 513
219. Question
1 pointsQID1143:Which of the following statements correctly describes fiduciary relationships?
I. A fiduciary relationship must be either business or monetary interest to both parties.
II. A fiduciary is a person who should be serviced with duties of good faith, trust, confidence, honesty and care by another person.
III. All fiduciary relationships are agencies.
IV. All agencies are fiduciary relationships.CorrectA fiduciary is a person who owes another person duties of good faith, trust, confidence, honesty and care. A fiduciary relationship is one in which one person has a duty to act for the benefit of the other on matters within the scope of their relationship. Examples of fiduciary relationships are those of stockbroker and client, principal and agent, solicitor and client, and trustee and beneficiary.
IncorrectA fiduciary is a person who owes another person duties of good faith, trust, confidence, honesty and care. A fiduciary relationship is one in which one person has a duty to act for the benefit of the other on matters within the scope of their relationship. Examples of fiduciary relationships are those of stockbroker and client, principal and agent, solicitor and client, and trustee and beneficiary.
Hint
Reference Chapter:1.3.66
- Question 220 of 513
220. Question
1 pointsQID2578:Which of the following best explains the basis of fiduciary relationship between a stockbroker and a client who signed a client agreement?
CorrectA fiduciary relationship means when the fiduciary, here this means the stockbroker, has a duty to act for the best benefit of the other person, meaning the client in this case. The written agreement is only a record of the relationship.
IncorrectA fiduciary relationship means when the fiduciary, here this means the stockbroker, has a duty to act for the best benefit of the other person, meaning the client in this case. The written agreement is only a record of the relationship.
Hint
Reference Chapter:1.3.66
- Question 221 of 513
221. Question
1 pointsQID1659:Which of the followings is an example of tort?
CorrectA tort are losses that incur without a contractual relationship in place. The careless mistake is not a part of the contract and thus is a tort.
IncorrectA tort are losses that incur without a contractual relationship in place. The careless mistake is not a part of the contract and thus is a tort.
Hint
Reference Chapter:1.3.67
- Question 222 of 513
222. Question
1 pointsQID128:According to the Securities & Futures Ordinance and other regulation governing the securities industry,
CorrectCivil law is intended to provide remedies for individuals or businesses that have suffered loss as a result of the actions of another person. Unlike criminal law, civil law is not primarily intended to punish the wrongdoer.
IncorrectCivil law is intended to provide remedies for individuals or businesses that have suffered loss as a result of the actions of another person. Unlike criminal law, civil law is not primarily intended to punish the wrongdoer.
Hint
Reference Chapter:1.3.67
- Question 223 of 513
223. Question
1 pointsQID127:Which of the following descriptions about civil law and criminal law is correct?
CorrectUnlike criminal law, civil law is not
primarily intended to punish the wrongdoer. The injured party, the plaintiff, brings the action for damages, compensation, redress or other remedy, such as the special equitable ones mentioned earlier, against the person causing the injury, who is the defendant. The court order or award is made if the plaintiff can prove his claim on “the balance of probabilities”. This is a standard of proof that is much less stringent than the level of “beyond reasonable
doubt” required in a criminal case. The case is brought in a civil court in the name of the plaintiff against the defendant.IncorrectUnlike criminal law, civil law is not
primarily intended to punish the wrongdoer. The injured party, the plaintiff, brings the action for damages, compensation, redress or other remedy, such as the special equitable ones mentioned earlier, against the person causing the injury, who is the defendant. The court order or award is made if the plaintiff can prove his claim on “the balance of probabilities”. This is a standard of proof that is much less stringent than the level of “beyond reasonable
doubt” required in a criminal case. The case is brought in a civil court in the name of the plaintiff against the defendant.Hint
Reference Chapter:1.3.67
- Question 224 of 513
224. Question
1 pointsQID1144:Which of the following descriptions about law of tort are correct?
I. Law of tort is used in civil law cases.
II. Law of tort are based on ancient roman laws.
III. When parties who have no contractual relationship are in a situation where one party suffers loss or damage as a result of the act of the other, a wrong or tort may have occurred and under civil law a liability may have arisen.
IV. The tort of negligence is a tort committed as a result of a failure to observe the standard of care expected under the law in a particular case.CorrectWhen parties who have no contractual relationship are in a situation where one party suffers loss or damage as a result of the act of the other, a wrong or tort may have occurred, and under civil law a liability may have arisen. There are various branches of the law of tort, of which the tort of negligence has the most direct application to securities and futures business. The tort of negligence is one committed as a result of a failure to observe the standard of care expected under law in a particular case.
IncorrectWhen parties who have no contractual relationship are in a situation where one party suffers loss or damage as a result of the act of the other, a wrong or tort may have occurred, and under civil law a liability may have arisen. There are various branches of the law of tort, of which the tort of negligence has the most direct application to securities and futures business. The tort of negligence is one committed as a result of a failure to observe the standard of care expected under law in a particular case.
Hint
Reference Chapter:1.3.67
- Question 225 of 513
225. Question
1 pointsQID129:Which of the following branches of law is intended to provide remedies for individuals or businesses that have suffered loss as a result of the actions of another person?
CorrectCivil law is intended to provide remedies for individuals or businesses that have suffered loss as a result of the actions of another person. Unlike criminal law, civil law is not primarily intended to punish the wrongdoer
IncorrectCivil law is intended to provide remedies for individuals or businesses that have suffered loss as a result of the actions of another person. Unlike criminal law, civil law is not primarily intended to punish the wrongdoer
Hint
Reference Chapter:1.3.67
- Question 226 of 513
226. Question
1 pointsQID1145:Which of the following statements correctly describe the employment laws?
I. An employer must provide his employee with remuneration, indemnity for expenses, losses and liabilities incurred while performing his duties.
II. An employee must demonstrate skills and competence, faithful service, obedience and confidentiality.
III. A director service is considered as an employment relationship by the company ordinance.
IV. If the two parties fail to observe these basic elements in the relationship, there can be a breach of the law as well as of the contractual relationship between them.CorrectUnder common law, an employer must provide his employee with remuneration, indemnity for expenses, losses and liabilities incurred while performing his duties, and a safe working
environment.
Also, under common law, an employee must demonstrate skills and competence, faithful service, obedience and confidentiality.
If the two parties fail to observe these basic elements in the relationship, there can be a breach of the law as well as of the contractual relationship between them.IncorrectUnder common law, an employer must provide his employee with remuneration, indemnity for expenses, losses and liabilities incurred while performing his duties, and a safe working
environment.
Also, under common law, an employee must demonstrate skills and competence, faithful service, obedience and confidentiality.
If the two parties fail to observe these basic elements in the relationship, there can be a breach of the law as well as of the contractual relationship between them.Hint
Reference Chapter:1.3.69&70&71
- Question 227 of 513
227. Question
1 pointsQID1044:A guarantee company is one that:
I. does not have a share capital.
II. is not a private company.
III. the liability of its members is limited by the company’s articles to the amount that the members undertake to contribute to the assets of the company in the event of its being wound up.
IV. does not have a director.CorrectA guarantee company is one that:
(a) does not have a share capital; and
(b) the liability of its members is limited by the company’s articles to the amount that the members undertake to contribute to the assets of the company in the event of its being wound up.IncorrectA guarantee company is one that:
(a) does not have a share capital; and
(b) the liability of its members is limited by the company’s articles to the amount that the members undertake to contribute to the assets of the company in the event of its being wound up.Hint
Reference Chapter:1.3.7
- Question 228 of 513
228. Question
1 pointsQID1043:Which of the following is a correct description of a guarantee company?
CorrectA guarantee company is one that:
(a) does not have a share capital; and
(b) the liability of its members is limited by the company’s articles to the amount that the members undertake to contribute to the assets of the company in the event of its being wound up.IncorrectA guarantee company is one that:
(a) does not have a share capital; and
(b) the liability of its members is limited by the company’s articles to the amount that the members undertake to contribute to the assets of the company in the event of its being wound up.Hint
Reference Chapter:1.3.7
- Question 229 of 513
229. Question
1 pointsQID2394:People who enforce the Privacy Ordinance are:
CorrectPeople who enforce the Privacy Ordinance are the Privacy Commissioner for Personal Data.
IncorrectPeople who enforce the Privacy Ordinance are the Privacy Commissioner for Personal Data.
Hint
Reference Chapter:1.3.72
- Question 230 of 513
230. Question
1 pointsQID808:The PDPO is applicable to which of the following individuals?
I. The user of personal data
II. The collector of personal data
III. The holder of personal data
IV. The processor of personal dataCorrectThe Personal Data (Privacy) Ordinance (“PDPO”) was established to protect the privacy of individuals in relation to personal data. It applies to any data user who, in relation to personal data, means a person who alone or jointly, or in common with other persons, controls the collection, holding, processing or use of the data.
IncorrectThe Personal Data (Privacy) Ordinance (“PDPO”) was established to protect the privacy of individuals in relation to personal data. It applies to any data user who, in relation to personal data, means a person who alone or jointly, or in common with other persons, controls the collection, holding, processing or use of the data.
Hint
Reference Chapter:1.3.72
- Question 231 of 513
231. Question
1 pointsQID502:According to the Personal Data (Privacy) Ordinance, personal data refers to:
Correct“Personal data” means any data relating directly or indirectly to a living individual, from which it is practicable for the identity of the individual to be directly or indirectly ascertained (and are in a form in which access or processing is practicable).
Incorrect“Personal data” means any data relating directly or indirectly to a living individual, from which it is practicable for the identity of the individual to be directly or indirectly ascertained (and are in a form in which access or processing is practicable).
Hint
Reference Chapter:1.3.72
- Question 232 of 513
232. Question
1 pointsQID501:Which of the follow ordinance/codes/rules protect the privacy of individuals in relation to their personal data?
CorrectThe Personal Data (Privacy) Ordinance (“PDPO”) was established to protect the privacy of individuals in relation to personal data.
IncorrectThe Personal Data (Privacy) Ordinance (“PDPO”) was established to protect the privacy of individuals in relation to personal data.
Hint
Reference Chapter:1.3.72
- Question 233 of 513
233. Question
1 pointsQID1147:Which of the following is responsible for the enforcement of Personal Data (Privacy) Ordinance?
CorrectThe Privacy Commissioner for Personal Data is an independent public officer appointed to enforce and promote compliance with the PDPO.
IncorrectThe Privacy Commissioner for Personal Data is an independent public officer appointed to enforce and promote compliance with the PDPO.
Hint
Reference Chapter:1.3.72
- Question 234 of 513
234. Question
1 pointsQID805:Which of the following are classified as personal data under the PDPO?
I. Data relating directly to a living individual, from which it is practicable for the identity of the individual to be directly ascertained.
II. Data relating indirectly to a living individual, from which it is practicable for the identity of the individual to be directly ascertained.
III. Data relating directly to a living individual, from which it is practicable for the identity of the individual to be indirectly ascertained.
IV. Data relating indirectly to a living individual, from which it is practicable for the identity of the individual to be indirectly ascertained.Correct“Personal data” means any data relating directly or indirectly to a living individual, from which it is practicable for the identity of the individual to be directly or indirectly ascertained (and are in a form in which access or processing is practicable).
Incorrect“Personal data” means any data relating directly or indirectly to a living individual, from which it is practicable for the identity of the individual to be directly or indirectly ascertained (and are in a form in which access or processing is practicable).
Hint
Reference Chapter:1.3.72
- Question 235 of 513
235. Question
1 pointsQID505:British Construction Bank is an authorised financial institution. Amid the downfall of the Hong Kong banking sector, it has decided to promote its personal loan service by acquiring a list of clients and contacts from its wholly owned subsidiary British Construction Securities, a licensed corporation. Should British Construction Securities provide such information to British Construction Bank?
CorrectWhere the data is collected from the data subject, he should be informed, at the prescribed times, of the purpose for which the data is to be used, the classes of persons to whom the data may be transferred and of his rights to access and to request the correction of the data. Also, personal data should not, without the consent of the data subject, be used for a new purpose.
IncorrectWhere the data is collected from the data subject, he should be informed, at the prescribed times, of the purpose for which the data is to be used, the classes of persons to whom the data may be transferred and of his rights to access and to request the correction of the data. Also, personal data should not, without the consent of the data subject, be used for a new purpose.
Hint
Reference Chapter:1.3.73
- Question 236 of 513
236. Question
1 pointsQID1146:Under the Personal Data (Privacy) Ordinance, the subject is entitled to which of the following rights?
I. The subject shall be notified about the purpose of collection of personal data.
II. The subject’s personal data should not, without the consent of the data subject, be used for any purpose other than that for which it was collected or a directly related purpose
III. The data subject shall be entitled to ascertain whether data of which he is the subject are held, request and receive access to his personal data within a reasonable time at a reasonable fee and in an intelligible form, and to request corrections to the data and to be given reasons for any refusals in relation to the above and to object.
IV. The subject’s personal data shall not be collected unless lawfully and fairly collected for a lawful purpose directly related to a function or activity of the data user, the collection is necessary for or directly related to that purpose and the data is not excessive for the purpose.Correct(a) Principle 1 – purpose and manner of collection of personal data
(i) Personal data shall not be collected unless for a lawful purpose directly related to a function or activity of the data user, and unless the collection is necessary for or directly related to that purpose and the data is not excessive for the purpose.
(ii) Where the data is collected from the data subject, he should be informed, at the prescribed times, of the purpose for which the data is to be used, the classes of persons to whom the data may be transferred and of his rights to access and to request the correction of the data.
(c) Principle 3 – use of personal data
Personal data should not, without the consent of the data subject, be used for a new purpose.
(f) Principle 6 – access to personal data
A data subject shall be entitled to ascertain whether data of which he is the subject is held, request and receive access to his personal data within a reasonable time at a reasonable fee and in an intelligible form, and to request corrections to the data, and to be given reasons for any refusals in relation to the above and to object to the Privacy Commissioner for Personal Data.Incorrect(a) Principle 1 – purpose and manner of collection of personal data
(i) Personal data shall not be collected unless for a lawful purpose directly related to a function or activity of the data user, and unless the collection is necessary for or directly related to that purpose and the data is not excessive for the purpose.
(ii) Where the data is collected from the data subject, he should be informed, at the prescribed times, of the purpose for which the data is to be used, the classes of persons to whom the data may be transferred and of his rights to access and to request the correction of the data.
(c) Principle 3 – use of personal data
Personal data should not, without the consent of the data subject, be used for a new purpose.
(f) Principle 6 – access to personal data
A data subject shall be entitled to ascertain whether data of which he is the subject is held, request and receive access to his personal data within a reasonable time at a reasonable fee and in an intelligible form, and to request corrections to the data, and to be given reasons for any refusals in relation to the above and to object to the Privacy Commissioner for Personal Data.Hint
Reference Chapter:1.3.73
- Question 237 of 513
237. Question
1 pointsQID2395:Which of the following statement is incorrect regarding the Privacy Ordinance?
CorrectSecurities companies have the responsibilities to provide clients with copies of their personal information, but not necessarily for free. The SFC can have access to the personal information of anyone in the period of investigation. The Stock Exchange of Hong Kong Limited has the right to ask for information with regard to senior management and part of shareholders from listed issuers. For these are reasonable uses. Clients can ask the company to delete their personal information, though it’s another issue that whether there are capabilities to continue to provide services.
IncorrectSecurities companies have the responsibilities to provide clients with copies of their personal information, but not necessarily for free. The SFC can have access to the personal information of anyone in the period of investigation. The Stock Exchange of Hong Kong Limited has the right to ask for information with regard to senior management and part of shareholders from listed issuers. For these are reasonable uses. Clients can ask the company to delete their personal information, though it’s another issue that whether there are capabilities to continue to provide services.
Hint
Reference Chapter:1.3.73
- Question 238 of 513
238. Question
1 pointsQID1149:The data protection principles include:
I. information to be generally available to the public.
II. use of personal data.
III. purpose and manner of collection of personal data.
IV. accuracy and duration of retention of personal data.CorrectPrinciple 1 – purpose and manner of collection of personal data
Principle 2 – accuracy and duration of retention of personal data
Principle 3 – use of personal data
Principle 5 is “information to be generally available”, but not ” information to be generally available to the public”.IncorrectPrinciple 1 – purpose and manner of collection of personal data
Principle 2 – accuracy and duration of retention of personal data
Principle 3 – use of personal data
Principle 5 is “information to be generally available”, but not ” information to be generally available to the public”.Hint
Reference Chapter:1.3.73
- Question 239 of 513
239. Question
1 pointsQID1148:Which of the following is NOT a data protection principle according to the PDPO?
CorrectPrinciple 1 – purpose and manner of collection of personal data
Principle 2 – accuracy and duration of retention of personal data
Principle 5 – information to be generally availableIncorrectPrinciple 1 – purpose and manner of collection of personal data
Principle 2 – accuracy and duration of retention of personal data
Principle 5 – information to be generally availableHint
Reference Chapter:1.3.73
- Question 240 of 513
240. Question
1 pointsQID503:Which of the following is NOT one of the 6 principles set in the
Personal Data (Privacy) Ordinance?CorrectOption C, Manner of saving personal data, is not a principle stated in the Schedule 1 of the PDPO.
IncorrectOption C, Manner of saving personal data, is not a principle stated in the Schedule 1 of the PDPO.
Hint
Reference Chapter:1.3.73
- Question 241 of 513
241. Question
1 pointsQID504:What of the following is not a principle of the PDPO?
CorrectOption C, Functionality, is not a principle stated in the Schedule 1 of the PDPO.
IncorrectOption C, Functionality, is not a principle stated in the Schedule 1 of the PDPO.
Hint
Reference Chapter:1.3.73
- Question 242 of 513
242. Question
1 pointsQID1045:A listed company is one that:
CorrectA listed company is one that has any of its shares listed on a recognized stock market.
IncorrectA listed company is one that has any of its shares listed on a recognized stock market.
Hint
Reference Chapter:1.3.8
- Question 243 of 513
243. Question
1 pointsQID1047:Which of the following descriptions about the articles of association under the NCO is correct?
I. The articles of association of a company is considered to be the single constitutional document of the company and form an agreement between the company and its members.
II. The articles of association of a company is considered to be the single constitutional document of the company and form an agreement among its members.
III. The articles of association prescribe regulations for the internal management and operation of the company.
IV. The articles of association are subsidiary to the memorandum of association.CorrectThe articles of association of a company is considered to be the single constitutional document of the company and form an agreement between the company and its members. The articles of association prescribe regulations for the internal management and operation of the company.
IncorrectThe articles of association of a company is considered to be the single constitutional document of the company and form an agreement between the company and its members. The articles of association prescribe regulations for the internal management and operation of the company.
Hint
Reference Chapter:1.3.9
- Question 244 of 513
244. Question
1 pointsQID1049:The articles of association of a company is:
CorrectThe articles of association of a company is considered to be the single constitutional document of the company and form an agreement between the company and its members. The articles of association prescribe regulations for the internal management and operation of the company.
IncorrectThe articles of association of a company is considered to be the single constitutional document of the company and form an agreement between the company and its members. The articles of association prescribe regulations for the internal management and operation of the company.
Hint
Reference Chapter:1.3.9
- Question 245 of 513
245. Question
1 pointsQID1046:Which one of the following descriptions about the articles of association under the NCO is correct?
CorrectThe articles of association of a company is considered to be the single constitutional document of the company and form an agreement between the company and its members.
IncorrectThe articles of association of a company is considered to be the single constitutional document of the company and form an agreement between the company and its members.
Hint
Reference Chapter:1.3.9
- Question 246 of 513
246. Question
1 pointsQID1150:The SFC was created by law under the:
CorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO).
IncorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO).
Hint
Reference Chapter:1.4.1
- Question 247 of 513
247. Question
1 pointsQID11:Under what circumstance can the Government intervene in the securities market in Hong Kong?
CorrectThe broad points stated by the Securities Review Committee under Ian Hay Davison were the need for: (e) checks and balances on the system, with the exchanges being supervised by a
commission independent of the Government, with the Government only to intervene if and when the Commission failed to regulate properly.IncorrectThe broad points stated by the Securities Review Committee under Ian Hay Davison were the need for: (e) checks and balances on the system, with the exchanges being supervised by a
commission independent of the Government, with the Government only to intervene if and when the Commission failed to regulate properly.Hint
Reference Chapter:1.4.1
- Question 248 of 513
248. Question
1 pointsQID1151:Which of the following descriptions correctly describes the status of the SFC?
CorrectThe SFC is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government.IncorrectThe SFC is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government.Hint
Reference Chapter:1.4.1
- Question 249 of 513
249. Question
1 pointsQID732:Which of the following descriptions about the SFC is correct?
CorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government.IncorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government.Hint
Reference Chapter:1.4.1
- Question 250 of 513
250. Question
1 pointsQID72:Which of the following Committees, tribunals and panels manages the administration of Codes on Takeovers and Mergers and Share Buy-backs?
CorrectCorporate Finance Division:
(a) administers The Codes on Takeovers and Mergers and Share Buy-backs and regulates takeovers, mergers and share buy-backs of applicable companiesIncorrectCorporate Finance Division:
(a) administers The Codes on Takeovers and Mergers and Share Buy-backs and regulates takeovers, mergers and share buy-backs of applicable companiesHint
Reference Chapter:1.4.1
- Question 251 of 513
251. Question
1 pointsQID57:The SFC﹕
I. Reports to the government
II. Was formed under the Securities and Futures Ordinance
III. Is not responsible for licensing of intermediaries
IV. Is a part of the governmentCorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above.IncorrectThe SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above.Hint
Reference Chapter:1.4.1
- Question 252 of 513
252. Question
1 pointsQID1161:What are the statuses regarding the Advisory Committee of the SFC?
I. It has no executive powers.
II. It does not police the SFC.
III. It is chaired by the financial secretary.
IV. Its members are appointed by the chief executive of the HKSAR.CorrectThe Advisory Committee is responsible for advising the SFC on policy matters concerning its regulatory objectives and functions. It has no executive powers and does not police the SFC in any way. It is chaired by the SFC Chairman, and comprises the CEO and not more than two other executive directors appointed by the Chairman, and between 8 and 12 other members appointed by the Chief Executive of the Hong Kong Special Administrative Region (“Hong Kong SAR”) in consultation with the Chairman of the SFC.
IncorrectThe Advisory Committee is responsible for advising the SFC on policy matters concerning its regulatory objectives and functions. It has no executive powers and does not police the SFC in any way. It is chaired by the SFC Chairman, and comprises the CEO and not more than two other executive directors appointed by the Chairman, and between 8 and 12 other members appointed by the Chief Executive of the Hong Kong Special Administrative Region (“Hong Kong SAR”) in consultation with the Chairman of the SFC.
Hint
Reference Chapter:1.4.10
- Question 253 of 513
253. Question
1 pointsQID1162:The Advisory Committee is responsible for which of the following matters?