LE Paper 1 · Topic 2
Topic 2 tests whether you can place a dispute in the right forum and apply company law to a set of facts. Expect questions on where Hong Kong law comes from under the Basic Law, which court or tribunal hears a claim, basic contract, agency and trust rules, and then the Companies Ordinance (Cap. 622): company types, share capital, charges, meetings and resolutions, directors' duties, minority remedies, inspectors and winding up under Cap. 32. Most marks turn on exact numbers: 75%, 95%, 5%, 21 and 28 days, one month, 12 months.
10 min read7 sections
Checked against the Companies Ordinance (Cap. 622), Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32), Arbitration Ordinance (Cap. 609), Trustee Ordinance (Cap. 29), Contracts (Rights of Third Parties) Ordinance (Cap. 623), Interpretation and General Clauses Ordinance (Cap. 1) and Small Claims Tribunal Ordinance (Cap. 338) as consolidated on HKLII (Cap. 622 version of 23 May 2025, the latest amendment commenced per the Companies Registry); the Basic Law (basiclaw.gov.hk); Judiciary guides to court services (judiciary.hk); Companies Registry, A Guide on Directors' Duties (March 2014). As at October 2026. Independent prep, not endorsed by HKSI Institute or the SFC.
Article 8 of the Basic Law maintains the laws in force before 1 July 1997: the common law, rules of equity, ordinances, subordinate legislation and customary law, unless they contravene the Basic Law or are amended by the legislature. Article 84 lets courts refer to precedents of other common law jurisdictions, so post-1997 English cases are persuasive, not binding. Within Hong Kong, lower courts are bound by the courts above them.
| Source | Key point | Provision |
|---|---|---|
| Basic Law | Constitutional document; final interpretation by the NPC Standing Committee | Article 158 |
| Ordinances | Passed by the Legislative Council; override inconsistent case law | Article 8 |
| Subsidiary legislation | Laid before LegCo, which may amend within 28 days of the laying sitting (extendable once) | Cap. 1 s.34 |
| Common law and equity | Judge-made; equitable remedies are discretionary | Article 8 |
| Foreign case law | Persuasive only | Article 84 |
Under Article 158, Hong Kong courts may interpret the Basic Law, but where a case needs an interpretation of provisions about Central Government affairs or the Central-Region relationship, and it affects the judgment, the Court of Final Appeal must seek an interpretation from the NPC Standing Committee before a final judgment.
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Trap: treating English decisions after 1997 as binding. They are persuasive only; a Court of Appeal decision binds the Court of First Instance.
Takeaway: Article 8 keeps the old law, Article 84 makes foreign cases persuasive, Article 158 sends interpretation to the NPC Standing Committee.
The court hierarchy runs from the Magistrates' Courts and the District Court up to the High Court (Court of First Instance and Court of Appeal) and the Court of Final Appeal. Tribunals are specialist bodies with simpler procedure; some exclude lawyers altogether. Figures below are from the Judiciary's guides to court services.
| Forum | Jurisdiction to remember |
|---|---|
| Small Claims Tribunal | Money claims up to HK$75,000; no solicitors or counsel (Cap. 338 s.19) |
| Magistrates' Courts | Normal maximum 2 years' imprisonment and HK$100,000 fine |
| District Court | Civil claims over HK$75,000 to HK$3 million; criminal sentences up to 7 years |
| Court of First Instance | Unlimited civil jurisdiction; also tries the most serious criminal cases |
| Court of Appeal | Appeals from the Court of First Instance, District Court and tribunals |
| Court of Final Appeal | Final adjudication; usually five judges, may include a judge from another common law jurisdiction (Basic Law Article 82) |
Arbitration is governed by the Arbitration Ordinance (Cap. 609), which adopts the UNCITRAL Model Law. If a party to an arbitration agreement asks in time (before its first statement on the substance), the court must refer the dispute to arbitration and stay the action (s.20). Proceedings are confidential unless the parties agree otherwise (s.18), the award is final and binding (s.73), and setting aside is on narrow grounds within three months of receiving the award (s.81).
Trap: assuming a client can always sue in court despite an arbitration clause, or that an award can be appealed on its merits as of right.
Takeaway: HK$75,000 and HK$3 million split the civil courts; a valid arbitration clause means referral and a stay.
