Donald and carrie reconcile and do not get divorced

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Reference no: EM132254747

Please read the below fact pattern carefully and answer the below questions applying relevant Hong Kong Company Law principles (cite cases or the appropriate section of the Companies Ordinance).

Fact Pattern: Fortunately, Donald and Carrie (together “DC”) reconcile and do not get divorced. Given the excellent job you did assisting them previously, DC turn to you again to advise them on additional matters.

First, DC mention they would like to give back to the community by incorporating a new company called Dance HKU, an organization designed to improve the wellness and happiness of HKU students through dance.

Second, they want to expand their business operations. DC want to use a new company they own and already incorporated called DC Forever Limited (“DFL”) to invest into Star Shows Limited (“Star”), a Hong Kong private company limited by shares that is a subsidiary whose holding company is a Hong Kong company that is listed on the Hong Kong Stock Exchange.

DFL is seeking a method to make an equity investment that will allow it the flexibility to negotiate investment terms with Star, including hopefully a seat on its board of directors. Star is eager for an investment from DFL and is willing to have a new director representing DFL sit on its board. DFL and Star are seeking advice on the best method to make such an investment as well as the duties DFL will have as a director.

A few weeks later, DFL’s investment into Star is completed and DFL acquires a majority stake in Star as well as a seat on Star’s board of directors, which DFL will fill directly. Donald also takes a senior executive role at Star.

Unfortunately, the relationship between DFL and Star deteriorates a few months later since DFL begins to take money from Star’s accounts and then sends those funds to Donald’s family in the United States since they just immigrated to Washington, D.C. and they need help with a home purchase. One of Star’s minority shareholders is upset with how Star’s assets are being used for Donald’s family and is preparing a legal action. DC asks for your advice regarding this legal action.

Please prepare a response that addresses the issues in the facts above.

Reference no: EM132254747

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