Fundamentals Level –Skills Module, Paper F4 (CHN)
Corporate and Business Law (China) June 2012 Answers 1This question requires candidates to explain the rule of exclusive jurisdiction, state the disputes that are subject to exclusive jurisdiction and the relationship between exclusive jurisdiction and territorial jurisdiction under the Civil Procedures Law of China.
(a)Exclusive jurisdiction refers to such special territorial jurisdiction under which the court of the place shall have exclusive
jurisdiction over certain cas, even if such jurisdiction contradicts the jurisdiction bad on the rules of common territorial jurisdiction.
(b)In accordance with Article 34 of the Civil Procedures Law, the following disputes are subject to exclusive jurisdiction:
(i) A dispute over real estate shall be under the jurisdiction of the court at the place where the estate is located;
(ii) A dispute over harbour operations shall be under the jurisdiction of the court at the place where the harbour is located;
(iii) A dispute over succession shall be under the jurisdiction of the court where the decead had his/her domicile upon his/her death, or where the principal part of the estate is located.
(iv) A dispute over registration shall be under the jurisdiction of the court where the registered office is located.
(c)The exclusive jurisdiction is a kind of special territorial jurisdiction. Where a dispute may be heard by two or more courts on
the basis of territorial jurisdiction, the court having exclusive jurisdiction shall prevail.
2This question requires candidates to explain the term divided co-ownership interest in buildings, and state the coverage of such form of ownership as well as the rules with respect to the transfer of residential or commercial properties in a building under the Property Law of China.
(a)Divided co-ownership interest in buildings refers to a situation where an owner has ownership over the exclusive parts within
the building, such as the residential hous or the hous ud for business purpos, and has an undivided ownership and right to common management over the common parts other than the exclusive parts of the same building.
(b)In accordance with Articles 73 and 74 of the Property Law, the roads within the building zone or community other than the
public roads in the cities and towns, the green fields within the building zone or community other than the green fields owned by cities and towns or owned expressly by individuals, the parking spaces and garages occupying the roads or other fields, shall be co-owned by all owners and belong to all owners.
(c)In accordance with Article 72 of the Property Law, where an owner transfers the residential or commercial hou within a
building, the co-ownership and the right to common management enjoyed by the owner over the jointly-owned parts shall be transferred accordingly.
3This question requires candidates to state the remedial measures for an employee to take if an employer fails to pay wages according to the labour contract, the legal effect on labour contracts where an employer changes its business name, or legal reprentative or legal personality under the Labour Contract Law of China.
(a)In accordance with Article 30 of the Labour Contract Law, if an employer delays to pay wages, or fails to make payment in
full amount as agreed in a labour contract, the employee may apply to the local labour arbitration commission to protect his or her right. An employee may also apply to the local people’s court for an order to pay. The people’s court shall directly issue such an order according to the law.
(b)In accordance with Articles 33 and 34 of the Labour Contract Law, a labour contract shall be performed without any impact
by any one of the following changes of the employer: change of its business name, change of the legal reprentative or the person who is in charge of the employer, change of the investors of the employer. Furthermore, where an employer is merged or divided, or any changes in its legal personality, the existing labour contracts shall remain effective and continue to be performed by the legal entity that has succeeded the rights and obligations of the original employer.
4This question requires candidates to state the rules as to the invalidity of the provisions concerning exemptions contained in a contract, and the ways of treatment where a contract is decided to be invalid or is cancelled under the Contract Law of China.
(a)In accordance with Article 53 of the Contract Law, the following provisions concerning exemptions contained in a contract
shall be deemed as invalid:
(i)the provisions that exclude one party’s liability for personal injury caud to the other party;
(ii)the provisions that exclude one party’s liability for property loss caud to the other party by its intentional misconduct or gross negligence.
(b)In accordance with Article 58 of the Contract Law, after a contract is decided to be invalid, the following ways to handle the
conquences caud by the invalid contract may be adopted:
(i)The parties shall return any properties acquired from such an invalid contract.
(ii)Where the returning in kind is impossible or unnecessary becau of the special nature of the subject matter of the contract, monetary compensations shall be made on the basis of the value of the property.
(iii)The party at fault shall indemnify the other party for its loss sustained as a result. Where both parties are at fault, the parties shall bear their respective liabilities accordingly.
5This question requires candidates to state the rules for a listed company to pass a resolution under certain special circumstances in accordance with the relevant provisions of the Company Law of China.
(a)In accordance with Article 122 of the Company Law, purchas or sales of any important asts or the amount of guarantee
provided by it exceeds 30% of the total amount of its asts within one year, the relevant matters shall be decided by the shareholders’ general meeting and the resolutions shall be adopted on an affirmative vote of two-thirds of the voting rights held by the shareholders attending the meeting.
(b)In accordance with Article 125 of the Company Law, where any director of a listed company has an affiliate relationship with
the enterpris related to the matters to be decided at the meetings of the board of directors, such directors may not exerci the voting rights upon the particular resolution nor may exerci the voting rights on behalf of other directors. The meeting of the board of directors may be held if more than half of the directors having no such affiliate relationship attend the meetings, and the resolution made at the meetings of the board of directors shall be pasd by more than half of directors having no such affiliate relationship. Where the number of the directors having no such affiliate relationship who attend the meetings is less than three, the particular matters shall be submitted to the shareholders’ general meeting of the listed company for examination and resolution.
6This question requires candidates to state the duties and functions of a bankruptcy administrator as to the conversion plan of solvent asts, and the means of the conversion of asts during the process of bankruptcy liquidation under the Enterpri Bankruptcy Law of China.
(a)In accordance with Article 111 of the Enterpri Bankruptcy Law, a bankruptcy administrator shall be under the duty and
have the functions as follows:
(i) A bankruptcy administrator shall draft a conversion plan of insolvent asts and submit it to the creditors’ meeting for
examination;
(ii) A bankruptcy administrator shall, according to the conversion plan of insolvent asts that has been adopted at the creditors’ meeting or that has been confirmed by a people’s court according to relevant provisions of the prent Law,
ll the insolvent asts by means of conversion at a proper time.
(b)In accordance with Article 112 of the Enterpri Bankruptcy Law, the following rules shall be complied with during the
process of the conversion of insolvent asts:
(i)The conversion of insolvent asts shall be conducted through auction, unless otherwi agreed by the creditors’
meeting;
(ii)An insolvent enterpri may be wholly or partially sold by means of conversion. Where an enterpri is to be sold by means of conversion, the intangible asts and other asts thereof may be parately sold by means of conversion.
(iii)Any asts that shall not be auctioned or who transfer is restricted shall be handled through other methods as prescribed by laws and regulations.
7This question requires candidates to state the statutory conditions to be satisfied to have the stocks listed under the Securities Law and the possible additional conditions by a curity exchange.
In accordance with Article 50 of the Securities Law, where a joint stock company applies to have its shares listed, the following conditions shall be satisfied:
(i)The stocks of the company have already been issued publicly with the approval of the curities regulatory authority under
the State Council;
(ii)The total amount of the company’s share capital is not less than RMB 30 million yuan;
(iii)The stocks of the company issued publicly amount to 25% or more of the total stocks of the company; where the total amount of the company’s share capital is more than RMB 400 million yuan, the ratio of the stocks issued publicly shall amount to 10% or more of the total stocks; and
(iv)The company must have no records of involvement in rious illegal activities in the previous three years, and its financial and accounting statements must contain no fal information in the same period.
A stock exchange may also stipulate stricter conditions for listing if such conditions have been approved by the curities regulatory
authority under the State Council.
8This question requires candidates to deal with the legal issues with respect to the legal relations between mortgage and lea under the Property Law of China.
(a)Ms Lee’s grounds for refusal to leave the hou cannot be established. In accordance Article 190 of the Property Law, when
the mortgaged property is lead after the mortgage has been established, the leahold shall not be held against the registered mortgage. However, where the lea agreement had been concluded before the mor十月电影
tgage contract, the original leahold shall not be affected by the mortgage. It means that the leahold depends on the time of its conclusion against the mortgage contract. In this ca, the lea agreement was concluded after the registration of the mortgage agreement, therefore it shall not be held against the registered mortgage.
(b)Ms Lee should leave the hou so as to make it possible to have the judgement enforced, even though the lea agreement
has not yet matured at the time when Credit Association advid her to leave. Since the lea agreement was still an effective one between Mr Fang and Ms Lee and Ms Lee was a bona fide party, Ms Lee should be entitled to request compensation from Mr Fang under the lea agreement for his breach of contract.
9This question requires candidates to deal with the legal issue of force majeure under the Contract L
aw of China.
(a)Seller’s argument of force majeure should not be established. In accordance with Article 117 of the Contract Law, force
majeure means any objective circumstances which are unforeeable, unavoidable and insurmountable at the time of the conclusion of the contract. In addition, Article 121 of the Contract Law provides that where a party’s breach was attributable to a third person, it shall nevertheless be liable to the other party for breach. Any dispute between the party and such third person shall be resolved in accordance with the law or the agreement between the parties.
In this ca荆轲
, due to the stop of production by a fire accident, Seller’s supplier was unable to supply the goods; this meant that it was not Seller but its supplier who met the force majeure. According to Article 121 of the Contract Law, Seller should be liable to Buyer for breach of contract by failure to deliver the goods.
(b)Buyer’s claim for liquidated damages should be supported by the court. In accordance with Article 114 of the Contract Law,
parties to a contract may prescribe that if one party breaches the contract, it will pay a certain sum of liquidated damages to the other party in light of the degree of breach. In this ca, Seller and Buyer prescribed that the liquidated damages should be 20% of the total amount of the price and Seller was a party in breach. Therefore, it should be liable for the liquidated damages.
Buyer’s claim for damages should not be supported by the court. In accordance with Article 114 of the Contract Law, the liquidated damages as prescribed by the parties are compensatory in nature. Buyer, by receiving the liquidated damages, has already recovered all its loss caud by Seller’s breach of contract. Therefore, its claim for liquidated damages and damages concurrently should not be supported.
10This question requires candidates to explain the relevant rules in relation to the incorporation of a joint stock company under the Company Law of China.
(a)In accordance with Article 79 of the Company Law, to incorporate a joint stock company, there shall be not less than two
and not more than 200 sponsors, of which more than half must have their domicile within the territory of China. However, in this business proposal more than half of sponsors would have their domicile o
utside the territory of China. It is not in conformity with the Company Law.
(b)In accordance with Article 85 of the Company Law, where a joint stock company is incorporated by means of share offer, the
shares subscribed for by the sponsors shall not be less than 35% of the total amount of the company’s shares. Under the proposal, the amount of shares to be subscribed by sponsors was RMB 30 million yuan which accounted for 30% of the total shares of the company. Therefore, it is not in conformity with the Company Law.
(c)In accordance with Articles 83 and 27 of the Company Law, a shareholder may make his capital contributions to a company
in currency or by contributing such non-currency property as material objects, intellectual property rights and land u rights at their appraid value that may be evaluated in currency and may be transferred. The amount in currency should not be less than 30% of the registered capital, which means not all capital need be in currency. Therefore, this part of the proposal is not in conformity with the Company Law, as sponsors might make their capital contributions with various forms as prescribed by the law.
Fundamentals Level –Skills Module, Paper F4 (CHN)
Corporate and Business Law (China) June 2012 Marking Scheme 18–10 A thorough answer which explains the rule of exclusive jurisdiction, and states correctly all the cas that shall be subject to exclusive jurisdiction and the relations between exclusive jurisdiction and common territorial jurisdiction.
6–7An answer which explains the rule of exclusive jurisdiction, and states correctly any two of the cas that shall be subject to exclusive jurisdiction as well as the basic meaning of its relation with common territorial jurisdiction.
3–5An answer which explains the rule of exclusive jurisdiction or states the legal relation between exclusive jurisdiction and common territorial jurisdiction; or an answer which explains the term exclusive jurisdiction and states any one of the cas
that shall be subject to exclusive jurisdiction.
0–2An answer which does not explain or explains very limited points in part (a), but f加油稿10字
ails to state any one point in part (b) and part (c); or an answer which fails to explain and state in part (a) and part (c) respectively, but states only one of the
cas that is subject to exclusive jurisdiction.
28–10 A thorough answer that explains the term divided co-ownership interest in buildings, and states correctly any parts within
a building or community that shall be co-owned by all owners and the rule with respect to the transfer of privately owned
residential or commercial properties in a building.
6–7An answer that explains the term divided co-ownership interest in buildings, and states some parts of a building that belong to the co-ownership by all owners in part (b) and the rule as to the transfer of privately owned properties in a co-owned building in part (c); or f追风筝的人观后感
ails to explain the term in part (a), but states correctly the parts of a building that belong
to the co-ownership by all owners in part (b) and the rule as to the transfer of privately owned properties in a co-owned
building in part (c).
3–5An answer that explains the term in part (a) and states some points in part (b) or the rule as to the transfer of residential or commercial properties in a building by all the owners in part (c). As an alternative, the answer explains the basic
meaning of the term in part (a) and states limited points in part (b) and pexport
art (c).
0–2An answer which does not explain the term divided co-ownership interest in buildings, and states limited points or no point in part (b) with respect to the parts within a building that shall be owned by owners on the basis of co-ownership, or
limited point or no point in part (c) with respect to the rule as to the transfer of residential or commercial properties in a
building by co-owners.
38–10 A thorough answer that states the remedial measures an employee is entitled to take in part (a), and states correctly the legal effect on the labour contracts in various circumstances with respect to the changes taken place by an employer in
part (b).
6–7An answer that states the remedial measures an employee is entitled to take in part (a), and states correctly the legal effect on the labour contracts under any two circumstances as described in part (b). As an alternative, an answer that states any
one of the remedial measures in part (a) and correctly the major contents in part (b).
3–5An answer that states correctly any one part and some points in the other part.
0–2 An answer that fails to state any points in both 紫色代表什么意思
parts, or states only very limited points.
48–10 A thorough answer that states the rule as to the invalidity of the provisions concerning exemptions in part (a), and states correctly the ways to handle the conquence resulted from the invalidity a contract in part (b).
6–7An answer that states the rule as to the invalidity of provisions concerning exemptions in part (a), and states some points as to the ways to handle the conquence resulted from the invalidity of a contract in part (b). As an alternative, an answer
that fails to state the rule as to the invalidity of provision concerning exemptions in part (a), but states correctly the ways
to handle the conquence resulted from the invalidity of a contract in part (b).
3–5An answer that states correctly the rule as to the invalidity of provisions concerning exemptions in part (a) and limited content in part (b). As an alternative, an answer that fails to state the rule in part (a), but states some or main contents
in part (b).
0–2An answer that fails to state any points in part (a) and part (b), or states very limited points in part (a) or part (b).
