Anna and Benjamin, a wealthy couple, are the two shareholders and directors of Vigilant Ltd, which runs a very profitable waste and recycling consultancy.

Vigilant Ltd owns all 100 issued HK$ 100 shares in Diligent Ltd, which operates several recycling centres. Anna and Benjamin are also the directors of Diligent Ltd. Unfortunately; Diligent Ltd has been struggling financially this year and now owes one of its key suppliers, Poon, HK$600,000. Diligent Ltd does not have sufficient assets to meet the claim, although Vigilant Ltd remains very successful.

Recently, Vigilant Ltd formed a new company, Active Ltd, taking its single issued HK$300 share. The director of Active Ltd. is Cyril, the son of Anna and Benjamin. Active Ltd was formed to buy and operate a further recycling centre that uses a new waste disposal process that has the potential to be highly profitable but uses potentially dangerous chemicals. The money to buy the centre was loaned to Active Ltd by Vigilant Ltd, secured over all Active Ltd's assets. Unfortunately, the venture was a disaster. The chemicals haveleaked, and local landowner, Lim now has a damages claim in the region of HK$3million against ActiveLtd. Active Ltd has no available assets to meet Lim's claim.

Advise Poon and Lim.