March Company Limited ("MCL") is engaged in the business of supply of building materials and hardware. The shares of MCL are listed on the Main Board of the Stock Exchange of Hong Kong Limited. As at 9 March 2020, Stanley Cheung ("Mr. Cheung") who is a director and a substantial shareholder of MCL, and/or persons and/or trusts associated with him hold appropriately 54.85% of the issued shares of MCL as recorded in the register required to be kept under section 336 of the Securities and Futures Ordinance.

April Limited ("AL")'s business is manufacturing building materials in Hong Kong, Taiwan, and China. AL is 100% owned by April Holdings Limited ("AHL"), an international conglomerate.

Peter Lee ("Mr. Lee"), an executive director of MCL, proposes to its board of directors to expand its business in Taiwan and China. Hence, he proposes MCL to acquire AL from AHL. All board members of MCL agree with Mr. Lee's proposal and believe that such an acquisition of AL will be in line with MCL's expansion plan.

AHL agrees to sell its entire shareholding (i.e. 200,000 shares) and the business of AL to MCL for a consideration of HK$500 million under the terms of the Sales and Purchase Agreement ("SPA") to be finalized by MCL and AHL.

After a series of negotiations, MCL as the purchaser and AHL as the seller agree to enter into the SPA on 9 March 2020 (the "Transaction Date"). The consideration will be paid by MCL to AHL in the following manner:

1. 10% to be paid on the Transaction Date;

2. 90% to be paid on the date when 200,000 shares in AL are duly transferred from AHL to MCL.

An extract from the MCL and AL's latest audited financial statements is shown below: MCL AL HK$ million HK$ million Turnover 5,000 750 Operating and finance costs (2,500) (500) Profit before tax 2, 500 250 Tax (450) (50) Profit after tax 2.050 200 HK$ million HK$ million Non-current assets 20,000 2,600 Current assets 4,000 900 Total assets 24.000 3,500 Number of issued shares 200 million 200,000