Question 2 MDC Holdings Limited (MDC) is a company listed on the Main Board of the Stock Exchange of Hong Kong. It owns a manufacturing operation in mainland China and operates 38 stores in Hong Kong, Macau, mainland China, Singapore, and Malaysia. It sells its self-branded products through stores, watch boutiques, and multi-brand watch stores, as well as through an online shopping platform. David Tai (David), who owns 51% of the shares of MDC, is also the Chairperson of the Board of Directors of MDC. Due to the economic slowdown, MDC has been making a loss over the past two years. To improve its cash flow, MDC's Board of Directors has been discussing whether to sell the entire interest of MDC's manufacturing operation (Factory A) in Dongguan, China to David's spouse, Anna. It will be an one-off transaction (Transaction). MDC's Board of Directors are in the final stage of discussions with Anna. It is expected that Anna will pay for the transaction in cash, as consideration upon completion of the Transaction. The Finance Director of MDC confirmed the following data which are relevant for calculating the ratio tests under Chapter 14 of the Listing Rules: MDC Factory A Total assets $1,000 $100 Asset ratio Revenue $100 $15 Revenue ratio Net profit $10 $2.6 Profit ratio MDC's Market Capitalisation $500 Consideration of the transaction $50 Consideration ratio Note: all figures in the table above are in HK$ million. ? ? ? ? REQUIRED: (a) Based on the information given above, calculate the relevant ratio tests and explain which type(s) of transaction the proposed transaction will be classified into under Chapters 14 and 14A of the Listing Rules. (13 marks) (b) With regards to your answer in (a) above, discuss the compliance requirements of MDC's proposed Transaction under the relevant Listing Rules. (12 marks) [Total for Question 2: 25 marks]