Question 3 Honest Trading Limited ("the Company") is a private company limited by shares. It owned an office building in Sheung Wan. Andrew and Jackie are the only members and directors of the Company. The Company's business has dropped a lot recently because of the US-China trade war. It has ceased operation for two months. After reviewing the financial position, Andrew and Jackie believe that the Company could repay all its debts if it realizes all its assets. They consider to dissolve the Company by deregistration. (a) Discuss whether the Company could be dissolved by deregistration. (12 marks) (b) Explain TWO advantages and TWO disadvantages each of deregistration as compared to voluntary winding-up of a company. (8 marks) (Total 20 marks) Question 4 Sunshine Company Limited ("the Company") is a private company selling disposable products in Hong Kong. In order to expand its business in mainland China, the Company would like to get HKS20 million additional fund. The board of directors were thinking of either issuing new shares or debentures for raising the necessary capital. (a) Explain the major differences between the two capital raising methods. (10 marks) (b) Suppose the board finally decided to borrow a $20 million secured loan from the BBS Bank ("the Bank"). The Company proposed to create a floating charge over all its current assets in favour of the Bank to secure the loan. However, the Bank insisted that the Company should charge all its office and factory premises under a fixed charge for securing the loan. (i) Compare the nature of fixed and floating charges. (8 marks) (ii) Name two types of assets which are usually charged under a floating charge. (2 marks) (Total 20 marks)