Question 1 (50 marks) Sanda Ltd (the Company’), a company incorporated in Hong Kong, sells shoes in Hong Kong. David and Edward hold equal shareholdings in the Company. It also has valuable stock-in-trade for a chain of five retail outlets in Hong Kong. In order to finance the growth of its business, David and Edward have approached a bank for the grant of business a loan. The bank manager suggested that a loan could be drawn in favour of the bank with a floating charge. Unknown to David, Edward had established a factory manufacturing shoes in Dongguan, China, several years ago. Recently, Edward has begun to buy shoes from the Dongguan factory on behalf of the Company. The factory sold products to the Company at a normal market price. Such products are well received by customers of the Company. Show transcribed image text Question 1 (50 marks) Sanda Ltd (the Company’), a company incorporated in Hong Kong, sells shoes in Hong Kong. David and Edward hold equal shareholdings in the Company. It also has valuable stock-in-trade for a chain of five retail outlets in Hong Kong. In order to finance the growth of its business, David and Edward have approached a bank for the grant of business a loan. The bank manager suggested that a loan could be drawn in favour of the bank with a floating charge. Unknown to David, Edward had established a factory manufacturing shoes in Dongguan, China, several years ago. Recently, Edward has begun to buy shoes from the Dongguan factory on behalf of the Company. The factory sold products to the Company at a normal market price. Such products are well received by customers of the Company.
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