Hong Kong Company Directors: Duties & Requirements

Starting a business in Hong Kong is a quick and straightforward process, which is why many foreign companies and entrepreneurs come to Hong Kong. 

Furthermore, Hong Kong offers strong government support and tax benefits, giving entrepreneurs even more reasons to start a business in Hong Kong.

But one thing that often gets overlooked is the role of the company's board of directors,  and this article aims to cover that gap. 

We'll cover what it takes to be a director in a Hong Kong company, the legal duties involved, and offer tips to help you make informed decisions for your board. 

Whether you're a seasoned business owner or new to Hong Kong, this guide will give you the key information you need.

Who Can Be a Company Director?

The Hong Kong Companies Registry requires that, during the process of establishing any company, a natural person consents to act as the executive director for the newly incorporated company and to follow the Articles of Association (AoA). 

The person nominated as the director of the company holds the power to authorise and act on behalf of the company and is the principal person to manage the company. For example, all documents from the local Hong Kong authorities related to operations and compliance must be signed by a company legal representative and, in this case, a director. 

A company with only one director will be known as the sole director. There is no limit to the number of directors nominated for a Private Limited Company. 

However, it is advised to keep the number of directors to a minimum to simplify the process of signing documents and official forms of the company.

💡 Tip: When establishing a Hong Kong Private Limited Company, there is a minimum requirement of one director and one shareholder. The same natural person can fulfil these roles.

Requirements to Be a Company Director

Here are some of the requirements for a natural person to become a director:

• Be of the majority of age (in Hong Kong, this means being 18 years or older).
• Not have any criminal record of malpractice or bankruptcy in Hong Kong.

Other considerations:

• Nationality: There are no restrictions on nationality to become a director.
• Residency: It is not required for the director to be a permanent resident in Hong Kong.

In most cases, the person who becomes the director of a Hong Kong Private Limited Company does not need to come to Hong Kong to be physically present during the incorporation process. 

However, if the director is also assigned as the authorised signatory for the company’s corporate bank account, for example, most traditional banks in Hong Kong will require the director to travel to conduct a physical interview.

Some Alternative Choices of the Director

If, for some reason, a director cannot be nominated for personal reasons or because of the overseas business structure, there are still solutions available.

 Here are the two most common solutions:

• Nominee Director: This individual is not a part of the company and is nominated to act as a director. They are third parties qualified to fulfil the role and follow the code of conduct. 
  
  In Hong Kong, some companies offer this service, as it is often convenient to have a local director. 
  
  However, it must be considered that all powers of the registered company are being granted to an outside party with whom a long-term stable relationship is not guaranteed.
• Corporate Director: This is when a company becomes the director of the Private Company. 
  
  For this to be allowed, the corporate director must not belong to a conglomerate or a group of companies in which one of them is a listed company on the stock market.

Duties and Powers of the Company Director

The director is in charge of running and authorising almost all of the acts by the legal entity. Some directors can have more specific functions that are outlined within the Articles of Association, such as a finance director, an executive director, or a non-executive director.

Here is a quick overview: 

• Always act in good faith and for the benefit of the company.
• Use their powers only for established purposes.
• Do not delegate any powers without due process.
• Leave out personal gain while conducting his role of director.
• Act with care, diligence, and expertise.
• Do not conduct company activities that will favour their personal interest.
• No abuse of power.
• Keep the accounting books and records in order
• Avoid using the company’s property without authorisation.
• Follow and comply with the Articles of Association (AoA) of the company.
• Do not engage in receiving benefits from outside parties for personal gain.

Powers of the Company Director

This is a list of the elements within the company incorporation process that include granting powers to the company director(s): 

• The Articles of Association (AoA).
• The Hong Kong Common Law.
• Any agreement signed by the Shareholders.
• The Companies Ordinance (Cap 622).
• A special or ordinary resolution passed by the members of a company.

While the Companies Ordinance (Cap 622) is the main regulatory framework to guide the conduct of a company registered in Hong Kong, the Articles of Association (AoA) establish its internal structure and the position and roles that will be occupied, as well as the capacities of the director. This is the main document that rules the internal conduct of a company. 

Conclusion 

Now that everything about a Hong Kong company director’s duties and requirements has been covered, you should have confidence about becoming or assigning the position of a company director. 

However, consulting with a professional company secretary is recommended to ensure your interests are protected and that you follow local laws and regulations.

Lastly, if you want to make a suggestion or add relevant or missing information, don’t hesitate to contact us at marketing@statrys.com.