What You Should Know About Change Of Director In Hong Kong Company

Appointment or removal of the director might be crucial for any Private Company, as it may influence its management and organization. In the case of Hong Kong, this process is fairly simple to implement, but there is an importance to do it in a right way to resolve the possible future complications, especially in cases of only one director, which is a common and simple company structure.

Since the directors as key decisions makers are responsible for representing the sentiment of the company and are also authorized to act on its behalf, governance issues need to be adequately understood, particularly in light of disputes. Such regulatory compliances are of great importance to the owners of the company in ensuring any removing or adding of the directors are done in accordance with the given regulations.

In this article, we are going to look at the Hong Kong change of director process, and the relevant Companies Ordinance requirements as well. However, before moving on to our legal discussion, we must make a brief introduction to this law.

Hong Kong Companies Ordinance

The Board of Directors for a Private Limited Company in Hong Kong must necessarily have at least one director, pursuant to the Companies Ordinance. The aforementioned what could be termed as the sole directorship is for that reason the most popular Directorship type. On the incorporation of the company, one person must be appointed as the director in the governance document. The appointment of the first director as effected from the time of inception will continue until formal change forms are introduced to the respective authorities.

Private Limited Companies’ Directors Requirements

In accord with regulations, people who are 18 and above, no matter they are locally or non-locally residents in Hong Kong, have the opportunity to work as directors in the companies. But it is essential that their past records are without any such negative activities like malpractices or bankruptcy. In like manner, a Private Limited Company may appoint a corporate entity as a director, but that corporate entity should be represented by a natural person as a director too. At least two directors of the company will be secured that one of the directors is a corporate entity and the other one is a natural person.

It should be remembered that a director may also need to quit in cases other than personal ones like health concerns, or to leave management as an example of when their role in the company is no longer needed. But, any internal actions that are not communicated to the related authorities, such as Hong Kong’s Companies Registry, will not be lawfully certified. The go-ahead for such a step is the approval of the director who is stepping down. The director as the official and resignee holds the authoritative powers to sign and process renouncements and in some other instances do business accounts. As a result, it is imperative that we take the initiative to start the compliance process before the situation turns into a legal matter.

For more description, please refer to the Companies Registry on the Companies Ordinance.

Removing or Adding a Director

The article exposed that Hong Kong’s business environment provides flexibility in many areas and simplicity in system for instance business restructuring through the straight forward system. Among the mergers and acquisitions rearrangements of a firm is also a case of the law, and it is not difficult.

Ensuring that regulations are complied with, and effective communication with the regulatory authorities is achieved, involves having a knowledgeable and experienced member of staff within the company. For this role, the company secretary is the major player who gives necessary advice that will help the Company to adapt to any changes and not to be in any legal conflict with the regulators. Next paragraph briefly introduces the function of the Company Secretary and the roles and responsibilities it covers.

Company Secretary Role in Change of Director

The Company Secretary is the person that needs to be on board of your company as the one who sees to it that your business adheres to the regulations in and out of your workplace and it is in full compliance with the local legislations.

This office will be held by the natural person or the legal person, who is an individual or company, that corresponds with the rest of the stipulations in Hong Kong. When it comes to who will occupy this position, he or she must be from Hong Kong in order to satisfy the legal requirements related to residency.

In addition to that, your Company Secretary can be useful to you because he can keep you updated about the latest changes in company’s regulations in Hong Kong and also can provide advice on which type of change is better for your company.

Read What is Company Secretary in Hong Kong And Why Is It Required?

Adding a Director

The preparation of documentation where the form of resolution is used and signed by all the board of directors is required for the purpose of doing a company restructure. Here, there is a need for one special document which is Director’s resolution.

In order to add the new directors to your company’s structure, the resolution paper stated above should also contain the following information:

• Effective Date of the Change: By this date the person directly responsible having been appointed will officially begin his/her duties in addition to the powers and responsibilities implied. It becomes the key date for all further company filings with the local authorities of the country.
• Full name: The name stated here should be the same as in the official document issued by the authority, which can be a passport for foreigners or an identity card for Hong Kong citizens.
• Permanent address: This section needs also the personal person’s permanent address or registered address.
• Signed resolution: The resolution form, drafted for the purpose of selecting a new director should be signed by all the existing directors as a sign of their agreement.

We need to mention that this is the situation where there are no directors and the owners of this business apart, in this case, the process can run smoothly. Furthermore, there not be any conflicting items in the Articles of Association (AoA) of your company in which the addition of more people as directors is not allowed.

Given that the approval is reached, form ND2A which is called “Notice of Change of Company Secretary and Director (Appointment／Cessation)” should be submitted in 15 days from the moment of the resolution validity. The registration procedure will be finalized in 2 working days given that all the required documents are presented to the Companies Registry in Hong Kong. This further change will be reflected in the next Annual Report statement which will be submitted to the Agenda.

Removing a Director

Situations of conflict between a director and the company who are typically due to work related disputes or breakdowns in communication, the shareholders might resolve the matter by removing the director and appointing a replacement is the choice. Such a provision should illustrate clearly that a target director has the right to appeal the decision and make any arrangements necessary with the shareholders.

Nonetheless, a default case common will not reach an agreement and will be escalated to the Hong Kong court and the DPR will decide on the case by removing the director’s powers. The same form ND2A is required, which will be sent to the Companies Registry for finalizing the change.

In both cases, notification of the creditors to all relevant bodies, including the financial institutions holding the business account, is a key step that should not be overlooked immediately the process is completed. This deliberate action is effective in risk management and thus enables the company to experience seamless progression and uninterrupted business operation throughout the acquisition process.

How FastLane Group Can Help?

Navigating the process of changing directors in a Hong Kong company can be straightforward with the right guidance. At FastLane, we specialize in providing expert advice and seamless assistance to ensure your company’s compliance with local regulations. Contact us today to streamline the change of director process and maintain your business’s smooth operation. Let our experienced professionals handle the complexities so you can focus on growing your business.