Maybe your friend asked you to be a director of their company. Or perhaps you’re starting your own business in Hong Kong and naming yourself director. Either way, you need to know what you’re getting into. This isn’t just about having a fancy title or signing some papers.
Let’s get real about your responsibilities as a Hong Kong company director.
Directors Must Meet High Standards of Fiduciary Duty and Care
1. Fiduciary Duties
Fiduciary duties are fancy words for “don’t mess up”. You have to put the company’s interests first. Here’s what that means:
- Act in Good Faith: Directors are required to act honestly and with genuine intent to benefit the company.
- Exercise Powers Properly: Directors must use their authority solely for company-related matters and not for personal advantage.
- Avoid Conflicts of Interest: Directors should disclose any personal interests that may conflict with those of the company and deal transparently with such conflicts.
- Maintain Independence: Directors are expected to make decisions independently, without undue influence or bias.
Hong Kong’s Companies Ordinance isn’t messing around. It includes specific provisions to support these fiduciary duties:
- Disclosure of Conflicts: Directors must openly disclose conflicts of interest, fostering transparency and trust.
- Credit Restrictions: Directors are restricted from receiving credit from the company to prevent misuse of corporate resources for personal benefit.
2. Duty of Care and Skill
Directors must also exhibit a standard of care, skill, and diligence in their roles, which is assessed through two key measures:
- Personal Skill and Experience: Directors should demonstrate the care and diligence expected of someone with their individual expertise.
- General Expectations for the Role: Directors are also held to a broader standard, which requires acting as a reasonably diligent person with the general skills and knowledge expected of someone in their position.
Translation: If you don’t know something, learn it. If you’re unsure, ask questions. “I didn’t know” won’t save you if things go wrong.
The Bottom Line
Whether it’s your company or your friend’s, being a director means real responsibility. It’s not just about the title. It’s about protecting the company’s interests and following the law.
If you’re having second thoughts, that’s normal. Better to think twice now than face problems later. And if you’re already a director? Time to make sure you’re doing it right.
Need Help Navigating Hong Kong’s Director Requirements?
At Monx, we’re here to guide you through the intricacies of corporate governance in Hong Kong. If you’re considering a directorship or want to ensure compliance for your company, reach out to us for expert support. Contact us at hello@monx.team – let’s ensure your business meets all governance standards effectively.
