What is a Resident Director?

A resident director in Hong Kong is either a citizen in Hong Kong who fulfils the eligibility criteria to hold a company's directorship. A resident director can also be a foreign citizen who fulfils the eligibility criteria to reside in Hong Kong.  Companies do not run by themselves. A director takes all the strategic decisions for a company. The directors are considered the agents of the company. Without their guidance and prudence, the company would not be operating correctly. A resident director would have the same responsibilities as the usual director of a company.

Board of Directors 

The Board of Directors (BOD) represents the authority of the company. All the decisions of the company are taken through the BOD. A company's resident director cannot act on behalf of the company without the express or implied authority of the BOD. The company has the status of a legal person; hence, the members who own the company have limited liability. The main benefit enjoyed by a limited company is the principle of limited liability of the members. The directors of the company may or may not be the owners of the company. However, the company directors can have dual roles as the shareholders and owners of the company. Resident directors would have the same responsibilities and roles played by the director of an organization. 

Duties of Resident Director 

The board of directors are the central authority for the company to enter into strategic decisions and contracts. However, each director of the board has its role to play in making decisions regarding the company. It is the individual and the collective responsibility of the directors to look for the company's best interests. Every resident director has the following duties to follow in the company. The director’s duties are divided into the following:

• Duty of Care

This means the director has the utmost duty when it comes to the company.  The director must be reasonable and prudent in making decisions for the company. The duty of care has evolved from common law principles.

• Duty to Act in Good Faith towards the Company

The director must always think from the company's perspective. All the decisions made by the director must benefit the company. For example, a director of a company enters into a contract. Such a contract must be carried out for the benefit of the company.

• Duty to Avoid Conflict of Interests

Conflict of interests comes from common law principles, which means a clash of two or more important interests. As per the Companies Ordinance of Hong Kong, the directors of a company must reveal their interests in the company's board meeting. The directors act as a fiduciary to the company. For example, when an individual is creating a trust for the beneficiary, a trustee is appointed to manage the trust property for the beneficiary's interest. However, if the trustee misappropriates the trust property, there is an active breach of the trustee's fiduciary duty.

Similarly, the director of the company must act as a fiduciary in carrying out his duties for the company. The director of the company must disclose any conflicts of interest with the company. For example, when the director is entering into any form of the service contract and if this contract clashes with the interests of the company, then the director must disclose the same in the board meeting.

• Duty to be Diligent, Skillful, and Act in the Best Interests of the Company

This provision for resident director duties is present under section 465 of the Companies Ordinance.  Reasonable skill and diligence must be exercised by a person who acts in the company's best interest. The threshold for determining the reasonableness would be based on a prudent individual performing the same amount of tasks as a director. All other attributes of the resident director will be taken in determining the prudence of the director. This would also include the director's amount of knowledge and experience in handling transactions within the company. This duty must not only be to the company but also should include the duty to the external stakeholders of the company.

• Duty to not take any Secret Profits

When the director enters into a transaction for the company, there should not be any form of secret profits taken by the director in the transaction. The director must not pocket any expenses from the contract or transaction. For example, a director is entering into a contract for the company. However, there is some portion of the commission that is received by the director. The director does not disclose this commission to the company. As a resident director, it is crucial to disclose the commission earned from the contract to the company.

Resident directors also have similar duties as a normal director of a company. 

Eligibility Criteria for becoming a Resident Director in Hong Kong

A director is an agent for the company. All the transactions entered into by the company are due to the director. The following criteria are required to become a resident director in Hong Kong:

• Educational/ Professional Qualifications

As per the company requirements, directors have to have the minimum educational criteria as required by the company.

• Experience

Directors of a company must have the minimum experience to hold the position of directorship. Experience is a crucial requirement for a director in the company.

• No form of Disqualification

The director of the company must not suffer from any form of professional disqualification that does not allow the individual to act professionally.

• Criminal Convictions

A director must not have any form of criminal convictions or adjudge as a bankrupt or insolvent individual. This would apply to both residents as well as foreign directors.

• Private Limited Company

A private limited company or another corporate can qualify as a director of a company. However, a company must have at least one director who is a natural person (individual).

• Public Limited Company

A public limited company also has to have a minimum amount of directors. A private company is not eligible to be a director of a public limited company. Public Limited Companies and Companies, which are limited by guarantee in Hong Kong, are required to have a minimum of two directors.

• Age Criteria

When a director is a natural person (individual), then he must be more than 18 years of age.

• Foreign Directors

Companies are also allowed to appoint foreign directors. There is no residency requirement until and unless it is specifically mentioned in the memorandum of association and articles of association of the company.

Regulatory Authority for Appointment of Director

The primary regulatory authority for the appointment of a director in Hong Kong is the Companies Ordinance. This ordinance provides the mandatory requirement for a company to appoint a director. Every private limited and public limited company requires appointing a director in Hong Kong. 

Process for Appointment of Resident Director in Hong Kong

Disclosure of Directors Details

When the company appoints a director, then they must disclose the details of the director in public.  This must be carried out within 15 days of the appointment of the director. The notice must be filed with the registrar of companies. The following information has to be disclosed regarding the director of the company:

Information on the director

• such as residential address.
• Director of Identity Number.
• Passport Information of the Director in case the director is a foreign national.
• Any other information related to the director of the company.

Register of Directors

Every private company having a minimum number of directors must maintain a register of members and directors. This registrar must be available for public inspection. Every director of the company must provide the registrar of companies with the above information.

necessary papers required

The following necessary papers are required to become a director in Hong Kong:

For an Individual Person

• If the individual is a resident of Hong Kong, then a Hong Kong ID and Citizenship Card is required for becoming a director.
• For an individual who is not a resident of Hong Kong- Visa and Passport are required.

For a company

• Certificate of Incorporation of the company.
• The Company must submit a Memorandum of Association and Articles of Association.

Enterslice Advantage - Resident Director Services

At Enterslice, we have expert professionals who can assist you in developing your business globally. Our professionals have expert knowledge on appointments of directors and related services in Hong Kong. Using our director services in Hong Kong will provide you with the following advantage:

• We will assist you in the process of appointment of directors for your company.
• We will provide you with information on the relevant director duties that have to be followed by a director.
• We also offer Paper works support services for director recruitments.

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