Director’s Duties (Private Limited Company)
Section 465 of the Companies Ordinance (Cap. 622) requires a director to exercise reasonable care, skill and diligence, which means the care, skill and diligence that would be exercised by a reasonably diligent person with:
(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company (objective test);
(b) the general knowledge, skill and experience that the director has (subjective test).
In summary, a director of a private company has the following duties:
· Duty to act in good faith for the benefit of the company as a whole
· Duty to use powers for a proper purpose for the benefit of members as a whole
· Duty not to delegate powers except with proper authorization and duty to exercise independent judgment
· Duty to exercise care, skill and diligence
· Duty to avoid conflicts between personal interests and interests of the company
· Duty not to enter into transactions in which the directors have an interest except in compliance with the requirements of the law
· Duty not to gain advantage from use of position as a director
· Duty not to make unauthorized use of company’s property or information
· Duty to observe the company’s constitution and resolutions
· Duty to keep accounting records
For legal advice and services on directorship and board room disputes of private company in Hong Kong, please contact CHOW & CHEUNG, Hong Kong Solicitors & Notary Public [ Tel: +852 2856 3799 or Email: cac@ccsn.hk]
Website: www.ccsn.hk