Restricting Corporate Directorship in Private Companies

The new Companies Ordinance (Cap. 622) ("the new CO") requires every private company to have at least one director who is a natural person, to enhance transparency and accountability.

Section 456 of the new CO maintains the restriction on corporate directorship in public companies, companies limited by guarantee and private companies which are members of a group of companies of which a listed company is a member. This restriction, however, does not apply to other private companies which are required to have at least one director who is a natural person.

Pursuant to section 458 of the new CO, the Registrar of Companies may direct a company to appoint a director who is a natural person in compliance with the requirement. If a company fails to comply with the direction, the company and every responsible person of the company commit an offence, and each is liable to a fine of $100,000 and for a continuing offence, a further fine of $2,000 for each day during the period.

Sections 457 and 458

Part 10, Section 89 of Schedule 11

For private companies registered under the old Companies Ordinance (Cap. 32), there is a grace period of 6 months after the commencement date of the new CO for the companies to comply with the new requirement.

Appointments of new directors should be reported to the Registrar of Companies in the specified form within 15 days pursuant to section 645 of the new CO.