Can a company act as a director of another company

The Answer in One Sentence

No, for a private company limited by shares incorporated in Hong Kong, a director must be a natural person; a body corporate (another company) cannot be appointed as a director.

Can a Company Be a Director of Another Company in Hong Kong?

Hong Kong company law does not permit a company to be a director of the standard trading vehicle, the private company limited by shares. The Companies Ordinance (Cap. 622) requires every director of such a company to be a natural person. A company, being a body corporate with separate legal personality, does not qualify.

Section 662 of the Ordinance states that a private company must have at least one director who is a natural person. The effect is absolute: no director may be a body corporate. The directors' register must contain the particulars of natural persons only, and the Companies Registry will reject any filing on Form ND2A or Form ND2B that attempts to appoint a company as a director.

Corporate Director Hong Kong: Why the Rule Exists

A director is the individual responsible for the management and control of the company. A company cannot itself exercise judgment, attend board meetings, or give consent. Hong Kong company law, like most common law jurisdictions, requires that the person managing the company be a natural person who can be held personally liable for director duties. These duties include the duty to act in good faith, to avoid conflicts of interest, and to exercise reasonable care, skill and diligence.

Company as Director Hong Kong: The Contrast with the Company Secretary

Readers often confuse the director rule with the rule for the company secretary. While a Hong Kong company cannot have a company as a director, it can have a body corporate as its company secretary. Section 475 of Cap. 622 provides that a company secretary may be either a natural person ordinarily resident in Hong Kong, or a body corporate with its registered office or a place of business in Hong Kong.

This distinction is important. A company may validly appoint a corporate secretarial firm (a licensed trust or company service provider) as its company secretary. The same firm cannot be appointed to the board. The register of directors is filed with the Companies Registry on Form ND2A and must show only natural persons; the register of company secretaries is also filed on Form ND2A but may show a body corporate.

Can a Body Corporate Be a Director in Other Company Types?

The rule applies specifically to a Hong Kong private company limited by shares. For public companies limited by shares, the position is the same. For other company types such as a company limited by guarantee, the articles of association may permit a body corporate to act as director, but the default position under Cap. 622 section 662 applies unless the articles expressly provide otherwise. In practice, most guarantee companies and public companies follow the private company model and require natural persons as directors.

Hong Kong Corporate Director Rules: Checking Your Articles of Association

Every Hong Kong company has articles of association. These set out the rules for appointing and removing directors. While the Ordinance bars a body corporate from being a director for a private company limited by shares, the articles may also impose additional requirements, such as a minimum number of directors, a maximum age, or a requirement that the director be ordinarily resident in Hong Kong. A company reviewing whether it can appoint a body corporate as a director should check its articles first. If the articles are the model articles set out in the Companies Ordinance, they follow the default position: a director must be a natural person.

Appointing a Company as Director HK: The Filing Process

If a company attempted to appoint a body corporate as a director, the filing on Form ND2A would be refused by the Companies Registry. The form requires the director's full name, identity document number and residential address. A corporate entity cannot provide a personal identity document number or a residential address of a natural person. The form would therefore be incomplete and invalid.

The correct procedure to appoint a director is for the members to pass an ordinary resolution approving the appointment, and then file Form ND2A within 15 days of the appointment. The person being appointed must sign Form ND2A to confirm consent.

What Should a Hong Kong Company Do Instead

A Hong Kong company that wants a group entity to have significant influence over board decisions should instead consider appointing the individual who represents the corporate entity as a director. For example, if Company A wants to control Company B, Company A appoints one of its directors or employees as a director of Company B. That individual remains a natural person subject to all director duties under Cap. 622.

The individual will appear on Company B's register of directors and in the Companies Registry's public record. The appointing company (Company A) must ensure the individual understands the fiduciary duties owed to Company B, which may conflict with duties owed to Company A.