Directors' fiduciary duties in Hong Kong

Fiduciary Duty of Hong Kong Company Directors

Directors of a Hong Kong company owe the company a fiduciary duty. They must act in its best interests and those of its members as a whole. The Companies Ordinance (Cap. 622) codifies this obligation, binding all directors, including shadow and de facto directors. This duty requires acting in good faith, avoiding conflicts of interest, and not making unauthorised profits from the position.

Directors' Duties Hong Kong

Part 10, Division 2 of the Companies Ordinance (Cap. 622) sets out the primary directors' duties under Hong Kong law. These duties are owed to the company, not to individual shareholders or creditors. Acting in good faith means exercising powers for a proper purpose and in the way most likely to promote the company's success for the benefit of its members as a whole.

Cap 622 Director Duties

Sections 465 to 472 of the Companies Ordinance detail the duties under Cap 622. Section 465 requires directors to act within the company's constitution and to exercise powers only for their proper purposes. The duty to exercise independent judgment is codified in section 466. Section 467 demands reasonable care, skill and diligence. Section 468 sets out the duty to avoid conflicts of interest, while section 469 concerns the duty not to accept benefits from third parties.

Company Director Obligations Hong Kong

Hong Kong law imposes both fiduciary duties and a statutory duty of care on company directors. A director must avoid any situation where their personal interests conflict with the company's. This prohibits exploiting company property, information or opportunity for personal gain without member consent by board resolution. Directors must also declare any interest in a proposed transaction or arrangement with the company.

Breach of Fiduciary Duty Hong Kong

Hong Kong courts grant equitable remedies for a breach of fiduciary duty. If a director makes an unauthorised profit, the company may seek an account of profits. The company can also claim equitable compensation for any loss suffered. A breach can result in personal liability, and the court may issue a disqualification order barring the director from office for a specified period. The company can take action for breaches, and the Registrar may also enforce compliance.