Removing a Director in Hong Kong
Removing a director from office in Hong Kong is a legal process that requires following specific procedures outlined in the Companies Ordinance (Cap. 622). Here's a general guide:
1. Ordinary Resolution:
A director can be removed by an ordinary resolution passed at a general meeting of shareholders. This means a simple majority of votes is required to remove the director.
This can be done regardless of any provisions in the company's articles of association or any agreements between the company and the director.
2. Special Notice:
A shareholder proposing the removal of a director must give a "special notice" to the company at least 28 days before the general meeting. This notice should specify the intention to remove the director and the reasons for the removal, if any.
3. Director's Right to be Heard:
The director being removed has the right to:
Make written representations to the company.
Request that these representations be circulated to all shareholders or read out at the general meeting.
Be heard at the general meeting to defend themselves against the removal.
4. General Meeting:
The company must call a general meeting to consider the resolution to remove the director.
Shareholders will vote on the resolution, and if the resolution passes by a simple majority, the director will be removed from office.
Important Considerations:
Private Companies: If the company is a private company, a director who has held office for life since 31 August 1984 cannot be removed by ordinary resolution.
Listed Companies: Listed companies may have additional rules and regulations regarding the removal of directors, which should be consulted.
How a Director Can Be Removed from Office in Hong Kong
The removal of a director from office in Hong Kong is primarily governed by the Companies Ordinance (Cap. 622). Here are the primary methods:
1. Removal by Ordinary Resolution of Shareholders:
General Meeting: A general meeting of shareholders must be convened.
Notice Requirement: A special notice of at least 28 days must be given to the company.
Resolution: A simple majority of votes cast by shareholders present and entitled to vote at the meeting is required to remove the director.
2. Removal by Court Order:
Grounds: The court may order the removal of a director if they:
Are persistently in breach of their duty to the company.
Are acting in a way that is unfairly prejudicial to the interests of the company's members.
Are disqualified from acting as a director.
Key Considerations for Directors and CEOs:
Articles of Association: Review your company's Articles of Association to understand any specific provisions regarding the removal of directors.
Shareholders' Agreements: If your company has a Shareholders' Agreement, it may contain provisions related to the removal of directors.
Director's Duties: Always act in the best interests of the company and comply with all legal obligations.
Board Meetings: Attend board meetings regularly and participate actively in decision-making.
Financial Reporting: Ensure accurate and timely financial reporting.
Risk Management: Implement effective risk management strategies.
Corporate Governance: Adhere to good corporate governance practices.
By understanding the legal framework and taking proactive steps, directors and CEOs can protect their interests and the interests of the company.
Additional Resources:
Companies Ordinance (Cap. 622): https://www.elegislation.gov.hk/hk/cap622
Companies Registry: https://www.cr.gov.hk/
How Bestar Can Assist in Removing a Director in Hong Kong
How is a Director Removed from Office? | Legal Guide for Company Directors and CEOs in Hong Kong
Bestar can provide invaluable assistance in the process of removing a director from office in Hong Kong. Here are some ways we can help:
1. Understanding Legal Requirements:
Companies Ordinance: We can interpret the relevant provisions of the Companies Ordinance to ensure compliance with all legal requirements.
Articles of Association: We can review the company's Articles of Association to identify any specific procedures or limitations related to director removal.
Shareholders' Agreement: We can analyze any shareholders' agreements to determine if they contain provisions relevant to director removal.
2. Strategic Planning and Advice:
Legal Strategy: We can develop a strategic plan for removing the director, considering factors like potential legal challenges and shareholder sentiment.
Risk Assessment: We can assess the potential risks and liabilities associated with the removal process.
Communication Strategy: We can advise on how to communicate with shareholders and other stakeholders to minimize negative impacts.
3. Drafting Legal Documents:
Notices of Meeting: We can draft notices of the general meeting to be held to consider the removal resolution.
Resolutions: We can draft the necessary resolutions to remove the director.
Professional Correspondence: We can prepare and send professional correspondence to the director and other relevant parties.
4. Post-Removal Procedures:
Appointment of New Director: We can assist in the appointment of a new director to fill the vacancy.
Compliance with Regulatory Requirements: We can ensure that the company complies with all post-removal regulatory requirements.
By engaging Bestar, you can increase the likelihood of a successful and legally sound director removal process.
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