How to appoint and remove officers in a Hong Kong Hong Kong

The mandatory corporate officers for Hong Kong companies are, firstly, directors and, secondly, a company secretary that ensures the company is compliant with the CO and other regulations. A company secretary is licensed as a “Trust or Company Service Provider” (TCSP), which is a license requirement under the Anti‐Money Laundering and Counter‐Terrorist Financing Ordinance (Cap. 615).

Private company limited by shares

A private company limited by shares must have at least one director, with at least one director being a natural person. If at least one director is a natural person, the private company is free to appoint a body corporate as a director (only if the private company is not part of a group which contains a listed company).

A private company can have a company secretary who is either a natural person or a body corporate. If there is only one director, they cannot also act as the company secretary.

Public company

A public company limited by shares must have at least two directors.

For a public listed company, the Listing Rules issued by The Stock Exchange of Hong Kong (Listing Rules) states that at least three independent non-executive directors must represent a minimum of one-third of the board. Additionally, a listed company cannot have a body corporate acting as its company secretary. The company secretary must also comply with certain academic and professional qualifications that satisfy the Stock Exchange.

A company’s first directors are appointed by the founding shareholders through a shareholders’ resolution, and these directors are named in the incorporation form filed with The Companies Registry (Hong Kong) (Companies Registry).

For the appointment procedure subsequent to the appointment of the first directors:

Private company limited by shares

Depending on what is provided for under the AoA, directors can be appointed either by the shareholders or the directors of the company.  

When appointment is by the shareholders, this can be done at any time through a general meeting or a written resolution. However, passing a written resolution requires unanimous agreement by all shareholders that are eligible to vote. As such, appointment through a general meeting can be more strategic as it only requires an ordinary resolution (a simple majority vote).

Under the Model Articles, a director can be appointed by the board of directors only when there is a casual vacancy (a vacancy on the board which arises for reasons other than retirement by rotation), or where the maximum number of directors prescribed under the articles has not been reached. The appointment can be done through a simple majority written board resolution or at a board meeting.

Under the Model Articles, the mode of appointment also has implications on the length of the office held by the director. Where a director is appointed:

• By shareholders, they are appointed for an unlimited period.
• By the board of directors, they must retire either at the next annual general meeting (AGM) after their appointment or, if there is no AGM, before the end of nine months after the company’s accounting reference period has concluded.

Public listed company

For a listed company, the Nomination Committee appointed under the Listing Rules is required to suggest candidates to the board of directors. Subsequently, a director may be appointed by either the board of directors or the shareholders. After appointment, the director must sign the required notices and declarations with the Stock Exchange, and the appointment must be announced on the Stock Exchange website.

In all cases, the register of directors must be updated, and the Companies Registry must be informed of the appointment within 15 days. All directors must also file a statement of their consent and be at least 18 years of age.

A director may resign at any time.

If either the AoA or the director’s service contract requires the director to provide a notice of resignation, such resignation is not effective unless it is in writing and left at the company’s registered office, or sent to the company in hard copy or electronically.

Private company limited by shares

A board meeting must be held to note the resignation of the director.

Public listed company

In addition to the requirements for a private company, among other formalities with the Stock Exchange, the director must provide reasons for their resignation, which will be announced on the Stock Exchange’s website.

For all types of companies, the Companies Registry must be informed of the resignation within 15 days, and the company should file form ND2A. However, if the director has reasonable grounds to believe the company will not comply with this requirement, they must file the relevant form with the Companies Registry themselves (form ND4).

As such, where a director is not contractually bound by a notice of resignation requirement, they may simply file the notice of resignation (form ND4) themselves, which may be strategic in contentious situations.

Private companies and unlisted public companies

Notwithstanding the procedures stipulated in the AoA or shareholder agreements (if any), the CO vests shareholders with the power to remove a director prior to the expiry of their term of office (excluding directors who are appointed “for life”). It is well-established that the director does not need to be given a reason for their removal.

A director cannot be removed by a written resolution of the shareholders. A general meeting with an ordinary resolution is required. The statutory procedure is lengthy and requires two rounds of notices. Firstly, a notice of 28 clear days prior to the general meeting must be given to the company (called “special notice”) to indicate the proposed resolution(s). This notice must also be sent to the director subject to the proposed removal, who is entitled under the CO to make written representations prior to the meeting and to speak at the meeting when it takes place.

Following the company’s receipt of the special notice, a board meeting must be held to authorise the convening of a general meeting and to issue notice of such convening. Once this has been authorised by the board, a second notice regarding the general meeting must be sent to all shareholders and the director.

Public listed companies

The same procedure above applies to listed companies. However, an announcement (including the reasons for removal) must also be posted on the Stock Exchange website. Subsequently, a circular and notice of the general meeting must be sent to the shareholders. Once the removal is effective, it must be announced on the Stock Exchange website.

As always, in both cases, the Companies Registry must be informed of the removal within 15 days, and the register of directors must be updated.

Although a director can be removed from office prior to the expiry of their term, they still have the right to pursue damages or compensation, subject to this right being provided for in their service contract or any other agreement. However, in practice, there is not much case law indicating many successful claims in this regard.