Reserve Director

Are you a sole director and shareholder of a Hong Kong company?

A board of directors generally exercise most of the powers of a company and in the case where there is only one director, that sole director is the only person who can exercise and authorize others to exercise such powers. That includes signing significant contracts to overseeing the day to day operations of a business. Many small and medium size enterprises in Hong Kong are operated by a sole director, who is also the sole shareholder. The advantage of this is that the company can be managed much more efficiently and can react to changes in the industry and market quickly.

However, if the sole director and shareholder unexpectedly dies, then the company will not have any director to exercise or authorize the exercise of its powers. Also, given that the sole director is also the sole shareholder, there will be no person capable of appointing a new director to act for the company. To deal with this, a grant of representation would have to be obtained from the courts to enable his or her successors to take the shares and then appoint a new director. In any event, there would be significant delays in effectively operating the company before such order or grant is obtained. Prior to such time, the company would not be able to produce any board resolutions as would generally be required by Hong Kong landlords as well as sign off on audited accounts.

The Reserve Director

One can plan ahead and avoid the above scenario by appointing a reserve director that will act in the place of the sole director in the event of his or her death. The nomination can be done even though no such provision is in the Articles of Association of the company. Once nominated and in the event of the death of the sole director and shareholder, the reserve director will act as the sole director of the company until such time another person is appointed as a director or he or she resigns. During this period, the reserve director will be vested with full powers and responsibilities of the sole director and shall comply with all duties of a director.

If this is something that you would like to know about in more detail, please contact Eddie Look of Tanner De Witt’s Corporate Commercial team.

If you are contemplating placing a reserve director, or any legal transaction, you should consult our solicitors, who can provide you with the advice that you need, for your specific circumstances:

Eddie Look
Partner | E-mail
Tim Drew
Partner | E-mail
Edmond Leung
Partner | E-mail
River Stone
Partner | E-mail
Pádraig Walsh
Partner | E-mail

Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

请注意:

与泰德威律师事务所在电邮沟通之前(或通过其他方式), 请阅读此连结內的免责声明及此连结內的隐私政策。免责声明和隐私政策亦列于本网站的注脚內。 在您收到我们的书面声明确认我们将代表您处理该案件之前,您不应向我们发送任何有关该案件的机密资料。 于我们接受代理该案件后, 我们将接受您发送有关该案件的机密资料, 之后我们可以亳无障碍地交换机密资料。 感谢您对泰德威律师事务所的关注。

免责声明隐私政策

Please note:

Before you contact Tanner De Witt by email (or otherwise), please read the Disclaimer at this link. and our Privacy Policy at this link. The Disclaimer and Privacy Policy is also at the footer of this website. Until we have informed you in writing that we represent you as a client you should not send us any confidential information. We will only accept your confidential information when we confirm we represent you as a client, and then we can exchange confidential information freely. Thank you for your interest in Tanner De Witt.

Disclaimer and Privacy Policy