You must act within the powers imposed by the Companies Ordinance and the company’s articles of association (“Articles”). The articles govern
how the company is to be run, including what the directors’ powers and responsibilities are. The Articles also set out how decisions are to be taken. For example, the procedures for calling a board meeting and how many directors are needed to vote on a proposal.
In exercising directors’ powers, you must exercise a degree of care, skill and diligence in your actions as a company director.
You are generally not liable for the actions of your fellow directors if you knew nothing about them and took no part in them, however you have a duty to make sure that you are informed about the company’s affairs – turning a blind eye is not an option.
Generally speaking, a director must observe the following duties:
This will be measured via a subjective test, i.e. where a director with additional or specialist knowledge and experience is appointed, they will be held to a higher standard of care compared to someone without. There will also be an objective test, i.e. a standard measurement of what is required of a director who has “the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions that are carried out by the director in relation to the company”. – the directors owe a fiduciary duty
There are many other areas of the law that impose duties on directors and senior managers.
Hong Kong has established the Prevention of Bribery Ordinance (POBO) which is primarily aimed at the prevention of corruption of public officials and corrupt transactions within the private sphere. (1) Prevention of Corruption of Public Officials
A person commits the offence of bribery, whether in Hong Kong or elsewhere and without lawful authority or reasonable excuse, if they offer any advantage to a public servant or chief executive, as an inducement to or reward for or otherwise on account of that public servant’s or the chief executive’s;
having assisted, favoured, hindered or delayed,
any person in the transaction of any business with a public body.
For the purposes of the above, an advantage could be described as;
The chief executive or public servant who solicits or accepts any advantage in the aforesaid circumstances will also be guilty of an offence.
(2) Corrupt transactions within the private sphere
Any agent shall be guilty of an offence if they, without lawful authority or reasonable excuse, solicits or accepts any advantage as an inducement or reward for or otherwise on the account of their;
person in relation to their principal’s affairs or business
Any person who, without lawful authority or reasonable excuse, offers any advantage to any agent in the aforesaid circumstances shall also be guilty of an offence.
An agent includes a public servant and any person employed by or acting for another (the principal). A director would be regarded as an agent of the relevant company.
Penalties for committing an offence under POBO can result in fines up to HK$1 million and imprisonment for those responsible for a period up to ten years.
AML legislation in Hong Kong is derived from several sources, including;
Ordinance (DTROP) (Cap 405)
Ordinance (UNATMO) (Cap 575)
Ordinance (AMLO) (Cap 615)
Where an individual believes that property has been obtained as a result of crime, it is an offence to fail to disclose this belief to the relevant individual, including the assigned individuals of the entity, a police officer or any other relevant civil officer.
Legislation imposes various requirements on financial institutions relating to customer due diligence and record-keeping. If a person who is an employee of a financial institution or is employed to work for a financial institution or is concerned within the management of a financial institution (which would include its director), knowingly causes or knowingly permits the financial institution to contravene a specified provision, the person will commit an offence. However, it is a defence for that person to prove that they acted in accordance with the policies and procedures established and maintained by the financial institution for the purpose of ensuring compliance with the relevant specified provision.