Appointment and Resignation of Directors

Key Takeaways

• Upon resigning as a director of a company, facing bankruptcy, or being prohibited by law to act as director, the existing director gives a company grounds for their removal. 
• Before removing a director from a company and appointing a new one, the company must first pass a board resolution or a shareholders resolution, depending on what its Articles specify. 
• The change of director form (ND2A) should then be filed to update the relevant government bodies on the directors’ particulars 
• Director changes should be brought to bank’s attention to prevent account freezes

Though the director is an indispensable cog in the corporate machine, it does not necessarily mean that a company will have just one director in its lifetime. 

Perhaps your director has resigned; perhaps your visions for the company no longer align; or perhaps, you simply wish to enlarge the size of your board of directors. In any case, the transition must be handled in a compliant manner, and you’ll find a full guide on how to do so below. 

Removing a director from a company: When is it necessary?

In Hong Kong, an individual ceases to be a director when one of the following happens: 

1. The person is prohibited by law from being a company director.
2. A bankruptcy order is made against the person.
3. The person becomes mentally incapable of acting as a director.
4. The person resigns from the role by giving a formal notice 
5. The person has been absent from the director’s meeting for more than six months without the consent of other directors.
6. The members pass an ordinary resolution to remove the director.
7. The director passes away 

Adding a director to a limited company: What to look out for?

Regardless of whether you’re replacing a resigning director, or adding a director to your company’s board of directors, you should first consult your company’s Articles of Association (AoA). Being your company’s legally binding “rulebook,” the AoA specifies requirements for director qualifications, the maximum number of directors your company can have, and appointment procedures. As breaching the AoA can nullify your actions, you should carefully read your AoA before proceeding with the director change. 

Who can be appointed?

Much like your company’s AoA, the Companies Ordinance (Cap. 622) also states requirements for companies and individuals taking up directorship. They are as follows: 

• A corporation may act as a director, but all HK private limited companies must have at least 1 natural person director
• Natural person directors must be at least 18 years old 

Note, however, that there is no rule restricting the nationalities of directors. In other words, foreigners are completely eligible to hold directorship in Hong Kong companies. 

How to remove a director? And how to appoint a new one?

1. Secure internal approval for the removal and appointment of directors

Depending on what the company’s AoA specifies, the board of directors or the company’s members must pass a resolution to authorize the removal of the old director, and the appointment of the new director. 

The individuals involved in the decision should sign the resolution and keep it on file, but note that this doesn’t have to be submitted to the Companies Registry. 

Provided that the new candidate is legally permitted to act as director, the appointment only comes into effect once they consent to it. 

2. Fill in Form ND2A – Notice of Change of Company Secretary and Director (Appointment/ Cessation)

Within 15 days of the effective date of the director change, the company must file the ND2A form at the companies registry. This form contains the details of the old and new directors, such as their passport numbers and correspondence address, and a declaration of acceptance where the new director confirms that they are above 18 years old.

If signed on the effective date, the form may be signed by either the resigning or the new director. However, if it’s signed after the effective date, only the new director may sign. 

3. Filing Form ND2A

The form may be filed online, via the government’s e-services portal, or it may be delivered by post or in person to the Companies Registry’s office. The filing, like most other government filings, is typically handled by your Company Secretary, who will ensure that the filing is completed accurately and on time. 

The Companies Registry will then take around 2 business days to process the change. 

After filing the change of director form, notify your bank

It isn’t a legal requirement to inform your bank after directorship changes. However, banks in Hong Kong routinely check on companies every few years. During checking, both members and directors will be asked to provide their personal information. 

If your bank finds out about the change before you inform them, this can erode the bank’s trust in you and precipitate an account freeze. Therefore, inform your bank as soon as the government filings have been completed, and tell your newly appointed director to expect a physical bank interview soon. 

There is no reason that your company’s transition into new leadership should be a jarring one. If you want your company’s director change to be handled quickly and by the book, leave it to a trustable corporate service provider. If you are an existing client of Get Started, please inform your designated sales representative for a free consultation.

---

Frequently Asked Questions