Appointment of Directors

Key Takeaways

• Appointment of director is a process strictly governed by a company’s Articles of Association
• Besides directors’ approval, an ordinary or special resolution may be required for appointment of director
• An ordinary or board resolution for appointment of director should be signed and kept on file after it has been passed
• Appointment of director form (ND2A) should be filed at the Companies Registry within 15 days of passing the resolution 
• Director changes should be brought to bank’s attention to prevent account freezes

As a business matures, branching out in different directions may be the best way to ensure that it will continue to flourish. Adding a new director to the company is a good way to inject new ideas into your business, and below, we will outline the steps you and your corporate service provider will take to institute this change in a compliant manner. 

What are your responsibilities before appointment of director?

The first step is to 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, appointment procedures, and appointment terms.

For instance, the Model Articles state that a director appointed by the company’s shareholders may hold office for an unlimited period of time, whereas a director appointed by other directors must retire from office at the next annual general meeting after the appointment. 

As breaching the AoA can nullify your actions, you should carefully read your AoA before proceeding with the director change.

Appointment of director: Ordinary or Special resolution?

Model articles provided by the HK government stipulate that directors may either be appointed via an ordinary resolution (which is passed with the approval of over 50% of the company’s shareholders), or via a decision of the directors (i.e. when a majority of directors on the board agree to the decision). 

That said, if a company wishes to raise the bar for appointing a new director, it may certainly alter its Articles of Association to state that the appointment of a new director can only be effected by a special resolution, whose passing requires 75% of shareholder votes. 

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: 

• A corporation may be appointed as a director of a HK private limited company, but the company must also have at least 1 natural person director
• Natural person directors must be at least 18 years old 

Note, however, that unlike in many other jurisdictions, there is no law in Hong Kong restricting the nationalities of directors, and no regulation that requires companies to appoint a local director.  In other words, it is perfectly viable for a Hong Kong company to be directed (and owned) completely by foreigners.

Step 1 – Board resolution for appointment of director

Depending on what the company’s AoA specifies, the board of directors or the company’s members must pass a resolution to authorize the appointment of the new director. This is usually either a board resolution or an ordinary resolution. 

The appointment comes into effect the moment the resolution is passed. 

Step 2: Filling in Appointment of Director Form ND2A

Within 15 days of the effective date of the director change, the company must file the Form ND2A Notice of Change of Company Secretary and Director (Appointment/ Cessation) 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 agree to take up the office and 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. 

Step 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 directorship changes before you inform them, this can erode the bank’s trust in you and even lead to 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. Let us know how we may help.

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Frequently Asked Questions