Restricting Corporate Directorship In Private Companies
Section 457(2) of the new Companies Ordinance requires that every private company must have at least one director who is a natural person.
It is expected that the new Companies Ordinance will come into operation in 2014 after enactment of all subsidiary legislation. The new requirement is applicable to all private companies registered under the new Companies Ordinance. Regarding the position of private companies registered under the Companies Ordinance (Cap. 32)
Pursuant to sections 89(1) and (2) of Schedule 11 to the new Companies Ordinance, there will be a grace period of 6 months after the commencement date of the new Companies Ordinance for companies registered under the Companies Ordinance (Cap. 32) to comply with the new requirement. Appointment of new directors should be reported to the Registrar of Companies in the specified form within 15 days pursuant to section 645 of the new Companies Ordinance.
The grace period will only apply to private companies registered pursuant to the Companies Ordinance (Cap. 32). All private companies registered under the new Companies Ordinance must have at least one natural person as director on incorporation.
Pursuant to section 458 of the new Companies Ordinance, the Registrar of Companies may direct the company to appoint a director who is a natural person in compliance with the requirement. If a company fails to comply with the direction, the company and every responsible person of the company commit an offence, and each is liable to a fine of $100,000 and for a continuing offence, a further fine of $2,000 for each day during the period.