September 16, 2021 8:16 pm

Appointment Of a Reserve Director


The benefits of company formation in Hong Kong are increasing. It is mainly due to the government’s incentive programs to encourage foreign companies to establish offices. Besides, there are a lot of tax benefits for company registration in Hong Kong. The government has also made it easier for foreign direct investment in the country’s business sector. All these factors have made company registration in Hong Kong an attractive option for international businesses. But before you start company registration in Hong Kong, you should consider its benefits and disadvantages.

An essential advantage of managing directors in Hong Kong company establishment: As the most critical decision-maker in a company, the managing directors greatly influence the firm’s business activities. Therefore, they should be trustworthy and should be able to manage the funds of the organization well. The function and authority in the management of the business should be well understood by the members of management. Moreover, they must have good communication skills and leadership qualities.

In the company establishment in Hong Kong, the Managing Director plays a vital role. He or she must be reliable and trustworthy and must be capable of taking decisions responsibly and with sound judgment. The company directors’ term should not be limited. The law requires that a company chairperson have been continuously elected for a minimum of five years to feel more attachment and loyalty to the Chairperson and the company.

How to decide the Managing Director? One way is to appoint a senior member of staff to act as the Acting Managing Director. Suppose the Managing Director cannot be selected. In that case, the next best alternative is to request for the appointment of a Trustee or a Secretary, or a Chairperson, or any other number of people known to have specialized knowledge, skills, and experience in running a company. If possible, you can get a temporary appointment until the Managing Director is installed.

Another method to decide between the Management corporations is by having an official meeting with all the directors. This meeting will also include the Managing Director. The company secretary or a person responsible for secretarial services may act as a chairperson in this meeting. After the meeting, if you still have problems with who to appoint as your interim management, you can nominate a second alternate director and request that he be made a company officer.

A director and an alternate director have different responsibilities. The reserve director is responsible for giving final approval on all matters relating to the company’s operations during his/her absence. During the term of a Reserve Director, the company’s affairs can only be conducted by him/her. Moreover, the reserve director can only be appointed when all other directors have resigned, so there is no room for biases. However, if the need arises, the Board of Directors can select a new director for the ongoing term.

An interim appointment of a director can only be made at a general meeting of all the directors held under the company’s Annual General Meeting. In public meetings, the Reserve Director will take over the role of a company owner during the Annual General Meeting. But the general meeting cannot be called every year, such as every two years, etc. Such needs to be decided through a proposal to the Management Team.

However, this process can become complicated. Firstly, only a minority of the shareholders may be interested in establishing a Managing Director, and hence the selection process may become a lengthy one. Furthermore, the Management Corporation itself cannot guarantee that the selected individual will be capable of taking on the role of reserve director if the need arises. Even if the selected individual is a good leader, he may lack the experience required for the management position.

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