-The text of this article is 1066 words in total / Expected to read about 5 minutes-
We often see terms such as "shareholder" and "director" in TVB's business war dramas, and they fight openly and secretly on the board of directors, making the story fascinating and exciting.
So, what are the meanings, rights and responsibilities of the directors and shareholders of the company in the day-to-day operation of a Hong Kong company, and what are the differences?
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Meaning and rights and responsibilities of shareholders
A shareholder is a person who owns shares in a company. They can be seen as the de facto owners of the company, i.e. the "boss". They start a company by investing money or resources, and the reward is the dividends distributed by the company.
These dividends are distributed according to the proportion of shares held by shareholders, so shareholders who hold more shares will receive a higher dividend income.
According to Hong Kong company law, every company must have at least one natural person shareholder or more than one shareholder, or the company can be held by "an individual who is at least 18 years old, and the company has no geographical restrictions".
Although shareholders are the owners of the company, they are not directly involved in the company's business decisions and development plans. They can only make adjustments to the company's name, articles of association, and registered capital.
Earn dividends;
change of registered share capital;
amending the Articles of Association;
change of company name;
appointing or dismissing directors;
pre-emptive purchase of shares transferred by other shareholders;
The shareholders' meeting deliberates and approves the annual audit report;
Notice of attendance at the Company's Annual General Meeting/Extraordinary General Meeting;
When the company is wound up (i.e. winds up), the shareholders can distribute the remaining assets of the company after the company has paid off its debts;
Participate in shareholders' meetings, enjoy voting rights according to the proportion of shares, and understand the company's operating conditions and financial status;
the right to sign for bank account opening;
Hong Kong shareholders holding more than 25% of the shares need to be witnessed by the bank to open an account, and some banks holding more than 10% of the shares need to be present, so if the company needs to open an account, it should pay special attention when registering.
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Meaning and Responsibilities of Directors
Directors are nominated, appointed and dismissed by shareholders and are mainly responsible for the daily operation and development direction of the company. Generally, directors are not for life, and will have a fixed term.
When directors meet to discuss the development of the company, they are called the "board of directors", but before the expiration of the term of office of the directors, the shareholders' meeting shall not remove them from their directorships without cause.
According to Hong Kong company law, every Hong Kong company must have at least one director.
The director of the bank account opening must be present;
duty to keep proper accounting records;
Responsible for complying with the company's articles of association and resolutions;
a duty not to use the directorship for advantage;
responsibility to avoid conflicts between personal interests and the interests of the company;
a duty not to use the Company's property or information for unauthorized purposes;
Duty not to engage in transactions in which there is an interest in the transaction, except in accordance with the law;
It is obliged not to accept a third party's personal advantage to the director by virtue of his position.
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The difference between directors and shareholders of a Hong Kong company
1. Election of shareholders. In Hong Kong, you can become a shareholder of a company by participating in a sale of a company's interests.
2. Election of directors. There are three ways in which a director of a company needs to have the authority of the board of directors of the company:
1) Generated by the provisions of the company's articles of association.
2) Elected by a resolution made by the general meeting of shareholders.
3) Arising from the provisions of Hong Kong law.
1. The directors of the company are elected by the shareholders of the company and are the managers of the company. The board of directors of a company is the executive body of the company's decisions.
2. The shareholders of the company are the investors of the company, and the shareholders of the company are the power organs of the company and make substantive decisions on the management of the company.