About the authors
Written by Mathilde Chator · Solicitor at Slotine. Mathilde advises on corporate governance, directors’ duties, and shareholder disputes.
Reviewed by Maeva Slotine · Founder and Solicitor at Slotine. Maeva oversees the firm’s corporate and governance practice.
KEY TAKEAWAYS
A director of a Hong Kong company can be removed by shareholders at a general meeting – no reason is required. Understanding the procedure protects both the company and the director.
- Removal requires an ordinary resolution at a general meeting under sections 462 and 463 of the Companies Ordinance (Cap. 622)
- A shareholder must give a special notice at least 28 days before the meeting
- The director has the right to make written representations and be heard
- Removal does not extinguish rights under any existing service contract
- The company must file Form ND2A with the Companies Registry within 15 days
- Written resolutions cannot be used – this is a common procedural error
The Legal Basis for Removing a Director in Hong Kong
The right of shareholders to remove a director before the end of their term of office is set out in section 462 of the Companies Ordinance (Cap. 622). It applies to companies incorporated in Hong Kong and allows shareholders to pass an ordinary resolution at a general meeting to remove a director, notwithstanding anything in the company’s articles or any agreement between the company and the director.
This is a fundamental shareholder right. It cannot be contracted out of or restricted by the articles. A director cannot be insulated from removal by a provision giving them a casting vote, weighted voting or a right to veto a removal resolution: the courts have consistently held that section 462 overrides any such arrangement.
No reason is required for removal. The Court of Appeal confirmed this in a recent decision, holding that the legislative intent of section 462 does not require shareholders to give reasons. The protections available to the director under section 463 (written representations and the right to be heard) are considered sufficient.
The Removal Process: Step by Step
The following table summarises the procedural steps required to remove a director under section 462 of the Companies Ordinance.
| Step | Timing | What Happens |
|---|---|---|
| 1 | At least 28 days before the general meeting | A member gives the company a special notice of the intended resolution to remove the director. The company must promptly send a copy to the director concerned. |
| 2 | As soon as practicable after receiving the special notice | The board calls a general meeting. Shareholders must receive at least 14 days notice of the meeting, stating the director has the right to make representations. |
| 3 | Before the meeting | The director may submit written representations and request they be circulated to all shareholders or read at the meeting. The director may also attend and speak. |
| 4 | At the general meeting | Shareholders vote on the ordinary resolution. A simple majority of votes cast is required. Written resolutions cannot be used for director removal. |
| 5 | Within 15 days of removal | The company files Form ND2A with the Companies Registry and updates the register of directors, bank mandates and any regulatory filings. |
Important: Written Resolutions Cannot Be Used
The removal of a director under section 462 of the Companies Ordinance must be effected by an ordinary resolution passed at a general meeting. It cannot be achieved by written resolution of shareholders. This is an express statutory requirement and a common procedural error. If a company attempts to remove a director by written resolution, the removal will be invalid.
The Director’s Rights During the Removal Process
Section 463 of the Companies Ordinance gives the director being removed a series of procedural protections. These rights exist regardless of whether the director is also a shareholder.
Right to Receive the Special Notice
Once the company receives the special notice, it must promptly send a copy to the director concerned. The director is put on formal notice of the intended removal before the meeting is called.
Right to Make Written Representations
The director may submit written representations to the company. If received more than two days before the last date for giving notice of the meeting, the company must state in every notice of meeting that representations have been made, and send a copy to every member who receives notice. If the company has not circulated them, they must be read out at the meeting.
There is no prescribed length limit, but representations must be of a reasonable length. The court has discretion to exempt the company from complying if the representations are being used to obtain publicity for defamatory material or if the right is being abused.
Right to Be Heard at the Meeting
The director has the right to attend and speak at the general meeting at which the removal resolution is voted on, whether or not they are a member of the company. This right cannot be removed by the articles or by any board resolution.
Compensation and Service Contracts
Removal under section 462 does not extinguish any rights the director may have under a service contract or other agreement with the company. A director who is removed may have a claim for breach of contract if the removal constitutes a premature termination of an employment or service agreement.
Before proceeding with removal, the company should review any existing service contract, consultancy agreement or employment contract to assess: the notice period required for lawful termination; whether any payment in lieu of notice applies; whether there are specific termination provisions or enhanced severance terms; and whether the director has any equity or option entitlements that crystallise on termination.
Proceeding without this review exposes the company to damages claims. In some cases the cost of contractual entitlements may be material and should be factored into the decision before the formal process begins.
Practical Note: Negotiated Departure vs Formal Removal
Where a service contract is in place, or where the director holds shares and removal may trigger shareholder dispute issues, a negotiated departure is often preferable to a formal section 462 process. A well-drafted settlement agreement provides finality, confidentiality and a clean exit for both sides. Slotine advises on both routes.
Other Routes to Director Removal
The section 462 shareholder resolution is the most common mechanism but it is not the only route.
Automatic Vacation of Office
A director may automatically cease to hold office in certain circumstances specified in the articles: bankruptcy, mental incapacity, absence from board meetings for a specified period without leave, or breach of confidentiality or conflict of interest rules. The articles should be reviewed as a first step in any director departure situation.
Court-Ordered Disqualification
A director may be disqualified by court order under the Companies (Winding Up and Miscellaneous Provisions) Ordinance where they have acted fraudulently, been persistently in default on filing requirements, or engaged in conduct making them unfit to be concerned in company management. Disqualification proceedings are initiated by the Official Receiver, liquidator or, in some cases, the SFC.
Resignation
A director may resign voluntarily by giving notice to the company in accordance with the articles. Resignation does not require a shareholder resolution and takes effect when notice is received or at the time specified in the notice. The company must file Form ND2A with the Companies Registry within 15 days.
Post-Removal Obligations
Once a director is removed, the company must:
- File Form ND2A (Notification of Change of Director) with the Companies Registry within 15 days of the date of removal.
- Update the register of directors and the register of directors residential addresses.
- Notify the company’s bank and update authorised signatory mandates.
- Revoke any powers of attorney granted to the director.
- Update any regulatory filings or licences where the director was a named officer.
- Recover any company property, devices or confidential information in the director’s possession.
Failure to file Form ND2A within the 15-day deadline is a breach of the Companies Ordinance and can result in a late filing penalty. The company and every responsible person may be liable to a fine.
How Slotine Can Help
Slotine advises companies, shareholders and directors on all aspects of director removal in Hong Kong. We advise on compliance with the section 462 procedure, preparation of special notices, general meeting documents and Companies Registry filings. We review service contracts to assess compensation exposure before removal proceedings begin. We also advise on negotiated departures and draft settlement agreements where a clean exit is preferable to a contested general meeting.
For directors facing removal, we advise on the right to make representations, the content of those representations, attendance at the general meeting and any contractual claims arising from premature termination.
For broader guidance on directors’ duties and board governance, see our articles on being a company director in Hong Kong and corporate governance.
This article does not, and is not intended to, constitute legal advice, and should not be relied upon as such. Slotine can assist with queries on the removal of directors in Hong Kong. Please contact us if you wish to learn more.
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