- Follow and comply with company policy (employee and shareholder side).
- Promote the success of the company (set aside personal interests, attend board meetings).
- Ensure accurate and timely financial reporting (oversee internal controls, review statements, facilitate audits).
- Make independent judgments (without outside influence).
- Exercise skill, care, and diligence.
- Avoid conflicts of interest.
- Reject benefits from third-parties (unless no conflict of interest).
- Declare interests in company proposals, transactions, and arrangements.
The position of a director within a company is possibly one of the most vital administrative roles in the business.
Company directors hold a position of trust and have fiduciary duties to the company and its shareholders. Their performance will have a direct effect on how efficiently the business is run.
It's incredibly important as an owner to ensure that your company director shares the same vision and work ethics you do.
Any positions that influence the workflow and mission statement of the company should also have a solid line of communication with the owner.
Normally, employees with duties like that of a director are the ones who will delegate assignments and duties to the other employees of the company.
It's important that these higher-ups convey your requests and wishes to the rest of your employees.
These directors are the link between you as an owner and the workforce of your organization.
It's vital that the director holds his influence as a go-between and does not allow paid employees to break the chain of command.
What Defines a Company Director?
Technically, a company director is an elected or appointed member of your company's board of directors and supervisors and a member of corporate officers. Directors need to be at least 18 years old, not bankrupt and can be from any country or residency.
The director is tasked with determining and implementing the company's corporate structure, which helps ensure efficient operations and clear lines of communication. The director is also tasked with determining and implementing company policy and other defining elements of the company.
Every private company limited by shares must have at least one director. Normally, the owner chooses a director in coalition with the board of investors to manage daily activities and finances. If there is already an individual director and specific company structures are not followed, a corporation can serve as a director.
The director will ensure that the appropriate legal filings are taken care of and the company operates lawfully.
A company director is allowed to enter into legally binding contracts with third parties and other entities in the company's name.
These parties include buyers, lenders, suppliers, and other vendors tied to the organization.
The director can also make verdicts for the well-being of the company and the company's shareholders.
Directors may also be required to act as trustees for the company they work for as well.
Corporate Director and Executive Director: What's the Difference?
In Hong Kong companies, both executive directors and corporate directors play important roles in guiding the organization to success, and their areas of focus vary.
Corporate Director
A director, also known as a corporate director, is a member of the board of directors who focuses on the company's overarching goals and long-term success.
Corporate directors primarily set the company's strategic direction, make important decisions, and provide legal and ethical compliance. They are not directly engaged in day-to-day operations.
Types of Corporate Directors
Executive Director: An executive director also holds a full-time executive position within the company.
Non-Executive Director: A director not involved in daily operations often brings external expertise to the board. A non-executive director can offer an unbiased perspective and hold the executive team accountable. These directors may also chair or serve on specific board committees.
In some companies, an executive committee may be positioned under the board of directors. This committee, usually consisting of senior executives, including some executive directors, manages operations and provides reports to the board.
Executive Director
An executive director participates in the company's business activities and works to achieve the business’s goals. These directors serve as both a member of the board of directors and a senior executive with managerial duties.
Executive directors generally takes responsibility for the development and implementation of strategic plans in collaboration with the board members, and they oversee specific departments or the overall operations of the company.
Company Director: Duties and Specific Roles
According to the Companies Act of 2006, these are a company director's specific roles and duties.
A director must follow and comply with company policy.
This includes policy on the employee side and shareholder side.
1. Promote the Success of the Company
The company director must follow the company's goals and mission statement and set aside their personal interests. Directors are also responsible for attending and actively participating in scheduled board meetings.
All actions must have a clear outline and order of operations to ensure the company's long-term success and scalability.
A director must always keep in mind that:
- The effects of their decisions are long-term
- They are responsible and must act in the interest of company employees
- They represent the company when doing business for the company
- They must maintain a reputation of good conduct and high business standards
2. Ensure the Accuracy and Timeliness of Financial Reporting
Company directors must guarantee that their financial reports are accurate, timely, and compliant with accounting standards by overseeing internal controls, reviewing statements, and facilitating audits.
3. Make Independent Judgements
They must have the responsibility and accountability to make important decisions and judgments without a superior or owner's consent or permission.
4. Exercise Skill, Care, and Diligence
Directors are expected to exercise the same skill, care, and diligence required of all employees.
5. Avoid Conflict of Interest
A director must avoid conflict of interest regardless of whether it would serve to benefit the company.
6. Reject Benefits from Third-Parties
The company director must never accept benefits from third parties.
However, there is no infringement if the benefits accepted do not cause a conflict of interest.
7. Declare Interests in Proposals, Transactions, and Arrangements With the Company
A director must declare the extent of any interest, transaction, or arrangement with the company to the rest of the company directors and supervisors.
Who Can Become a Company Director
There are certain limitations and requirements for filling the role of a company director.
The following positions and entities are eligible for this position.
- An individual who is a shareholder or recent employee, such as a secretary
- A corporate body
- A partnership
- A group
- Another limited company
- An organization, whether it's a business or a charity
Who Can't Become a Company Director
- An auditor
- A banned employee or company director
- Anyone under the age of 16
Company Director vs. Shareholder
A shareholder is any member of the board of shareholders who owns part or all of a company.
A shareholder does not have to be employed by the company.
Typically a company director is chosen by a board of shareholders.
The shareholders appoint a director to supervise every financial aspect of a company to ensure it runs smoothly.
Directors do this in conjunction with running the operational aspects of the company.
Together, these two duties must be met to ensure the smooth and profitable operation of a company.
The performance of the company director will directly affect the financial gains or losses of the shareholders.
Are Corporate Directors and Company Directors the Same?
As stated above, a corporate director and a company director are completely different.
A company director is appointed by shareholders (normally individuals, but not always) to manage a limited company's operational and financial duties directly.
A corporate director describes a company or corporate body that has been appointed the director of another company.
There is no limit to the number of corporate directors a company can have.
The company director can simultaneously be a shareholder of a company but doesn't always have to be.
However, shareholders will always look to the company director to ensure their interests are paying off.
A company director has a large workload to shoulder and must manage every vital element of a company on a daily basis.
It takes a strong leader and personality to be a company director.
Still, with the proper delegation, the job can be handled efficiently and without overload.
Interested in becoming a director yourself?
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