Q290 · As a company director, am I personally…

Q290 · Category F: Fees, budgeting and financial planning (Q251–Q300)

In Hong Kong, the main advantage of operating as a “limited company” is the shareholders’ “limited liability”. In ordinary circumstances, as a company director or shareholder, you are not personally liable for repayment of the company’s debts. The company’s creditors can claim only against the company itself, and your loss is limited to the share capital you have invested. However, this protection is not absolute. If you are required to provide a “personal guarantee” when applying for a bank loan or other credit for the company, the bank will be entitled to claim the debt from you personally if the company is unable to repay it.

📘 Regulatory basis

The Companies Ordinance (Cap. 622) establishes the separate legal personality of a limited company and the principle of limited liability for shareholders. However, the Companies (Winding Up and Miscellaneous Provisions) Ordinance also provides that, in certain circumstances such as fraudulent trading, the “corporate veil” may be pierced and directors may be held personally liable.

📗 Drew Tang's recommendations

The best ways to reduce personal liability risks are: 1. Operate as a limited company. 2. Make every effort to avoid giving personal guarantees in business activities. 3. As a director, always act with integrity, prudence and due diligence, and do not engage in conduct that may be regarded as fraudulent or improper. 4. Take out directors’ and officers’ liability insurance (D&O insurance) to cover claims arising from inadvertent errors in the course of performing your duties.

📕 Risk notice

Signing a personal guarantee is a very serious decision; do not do so lightly. Before signing any personal guarantee document, you must fully understand the legal consequences and seek independent legal advice. Once you sign, you are tying your personal assets and financial position to the company’s fortunes, and the protection of limited liability will no longer apply.

Plan Your Hong Kong Pharmaceutical Licensing Project with Drew Tang

Business Manager Tang Shangyong (Drew Tang) will review your products, operating model, licence type and preparation requirements with you one-to-one. The precise service scope is confirmed in writing; pharmaceutical duties are carried out by legally qualified personnel, and approvals are determined by the competent authorities.

As a company director, am I personally liable for the company's debts? How can I manage this financial risk?

Plan Your Hong Kong Pharmaceutical Licensing Project with Drew Tang