Skip to main content

4. If I am a director of a company being wound up, will the winding-up procedures have any practical impact on my personal life?

Generally speaking, it will not affect your personal life, unless:

 

Case 1
1. you are convicted of unlawful conduct; or

 

Case 2 
2. your conduct as a director makes you unfit to be involved in the management of a company; or

 

Case 3
3. you have attracted liability due to any unlawful acts, a breach of director's duties or personal guarantees given to the creditors.

 

In case 1, you may be subject to a criminal sentence including a fine. The following table (as extracted from the website of the Official Receiver's Office) highlights some of these offences:

 

 

 

Companies Ordinance (Cap. 622) 
Sections

Brief descriptions of the offences

Penalties

 

373(5)&(6)

374(4)&(5)

377(3)&(4)

Director failing to take reasonable steps to ensurethat proper books of account are kept and preserved.

Liable to a maximum fine of $300,000 and imprisonment for up to amaximum of 1 year.

429(3)&(4)

Director failing to take reasonable steps to ensurethat accounts are tabled at the Annual General Meeting.

Liable to a maximum fine of $300,000 and imprisonment for up to amaximum of 1 year.

 

Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32)

Sections

Brief descriptions of the offences

Penalties

 

190(5)

Person failing to comply with requirements to submit a statement of affairs or a supplementary affidavit.

Liable to a maximum fine of $50,000 and a daily default fine of $300

271(1)(o)

Officers disposed any property of the company which had been obtained on credit and had not been paid for within 12 months next before the commencement of the winding-up or at any time there after.

On indictment : liable to imprisonment for up to a maximum of 5 years. Summary prosecution :liable to a maximum of 2 years imprisonment.

271(1) [relating to all paragraphs except (o)]

Officers failing to comply with section 271,including: (i) Officers failing to deliver to the liquidator all theproperty, books and records or disclose their information; and (ii) Officers concealed or fraudulently removed any part of the property or the books of the company within 12 months next before the commencement of winding-up.

On indictment : liable to a maximum fine of $150,000 and imprisonment for up to amaximum of 2 years. Summary prosecution :liable to a maximum fine of $50,000 and imprisonment for up to amaximum of 6 months.

272

Officers falsifying books.

On indictment : liable to amaximum fine of $150,000 and imprisonment for up to amaximum of 2 years. Summary prosecution :liable to a maximum fine of $50,000 and imprisonment for up to a maximum of 6 months.

273

Officers acting with intent to defraud creditors by giving, or concealing, property of company.

On indictment : liable to amaximum fine of $150,000 and imprisonment for up to amaximum of 2 years. Summary prosecution :liable to a maximum fine of $50,000 and imprisonment for up to a maximum of 6 months.

274(1)

Officers failing to keep proper books for the 2 years prior to the winding-up of the company.

On indictment : liable to a maximum fine of $150,000 and imprisonment for up to a maximum of 2 years. Summary prosecution :liable to a maximum fine of $50,000 and imprisonment for up to a maximum of 6 months.

275(3)

Person being a party to carrying on the businessof a company with intent to defraud creditors.

On indictment : liable to unlimited fine and imprisonment for up to a maximum of 5 years. Summary prosecution :liable to a maximum fine of $150,000 and imprisonment for up to a maximum of 1 year.


In case 2, you may be subject to a disqualification order so that you cannot take up the office of director of any company within a specific period.

 

In case 3, you may be liable to the company for the advantages gained by you or the loss suffered by the company due to the breach or the unlawful act or you may be liable to the creditors under the personal guarantees given to them.

Last revision date: