Law Assignment

Hong Kong is a major international business and financial centre. As to improve Hong Kong’s competitiveness and attractiveness therefore the Government launched a major and comprehensive exercise to rewrite the Companies Ordinance (“CO”) in mid-2006. And it is called Companies Bill which gazette on 14 January 2011 and introduced into the Legislative Council on 26 January 2011. Inside, it states that directors’ duty of care, skill and diligence should be codified. The law need to be develop through the evolving law. And the Legislative Council formed a Bills Committee to scrutinize the Companies Bill.

Director’s duties can be divided into two parts: fiduciary duties and the duties of care, diligence and skill. Companies bill just rewrite on the part of the director’s duty of care, diligence and skill when the fiduciary remain unchanged and follow under the common law as usual. In the common law position regarding directors’ duty of care, skill and diligence, it has not a standard to follow. It is no provision in the current CO and it is not so clear. Moreover, it is mainly concerns about the experience and knowledge of the director. So that’s a difficulties to measure what level of the skill the director has since it is too subjective. There is nothing to ensure the company is under managing a right director to create the good quality of outcome from the company. Do they have the competence to run the company business perfectly? What profession or qualification do they own? Are those profession or qualification related to the feature of the company or can it helps handle the business running in a right way?

In Re City Equitable Fire Insurance Co Ltd (1925) UK, the company loss and the liquidator sue the director but he fail because the articles provided that the directors were exempt from liability unless caused by their own willful neglect or default. It’s hard to definite the willful neglect or default. The case shows that the director does not need to perform a great skill to operate the company but base on their qualification and experience. Their conduct should just judge with the relative profession skill for the comparison. For example, if the director has a profession on the accounting qualification, then he will be judge the qualification only with the accounting task but not any other type of task within the company. But if the profession the director own has been unqualified, it will become a lower standard of competence. It is the problem about what skill should be required by the director. It is possible that the director should perform a great work if their professional is not related to the company’s duty. It can shows that the director have the appropriate skill to handle the company works. Second, the directors are not supposed to look after the running of the company operation in every minute. They just concern the macro-status of the company running