Chapter 2: Appointment and
Dismissal of Other Office Holders
250. The general manager shall be appointed and
dismissed by the board of directors, unless otherwise provided in the articles
Appointment and dismissal of general
251. Office holders in a company, other than
directors and the general manager, shall be appointed and dismissed, in a public
company by the general manager and in a private company by the board of
directors, unless otherwise provided in the articles of association.
Appointment and dismissal of office holders
Chapter 3: Duties of Office
Article A: Duty of Care
252. (a) An
office holder owes a duty of care to the company as provided in sections
35 and 36 of the Civil Wrongs Ordinance [New Version]8.
(b) The provisions of
subsection (a) shall not preclude a duty of care being owed by an office holder
to another person.
Duty of care
253. An office holder shall act with the standard
of proficiency with which a reasonable office holder, in the same position and
in the same circumstances, would act; this shall include taking reasonable
steps, in view of the circumstances of the case, to obtain information regarding
the business expedience of an act submitted for his approval or of an act done
by him by virtue of his position, and to obtain all other pertinent information
regarding such acts.
Precautions and standard of proficiency
Article B: Fiduciary duty
254. (a) An
office holder shall owe a fiduciary duty to the company, shall act in
good faith and for the benefit of the company, including the following:
1) he shall refrain from
any act involving a conflict of interest between the fulfillment of his role in
the company and the fulfillment of any other role or his own personal affairs;
2) he shall refrain from
any act involving competition with the business of the company;
3) he shall refrain from
taking advantage of a business opportunity of the company with the aim of
obtaining a benefit for himself or for any other person;
4) he shall disclose all
information to the company and shall provide it with all documents relating to
its interest that reach him by virtue of his position with the company.
(b) The provisions of
subsection (a) shall not preclude a fiduciary duty being owed by an office
holder to any other person.
255. (a) A company may approve any of the acts enumerated in section
254(a) provided that all the following conditions apply:
1) the office holder
acted in good faith and neither the act nor the approval of the act prejudices
the good of the company;
2) the office holder
disclosed the essence of his personal interest in the act, including any
substantial fact or document, a reasonable time before the date for discussion
of the approval.
(b) The company’s
approval for acts that are not substantial acts shall be given in accordance
with the provisions of Chapter 5 regarding the approval of transactions, and the
company’s approval for substantial acts shall be given in accordance with the
provisions of Chapter 5 regarding the approval of extraordinary transactions;
the provisions of Chapter 5 regarding the validity of transactions shall apply,
mutatis mutandis, to the validity of acts.
Approval of acts
256. (a) The
rules applying to breach of contract shall apply,
mutatis mutandis, to
the breach of the fiduciary duty of an office holder.
(b) Without derogating
from the generality of the provisions of subsection (a), an office holder in
breach of a fiduciary duty towards the company shall be considered as a person
in breach of his contract with the company.
(c) A company may revoke
an act done by an office holder on behalf of the company towards another person
or may claim from such person the compensation owed to it from the office
holder, even without canceling the act, if such person knew of the breach of the
office holder’s fiduciary duty, and knew or ought to have known of the lack of
approval of the act.
(d) There is a
presumption that a person was not required to have known about the lack of
approval of an act as necessitated under this Chapter if such person received
confirmation from the board of directors that all consents required for the act
257. Where a director becomes aware of a matter of
the company in which an apparent breach of a law or harm to proper business
procedures has been discovered, he shall immediately act to convene a meeting of
the board of directors as provided in section 98(b)(2).
Disclosure of defects