If a corporation accepts the long-term employment of a general manager without the prescribed consent of its members, the corresponding provision of the service contract is null and void to the extent of the breach. In addition, it can be assumed that the contract contains a clause that entitles the Company to terminate it at any time with reasonable notice (§ 535). In the absence of provisions requiring members` consent for the long-term employment of a director, there is a risk that a director will arrange for himself or herself for long-term employment in his or her corporation, which will anchor him or her in his or her duties or make it too costly for the corporation to remove him or her from office before the expiry of his or her contract (since the director may be entitled to compensation for the corporation`s default, resulting from early termination). In the event of a decision taken at a meeting, a memorandum on the proposed service contract should be sent to each member, together with the convening of the meeting. In the case of a written decision, the memo must be sent to each member no later than the date on which the proposed resolution is sent to the member. In order to close a potential loophole whereby the loss of office payments to directors may occur indirectly through other parties, subsection 516(3) expands the provisions relating to the loss of office payments to include the following conditions: Corporations should consider the terms of the proposed service contract and the provisions of section 531. In case of doubt, they should seek independent legal assistance. § 534 of the new CO requires the consent of the shareholders of a company for all contracts in which the guaranteed period of employment of a managing director with the company exceeds or may exceed 3 years. In this legal update, we consider the authorized duration of a general manager`s service contract.
With hong kong`s new corporate regulations coming into effect on March 3, 2014, it`s now time to check if your company`s service contract with your general manager or general manager complies with the new law. Article 469 of the new CO allows a company to transfer liability from a director to a third party if the conditions are met. Some debts and costs cannot be covered by compensation, such as .B. Penalties, penalties imposed by regulators, costs of defending criminal proceedings if the director is found guilty, and costs of defending a civil case against the director of the corporation or an affiliate in which the director is sued. As far as I know, there is no management contract in Hong Kong. Only the MAA regulates the powers and duties of directors vis-à-vis the company. If you want to enter into a contract between the company and someone who is a business owner, you are free to do so. You can consider it as an employment contract if you wish. Directors are not employees per se. Directors are natural persons (or other companies) who represent the company and have the power to act on its behalf. As an administrator (provided the MAA does not restrict you), you can include the company in the contracts. B, e.g.
opening a bank account, signing a rental agreement, etc. Yes, as an administrator, you can perform all day-to-day and management tasks, unless the MAA prohibits it (for example. B by requiring all directors to sign a new contract and not just one). There is no real legal role for an “employee” in this context of company law – it is indeed any person who obliges the company to perform certain tasks permanently for remuneration (or even without remuneration). The prescribed consent of the members of a company is required if the guaranteed duration of the employment of a managing director of the company with the company exceeds or may exceed 3 years (§ 534 para. 1). In addition, subsection 521(2) extends the prohibition on payment by a corporation to a director or former director of its holding company. § 522 para.
2 extends the provisions to payment made in connection with the transfer of the company`s business or assets from the company`s subsidiary. Under the old Enterprise Regulation, a company could conclude an employment contract with its general manager for a guaranteed period of more than three years. This opened up the risk that a majority shareholder could conclude a long-term fixed-term employment contract for a person who could not be terminated. The Executive Director would then become “inviolable” because it would be too costly to remove him from office before the expiry of his contract. The meaning of a reference to a period of guaranteed employment of a Director General is specified in §§ 534 (2) to (5). The provisions provide for .B. whereas a reference to the guaranteed duration is a reference to the period during which the employment relationship must be or may be continued in a manner other than at the instigation of the undertaking; and may not be terminated by the Company or may only be terminated in certain circumstances. Article 469 of the new CO allows a company to indemnify a managing director for the general manager`s liability vis-à-vis a third party if the specified conditions are met. Some liabilities and costs may not be covered by compensation, such as. B fines, penalties imposed by the supervisory authorities, costs of defending criminal proceedings in which the Director-General is found guilty and costs of defending civil proceedings brought by or on behalf of the company or an affiliated company against the Director-General in which a judgment is rendered against the Director-General.
Under the new Companies Regulation, a company cannot enter into a service or employment contract with its managing director without the consent of the shareholders if the contract provides for or may exceed a guaranteed employment period of more than three years (“long-term contract”). The prohibitions will be extended to a broader category of persons associated with a director. Articles 502 and 503 of the new CO prohibit a particular company (as defined in Article 491(1) of the new CO) from granting a loan or quasi-loan to a company related to a managing director or from entering into a credit transaction as a creditor for an undertaking linked to a managing director without the prescribed consent of the shareholders. Sections 486 to 488 of the new VDV provide for the coverage of a company affiliated with a general manager. It includes, in addition to those of the old regulation (including, for example, the spouse of the administrator, a minor child of the administrator): This service contract should be used when a company hires a director and wants its legal status to be that of an employee rather than an independent contractor. The provisions of the new DA do not preclude a service contract without remuneration to a director general. If the proposed contract with the managing director concerned falls within the definition of the term “service contract of a managing director of a company” in § 531 and with reference to the provisions of § 534, the guaranteed duration of employment of the managing director under the service contract of the managing director may exceed or exceed 3 years, the prescribed consent of the shareholders of the company in accordance with § 534 paragraph 1 must be obtained. However, a long-term contract to be concluded with an Executive Director after 3 March 2014 is void to the extent of the infringements. Therefore, the long-term contract would be terminated by the company with reasonable notice. Similarly, the ceo should be able to terminate his contract by giving the company reasonable notice, although this is not explicitly stated in the new legislation.
Depending on the industry, the reasonable notice period can vary between three and six months. Section 473 of the new CO provides that any ratification of the conduct of a chief executive officer by a corporation that constitutes negligence, omission, breach of duty or breach of trust in the corporation must be approved by decision of the shareholders of the corporation, without regard to the votes of the chief executive officer. any legal person associated with the Administrator and any person holding shares of the Trust Company for the Administrator or for the affiliated entity. For the purposes of section 534, “employment” means any employment under a contract of employment of a director. Section 531 defines “a contract for the services of a director of a corporation”. Section 531 refers to the provision of services “as a director or otherwise” and “the provision of services outside the scope of the administrator`s normal duties as a director.” .