Featured Report

 

A Key Understanding of the Companies Ordinance by Directors of National Sports Associations

 

Since 2017, the Leisure and Cultural Services Department has organised a symposium and a series of special courses on “Governance, Leadership and the Future Development of Sports” for members of the Board of Directors and management staff of National Sports Associations (NSAs), with the aim of enhancing in phases the management standards of local NSAs in a bid to further promote sports development in Hong Kong. The symposium consists of four modules. This issue’s Featured Report will explore the main part of the first module, namely the “Understanding of the Companies Ordinance for Directors”.

 

The duty of directors is to sustain the effective operation of NSAs, instead of merely undertaking management work. As such, NSAs must exercise prudence when appointing directors to ensure their possession of a reasonable standard of ability, skill, care and diligence required for discharge of responsibilities as directors, who must:

 

1. Possess the general knowledge, skill and experience that may resonably be expected of a person carrying out the functions carried out by the director (the objective test under section 465(2)(a));
2. Possess the general knowledge, skill and experience that the director has (the subjective test under section 465(2(b));
3. Act in accordance with the Articles of Association;
4. Comply with all relevant laws and regulations in force in Hong Kong; and
5. Abide by the principles, reporting requirements and procedural guidelines as set out in the Handbook for NSAs.

 

In addition to the above, the Board of Directors must formulate specific and comprehensive Articles of Association.  Hailed as the “constitution of a company”, Articles of Association are of notable significance to the establishment and subsequent operation of NSAs. The Australian Sports Commission has made the following recommendations to NSAs for the formulation of Articles of Association:

 

1. An NSA should issue an invitation to voting members 45 days prior to the proposed date of the annual general meeting (AGM), and remind them of the requirement to notify the NSA 28 days prior to such date of attendance.  This requirement is deemed as satisfied upon the NSA’s receipt of such notifications.
2. If the NSA will propose one or more resolutions on filling the vacancies of directors at the AGM, voting members should be notified 45 days prior to the proposed date.  They should also be reminded of the requirement to submit candidate nominations together with their individual profiles 28 days prior to the AGM date, ensuring that sufficient time is given for directors to receive and consider the profiles of the nominations.
3. A code of conduct for the use of electronic communications should be devised.
4. The size of the Board of Directors should be determined.
5. In case of an equal number of votes for and against a resolution among directors, the resolution in question will be deemed as rejected.
6. The length of the tenure of directors should be capped.
7. It should be indicated whether appointment of alternate directors is allowed by the Board of Directors.
8. Terms and conditions for the nomination and appointment of directors should be expressly specified.
9. The number of board meetings per annum should be determined.
10. The Board of Directors should be allowed to pass a resolution in writing.

 

To learn more about the programme, please visit the following webpage: