Am I personally liable as a director if my bookkeeper keeps poor records?
The duty to keep adequate records falls on the directors, and the penalty can be a HK$300,000 fine, or that plus 12 months' jail if wilful. But it is a defence to show you reasonably believed, and did believe, that a competent and reliable person was responsible for the task and able to do it.
The duty. Sections 373 and 377 require the company to keep and preserve adequate accounting records. The offences are committed by a director who fails to take all reasonable steps to secure compliance: HK$300,000, or HK$300,000 and 12 months' imprisonment if the failure is wilful.
The defence. On a charge for the ordinary (non-wilful) offence, it is a defence to establish that the director had reasonable grounds to believe, and did believe, that a competent and reliable person was charged with the duty of ensuring compliance and was in a position to discharge it (ss.373(7), 377(5)).
How to support that defence in practice
- Appoint someone with suitable experience, and keep evidence of their role and qualifications.
- Receive and read regular reports: monthly reconciliations, ageing lists, management accounts.
- Make periodic checks: ask to see the bank reconciliation and a sample of supporting documents.
- Act on warning signs, such as missed deadlines, unexplained differences or reluctance to share files.
- Keep written instructions on what records must exist, where they are held and for how long.
The defence is for those who did take care. It will not help if red flags were ignored. The wilful offence has no equivalent defence stated in these sections.
This is general information, not legal advice.
Legal basis
- Companies Ordinance (Cap. 622), ss.373, 377
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- What does section 51C of the Inland Revenue Ordinance require from my business?Anyone carrying on a trade, profession or business in Hong Kong must keep enough records, in English or Chinese, to work out assessable profits, and keep them for at least 7 years. Failing to do so without reasonable excuse can lead to a fine of up to HK$100,000.
- What is the difference between bookkeeping and accounting in Hong Kong?Bookkeeping is the day-to-day recording of transactions: sales, purchases, payments and receipts. Accounting uses those records to prepare financial statements, interpret results and support tax and audit work. In Hong Kong the law cares about both: the company must keep adequate records, and its directors must prepare financial statements from them.
- Is a Hong Kong company legally required to keep accounting records?Yes. Section 373 of the Companies Ordinance (Cap. 622) requires every company to keep accounting records that explain its transactions and show its financial position and performance at any time. Directors who fail to take all reasonable steps risk a fine of HK$300,000, and up to 12 months' jail if the failure is wilful.
- What must a Hong Kong company's accounting records contain?The law names two things: daily entries of all money received and spent, with what each was for, and a record of the company's assets and liabilities. Beyond that, the records must be sufficient to explain transactions and show the financial position accurately at any time.
- How long must a Hong Kong company keep its accounting records?Seven years. Under section 377 of the Companies Ordinance, a company must keep its accounting records for 7 years after the end of the financial year to which the last entry relates. The Inland Revenue Department separately requires business records to be kept at least 7 years after the transactions they relate to.