What is a director's current account and how should it be recorded?
It is a ledger account showing money flowing between a director and the company: amounts the director has lent or paid on its behalf, and amounts the company has paid to or for the director. A credit balance means the company owes the director; a debit balance means the director owes the company, which may be a restricted loan.
How it works
- The director pays a company expense personally, or puts money into the company: credit the account (the company owes the director).
- The company pays a personal expense or hands the director cash: debit the account (the director owes the company).
Why the balance matters
- A credit balance is a liability of the company to the director.
- A debit balance is effectively a loan to the director. Section 500 of the Companies Ordinance restricts companies from making loans to directors, or to companies they control, without the prescribed approval of members, subject to exceptions (see our answer on loans to directors).
- Loans and similar dealings with directors must be disclosed in the notes to the financial statements (s.383).
Good practice
- Keep one clearly labelled account per director.
- Support every entry with a receipt, claim form or written note.
- Do not net personal and business items quietly; record each one.
- Review the balance at every month end and again at year end. Agree it with the director in writing, and discuss any debit balance with your accountant before the year end.
The record also helps the auditor, who will ask about director balances.
Legal basis
- Companies Ordinance (Cap. 622), ss.383, 500
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
- 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.
- 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.
- 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.
- Which documents should a Hong Kong business keep for its books?Keep every document that supports an entry in your books: sales and purchase invoices, receipts, bank statements, contracts, payroll and MPF records, asset purchase papers, loan agreements, and stocktake sheets. The test is whether someone else could trace any figure back to its source.
- Can a Hong Kong company keep its accounting records digitally or scan paper originals?Yes. The Companies Ordinance allows records in hard copy or electronic form, provided they stay available for reference and can be reproduced on paper. The IRD also accepts electronic books and scanned source documents if integrity, legibility and origin details are preserved, and no prior approval is needed.