What is a directors' report in Hong Kong and who signs it?
The directors' report accompanies the financial statements and gives information the Ordinance requires, such as principal activities and directors. A director or the company secretary signs it on the board's behalf after the directors approve it. Companies using simplified reporting can omit the business review and some other items.
Under section 388 of the Companies Ordinance, directors must prepare a report for each financial year.
Content. It contains the information prescribed by the Ordinance and its regulations. Companies that do not qualify for simplified reporting must also include a business review (Schedule 5), covering matters such as risks and key performance indicators. A private company outside the reporting exemption can opt out of the business review by special resolution passed at least 6 months before the end of the year.
Reduced content for exempt companies. If the company falls within the reporting exemption, no business review is required, and some items may be omitted: directors' interests in share or debenture arrangements, donations, reasons for resignations, and directors' material interests in significant transactions.
Approval and signing (s.391). The directors approve the report, and it is signed on their behalf by a director or the company secretary, whose name must appear on every copy.
Penalty for not preparing it: directors who fail to take all reasonable steps face a fine of HK$150,000 (HK$150,000 plus 6 months' imprisonment if wilful).
Legal basis
- Companies Ordinance (Cap. 622), ss.388, 391
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.