Does a Hong Kong Company Have a Supervisor Position? Analyzing Corporate Governance Structure

Does Hong Kong Companies Really Have the Position of Supervisor? Unveiling the Mystery of Corporate Governance!

In recent years, with the accelerated development of the Guangdong-Hong Kong-Macao Greater Bay Area, more and more mainland enterprises have chosen to set up branches or register companies in Hong Kong to explore international markets. However, when people understand the operational model of Hong Kong companies, they will find an interesting phenomenon Hong Kong companies seem not to have the position of supervisor. This contrasts sharply with the governance structure of mainland companies. So, do Hong Kong companies really lack this position? And if they do have it, how do they carry out corporate governance?

Basic Framework of Hong Kong Company Governance

As one of the international financial centers, Hong Kong's corporate governance model is deeply influenced by the Anglo-American legal system. Under the common law system, the governance structure of Hong Kong companies is relatively simple and clear. According to the Hong Kong Companies Ordinance, Hong Kong companies are usually managed and operated on a daily basis by directors. These directors are responsible for the main operation of the company and must comply with the legal obligations of integrity and prudence.

Unlike mainland companies, Hong Kong companies do not specifically set up the position of supervisor. This is because Hong Kong's corporate governance emphasizes that shareholders supervise the board of directors through general meetings, without the need to establish additional supervisors to perform supervisory functions. In other words, Hong Kong companies tend to rely on internal mechanisms rather than external supervision to ensure the compliance of management behavior.

Why Doesn't Hong Kong Companies Set Up Supervisors?

This difference stems from the different cultural backgrounds and legal environments of the two places. In mainland China, due to historical reasons and the influence of the planned economy system, there is a tendency for power to be centralized among management personnel. Therefore, the supervisor system was introduced as an independent supervisory body to balance the power of the board of directors and protect the interests of small and medium-sized shareholders. In Hong Kong, however, due to intense market competition and strict information disclosure requirements, companies have already formed a complete self-discipline mechanism internally, making the separate establishment of supervisors unnecessary.

The Hong Kong Companies Ordinance also stipulates that any natural person who is 18 years old and not bankrupt can serve as a company director, provided that the person has the necessary knowledge and experience to fulfill their duties. At the same time, the role of the company secretary is also assigned important supervisory functions. They not only assist in administrative work but also ensure that the company complies with relevant laws and regulations. In a sense, the company secretary assumes some of the responsibilities of the supervisor in mainland China.

Recent Case Analysis The Importance of Corporate Governance

Although Hong Kong companies do not have a formal supervisor position, this does not mean they can ignore internal supervisory mechanisms. In fact, recent events involving financial fraud and insider trading remind us that good corporate governance is crucial for maintaining investor confidence.

For example, at the beginning of 2025, a well-known Hong Kong-listed company was investigated by regulatory authorities for suspected false statements, which ultimately led to a sharp drop in its stock price and the resignation of several senior executives. This incident exposed serious loopholes in the company's internal control. Although the company did not clearly establish a supervisor position, the lack of an effective supervisory mechanism was undoubtedly the key problem.

In response to this, the Hong Kong Stock Exchange HKEX has repeatedly emphasized that listed companies should establish a sound risk management system and regularly conduct internal audit activities. The exchange also encourages companies to hire third-party professional institutions to evaluate their financial status to enhance transparency and credibility.

References and Insights How to Improve Corporate Governance?

Although Hong Kong companies do not have the position of supervisor, their practices in other areas are still worth learning for mainland enterprises. First, while introducing the supervisor system, mainland enterprises can also consider strengthening the role of company secretaries, making them an important bridge between management and shareholders; second, modern information technology tools such as blockchain should be fully utilized to achieve full traceability of business processes, thereby reducing the possibility of human intervention; finally, a scientifically reasonable incentive constraint mechanism should be established so that management personnel can fully display their talents while being effectively supervised.

In short, whether in Hong Kong or mainland China, the core goal of corporate governance is to safeguard the legitimate rights and interests of all stakeholders. In the future, with the continuous deepening of economic integration between the two places, more beneficial experiences will surely be shared and learned, jointly promoting the prosperity and development of the regional economy.

In conclusion, although Hong Kong companies do not have the traditional position of supervisor, this does not mean that they lack effective supervision of management. On the contrary, it achieves good control over the enterprise through a series of flexible and efficient mechanisms. For those enterprises hoping to operate in Hong Kong, understanding and adapting to local corporate governance rules will be the first step to success.