Director's Current Account in Hong Kong: What It Is, When It's Overdrawn, and What the Law Says

By Di Ma, Project Manager 27 OCT 2026 · 5 MIN READ

In most small Hong Kong companies, money moves between the company and its director all the time. The director pays a supplier from a personal card; the company card pays for a family dinner by mistake; the director tops up the bank account in a quiet month. Each of these is recorded in one place: the director's current account.

Kept properly, it is an ordinary balance sheet line. Left alone, it's the account auditors ask about first, and when it runs the wrong way it brings in the Companies Ordinance's rules on loans to directors.

What it is

The director's current account is the running balance between the company and a director, in both directions:

In credit: the company owes the director. This is the usual case when the director has paid company costs personally or put money in. It shows as a liability, often "amount due to a director".
Overdrawn: the director owes the company. The company has paid more for the director than the director has paid for it. It shows as an asset, "amount due from a director".

Companies with more than one director usually keep a separate account for each.

What goes through it

What typically goes through a director's current account
What happened	Effect on the account
The director pays a company bill personallya supplier invoice, a software subscription, an airfare for a client trip	Company owes the director more
The director puts money into the companyto cover a cash gap, not as share capital	Company owes the director more
Salary, fees or a dividend declared but not yet paid	Company owes the director more, until it is paid
The company pays something personala family dinner on the company card, a personal purchase	Director owes the company more
The director takes cash outother than salary or a declared dividend	Director owes the company more
Either side repays the other	Brings the balance back towards zero

What doesn't belong here: share capital (that's equity, not a balance owed) and genuine company expenses, which go to the expense accounts with their receipts. A personal cost paid by the company is not a business expense; it belongs on the director's account (see lost receipts).

Where it shows in the accounts

On the balance sheet, usually under current liabilities or current assets, and in the notes to the financial statements. Because it's normally repayable on demand, it's usually presented as current.

The Certanta client portal, balance sheet of the fictional demo company Harbourfront Trading Ltd: under current liabilities, accrued charges, trade payables and a Director Current Account of HKD 124,800, owed by the company to its director. — The demo company's balance sheet: HKD 124,800 owed to the director, shown under current liabilities next to accrued charges and trade payables.

When the director owes the company: what the law says

An overdrawn director's account usually means the company has, in substance, lent money to its director. The Companies Ordinance (Cap. 622) deals with this in Part 11, Division 3. These are the provisions most small private companies meet:

The basic rule (section 500). Without the prescribed approval of its members, a company must not make a loan to a director, or to a body corporate the director controls, or guarantee or secure a loan made to them by someone else. It applies to private companies too, and "director" includes a shadow director (section 491).
What approval means (sections 496 and 499). A members' resolution passed before the loan, with a memorandum to every member setting out the nature of the transaction, the amount, its purpose and the company's liability. Alternatively, the unanimous consent of the members given before it is made.
Small amounts (section 505). The prohibition does not apply if the loan, together with other relevant transactions for the same director, does not exceed 5% of the company's net assets in the financial statements most recently sent to members (or 5% of called-up share capital if none have been prepared).
Company business (section 506). Nor does it apply to funds provided to a director to meet expenditure for the purposes of the company, or to let the director properly perform their duties: a travel float, for example.
Public companies and their subsidiaries ("specified companies") face wider rules, covering quasi-loans, credit transactions and connected entities (sections 501–503).
If the rules are broken (section 513). The transaction is voidable at the company's instance, and the director, along with any director who authorised it, can be liable to account for any gain and to indemnify the company for any loss.

Whether a particular balance is a loan, and whether an exception applies, depends on the facts. If the account is heading overdrawn, talk to your company secretary or adviser before the year end, not after the audit.

Disclosure in the financial statements

The notes to a company's financial statements must contain prescribed information about loans, quasi-loans and other dealings in favour of directors (section 383(1)(d)). Your auditor checks this, so the balance and its movements need to be known and documented.

What your auditor will ask for

A list of the year's movements on each director's account, with the document behind each.
The year-end balance, confirmed by the director.
For any amount the director owed the company: the members' approval, or the basis on which an exception applied.
An explanation of anything unusual: large round sums, cash withdrawals, personal costs.

Keeping it clean

Record every movement as it happens, with the receipt, invoice or bank line behind it.
Keep personal and company spending apart. When a personal cost does go through the company, book it to the director's account straight away, not to an expense.
Reconcile the account monthly, so the director knows the balance at any time.
Agree the balance with the director at the year end, in writing.
Watch which way it runs. If the director is starting to owe the company, deal with it while it is still small.

Whether interest should be charged, and any tax effects of the balance, are questions for your tax adviser.

How Certanta handles it

A director's current account in your chart of accounts, so money between you and the company never ends up in suspense or in expenses.
Personal spending caught as it happens. When a bank line looks personal, your bookkeeper asks you on your to-do list, and if you confirm it, it goes to the director's account, not to an expense.
The balance on your balance sheet all year, with every movement and its document one click away in the general ledger.
Ask about it. "How much does the company owe me?" is a question for the AI assistant in your portal, answered from your posted books.
The year-end schedule ready for the auditor: the movements, the documents and the balance to confirm.

Frequently asked questions

What is a director's current account?

The running balance between a company and its director. It is in credit when the company owes the director, for example after the director has paid company bills personally, and overdrawn when the director owes the company, for example after the company has paid personal costs.

Can a Hong Kong company lend money to its director?

Only within the rules in the Companies Ordinance (Cap. 622). Section 500 says a company must not make a loan to a director without the prescribed approval of its members (a resolution with a memorandum to every member, passed beforehand, or the members' unanimous consent). Exceptions include loans that, with other relevant transactions, do not exceed 5% of net assets (section 505), and funds for expenditure on company business (section 506).

Does the rule apply to private companies?

Yes. Section 500 applies to every company, including private companies. Public companies and their subsidiaries (specified companies) are also subject to wider rules on quasi-loans, credit transactions and connected entities in sections 501 to 503.

What happens if a loan to a director breaks the rules?

Under section 513 the transaction is voidable at the company's instance, and the director, along with any other director who authorised it, can be liable to account to the company for any gain and to indemnify it for any loss.

Where does the director's current account appear in the accounts?

On the balance sheet, usually as a current liability (amount due to a director) or a current asset (amount due from a director), and in the notes. The notes must also contain prescribed information about loans and other dealings in favour of directors (section 383).

Is personal spending on the company card a business expense?

No. A personal cost paid by the company is recorded against the director's current account, as money the company paid on the director's behalf, not as an expense.

A director's account you can explain line by line

Certanta books every movement between you and your company with the document behind it, so the balance is known all year and agreed at the year end, not reconstructed for the auditor.

Open the demo See pricing

This article summarises the Companies Ordinance (Cap. 622) as published on e-Legislation on 27 October 2026. It is general information, not legal, tax or audit advice. Whether a particular transaction is a loan, whether an exception applies, and how a balance should be settled depend on your company's facts; ask your company secretary, auditor or lawyer.