Hong Kong is the regional business center of Asia and provides a significant and multicultural service industry. It is the most effective destination for the incorporation of a company in the world. With its tax-friendly policies, trade policies, open market, free business climate, clear company incorporation process, and excellent infrastructure, Hong Kong has attracted international investors. Often, on products and consumer goods, no capital gains taxes or currency caps are used.
Its location as a financial hub in Asia and its access to the Chinese market has provided businesses with opportunities. There are slightly few limitations to global investment, and that is why it is known as an investor-friendly business city.
Setting up a business in Hong Kong and becoming a director and shareholder of a corporation is a simple and straightforward process. Various entrepreneurs are launching their own business or setting up another company in their name in Hong Kong to take advantage of the advantages it provides. Therefore, it is highly sought after for entrepreneurs and new business owners with great potential here due to its low barrier to entry and the friendly business community.
In Hong Kong, a corporation must have at least one director, one secretary, and a physical location. Each company in Hong Kong is required by the Companies Ordinance of the Laws of Hong Kong to appoint a company secretary who must reside there, or a company must have a corporate entity with its registered office in Hong Kong. So, it is a must to have either a registered agent or a company secretary if you are thinking of starting a business in Hong Kong
What is a Company Secretary in Hong-Kong?
According to Section 474, Cap., having a company secretary is a foremost requirement for any company registered in Hong Kong.
In normal cases, you should not misinterpret “company secretary” as the name “secretary,” but more roles are adhered to by a company secretary in Hong Kong. A company secretary is the company’s representative whose primary responsibility is to ensure that, by the Hong Kong Companies Ordinance, the company and its operations are fully compliant with all statutory laws and regulations.
In general, the function of the company secretary is of paramount significance to a Hong Kong company’s direction, administration, and corporate governance.
Main Benefits of Company Secretary in Hong Kong
There are many reasons why it is essential to have a company secretary in Hong Kong.
It is one of the mandatory requirements constructed based on the Company Ordinance, so if you want to register a company in Hong Kong, you have no choice but to choose a company secretary. It should be noted that if the firm does not appoint a qualified company secretary, a company may fail to be listed on the Stock Exchange.
In Hong Kong, a company secretary is also a contributing factor to a company’s growth and sustainability. To be specific, choosing a company secretary has two major advantages:
Ensure that the company well complies with the Hong Kong law
In the Hong Kong jurisdiction, there are such obligations to result in effective company setup and administration. They will help you understand and continue with the appropriate and orderly measures with qualified company secretaries to adhere to the Hong Kong rule, ensuring that the company operates smoothly without any dispute with the legislation.
Act as the bridge between the company and the Hong Kong government
An HK business secretary not only deals with the company’s directors and stakeholders but also liaises and deals with several governments and regulatory bodies responsible for overseeing the activity and operations of the company. The Registrar of Companies, the Inland Revenue Department, the Stock Exchange of Hong Kong, the Securities and Futures Commission of Hong Kong, etc., are some of the regulatory bodies that company secretaries must deal with.
The corporate secretary’s main duties
A Hong Kong company secretary’s duties and responsibilities are broad, ranging from administrative to managerial functions. Here are some of the business secretary’s core duties:
Fulfilling tax obligations
One of the key functions is to facilitate tax compliance when you have a corporate secretary in Hong Kong. One point that you need to get right about the administration of Hong Kong is that tax matters are very clear. The corporate secretary works to ensure that all the tax responsibilities are fulfilled by the company. Some of these duties are here:
- Seeking additional authority on tax matters that the corporation might need. When faced with nuanced tax-related problems that require clarity from the authorities, you will find this position to be very critical.
- Registration of the company with the Inland Revenue Department (IRD) since incorporation. This is very important to ensure that the information of the business is accessible in government records.
- The company secretary helps to ensure that the company reports tax returns properly and on schedule at the end of the financial year. It is very important to ensure that, where possible, you take advantage of tax relief to minimize fines.
Organizing and Attending Board Meetings
Your corporate secretary is also mandated to coordinate and attend all meetings of the company’s board of directors or shareholders. Before the conference, the Secretary is expected to assist with the development of the key agenda, to prepare the minutes of those meetings, and to ensure that proper protocols are followed.
The company secretary Hong-Kong often comes in handy to assist with implementation, based on the decisions taken by the board. The secretary makes sure that the decisions taken at the meetings are followed in compliance with the laws and policies of Hong Kong.
Maintaining and upgrading the Statutory Financial Statements of the company
The business secretary is required to hold all the statutory records when enters a company in Hong Kong. This provides clear and simple access to government departments when detailed records are needed. For example, the Inland Revenue Department will approach the company secretary for record inspection if there is a concern with the tax enforcement of the company.
Still, on the documents, as their specifics change, the business secretary is expected to amend the records. For instance, the secretary should update the registry of shareholders & directors if a shareholder raises his/her shares in the company.
Coordinating with different stakeholders
Coordination with various stakeholders is another important role performed by the business secretary in Hong Kong. The Secretary must believe to be responsible with organizations whose role impacts the company’s day-to-day activities. This includes, among others, the Hong Kong Stock Exchange, the Inland Revenue Department, and the Companies Registry. This coordination helps the secretary to know promptly whether new legislation, rules, or timely measures are necessary. Also, the secretary needs to collaborate in the corporation with directors, employees, and other officials.
Post Incorporation Filing
While during incorporation, you chose a particular configuration for your Hong Kong business, the chances are that at some stage you would need to make changes to the setup. Some of these changes may include the elimination or inclusion of shareholders or directors, a change in the name of the company, an increase or reduction in the share capital of the company, or a change in the registered address. When these changes are implemented, the company secretary in Hong-Kong is expected to prepare and file with the registry the required documentation capturing the changes.
Who to designate as a Company Secretary?
One thing is obvious when looking at the above positions and responsibilities of a company secretary in Hong Kong. Notice that the secretary must be a citizen of Hong Kong or listed in Hong Kong as a corporate body.
From March 2018, every business secretary in Hong Kong must possess a TCSP License.
Here are the characteristics to search for when choosing a business secretary.
Great Planning Capability
One must have outstanding planning skills to run a company secretary’s portfolio in Hong-Kong. The secretary will be able to arrange meetings on time with the necessary preparation skills and encourage compliance with various schedules.
Consider checking input from his or her experience to know if a prospective applicant is a good planner. You may also expect similar positive outcomes if they are pleased.
Experience in Corporate Governance
Corporate governance is the majority of the responsibilities of a business secretary in HongKong. It is therefore worth looking for a secretary in company secretarial services with both technical and formal qualifications.
Also, the secretary should be enthusiastic about the profession, especially keeping up-to-date with the latest developments in your company’s regulatory structure and corporate governance.
In Hong Kong, almost all of the company secretary’s responsibilities include contact at various levels. The secretary should also be able to liaise and pass on information promptly to other stakeholders, such as executives, managers, and investors. The following qualities should be shown by a successful communicator:
- Language skills
- Emotional intelligence
Committed to the role
Absolute contribution to the job should be demonstrated by the best company secretary. The secretary should be involved, both in the short and long term, in seeing the organization achieve its objectives.
A company secretary is expected to conduct essential duties, such as engaging in board meetings and advising managers on compliance, which are vital to business results.
It is therefore wise to look for a capable secretary who can assist in crafting plans to help the business succeed
Powers of a company secretary
A company secretary must ensure the efficient administration of the company, in particular concerning compliance with regulatory requirements. Also, the company secretary has to ensure that all the decisions taken by the board of directors are legally sound and completely executed.
What makes a good company secretary?
A good company secretary should be an effective communicator, have the right capacity for corporate governance, and show an underlying determination to excel in your company. Since the secretary deals with the directors of the organization, senior executives, and members of the board, he/she should be diplomatic and fearless as well. These qualities make it easier for the secretary to work with the whole team and help make sound decisions for the organization.
To help your business, run smoothly, the position of company secretary in Hong Kong is relatively crucial, particularly to be fully compliant with government laws and regulations.
In Hong Kong, a company secretary can be either a corporation or an individual; however, there are clear criteria that your HK company should know for registering an “eligible” company secretary. In Hong Kong, employing a knowledgeable corporate service provider such as Vita Liberta to get better advice on how to choose your company’s qualified company secretary. Feel free to contact us now!
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