In reference to the formation of companies, Hong Kong retains a low entry barrier. During the business forming process, the city introduces few constraints but retains criteria relating to the primary roles to be filled within a company in particular.
A Hong Kong corporation must have at least one director and one secretary, in compliance with the Hong Kong Companies Ordinance. However, shareholders are also an important part of Hong Kong firms and are found as generally as a director or secretary. We will outline the main responsibilities and duties for all three positions in this article.
Obligations of a Company in Hong Kong
An organization is a distinct legal body, that is, in its own right and separate from its shareholders, it is a legal individual. The advantage of limited liability when functioning as a limited company often entails responsibilities to the degree that the company must comply with the relevant provisions of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong).
These responsibilities require the prompt disclosure and reporting to the Registrar of Companies of the stated details about the company, its officers and shareholders, etc. and any modifications to that information and the ability for members of the public to have ready access to the current company information retained by the Registrar of Companies
Obligations as Officers of a Company
It is the responsibility of any company official, including its director(s), company secretary, or manager, to ensure that the company has complied with all of the provisions of the Companies Ordinance. Where a corporation fails to meet with the provisions of the Ordinance, the company shall be liable for indictment and, if prosecuted, for default fines, along with every responsible individual of the company.
In specific, any person named to serve as a company’s first director must either indicate his approval by signing the incorporation form with his/her Consent to Act as Director, or by confirming the consent in a Form NNC3. Form NNC3 shall be sent to the Registrar of Companies no less than 15 days after the date of incorporation of the Company, in the absence of which the Company, each responsible person (including an officer) of the Company, and the founder member who signs the incorporation form have committed an offense and each of them is liable to a fine and, in the case of a continuing offense, to a further regular fine.
‘A Guide on Directors’ Duties’ (pdf Format) has been provided by the Companies Registry which outlines the general principles that a director should follow in performing his duties and exercising his powers. These instructions should be read by all directors. You can pursue impartial legal or technical counsel if you are in doubt about the extent of your duties and commitments as an officer of a corporation
Company directors are individuals who are chosen or assigned to the board of directors of a company. These people are chosen to handle a corporation’s operations and activities on behalf of the company and its’ shareholders.
Responsibilities and Duties of Company Director
Since the company’s directors, on behalf of their investors, are responsible for the management of the company, they retain a fiduciary duty to behave in good conscience and the best interest of the company and its shareholders. These roles entail ensuring that the company’s corporate practices are consistent with the priorities and course set.
The Hong Kong Companies Registry has defined 11 general duties to be undertaken by a company director: Company directors who are found to have failed to fulfill their duties as described in the Companies Registry will be liable to legal action and may be excluded from their role as director of a company.
- The duty to demonstrate diligence, skill, and perseverance
- Obligation to use powers for members as a whole for a good faith
- Duty not to misuse the position of Director of Company
- Right not to perceive personal advantage from third parties conferred due to the position of director
- Obligation to keep financial documents
- Duty to observe the constitution and resolutions of the company
A shareholder of a company is any person, company, or entity that owns at least one share of the equity of a company. Shareholders become beneficial shareholders of the company by holding a company’s stock and gain rights to all income generated. A shareholder’s decisionmaking authority is determined by the quantity and valuation of the stock owned and has a considerable impact on their benefit payments.
Responsibilities and Duties of Company Shareholders
Shareholders are usually not included in a company’s regular activities. The primary duty of shareholders is to pass resolutions brought forward at general board meetings by voting as shareholders in their power. The strength of a vote would also be decided by the proportion of the stock of the corporation owned by each shareholder.
A secretary of an organization is NOT a clerical assistant. In your business, a company secretary occupies a senior position and is designated by the company’s directors. In addition to operating and dealing with the company’s directors and shareholders, the company secretary is appropriate for complying with the government and regulatory bodies (e.g., the company registrar, IRD, SFC, and the Hong Kong stock exchange) to ensure that the company complies with the regulations.
Importance of Company Secretary
Through advancement and execution guidance and advice to their employers, company secretaries are responsible for ensuring statutory compliance with regulations. These obligations also include ensuring that all official records and filings are punctually filed to prevent fines.
Requirements of Company Secretary
The Company Secretary may be a person or even a company for all Hong Kong incorporated businesses. In the condition that an individual is designated by the organization as a secretary, they must reside in Hong Kong. It is compulsory to have a registered office or a place of business in Hong Kong if a corporation is named as the company’s secretary. From the date of incorporation of a company, the first company secretary has to be specified in the incorporation process of the company.
Responsibilities of a Company Secretary
- Prepare reports and minutes for annual shareholder conferences and board meetings
- Execute accounts of appointments and resignations of directors
- To have all government communications issued
- Preserve the regulatory book
- Assist in shares issuance and transition
How to Fulfill Your Obligations?
- Deliver regulatory returns to the Registrar of Companies for registration in compliance with the provisions of the Companies Ordinance during the dates specified.
- Inform the Registrar of Companies promptly either by e-mail at firstname.lastname@example.org or by fax at (852) 2596 0585 if you notify the Registrar of Companies that your company’s information is inaccurate or has been altered as a result of irregularities in any registered records or improper filing with the Registrar of Companies.
- Keep an eye on the statements of the company to make sure that the company has issued the Registrar of Companies with an annual return and any reports of improvements to the location of the registration office, directors and company secretary, etc. To assess if the company’s public record is up-to-date and correct, you can perform free database archive searches and, if necessary, searches on the company’s documents at the Cyber Search Centre or via Company Search Mobile App.
Vita Liberta is your one-stop solution for Hong Kong-based companies. We have company setup and registration advice, company clerk, audit, tax calculation, income tax return filing, and a registered address for your company registration concern.
Office in Hong Kong
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