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The director(s) and shareholder(s) of a Hong Kong company are identified on The Cyber Search Centre of the Integrated Companies Registry Information System (ICRIS) www.icris.cr.gov.hk/csci/
Significant Controllers Register should be maintained and accessible by the Companies Registry, Customs and Excise Department, Hong Kong Monetary Authority, Hong Kong Police Force, Immigration Department, Inland Revenue Department, Insurance Authority, Independent Commission Against Corruption, Securities and Futures Commission.
The Significant Controllers Register doesn’t offer public access, yet.
CRS is a global standard for the automatic exchange of financial information (AEOI) between participating jurisdictions that have agreed to adopt it. Compliance is mandatory under local law in each participating jurisdiction, including Hong Kong (HK).
Clients that hold financial accounts with a bank will be subject to CRS required due diligence procedures. Clients affected include individuals (whether banking directly or indirectly through an entity), sole proprietors and entities such as corporations, partnerships and trusts. Generally, clients that are identified as reportable persons, i.e., tax residents of reportable jurisdictions, will be subject to reporting.
In general, whether or not an individual or entity is a tax resident of a jurisdiction is determined by having regard to the person’s physical presence or stay in a place (say, for example, whether a person has stayed over 183 days in the same place within a tax year) or, in the case of a company, the place of incorporation or where the central management and control of the entity lies. That a person has paid taxes charged by a jurisdiction (say, value-added tax, withholding tax or capital gains tax) does not automatically render that person a tax resident of that jurisdiction.
A nominee director in Hong Kong is a non-executive director appointed to shield the identity of the effective director/shareholder of the company.
With a nominee director setup instead of the use of Director services, the company will de facto abandon the opportunity to gain the Hong Kong Tax Residence Certificate this because of a lack of demonstration for management and control in Hong Kong.
Duty to act in good faith for the benefit of the company as a whole. A director of a company must act in good faith in the best interests of the company. This means that a director owes a duty to act in the interests of all its shareholders, present and future. In carrying out this duty, a director must (as far as practicable) have regard to the need to achieve outcomes that are fair as between its members.
Duty to use powers for a proper purpose for the benefit of members as a whole. A director of a company must exercise his powers for a “proper purpose”. This means that he must not exercise his powers for purposes that are different from purposes for which they were conferred. The primary and substantial purpose of the exercise of a director’s powers must be for the benefit of the company. If the primary motive is found to be for some other reasons (e.g. to benefit one or more directors and to gain control of the company), then the effects of his exercise of his power may be set aside. This duty can be breached even if he has acted in good faith.
Duty not to delegate powers except with proper authorisation and duty to exercise independent judgement. Except where authorised to do so by the company’s memorandum and articles of association (the “constitution”) or any resolution, a director of a company must not delegate any of his powers. He must exercise independent judgement in relation to any exercise of his powers.
Duty to exercise care, skill and diligence. A director of a company must exercise reasonable care, skill and diligence. This means the care, skill and diligence that would be exercised by a reasonably diligent person with (i) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company; and (ii) the general knowledge, skill and experience that the director has.
Duty to avoid conflicts between personal interests and interests of the company. A director of a company must not allow personal interests to conflict with the interests of the company.
Duty not to enter into transactions in which the directors have an interest except in compliance with the requirements of the law. A director of a company has certain duties where he has a material interest in any transaction to which the company is, or may be, a party. Until he has complied with these duties, he must not, in the performance of his functions as a director, authorise, procure or permit the company to enter into a transaction. Furthermore, he must not enter into a transaction with the company, unless he has complied with the requirements of the law.
The law requires a director to disclose the nature of his interest in respect of such transactions. Under certain circumstances the constitution may prescribe procedures to secure the approval of directors or members in respect of proposed transactions. A director must disclose the relevant interest to the extent required. Where applicable, he must secure the requisite approval of other directors or members.
Duty not to gain advantage from use of position as a director. A director of a company must not use his position as a director to gain (directly or indirectly) an advantage for himself, or someone else, or which causes detriment to the company.
Duty not to make unauthorised use of company’s property or information. A director of a company must not use the company’s property or information, or any opportunity that presents itself to the company, of which he becomes aware as a director of the company. This is except where the use or benefit has been disclosed to the company in general meeting and the company has consented to it.
Duty not to accept persona l benefit from third parties conferred because of position as a director.
A director or former director of a company must not accept any benefit from a third party, which is conferred because of the powers he has as director or by way of reward for any exercise of his powers as a director. This is unless the company itself confers the benefit, or the company has consented to it by ordinary resolution, or where the benefit is necessarily incidental to the proper performance of any of his functions as director.
Duty to observe the company’s memorandum and articles of association and resolutions. A director of a company must act in accordance with the company’s constitution. He must also comply with resolutions that are made in accordance with the company’s constitution.
Duty to keep proper books of account. A director of a company must take all reasonable steps to ensure that proper books of account are kept so as to give a true and fair view of the state of affairs of the company and explain its transactions. To avoid breaching the fraudulent trading provisions in section 275 of the Companies Ordinance (Cap. 32). a director must not allow the company to incur further credit knowing that there is no reasonable prospect of avoiding insolvency.
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