Director Services
Director Services with Hong Kong Tax substance
The main goal is to match the requirements for the obtention of a Hong Kong Tax Residence Certificate if a DTA is in force, alternatively / additionally to protect the interests of Ultimate Beneficial Owner(s).
- Hong Kong resident with extensive business exposure, capable of formulating strategic policies, determining the business direction, implement management policies, evaluate the business performance and taking an active part in the company management.
- Agreements to be signed by the Director will be reviewed by the para-legal team for compliance to Hong Kong laws and regulations.
- With individual Bank signatory power and sole control over the account(s)
- Arranging Shareholders Meeting minutes and resolutions, audit reports, Company secretary services
- In absence of dedicated office, sublet of the Director’s main office where are located few companies owned and managed by the Director.
- Director’s fees to be paid as a monthly salary and subjected to MPF (minimum USD 5000/month)
The Hong Kong Company Director Services are only provided after an enhanced due diligence to an ultra-short list of clients, only Accoplus Directors could explain in details this arrangement, please send an email or schedule a call
Many Westerners, with them most of our long-time trusted friends, have left the city du to stringent covid measures, so the talent pool is shrinking.
The decision to use the Director Services with Hong Kong Tax substance is difficult to apprehend, to learn more about this opportunity schedule a call
Non-Executive Director / Nominees
Let’s start by the elephant in the room, a Non–Executive Director and a nominee are two very distinct concepts:
A non-executive Director is contributing to the company by guiding executives and sharing advices and contacts, most of the time during board meetings.
A nominee rent his/her name and time to protect business confidentiality and shield privacy, below we focus on the nominee aspect.
PROS
- Because company documents are easily accessible on the Net for a small fee, using a nominee is a real protection against unwanted attention
- As the nominee will sign all agreements, very good protection for business confidentiality
- When a company is registered in one jurisdiction where the director is also a resident this is a plus for the company credibility
CONS
- Banks reluctance, less to say, to open and maintain company bank account
- If the nominee is rendering services to many clients, if one of them is caught in a scandal the reputation of all his clients is tainted
- Legally the nominee is empowered to act on behalf of the company, risk of abuse
- Most of nominee services are rendered by staff of a law or accounting firm, very easy to detect the Director’s lack of credibility
- Yearly costs, plus cost by agreement signature
As the compliance process should keep at bay illicit activities, the cost of nominee services tends to be high, in Hong Kong the system remains valid due to the absence of publicly available register of beneficial owners.
Interested by Director or nominee services?
Nominee services and tax situation
A search on the net will bring lot of misleading information, basically a nominee couldn’t be considered as an Operational Director in a tax perspective.
For sure a nominee shareholder will never be considered by a Financial Institution as the individual Ultimate Beneficial Owner, so pretending that the nominee shareholder will protect a client in terms of tax reporting is wrong.
The concept of nominee shareholder as a tax avoidance tool was defeated years ago by the implementation of the Automatic exchange of Information.
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. A person paying 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.
There still are solutions to legally and ethically decrease the tax exposure
Duties & Principles Related to A Hong Kong Company Director
Principle 1
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.
Principle 2
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.
Principle 3
Duty not to delegate powers except with proper authorization and duty to exercise independent judgement. Except where authorized 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.
Principle 4
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.
Principle 5
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.
Principle 6
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, authorize, 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.
Principle 7
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.
Principle 8
Duty not to make unauthorized 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.
Principle 9
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.
Principle 10
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.
Principle 11
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.
