Hong Kong companies, demands are high despite worldwide tensions.
The city registered 48,000 companies in the first six months, incorporating a Hong Kong company is remaining attractive despite, or because? Of the economic turmoil.
The low tax location (8.25% of the first USD 250,000 profits, then 16.5%) is attracting interest from International entrepreneurs.
Incorporating a Hong Kong company is an easy process but demand attention to details as the bank account opening is a difficult operation, with travel restrictions many are caught with a company which can’t be operational in absence of bank account.
The preparation of a compliance report before incorporating a Hong Kong company is therefore a better concept for those with immaterial business models and/or operating in countries which could be considered as a risk by the bank compliance.
Hong Kong laws (section 154, Hong Kong Companies Ordinance) require every company incorporated in Hong Kong to have a company secretary. The company secretary could either be an individual resident in Hong Kong or a corporate establishment based out of Hong Kong.
Why you need a Company Secretary?
The benefits of having a company secretary does not only extend to complying with the law. Company secretaries also have other essential responsibilities that extend to governance, administration and decision making in a company. Here are the essential reasons why you should have a company secretary on board your new company.
It is required by law. The Hong Kong Companies Ordinance mandate every company incorporated in Hong Kong to retain the services of a Company Secretary or company secretarial service. It is impossible to have your company listed on the Hong Kong stock exchange without having a qualified Company Secretary.
Regulations, policies and laws guiding business activities in Hong Kong are becoming more complex by the day. Having a competent company secretary on board your company or using the services of a reliable agency offering company secretarial services is essential to easily navigating the increasingly complex legal and regulatory business environment in Hong Kong and ensuring that your company always stays on the right side of the law.
Duties of a Company Secretary
If you operate an active company, your company secretary will be tasked with a lot of daily duties and responsibilities. These duties generally cover a wide range of administrative and management functions and may range from personnel management; organizing and maintaining the company’s corporate and statutory documents; helping the company comply with laws and government regulations; as well as positively interacting with directors and officers of the company and counseling them on the fundamentals of corporate governance.
The company secretary is certainly tasked with a lot of responsibilities. Some of them are outlined here.
The company secretary is in charge of maintaining and updating the company’s statutory books, which include the registers of shareholders and directors. These books are kept in the custody of the company secretary and he/she is tasked with updating them when necessary. The company secretary is also responsible for overseeing the production and distribution of company accounts and reports to shareholders and members of the company.
The company secretary is responsible for organizing and attending meetings of the board of directors/shareholders. In these meetings, the company secretary prepares the minutes of meetings, helps in the formulation of the agenda and ensures that proper meeting procedures are complied with.
Another responsibility of the company secretary is preparing and filing the company annual returns with the Hong Kong Company Registry. Company annual returns are required to be filed with the company registry on a yearly basis and it serves as evidence that the company is a going concern.
The company secretary is responsible for helping the company carry out its post incorporation filings. During the lifetime of a company, there may be need to effect some changes or alterations in the corporate set up of the company. Post incorporation filings are required to be done with the company registry in order for these changes and alterations to be legally valid. Some of these filings include: addition or removal of directors or shareholders; transfer/allotment of shares; change of the company name; change of the objects of the company; increase or decrease in the company’s share capital; alteration of the company’s registered address etc. Whenever the company decides to alter some aspects in its corporate set up, the company secretary has to prepare the necessary documents and file same with the company registry in order for the alterations to attain legal validity.
A company secretary also provides professional advice and guidance to the company’s directors and shareholders on corporate governance issues. He or she should be able to proffer solutions to help the company establish a viable corporate structure.
Company Secretaries do not only work and collaborate with the company’s shareholders, directors and officers, they also have to work and collaborate, on behalf of the company, with different government regulatory agencies responsible for overseeing the activities of companies registered in Hong Kong. These agencies include the Company Registry, Hong Kong Stock Exchange and the Inland Revenue Department. The company secretary has to ensure that the company is always in compliance with the regulatory measures initiated by these agencies from time to time.
The company secretary can also carry out other miscellaneous duties, for example helping the company apply for business registration certificate or its renewal. He or she could also assist in opening the company’s corporate bank account.
Who to appoint as a company secretary?
In choosing a company secretary for your company, you should go for a specialized company secretary and not just anybody. The company secretary you choose to bring onboard your company should possess certain fundamental qualities. What are these qualities? Find them below :
Expertise in Corporate Governance
Company Secretaries, being the corporate governance expert in a company, need to have some professional and formal training in corporate governance and company secretarial services. They should equally be up to date with changes and developments in corporate governance and the regulatory and compliance framework affecting your company.
The Company Secretary must ensure that he or she is abreast with the business of your company. They should understand the rudiments of transforming corporate governance ideals into workable policies, procedures and processes for your company. They should be able to develop these procedures and policies in a manner that is practical and easy to implement.
A good company secretary should be able to plan and organize activities within his or her scope of control. The necessity of a company secretary having the ability to plan cannot be overemphasized considering the fact that the company secretary is in charge of organizing and planning company meetings and complying with a lot of schedules and deadlines. These responsibilities, by their nature, require a great degree of planning ability.
The job brief of company secretaries include working with senior members of the company which includes shareholders, directors, managers, executives and investors. A company secretary should be able to effectively pass across information to this group of people, either orally or through writing.
He or she should be able to exhibit tact, emotional intelligence, language skills, negotiation ability and diplomacy to ensure that others understand and agree with his or her point of view. The ability to listen well and understand instructions is also a basic skill of a company secretary. The company secretary should be aware of the goals, strategies and plans of the company and should be able to make decisions that bring the company closer to these goals.
Responsibility and independence
The company secretary is the custodian of the company’s conscience. Being in this position requires the company secretary to have a great deal of responsibility and integrity towards the affairs of the company.
A company secretary should also be able to display courage and be fearless when counseling or guiding the company on corporate governance issues. He or she should be able to exhibit a high level of independence when dealing with other senior staff members of the company and be able to fearlessly bring up issues or concerns that if not properly addressed will negatively impact on the company.
The company secretary should possess the skill to make assessments and take the right decisions, especially when conflicting issues and circumstances arise. He or she should be able to pay attention to detail and ensure that no important issue or consideration escapes his or her attention span.
A good company secretary should be committed to the job. He or she should have the interest of the company at heart and should take decisions that help the company attain its short term, medium term and long term aspirations.
The above are the characteristics of an ideal company secretary. The company secretary which you choose to bring on board your company should possess, at least, a majority of these characteristics. This is due to the important roles a company secretary play in your company.
You certainly do not want to gamble on an incompetent company secretary
Having trouble finding a great Hong Kong company secretary that fits the bill? Contact us and we will provide you with company secretarial services that will help your company stay on the right side of the law and attain its corporate governance objectives.