What is Company Secretary in Hong Kong and Why You Need It
Hong Kong is an economic powerhouse and one of the best jurisdictions to incorporate an offshore company. Ranked the freest economy in the globe between 1995 and 2019, Hong Kong provides companies with the perfect platform that they need to grow exponentially in Asia and internationally. But first, you need to register your company in Hong Kong.
According to the Hong Kong Companies Ordinance, one of the requirements for registering a company in the jurisdiction is having a company secretary.
In this article, we take a closer look at the company secretary in Hong Kong and demonstrate why you must get it right.
What is a Company Secretary in Hong-Kong?
A company secretary in Hong-Kong is the business’s named representative, who has the responsibility of ensuring the company and its operations are run in accordance with the law. Even though the company representative goes by the name “secretary,” the roles are not clerical.
Why is a Company Secretary in Hong-Kong so Crucial?
When you incorporate a company in Hong Kong, the company secretary is one of the most important representatives, with his/her roles extending well beyond facilitating compliance. Here are some of the primary reasons why you should have a company secretary.
- It is a legal requirement
Having a company secretary is not an option you can do away with when registering a company in Hong Kong. According to the Companies Ordinance, your company will not get registered if you do not have a secretary. You can also be prosecuted for trying to operate without a company secretary. So, make sure to select the best company secretary before starting the process of registering your business.
- Bridging your company with the Hong Kong administration
When the Hong Kong administration wants to reach your company, the company secretary act as the main bridge. This means that the secretary is answerable for all clarifications that the government agencies might want about the company.
- Ensuring compliance with local laws, policies, and regulations of doing business
There are specific regulations and policies that guide business operations in Hong Kong. A secretary will come in handy to help you understand and comply with the peculiarities of local corporate, financial and fiscal obligations and ensure the business does not get into conflict with the law.
The Core Responsibilities of a Company Secretary
Your company secretary in Hong-Kong has a lot of duties, which range from managerial to administrative. Here are some of these responsibilities.
Facilitating Tax Compliance
When you get a competent company secretary in Hong Kong, one of his/her main roles is facilitating tax compliance. One thing you need to get right about Hong Kong administration is that it is very straight forward on tax matters. The company secretary helps to ensure that your company meets all the tax obligations. Here are some of these roles:
- Registering the company with Inland Revenue Department (IRD) after incorporation. This is very important to ensure that the company's details are available in government records.
- Seeking additional authorization that the business might require on tax matters. You will find this role very important when faced with complex tax-related issues that need clarification from authorities.
- At the close of every financial year, the company secretary helps to ensure that your company files the tax returns correctly and on time. This is very important to ensure you take advantage of tax relief where applicable and avoid penalties.
Maintaining and Updating the Company’s Statutory Books
When you incorporate a business in Hong Kong, the company secretary is mandated to keep all the statutory documents. This gives the government agencies a direct and easy access when specific documents are required. For example, if there is an issue about the company’s tax compliance, the Inland Revenue Department will reach the company secretary for record inspection.
Still, on the records, the company secretary is required to update the records when their details change. For example, if a shareholder increases his/her shares in the company, the secretary should update the register of shareholders & directors.
To keep the shareholders well informed about the operations of the company, the secretary is also responsible for reproducing and distributing different reports and accounts.
Organizing and Attending Board Meetings
Your company secretary is also mandated to organize and attend all the company’s board of directors or shareholders' meetings. Before the meeting, the secretary is required to help formulate the main agenda, prepare the minutes of these meetings, and ensure that proper procedures are followed.
Depending on resolutions that are made by the board, the company secretary Hong-Kong also comes in handy to help with compliance. The secretary ensures that the decisions made during the meetings are implemented in line with Hong Kong laws and policies.
Post Incorporation Filing
Although you selected a specific structure for your Hong Kong company during incorporation, the chances are that you will need to make adjustments on the setup at some point. Some of these changes may include removal or addition of shareholders or directors, change in the company name, increase/decrease in the company’s share capital, or alternation of the registered address. When these changes take place, the company secretary in Hong-Kong is required to prepare the required documents capturing the changes, and filing them with the registry.
Collaborating with Different Stakeholders
Another crucial duty played by the company secretary in Hong-Kong is collaborating with different stakeholders. In particular, the secretary must work closely with agencies whose mandate impact the daily operations of the company. These may include the Hong Kong Stock Exchange, the Inland Revenue Department, and Companies Registry, among others. This cooperation allows the secretary to promptly know when new policies, regulations, or prompt actions are needed. Furthermore, the secretary has to collaborate with directors, shareholders, and other officers in the company.
NOTE: Although the responsibilities we have listed above are the main ones, a good company secretary in Hong-Kong will do more. Many companies rely on company secretaries to understand the new market, especially in the early days of business establishment. For others, the secretary comes in handy in facilitating the identification of the best staff and daily operations.
Who to Appoint as a Company Secretary
Looking at the above roles and responsibilities of a company secretary in Hong-Kong, one thing is clear: you must go for the best representative. Note that the secretary must be a Hong Kong resident or a corporate entity registered in Hong Kong.
Any company secretary in Hong Kong must be holding a TCSP License starting from March 2018.
Here are the qualities to look for when selecting a company secretary.
Experience in Corporate Governance
Most of the duties of a company secretary in Hong-Kong are on corporate governance. Therefore, it is prudent to look for a secretary with both professional and formal training in company secretarial services.
Furthermore, the secretary should be enthusiastic about the role, especially staying up-to-date with the latest developments in the regulatory framework and corporate governance relating to your business.
A company secretary is required to do crucial tasks, such as participating in board meetings and advising the directors on compliance, which are central to business success.
Therefore, it is prudent to look for a competent secretary who can help to craft strategies to help the company succeed.
Good Planning Capability
To run the portfolio of a company secretary in Hong-Kong, one must have excellent planning skills. With the right planning skills, the secretary will be able to organize meetings on time and facilitate compliance with different schedules.
To know if a potential candidate is a good planner, consider checking feedbacks from his/her previous experience. If they were satisfied, you can also anticipate similar good results.
A Perfect Communicator
Almost all the duties of the company secretary in Hong-Kong involves communication at different levels. Therefore, the secretary should be able to liaise and pass information to other stakeholders, such as directors, managers, and investors, in a timely way. A good communicator should demonstrate the following skills:
- Emotional intelligence
- Negotiating skills
- Teamwork skills
- Language skills
Responsible and Firm
One of the roles of a company secretary is being the custodian of the company’s records, which makes him/her privy to the company’s affairs. Therefore, you should look for the secretary whose integrity is beyond reproach.
The secretary you select should be courageous and committed to guiding the enterprise on governance issues. Particularly, the secretary should demonstrate great independence and be articulate in highlighting issues that need to be addressed to avoid hurting the company.
The best company secretary should demonstrate total commitment to the job. The secretary should be interested in seeing the company achieve its goals, both short-term and long-term.
Why You Should Select a Consultancy to Serve as a Company Secretary
Now that you know the qualities to look in a good company secretary Hong-Kong, one of the sure ways of getting the best is selecting an agency. Secretary services agencies are run by professionals and have years of experience in helping other offshore companies in Hong Kong.
Here are the main benefits of using an agency as your company secretary:
Agencies can help you with registration and act as company secretary
When you select an agency to serve as your secretary early enough in the company registration process, it can also act as its address. This can help you to cut costs associated with acquiring your own office, register the company faster, and enjoy the services of a professional company secretary.
They are run by experts in secretary services
One of the most notable benefits of consultancies is that they are run by experts. These are professionals who specialize in corporate governance and will go to any length to make your offshore company operations seamless. This expertise makes them the perfect option for companies that are moving to Hong Kong for the first time.
They have a lot of experience
After registering a company in Hong Kong, you will realize that the operating environment is very competitive and different from what you are used to back home.
Having been in the Hong Kong business environment for many years, agencies have seen the mistakes that most companies make and can help you to avoid them. They also know the strategies that work and will help guide your company to success.
Can help you to maintain the significant controllers register (SCR)
Following the 2018 amendment to the Companies Ordinance, all companies are required to prepare and maintain a Significant Controllers register (SCR). If you select an agency to act as your company secretary, it can also help to prepare, maintain, and regularly update the register.
When it comes to company secretary Hong-Kong, you do not want to get stuck with an incompetent person who cannot help your enterprise grow. Instead, go for the best agency with demonstrated experience and commitment to see your venture realize its exponential potential.
What are the skills required for a company secretary?
The ideal company secretary should have top corporate governance skills such as diplomacy skills and emotional intelligence skills. Other skills that the secretary should have include:
- Problem-solving skills
- Planning skills
- Communication skills
- Teamwork skills
- Attention to details
What are the powers of a company secretary?
A company secretary has the responsibility of ensuring the efficient administration of the company, especially with regard to compliance with regulatory requirements. Furthermore, the company secretary is responsible for ensuring that all the decisions made by the board of directors are legally sound and fully implemented.
What makes a good company secretary in Hong Kong?
A good company secretary should be an effective communicator, have the right corporate governance ability, and demonstrate inherent drive to see your company become successful. Because the secretary works with the company directors, senior executives, and board members, he/she should also be diplomatic and fearless. These attributes make it easy for the secretary to work with the entire team, and help in drawing sound company decisions.
Can a sole director of a Hong Kong company serve as a company secretary?
When you incorporate a company in Hong Kong, the sole director or shareholder cannot serve as the company secretary. In such a case, you will need to appoint a company secretary to act as the custodian of statutory documents and act as the bridge with the Hong Kong administration.