With its strategic location in the heart of Asia, alongside key factors like its low-rate tax system, established infrastructure, and sizeable foreign exchange reserves, Hong Kong is consistently rated the world’s freest economy. Furthermore, the city continues to be Asia’s second-largest and the world’s third-largest Foreign Direct Investment recipient.
For individuals and corporations wanting to know about Hong Kong company registration, they must first meet certain requirements; with one such requirement being the appointment of a company secretary.
This guide highlights why you need a company secretary in Hong Kong and the duties that such a role involves.
What is a company secretary in Hong Kong?
A company secretary in Hong Kong acts as a company’s representative in the region, ensuring that a company’s operations are managed following the Hong Kong Companies Ordinance. Moreover, a company secretary plays a key role in the administration, direction, and corporate governance of a Hong Kong company, whether it is a listed company or a private company.
It is important not to confuse the role of a company secretary in Hong Kong with the role of a company’s typical “secretary”. Rather, a company secretary in Hong Kong ensures that a company’s operations are compliant with all regulations and statutory laws under the Hong Kong Companies Ordinance.
The duties of a company secretary also include relevant interaction with the shareholders and directors of a company, as well as government bodies like the Inland Revenue Department, the Companies Registry, the Hong Kong Stock Exchange, etc.
Why is a company secretary in Hong Kong so important?
As one of a company’s most vital representatives, a Hong Kong company secretary is crucial for a foreign business to incorporate a Hong Kong company. Both private companies and listed companies require the appointment of a company secretary.
A foreign company cannot be registered in Hong Kong without a company secretary as this is a legal requirement. Consequently, business owners can find themselves prosecuted for attempting to operate without a company secretary.
A company secretary also acts as the main conduit between a company and the Hong Kong administration. If the administration or regulatory bodies have any questions or concerns pertaining to a company, it is, therefore, the job of a company secretary to provide such clarification.
For any foreign business to operate in Hong Kong, there are several policies and regulations that must be adhered to. A company secretary staying abreast of these regulations helps to ensure that business owners maintain compliance with their financial, fiscal, corporate governance, and Hong Kong laws. As a result, business owners are better able to navigate — and less likely to breach — Hong Kong Companies Ordinance and corporate laws.
Who can be appointed a company secretary?
Either a natural person or a corporation can be appointed as a company secretary in Hong Kong. However, some prerequisites need to be met, including the following:
- If a company wishes to elect a natural person as the company secretary, the individual must be a Hong Kong resident.
- If a corporation is appointed as company secretary, it must be a licensed Hong Kong Trust and Corporate Service Provider (TCSP) and have a business address in Hong Kong.
- Where a Limited Hong Kong company only has one director, that director is exempt from also being the company secretary.
- Additionally, if a Limited Hong Kong company only has a sole director, then that company cannot engage another company that shares the same director to act as its company secretary.
What are the responsibilities of a company secretary?
As already specified, the primary role of a company secretary in Hong Kong is to ensure a company remains compliant with the appropriate rules and regulations.
Although the Hong Kong Companies Ordinance does not outline the explicit responsibilities of a company secretary, a company’s articles of association should detail what is expected of this role.
A company secretary in Hong Kong is expected to perform the below responsibilities:
Company setup
A company secretary can assist in the process of company incorporation of a new entity in Kong Kong, especially in the process to select the most suitable type of legal entity for the project.
The company secretary will prepare the corresponding forms for incorporation depending on the company type and file the documents with the Companies Registry.
Additionally, the company secretary will prepare other documents related to the incorporation including the Articles of Association, obtain the stamps for the company, appoint directors, etc.
A widespread practice in the incorporation process is to use the registered address at the same address as your company secretary, this facilitates the operation of the company and helps you reduce costs in the operation. In general, the company secretary will assist you in all the processes of the company incorporation.
Facilitate tax compliance
As one of the major roles of a company secretary in Hong Kong, facilitating tax compliance is central to the smooth running of any business.
This can be broken down into the following components:
- Registration of the company with the Inland Revenue Department (IRD) — On successful approval of the corporate entity to operate in Hong Kong, the company secretary must register the company with the IRD. The company secretary must also ensure the company’s details are present on the government’s record and obtain the Business Registration certificate of the company.
- Deal with advance tax matters and clarification with the Inland Revenue Department — The company secretary is charged with liaising with government agencies in Hong Kong, including the Inland Revenue Department.
- Annual filing of tax returns — The company secretary must lodge tax returns at the end of each year, this is key to avoiding tax-related sanctions by the Hong Kong government.
Maintain and update statutory books
A company secretary in Hong Kong is expected to be in custody of all statutory documents of the company. Furthermore, they are charged with ensuring that such documents are available upon request from the Hong Kong government.
This role is further outlined below:
Maintenance and custody of all statutory documents of the company — The company secretary has the responsibility of keeping all statutory documents and providing direct access when such documents are required by directors, shareholders, and authorities.
Making any updates or changes to records — In the event there is a change in the details of the company, the company secretary must ensure that such changes are documented in the books. As an example, this can include changes in company directors, the number of shareholders, or the number of shares held by a shareholder.
Production, publication, and distribution of company reports — The company secretary is charged with compiling a company’s account reports, as well as the monthly and annual publishing of such reports. This ensures that shareholders are kept abreast of financial trends that have an impact on the performance of the company.
Schedule and attend board meetings
It is the role of a company secretary in Hong Kong to schedule and attend shareholder meetings and a company’s board of directors meetings. This includes formulating a meeting’s agenda, preparing the minutes of a meeting, and ensuring that adequate procedures are adhered to, and final verdicts comply with Hong Kong regulations.
Collaborate with stakeholders
A key role of any company secretary is the ongoing collaboration with various stakeholders, including shareholders, directors, and other officers in the company. This ensures that the company secretary is made aware of new regulations and policies and knows when affirmative action is required.
The company secretary needs to closely align themselves with the agencies whose mandate may impact the daily operations of a company. This can include such bodies as the Companies Registry, Inland Revenue Department, and Hong Kong Stock Exchange.
Post incorporation filing
Some companies will need to adjust the structure of their Hong Kong incorporation at some point. This could include things like a change in a company name, update passport information of the shareholders, changes to a registered address, or the addition or removal of directors or shareholders.
It is the responsibility of the company secretary to prepare the required documents that outline such changes and file them with the registry.
One more point to consider is the process of closing a company and deregistering the entity with the authorities, company secretaries can also assist in the proper closure of the company.
What skills does a company secretary require?
Aside from being a Hong Kong resident or a corporate entity registered in Hong Kong, a company that is appointed as company secretary must hold a TCSP License from March 2018 onwards.
A company secretary in Hong Kong should also possess the following skills and attributes:
Operational competence — A company secretary is charged with performing vital tasks, including advising directors on compliance and participating in board meetings. These tasks are paramount to a business’s success and as such, a company secretary should maintain operational competence and excellent planning abilities.
Corporate government experience — The majority of a company secretary’s duties focus on corporate governance. Consequently, a company secretary should possess some formal training in company secretarial services. They should also understand the regulatory framework and corporate governance as it pertains to an organization.
High-level communication skills — Because most company secretary duties involve a large degree of communication, the person, or persons you select for the role should have advanced communication skills. They need to be able to liaise with managers, directors, and other stakeholders, which requires both communication skills and proficiency in negotiation, teamwork, and emotional intelligence.
Conclusion
When incorporating your foreign business in Hong Kong, you are legally obligated to appoint a company secretary.
The individual or corporation you appoint to this role ensures that your company maintains compliance with Hong Kong corporate and tax regulations. In addition, they play a key role in the administration, direction, and corporate governance of your company’s operations in Hong Kong.
If you are looking for further resources on this matter, we have compiled reviews of the most popular company secretaries in Hong Kong, and you can find the best service provider that fits the needs of your company.
