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 incorporate a company in Hong Kong, 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 responsibilities 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 applicable laws. Moreover, a company secretary plays a key role in the administration, direction, and corporate governance of a company in Hong Kong.
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 and Registrar of Companies.
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 be incorporated in Hong Kong.
Being a legal requirement, this means that a foreign company cannot be registered in Hong Kong without a company secretary. 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 a number of policies and regulations that must be adhered to. With a company secretary staying abreast of these regulations, this helps to ensure that business owners maintain compliance with their financial, fiscal, and corporate obligations. As a result, business owners are better able to navigate — and less likely to breach — Hong Kong’s corporate laws.
Who can be appointed a company secretary?
Either an individual 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 an individual 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 one 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 generally expected to perform the below responsibilities:
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.
- Seek clarification or approval from the relevant authorities when dealing with advanced tax-related matters — The company secretary is charged with liaising with government agencies in Hong Kong, including the IRD.
- Annual filing of tax returns — The company secretary must lodge tax returns at the end of each year, with this being 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 the 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.
Making any updates or changes to records — In the event there is a change to 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 director 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, as well as 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
For nearly all companies, they will likely need to make adjustments to the setup of their Hong Kong incorporation at some point. This could include things like a change in a company name, 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.
What skills does a company secretary require?
Aside from being a Hong Kong resident or a corporate entity registered in Hong Kong, a 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 scheduling 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.
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’re looking for further resources in this matter, we’ve compiled reviews of the most popular company secretaries in Hong Kong.
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