Hong Kong is frequently voted the world’s freest economy due to its strategic location in the heart of Asia, as well as essential characteristics such as its low-rate tax system, developed infrastructure, and sizable foreign exchange reserves. In addition, the city remains Asia’s second-largest and the world’s third-largest recipient of Foreign Direct Investment.
Individuals and organizations who want to establish a company in Hong Kong must first meet a number of conditions, one of which is the appointment of a company secretary.
This guide explains why you need a company secretary in Hong Kong and the responsibilities that come with the role.
What Is a Company Secretary In Hong Kong?
In Hong Kong, a company secretary serves as a company’s representative in the territory, ensuring that the firm’s operations are conducted in accordance with local legislation. A company secretary also plays an important role in a business’s administration, direction, and corporate governance in Hong Kong.
It’s crucial to distinguish between the role of a company secretary in Hong Kong and the role of a conventional “secretary” in a firm. Rather, under the Hong Kong Companies Ordinance, a company secretary guarantees that a business’s operations are compliant with all regulations and statutory laws.
A company secretary’s responsibilities also include essential engagement with the company’s shareholders and directors, as well as governmental organizations such as the Inland Revenue Department and the Registrar of Companies.
Why Is a Company Secretary In Hong Kong So Important?
A Hong Kong company secretary is essential for a foreign business to be incorporated in Hong Kong since he or she is one of the company’s most important representatives.
This is a legal requirement; thus a foreign business can’t register in Hong Kong unless it has a company secretary. As a result, business owners who try to operate without a company secretary risk being prosecuted.
A company secretary is also the main point of contact between a firm and the Hong Kong government. A company secretary’s responsibility is to provide clarification to the administration or regulatory agencies if they have any queries or issues about the company.
There are a number of policies and regulations that must be followed by any foreign business operating in Hong Kong. By keeping up with these requirements, a company secretary may help guarantee that business owners stay on track with their financial, fiscal, and corporate obligations. As a result, business owners are better able to negotiate Hong Kong’s corporate regulations and are less prone to break them.
Who Can Be Appointed a Company Secretary?
In Hong Kong, a company secretary can be either an individual or a corporation. However, there are some requirements that must be completed, including the following:
- An individual company secretary must be a Hong Kong resident.
- If a corporation is appointed as a company secretary, it must be a licensed Hong Kong Trust and Corporate Service Provider (TCSP) with a Hong Kong business address. Where a Company has a sole director, the sole director cannot be the company secretary of the Company.
- Furthermore, if a Limited Hong Kong company has a sole director, it cannot appoint another company who has the same director to act as its company secretary.
What Are the Responsibilities of a Company Secretary?
As stated previously, a company secretary’s principal responsibility in Hong Kong is to ensure that a company follows all applicable rules and regulations.
Although the Hong Kong Companies Ordinance does not spell out a company secretary’s specific responsibilities, the articles of association should lay out what is expected of this role.
In Hong Kong, a company secretary is typically expected to undertake the following duties:
Facilitate Tax Compliance
Facilitating tax compliance is one of the key tasks of a company secretary in Hong Kong, and it is critical to the successful operation of any company.
This can be deconstructed into the following elements:
- Inland Revenue Department (IRD) registration – After the corporate entity has been authorized to operate in Hong Kong, the company secretary must register the company with the IRD. The company secretary must also guarantee that the company’s information is on record with government.
- When dealing with advanced tax-related issues, obtain clarification or authorization from the appropriate authorities. — The company secretary is responsible for communicating with Hong Kong government authorities, notably the IRD.
- Annual tax return filing — The company secretary is required to file tax returns at the end of each year in order to avoid tax-related penalties from the Hong Kong government.
Maintain and Update Statutory Books
In Hong Kong, a company secretary is expected to maintain all of the company’s statutory documents secured. They are also responsible for ensuring that such records are available to the Hong Kong government upon request.
This role is described in further detail below:
Maintenance and Custody of All Company Statutory Documents
The company secretary is in charge of keeping all statutory documents and providing direct access to these when they are needed.
Making Any Updates or Changes to Records
In the event that the company’s information change, the company secretary must ensure that the change is properly recorded. Changes in company directors, the number of shareholders, or the number of shares held by a shareholder are instances of this.
Production, Publication, and Distribution of Company Reports
The company secretary is responsible for creating and publishing a company’s account reports on a monthly and annual basis. This guarantees that shareholders are continuously informed about financial trends that affect the company’s performance.
Schedule and Attend Board Meetings
In Hong Kong, a company secretary is responsible for scheduling and attending shareholder and board of director meetings. This includes formulating a meeting’s agenda, preparing meeting minutes, and ensuring that proper procedures are followed and final decisions are in compliance with Hong Kong regulations.
Collaborate with Stakeholders
Collaboration with numerous stakeholders, including shareholders, directors, and other officials, is an important part of every company secretary’s job. This guarantees that the company secretary is informed about new legislation and policies and is aware of when affirmative action is needed.
The company secretary must work closely with agencies whose mandates may have an impact on a company’s day-to-day operations. The Companies Registry, the Inland Revenue Department, and the Hong Kong Stock Exchange are examples of such organizations.
Post Incorporation Filing
Almost all companies will need to make changes to their Hong Kong incorporation at some point. A change in the company name, a change in the registered address, or the addition or removal of directors or shareholders are all examples of this.
The company secretary is responsible for preparing and filing the relevant documents that detail such changes with the registry.
What Skills Does a Company Secretary Require?
From March 2018, a company secretary must have a TCSP License in addition to being a Hong Kong resident or a Hong Kong-registered corporation.
In Hong Kong, a corporate secretary should also have the following skills and characteristics:
A corporate secretary’s responsibilities include counselling directors on compliance and scheduling, as well as attending board meetings. These responsibilities are critical to a company’s performance, so a company secretary must be operationally competent and have strong planning skills.
Experience In Corporate Government
A company secretary’s responsibilities are mostly focused on corporate governance. As a result, a company secretary should have some formal training in the field of corporate secretarial services. They should also be familiar with an organization’s regulatory framework and corporate governance.
High-level Communication Skills
Because most company secretary tasks entail a great deal of communication, the person or people you select for the position should be able to communicate at a high level. They must be able to communicate with managers, directors, and other stakeholders, which necessitates both communication and negotiation abilities, as well as teamwork and emotional intelligence.
When establishing a foreign company in Hong Kong, you are required by law to appoint a company secretary.
The person or organization you choose to this position guarantees that your company follows Hong Kong corporate and tax requirements. They also play an important role in the administration, direction, and corporate governance of your company’s Hong Kong activities.