Why Do You Need a Good Company Secretary in Hong Kong?
Hong Kong is one of the best countries to start a business in. It has become an economic powerhouse in the last decade and has been repeatedly ranked as one of the freest economies in Asia. Hong Kong offers the perfect platform for companies to grow exponentially and internationally. However, the company has to be registered in Hong Kong for it to enjoy these benefits.
Anyone can register a company in Hong Kong once they have fulfilled the main requirement, which is that every company should have a company secretary in Hong Kong. And before you misunderstand this, a company secretary is not your typical secretary. A company secretary in Hong Kong has a vast role and is an important part of the business. This article will help you understand why you need a company secretary in Hong Kong and the benefits of having a company secretary.
Company Secretary in Hong Kong
The main requirement to incorporate a company in Hong Kong for both corporations and individuals is the appointment of a company secretary, as per Section 474, Cap. 622 of the Companies Ordinance.
What is a company secretary?
A company secretary is not your typical “secretary” that you find in companies all over the world. These two are very different from each other. In fact, a company secretary in Hong Kong acts as a representative of the company in the jurisdiction. Their work is to make sure that the company is following all the applicable laws and regulations under the Hong Kong Companies Ordinance. In addition to this, a company secretary in Hong Kong also plays a large role in the direction, corporate governance, and administration of a company.
Why do you need a company secretary in Hong Kong?
When you open your company in Hong Kong, the company secretary you hire will be the most important representative of your business. The company secretary’s role will extend way beyond facilitating compliance. Some of the reasons why you need a company secretary in Hong Kong include:
- Legal requirement: Hiring a company secretary is not an option for you. You will not be able to open a company in Hong Kong without sharing the details of the company secretary you hired. Hence, your company will not get registered without a secretary. And if you try to operate without a company secretary, you will be prosecuted by the law.
- Bridging the gap between the Hong Kong administration and the company: When the government wants to reach out to a company, the company secretary acts as the bridge in making the process smoother. They are the face of the company for the government. This also means that the company secretary should have answers ready for any clarifications needed by the government regarding the company if needed.
- Regulating the company’s compliance with local policies, and laws: Just like in every other country, there are specific laws and policies that need to be followed by businesses operating in Hong Kong. The company secretary will help you comprehend and comply with all the financial, local, corporate and fiscal obligations. Their duty is to make sure that the company follows everything properly, and doesn’t get into any conflict with the government.
- In short, all you need to do is hire a company secretary and register your business in Hong Kong. After that, you can leave everything legal for the secretary to handle while you focus on running and growing your business.
Benefits of having a good company secretary in Hong Kong
As mentioned earlier, the role of a company secretary doesn’t just include the regulation of compliance. There are a lot of benefits that come with hiring a great company secretary in Hong Kong, mostly because a good company secretary has many roles to fulfill in a business. These roles include:
Helps the company stay compliant
A good company secretary in Hong Kong will take care of everything to ensure that the company is always compliant, where your company follows all the laws and meets all the tax obligations. In fact, most of your work ends the moment you hire a company secretary in Hong Kong.
The company secretary takes care of the following things:
- Once the company has been incorporated, the company secretary goes ahead and registers your business with the Inland Revenue Department (IRD) once the company has been incorporated. This is a crucial step for every company as the IRD manages all the tax-related matters in the jurisdiction. The company cannot begin to operate without this step.
- The secretary helps in obtaining any additional authorization that is needed for the company on tax matters. This step is an important one for companies that face complex tax issues and need clarification from the government authorities.
- At the end of every financial year, the secretary makes sure that all the tax returns are filed properly and on time. This helps you claim any tax reliefs, if applicable, and avoid any penalties.
Updating & Maintaining Various Records of the Company
Once a company has been incorporated in Hong Kong, the secretary has to store and maintain all the statutory documents of the business. This is another mandatory role of a company secretary in Hong Kong, as per the law. And it is beneficial for both the company and the government. It offers the government direct and easy access to particular documents that are needed in case of clarification.
For instance, if an issue comes up with the tax compliance of the company, the IRD can reach out to the company secretary for a record inspection. In such cases, the company secretary will take care of handing over the required documents and manage the complete process, while you stay stress-free and focus on running your business as usual.
In addition to this, the company secretary also has to update the records when there is any change in the company details. For instance, if a shareholder is given additional shares in the company, the secretary will have to update the record accordingly. Along with this, the secretary will also have to keep all the shareholders in the company informed about the updates and the company’s operations. This is done by preparing and distributing various reports and accounts to all the shareholders in the company.
Managing Board Meetings
A company secretary in Hong Kong also has to organize the company’s board meetings, when applicable. In addition to this, the secretary also has to attend it and record the minutes accordingly, while making sure that all the proper procedures of the board meeting are followed. For instance, if new resolutions are added by the board during the meeting, the secretary is required to make sure that it is implemented in accordance with all the Hong Kong policies and laws.
There are a lot of things that change along the way after a company has been incorporated. For instance, you might have already selected a specific business structure. But if you want to change the structure of your company, this will include one or many changes. All these changes that take place, have to be in the knowledge of your company secretary. The secretary will be in charge of preparing the required documents that capture these changes. They are also required to file the required changes with the respective government agencies on behalf of the company.
Representing the company
Other than the basic filing requirements and updates, a company secretary is responsible for being the representative of a company. They are considered an officer of the company and are the ones who sign most of the government and legal-related documents on behalf of the company. This is one main reason why it is important to choose a good company secretary in Hong Kong because you do not want someone who you cannot trust.
Collaboration with different stakeholders
Filing is just one part of the company secretary’s task. Another crucial duty that they have is collaborating with different government agencies that impact the company’s daily operations. Some of these agencies include the Companies Registry, the Inland Revenue Department, and the Hong Kong Stock Exchange. Due to this collaboration, the company secretary will always be ahead of all the new regulations, policies, and laws that need to be followed.
How to find the right company secretary for your business?
Looking at all the roles of a company secretary in Hong Kong, it is clear that every company needs a great company representative. Not only do they need to have the said skills, but the company secretary has to be a Hong Kong resident or a corporate entity that is registered in Hong Kong. In addition to this, they must hold a TCSP License to offer these services in Hong Kong.
Once you have checked all these, here are some additional qualities that you should look for when selecting a company secretary in Hong Kong:
- Experience: There are many who offer company secretarial services in Hong Kong, but not all have the experience. Since most of the roles of a company secretary are related to corporate governance, it is important to look for an agency or person who has both formal and professional training and experience in company secretarial services.
- Great planning abilities: This is an important skill since the company secretary will be in charge of organizing and facilitating the board meetings.
- Operational competence: Since a company secretary in Hong Kong is required to be a part of the board meetings and chip in advice, it is prudent for them to have the skills that will help the company succeed. They should be able to craft strategies that will help in growing the company and staying compliant with the law.
- Excellent communicator: Almost every role of a company secretary involves communication. Due to this, it is important for the secretary to liaise and share the information with others, in a timely manner. They should have the following communication skills – diplomacy, language skills, teamwork skills, negotiating skills, and emotional intelligence.
- Committed: The best company secretary in Hong Kong will be dedicated and committed to their job. They should be interested to see the company grow and achieve its goals.
- Responsible: A company secretary is in charge of managing the company’s records, which include confidential information about the company. Due to this, the company secretary you choose has to be responsible and trustworthy.
Tips for working with a company secretary in Hong Kong
From the above, you know what all qualities a great company secretary in Hong Kong should have. But to get a great company secretary, you will also have to do a bit of work before they are hired.
Here are some tips to help you work with a company secretary:
- Tell them what you need: When you have narrowed down your list of company secretaries and have decided to try out one option, the next step involves being open about your needs. You won’t just hire a company secretary to get the work done, you also need them to be on the same page as you are. Letting them know your goal will also give the company a sense of direction. A company secretary in Hong Kong can only work well if they know what they have to achieve.
- Discuss the Company Policy: Even though the company secretary you hired might have enough experience, every company is different. It is important for them to know the beliefs and policies of your company before they can start work. In fact, you should have this cleared even before the Service Level Agreement is made.
- Communicate regularly: The only way to get the best out of a company secretarial service is through communication. Outsourcing operations of your company doesn’t mean that you get to lay back and let someone else do all the work. It is important to take regular updates. This will not just let you know about the promised accomplishments, but will also help you grow and improve your company.
- Share your feedback: You can give feedback to the company secretary you hired to help them improve and adapt according to your needs. Make sure to take advantage of this to make working with a company secretary more efficient.
- Be clear about the Service Level Agreement: This is the document that will bind the services you receive. Make sure that you know what each term means in this agreement. Partial knowledge or hand-shakes can cause issues in the future. Question the team/person as much as you need and be clear about what you are getting into beforehand.
Why should you consider using a corporate services provider in Hong Kong?
There are two kinds of company secretaries you can hire – an individual or an agency. If you hire an individual as your company secretary in Hong Kong, you will only benefit from the company secretarial services that this person would offer. On the other hand, if you hire an agency that offers everything from company registration and company secretarial services to post-incorporation services, you would not have to worry about anything else. The second option is the best, especially if you are running your business from outside the jurisdiction and want to focus on its growth.
Startupr is a registered company secretary in Hong Kong and has a TCSP license (TC007820). Our agency offers company registration and secretarial services. We will take care of everything for you while you concentrate on growing your business. Contact us today and our representatives will help you with the complete process!