The evolving role of company secretaries in Hong Kong

The evolving role of company secretaries in Hong Kong

The evolving role of company secretaries in Hong Kong

Traditionally, a company secretary’s duties were restricted to simple administrative activities like filing annual returns, taking minutes, amending company constitutions and other in-house office tasks. However, the position is changing as corporate governance and company management become more important and sophisticated.

In contemporary Hong Kong, the company secretary is a high-level position with a wide variety of significant responsibilities across several business areas. As a result, the company secretary plays a key part in supporting an organisation to realise its full potential.

Read on as we examine the changing responsibilities of a company secretary, and the ways a capable company secretary can give your company a competitive edge.

What is the importance of a company secretary?

Company secretaries perform a range of tasks to assist with the operations of an organisation, but crucially, they ensure strict adherence to the Companies Ordinance and other local rules.

Do not undervalue what a knowledgeable company secretary can bring to your business, especially if you are aiming to prosper in competitive markets. They will be able to assist in improving your governance procedures so that advantages and performance are maximised.

Services provided by company secretaries include:

  • improving the structure of your company;
  • championing the creation of a robust environmental, social and governance (ESG) strategy;
  • ensuring your business meets its legal and regulatory obligations; and
  • establishing modern corporate governance procedures.

The company secretary serves as a level-headed advisor, ensuring your business pursues its objectives with tenacity and honesty.

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What do company secretaries do?

Within the Asia-Pacific (APAC) region, there are different laws and expectations governing company secretarial matters. After incorporation, companies in Hong Kong are required by law to select a company secretary.

Standard responsibilities for company secretaries in Hong Kong include:

Taking part in board conferences
Arranging annual general meetings
Communicating with directors and shareholders
Maintaining secretarial records and statutory registers
Drafting and submitting annual returns and other statutory returns with the Companies Registry
Certifying documents with local authorities
Managing the change of corporate structure
Carrying out ad hoc tasks on the board’s behalf

Company secretaries provide assistance throughout the business lifecycle, from setting up and maintaining a company in Hong Kong, business expansion across Asia Pacific, restructuring the company and even closing down the company.

In what ways has the company secretary role changed?

Company secretaries once had a relatively administrative role, but today they are extremely knowledgeable about the fast changing regional rules and regulations and high standards of corporate governance. As a result, they have adopted an advisory role within businesses: directors and shareholders are able to consult the company secretary for guidance on how to navigate compliance and corporate governance issues.

Current areas of focus for company secretaries include advising the board on matters pertaining to ESG and statutory compliance.

ESG advisory

Businesses in Hong Kong are under building pressure to exhibit good governance as demand for strong ESG grows among investors, regulators and consumers. A 2020 KPMG survey revealed that sustainability reporting across APAC has increased from 78–84% since 2017.

The company secretary has a significant role to play in advancing ESG because of their extensive involvement in both the operations and board activities of an organisation.

Company secretaries help elevate initiatives by:

  • assisting with the development of ESG measures (such as whistleblower protection policies)
  • collaborating with sustainability team members to respond to ESG opportunities and risks;
  • setting up routine ESG auditing; and
  • assisting with accurate ESG reporting in company publications.

Statutory compliance

One of the company secretary’s primary duties is to remain aware of statutory requirements and provide updates to the relevant stakeholders. Directors and management teams must be able to consult the company secretary for accurate compliance advice, though the company secretary is not held responsible for legal decisions.

Additionally, company secretaries help ensure the business is prepared for regulatory change.

Some ways company secretaries assist with statutory compliance include:

  • scheduling proceedings of board and shareholder meetings;
  • drafting resolutions for the board and shareholders;
  • ensuring all required returns are submitted on time to the Inland Revenue Department Companies Registry and other government authorities;
  • helping any listed businesses comply with the Listing Rules for HKEX; and
  • providing training and updates on regulatory changes to directors and the relevant stakeholders.

A skilled company secretary can deliver customised compliance solutions that meet regulatory criteria.

Key obstacles in company secretarial services

When appointing a company secretary, look for strong adaptability and excellent communication abilities. They will need these qualities to navigate compliance-related difficulties.

Here are the top three obstacles company secretaries encounter.

1. Keeping across evolving regulations

Maintaining organisational compliance amid shifting regulatory environments is the primary challenge company secretaries face. One way they promote continuous compliance is by collaborating directly with authorities.

Company secretaries provide a crucial link between businesses and regulators. They are able to assist with internal forward planning because, at times, they are aware of the proposed regulatory changes before the changes come into force.

This prevents the need to rush the formalities to accommodate compliance with the new rules and regulations when the changes take effect.

    2. Implementing customised compliance solutions

    Every company’s compliance structure will be unique, taking into account the company’s corporate value, mission, size, location, industry, and listing status. The ability to create specialised business solutions for an organisation in accordance with its charter, within the constraints of the Companies Ordinance, is thus a requirement for company secretaries.

    A tailored compliance framework can help a company run ethically while still excelling in its sector.

    3. Securing buy-in among stakeholders

    Some companies fail to recognise the benefits of hiring a highly qualified company secretary. This is typically due to a weak compliance culture, where compliance is considered a burdensome task rather than a promising way to progress business objectives.

    Generally, the company secretary is in charge of directing secretarial compliance at all levels of a business. It is their responsibility to help shareholders, directors and staff understand:

    • the reason statutory, regulatory and corporate requirements are in effect;
    • why it is important for the business to meet these requirements; and
    • how strong compliance benefits the business and its people.

    Selecting a company secretary that takes compliance very seriously will help ensure your business maintains strict adherence to local regulations.

    Corporate Secretary

    Appoint a company secretary you can rely on

    Many businesses decide to partner with a respected corporate services provider for support with streamlining their operations. Along with corporate secretarial services, these can include help with accounting and payroll or share registry and employee stock ownership plans (ESOP). With this strategy, executive members of staff can pay more attention to business growth and worry less about compliance requirements. This provides greater opportunity to increase your production levels, effectiveness and profitability.

    By engaging a third-party secretarial service provider, you can also:

      Ensure the incorporation of your business is expertly handled
      Streamline secretarial compliance across multiple regions
      Maintain multi-country compliance through a single point of contact
      Receive crucial advice to support business expansion
      Minimise resource expenditure through a decreased administrative load
      Channel more resources into progressing core goals

      If your company intends to grow throughout APAC, you need to be ready for the various regulations and cultural expectations of each region. In addition, you will need to meet the legal requirements for any cross-border partnerships you enter into.

      Your business runs the risk of being fined for not meeting its compliance duties if your company secretary lacks the right credentials, abilities or attitude to ensure effective corporate governance.

      Be aware that if you engage corporate advisory services in individual regions, the complexity of your operations may increase. Seek a provider with offices throughout APAC to simplify your company compliance processes.

      Corporate Secretary

      Maintain competitive advantage

      If your goal is to expand successfully throughout APAC, BoardRoom specialises in a range of corporate services to suit your business needs. Our company secretary Hong Kong team are highly qualified with extensive experience in secretarial compliance matters, so they are able to provide valuable guidance at each stage of your growth journey.

      Chat with our specialists today to learn more about working with a capable corporate secretarial service provider.

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