Great corporate governance starts with a skilled company secretary

Great corporate governance starts with a skilled company secretary Banner

Great corporate governance starts with a skilled company secretary

The COVID-19 pandemic altered the business landscape of marketplaces worldwide. Adapting to continual uncertainty and change has been necessary for survival. However, as we enter a new age of economic promise, Asia-Pacific enterprises are taking a proactive approach to corporate governance in order to assure a bright future for themselves and the larger economy.

In this article, Samantha Tai, Regional Managing Director for Corporate Secretarial, outlines the significance of corporate governance in Hong Kong. She further discusses how leaders may build values-based governance procedures in order to achieve outstanding results. In addition, we look at how the company secretary may advise and execute best-practice corporate governance measures to full effect.

What is corporate governance?

The meaning of corporate governance at the organisational level is to achieve superior performance, behave with integrity and maximise value to stakeholders. Companies that adhere to corporate governance norms are more likely to satisfy company goals, attract investment and outperform their rivals.

Significantly, the adoption of group-wide good corporate governance reduces the possibility of wrongdoing and consequent punishment.

In Hong Kong, the Prevention of Bribery Ordinance (POBO) sets out provisions for the prevention of bribery and for purposes thereto and connected therewith. Through the introduction of new code provisions under the Corporate Governance Code as set out in Appendix 14 to the Main Board Listing Rules and Appendix 15 to the GEM Listing Rules, that came into effect on 1 January 2022, all issuers have to establish an anti-corruption policy. For this reason, “companies need to make sure they have adequate procedures in place”, Samantha says.

Corporate governance is not a legal necessity for all Hong Kong enterprises, but Samantha believes that its link with fiduciary obligation makes it a crucial investment for every leader.

“We open BoardRoom training sessions in Malaysia by discussing a director’s fiduciary obligation to the Commonwealth to always prioritise the best interests of the firm, minimise conflicts of interest and act in good faith,” she explains.

“In Hong Kong, fiduciary obligation is taken very seriously, with authorities taking action against directors who fail to fulfil their responsibilities – including independent directors.”

Successful corporate governance frameworks include the creation of customised policies and their subsequent execution.

The corporate secretary is normally in charge of this duty.

Corporate Governance

The role of company secretaries in promoting corporate governance

Historically, the corporate secretary was a primarily administrative role and held minimal influence with the board. Today however, as a member of senior management and a statutory officer, the company secretary now handles various critical obligations for the organisation.

Company secretaries act as a connection between the board of directors, senior management and the company’s stakeholders (including regulatory bodies). This is in addition to their role in administrating crucial undertakings such as minutes taking, secretarial compliance and also company incorporation. Other duties include utilising digital technology, such as board management and ESG software, to strengthen board and shareholder procedures and improve corporate governance. Furthermore, because they are well-versed in local laws, they can guarantee that corporate governance standards are established, followed and evaluated on a regular basis.

The present responsibilities of the company secretary, according to Samantha, are clearly defined in the Corporate Governance Guide for Boards and Directors.

“In Hong Kong, the company secretary’s views on corporate governance are sought since they attend all board meetings, are familiar with relevant regulations and understand compliance needs,” she explains. “They advise the board on corporate governance practices that must be implemented. This might be related to the board’s structure or the company’s rules and code of ethics.”

They also assist publicly traded corporations in demonstrating corporate governance in their annual reports, including any alternative means utilised to attain the same goals.

Company secretarial responsibilities have become so synonymous with corporate governance that the Institute of Company Secretaries in the United Kingdom and the Institute of Chartered Secretaries and Administrators in Australia have both rebranded to the ‘Chartered Governance Institute’, with other regions expected to follow suit.

In Hong Kong, The Hong Kong Chartered Governance Institute unveiled its new brand identity in Jan 2022. Aiming to reflect its unique position and critical role as highly qualified experts in corporate governance in Hong Kong and the Mainland China, and as the China Division of the Chartered Governance Institute, an international organisation with nine Divisions globally.

Corporate Secretarial

How to elevate your corporate governance

Good corporate governance will become increasingly crucial in the coming years, with regulators anticipated to issue new guidelines for both public and private companies. Organisations that maintain best-practice standards as they develop will be well positioned to seize new opportunities and fulfil market needs.

You may lead your organisation to better corporate governance by implementing the actions outlined below.

1. Obtain the services of a qualified company secretary in Hong Kong

The first step toward better corporate governance is ensuring that your company follows existing standards and best practices, notably those outlined in the Hong Kong Stock Exchange Limited’s Corporate Governance Code. This includes assisting companies to adopt the new standards when they come into effect.

“Because they must report to the stock exchange, publicly traded firms already require corporate governance,” Samantha says. “However, they must now guarantee that corporate governance is practised in all of their subsidiaries as well – regardless of whether the subsidiaries are also listed firms or headquartered in Hong Kong or elsewhere.”

To meet this criterion, an experienced company secretary would assist in the development of a group-wide corporate governance structure. A code of conduct would be included, as well as rules and processes for corporate governance issues such as whistleblowing, anti-corruption, board diversity and sustainability.

Company secretarial service providers are a popular choice for executives who want to know that they will receive expert advice that is specific to their organisation.

    2. Develop detailed policies tailored to your needs

    Despite Hong Kong’s relatively high corporate governance performance, corporate irregularities can still occur. Failure to achieve expectations is sometimes attributed to internal perceptions of corporate governance as a box-ticking process, with the resulting policies being insufficient in length and content.

    Senior-level workloads can result in rapid copy-paste solutions.

    “Corporate governance involves more than simply copywriting,” Samantha cautions. “As there are many tools available, it’s important to bring your relevant management team together to discuss corporate governance framework development”.

    The most successful corporate governance policies:

    • are comprehensive;
    • represent the organisation’s values;
    • are appropriate for the organisation’s industry and size; and
    • outline how good governance is actively practised.

    3. Implement integrated reporting

    While it is critical to ensure that your corporate governance policies and yearly reports are up to date, effective governance cannot be accomplished simply with documentation. According to Samantha, integrated reporting will most likely become essential in the coming years.

    “Integrated reporting is a method based on integrated thinking that communicates how a company’s strategy, governance, performance and prospects lead to value generation,” Samantha explains. “It gives your yearly report more weight.”

    Rather than viewing reporting simply as a compliance exercise, embarking on an integrated reporting journey provides for improved employee engagement and value generation.

    Because all members of an organisation play a role in achieving good governance, it is equally critical to spend time articulating the importance of corporate governance to board members and personnel. You may do this by demonstrating how corporate governance standards are valuable instruments for improving business performance rather than arbitrary duties that must be completed.

    “Successful corporate governance is interwoven into the company’s day-to-day activities,” Samantha explains. “It’s not merely a compliance policy.”

    CS Reporting

    4. Develop a corporate culture that prioritises ESG

    Developing a corporate culture that prioritises Environmental, Social and Governance (ESG) can significantly elevate a company’s corporate governance. By integrating ESG considerations into business strategy, decision-making processes, and daily operations, you can demonstrate a solid commitment to ethical and responsible practices.

    According to Samantha, corporate governance issues are often overlooked by many CEOs due to their focus on navigating a challenging economy.

    Regulators are urging increasing board engagement in ESG efforts in the interests of top-down corporate governance, with country-specific compliance requirements changing on a regular basis. Board directors are better placed to account for ESG risks and make choices that increase shareholder value. As a result, more emphasis is placed on developing a complete ESG strategy that benefits not just the organisation, its shareholders and the environment but also its employees. This leads to long-term financial performance and value creation for all stakeholders.


    Prioritise good corporate governance

    The strength of your corporate governance policies, practices and structures in the coming years will determine your business’s immediate and long-term prosperity.

    It is critical that your business’s board of directors and management team embrace its governance structure, but it is also critical that your company secretary steers its success. Choose a company secretary with diverse knowledge, strong ethics and exceptional communication skills for optimal results.

    Having an expert company secretary handle your corporate governance frees up your executive team to focus on other essential business objectives such as digital transformation.

    Contact BoardRoom’s corporate secretarial experts to learn how we can assist your company in meeting its corporate governance objectives.

    Contact BoardRoom for more information:

    Samantha Tai

    Samantha Tai

    Regional Managing Director, Corporate Secretarial

    E: [email protected]

    T: +60-3-7890 4800

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    Make the transition to outsourced accounting services to grow your business

    Make the transition to outsourced accounting services to grow your business

    If your firm intends to expand throughout the Asia-Pacific region (APAC), outsourced accounting services can help you achieve seamless business growth in an unpredictable economic climate.

    Given the complexities of the accounting function, it is common for business owners to be intimidated by the notion of hiring outside staff. In this article, we will look at how outsourcing can be used to create a smart business model and what actions you should take to guarantee a smooth transition.

    Why use outsourced accounting firms?

    Because of the numerous advantages of outsourcing accounting and bookkeeping, it is becoming a common alternative for APAC firms. In fact, according to a 2020 global study, over half of finance accounting professionals are contemplating outsourcing additional tasks.

    This can be attributed to three significant factors.

    1. Access to expert knowledge and skills

    Outsourcing gives businesses access to qualified professionals with a high degree of relevant knowledge and expertise – attributes that are not always simple to achieve through recruiting.

    “Companies frequently want to shift to outsourcing because they’re seeking specialists who can help them enhance their procedures,” says Yang Shuzhen, BoardRoom’s Accounting Director.

    Operational teams and managers are typically preoccupied with day-to-day operations, making it challenging to examine procedures objectively and discover opportunities for change. This is just one example of how an outside team might assist.

    “During COVID, many people working in Asia returned to their home countries, which has caused a shortage in the labour market,” Shuzhen notes. “Because of this, many APAC firms cannot source talent with the skills and experience they require.”

    2. Reliable and prompt service

    Accounting outsourcing provides immediate, practical support at a time when finance personnel turnover is rampant.

    “A lot of financial professionals want to take a break or try a totally new industry,” Shuzhen explains. “As a result, individuals are leaving, and in many cases, businesses cannot replace them at the same rate.”

    This can lead to insufficient handovers and employee shortages, causing transactions and procedures to fall between the cracks. Businesses confronted with these issues would consequently seek the assistance of an external provider with a pool of trained, professional accountants ready to analyse the situation and take over the processing.

    “They require experts who are experienced enough not just to take over their accounting duties but also to advise them moving ahead,” Shuzhen explains. “An external team can assist you in developing standard operating procedures and internal controls, both of which are essential for success.”

    Reliable and prompt service

    3. Digital transformation insights

    The accounting sector is undergoing significant development, with digital transformation providing opportunities to translate data into valuable business insights. The finance function is increasingly expected to contribute to the advancement of the strategic goals for a business in addition to executing transactional activities, which means that the required skill set for finance professionals is changing.

    According to A 2020 Deloitte study, finance’s new position as a strategic business partner would necessitate firms balancing human and machine-based skills while reflecting the four future-ready company qualities: analytical, adaptable, agile and anticipatory.

    The data analytics skills and technical experience necessary to do this can be challenging to maintain internally, which is why many organisations seek the assistance of premium outsourced accounting services.

    The COVID-19 pandemic has intensified outsourcing demand even further, with the global finance and accounting outsourcing industry predicted to reach USD 53.4 billion by 2026. This is mainly owing to a widespread demand for efficient solutions and stability in difficult times, which corporate services providers can deliver.

    Challenges faced by in-house accounting

    There are two primary reasons why APAC organisations are moving away from in-house accounting.

    Intensive labour is involved

    Recruiting, training and managing a finance team is time-consuming, as is expanding the team as your company grows.

    “A fast-growing organisation will devote a significant amount of money to educating the workforce, maintaining morale and ensuring the team functions properly,” Shuzhen explains. “This is significant because strong financials and timely reporting benefit the company when stakeholders make decisions.”

    However, resignations may be difficult for a team. Businesses may invest time in effective handovers and training for the new staff, but there will be a learning curve, so they will not have the same influence as the prior team. There is also no assurance that the workers will remain for an extended period.

    “Deliverables may be impacted when these changes become frequent and handover times are short,” Shuzhen warns.

    Technological changes are difficult to adapt

    Across APAC, digital innovation places pressure on internal teams to embrace new, more complex accounting systems.

    While this adaptability is necessary for continuous productivity, workforce constraints caused by the Great Resignation mean that there is frequently little time to guarantee new systems are implemented correctly. As a result, the new software may become a barrier rather than an aid, resulting in further delays and investment.

    An experienced accounting partner can efficiently negotiate with software providers to ensure that new systems are correctly customised to your firm. They can also plan a smooth and smart rollout of the new software, ensuring that the most critical solutions are installed first.

    How to outsource accounting services

    For a simple transition to outsourced accounting services in Hong Kong, we propose the following steps:

    1. Consider the accounting issues you are presently dealing with and the solutions you want to find through outsourcing.
    2. Examine the budget you have for accounting outsourcing.
    3. Get in touch with a reliable accounting services provider. They will meet with you to discuss your present position, assist you in gathering the essential information and advise you on the next steps.
    4. Inquire about the firm’s accounting software options to discover which is best for your company.

    A good provider will prioritise the critical tasks that require attention. Once things are under control, they will collaborate with you to develop a comprehensive end-to-end accounting solution for your company, as well as a tailored approach to advice.

    To set the initial onboarding and subsequent relationship up for success, evaluate who in your organisation is most suited to engage with them directly.

    The designated individual might be a finance manager, CEO, firm owner or director; the most essential thing is that they have extensive financial expertise and can discuss financial topics in depth. This will also assist in guaranteeing that the final solutions are matched to your specific requirements.

    Asian Accountant

    Making the right choice for your business

    Like an in-house team, your accounting services provider should integrate smoothly with your firm and have a deep awareness of your challenges. Your partner should deliver all the benefits of an in-house team while eliminating all the negatives. Once we have gained a deep understanding of your issues, we can provide all the benefits of an in-house team while removing the disadvantages.

    From accounts receivable and payments to general ledger and financial reporting, a full-service business can handle all areas of your accounting and bookkeeping. They will also be able to give business support in other areas, such as cash flow management, to assist your firm in meeting its objectives.

    “Our accounting solution at BoardRoom extends beyond transactional processing,” Shuzhen explains. “Financial data may be quite beneficial, and we utilise it extensively when advising our customers.”

    It is critical to seek an experienced accounting services provider since they can quickly and readily discover effective solutions to any accounting difficulties you may be experiencing. You will also know that the next time your firm is audited, it will have followed all of the proper protocols.

    Accounting outsourcing: what to avoid

    If you’re thinking about switching to accounting outsourcing, get started now.

    Businesses sometimes waste valuable resources attempting to handle accounting issues independently when an external services provider might have stepped in far earlier and implemented solutions in a much shorter time.

    Even if the organisation is small, financial commitments and difficulties can swiftly add up. So, if you are establishing a new organisation or branch in a neighbouring nation, it is important to hire an external team from the beginning to verify that the proper accounting processes are in place.

    The longer you put off outsourcing, the more difficult and time-consuming it can be to organise your finances and resolve problems.

    Outsource accounting services

    What are the benefits of outsourcing for business growth?

    If your firm has expansion plans, an accounting services provider might be a beneficial business partner.

    They can help you by:

    Offering thorough guidance and precise data at any time (so you can make quick decisions)
    Generating reports for possible investors
    Preparing financial ratios so you can have timely interactions with banks

    An accounting partner can also assist in establishing internal accounting controls at your headquarters and implementing these among finance units in other countries. Because you have identical internal controls throughout your regional sites, you can quickly generate reliable group-wide statistics at any time of year.

    Compliance with multi-country regulations

    Accounting partners also help businesses thrive by guaranteeing full regulatory compliance, including drafting and submitting statutory reports.

    In terms of your Hong Kong duties, an accounting partner will ensure that all your Hong Kong Financial Reporting requirements are completed and filed on time. Choosing a provider who supports multiple regions is crucial as other APAC areas will have distinct regulatory regimes, some of which may be quite rigorous and complicated.

    They can also ensure that your business is achieving its local compliance obligations on an ongoing basis by consolidating taxes with a worldwide organisation.

    Begin your transition to outsourcing your accounting services

    An expert accounting team working in close partnership with your internal team is critical to ensuring a smooth and lucrative trajectory, regardless of where you are in your expansion journey.

    Please contact us to learn more about BoardRoom’s world-class accounting and bookkeeping services, as well as our complementary payroll outsourcing and tax advisory solutions.

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    Hong Kong 2023-24 Budget

    HK Budget 2023-24 image

    Hong Kong 2023-24 Budget

    As Hong Kong enters the post-pandemic era, the Hong Kong 2023-24 Budget laid out the plans and measures for pursuing economic growth, moving to high‑quality development and enhancing people’s quality of life. We’ve outlined the key changes that you’ll need to be aware of, in order to optimise the benefits for your business.

    To find out how the tax measures announced will implicate your tax planning, download our Hong Kong 2023-24 Budget Report.

    If you have any questions relating to the information contained in this report or require tax advisory services, please contact our tax advisors via email or call us at +65 6536 5355.

    To view this report in Traditional Chinese, click here.

    To view this report in Simplified Chinese, click here.

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