In Hong Kong, the appointment of a company secretary for a limited company is mandatory from company incorporation. As a business leader, you may choose to hire a company secretary internally or engage the company secretarial services of an external team.
Given the pivotal role of the company secretary in contemporary Hong Kong, your choice will have significant impacts on the operation, safety and future direction of your company.
To guide you in making an informed decision, we turn to Esther Choy, Head of Corporate Secretarial for BoardRoom Hong Kong. In this article, Esther shares her views on how an in-house company secretary or an outsourced company secretarial services provider might be the best fit for your business.
What does a corporate secretary do?
When setting up a company in Hong Kong, the board of directors must appoint a company secretary.
Historically, the role of company secretaries was largely administrative in nature. Today, the company secretary is a high-level position with a broad range of vital responsibilities across various business functions. The primary duties of the company secretary are set out in the Hong Kong Companies Ordinance.
Depending on the nature and scale of your business, the type of organisation etc. these may include:
Regulatory compliance support
Regulatory compliance is one of the most complicated, time-consuming aspects of running a business but also one of the most critical. Companies who fail to prioritise corporate compliance may face fines, lawsuits and reputational damage.
“It is the duty of a competent company secretary to facilitate and ensure regulatory compliance and to release your company from the compliance burden so that your executive staff can concentrate on growing the business,” explains Esther.
Corporate governance assurance
With Hong Kong authorities now demanding a high standard of corporate governance from local companies, the support of a qualified company secretary is invaluable.
“In Hong Kong, the dual qualification of Chartered Secretary & Chartered Governance Professionals was launched in 2019. A qualified company secretary who possesses a high level of professionalism, competence and communication skills plays a crucial role in assisting organisations in upholding the high corporate governance standards. Among the large organisations and the listed companies, we’re seeing a greater focus on the internal controls and policies companies have in place to ensure corporate governance work is carried out properly,” says Esther.
How should I choose a company secretary?
The decision of whether to hire an internal company secretary or engage an external team depends on various factors related to your company’s unique requirements.
Key factors that will determine your secretarial workload include:
- the size of your organisation and the complexity of its structure (e.g. whether the volume of secretarial work justifies hiring an in-house company secretary or is it more cost efficient to outsource to an external services provider. This could include looking at whether you have subsidiaries in multiple countries);
- growth plans for your business (regional and international);
- whether you need an inhouse company secretary to serve as a liaison for communication between the executive and non-executive boards, between the board and the management, and between different stakeholders;
- how the board needs support from the company secretary in respect of director training, meetings schedule and proceedings, board-level governance, corporate governance, etc
Having a good understanding of your current requirements allows you to ascertain how much secretarial advice and assistance you will need in the short and long term. From here, you can perform a cost-benefit analysis for each option to determine the best path for your business.
When to hire internally
In-house company secretaries are more commonly found in listed companies, public companies, charitable organisations or large private companies with numerous subsidiaries. In contrast to smaller private businesses, these organisations tend to have a compliance workload significant enough to warrant the hire of a dedicated resource.
“This is simply a cost and benefit analysis.” Esther explains.
Aside from steep employment costs, potential downsides of company secretary insourcing are as follows:
- The skill of the individual is not guaranteed. During recruitment, you will need to thoroughly check the candidate’s ability to perform the job well.
- Compliance may not be prioritised. If your company secretary simultaneously performs another role (e.g. chief financial officer, general counsel), competing priorities may lead to performance issues.
- Key man risk. If your in-house company secretary resigns or takes extended leave and you are unable to find a suitable replacement promptly, it will leave your company open to secretarial compliance risk.
To avoid these problems, many organisations choose to engage external corporate secretarial services instead.
When to outsource
In Hong Kong, a company secretarial services provider must be a Trust or Company Service Provider (TCSP) license holder.
“In a reputable corporate services provider, there are teams of chartered secretarial and chartered governance professionals and professional staff who are experts in handling the full spectrum of secretarial compliance and corporate governance matters.” says Esther.
“Company secretarial firms tend to be a cost-saving option for small businesses and new start-ups in this instance.”
By engaging a reputable corporate services provider as your company secretary, you can:
- leverage the skills and knowledge of a full team of experts;
- benefit from a consistently high standard of performance;
- trust that your company secretary is singularly focused on keeping your company safe in full compliance with the Companies Ordinance;
- rely on smooth continuity of service via a team of dedicated client managers and professional staff, eliminating key man risk; free up your executive staff to focus on core activities and strategic priorities;
- access complementary services with ease (e.g. tax, payroll and accounting); and
- receive seamless support with international expansion (when you engage a firm with global presence).
The numerous advantages of engaging a reliable company secretarial services provider make outsourcing a popular option for all kinds of businesses, from local start-ups and fast-growing SMEs to large multinational organisations.
Achieve your goals with premium company secretarial services
In Hong Kong’s competitive landscape, where the success of a business now depends on its corporate governance performance, your choice of company secretary can mean the difference between gaining a competitive advantage and falling behind.
At BoardRoom, our 50-year track record of helping businesses thrive speaks to the valuable expertise, reliability and positive client experience we deliver every time.
By partnering with us, you can rest assured that your company secretarial needs will be handled with the utmost skill and professionalism, allowing you to focus on what matters most – pursuing business success in Hong Kong and beyond.
Contact us to find out how our world-class company secretarial services can add value to your business.
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