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A company secretary is usually a key component of the corporate world. You cannot do without having someone in that position, not just because it is a government requirement, but because of the significant role that the individual in that position performs for and on behalf of the corporate company. Can a certain company position prevent you from taking the role of a company secretary?

Who can be a company secretary?

The Hong Kong Company Ordinance prohibits the sole director and sole shareholder from being a company secretary. Those three positions must be occupied by distinct entities. In a sole proprietorship, the director and shareholder can be held by one person. A shareholder and a director must be a natural person from any residency while a company secretary must be a resident of Hong Kong if the choice is a natural person. But if the choice is a corporate body, the branch or registered office must be incorporated within the jurisdictions of Hong Kong. A company secretary must be academically qualified and familiar with the company laws and regulations.

Roles of a Company Director

According to corporate governance practices under the Listing Rules, directors must behave in a certain manner and to hold certain roles. This Corporate Governance code speaks in detail concerning the appointment of directors, director compensation, director accountability, and audit. However, this does not prevent companies from producing their terms concerning the position of a director in their company. Even so, in doing that, they should ensure it does not belittle the Corporate Governance code. Their company ordinance on the same does not have to be a letter by letter copying of the Listing Rules.

A sole director is also responsible for signing the notification of change of a company secretary when those changes occur. Therefore, he/she cannot undertake the two roles of being both a sole director and a company secretary. Will he sign a notification for his/her appointment or dismissal as a company secretary? No, he/she cannot do so, that will be a conflict of interest.

Disclosure of interest by the company

  • A Hong Kong company director is to ensure the company complies with the Listing Rules in terms of general and specific disclosures such as sensitive information on the share price.
  • A director is to ensure the company maintains the register of interest concerning themselves, shareholders, and chief executives of their company.
  • A Hong Kong company director should ensure that he/she is familiar with rules and restrictions concerning securities transactions according to the Model Code of the Listing Rules found in the Securities and Futures Ordinance.
  • A company director is to ensure that the company and all its constituent members, him being included, do not infringe the provisions for market misconduct, insider dealing, manipulation of the stock market, and price rigging among other misdemeanors as stated under the Securities and Futures Ordinance.
  • The director of a Hong Kong company is responsible for all company publications or listing documents related to the disclosure concerning transactions. He/she must include proof of this transaction in the listing documents. This proof and the director’s responsibility statement acknowledging individual and collective responsibility of the correctness and wholeness of the provided information may be required by the Stock Exchange as part of the company’s announcement.
  • As a company director, you are to timely inform the Stock Exchange of any company changes or decisions regarding shareholding or leadership such as disposal and acquisition of shares or leaders.

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Director’s disclosure

On a personal level, a company director is mandated to disclose his/her holding interest in regard to the shares of the company and any other associated company, according to the Securities and Futures Ordinance of Hong Kong. This ensures transparency in all the listed companies hence providing investors with significant information for making informed decisions. Failure to make this disclosure is a criminal offense in Hong Kong which attracts a fine of HK$100,000 and a two-year imprisonment verdict.

Corporate governance

Complying with corporate governance stipulations gives your company a positive outlook from investors. As a company director, you should ensure that your company complies with the corporate governance regulations, and should some areas be not complied with, you are mandated to report this in the annual reports.

Important Attributes of a Company Director

  • A company director should be academically qualified and be familiar with the company laws and regulations of a Hong Kong company.
  • A director should have relevant experience in directing a Hong Kong company.
  • A director in a Hong Kong company must also possess a service provider’s from the Trust or Company Service Provider licensing body of Hong Kong.
  • He/she should possess integrity and accountability skills.
  • A company director should possess people skills such as being a good communicator.
  • A company director should also possess technical skills relevant to that position.
  • Honesty and trustworthiness must be part of a director’s character.

Hong Kong Shareholders

A Hong Kong shareholder can be either a natural person or an institution as long as they have at least one share in that company and be 18 years and above. They are not just there to be seen but they have rights and roles as below:

Rights of a Hong Kong shareholder

The Hong Kong Company Ordinance protects the rights of shareholders from being altered except under a special resolution. In the same light shares of one class cannot be converted to another class of shares unless under a special resolution and 100% consent of all shareholders. In the case of a special resolution to these two elements of shareholders’ right, a copy of the notice to undertake a special resolution plus a certified copy of the resolution must be presented to the offices of the Company Ordinances.

  • Because you own a share, you have the right to receive dividends and buy new shares.
  • During the dissolving/deregistration of that company, you have the right to receive the capital distribution as a shareholder.
  • A shareholder has the right to appoint commissioners.
  • As a shareholder, you have a right to vote on the company’s decision making and a right to sue the company for any wrongful undertakings.
  • A Hong Kong shareholder has a right to receive audited accounts reports and director’s report.
  • Shareholders have a right to hold their meetings in any geographical location of their choosing.

Shareholders’ role

  • Shareholder monitors and approves the financial statements of the company.
  • A shareholder is responsible for the acquisition or dismissal of directors and he/she also responsibles in deciding on the extent of authority that directors will hold.
  • He/she decides the remuneration number of directors and makes decisions that the directors cannot make.
  • A shareholder attends general meetings of the company on an annual basis and votes to decision making during the Annual General Meeting.
  • A shareholder’s responsibility is to examine financial records and audited accounts of the company and monitor the performance of the company.

Summary

In regard to the question of whether a company director or shareholder can be a company director, the answer will not be a straight no or yes. This is because it will depend on whether the shareholder or director is the sole shareholder or sole director of that company. If she/he is a sole director/shareholder, he/she cannot undertake the position of a company director. A shareholder on the other hand can be both a shareholder and a director of a company.

Can a Shareholder or a Director of a Company be the Company Secretary? FAQs

What are the prerequisites to be a company secretary in Hong Kong?2021-06-10T06:46:16+00:00

The choice of who becomes a company secretary is critical for the success of the company. The professional qualifications must be taken into consideration. Other things to be considered are as below:

  • Must be above 18 years
  • Have be a Hong Kong resident
  • Reliable
  • Possess company service provider license
  • Have good interpersonal skills
What are the differences between a Hong Kong shareholder and a director?2021-02-04T09:48:09+00:00

A shareholder in a sole proprietorship is the owner of that company, therefore he/she can also double up as a director and control how the company is managed. In other business settings that need the appointment of other directors, the shareholder will oversee their appointment. Directors run the affairs of the company on behalf of shareholders.

What is the importance of a Company Secretary?2021-06-10T06:46:24+00:00

A company ecretary certifies all documents for the company. E.g., certificate of incorporation.

Can a Hong Kong company secretary be part of the meeting that appoints another company secretary?2021-02-04T09:45:16+00:00

Yes, it is one of his/her legal duties as stipulated by the company law of Hong Kong to provide a resident company secretary. So as a corporate body acting as a company secretary you can provide a company secretary who a natural person is residing in Hong Kong.

2021-03-02T06:27:17+00:00February 4, 2021|0 Comments
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