Designated Representative vs Company Secretary in Hong Kong

April 12, 2024

The Hong Kong corporate world is a place where one needs to comprehend the roles and responsibilities of an organization. One such focus in terms of roles is that of a designated representative and company secretary. Although they may appear to be similar at first glance, it is essential to understand the differences and nuances between the two positions.

This blog post will examine the definitions, main roles, and appointment procedures for Designated Representatives and Company Secretaries. Moreover, we will discuss the possibility of merging these functions and the legal requirements and best practices that companies need to adhere to in order to comply.

Hence, let us start the journey to know better-designated representatives vs company secretaries and how they can affect the organization in running smooth.

Content Outline

Designated Representative Roles

A Designated Representative, appointed to ensure the smooth running of operations, supports Law Enforcement Officers in relation to enquiries on the Significant Controllers Register (SCR). This person can be a company service provider, a lawyer, or an accountant. The Hong Kong is one of the jurisdictions which require the companies to have a Designated Representative.

The Designated Representative’s central duty involves:

Providing support to law enforcement officials regarding issues concerning the company’s Significant Controllers Register (SCR).
Ensuring the availability of the register for examination by law enforcement personnel upon their request.
Completing and submitting Form NR2 regarding the whereabouts of the SCR.

Also, it is advisable to have a legal professional or an accounting professional appointed as the Designated Representative.

Designated Representative Main Functions

The primary responsibilities of the Designated Representative are:

Overseeing statutory records management: All legal records are carefully managed and maintained by the Designated Representative in accordance with legal requirements. This includes important papers like the ownership records, financial statements, and regulatory filings.
Coordinating board and shareholder meetings: The Designated Representative is responsible for the effective organization and conduct of both board and shareholder meetings. This consists of planning, agenda setting, material distribution, minute taking, and enforcing the corporate governance norms and legal protocol.
Timely submission of the Annual Return: It is the duty of the Designated Representative to ensure that the company’s Annual Return is submitted to the regulatory bodies without delay. This detailed report provides important company information including its registered address, director and shareholder details, and financial status. Compliance is achieved by submitting on time and with the right information.
Assisting law enforcement with SCR matters: The Designated Representative assists the law enforcement inquiries on the company’s Significant Controllers Register (SCR). They guarantee the accuracy and availability of the SCR for law enforcement examination as required by the law. In addition, they enable communication and supply the required paperwork to help with law enforcement investigations or compliance activities associated with the SCR.

Appointment of at least one person as a Designated Representative is a requirement.

The primary responsibilities of the Company Secretary are:

Facilitating tax compliance: This includes making sure that the company complies with all tax laws and regulations that are applicable. The Company Secretary is a key person in dealing with tax authorities, preparing required documentation and executing tax strategies to ensure compliance.
Preserving and updating the company’s statutory books: The Company Secretary is in charge of the keeping of the correct records of the company’s statutory information, such as information about shareholders, directors, and other important company documents. Periodical review and update of such records are crucial to the compliance with legal requirements.
Organizing and attending company meetings: This involves organizing and attending different company meetings, which may include board meetings, general meetings, and committee meetings. The Company Secretary assists in arranging meeting logistics, preparing agendas, and making sure that all relevant documents are provided to the participants.
Recording meeting minutes: The Company Secretary is responsible for keeping the detailed minutes during company meetings to capture the discussions, decisions, and actions taken. Minutes are the official record of the meeting and are very important in sustaining the transparency and accountability in the organization.
Ensuring adherence to local laws and regulations: The Company Secretary keeps track of changes in relevant laws and regulations and informs the company about compliance requirements. They are responsible for the implementation of rules, regulations, and processes that will ensure the company operates within the law.
Directing the implementation of resolutions: After decisions are made at company meetings, the Company Secretary is charged with the enforceability of resolutions and compliance with legal and regulatory requirements.
Overseeing secretarial compliance across all business levels: This encompasses creating and sustaining a system that will ensure the compliance of company law and corporate governance standards throughout the organization.
Notifying authorities of any changes to the business’s structure: The Company Secretary has the duty of notifying the relevant authorities about any changes to the structure of the company like changes in directors, shareholders, or registered office address, as per the legal requirements.
Preparing and filing statutory returns: This entails the timely preparation and filing of different statutory returns and reports as required by the law such as annual returns, financial statements, and other regulatory reports.
Ensuring compliance with corporate governance requirements: The Company Secretary is instrumental in instilling the culture of good corporate governance within the organization such as transparency, accountability, and ethical behavior. They closely cooperate with the board of directors to set and implement governance policies and procedures.

Designated Representative Appointment Process

The procedure of appointment of a Designated Representative changes depending on the structure of a company. A company must:

Examine its list of members, articles of association, shareholders agreements or other agreements, and send notices to any person who is suspected to be a significant controller or who is thought to know the identity of the significant controller.
If the company has been notified of the registrable person being a significant controller and all relevant details have been provided, no further action is required.
The company should also make sure that the appointment meets the Companies Registry requirements.

The company’s representative must be a shareholder, director or an employee of the company who is a natural person resident in Hong Kong. Moreover, other specific requirements may differ by jurisdiction. For the appointment of the designated representative of a company, the required documentation may include the name and contact details of the representative, any information needed in relation with the relevant regulations or guidelines, as well as the copy of the parent company registration documents, including the Certificate of Incorporation and the Articles of Association (if applicable). Read Everything You Should Know Before Choosing Your Company Secretary

Company Secretary Role

Under the Companies Ordinance of Hong Kong, all companies are required to appoint a secretary. The designated person should be a Hong Kong resident or an entity registered in Hong Kong with an office. It should be noted that the only director of a private company cannot hold this position, which requires the choice of another person.

The process of appointing a Company Secretary in Hong Kong involves several essential steps:

Compliance with Regulations: The first move is to comply with the law of the land in Hong Kong as laid down by the authority.
Passing a Resolution: The company’s board should adopt a resolution to approve the appointment of the Company Secretary. This resolution is the official appointment.
Verification of Eligibility: Before confirming the appointment, it is important to ensure that the chosen person meets the eligibility criteria that Hong Kong regulatory requirements specify. This also involves verifying the fact of residence or incorporation as a legal entity with the office in Hong Kong.
Notification to the Registrar of Companies: On confirmation of the appointment, the company is legally required to notify the Registrar of Companies in Hong Kong about the new Company Secretary. This guarantees that the appointment is formally noted and acknowledged by the regulatory bodies.

The role of the Company Secretary requires keeping in line with statutory and regulatory requirements, maintaining company records, and coordinating with the shareholders.

Company Secretary Main Functions

The main roles of the Designated Representative are to help the company’s significant controllers to register with an officer of law, to manage SCR inspections, and to engage a lawyer when required. On the other hand, the main roles of a Company Secretary include tax compliance facilitation, keeping and updating the company’s statutory books, arranging and attending company meetings, and ensuring local laws and regulations compliance. This is applicable to local and international companies, not merely a local company.

Responsibilities commonly assigned to both a Designated Representative and a Company Secretary entail:

Updating and managing statutory records: Maintaining the correctness and timeliness of the official documents.
Coordinating board and general meetings: Arrangement and organization of these meetings.
Completing and submitting annual returns: Timely completion of required paperwork.
Participating in board meetings: Providing compliance support and recommendations.
Recording minutes for shareholders and board meetings: Accurately documenting discussions and decisions.
Assisting law enforcement with inspections: Supporting significant controller information scrutiny.

An organization can hire a company service provider that can act in both roles.

Company Secretary Appointment Process

The usual procedure of appointing a Designated Representative in a company is subject to the jurisdiction and specific requirements.

The general process are:

Choosing a person who is a member, director or employee of the company and who satisfies the criteria specified by the respective authorities.
The appointed person will serve as the Designated Representative and will perform the designated duties and obligations specified by law or regulation.
The specific rules and regulations of the jurisdiction where the company operates need to be consulted to ensure that the appointment process is strictly complied with.

The legal prerequisites for the appointment of a Company Secretary are different from jurisdiction to jurisdiction. All private companies incorporated in Hong Kong must have a company secretary, who is either a Hong Kong corporate or an individual who is a Hong Kong resident. It is recommended to appoint the company secretary within 6 months of the start of the business.

Difference Between Designated Representative and Company Secretary

Some duties of the Designated Representative and the Company Secretary roles may be overlapping, for example, record keeping and compliance. Nevertheless, they have different roles in relation to the significant controllers register and shareholder communication. To appreciate the similarities and differences of the roles is crucial to make sure that both functions are performed properly within an organization.

Now we will analyze the overlapping and distinct roles of Designated Representatives and Company Secretaries, emphasizing on convergence and divergence in their roles. By knowing these subtleties, organizations can make better decisions on placement and control of these critical positions.

Shared Responsibilities

Both Designated Representatives and Company Secretaries share certain overlapping duties, such as:

Updating and preserving statutory records
Calling and setting the agendas of board and executive meetings.
Make sure company is compliance with regulations
The issue of preparing and submitting the annual returns.
Facilitating tax compliance

These common obligations are vital for the effective operation of a business and compliance with legal and regulatory issues.

Although there are some similarities between these two roles, it is important to understand that Designated Representatives and Company Secretaries also have their own specific roles and responsibilities. In the next subsection, we will talk about the separate duties of each role and their contribution to the governance and compliance of a company.

Unique Duties

The responsibilities of a Designated Representative in maintaining the company’s significant controllers register encompass:

Accurate information provisioning on the corporate persons with large holdings of Providing help in respect of the company’s major controllers registered to a policeman.
Managing SCR inspections
Ensuring that the register is correct and current.
The company’s agent for the purpose of the significant controllers register.

On the other hand, the duties of a Company Secretary center on:

Compliance with statutory and regulatory requirements
Keeping company records
Company meeting management and participation
Managing communication with shareholders
Active participation in the drafting of resolutions
Ensuring tax compliance
Legal records of the company

Can A Company Secretary Be a Designated Representative or Not?

A company secretary can act as a Designated Representative, thus merging the roles and functions of both positions. This set-up can bring many benefits, including more efficient communication, cost effectiveness, and better decision making. Nevertheless, some issues may occur concerning workload, potential conflicts of interest and the requirement to ensure proper management and oversight.

Let us now consider the advantages and disadvantages of a Company Secretary being a Designated Representative. Through consideration of the advantages and disadvantages of this approach, companies are able to make more reasoned decisions whether to merge these roles or not.

Advantages of company secretary can act as a designated representative

Consolidating the functions of a Company Secretary and a Designated Representative can result in various advantages for a company, including:

Improved Communication Efficiency: Having a single person in charge of both positions can simplify communication channels in the organization. This person can act as a hub for all internal and external stakeholders, guaranteeing that the communication is clear and consistent.
Cost-Effectiveness: This integration can generate cost savings for the company. Rather than employing and sustaining different people for each role, the company can use resources more effectively by having one person serve both functions.
Enhanced Compliance Measures: A dual position allows for more effective control and supervision of compliance works. The person in charge can make sure that all regulatory obligations concerning both company secretarial functions and significant controllers’ registers are fulfilled in a timely and accurate manner.
Better Decision-Making Capabilities: Having a good knowledge of company’s secretarial and significant controllers’ registers, the person in the dual role can give good inputs and support the decision-making processes. This systemic approach can support more educated and efficient decision-making.
Increased Levels of Accountability: Unifying these duties in one person leads to a greater level of responsibility in making sure that all duties are completed correctly and on time. This responsibility can limit threats and make sure that the company works according to the law and in an open way.

For instance, in the role of a named representative, the Company Secretary has a direct access to crucial information and documents, which facilitates quick and effective communication with the stakeholders. This could lead to time savings and increased efficiency and, therefore, cost savings.

Furthermore, the presence of a Company Secretary serving as a Designated Representative provides numerous advantages, such as:

Immediate Access to Information: This double function provides quick access to important data, allowing quick decisions and response to queries or regulatory requests.
Ensuring Compliance: Combining the roles of a Company Secretary and a Designated Representative ensures a greater emphasis on adherence to legal and regulatory requirements. This comprehensive method reduces the possibility of omission and improves the company’s compliance with applicable laws and regulations.
Facilitating Effective Stakeholder Communication: The person in this dual role is a key communicator between the stakeholders. This enhances openness and relations with shareholders, regulatory bodies, and other stakeholders.
Enhanced Alignment and Synergy: Dual role of legal compliance and corporate governance functions integration achieves such alignment and synergy within the organization. Through harmonizing practices and processes, the organization will work in a more unified and consistent way.
Improved Performance Guidance: This special role gives important advice on total performance by linking legal compliance and corporate governance functions. Through combining knowledge in both fields, a person can provide recommendations to improve organizational processes and decision making.

Potential Issues of company secretary can act as a designated representative

Although there are benefits, there are potential risks and disadvantages in integrating the roles of Company Secretary and Designated Representative. Conflicts of interest may occur when a Company Secretary is designated as a Designated Representative. The Company Secretary has to ensure that they perform duties and functions of both the roles equally, without any bias or favouritism, ensuring that there is no conflict of interest between their personal interests and that of the company that they represent.

Another possible problem is the more demanding schedule of the person who combines both functions. The duality may involve an individual having to handle a wide array of activities, which can be very demanding and time-consuming. In addition, the merger of these positions may violate the necessary checks and balances of a company, because all the power is concentrated in one person, and he or she will not be responsible to anyone.

Legal Requirements and Compliance

Compliance best practices and Companies Ordinance must be followed by companies to ensure that the roles of Designated Representative and Company Secretary are effectively carried out. Compliance and risk of penalties and fines are reduced when companies are aware of the legal requirements and best practices.

This part of the article will now focus on the legal duties provided by the Companies Ordinance and the compliance best practices for the roles of Designated Representative and Company Secretary. Through understanding and compliance with these requirements and best practices, companies can be sure that they are operating within the law and keeping good corporate governance.

Companies Ordinance

The Companies Ordinance is a legislation in Hong Kong that aims to reform and update company law. It sets out the legal obligations of both Designated Representatives and Company Secretaries, thus, ensuring that companies are compliant and maintain good corporate governance.

In respect of the Designated Representative, the Companies Ordinance provides that such person should satisfy the regulatory requirements set out in subsection (2) and the company must keep the relevant details of the designated representative in the Companies Register.

For a Company Secretary, every private company incorporated in Hong Kong is required by the ordinance to appoint a company secretary and the company secretary must be a natural person not less than 18 years of age and must ordinarily reside in Hong Kong.

Compliance Best Practices

To uphold compliance with the Companies Ordinance and other pertinent regulations, companies should adhere to recommended best practices, including:

Encouraging and advancing compliance standards
Engaging in risk management and overseeing corporate governance
Verifying tax compliance
Maintaining current legal documentation
Conducting and engaging in board meetings
Submitting required statutory filings
Developing optimal practices for ESG and fostering sustainable corporate governance.

These best practices enable companies to efficiently handle the dual roles of Designated Representative and Company Secretary, meeting legal and regulatory compliance as well as maintaining good corporate governance in their activities.

One of the essential duties of your company secretary is to keep your corporate secretarial documents in order. Every business should have an honest and dependable secretary. Before making a switch, click that link to receive the checklist to make sure you do not miss any important steps in the procedure.

How FastLane Group Can Help?

FastLane Group has helped thousands of companies as a company secretary with our record of working in the fields of company formation, accounting, and auditing. We fill the gaps of service for small businesses in Hong Kong by providing one-stop corporate solutions.

We do our best to make certain that your company’s direction is in line with the established statutory principles and that you will be informed about the most recent corporate law changes. We will be your company secretary and our knowledge and experience mean you can focus on the parts of the business that bring you joy by allowing us to deal with the administration jobs for you.

Ready to learn more? Contact us today, and find out how our services can help you.