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Hong Kong TCSP Companies: Essential Responsibilities and Obligations You Must Know

Company Secretary Duties in Hong Kong and Who Can Do the Job

In recent years, Hong Kong has been intensifying its regulatory framework for the financial system, leading to the increased significance of Customer Due Diligence (CDD). However, some clients may express concerns over privacy or find the procedures overly complex. This article explores whether clients can opt out of CDD, the reasons for conducting it, and how to comply with the process effectively.

1. Can Clients Refuse Customer Due Diligence (CDD)?

Customer Due Diligence is a critical measure to safeguard the stability of the financial system. While some clients may have reservations, opting out of CDD can lead to the following consequences:

Ineligibility for Company Secretarial Services

According to Hong Kong law, licensed company secretarial service providers are required to complete CDD before establishing business relationships with clients. If a client's identity cannot be verified, the service provider may not be able to continue offering services. For existing clients, refusal to participate in periodic CDD reviews may result in the termination of ongoing service contracts,meaning the client will no longer have access to services such as company registration, company secretarial duties, or registered office services.

Potential Legal Liability

Under Section 474 of the Companies Ordinance, all limited companies must appoint a company secretary to ensure compliance with statutory requirements, such as maintaining proper company records. If company secretarial services are terminated and a new secretary is not appointed in a timely manner, the company and its directors could face legal liability, including fines, as stipulated by the Companies Ordinance.

For more information on company secretarial responsibilities, please refer to the article: Company Secretary Duties in Hong Kong and Who Can Do the Job

2. Why is Customer Due Diligence (CDD) Necessary?

As an international financial center, Hong Kong operates under a comprehensive legal framework. Licensed company secretarial service providers are obligated to perform CDD and maintain relevant records to uphold the stability and security of Hong Kong's financial system.

Risk Assessment

By thoroughly understanding a client's identity, business information, and source of funds, companies can better identify and assess potential risks. This, in turn, helps prevent legal disputes and commercial losses. For clients involved in high-risk industries or regions, company secretarial service providers are required to conduct enhanced monitoring and may request additional supporting documentation.

For more detailed information, refer to the article: Hong Kong TCSP Companies: Essential Responsibilities and Obligations You Must Know

3. How Can Clients Comply with CDD?

The following tips can help clients navigate the CDD process smoothly and ensure uninterrupted business operations:

Understand the Necessity of CDD: CDD is not only a legal requirement but also an important measure to protect the rights and interests of both parties. Cooperating with CDD helps mitigate legal risks.

Prepare the Required Documents: CDD usually requires clients to provide identification documents, company registration papers, ownership structure diagrams, business plans, and other relevant information. Providing complete and accurate documents can expedite the process and minimize delays. If clients have any questions about the required documentation, they can contact OneStart Business Centre for further assistance.

Maintain Transparency: During the CDD process, it is important to remain transparent and provide accurate information. Clients should answer the company secretary's questions truthfully and supply the necessary information and documentation.

Keep Information Updated: CDD is an ongoing process. Clients should regularly communicate with their company secretary and notify them of significant changes, such as changes in shareholders or business operations. This is not only a legal obligation but also helps to maintain a strong business relationship.

4. Conclusion

Customer Due Diligence is a statutory responsibility of licensed company secretarial service providers and helps to prevent potential legal risks. Clients are encouraged to actively cooperate with CDD, understand its necessity, and provide the required documents to ensure smooth business operations. By working closely together, both parties can achieve mutual success within a lawful framework.

OneStart Business Centre is a licensed TCSP in Hong Kong . Entrepreneurs can choose from a variety of services, streamlining company registration, secretary services, business address leasing, virtual office services, and more. Please feel free to call or WhatsApp (852) 3575 6888 to our OneStart Business Consultant.

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