While every company has one and they help both small start-ups and larger multinationals, corporate service providers provide an extremely important ‘behind the scenes’ role in the operations of a company
However, too often business owners will choose a corporate service provider in a hurry, based more on price than quality, almost like a box-ticking exercise.
Karen Leung, Managing Director of Alpadis Group in Hong Kong, explains how, by not understanding the importance of the corporate service provider and focusing on fees only, business owners could create complications for themselves further down the road.
Please tell us a bit about yourself and Alpadis Group in Hong Kong
I am Karen Leung. I set up the Hong Kong office of Alpadis Group back in 2013. I currently head up the office here and manage all daily administration and operations. I have over 20 years’ experience and have worked with many global multinational companies. I have a degree in Business Administration, and a Professional Diploma in Company Law and Corporate Administration.
We provide a range of services from our Hong Kong office, including company formation, company structuring, accounting, human resources, tax matters and management of secretarial duties in various jurisdictions and liaison with relevant financing and government institutions.
In your opinion, what are the main mistakes entrepreneurs and business owners make when choosing a corporate service provider?
I think a common mistake made by business owners and entrepreneurs is not fully understanding the role of a corporate services provider. Too often they think that a corporate secretary is almost like a company secretary who performs simple administrative tasks that do not require any form of professional qualification.
However, Company Secretaries, or Chartered Secretaries, are highly trained individuals who should attain their qualifications from a reputable institution, such as The Hong Kong Institute of Chartered Secretaries (to be renamed as The Hong Kong Chartered Governance Institute). They need to understand company law like the back of their hands and be able to uphold the highest standards of corporate governance, effective operations, compliance and administration – often in very complex environments and industries.
Perhaps as a result of this, business owners will place a premium on price, rather than quality, and choose service providers that offer the lowest fees. This can come back and bite them later on, something we often see with new transfer-in clients.
You mention fees, what should companies look at when assessing a service provider’s fee?
Unfortunately, many corporate service providers are not transparent when it comes to fees, and usually offer very low incorporation and annual fees to attract clients. Clients should understand that while the cost may seem low, these firms will often charge for ancillary – but vital – services, such as annual returns filing, AGM services or the updating of registers, so costs soon add up.
Furthermore, by prioritising costs these service providers usually sacrifice ability and quality, often having inexperienced or underqualified company secretaries to prepare incorporation documents etc.
How can you tell the quality of a service provider?
Firstly, you should consider whether or how many qualified staff the service provider has and the type of advice they can offer. A good service provider should be able to advise not just on incorporation, but also on share structuring, accounting and tax filing etc. If they cannot do this then I would urge you to find one that can, as while you may not feel you need these services now it is highly likely you will need that further down the road.
Every corporate service provider should perform a health check for their new clients. They should check to see if the corporate documents are properly prepared, recorded and filed among other things. The reason for this is to ensure the client is fully in compliance and there are no outstanding issues that could cause complications.
For instance, a recent client of ours who has just transferred to us had used over five company secretaries over the past 10 years. None of them had conducted a health check when the company was transferred to them, yet when Alpadis Group conducted our health check we found that the shareholding was incorrectly transferred eight years ago and as such, the shareholding was also incorrectly reported in the annual returns.
As this happened eight years ago, none of the service providers had been willing to fix the mess which resulted in the client being unable to prove the ownership of his company.
You have mentioned qualifications and accreditation, can you give us more details as to what business owners should look for in this respect?
You have to be vigilant to check if the service provider has a chartered company secretary or chartered accountant in place. These individuals would have been through the Hong Kong Institute of Chartered Secretaries and Hong Kong Institute of Certified Public Accountants respectively and be well up to date with the latest rules and regulations, as well as ethics and compliance requirements.
Besides, starting from March 2018, the law in Hong Kong requires that all Trust or Company Service Providers (TCSP) have to apply for a license with the TCSP Registry (the “Registry”) before they can carry out the relevant services in Hong Kong. Business owners are recommended to do a quick search at the Registry to ensure that the service provider has obtained such a license before engaging their service.
Why should clients choose Alpadis Group?
Alpadis Group Hong Kong is a licensed corporate service provider offering bespoke services through our certified professionals on wide range of company services. Located in a convenient business area, clients can reach us easily, and get responses in less than 24 hours as we are committed to providing customer-focused services.
For inquires, please contact Alpadis Group Hong Kong.