Hong Kong Nominee Director
Tetra Consultants offers Hong Kong nominee director service for our international clients. Our full-service package includes Hong Kong company registration, including offshore company formation, nominee director services, Hong Kong corporate bank accounts opening, merchant account opening, provision of company secretary and legal registered address, Money Service Operator license application and accounting and tax obligations.
If you are a business owner planning to expand your business in Hong Kong, you may have encountered the terms “Hong Kong nominee director”, “Hong Kong representative director” or “Hong Kong resident director”. This webpage will explain these concepts in detail in order for you to be able to understand these terms fully and make an informed decision for your Hong Kong entity.
What is a Hong Kong nominee director?
- A nominee director is a third-party qualified individual who is appointed to be a director of a certain company. They tend to be appointed in order to fulfil the requirements for a resident director in certain jurisdictions such as Singapore and India, where they are compulsory for business incorporation. The nominee director will not play an executive role and instead mainly follow the instructions of the ultimate beneficial owner.
- Although foreigners are able to start a new business in Hong Kong with no specific nationality requirement for company directors for most business entities, you may still wish to engage Hong Kong nominee director services. This is as having a Hong Kong representative director will provide your company with greater privacy and confidentiality, as well as save on tax costs. The appointment of a nominee or resident director is allowed under Section 459 (1) of the Companies Ordinance, so long as the appointed director is fit for duty and complies with other regulations of the Companies Ordinance.
- As finding a suitable candidate to take up the position of nominee director in Hong Kong is time-consuming and challenging, Tetra Consultants serves to bridge this gap by providing a cost-effective nominee and resident director service in Hong Kong.
Requirements for Hong Kong Nominee Director under Companies Ordinance law
- To be a Hong Kong resident director, an individual has to be a Hong Kong citizen, Hong Kong Permanent Resident or a holder of a valid EntrePass work permit authorizing the individual to work in the jurisdiction legally.
Criteria to be Hong Kong Director
- To be a Hong Kong director, the individual also needs to be a natural person and cannot be an entity, company or institution. This is as according to Cap. 622, Section 457(2) of the Hong Kong Companies Ordinance, a minimum of one of a Hong Kong company’s directors needs to be a natural person.
- Under the Companies Ordinance law, if a company does not have at least 1 natural person as a director, despite intimation from the Hong Kong Companies Registry, all the officeholders of the company will be fined HKD 100,000 for the offence, with an additional daily fine of HKD 2000 for each day that the company fails to abide by the law.
- The nominee also has to be 18 years of age or older in order to be a director. He or she has to have a track record of no criminal activity or conviction and cannot be bankrupt.
Duties of Hong Kong nominee director
- The nominee director will act as a non-executive director and carry out only specifically the actions that the ultimate beneficial owner instructs the nominee director to do. Some of these actions may include assisting in opening corporate bank accounts and participating in company agreements, signing corporate documents.
- The nominee director will have all the legal obligations of a typical director under Hong Kong corporate law, including a duty to act in good faith and in the company’s best interests instead of in one’s own interest, to fulfil a duty of care to the company and to abide by fiduciary duties.
Advantages of choosing Hong Kong Nominee Director Service
- Despite the fact that there is no official nationality requirement for the directors of Hong Kong companies and most local companies can be foreign-owned, a nominee director is still useful for many reasons.
Anonymity and privacy
- One of the key reasons is anonymity. Hong Kong law typically requires details about a Hong Kong company’s directors and shareholders to be listed and declared to the public in the Hong Kong Companies Registry, according to the regulations of the Companies Ordinance. However, with nominee directors and shareholders, you will be able to maintain anonymity and confidentiality instead of your identity as a business owner or your personal details becoming publicly known. This is as the information of the nominee director and shareholder will be listed instead of yours.
- However, government authorities in Hong Kong will still have to know the true identity and details of the business owner that the nominee director represents.
- If you would also like to keep shareholder identity anonymous, Tetra Consultants can also provide our nominee shareholder service to assist you to appoint suitable nominee shareholders for your company.
Save tax costs
- Having a nominee director in Hong Kong can also enable foreign business owners to save on tax costs, as having a Hong Kong resident director can make your company be considered a tax resident in Hong Kong. This can qualify you for tax relief from double taxation under the jurisdiction’s double tax treaties. With a nominee director representing you on the board of directors instead of being a director yourself, you will then be able to save on tax costs from double taxes, hence increasing your net profit earned from your company.
- In addition, foreign business owners and investors may also wish to have a nominee director in order for the company to qualify as an offshore company instead of onshore in the business owner’s home jurisdiction. Having a Hong Kong director and having the company be a tax resident of Hong Kong will then enable the company to qualify for offshore tax exemption from certain tax policies of the business owner’s or investor’s home jurisdiction.
Serve as local representative to Hong Kong banks
- In addition, if you intend to open an account for your company with a Hong Kong bank, a representative will typically be needed, to be present at the Hong Kong bank branch for in-person interviews. At no additional fees, Tetra Consultants’ qualified Hong Kong representative director will attend the interview on your behalf such that you will not need to travel at any point, saving time and expenses.
Bridge language barrier
- Furthermore, having a local representative will also be useful in enabling you to overcome the language barrier in Hong Kong, as many meetings and corporate or legal documents in the jurisdiction will be in the official language of Chinese. The representative will also be able to assist in translating documents to Chinese or from Chinese, such that the paperwork process will be greatly sped up.
Disadvantages of appointing a nominee director in Hong Kong
- Although there are many benefits to engaging a nominee director service in Hong Kong, there are a few risks involved.
Suspicion of Hong Kong banks towards nominee directors
- The first risk is that some banks in Hong Kong may be reluctant to approve bank account opening for businesses with a nominee director, following the local Monetary Authority’s advice. This is as some banks are suspicious that companies may choose to use nominee director and shareholder services to hide information in order to carry out tax evasion or fraud. Banks can also deem the costs of ensuring the compliance of businesses with nominee directors to be too costly.
- In the event that your company is unable to open a corporate account with a local bank, Tetra Consultants will assist you to find a reputable offshore international bank in a jurisdiction such as Singapore that is better suited for your needs.
Access to director’s powers
- The second risk of engaging nominee director services is that a Hong Kong nominee director has legal access to the same range of powers and authority granted to company directors under local law. This will give the nominee director the power to make decisions in the company on his or her own. A nominee director may also attempt to challenge the nominee director’s claim to be the true owner of the company.
- However, Tetra Consultants will take steps to mitigate this risk by setting out clear terms for the role and powers of the nominee director we appoint. Unless specifically requested, in the Nominee Director Service Agreement that we draft at the start of the engagement, the nominee director will only act based on the instructions from the Ultimate Beneficial Owner and will be prohibited from acting in his or her own self-interest or without your consent.
- As such, the nominee director will not be able to interfere with the day-to-day running of your company or have access to your company’s funds. Hence, you will be guaranteed to maintain full control over your business at all times without having to worry about your authority or business integrity being compromised.
Risks undertaken by a nominee director in Hong Kong
- Besides the disadvantages incurred by the hiring company, there are also some risks involved for the nominee director himself or herself in agreeing to take on the new role. The Hong Kong nominee director acts based on instructions from the ultimate beneficial owner or executive directors. In the event that the ultimate beneficial owner or executive directors are negligent, the Hong Kong nominee director may be held legally responsible together with the other executive directors, despite not being the culprit. The nominee is hence subject to litigation and fiduciary risks.
- However, rest assured that Tetra Consultants will take steps to mitigate this risk. The nominee director appointed for your business will be a qualified and reliable individual who has gone through our stringent KYC checks and due diligence process and will monitor the business’ activities closely to ensure strict compliance with all local regulations. Thus, by engaging Tetra Consultants’ Hong Kong representative director service, you will be able to minimize such risks.
Why choose Tetra Consultants’ Hong Kong nominee director services?
- The nominee director appointed by Tetra Consultants’ will go through strict KYC checks and be knowledgeable of the local Hong Kong regulations, such that he is able to monitor your business activities closely to ensure full compliance with all laws.
- By engaging Tetra Consultants’ nominee director service Hong Kong, you will also be able to maintain full authority and control over your business, as the nominee director we appoint will not be able to interfere in the daily operations and running of your business without consent, nor have access to your company’s funds as per the terms of the Nominee Director Agreement.
- In addition, unlike other firms, we highly value transparency and do not charge our international clients with deposits, nor do we have any hidden costs. All payment terms will be stated clearly in the appointment letter prior to the start of the engagement without any information withheld.
Process to appoint Hong Kong nominee director with Tetra Consultants’ services
- Before the start of the engagement, Tetra Consultants’ compliance team will first shortlist trusted individuals who have relevant experience in corporate governance and annual reporting or filing, and have passed our enhanced due diligence checks. These nominees are usually either our in-house employees or long-term partners and are mostly professionals in the field of accounting or tax or law.
- Once engaged, Tetra Consultants will provide you with the KYC documents of the new nominated Hong Kong director, including his or her updated resume, passport copy, proof of address and legal records proving lack of criminal activity.
- Our legal team will also draft a nominee director agreement and statutory declaration of trust to be signed by all parties involved. This is to guarantee that the company is completely and fully under your management and that you are indemnified as well. Unless requested specifically, the role of the nominee director appointed will not include playing an active part in your business, nor acting as a signatory to the bank.
- Other documents required include a Power of Attorney document to authorize the nominee director, as well as an un-dated Resignation Letter by the nominee director to be prepared beforehand as proof that the nominee director will be able to resign and confer director rights and powers back to the actual business owners.
- After the settlement of the nominee director fee, Tetra Consultants will proceed to register the Hong Kong company and appoint the Hong Kong nominee director with the Hong Kong Companies Registry.
Required documents for Hong Kong nominee director
- Due to the litigation and fiduciary risks that the Hong Kong resident director will ultimately be subjected to, Tetra Consultants’ compliance team will require certain information from your business for due diligence checks:
- Identity documents of the Ultimate Beneficial Owners (UBOs) and non-resident directors.
- Documents of the parent company (in the event a corporate shareholder is appointed)
- Nature of intended business activity
- Dormant or active status of the company
Contact us to find out more about Hong Kong Nominee Director services. Our team of dedicated professionals will revert within the next 24 hours.
What is a nominee director?
- A nominee director refers to a third-party individual appointed as the director for a company through a contract. A nominee director does not hold any shares in the company and will not be involved in your everyday business operations or have access to your company’s funds.
- Unless specifically requested, most nominee director roles will take on a passive role. This means that despite being appointed as an office member of the company, a nominee director is prohibited from making decisions or performing duties at his sole discretion. He is only allowed to act based on instructions given by the Ultimate Beneficial Owner (UBO) of the company.
Who appoints nominee directors?
- The owner or investor of the company appoints the nominee director through a legal contract called the Nominee Director Agreement.
- By engaging Tetra Consultants’ services, you will be able to shorten the process to appoint a nominee director, as we will shortlist a qualified and trusted individual for you through our enhanced KYC checks. Our legal team will also draft a Nominee Director Agreement for you, to be signed by all parties involved.
Is Nominee Director a director?
- Yes, a nominee director is a non-executive director of a company. He or she will usually be treated equally to the other directors in the eyes of the law.
Can you have a nominee director?
- Yes, you can legally have one. Simply appoint a qualified individual who passes the relevant KYC checks and complies with the jurisdiction’s regulations for nominee director requirements, and your business will have a nominee director to act as your director.
- Tetra Consultants assists our international clients to fulfil KYC checks to appoint trusted nominee directors, through a hassle-free process.