What are the procedural requirements for opening and closing company bank account for Hong Kong company formation and bank account

Financing is the most important aspect of any corporate entity. Accounting and finance act as the back bone of the corporate structure without proper accounting structure and framework there is no corporate nor financial prospect of the company. Realizing vitality of accounts, Cap. 622 has the provisions related to this matter. As per the general view of these provisions of Cap. 622; A corporate entity is required to keep and maintain financial records of the company and in addition to this a company is supposed to prepare annual audited financial statement of the company and meant to disclose it to shareholders of the company and if company is a public company then such disclosure shall be made to the general public. These liabilities are to ensure that investors and creditors of the company should be kept informed about the financial performance and current financial position of the company. Such types of statutory requirement regarding audited accounts statement are the result of public campaign which introduced the public revelation of the company’s accounts so that fraud on part of investors shall be avoided by the joint stock companies and that was the basic motivation which was concluded as the introduction of such provisions in 1^st Companies Act of the England, back in 19^th century. This didn’t remain there, and such disclosure doctrine remains an integral part of modern company laws and serves as the beacon of light for matters related to corporate governance even in today’s world of modernisation and versatility.

Cap. 622 does not completely change the script of provisions of predecessor companies ordinance, but it poses some modifications for the provisions related to accounts and auditors of the company. Some of main modification are as follows:

• The amendment poses the modification in some of terminologies such as predecessor companies ordinance has the term “accounts” which now has been replaced with the term “Financial Statements”.
• The modifications now have the new provisions related to the determination of financial year for the company.
• Cap. 622 omits the provisions related to the statutory content of the financial statements of the company and thus in this way Schedule 10 and 11 of Cap. 622 now have been repealed.
• The amendment now has extended the scope and nature of circumstances where simplified reporting can be adopted.
• The enacted modifications in the Cap. 622 has enhanced the rights of the auditors.

We shall discuss these modifications and other matters related to accounts of the company later on. Stay tuned with us and keep reading to enrich your minds with legality of company’s pre- register and post registration process. Now let’s move to the procedural obligations pertaining to operations and maintenance of company’s bank account.

Bank Account of a Company

Dealing in cash is the very depreciated and unappreciable practice in corporate world thus to run the financial affairs of the company, a bank account is indeed in dire need. Now we shall discuss the matters related to the opening criteria and operating mechanism of corporate account in the bank because company’s bank account will be quite different from conventional bank accounts. It is a well-known fact that pertaining to relevant circumstances company’s account would have to closed, if opened and may need to be re-opened or open a new one, there is one key point that must be remembered which says that any such closure or opening of bank account should occur with the consent of director(s) of the company.

Opening a Bank Account

Every task in corporate world is done by following a pre-defined procedure and contravention of prevailed procedure results in the penalty. So, for opening the bank account of the company, a resolution should be presented before the board and must be passed in order to open the account. Below is the sample resolution in this regard:

That a HK$ current account needs to be opened in the name of the company with the XYZ Bank in its Central Branch in Hong Kong. This account shall be operated by the [name of the director(s) or person(s)], singly or if jointly then [name of the person(s) or director(s)] should operate this company’s bank account.

When the resolution shall pass successfully, in accordance with company’s constitution then printed form of this passed resolution shall be the part of meeting’s minutes. Now let’s come to the documents which needs to be attached with the account request form to the bank so that bank can proceed with its legal and corporate obligations. Following documents should be attached with the bank’s account request form:

• Evidence that board has authorised and passed the resolution related to the opening of bank account.
• A certified and authentic copy of company’s certificate of incorporation Hong Kong.
• A certified and authentic copy of business registration certificate of the company obtained after certificate of incorporation Hong Kong.
• Declaration of the directors which primarily discusses the particulars and credentials of company’s director and principal shareholders of the company.
• A certified and authentic copy of company’s Incorporation Form which may in other words knows as Form NCI or NCIG. Whereas if this document is not approachable or could not be submitted due to any reason then notification pertaining to the change of company secretary Hong Kong or directors typically known as Form D2A, would be suffice.
• A certified and authentic copy of following documents from the company’s directors, beneficial owners of the company’s shares and principal shareholders of the company:
• Any identification document such as Hong Kong National Identity Card or Passport.
• Proof of former name/ alias, if applicable.
• Any essential proof which can either be in the form of utility bills, bank statement(s), lease agreement or property document or valid driving license.
• List consisting of signatures of the signatories specimen, which must be attested and verified by their respective banker.
• Any proof of business which may include business plans, business model or audited financial statements.
• Initial deposit.
• A duly filed and signed bank account request form.

Disclaimer!

There are some notes for the sake of disclaimer and to let the reader of this article aware of do’s and don’ts while following this procedure. These disclaime or cautionary notes are:

• Copy of documents which are being attached should duly be attested and verified by any certified public accountant, banker, lawyer or company secretary Hong Kong.
• It must be make sure that principal shareholder is any such person who is entitled to control and exercise his/her voting rights as equivalent to the person having 10 percent or more voting rights of the company.
• If the company has the corporate structure as that of company with corporate shareholder then such company shall be required to submit certified and verified copies of organisational chart which articulate the percentage shares hold by each shareholder or individual and clearly mentions the beneficial owners of the company and for this authentic submission should be furnished in which beneficial owners of the company are clearly discussed.
• If records and facts show that ultimate beneficial owner of the company is a trust then company should furnish trust deed or any declaration which clearly mention the credentials and particulars of trustees, settlers and beneficiaries of this specific trust.
• If establishment of the company has the concept and appointment of nominee shareholders then details of ultimate beneficial owner of the company must be submitted.

There is one security feature or provision which can further strengthens the security aspect of company’s bank account. Necessary security measures should be taken so as to ensure secure use of company’s accounts. It is advised that whenever the bank’s signatory operates the bank account of the company, on behalf of the company then company’s rubber chop should be stamped at the place where signatures are required. Where company’s rubber chop is not found then signatory shall personally be held liable for that transaction or any amount withdrawn on the cheque, signed by signatory.

Changing the Signatory

Corporate world is full of abuses and probability thus exist each and every time that any person whether in executive or managerial position can indulge in fraudulent activities. Financial fraud leads all other types of fraud because the harm it can cause shall last longer than any other corporate fraud after create a company in Hong Kong. Now let’s get familiarised with the procedure through which signatory can be changed. Simply approval of company’s board is needed to change the signatory. Have a look on the sample resolution below:

It is submitted that method of operation of company’s HK$ current account no. XX-XXXXX-XXX opened in the Central Branch of XYZ Bank, Hong Kong, should be considered cancelled, revoked and that in future this account shall be operated by [name of the person(s) or director(s)], jointly.

Just as we need to submit certain documents while opening the bank account, certain documents shall need to be submitted while changing the signatory, these documents are:

• A duly signed covering letter should be submitted by the outgoing bank signatory notifying about his/her leave and change of bank of signatory.
• A certified and authentic copy of the board’s approval of resolution pertaining to change of bank signatory.
• The person who has been appointed or is being appointed as signatory needs to furnish following documents to the bank:
• Any identification document such as Hong Kong National Identity card or passport.
• Proof of any former name or alias, if applicable.
• Proof of residency in either form of utility bill, lease or property agreement, bank statement or valid driving license.
• List which contains signature of the specimen signatory, which further should be verified and attested by the banker.
• If required then new bank mandates should also be submitted.

Closing of Company’s Bank Account

There can be the situation where company needs to close its bank account after create a company in Hong Kong such as in the situation of winding up of company, consistent financial irregularities and many more. Because there is no word of absolute in the corporate world. Let’s summarise our discussion and now let’s come towards the procedural matters related to the closing of bank account of the company.

First of all, we need to present the resolution before the company’s board of director that in xyz situation it is quite obvious that company’s bank should temporarily or permanently be closed. Sample resolution is as follows:

It is submitted that company’s HK$ Current Account no. XX-XXXXXX-XXX, opened in the Central branch of XYZ Bank in Hong Kong. Now pertaining to [explain the reason, if applicable] company’s bank account should be closed and for the procedural formalities, bank should be notified accordingly.

It must be noted that, process for the closing of bank account shall only be processed if company’s board ratifies this proposed resolution. So, after obtaining board’s approval to commence the proceedings of closure of bank account on the part of bank, certain procedural obligations are needed to be followed. Following are some of the documents which needs to be submitted to complete these procedural obligations:

• A duly signed covering letter should be submitted by the existing bank signatory of the company in which he/she should notify bank about the closing of company’s bank account. In addition to the closure communication, covering letter should contain the instructions regarding disposal of balance of funds in company’s account.
• A certified and authentic copy of the board’s ratification pertaining to closing of company bank account needs to be submitted to the bank.