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 1st Companies Act of the England, back in 19th 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:
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:
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:
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:
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: