The winner of the HKICS Prize 2017, Natalia Seng FCIS FCS(PE), Chief Executive Officer – China and Hong Kong, Tricor Group/Tricor Services Ltd, and Institute Past President, shares her thoughts on the art of governance and the future of the company secretary role.
What are your feelings about receiving the HKICS Prize 2017?
‘It’s an honour and I am very pleased to have received this award. It has made me look back and realise how glad I am that I joined this profession.’
Could you talk about your route into the profession?
‘When I finished my higher diploma in company secretaryship and administration at the Hong Kong Polytechnic, I was keen to get some practical work experience. I had been studying a three-year, full-time course and had a pretty good knowledge of company law and company secretarial practice, but I wasn’t sure what corporate secretarial work would actually be like. I have been in the profession for over 30 years now, so you can see how that worked out.
Looking back, I think the diploma course gave me a good foundation in the essential concepts you need to progress as a company secretary, such as the concept of limited liability, the principal/agent relationship and the role of the board of directors. I always tell those at the beginning of their career not to underestimate the importance of getting a professional qualification and continuous professional development because it will help them climb the career ladder. It certainly helped me. When one is in a senior management position, it is true that you can rely on lawyers and other professional experts to advise you, but you still need to rely on your own judgement. Corporate governance is really an art and you learn more about it through practice. In board meetings, as a Chartered Secretary and as a governance professional you need to make your own assessment of the issues under discussion, particularly when it comes to ethical issues and risks.’
You have worked your way to the top of a professional services provider and this career path will perhaps be less well-known than a career as a company secretary of a listed company. Do you think taking the professional services route was a good career choice for you?
‘The longer I stay in a professional firm, the more I am convinced that this is the right place for me. Perhaps it is just that I have become accustomed to it, but I do appreciate the fact that I am always meeting different customers from different sectors. Tricor is the service provider for thousands of companies so I am always working with different types of companies and coming across different types of people. Over a 30-year career, how many different sectors or types of companies would I have encountered if I was working in the corporate sector?
I would like to add, however, that participating in the work of the Institute has also helped. Attending Council and committee meetings at our Institute – or at The Institute of Chartered Secretaries and Administrators (ICSA) and the Hong Kong Institute of Certified Public Accountants where I served a two-year term as a lay member on their Council – I have come across great leaders and I have been able to learn from them, even if it is just the way they conduct meetings or their deliberations in meetings. Some people say they hate meetings and they consider meetings to be a waste of time, but I think there is value in holding meetings. In meetings you have to articulate what you think about the issues being discussed and sometimes you have to voice disagreement, but there is an art to doing this in a way that doesn’t offend others while reaching a solution.
So you can learn a lot about the soft skills you will need from experienced colleagues or members of the profession. For young people, participating in the Institute’s work is a good way to observe and learn how to chair a meeting or how to set the agenda and manage time effectively – until you get to a senior position you are unlikely to have any experience of this. These skills are really an art. If you’ve got a good chairman and you’ve got a good secretary who is able to prepare a proper agenda, then you are more likely to have a fruitful discussion and get good results.’
You have been active in public service work – for example working as a member of the Standing Committee on Company Law Reform. Are there career benefits from public service work too?
‘It enables you to be closely involved in the issues that are relevant to your work. In my case, I have been involved in the issues surrounding the licensing of trust and company service providers (TCSPs) and the new significant controllers register requirements. I have been working on these issues at Tricor and that’s why I was invited to join the Standing Committee.’
Both of those issues will be relevant to readers of CSj – what’s your view of Hong Kong’s new TCSP licensing regime?
‘With the licensing of TCSPs, we now have a clear obligation upon those owning or running a TCSP to follow international standards on anti–money laundering. They have to know their clients, they have to keep proper records and if they notice any suspicious transactions they have to make a report. Also, as an employer, they need to cultivate the right culture in their business through training. Without training, some people may be unaware of the serious responsibilities they are taking on as directors or trustees when they agree to provide these services.
I was interviewed recently by Cable TV on this and I mentioned that the absence of a licensing regime for TCSPs was hurting Hong Kong. Without a licensing regime, there was no entry barrier – anybody could set themselves up as a service provider to set up companies. If businesses then chose low-cost service providers who fail to conduct customer due diligence, or to provide professional advice on the duties and responsibilities of the officers and the annual health check compliance requirements of each company, that would end up hurting Hong Kong’s reputation if Hong Kong companies are reported as being involved in money laundering activities. So I think the way the government is now moving is correct. If you are in this business, you have to have people with the necessary skills, qualifications and knowledge. That means you have to invest, you have to pay professionals to run the business and to provide training to your staff. When those things are in place, this will help to mitigate the risks and liabilities, and ensure the sustainability of a TCSP.’
Do you think Hong Kong is ready for the new requirement to keep a significant controllers register?
‘In the past few years the banks have already started asking for disclosure of beneficial owners, so financial institutions have already passed through the first stage of the changes. We are now moving on to stage two, and service providers will also have to ensure that a record is kept of the identity of beneficial owners and significant controllers.
If beneficial owners do not want to disclose their identities there will be a suspicion of malpractice. We are moving towards common reporting standards globally, with the Organisation for Economic Co-operation and Development requirements on transparency, the emerging standards on transfer pricing and base erosion and profit shifting and the tougher anti–money laundering controls. These new standards are accepted by all the major countries of the world so businesses in Hong Kong need to abide by the rules, embrace the changes and move with the new reality.
The significant controllers registers will not be open to public inspection, so we have maintained a degree of privacy in Hong Kong. The original idea was to have the registers open to inspection by anybody, but that would create privacy issues, particularly for public figures. I think you may know that the Institute advocated that the registers should only be open to inspection by competent authorities and this was accepted by the government.
So I think the new requirement puts Hong Kong on a par with other international financial centres – the UK, the Cayman Islands, the British Virgin Islands and Singapore, for example, already have similar requirements. We couldn’t afford to fall behind, so in many ways the new regime is no big surprise – Hong Kong naturally had to move in this direction.’
You mention the global effort to counter transfer pricing and base erosion and profit shifting. What is your view of this initiative and the new standards on transparency regarding tax issues in general?
‘Times have changed. In the past businesses could use offshore companies to reduce their tax burden or to avoid paying tax altogether. Businesses can still pay huge sums in professional fees to tax specialists in order to ensure they have the best tax arrangement, but they need to be very careful. They will be under scrutiny to determine where their management control is based and the location of their source of income. There is no way that business transactions can be structured to ensure that the business does not have to pay tax anywhere. If a company is incorporated in a jurisdiction where it pays zero tax then people will be sceptical. The assumption is that a company needs to pay tax in its principal place of business. If you have your headquarters in Hong Kong, for example, if this is the place you hold your board meetings and make all of your decisions, then you have to pay Hong Kong corporate tax. Our corporate tax rate is very reasonable of course, and it is important to emphasise that operating as a legitimate business will attract investors and good relations with stakeholders.’
You helped maintain the relationship between the Institute in Hong Kong and the ICSA during the difficult period before 2012. Are you pleased with how that relationship has evolved?
‘I am very pleased to see that there is better communication among the ICSA divisions. The ICSA now holds its international council meetings in different parts of the world and we have better representation from different divisions on the executive committee.
It is also good to see better co-operation between the Institute here in Hong Kong and other countries in Asia such as Thailand, Taiwan, and Indonesia. I think everyone sees the need to enhance corporate governance and they are looking to peer bodies in the region for ideas on how best to do this. I think this is a common trend.’
What’s your view of the recent ICSA initiative to create the new Chartered Governance Professional designation?
‘I support adding the governance professional qualification to our existing Chartered Secretary qualification because calling ourselves only Chartered Secretaries might limit the scope of our profession. There are so many areas we focus on, including for example risk management, but to a large extent all of our work is about upholding corporate governance so why not call ourselves governance professionals? Also, this is a way to embrace more members in the profession, some of whom do not regard themselves as corporate secretaries. So I think this is a win-win situation.’
What do you think the role of the company secretary will look like in, say, 10 or 20 years time?
‘Company secretaries have a central position in companies and, if they stay for long enough, they become an essential knowledge-base. They are responsible for keeping records, keeping up to date with regulatory compliance and many other things that, if they do not fit within an existing department, find their way to the company secretary. So these days we talk about the Company Secretary but over time I think every large organisation will have a Company Secretary’s Office, which will function as the corporate memory and the repository of corporate knowledge. This will help maintain continuity as different individuals move in and out of
What issues do you think new recruits to the profession here in Hong Kong will be dealing with in the years ahead?
‘I think there will be a growing demand for company secretaries in Hong Kong. Hong Kong is a major IPO centre and increasing numbers of companies from Mainland China are coming to Hong Kong to list so there will be a lot of work to do. If there is a Company Secretary’s Office then you can imagine that there will be a team of people involved in company secretarial work and there will be a career ladder for new recruits.
I expect language skills to be increasingly important. If practitioners are able to read and write effectively in English and Chinese, that will be very useful. Understanding the culture here and in the Mainland will also be an important asset.
Members of the profession will certainly also have to consider technology. Some developments, for example more advanced data management and document management systems will certainly save company secretaries a lot of time and make it easier to locate and circulate documents. They might also, of course, reduce the number of people required at a junior level on some tedious work. Professionals doing high-end work, though, cannot be replaced easily by technology. In the future, whether it is taking minutes or providing advice to the board, you will still need people with the right technical and interpersonal skills, experience and judgement for that work.’
Natalia Seng FCIS FCS(PE) was interviewed by CSj Editor Kieran Colvert.