Questions and Answers pages:
|Registration of a corporate practice|
|Q1.||What is a corporate practice?|
In July 1995 the Professional Accountants (Amendment) Ordinance 1995 and the Companies (Amendment) (No. 2) Ordinance 1995 were passed to enable CPA practices in Hong Kong to practise as limited companies and partnerships. These laws became effective on 2 August 1996.
Before the introduction of this legislation, auditors must practise as sole practitioners or in partnerships and their liability is unlimited and is joint and several, i.e. each partner of a CPA firm named in a law suit is exposed to full liability for all assessed damages in a negligence claim, regardless of the degree of fault. A negligence claim does not therefore only affect the partner who is responsible for the audit work in question, it also affects those partners who are not personally involved or negligent.
|With the enactment of the legislation enabling CPAs to practise as limited companies, the personal assets of the auditors who are not personally negligent will be protected from unsatisfied negligence claims against the practice. However, incorporation may not limit the liability of an auditor arising from his own professional negligence.|
|Q2.||What is professional indemnity insurance?|
Under the corporate practices (professional indemnity) rules, each corporate practice shall have a valid and binding contract of professional indemnity insurance under the professional indemnity insurance master policy of the Institute. Any additional binding contract of professional indemnity insurance is required to ensure compliance with the minimum requirements set out in the rules.
The professional indemnity insurance master policy is administered by the sole insurance broker, Aon Hong Kong Limited. Institute members are welcome to call Aon’s hotline at (852) 2861-6574 or (852) 2861-6534 during 10 a.m. and 5 p.m. from Monday to Friday (except public holidays) to ask for a quotation or more information about the master policy.
|Registered CPA firms of the Institute may also subscribe to the master policy according to their needs.|
|Q3.||What are the guidelines for registration of non-personalized (trading) name?|
|Ans.||Under the current policy, a proposed trading name will not be approved if, in the opinion of the council, it is:|
|(c)||not of professional good taste and is inconsistent with the image of the profession; or|
in conflict with the ethical rules of the Institute, in particular section 450 - Practice promotion of the Code of Ethics for Professional Accountants.
|Council has rejected certain names in the past, mainly on one of the following grounds, which have been adopted by the registration & practising committee as guidelines on the application of (a) and (c) above:|
|(i)||the name is not of professional good taste and inconsistent with the image of the accounting profession;|
|(ii)||the name may mislead the public to believe that the practice is related to a famous brand or organization;|
|(iii)||the name may mislead the public to believe that the practice is superior to the other practices;|
|(iv)||the name may mislead the public to believe that the sole-proprietorship practice is a partnership;|
|(v)||the name may mislead the public to believe that the practice is an international practice;|
|(vi)||the name implies territories other than Hong Kong and may mislead the public to believe that the practice will be able to provide services in all such territories; and|
|(vii)||the name may mislead the public to believe that the practice belongs to a group of practices.|
|Maintain the registration of a corporate practice|
|Q1.||Our corporate practice was registered before the new Companies Ordinance (Cap. 622) ("CO") came into operation on 3 March 2014 and has adopted the Institute's Model Memorandum & Articles of Association ("M&A") for corporate practices. Do we need to amend our M&A to conform to the new CO?|
|The Institute has issued a Model Articles of Association ("AA") for corporate practices that conforms to the new CO. The Model AA is applicable to corporate practices which are incorporated on or after 3 March 2014. For corporate practices incorporated before 3 March 2014, the Institute does not require them to adopt the Model AA since the new CO contains deeming provisions such that their existing M&A should continue to be effective.|
|Q2.||Our practice has just moved to a new office. What should we do to update the Institute with our new address?|
Please complete and return a form RCP-3A which is obtainable from our website, our hotline at (852) 2528-9000 and our service counter at 27th floor, Wu Chung House, 213 Queen's Road East, Wanchai, Hong Kong along with supporting documents to the Institute's Admission Department for processing.
You may also email our Admission Department at firstname.lastname@example.org to request a copy of the form.
|Q3.||I am the managing director of a multi-practising corporate practice. I will become the sole director/ shareholder of my practice after the resignation of the existing practising member director in next month. Please advise what is the standard form or updating procedures required for such change.|
|Ans.||Please be advised that you are required to file:-|
|Form RCP-3A – notification for change of particulars of a corporate practice along with supporting documents to inform the Institute of details of the outgoing practising member director|
|Form RCP-3B – application for change of particulars of a corporate practice along with a draft articles of association to apply for change of articles of association consequent to change of registration status of your practice from multi-practising to sole-practising|
for consideration and approval by the Institute’s registration & practising committee and council.
|Q4.||We have registered a corporate practice. Can we authorize our staff to sign on behalf of our practice?|
As defined in rule 3(a) of the corporate practices (registration) rules , "authorized person" means a practising member who has been duly authorized by the board of directors of a sole practising corporate practice and approved by the council to practise as a certified public accountant or public accountant (as the case may be) in the name of the sole practising corporate practice in the event of death or incapacity or disqualification or involuntary absence of the sole practising member for such period and subject to such conditions as the council may impose.
|As such, only a sole practising corporate practice may register an authorized person with the Institute. In this case, you are required to send a completed form RCP-3B to the Institute's council for consideration.|
|Q5.||How can we deregister a corporate practice?|
Under section 50 of the Professional Accountants Ordinance, a corporate practice may apply in writing to the council to be removed from the register. According to the current ruling, please apply for deregistration of your practice by completing and returning a form RCP-2 that should be signed by a practising member director on behalf of your practice.
|Upon receipt of your completed form with the following documents, your application will be considered by the registration & practising committee and council:|
|a certification note from Aon Hong Kong Limited confirming that a run-off cover for the above-mentioned practice has been arranged under the corporate practices (professional indemnity) rules (i.e. the run-off cover should take effect from the date of your cessation of practice); and|
|a signed copy of a special resolution of the above-mentioned practice to apply for removal of the company from the Institute’s register of corporate practices.|
|Q1.||Where can I obtain a full list of CPA practices in Hong Kong?|
A copy each of the Institute's registers of CPA firms and corporate practices are available for public inspection during office hours at the Institute's service counter at 27th floor, Wu Chung House, 213 Queen's Road East, Wanchai, Hong Kong.
The Hong Kong CPA Practice Directory (including both CPA firms and corporate practices) is available in this website.
|Lists of practising certificate holders and CPA practices are published annually in the government gazette. You may check the government website.|