Significant controllers register in Hong Kong
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Under the Companies (Amendment) Ordinance 2018 (“the Amendment Ordinance”), all Hong Kong incorporated companies must satisfy new requirements with regard to keeping significant controllers register (“SCR”).
This is an important step to enhance the transparency of ownership and control. A company incorporated in Hong Kong is required to identify persons who have significant control over the company (“significant controllers”) and to keep a SCR and make it available for inspection by the law enforcement officers upon request.
Who is a significant controller in Hong Kong
An applicable company is required by law to determine whether they have significant controllers and establishes the identity of significant controllers. A company has to take reasonable steps to ascertain its significant controllers (“SC”). The steps include reviewing the company’s register of members, ownership structure and shareholder agreements (if applicable) to identify and verify the identity of SC.
A SC of a company includes a legal entity and a person. The legal entity must be a member of the company. A person has significant control over a company if one or more of the following 5 conditions are met:
In simple terms, a SC is:
An applicable company must appoint at least one person to act as its Designated Representative to provide assistance to a law enforcement officer regarding the company’s SCR. The Designated Representative for this purpose must be one of the following:
Which type of company has to keep a SCR
The requirement to maintain a SCR is applicable to any company incorporated in Hong Kong i.e. companies limited by shares and/or guarantee and incorporated unlimited companies, excluding those with shares listed on the Stock Exchange of Hong Kong and those not incorporated in Hong Kong. A company that falls within the scope is known as an applicable company.
Where to keep a SCR
An applicable company is required to keep a SCR at the company’s registered office or a prescribed place in Hong Kong. The SCR should be kept either in hard copy or electronic form.
Contents of the SCR
Particulars of each of the SCs, including:
Registrable legal entity
Preparation and maintenance of a SCR
An applicable company is required to fulfil the following obligations in preparing and maintaining a SCR:
Who is authorised to access SCR
The SCR is not open to the public inspection. Only a person whose name is entered in the SCR as a SC and the law enforcement officers for the purpose of performance of functions relating to the prevention, detection or investigation of money laundering or terrorist financing can request to inspect the SCR. The officers include those from the following government departments or statutory bodies:
Non-compliance and offences
For an applicable company
Non-compliance with the requirement of keeping an updated SCR is a criminal offence. The company and every responsible person of the company are liable to a fine.
For the addresses who received a notice
Failure to comply with the requirements laid down in the SCR notice within one month from the date of notice is an offence. The addressee of the notice along with every related person are liable to a fine.
For false statement
If someone knowingly or recklessly makes a false, deceptive, or misleading statement in the SCR, it amounts to committing an offence. The offence is liable on conviction in the form of imprisonment or fine.
It is important that an applicable company familiarizes itself with the SCR regime. If there is any change of SC or change of particulars of a SC in a company, it is required to give notice to the person within 7 days unless it was already informed of the change.
The company must update the register within a week following the confirmation of the revised particulars. All entries in the SCR relating to a SC may only be destroyed after 6 years from the date the person ceased to be a SC of the company.