To enhance the transparency of corporate beneficial ownership and satisfy the international standard, all companies in Hong Kong under limited by shares, companies limited by guarantee and unlimited companies, they must:
1. Make the SCR(Significant Controllers Register) available for inspection and taking of copies by the significant controllers whose names have been entered therein, and by law enforcement officers. [s.653X]
2. Take reasonable steps(including giving notices) to identify its significant controllers, and obtain their particulars for entry in the SCR. [s.653P]
3. Keep the SCR at its registered office or a prescribed place. [s.653H]
4. Keep the SCR up-to-date. [s.653T]
5. Enter significant controllers’ particulars in an SCR. [ss.653J & 653K]
How is Significant Controllers Register should be? (Example)
Be aware that each company must keep an SCR even if it does not have a significant controller.
Who is a Significant Controller in Hong Kong?
A person / legal entity will become registrable that significant control over a company if one or more of the following five conditions are met:
• The person holds, directly or indirectly, more than 25% of the issued shares in the company or, if the company does not have a share capital, the person holds, directly or indirectly, a right to share in more than 25% of the capital or profits of the company.
• The person holds, directly or indirectly, more than 25% of the voting rights of the company.
• The person holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of the company.
• The person has the right to exercise or actually exercises significant influence or control over the company.
• The person has the right to exercise, or actually exercises significant influence or control over the activities of a trust or a firm that is not a legal person, but whose trustees or members satisfy any of the first four conditions (in their capacity as such) in relation to the company.
What kind of steps to inspect who is a Significant Controller in Hong Kong?
These steps include the following:
1. Consisting to continue reviewing the structure of ownership
2. Reviewing the company’s register of members
3. Reviewing articles of association, shareholder agreements or other agreements
4. Issuing notices to the party that believed to know as the identity of the Significant Controller
Who is authorized to access the Significant Controllers Register?
The Significant Controllers Register is NOT OPEN for public inspection however it can be accessed by law enforcement officers to ensure the performance of the functions regarding the detection, investigation of money laundering, detection, or terrorist financing.
The following government departments or statutory bodies have the right to access the information:
• Companies Registry
• Customs and Excise Department
• Hong Kong Monetary Authority
• Hong Kong Police Force
• Immigration Department
• Inland Revenue Department
• Insurance Authority
• Independent Commission Against Commission
• Securities and Futures Commission
What is the Non-compliance and offence consequence?
The company and each of its responsible persons commit an offence, and each is liable to a fine up to HKD 25,000. Where applicable, there is a daily fine of HKD 700.
Company Registrar has conducted site inspections and issued 166 summonses to those companies fail to comply with any of the above requirements from October 2018 to September 2019.
The Significant Controllers Register introduced by the Companies (Amendment) Ordinance 2018 is part of Hong Kong’s commitment to strengthen global governance on combating money laundering, tax evasion and terrorist financing.
*Source: Companies Registry