The Companies (Amendment) Ordinance 2018 which came into operation on 1 March 2018 imposed on companies incorporated in Hong Kong (excluding listed companies in Hong Kong) an obligation to maintain a Significant Controllers Register (SCR).
Coupled with the Common Reporting Standard which took effect on 1 July 2017 in Hong Kong, the new provision reflects the government's intention to increase the transparency of corporate beneficial ownership in order to enhance Hong Kong's regulatory regime to combat money laundering and terrorist financing.
Who has to keep a significant controllers register?
All companies formed and registered under the Companies Ordinance (Cap. 622) or former Companies Ordinance (Cap. 32), including:
- Companies limited by shares
- Companies limited by guarantee
- Unlimited companies
(Not applicable to listed companies in Hong Kong)
Who is a significant controller?
A significant controller includes a registrable person and a registrable legal entity that has significant control over the company.
A person is considered to have significant control over the company if one or more of the following conditions are met:
a. The person holds, directly or indirectly, more than 25% of the issued shares in the company (or the right(s) to share in more than 25% of the capital or profits of the company if the company does not have a share capital) ;
b. The person holds, directly or indirectly, more than 25% of the voting rights of the company;
c. The person holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of the company;
d. The person has the right to exercise, or actually exercises, significant influence or control over the company;
e. 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 four conditions above
Designated Representative
The company is required to designate at least one person as representative to provide assistance relating to the SCR of the company to law enforcement officers and such representative must be in either one of the following capacities:
a. A shareholder/ director/ employee of the company who is a natural person resident in Hong Kong;
b. A certified public accountant or a firm / corporate practice of certified public accountants in Hong Kong;
c. A qualified Solicitor or Registered Foreign Lawyer in Hong Kong; or
d. A person licensed to carry on a business as trust or company service provider
How to prepare and maintain SCR?
- Take reasonable steps to identify the company's significant controllers (for example, by reviewing the company’s register of members, articles of association, shareholders agreements or other agreements)
- Send out notice to any person who is reasonably believed to be a significant controller and any person who is reasonably believed to know the identity of the significant controller
- Enter the required particulars of the company's significant controllers in the SCR
- Keep the required particulars in the SCR up-to-date
- Make the SCR available for inspection by a law enforcement officer and a significant controller whose name has been entered in the SCR
What are the consequences of non-compliance?
- If a company fails to comply with the above requirements, the company, and each of its responsible persons (including directors, managers and company secretaries), will be liable on conviction
- If any person knowingly or recklessly makes a statement which is misleading, false or deceptive in the SCR; or in the reply to a company's notice, the person commits an offence and is liable to a fine and/or imprisonment
Who can inspect SCR?
- Companies Registry
- Customs and Excise Department
- Hong Kong Monetary Authority
- Hong Kong Police Force
- Immigration Department
- Inland Revenue Department
- Insurance Authority
- Independent Commission Against Corruption
- Securities and Futures Commission
How can we help?
Our Corporate and Commercial team is available to advise you on the compliance steps and the ongoing obligations under the new SCR regime:
- Making the SCR available for inspection by law enforcement officer(s)
- Preparing, updating and maintaining the SCR
- Issuing relevant notices on behalf of your company
- Assisting in identifying the significant controllers of your company
- Acting as a designated representative of your company
- Providing advice on the duties and obligations of your company
Tel：(852) 3628 0170