HK Companies to Keep Significant Controllers Registers

New Requirements for HK Companies to Keep Significant Controllers Register

What are the new requirements of the Companies (Amendment) Ordinance 2018 (“Amendment Ordinance”)?

Under the 2018 Amendment Ordinance which came into force on 1 March 2018, all companies incorporated in Hong Kong (except listed companies) are required to :-

1. identify and ascertain a person / persons who has / have significant control over the company; and
2. maintain a significant controllers register (SCR) to be accessible by law enforcement officers upon demand to enhance the transparency of corporate beneficial ownership.

Who is a significant controller of a HK company?

A significant controller includes :-

1. A registrable person who is a natural person that has significant control over the company; and
2. A registrable legal entity e.g. a company, which is a shareholder of the company that has significant control over the company.

A person has significant control over a company if one or more of the following 5 conditions are met:

1. 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;
2. The person holds, directly or indirectly, more than 25% of the voting rights of the company;
3. The person holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of the company;
4. The person has the right to exercise, or actually exercises, significant influence or control over the company;
5. 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 relation to the company.

What are the major obligations of HK company to comply with the new requirements relating to SCR under the Amendment Ordinance ?

To comply with the new requirements relating to SCR, a company has the following major obligations –

1. keeping a SCR at the company's registered office or a prescribed place; and
2. taking reasonable steps to identify the company’s significant controllers, including the giving of notices and obtaining their required particulars; and
3. entering the required particulars of its significant controllers in the SCR; and
4. keeping the required particulars in the SCR up-to-date; and
5. making the SCR available for inspection and taking of copies by a law enforcement officer.

What are the legal consequences for failing to comply with the requirements under the Amendment Ordinance ?

It is a criminal offence. The company and every responsible person of the company are liable to a fine at level 4 (i.e. HK$25,000), and a further daily fine of HK$700 (if applicable).

Which law enforcement officers will have access to the SCR ?

1. Companies Registry;
2. Customs and Excise Department;
3. Hong Kong Monetary Authority;
4. Hong Kong Police Force;
5. Immigration Department;
6. Inland Revenue Department;
7. Insurance Authority;
8. ICAC- Independent Commission Against Corruption;
9. SFC- Securities and Futures Commission.

 

For legal advice and service on company and commercial matters, please contact

CHOW & CHEUNG, Solicitors & Notaries at Tel: +852 2856 3078 or Email: cac@ccsn.hk

​Website:  www.ccsn.hk