Significant Controllers Register

May 8, 2018

The Companies (Amendment) Ordinance 2018 will come into operation on 1 March 2018.  Several new requirements are introduced by the CO, all for the purpose of enhancing transparency of corporate beneficial ownership in order to fulfill Hong Kong’s international obligations.

 

(A)       New requirements

 

Every company incorporated in Hong Kong must keep a significant controllers register (“SC Register” or “SCR”).  The only Hong Kong incorporated companies exempted from this requirement are the listed companies.

 

In brief, every Hong Kong incorporated company (except listed companies) must:

 

(a)   keep a SC Register at its registered office or a prescribed place;

 

(b)  take reasonable steps (including giving notices) to identify its significant controllers, and obtain their   particulars for entry in the SC Register;

 

(c)   enter significant controllers’ particulars in the SC Register;

 

(d)   keep the SC Register up-to-date;

 

(e)  make the SC Register available for inspection and taking of copies by the significant controllers whose names have been entered therein, and by law enforcement officers.

 

Significant controllers include:

 

a “registrable person”, being a natural person or government or local authority international organisation who meets any one or more of the following conditions; and

 

a “registrable legal entity”, being a local or an overseas entity which is a member of the company and meets one or more of the following conditions.

 

Conditions for significant control over a company:

 

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

 

Law enforcement officers include:

 

- an officer of 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

- and Securities and Futures Commission.

 

(B)    Contents of the SC Register

 

A company’s SC Register must contain:

 

(i)      the required particulars of every of its significant controllers;

 

(ii)     the particulars of any registrable change with respect to each of its significant

         controllers;

 

(iii)    the name and contact details of a designated representative; and

 

(iv)    all additional matters specified by the Companies Ordinance.

 

A registrable change includes a significant controller’s cessation as a significant controller, and a change rendering the particulars already entered incorrect or incomplete.

 

The company must designate a representative to serve as a contact for providing information on the SC Register and related assistance to law enforcement officers.

 

The required particulars of a registrable person or registrable legal entity must be entered in the SC Register in a timely manner, within 7 days after all the particulars have been provided or confirmed by the registrable person, and in the case of a registrable legal entity, within 7 days after each required particular comes to the notice of the company.

 

(C)   Non-compliance and offences

 

If a company fails to comply with the requirement of keeping a SC Register, the company and every of its responsible persons, will be liable on conviction to a fine.

 

If the addressee of a notice relating to the SC Register (“SCR notice”) fails to comply with the requirements stated in the SCR notice, the addressee and every related person, will be liable on conviction to a fine.

 

Any person who knowingly or recklessly makes a statement which is misleading, false or deceptive in the SC Register commits an offence, and equally, any person who knowingly or recklessly makes a statement which is misleading, false or deceptive in reply to a SCR notice, will be liable on conviction to a fine and/or imprisonment.

 

The above merely highlights the key provisions under the CO.  More details on the CO can be found at the Companies Registry’s website.   We will be happy to answer any questions you may have and help with your company’s compliance with the new requirements under the CO.

 

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