At the beginning of 2018, the Hong Kong Companies Ordinance (HKCO) has been amended, coming into effect as of the 1st March 2018. The Legislative Council of China hopes to herewith enhance the transparency of corporate beneficial ownership, making it compulsory for companies incorporated in Hong Kong to maintain additional information on their significant controllers, in an up-to-date SCR (Significant Controller Register), which will be kept at the company’s registered office in Hong Kong. Companies registered under the Hong Kong Companies Ordinance, Part 16 will, however, not be subject to these new laws.

Who is a Significant Controller?

The Ordinance defines the Significant Controller as any natural person or legal entity, who holds significant control in a company registered in Hong Kong, as described below:

  • directly or indirectly holds 25% or more of the issued shares, or the right to share 25% or more of the capital or profits;
  • directly or indirectly holds 25% or more of the voting rights;
  • directly or indirectly holds the right to appoint or remove a majority of directors
  • directly or indirectly holds the right to appoint or remove a majority of directors
  • has any other right to exercise or currently exercise significant influence or control
  • has the right to exercise, or currently 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 meet any one or more of the first four conditions.

 

How does this affect my company?

Starting from the 1st March 2018, all companies registered under the HKCO have the obligation to:

  • take any and all reasonable steps to identify their Significant Controllers (by examination of their Articles of Incorporation or consulting the Companies Registrar)
  • Maintain the SCR up-to-date and keep it at their main office or registered office in Hong Kong, either in English or Chinese
  • Inform the Companies Registrar within 15 days of setup of the place where the SCR is kept
  • Inform the Significant Controller(s) or legal entities by written notice, within 7 days after identification, and requesting/receiving the registrable personal details from them within 30 days after receipt of said notice.

 

Which information is registered in the SCR?

For natural persons:

  • Name
  • Correspondence address (PO box excluded)
  • ID card details
  • Passport number and issuing country (for foreign nationals / non-residents in Hong Kong)
  • Date of registration in the company
  • Nature of control / position within the company

 

For legal entities:

  • Legal entity name & type of entity
  • Registered address
  • Registration number and date
  • Nature of control / position within the company

 

Who will have access to my information?

Access to the SCR is restricted to officers of the Companies Registry and law enforcement (currently including, but not limited to, the police, Independent Commission Against Corruption, Securities and Futures Commission, Hong Kong Monetary Authority, Insurance Authority, Customs and Excise, Immigration, or Inland Revenue Department). Each company must designate a representative for SCR-related issues and inquiries, and assistance to law enforcement officers.

 

What happens in case a company does not comply?

When a company fails to comply with above regulation, all controlling individuals are considered in breach of law and will be fined HK$ 25,000. If they continue to be in breach of law, they will be subject to a HK$ 7,000 fine per day of non-compliance. For knowingly providing false information, individuals will face a fine of up to HK$ 300,000 and a two years prison sentence.

Image: CC © Callan Chesser