From March 1, 2018, all Hong Kong Companies except Companies listed in Hong Kong will be required to keep and maintain an up-to-date beneficial ownership information in a Significant Controllers Register (“SCR”).
The purpose of this Ordinance is to enhance the transparency of company ownership and control in order to reflect the government has already taken action to comply with the guideline of anti-money laundering and counter-terrorist financing.
What is Significant Controllers Register (“SCR”)?
Each Applicable Company will be required to keep and maintain a register (the “SCR”) for any person who has significant control over an Applicable Company (the “Significant Controllers”).
Which type of company (Applicable Company) apply to:
- Limited by share (private and public)
- Limited by guarantee
- Unlimited company
Who is Significant Controllers?
- A natural person or specified entity that has significant control over that company (a “Registrable Person”); or
- A legal entity that is a member of and has significant control over that company (a “Registrable Legal Entity”).
Who has significant control?
A person has “significant control” over an Applicable Company if the person satisfies one or more of the following criteria:
- The person holds, directly or indirectly, more than 25% of: either the issued shares in that company if it has a share capital; or the right or rights to share in the capital or profits of that company if it does not have a share capital;
- The person holds, directly or indirectly, more than 25% of the voting rights in that company;
- The person holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of that company;
- The person has the right to exercise, or actually exercises, significant influence or control over that company; or
- The person has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or a firm, not being a legal person under the relevant governing law, whose trustee(s) or member(s) meet(s) one or more of the conditions specified above.
Where to keep a SCR ?
- The SCR must contain the prescribed contents and be kept at the registered office of the Applicable Company, or at another prescribed place.
- The purpose of the register of Significant controllers is to enable law enforcement authorities to be informed, in an easily accessible manner, of certain beneficial ownership information.
- The Register will not be publicly available.
Penalty for Non-Compliance :
- The company and every responsible person of the company is considered commit an offence, and each is liable to a fine equal to Level 4 (HK$25,000) and in the case of a continuing offence, to a further fine of HK$700 for each day during which the offence continues.
- If a person gives false information in response to a notice sent by a company, the person is liable to a fine of HK$300,000 and to imprisonment for 2 years on conviction on indictment; or HK$100,000 and to imprisonment for 6 months on summary conviction.
How’s CW can help:
- Taking reasonable steps to identify the company’s significant controllers, including reviewing the company’s register of members, constitutional documents and any shareholder agreements;
- Obtaining the required information from the Significant Controller that CW has already identified or from others who might know generally by help to prepare a written notice;
- Entering the required particulars of the significant controllers in the SCR
- Keeping the required particulars in the SCR up-to-date;
- Being appointed as a Hong Kong-based designated representative to act as a contact point for law enforcement officers;
- Making the SCR available for inspection and taking of copies by a law enforcement officer.