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Significant Controllers Register

Feb 22, 2018
The Companies (Amendment) Ordinance 2018 was recently passed by the Legislative Council in an effort to enhance Hong Kong’s regulatory regime for combating money laundering and terrorist financing by way of requiring Hong Kong companies to maintain beneficial ownership information. The new law will come into force on 1 March 2018.

1.   The Significant Controllers Registers (“SCR”)

The new law applies to companies incorporated in Hong Kong. Such companies are required to prepare and maintain a SCR which shows the up-to-date information of the beneficial owners of the company (“Significant Controllers”).
The purpose of this new law is to allow law enforcement officers to have access to the SCR to perform functions relating to the prevention, detection or investigation of money laundering or terrorist financing, or checking if the requirements relating to the keeping of a SCR have been complied with.

2.   Who are Beneficial Owners?

A person has significant control over a company if any of the 5 conditions under the new law are met. These extend beyond simply controlling 25% or more of shareholder votes and includes having the right to appoint/remove a majority of the board of directors or having significant influence or control over the company (e.g. having veto rights or absolute decision rights over certain reserved matters). So long as any one of these conditions are satisfied, the person (even though he/she is not a registered shareholder on the record) would be regarded as a Significant Controller. A Significant Controller could be a legal entity, a natural person, a government organisation, or an international organisation.
3.   Inspection of the SCR
The SCR is not open to public inspection. It can only be inspected by the law enforcement officers and any Significant Controller (whose name is entered in the SCR). A company must, at any reasonable time, make its SCR available for inspection by the law enforcement officers at the place at which the SCR is kept and permit the officer to make copies.
The new law also requires the company to designate a representative to serve as a contact point for providing information about the SCR and related assistance to law enforcement officers. The designated representative must be either a shareholder, director or an employee of the company who is an individual resident in Hong Kong or a Hong Kong accountant or a solicitor’s firm or a person licensed to carry on a business as trust or company service provider (“TCSP”). Hong Kong is simultaneously launching a TCSP licensing scheme.
4.   Penalty
If a company fails to comply with the requirement of keeping a SCR, the company, and each of its responsible persons, will be liable on conviction to a fine up to HK$25,000 and a daily fine of HK$700.
Further, if any person knowingly or recklessly makes a statement which is misleading, false or deceptive in any material particular in the SCR; or if any person knowingly or recklessly makes a statement or provides any information that is misleading, false or deceptive in a material particular in the reply to a company’s notice, the person commits an offence and is liable for a maximum penalty of a fine of HK$300,000 and imprisonment for two years.

For more information on the Significant Controllers Register and related matters in Hong Kong, please contact:-
Chris Lambert | | +852 2861 8417
Lawrence Tang | | +852 2861 8493
Joe Chan | | +852 2861 8320
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