Important change in Hong Kong’s corporate regulatory regime
From our office IC&Partners Asia
The Hong Kong government has recently published a new regulation under which Hong Kong companies will be required to keep a register of significant controllers “SCR“.
This new regulation is part of an effort by the government to strengthen Hong Kong’s regulatory regime for combating money laundering and terrorist financing, and to bring Hong Kong more into line with international standards.
This new regime, requiring Hong Kong companies to maintain up-to-date beneficial ownership information will come into force on 1 March 2018.
A significant controller can be:
– a registrable person who is a natural person that has significant control over the company; and
– a registrable legal entity (e.g. a company), which is a shareholder of the company that has significant control over the company.
A person (or entity) has significant control over a company if one or more of the following conditions are met:
– the person holds, directly or indirectly, more than 25% of the issued shares in 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 significant controllers register can be kept at the registered office of the company or any other place in Hong Kong.
The significant controllers register must contain the required particulars of the significant controllers, as well as the name and contact details of the designated representative of the company. The Register should be open for inspection by law enforcement officers upon demand.
The designated representative is a person appointed by the company as its representative to provide assistance related to the company’s significant controllers register to a law enforcement officers.
A company’s designated representative can be either a shareholder, director or an employee of the company who is a natural person resident in Hong Kong or, alternatively, an accounting professional, a legal professional or a person licensed to carry on a business or company service provider.
The information required for a significant controller is:
– for a registrable person: name, correspondence address, identity card number (or passport number);
– for a registrable legal entity: name, legal form, registration number, place of incorporation and address of registered office;
– date of becoming a significant controller;
– nature of control over the company.
Failure to comply with the SCR obligations is a criminal offence, with both the company and every responsible person of the company liable for a fine of HK$25,000 and possible additional daily fines of HK$700.