To improve the transparency of business ownership, Hong Kong corporations must prepare for and maintain a Significant Controller Register (SCR) by 1 March 2018, according to The Companies (Amendment) Ordinance 2018.
Except for Hong Kong-listed firms, which are already subject to more strict requirements, the regime applies to every responsible person of any company registered in Hong Kong under the Companies Ordinance.
The regulation applies to the following sorts of Hong Kong companies:
• Hong Kong Private Limited Company by Shares
• Hong Kong Private Limited Liability Company
• Hong Kong Public Company Limited
However, it does not apply to non-Hong Kong incorporated corporations or non-Hong Kong-registered non-incorporated organizations, such as:
• Sole proprietorship
• Representative Office
• Branch Office
• Non-Hong Kong Company Registered in Hong Kong
Although it is not a compulsory public document, the SCR must be available for review on-demand to law enforcement agencies (mentioned below). In its broadest sense, SCR allows authorities to identify and contact the person(s) and/or corporate(s) who are the company’s most recent decision-makers.
A registrable legal entity and a registrable person who has considerable control over a company are both considered significant controllers (SC) of a Hong Kong company.
When at least one of the following conditions is met, a person is deemed to have significant control over a company:
• The person holds, directly or indirectly, more than 25% of the company’s issued shares or, if the company does not have a share capital, a right to share in more than 25% of the company’s capital or profits;
• The person holds, directly or indirectly, more than 25% of the company’s voting rights;
• The person holds, directly or indirectly, the right to appoint or remove a majority of the company’s board of directors;
• 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 exercises, significant influence or control over the activities of a trust or a fiduciary.
The registry must include current information and contact information for any SC of the company who has authority over the
SC must include the following details:
• Complete name
• Address for correspondence
• Identification Card / Passport
A legal entity that is registrable:
• The registered name
• Articles of Incorporation
• Main office address
SC’s control of the firm must be described as follows:
• The date on which you become an SC
• The nature of their power
The company must take “reasonable steps” to:
• Identify the company’s SC, including giving notices to identified SC and persons who are believed to be SC and obtaining their required particulars;
• Enter the required particulars of its SC in the SCR;
• keep the SCR up to date, including giving notices to known SC and persons who are believed to be SC when there is a registrable change; and
• Make the SCR available for inspection at any time.
Furthermore, the firm must nominate at least one designated person to provide help with the company’s SCR. The representative’s eligibility is either:
• A natural person residing in Hong Kong who is a director, employee, or member of the business; or
• A Trust or Company Services Provider licensee, accounting professional, or legal professional as defined in the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
The SCR can be retained in paper copy or electronic form, and it must be kept inside Hong Kong territory. The SCR should ideally be stored at the Registered Office Address. Otherwise, the corporation is required to notify authorities of its location.
Because the information on the SCR is secret, only the person whose name is recorded as an SC on the SCR and law enforcement personnel have access to it.
• Companies Registry
• Customs and Excise Department
• Hong Kong Monetary Authority
• Hong Kong Police Force
• Immigration Department
• Insurance Authority
• Independent Commission against Corruption
• Securities and Future Commission
The corporation should be held for a minimum of seven years. For example, once a person’s information is recorded into the SCR, the data must be preserved for 7 years even if the person is no longer the SC.
What are the consequences of noncompliance?
Failure to comply with the SCR duties is a criminal offense, with the corporation and each guilty individual possibly facing a HK$ 25,000 fine and extra daily fines of HK$ 700.
Stephen M.S Lai & Co CPA Limited can help you comply with the SCR-related regimes by:
• Advising on the duties and obligations of the company and its responsible persons under the regimes;
• Sending notices to persons identified or suspected of being the SC on your behalf.
• Preparing the most recent SCR based on the returned notices.
Our Hong Kong company secretary service and Hong Kong company formation service have both included SCR-related support as part of the service charge.