As per new legislation, from March 1st 2018, every company incorporated in Hong Kong will be required to keep and maintain a register of all persons who have significant control of the company. The record must be updated as required and kept at the registered company address, even if there are no persons of significant control.
Companies listed on the Hong Kong Stock Exchange, are exempt as they are subject to even stricter requirements under the Securities and Futures Ordinance.
Persons with Significant Control
An individual qualifies as having significant control if any of the following conditions are satisfied:
- If the individual owns over 25% of the company shares or voting rights.
- If the individual has the right of appointment or removal of the company Directors.
- If the individual is in a position to significantly influence the Board’s decision making or the on-going company operations.*
- If the individual has the right to exercise significant influence or control over the company or Trustees of a trust or firm who meet any of the above requirements.
*It is important to note here that even when a person has significant influence, this is sufficient to have adequate significant control, regardless of their direct or indirect shareholding in a company.
Taking Steps to Identify & Verify Significant Controllers
A company is required to take reasonable steps to identify any PSCs involved in the business through research to anyone potentially classed as one within the structure or daily runnings of the business. The company must then serve notices respectively to each individual they find fall into one or more of the above conditions.
Failing to serve such notice will result in the company and its Directors having to pay a fine. Additionally, any person who receives such a notice will be liable to pay a fine if they do not to respond to the notice within one month.
Contents of the Register
A company’s register of significant controllers must contain:
- The individual significant controller’s name & address.
- The significant controllers Hong Kong ID number/passport number.
- For legal entities, the company registration number.
- The date when the significant control commenced.
- Any steps the company is taking to ascertain details of any potential significant controllers.
- A note stating that the company has no significant controllers (if required).
- For legal entities, the entity’s legal form and the specific laws in the jurisdiction of establishment (if not in Hong Kong).
- Yearly updates or amendments to the any of the registers individuals or information.
Accessing & Viewing Rights of the Register
The register is not available for public viewing to remain a degree of anonymity; however those who are mentioned by name on the register can request access to it without charge. Additionally, only the Hong Kong Companies Registry and any law enforcement agencies working on cases relating to the respective company can access the register, who must file a request with the Companies Registry.