The Companies (Amendment) Bill 2017 was published on 23 of June 2017 in order to combat money laundering and terrorist financing. This Bill requires Hong Kong companies to keep and maintain a register of significant controllers (PSC Register).
Significantly, the Bill does not require the register to be open for public inspection. It is only available for inspection by persons whose names are entered in the PSC Register or on demand by any law enforcement officer.
A person has significant control over a company if one or more of the following conditions are met:
- The person holds, directly or indirectly –
- if the company has a share capital – more than 25% of the issued shares in the company; and
- if the company does not have a share capital – a right or rights to share in more than 25% of the capital or, as the case requires, profits of the company;
- The person holds, directly or indirectly, more than 25% of the voting rights in 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 influence or control over the company;
- The person has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm:
- that, under the law governing the trust or firm, is not a legal person; and
- whose trustees or members meet one or more conditions specified above.
Every company must take reasonable steps:
- to ascertain whether there is any significant controller of the company; and if any, to identify each of them;
- If the company knows, or has reasonable cause to believe, that a person is a significant controller of the company; or a particular person knows the identity of another person who is a significant controller, the company must give a notice within 7 days to obtain information from such person.
The particulars to be provided in response to such a notice include:
- the name of the significant controller;
- (if applicable) the number of the identity card, or the number and issuing country of a passport, of the person;
- the date on which the person became a registrable person of the company; and
- the nature of the person’s control over the company.
A fine (maximum $25,000) and a further daily fine of $700 would apply to the company (and each of its responsible persons) for failure to keep the register.