Implementation of registers of significant controllers in Hong Kong

Implementation of registers of significant controllers in Hong Kong 15.02.2018

From 1 March 2018, companies and firms without legal personality registered in Hong Kong Special Administrative Region will be required to create and keep registers of their significant controllers (analogue of the term "beneficial owner").

The legal definition of significant controllers is established in the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, the amended version of which will come into force on 1 March 2018. The significant controller is a private individual or legal entity that:

  1. Directly or indirectly holds more than 25% of issued shares, participation interest or voting rights in the company.
  2. Directly or indirectly has a right to appoint or remove the majority of the board of directors of the company.
  3. The person has the right to exercise, or actually exercises, significant influence or control over the company.
  4. The person has the right to exercise, or actually exercises, significant influence or control over the firms without legal personality (for example, trust).

One company may have either one significant controller, or several significant controllers. For example, if a single member of a Hong Kong company "A" is a company "B" with 100% of participation interest, and a single member of a company "B" is a private individual "C" who holds 100% of participation interest, the significant controllers of a company "A" will be "B" (a legal entity that directly holds 100% of participation interest), and "C" (a private individual who indirectly holds 100% of participation interest).

The obligation to create and keep registers of significant controllers on Hong Kong companies is imposed by Companies Ordinance that comes into force also on 1 March 2018. Such obligations are applicable to all companies of all legal forms registered in Hong Kong in accordance with the Companies Ordinance with the following particular features:

  1. The company is obliged to take all measures to determine if it has a significant controller and to identify it (including sending notifications to such persons and requiring to provide information for the register).
  2. The company is obliged to fill in the information about the significant controller into the register (even if the company does not have significant controller, this fact must be reflected in the register). Examples of filling the register are presented in the official Guideline on the Keeping of Significant Controllers Registers by Companies (pages 34-37).
  3. The company is obliged to keep the register at the company's registered office address in Hong Kong, or at another address in Hong Kong. In the second case, the company shall provide written notification of keeping the register of significant controllers at another address to Companies Registry not later than 15 calendar days from the date when the company started to keep register at that address.
  4. The company is obliged to keep the information in the register up-to-date and timely fill in any changes (for example, in case if there was change of significant controllers).
  5. The company is obliged to provide the register to officers of governmental authorities and to the significant controllers themselves (including making copies of the register).
  6. Registers of significant controllers shall include the following information:

    1. For private individuals –

    • name;
    • correspondence address;
    • number of identity card or number and issuing country of passport (for foreign persons);
    • date of becoming a significant controller;
    • nature of control over the company.

    2. For legal entities –

    • name;
    • legal form;
    • registration number;
    • place of registration (governing law);
    • address of registered office;
    • date of becoming a significant controller;
    • nature of control over the company.

    There is an obligation for the company to designate at least 1 representative of significant controller. Such designated representative shall be a shareholder, director or an employee of the company who is a private individual resident in Hong Kong or an accountant, a legal professional or professional intermediary.

    As in some other jurisdictions (offshore jurisdictions like Belize and British Virgin Islands, most of EU countries), the register of significant controllers is not publicly available, so the information from it may be provided only to the number of persons limited by law. In particular, the company will have to disclose the register to the authorities listed below on demand of its officers:

    1. Companies Registry;
    2. Customs and Excise Department;
    3. Hong Kong Monetary Authority;
    4. Hong Kong Police Force;
    5. Immigration Department;
    6. Inland Revenue Department;
    7. Insurance Authority;
    8. Independent Commission Against Corruption;
    9. Securities and Futures Commission.

    Thus, Hong Kong has become another Asian jurisdiction, along with Singapore, that has recently joined the worldwide process of enhancing the transparency of beneficial owners information and optimizing national legislation in accordance with general trends of this process.


Tags: Hong Kong, beneficial owners

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