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Commencement of Operation of the Companies (Amendment) Ordinance 2018 - Keeping of Significant Controllers Registers by Companies

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Monday, 05 February 2018 03:26

The Company Registry announced on 25 January, 2018 that the Companies (Amendment) Ordinance 2018 (“the Amendment Ordinance”) will come into operation on 1 March 2018.

The Amendment Ordinance introduces new requirements on the keeping of significant controllers registers by companies to enhance the transparency of corporate beneficial ownership. All firms incorporated in Hong Kong, except listed companies, will be required to maintain a significant controller's register for inspection by law enforcement.

New Requirements under the Amendment Ordinance

1. To enhance transparency of corporate beneficial ownership in order to fulfil Hong Kong’s international obligations, the Companies Ordinance (Cap. 622) is amended to require a company incorporated in Hong Kong to obtain and maintain up-to-date beneficial ownership information, by way of keeping a Significant Controllers Register (“SCR”), for inspection by law enforcement officers upon demand.

2. The Amendment Ordinance requires a company to keep a SCR in either the English or Chinese language, containing required particulars of its significant controllers (including registrable person and / or registrable legal entity). The SCR should be kept at the company’s registered office or a prescribed place in Hong Kong.

3. The company is required to take reasonable steps to ascertain its significant controller(s). The steps include reviewing the company’s register of members, articles of association, shareholder agreements or other agreements and issuing notice(s) to any person that the company knows or has reasonable cause to believe (a) to be a significant controller; or (b) to know the identity of another person who is a significant controller. The addressee of the notice is required to confirm or provide (as appropriate) the requested particulars relating to the significant controller.

4. A person has significant control over a company if one or more of the following 5 conditions are met:

  • The person holds, directly or indirectly, more than 25% of the issued shares in the company or, if the company does not have a share capital, the person holds, directly or indirectly, a right to share in more than 25% of the capital or profits of 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 person has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or a firm that is not a legal person, but whose trustees or members satisfy any of the first four conditions (in their capacity as such) in relation to the company

5. The required particulars relating to a registrable person of a company should be entered into the company’s SCR within seven days after they have all been provided or confirmed by the registrable person; while each of the required particulars relating to a registrable legal entity should be entered in the company’s SCR within seven days after that particular comes to the notice of the company.

6. The company will have to designate a representative to serve as a contact point for providing information about the SCR and related assistance to law enforcement officers. The designated representative must be either a shareholder, director or an employee of the company who is a natural person resident in Hong Kong or an accounting professional, a legal professional or a person licensed to carry on a business as trust or company service provider. The particulars of the designated representative should also be entered into the SCR.

7. If a company fails to comply with the requirement of keeping a SCR, the company, and each of its responsible persons, will be liable on conviction to a fine up to $25,000 and a daily fine of $700.

8. The new requirement to keep a SCR applies to all companies incorporated under the Ordinance in Hong Kong, including companies limited by shares, companies limited by guarantee and unlimited companies. Companies which have their shares listed on the Stock Exchange of Hong Kong are exempted from the requirement.

The above highlighted the key provision under the Companies (Amendment) Ordinance only, for more details please visit: