Introduction of Significant Controller Register – Amendment on Companies Ordinance
The Hong Kong authority has introduced a new law starting from 1 March 2018. The new law requires every company to maintain the document – significant controller register. The aim is to enhance transparency of ultimate beneficial owners of each company. The register will not be opened to pubic while law enforcement officers can have access upon request.
Who is a significant controller of a company?
A significant controller includes:
- A registrable person who has significant control over the company; and
- A registrable legal corporate entity, which is a shareholder of the company that has significant control over the company.
A registrable person who meets one or more of the following 5 conditions:
- 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 relation to the company.
To identify significant controllers, what shall a company do?
A company shall take reasonable steps including to review the company’s register of members, article of associations, shareholders agreements and issuing notices to any party that is believed to be the significant controller. If a significant controller does not reply to company’s notice or notification within a month after notice, the company must add a note in its significant controllers register that the company has already given a notice, yet the significant controller fails to comply with the notice within the specified period of one month. The company may also consider reporting the case to the Companies Registry if the notice addressee fails to comply with the requirements.
Is it necessary to deliver the significant controllers register to the Companies Registry?
No. While the document is not required to be submitted to Companies Registry for registration, this particular register shall be prepared immediately right after you register a company in Hong Kong. It is generally kept at the company’s registered address in Hong Kong, unless a company decides to keep the significant controllers register somewhere else. A company must notify the Registrar of the place for the document keeping or any chance thereafter in Form NR2 within 15 days after the significant controllers register is first kept at that place, as appropriate.
The register must also contain information of the company’s designated representative. The representative shall hold a company service provider license and is responsible to liaise with law enforcement officers. Should you require assistance in preparing this Register, please contact our Hong Kong company formation team at firstname.lastname@example.org.