significant controllers register hong kong

As a business owner, are you aware of the Significant Controllers Register Hong Kong and its relevance to the role of the company secretary? There’s a popular belief that large businesses worldwide prefer to shield the true nature of their business activities from the public eye.

Regardless of their reasons for doing so, it doesn’t make it less treacherous. For the past few years, governments in different parts of the world have insisted that corporate organizations should be transparent. This is in a bid to track all money laundering activities.

Hong Kong is one of the countries pushing for this high level of transparency too. And that’s why it’s essential that all organizations learn about the significant controllers register Hong Kong.

There has been a long-term concern that unscrupulous elements use corporate business structures to mask criminal activity. These companies employ complex structures to signify who’s really in control of the company. And these entities are easily used for money laundering.

To solve this issue, the Hong Kong government released a law on March 2018 called the Companies (Amendment) Ordinance 2018. This law called for the creation of transparency rules for beneficial ownership. These rules included the creation of ‘Significant Controller Register’.

But what really is it? Keep reading to learn more. This piece will reveal all the crucial information about Significant Controllers Register Hong Kong.

Latest Legal Update On Significant Controllers Register Scheme

The Significant Controllers Register will allow the Inland Revenue Department to determine the owners of a particular company. The Companies (Amendment) Ordinance 2018 was last updated in 2018.

The following are the new legal requirements on Significant Controllers Register scheme:

  • Clear steps are taken to identify individuals or legal entities with significant control over the company. These individuals or entities are known as Significant controllers.
  • Maintain a Significant Controllers Register Hong Kong. Your Register must be available and accessible to law enforcement officers.
  • Keep the Significant Controllers Register at the registered business office or any other prescribed location within Hong Kong. If the Significant Controllers Register is kept from the registered business office, the entity must inform the Hong Kong Companies Registry of its location within 15 days.
  • Regularly update the Significant Controllers Register Hong Kong. Any changes to the ownership structure that affect control within the organisation should be documented.
  • Submit the Significant Controllers Register Hong Kong for inspection when requested by enforcement officers or other government bodies.
  • Appoint a ‘Designated Representative’. This representative would be responsible for handling issues concerning the Significant Controllers Register Hong Kong

The main purpose of the new legal updates to the Significant Controllers Register Hong Kong is to strengthen the transparency achieved through this documentation. It eliminates any loopholes in determining entity ownership and control.

The Significant Controllers Register Hong Kong will allow government bodies to identify and contact the owners of a legal entity.

What Businesses Must Comply With The Significant Controllers Register Scheme?

Learning the businesses that must comply with the Significant Controllers Register scheme is essential before starting a business in Hong Kong. As new updates are made to the Significant Controllers Register scheme, the number of companies affected has expanded.

The following companies should be a part of the Significant Controllers Register Hong Kong.

Who Is The Designated Representative?

The updated Company Amendment Ordinance stipulates that every legal entity must have at least one individual as its Designated Representative. But who really is this person, and what’s their role?

A designated representative is an individual responsible for dealing with law enforcement and government authorities on issues relating to the Significant Controllers Register Hong Kong. To qualify as a designated representative, the person must be:

  • A registered shareholder, employee, or director in the company.
  • A real person residing in Hong Kong
  • An accounting professional, legal expert, or a Trust and Company Service Provider licensee.

How To Identify A Company’s Significant Controllers?

Simply put, a significant controller is an individual with considerable influence over an organization or its activities. He or she must be a registered legal entity or part of the company. In private limited companies, shareholders are those that qualify as Significant Controllers.

According to the Amendment Ordinance, the following must occur for an individual to exert ‘significant control’;

  • Directly or indirectly own 25% of the company’s total shares
  • Must be entitled to 25% of the company’s profits (for companies without share capital)
  • Must hold 25% of voting rights on the company’s crucial decisions
  • Must directly or indirectly control the right to appoint or remove company directors.
  • Have the right to exert significant control or influence over the company. For instance, in a family-owned entity, the owner may transfer control of the organization to his children while running affairs from the background.
  • Has the right to exert influence over an entity or individual who falls under any of the above-listed conditions.

Every company must take steps to identify significant controllers of their organization. These steps may include:

  • Reading through company’s official documents. These documents may include the shareholders’ register, shareholder agreements, constitution, article of association, memoranda, etc.
  • Investigating issues. relating to the company. For instance, you may check the trust deed to identify its beneficiaries if the organization is a trustee.
  • Reading evidence of joint agreement or rights. Any joining agreement or right may result in control over the company.

After assessing the organization’s records to identify significant controllers, the company should;

  • Notify the individual or entity within seven days about their position as a significant controller. The company should contact only those who satisfy the conditions stated above.
  • Notify whoever is knowledgeable about the identity of any significant company controller.

After the company has contacted the individual or entity, they have one month to respond.

Contents Of The Significant Controllers Register

Much has been said about the contents of a Significant Controllers Register, but what exactly does it contain? Let’s look at the detailed breakdown of the contents of the Significant Controllers Register Hong Kong. Its contents include:

  • The name of the individual being added to the Significant Controllers Register
  • The date the individual was added as a Significant Controller of the company
  • The conditions that have caused their significant control
  • The residential address of the individual, including other essential information such as Passport information and Identification Card Number
  • Company information, including Registration details, registered address, place of corporation, and contact information
  • Essential details about the company’s designated representative
  • Any other information required by Schedule 5C of the Companies Ordinance

Where Should You Keep The Significant Controllers Register?

Earlier on, we’ve outlined the importance of the Significant Controllers Register Hong Kong and the need for its constant accessibility by government or law enforcement officials.

Therefore, the location of your Significant Controllers Register Hong Kong is more important than you could ever imagine.

Whenever you complete your Significant Controllers Register, you’re expected to keep a copy of this document at the registered business address of your organization or any branch of your company located in Hong Kong.

Depending on your organization, you may keep a hard copy or an electronic version of your Significant Controllers Register Hong Kong at the company address.

Having an electronic copy of the Significant Controllers Register Hong Kong will support easy accessibility and can be connected to several other offices. It can also be updated and altered instantly.

Inspection Of The Significant Controllers Register

Companies who are expected to compile their Significant Controllers Register Hong Kong will be notified. However, they must complete this activity within one month. A Hong Kong company will have seven days to add the name of any individual to the Significant Controllers Register.

They will also have another seven days to update the information of any significant controller. You can only delete the records of any significant controller after 6 years from the date they were added to the Registry.

The company may be required to provide their Significant Controllers Register Hong Kong for inspection at any reasonable time. Law enforcement officers can perform visits to inspect this information.

The following entities may request to see your Significant Controllers Register:

  • Hong Kong Police Force
  • Hong Kong Monetary Authority
  • Insurance Authority
  • Security and Futures Commission
  • Immigration Department
  • Companies Registry
  • Independent Commission Against Corruption
  • Custom and Excise Department
  • Inland Revenue Department

Aside from inspecting your Significant Controllers Register Hong Kong, a law enforcement officer can also make copies of this document. Law enforcement officers are just some of the ones allowed to inspect the Significant Controllers Register.

Any significant controller also has the right to inspect this document. Failure to comply with the right of inspection will result in penalties. These penalties may be directed at the company, directors, employees, or anyone liable for the lack of compliance.

Anyone guilty of adding deceptive or inaccurate information to the Significant Controllers Register Hong Kong could be charged with a criminal level 4 offense. This could result in a fine up to $25,000 or 2 years of imprisonment.

How Can We Help – Our Company’s Secretarial Services

This piece has clearly outlined the importance of a Significant Controllers Register Hong Kong and explained why every organization must have one. However, this document can be quite challenging to compile, especially when combined with other day-to-day operations.

You’ll need to collate plenty of information to compile your Significant Controllers Register Hong Kong and regularly update the information you’ve added. Failure to comply would result in heft penalties.

If you’re a legal entity needing expert Significant Controller Registers service, it makes sense to appoint a reliable brand to help out. Premia TNC is your best bet for satisfactory results. We know everything it takes to complete business registration as a business consultancy firm.

We offer more than accounting services. We’re also a one-stop shop for professional company secretarial services. Our experts have numerous years of experience in creating Significant Controllers Register Hong Kong. They’ve also worked with several companies.

We’ll help you speed up the process and avoid legal complications when you hire us. We understand the importance of staying on the right side of the law and will help you accomplish it.

Aside from the Significant Controllers Register Hong Kong, Premia TNC can also help with other secretarial services, such as business registration, filing annual returns, documentation of annual general meetings, statutory record updates, and more.

Significant Controllers Register Hong Kong – Frequently Asked Questions

1. Who is a significant controller?

Simply put, a Significant Controller is an individual or entity whose information is added to the SCR. This type of person can exert some level of control over the affairs of a company.

Several conditions may give an entity the right to significant influence over the company, including the number of shares owned, profit entitlement, voting rights, nature of company formation, etc.

2. How many significant controllers can a company have?

Significant controllers are those whose decisions and actions can have plenty of influence on the company. There’s no limit to the number of significant controllers that a company can have.

However, it’s essential that all entities included in the Significant Controllers Register Hong Kong must meet the conditions stipulated by the Companies Ordinance.

3. What are the penalties for failing to submit Significant Controllers Register Hong Kong?

The world’s governments have taken a serious stance towards tackling terrorism and money laundering. As a result, every firm must reveal their major shareholders or decision makers. That’s where the Significant Controllers Register Hong Kong comes in.

The company’s Significant Controllers Register is the only document that can ascertain that there’s no undue influence behind the company’s activities. The Hong Kong government takes the Significant Controllers Register filing seriously.

If you’re unable to provide your Significant Controllers Register Hong Kong for inspection when necessary, it will result in penalties. These penalties will be borne by whoever is held responsible for the offense.

4. What companies are required to keep a Significant Controller’s Register Hong Kong?

Not every company is required to keep the Significant Controllers Register Hong Kong. Any registered Hong Kong company formed under part 16 of the Companies Ordinance (Cap. 622) is not required to keep the Significant Controllers Register.

However, local companies formed and registered under Companies Ordinance (Cap. 622) or former Companies Ordinance is expected to keep the Significant Controllers Register Hong Kong. Listed companies do not belong to this category.

5. Do you need to submit the Significant Controllers Register Hong Kong to the Companies Registry?

Not, it’s not compulsory to submit the Significant Controllers Register Hong Kong to the Companies Registry. However, the register must be available at the company’s registered business address or any other branch address in Hong Kong.

6. What should a company do if a significant controller does not respond after one month?

The company should add a note in its Significant Controllers Register Hong Kong stating that it has issued a notice to the person whom they feel to be a registrable entity or individual of the organization and that the entity has failed to comply with the one-month period.

The company may also file a report to the Companies Registry.