One of the most important parts of running a business is staying on top of any changes to rules, regulations, and laws regarding business. Anyone that runs in business in Hong Kong should be aware of the Significant Controllers Register; one of the newest pieces of legislation that changes how businesses work in the city. Here are the five most commonly asked questions about Significant Controllers Register (SCR) regulations.
#1 What is the Significant Controllers Register?
The latest requirements of the Companies (Amendment) Ordinance of 2018 dictate that companies incorporated in Hong Kong – with the exception of listed companies – are now required to identify and ascertain the person/persons with significant control over the company and keep a significant controllers register that details them. The register will be made available to law enforcement officers upon request as well.
#2 Do All Shareholders Need to be Registered?
Not every shareholder with a company needs to be included in the register. It is for people who hold significant control over the company. This is someone who meets one or more of the following criteria:
- The person holds, whether directly or indirectly, over 25% of the issued shares of a company. If a company does not have a shares capital, then it is someone who holds, whether directly or indirectly, the right to share in over 25% of the capital or profits of a company;
- The person holds over 25% of the voting rights of a company;
- The person holds the right to appoint or remove a majority of the board of directors from a company;
- The person has the right to exercise, or actually does exercise, significant influence or control over a business; and
- The person has the right to exercise, or actually does exercise, significant influence or control over the activities of a trust or firm that is not a legal person, but whose trustees and/or members satisfy any of the other four conditions within relation to the company.
#3 What Penalties – if any – are Handed out for Failure to Comply with the Significant Controllers Register Requirements of a Company?
Failure to comply with the obligations of the SCR is a criminal offence. The company as a whole, and anyone considered a responsible person of the company, are liable to a level 4 fine (i.e., $25,000). There is also a daily fine of $700 where applicable.
#4 Who can Inspect an SCR?
The SCR is accessible to people from different law enforcement agencies including members of the:
- Companies Registry
- Hong Kong Monetary Authority
- Customs and Excise Department
- Hong Kong Police Force
- Immigration Department
- Inland Revenue Department
- Insurance Authority
- Securities and Futures Commission
- Independent Commission Against Corruption
#5 Where is the Significant Controllers Register of a Company Kept?
Companies can keep the Significant Controllers Register at their registered office or any other place in Hong Kong. Basically, it has to be kept at a location designated by the company but not open to the public.