Hong Kong is an investor’s paradise and a unique destination that businesses can rely on to catapult their enterprises to success. One notable thing about the Hong Kong administration is that it is always on the race to make it’s a business environment more attractive.
In line with this focus, the administration passed the Companies Amendment Bill of 2017 that introduced the Significant Controllers Register (SCR) for businesses operating in Hong Kong. This means that in addition to company incorporation, and registration with IRD, you will also need to maintain an updated SCR.
What are a Significant Controllers Register?
As the name suggests, this is a register that captures the details of persons or entities that have significant control in a company. Also, the register must be updated all the time. The goal of the register is to ensure transparency in company control and simplify the process of inspection.
Who is considered a Significant Controller in Hong Kong?
Simply put, a significant controller implies the following:
- A registrable person: This is any person who has significant control in the company.
- A registrable legal entity: These are entities such as companies that hold shares and wield some control over another company registered in Hong Kong.
To prepare the Significant Controllers Register, your company is required to follow reasonable steps, including reviewing the ownership structure, the business register of members, and shareholder agreements (if applicable). A person is considered to have significant control if he/she meets the following conditions.
- Holds more than 25% of the issued shares in a company.
- Holds over 25% of the company’s capital or profits.
- Holds more than 25% of voting rights.
- Holds the right to appoint or remove the company’s majority board.
- Has a right to exercise a significant influence on the activities of a company.
Information Captured in the Significant Controllers Register
When preparing a Significant Controllers Register, you are required to capture the following details.
- The correspondence address.
- The date when the person became registered.
- The identity document number.
- The nature of the control.
- The legal form of the entity.
- The business registration number.
- The place of incorporation.
- Address of the entity.
- When the business became a registrable legal entity.
- The nature of control.
Once you prepare the SCR, you are also required to identify one person to serve as the designated representative responsible for keeping the register.
The representative is also required to provide assistance to the law enforcement who want to check it for compliance. People who can serve as the designated representatives include a director, an employee, or a legal professional registered in Hong Kong.
Who Should Keep the Significant Controllers Register?
Whether your company is new or has been in operation in Hong Kong, it is required to prepare and keep an updated SCR. If your business falls in any of these categories, you need to prepare SCR in line with the Hong Kong laws.
- Dormant companies.
- Charitable organizations.
- Financial institutions.
- All companies that are limited by guarantee.
- Every company incorporated in Hong Kong.
When you register a company in Hong Kong, make sure to strictly follow all the rules to avoid getting into conflict with the law. Particularly, you need to prepare the significant controllers register and make it available to authorities when needed. If you find it a challenge to prepare SCR, make sure to work with an expert agency.