Practical Guide – Keeping a Register of Significant Controllers of Hong Kong Companies
Legal Basis for Keeping a Register of Significant Controllers of Hong Kong Companies
The legal basis for Hong Kong companies to keep a register of significant controllers is the Companies (Amendment) Ordinance 2018 (the “Amendment Ordinance”). The Amendment Ordinance requires companies to keep a register of significant controllers. The Amendment Ordinance will come into operation on 1 March 2018.
Practical Guide on Keeping a Register of Significant Controllers of Hong Kong Companies
The Hong Kong Companies Registry (HKCR) has issued a Practical Guide on Keeping a Register of Significant Controllers:
- what are the new requirements for keeping a register of significant controllers?
- what types of companies are required to keep a register of significant controllers?
- who are the significant controllers of a company?
- what are the contents of the register of significant controllers?
- what actions should a company take to identify significant controllers?
- when should a company enter the details of its significant controllers in the register of significant controllers?
- what form should a company deliver to report where the register of significant controllers is kept?
For Mainland and overseas Chinese who have a company registered in Hong Kong, what do they need to do?
- Find a Hong Kong resident to act as a designated representative
Under the Amendment Ordinance, a Hong Kong company is required to provide at least one designated representative to provide relevant assistance to law enforcement officers in relation to the company’s registration. Persons eligible to act as such a designated representative include: (1) a shareholder, director or employee of the company and must be a natural person resident in Hong Kong; or (2) an accounting professional, a legal professional or a trust or company services licensee.
It should be noted that: Mainland or overseas persons who previously registered their companies in Hong Kong often found a local Hong Kong secretarial firm to act as company secretary and provide address and company secretarial services. However, according to the above provision, only shareholders and directors or employees of a company can act as the designated representative of the company, the company secretary is not included. Therefore, for a Hong Kong company whose shareholders and directors are not resident in Hong Kong and do not have any local employees in Hong Kong, a certified public accountant (CPA), a legal professional, or a trust or company services licensee in Hong Kong should be appointed as the designated representative in accordance with the second paragraph.
- Find a place to keep a significant controllers register
This can be anywhere in Hong Kong, at the company’s registered office or elsewhere, but the place of deposit needs to be reported to the Companies Registry by completing Form NR2. For companies registered in Hong Kong by Mainland or overseas persons, if a Hong Kong accountant or legal professional or trust or company services licensee is appointed as the designated representative, consideration may be given to placing the register of significant controllers at the designated representative’s service office, or of course, the register of significant controllers may be placed at the registered office address of the company located in Hong Kong.
- Identifying the significant controllers of a company
In short, a significant controller of a company includes a natural person or a company that: (a) holds, directly or indirectly, an interest in more than 25% of the shares of the company; (b) holds, directly or indirectly, more than 25% of the voting rights of the company; or (c) holds, directly or indirectly, the right to remove a majority of the directors of the company; or (d) is the de facto controller of the company; (e) is not a person who is the de facto controller of the trust or firm that meets any one of the above four conditions; and (f) a de facto controller of a trust or firm that is not a natural person who satisfies one of the above four conditions (e.g. A natural person who holds more than 25 per cent of the shares of a Hong Kong company, Company C, through a trust in place of B is also a de facto controller).
- Give notice to a significant controller of a company or to any person believed to know the identity of a significant controller of a company.
- Compile a significant controllers register of the company.
Effect of keeping a register of significant controllers on overseas persons incorporated in Hong Kong
- For companies whose shareholders and directors are not Hong Kong residents and do not have employees in Hong Kong, it is necessary to find a separate Hong Kong accounting professional, legal professional or trust or company services licensee to act as the company’s appointed representative. This will incur additional company maintenance fees and costs for an overseas person who has set up a vehicle company in Hong Kong Hong Kong.
- For cases where shares are held on behalf of a company through, for example, a share trust, or where the registered shareholders of a company are not in fact the controllers of the company, the de facto controllers of the company will need to be registered in the register of significant controllers under the new requirements. The register of significant controllers does not need to be made available to the public (and therefore still has a degree of privacy) but must be made available for inspection by Hong Kong law enforcement agencies (e.g. Customs and Excise Department, Police, SFC, Immigration Department, etc.) where necessary.
Services provided by the Firm in relation to the maintenance of the register of significant controllers of Hong Kong companies
Yan Lawyer is a law firm registered in Hong Kong that provides Hong Kong lawyers and cross-border legal services. We provide Hong Kong company formation and company secretarial services. For matters relating to the maintenance of the register of significant controllers of Hong Kong companies, please consult our lawyers. We can also be engaged to provide services to Hong Kong companies in this regard.