What is the register of significant controllers? What are the responsibilities at company level?

The identification and updating of the register of significant controllers is the responsibility of registered companies in Hong Kong and failure to comply with the register is a criminal offence punishable by a fine of $25,000 for each person responsible. In order to avoid being fined, company owners may need to be aware of the regulations relating to the Register of Significant Controllers and this article will summarise the key points for you.

What is the register of significant controllers requirement?
On 1 March 2018, the amended Companies Ordinance (Cap. 622) came into effect, requiring all companies incorporated in Hong Kong to keep a register of significant controllers.

In short, companies incorporated in Hong Kong are required to “identify the persons who have significant control over them”, otherwise known as significant controllers (it will be mentioned below who these persons are); and to keep a register of significant controllers (the “Register”) for inspection by enforcement officers as and when required.

This is primarily to enhance the transparency of beneficial ownership of Hong Kong corporations in order to meet Hong Kong’s international obligations.

Do all companies have to keep a register of significant controllers?
Yes, basically all local companies, other than listed companies, which are incorporated and registered under the Companies Ordinance or the Old Companies Ordinance are required to keep a register.

Who are the “significant controllers” of a company?
As mentioned above, a “significant controller” is a person who has significant control over a company, either as a registered natural person or as a shareholder of a legal entity.

A person is a significant controller if one or more of the following conditions are met.

holds, directly or indirectly, more than 25% of the issued shares of the company
does not have a share capital but has the right to share, directly or indirectly, more than 25% of the capital or profits of the company
holds, directly or indirectly, more than 25% of the voting rights of the company
the right, directly or indirectly, to appoint or remove a majority of the directors of the company.
the right to exercise, or the fact of exercising, significant influence or control over the company
has the right to, or actually exercises, significant influence or control over the activities of a trust or firm which is not a legal person, but the trustees of the trust or members of the firm satisfy any one of the first four conditions in relation to the company.
How does a company maintain a Register of Significant Controllers?
At the company level, the main responsibilities include

Making the register available for inspection by enforcement officers.
Identifying significant controllers.
updating the register.
maintaining a register of significant controllers and entering the details in the register
Notifying and otherwise giving notices to persons who are significant controllers.
In general, when a registrable person/registrable legal entity confirms all the required details (including name, correspondence address, etc.)

Details of the controller must be entered in the Register of Significant Controllers within 7 days of confirmation by the registrable person/registrable legal entity of all the required details (including name, correspondence address, identity card number, etc.).

Unless the register is kept at the company’s registered office, the company should send the specified form NR2 to the registrar for registration within 15 days of first keeping the register at the relevant place, or after changing the place of keeping. However, if a copy of the existing register of companies is kept at the same place as the company’s employee directory, it is not necessary to notify the Registrar of the place where the register is kept.

The above information is for reference only. If you have any queries regarding taxation or accounting, the best course of action is to seek advice from a professional accountant and we welcome your enquiries.