Learn why you need to pay attention to this particular registry when it comes to your newly registered Hong Kong company.
Governments throughout the world have been pursuing enhanced openness regarding corporate ownership following the emergence of the Panama Papers in 2016 (as depicted in the 2019 film “the Laundromat”).
There has been concern that various business structures (including companies and trusts, and usually a combination of the two) have been used to conceal who controls a company. This raises questions about whether those structures are being utilized to launder money.
The Companies (Amendment) Ordinance 2018 (“the Amendment Ordinance”), which came into effect in March 2018, created new transparency regulations for company ownership, including the development of a “Significant Controllers Register.”
We’ll explain you how to comply with the legislation in this section.
The new legislative requirements apply to all Hong Kong-based private limited companies.
Note that these restrictions do not apply to public limited corporations (i.e., large companies that are listed on a stock exchange) or companies formed in other jurisdictions (even if that company is registered as a business in Hong Kong).
Private companies incorporated in Hong Kong must comply with the following requirements under the Amendment Ordinance:
At least one person must be designated as the company’s representative (‘Designated Representative’) under the amendment ordinance. When it comes to the Significant Controller Register, this is the natural person who interacts with authorities and law enforcement. This person must be able to:
For the purposes of the register, who controls the company?
‘Significant control,’ according to the amended ordinance, means that a person or entity either:
As stated previously, the company must take reasonable steps to identify and determine who has considerable control over it. This covers, but is not limited to, the following items:
Following this assessment, the company must take the following actions:
The individual or entity who receives the notice has one month to comply after receiving it.
The information regarding significant controllers must be entered into the register after it has been obtained.
For a registrable person, the company must enter the following information into the Significant Controllers Register:
It is important to document the facts in the Significant Controllers Register if the company is unable to identify or determine who the significant controllers are, or if the company does not have any significant controllers.
The company may be required to make the Significant Controllers Register available for inspection at any reasonable time.
The Police, Inland Revenue, Customs and Excise, Immigration, the Securities and Futures Commission, and the Hong Kong Monetary Authority are a few of the governmental bodies that have the authority to review the register.
Law enforcement has the right to make copies of the register in addition to inspecting it.
The right to inspect the register is not limited to law enforcement. Anyone whose name appears on it has the right to inspect it and receive a copy of it.
Failure to comply with the right of inspection is an offence that can result in penalties for the company, its employees, or its directors.
Furthermore, anyone who intentionally or recklessly makes a false, misleading, or deceptive statement in regard to the Register may face a substantial fine and up to two years in prison.
The Significant Controllers Register regulations must be understood by all companies incorporating in Hong Kong. Failure to comply with legal requirements can result in serious consequences.
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