Significant Controllers Register (SCR) in Hong Kong

Since 1 March 2018, every local company formed under the Companies Ordinance (Cap. 622) or an earlier Companies Ordinance, except a listed company, has had to keep a Significant Controllers Register (SCR). It records who ultimately owns or controls the company, usually anyone holding more than 25% of the shares or votes. The company keeps the register itself, at its registered office or another prescribed place, and must produce it to law enforcement officers on demand. A company with no significant controller still keeps an SCR and says so in it.

Which companies must keep one

The Companies Registry’sSCR overviewexplains that the Companies (Amendment) Ordinance 2018 introduced the requirement so that Hong Kong could meet its international obligations on transparency of beneficial ownership. It applies to:

• local companies formed and registered under Cap. 622 or a former Companies Ordinance;
• re-domiciled companies.

Listed companies are excluded. Because the duty is on local companies, a non-Hong Kong company registered here is outside it.

Who is a significant controller

Under the Registry’sGuideline on the Keeping of Significant Controllers Registers, a person has significant control over a company if one or more of these conditions is met:

1. they hold, directly or indirectly, more than 25% of the issued shares or, for a company without share capital, a right to share in more than 25% of its capital or profits;
2. they hold, directly or indirectly, more than 25% of the voting rights;
3. they hold, directly or indirectly, the right to appoint or remove a majority of the board;
4. they have the right to exercise, or actually exercise, significant influence or control over the company;
5. they have the right to exercise, or actually exercise, significant influence or control over a trust or a firm that is not a legal person, whose trustees or members meet any of the first four conditions for the company.

The register has two kinds of entry. A registrable person is a significant controller who is a natural person. A registrable legal entity is a legal entity that is a shareholder of the company and has significant control over it.

What the register must contain

• Each significant controller’s required particulars. For a natural person these include name, correspondence address, Hong Kong identity card or passport number, and the passport’s issuing country. For a legal entity they include its legal form, registration number, place of incorporation (governing law), registered office address, the date it became a significant controller and the nature of its control.
• Registrable changes to those particulars.
• A designated representative: the name and contact details of at least one person who will help law enforcement officers with the register.

If the company has no significant controller, the register must say that the company knows, or has reasonable cause to believe, that it has none. The register is never left blank.

How to identify controllers and fill the register

The Registry’sSCR FAQexpects a company to take reasonable steps, in this order:

1. Review the register of members, the articles of association, shareholders’ agreements and other agreements.
2. Within 7 days of knowing, or having reasonable cause to believe, that someone is a significant controller, send that person a notice. Notices can also go to anyone believed to know who the controller is.
3. Skip the notice for a registrable person who has already told the company of their status and supplied all their particulars, or had them supplied with their knowledge.
4. Enter a registrable person’s particulars within 7 days after they have all been confirmed by that person.
5. Record the designated representative’s name and contact details.
6. Update the register whenever there is a registrable change.

The designated representative

A company must name at least one designated representative. That person must be either a shareholder, director or employee of the company who is a natural person resident in Hong Kong, or an accounting professional, a legal professional, or a licensed trust or company service provider. Acompany secretarycan take the role only if they fit one of those categories. If an outside firm is to act,check its TCSP licencefirst.

Where the register is kept, and who can see it

The SCR is kept at the registered office or at another prescribed place. If the company keeps it somewhere other than the registered office, it must notify the Registrar on Form NR2 within 15 days after the register is first kept at that place. No NR2 is needed if the register has been at the registered office ever since it came into existence. If you move the registered office, seechanging a Hong Kong registered office.

The company must make the register available for inspection, and for copies to be taken, by a law enforcement officer on demand. The designated representative is the person those officers deal with.

Penalties

The Registry’sSCR pamphletsets out the sanction for breaching the requirements: the company and every responsible person of the company are liable to a fine at level 4, which is HK$25,000, and where applicable a further daily fine of HK$700. If you want a firm to keep the register and act as designated representative, comparecompany secretary firmsin our directory. This page is not legal advice.