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The Companies (Amendment) Ordinance 2018 has come into operation on 1 March 2018. New requirements were introduced under the Ordinance to enhance transparency of corporate beneficial ownership.
The Hong Kong Government is committed to fulfill its international obligations and enhance its tools to tackle money laundering and terrorism financing under the AMLO (Anti-Money Laundering and Counter-Terrorist Financing Ordinance), introducing similar requirements to the ones that have been put in places in other jurisdictions.
The requirements apply to all companies formed and registered under the Companies Ordinance (Cap. 622) or a former Companies Ordinance, therefore all companies locally incorporated.
Companies excluded from applying the new requirements include listed Companies, non-Hong Kong Companies and unincorporated businesses.
Under the Companies (Amendment) Ordinance 2018, a company incorporated in Hong Kong is required:
A significant controller of a company includes a registrable legal entity and a registrable person.
A registrable legal entity is a legal entity that is a member of the company and has significant control over the company (e.g. a shareholder).
A registrable person is a natural person or a specified entity that has significant control over the company.
A person has significant control over a company if one or more of the following conditions are met:
A company is required under the Companies (Amendment) Ordinance 2018 to take reasonable steps to identify and ascertain persons and legal entities who have significant control over the company.
Such steps include:
If a company has reasons to believe that a person is a significant controller of the company, the company must give notice to such person within 7 days of such knowledge or belief.
If a company has reasons to believe that a person knows the identity of another person who is a significant controller of the company, the company must give notice to such person within 7 days of such knowledge or belief.
A person or a legal entity who has received the above notice must comply with the requirements stated in the notice within one month from the date of the notice.
The required particulars to be entered in the significant controller register for a registrable person are:
The required particulars to be entered in the significant controller register for a registrable legal entity are:
A significant controller register cannot be blank. If the company is still identifying or ascertaining its significant controllers or the company does not have significant controllers such statements must be recorded in the significant controller registry along with notices sent to third parties to ascertain the identity of the significant controllers.
Under the Companies (Amendment) Ordinance 2018, companies are required to designate at least one person as its representative (namely the “Designated Representative”) to provide assistance relating to the company’s significant controller register to a law enforcement officer.
A designated representative must be one of the following:
The definitions of accounting professional, legal professional and TCSP licensee are defined respectively according to the Professional Accountants Ordinance (namely “PAO”), the Legal Practitioners Ordinance (namely “LPO”) and the Anti-Money Laundering and Counter-Terrorism Financing Ordinance (namely “AMLO”).
A company is required at any reasonable time to make its significant controller register available for inspection by a law enforcement officer at the place at which the SCR is kept.
Law enforcement officers include:
Law enforcement officers are allowed to inspect the significant controller register as well as make copies of it. A person whose name is registered in the significant controller register is entitled upon request to inspect the SCR and be provided with copies of it.
Failure to comply with the new requirements under the Companies (Amendment) Ordinance 2018 is a criminal offense. The company and every responsible person of the company are liable to a fine at level 4 up to HKD 25,000 and a further daily fine of HKD 700.
Any person who knowingly or recklessly makes a false, misleading or deceptive statement in any material in the SCR or in replying a notice sent under the SCR is liable to a fine up to HKD 300,000 and imprisonment up to two years.
Read more about a Hong Kong company registration.
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