All you need to know about Significant Controllers Register in Hong Kong | Article – HSBC VisionGo
Here are all the details for maintaining the Significant Controllers Register - one of Hong Kong’s stringent anti-money laundering regulations.
In alignment with strict international financial guidelines, Hong Kong’s corporate law has several features to curb money laundering and illegal transactions. One of these makes it mandatory for all businesses to maintain up-to-date records about the company owners and key decision-makers in the form of a Significant Controllers Register (SCR).
Let’s study this compliance feature in more detail.
What is an SCR, and who needs to keep it?
A Significant Controllers Register or an SCR is a record of information of all significant controllers of a registered company. All private companies in Hong Kong are required to maintain an SCR (companies listed on the stock exchange of Hong Kong are exempt).
Who is a ‘significant controller’?
People, as well as businesses, can be deemed significant controllers of a company if they fulfil one or more of the qualifying definitions below:
- they hold more than 25% of the company’s shares,
- they have the right to share more than 25% of the capital or profits of a company,
- they have over 25% of the total voting power,
- they can appoint or remove the board of directors,
- they exert influence or control over the company’s daily operations
WHAT INFORMATION MUST BE INCLUDED IN AN SCR?
An SCR in Hong Kong can be kept in either English or Chinese and must include the following information about the significant controllers:
- Correspondence address
- ID number or the number and the issuing country of the passport
- Date on which the person became a registrable person of the company
- The exact nature of the person’s control over the company
For legal entities:
- Registration number or its equivalent in other countries
- Registered office address
- Legal type of the entity and the law that governs it
- Date on which the legal entity became a registrable legal entity of the company
- The nature of the legal entity’s control over the company
Every company must appoint at least one designated person who is responsible for collecting this information, maintaining the register and deals with SCR inspections.
A designated representative must be either:
- an employee or part of the company who is a resident of Hong Kong
- an accounting or legal professional or a TCSP licensee as defined in the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).
The SCR should also include the name and the contact details of a designated representative, and details of every information change or update.
Other Important Details Of Keeping A SCR
Ensure accurate information in the SCR
Every company is responsible for presenting accurate and updated information about its owners, stakeholders and decision-makers. For this, they must identify its significant controllers and get all the latest information from them to keep the SCR up-to-date.
The company is entirely responsible for the veracity of the contents and must make all reasonable efforts as per the law to get the right information. Information can be sourced from :
- Organisational documents and information such as the company’s register of members, the articles of association, the statement of capital, the shareholder agreements, etc.
- Information regarding individuals, legal entities, trusts or firms who hold an interest in the company
- Any joint arrangements or similar contracts that give control to individuals and companies.
- Outside research
Any changes must be entered into the register within 7 days after the company comes to know about it. Similarly, when a company gets any information about a new significant controller, they must send a notice to this person within 7 days.
It is recommended that the company and the designated representative keep a detailed record of all the steps taken by them to identify the significant controllers.
Where is an SCR kept?
The SCR must be kept at the registered office address (or any other place identified to the authorities within 15 days of the move) and should always be available for inspection by law enforcement officers and significant controllers.
It can be kept as a hard copy or in electronic form.
So, what happens if a company fails to follow its SCR obligations?
As the law promotes transparency in ownership and the flow of money in and out of Hong Kong, the government treats violations very seriously. Failure to produce a truthful account is severely punished, and the company and every person responsible can be punished with a fine of 25,000 HKD, and in some cases with a further daily fine of 700 HKD.
For falsifying information in the SCR, a person can be slapped with a fine of 300,000 HKD and imprisonment for two years, or a fine of 100,000 HKD and imprisonment for six months. The same punishment is applicable to the controller if he/she provides false information to the company.
By the way, we can help you have your records in order with our Corporate Secretary services.
A Significant Controllers Register is a critical part of every organisation’s paperwork, and it is best to put in place transparent processes to ensure it never gets overlooked in the daily hustle-bustle of business operations.
To understand it further, do go through the detailed resources below -
- The Amendment Ordinance
- The CR Guideline on SCR keeping
- The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO)