21 November, 2017
In June 2017, the Hong Kong government accounced changes to Hong Kong's company law.
The Companies (Amendment) Bill 2017 will require (once approved) all Hong Kong companies to establish and maintain a register of significant controllers (the "SC Register"); a non-public record system accessible only upon demand by a law enforcement officer i.e. an officer from the IRD. This requirement will apply to all Hong Kong companies, except listed companies. Thus, the legislation will apply to charities and dormant companies.
This legislation, along with the new Anti-Money laundering legislation, is to bring Hong Kong in line with international requirements as promulgated by the Financial Action Task Force (FATF), an inter-governmental body that sets international standards and reviews compliance by its members.
A general outline of the responsibilities is to be expected:
1) New Register of Significant Controller
Someone holding a 25% or higher beneficial interest in a Hong Kong company, or those with the capacity to exercise significant control, will be declared a "Significant Controller".
2) Obligations of Significant Controller
There will be an obligation for all Hong Kong companies to service notice on any registrable person that the company within 7 days after first knowing, or having reasonable cause to believe, that the person is a significant controller.
A person having significant control is under no legal obligation to notify the company of its status. However, upon receipt of the company's Notice, failure to respond and comply within one month from the date of Notice is an offence.
3) What action must now be taken by the company?
No further action is required as of now. This information is for guidance purposes only. Please check back here for further updates as there will be a follow-up article on what is to be expected in order to complete due diligence.
Darren Barnett, Eversheds Sutherland
darrenbarnett@eversheds-sutherland.com
