The Companies Ordinance (Cap 622) (the “Ordinance”) has been amended under the
Companies (Amendment) Ordinance 2018. The amendments have come into force
since 1 March 2018.
Under the new amendments to the Ordinance, private companies incorporated in
Hong Kong are required to identify “significant controllers” and maintain a
“Significant Controllers Register” (the “SCR”), which lists out the particulars of the
A “significant controller” of a company includes
- a registrable person - a natural person/ a corporate sole / a government / a local
authority / an international organisation that has significant control over the
- a registrable legal entity – a legal entity which is a shareholder of the company
that has significant control over the company.
There is “significant control” if one of the following requirements is met:
1. The person holds, directly or indirectly, more than 25% of the issued shares in
the company or, if the company does not have a share capital, the person holds,
directly or indirectly, a right to share in more than 25% of the capital or profits
of the company;
2. The person holds, directly or indirectly, more than 25% of the voting rights of
3. The person holds, directly or indirectly, the right to appoint or remove a
majority of the board of directors of the company;
4. The person has the right to exercise, or actually exercises, significant influence
or control over the company;
5. The person has the right to exercise, or actually exercises, significant influence
or control over the activities of a trust or a firm that is not a legal person, but
whose trustees or members satisfy any of the first four conditions in relation to
Companies also need to appoint a representative to provide assistance relating to the
company’s SCR to law enforcement officers, including:
- Companies Registry
- Customs and Excise Department
- Hong Kong Monetary Authority
- Hong Kong Police Force
- Immigration Department
- Inland Revenue Department
- Insurance Authority
- Independent Commission Against Corruption
- Securities and Futures Commission.
The SCR can be inspected by law enforcement officers and significant controllers
listed in the SCR, but there is no duty to make available the SCR to the public.
Identifying significant controllers
Companies may identify significant controllers by reviewing documents readily
available, such as the register of members, articles of association and shareholders’
agreement. Companies will also need to issue notices (the “Notices”) to any person
who is believed to be a significant controller and any person who is believed to know
the identity of the significant controller to obtain required particulars.
If a company fails to take reasonable steps to identify significant controllers or fails to
maintain the SCR as required, the company and every responsible person may be
liable to a fine on conviction.
Recipients of the Notices are required to respond to the Notices within 1 month.
Recipients of Notices may be liable to a fine if they fail to comply with the Notice
within 1 month. They may be liable to a fine or even imprisonment if they make false
statements, provide misleading, false or deceptive information in reply to the Notice.
Implications for private companies in Hong Kong
A person’s particulars will be disclosed in the SCR if he falls within the definition of
“significant controllers”, which is widely defined under the Ordinance. This would
mean that common commercial arrangements which have been in the past used for
maintaining privacy or anonymity may need to be disclosed in the SCR, including
indirect shareholdings through corporate vehicle(s); shadow directorship, nominee
arrangements and trust relationship. The new amendments to the Ordinance will
bring greater transparency to companies so as to combat money-laundering, terrorist
financing and tax evasion.
At the same time, as there may be criminal liability for failure to maintain the SCR or
failure to respond to the Notice properly, companies and significant controllers must
be more cautious in complying with the new requirements under the Ordinance.
This article only summarises the major changes to the Ordinance. It is desirable for
companies to consult their legal advisors regarding issues arising from compliance of
the new requirements. We are prepared to offer legal advice or other legal services in
relation to the new requirements or general company matters.