On June 23, 2017, the official government publication of Hong Kong published a draft amendment in the Ordinance on the companies (Companies (Amendment) Bill 2017). One of the changes it covered was the introduction of a requirement for the companies registered in Hong Kong to collect, store and provide up-to-date information on their beneficiaries for the verification. This refers to the so-called “Registers of people with significant control over the companies”. This innovation was adopted within the framework of the international policy on combating money laundering and financing of terrorism and it is designed to bring the corporate jurisdiction legislation in the line with the standards of the Financial Action Task Force on Money Laundering. By analogy with the definition given by the FATF, in anti-laundering legislation of Hong Kong, “significant controllers” are defined as individuals and legal entities that:
- directly or indirectly own more than 25% of the company’s shares;
- directly or indirectly have more than 25% of the voting rights of the company;
- directly or indirectly have the right to appoint or remove the majority of the members of the company’s board of directors;
- otherwise exercise or have the right to exercise the significant influence over the activities of a company or control over it;
- in fact, exercise or they are entitled to exercise significant influence or control over the activities of a trust or partnership that is not a legal entity whose members or managers meet any of the above criteria.
Therefore the persons having significant control over the company imply its beneficiary owners. It is worth noting that the register of data on the beneficiaries will be non-public, that is, only law enforcement bodies and “people with significant control” themselves will have access to it.
In accordance with the new requirements, each company established in Hong Kong is required to identify individuals and legal entities that have a significant impact on its activities and control over it and then within 7 days send them a notice requesting the data required for the registry.
Regarding individuals, the following data are requested:
- name and surname;
- mailing address;
- the number of the identification document and the country that issued it;
- the date from which the person is “controlling”;
- the nature of control over the company.
As for legal entities, the registry will require:
- name of the enterprise;
- the address of the main office;
- organizational and legal form and the country of registration;
- the date from which the person is “controlling”;
- the nature of control over the company.
The persons who did not comply with the notification requirements within 1 month will be fined of up to 25,000 HKD. In addition to the above information, the contact data of the appointed representative of the company should be included in the register, who can provide the information to the law enforcement agencies about the “controlling” persons, if necessary.
