To ensure transparency of corporate beneficial ownership, the Hong Kong Administration now requires that all companies must prepare and maintain the Significant Controllers Register (SCR). However, many investors have been asking a lot of questions about SCR, and we are going to answer them in this post.
- What Exactly is SCR?
Significant Controllers’ Register is a new requirement that came into effect on 1st March 2018 following the Amendment to the Companies Ordinance (Cap. 622). The new legislation is designed to help prevent unlawful purposes that can be facilitated by the abuse of company structure, such as financing terrorism, tax evasion, and hiding proceeds of crime.
Before passing SCR, most companies only had to disclose the info about their direct shareholders and not the ultimate beneficial owners (UBO). Therefore, SCR achieves two goals with a single strike; all companies registered in Hong Kong and bank account in Hong Kong are required to keep a physical SCR, and if a person provides misleading information on the register, he/she commits an offense that attracts severe penalties.
- Who is Considered a Significant Controller?
Before you can start preparing an SCR, it is important to start by understanding the meaning of the significant controller. According to Hong Kong’s Company Ordinance, a significant controller means the following:
- A registrable individual: This is a natural person who wields significant control over the operations of a company registered in Hong Kong.
- A registrable legal entity: This is any entity, such as a company that is a shareholder in a company registered in Hong Kong. This entity should have some significant control in the company.
To identify a significant controller, a company registered in Hong Kong is required to use reasonable steps, such as reviewing the shareholder’s agreements, the structure of ownership, and the company’s register of members.
- What Details are Captured in an SCR?
When preparing a significant controller’s register, you need to include the following details:
- Registrable Person
- Correspondence address
- The nature of control
- The date when the individual became a registrable person
- Identity document details
- Registrable Entity
- The legal form and registration number
- Place of incorporation
- Address of the registered office
- Nature of control
- The date when the entity became a registrable entity
- Where Do You Keep an SCR?
If your business is an applicable company, it is required to maintain the SCR in the registered office in Hong Kong. However, you can also keep it in a prescribed place in Hong Kong where it can be easily accessible when the authorities need to check it. If you need to keep the SCR in a place that is different from the registered office, you are required to provide additional filing with the Companies Registry.
- Use Experts to Get it Right on SCR?
From the answers we have provided in this post, it is clear that the whole idea of SCR, from preparing it to maintenance, is pretty complex. Because of the severe penalties that are associated with failure to prepare an SCR or doing it incorrectly, you should ensure to engage the services of an expert. Our professionals understand the Companies Ordinance in its entirety and are willing to help you. Reach us today to get your SCR prepared or updated professionally for your company.