Beneficial Ownership Register to be introduced for Hong Kong companies

 As a member country of the Financial Action Task Force (FATF), the international standard setter on anti-money laundering and counter-terrorist financing, Hong Kong is implementing the statutory requirement for companies to maintain up-to-date beneficial owner information in accordance with FATF recommendations.

This move comes in light of the 2018 FATF mutual evaluation of Hong Kong to comply with international transparency standards. Hong Kong has legislated the requirement to keep a register of “persons with significant control” for Hong Kong companies in the Companies (Amendment) Bill 2017 which will come into effect on 01 March 2018.

What is a beneficial owner?

The consultation proposes a redefinition of a beneficial owner in line with the current FATF terms. A beneficial owner is an individual who-

1. Directly or indirectly holds more than 25% of the shares or voting rights of an entity;
   
2. Directly or indirectly holds the right to appoint or remove a majority of the directors of the board;
   
3. Otherwise has the right to exercise, or actually exercises, significant influence or control; or
   
4. 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 former conditions (in their capacity as such) in relation to the company, or would do so if they were individuals.
   

The register of beneficial owners / people with significant control would therefore look through successive layers of companies and identify the natural persons owning more than 25% of a Hong Kong company. The company will be required to keep the register at a specified place in Hong Kong and appoint a Hong Kong resident person or company service provider as the named responsible person and contact point for the cooperation with law enforcement on information requests. Non-compliance will be subject to a fine of HKD25,000 and up to HKD300,000 and 2 years imprisonment for providing false or misleading information.

Compliance made easy

In order to ensure your company’s statutory records are compliant with existing and future laws and regulations, contact Encore Professional Services Ltd at info@encorepro.com. Our holistic corporate services will help you to continue to focus on your core business rather than compliance risk.

Encore Professional Services Ltd assists start-ups and SMEs with their needs to establish a corporate presence in Hong Kong and supports business growth by providing outsourcing solutions for accounting, payroll administration and IT services.