Ultimate Beneficial Owners in Hong Kong

Hong Kong has a robust legal framework requiring the identification and registration of UBOs, primarily through the Significant Controllers Register (SCR). The SCR regime was introduced on 1 March 2018 to align with Financial Action Task Force (FATF) Recommendation 24, aiming to enhance corporate transparency and combat financial crimes such as money laundering, terrorist financing, and tax evasion.

The identification and registration of UBOs is governed by:

• the Companies Ordinance (Cap. 622) (CO), which sets out the statutory obligations for companies to maintain and disclose beneficial ownership information;
• the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO), which imposes customer due diligence and record-keeping requirements by certain professions, including but not limited to financial institutions, legal professionals, licensed trust or company service providers, and accountants.

In addition, the Hong Kong Companies Registry provides detailed guidelines to help companies comply with the regulatory requirements in relation to the identification of UBOs and the maintenance of the SCR.

Every Hong Kong company (except listed companies) is required to:

Maintain a SCR at its registered office or a prescribed place in Hong Kong – meaning a place in Hong Kong – either in hard copy or electronic form;

Take reasonable steps to identify its significant controllers and enter their particulars in the SCR:

• review readily available documents and information;
• consider interests in the company as held by individuals, legal entities and trusts or firms;
• consider any evidence of joint arrangements or indirect rights and interests that may indicate ultimate control by the same person; and
• take any other actions necessary based on the specific circumstances of the company;

Keep the SCR up to date;

Make the SCR available for inspection by law enforcement officers and the controllers themselves.

In addition, every company must designate at least one person as its representative to provide assistance to law enforcement officers in relation to the company’s SCR. The designated representative must be an individual shareholder, director or employee of the company who resides in Hong Kong or, alternatively, an accounting professional, legal professional or licensed trust or company service provider.

The Companies Ordinance (Cap. 622) defines a UBO (referred to as a significant controller) as a natural person or legal entity that has significant control over a company. A registrable person or a registrable legal entity has significant control over a company if one or more of the following conditions are met:

• 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, more than 25% of the capital or profits of the company);
• the person holds, directly or indirectly, more than 25% of the voting rights of the company;
• the person holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of the company;
• the person has the right to exercise, or actually exercises, significant influence or control over the company;
• the person has the right to exercise, or actually exercises, significant influence or control through a trust or firm that meets any of the conditions listed above.

If a company can’t identify any person or entity that meets the criteria for significant control, it must still maintain a SCR and include a statement that it “knows or has reasonable cause to believe that it has no significant controller”.

The Significant Controllers Register (SCR) must contain the following information:

• the particulars of every significant controller:

for an individual: full legal name, correspondence address (which cannot be a post office box), identity card or passport number and issuing country;

for legal entities: name of the entity, legal form and registration number (or equivalent) and registered or principal office address;

• the date on which the person or entity became a registrable person;
• the nature of the control over the company;
• any registrable change with respect to each significant controller: change of particulars, cessation to be a significant controller, etc.;
• the name and contact details of the designated representative.

The SCR must be kept at the company’s registered office or a prescribed place in Hong Kong. If the SCR is not kept at the company’s registered office or at the same place as the company’s register of members, the company must notify the Hong Kong Companies Registry of the location by filing a form NR2 within 15 days after the SCR is first kept at a new location.

Being identified as a significant controller entails several legal implications:

• right of access: a person listed in the SCR has the right to inspect the register and may apply to the court for rectification if the information is incorrect;
• duty to respond: if a company suspects that a person may be a significant controller or knows who the controller is, it must issue a formal notice to such person within seven days of acquiring such knowledge or belief, and the person must comply with the requirements stated in the notice;
• duty not to provide false or misleading information: any person who knowingly or recklessly provides false or deceptive information in the SCR or in response to a company’s notice to provide information commits a criminal offence.

These obligations ensure the integrity of the register and support law enforcement efforts.

The SCR is not open to public inspection. However, it must be made available for inspection by the following law enforcement officers at any reasonable time, for the purpose of performing functions relating to the prevention, detection or investigation of money laundering or terrorist financing:

• Hong Kong Companies Registry;
• Hong Kong Customs and Excise Department;
• Hong Kong Monetary Authority;
• Hong Kong Police Force;
• Hong Kong Immigration Department;
• Hong Kong Inland Revenue Department;
• Hong Kong Insurance Authority;
• Hong Kong Independent Commission Against Corruption;
• Hong Kong Securities and Futures Commission; and
• any other law enforcement officers specified by the Financial Secretary.

These authorities may inspect the SCR and make a copy of it in the course of the inspection.

In addition, the Hong Kong Companies Registry regularly conducts on-site visits in order to ascertain whether Hong Kong companies comply with relevant requirements in relation to the keeping of the SCR.

A person whose name is entered in the SCR as a significant controller may also request:

• to inspect the register without charge, during business hours;
• to be provided with copies of the register at a prescribed fee (HK$5 for each ten entries in the register);
• to rectify the SCR if its name is wrongly entered or omitted or if there is default or unnecessary delay in updating the register after the person has ceased to be a significant controller.

Failure to comply with the relevant requirements in relation to the SCR is a criminal offence. In case of prosecution, the legal sanctions set out below apply:

• if a company fails to (i) keep a SCR, (ii) take reasonable steps to identify significant controllers, (iii) enter particulars of significant controllers in the register and keep such particulars up to date or (iv) make the SCR available for inspection by law enforcement officers, the company and every responsible person of the company may be liable, on conviction, to a fine of up to HK$25,000 and an additional daily fine of HK$700 for continued non-compliance;
• if a person who has received a notice relating to the SCR fails to comply with the requirements stated in such notice within one month from the date of the notice, the person and every related person may be liable, on conviction, to a fine of up to HK$25,000;
• if any person knowingly or recklessly makes a misleading, false or deceptive statement in the SCR or in response to a SCR notice, that person may be liable, on conviction on indictment, to a fine of up to HK$300,000 and imprisonment for up to two years, or on summary conviction, to a fine of up to HK$100,000 and imprisonment for up to six months.