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The Companies (Amendment) Ordinance 2018

In Anti-Money Laundering, Business, News by Parvesh ShamdasaniLeave a Comment

The Companies (Amendment) Ordinance came into effect on March 1st, but what does that mean for you? If your company is not listed on the Hong Kong stock exchange, you will have to keep a “Significant Controllers Register” (SCR), and appoint a Designated Representative (DR) responsible for reporting regarding the SCR to local authorities if and when requested.

A “significant controller” is a person or entity who:

  1. Holds over 25% of a company’s issued shares or over 25% of its voting rights;
  2. Holds the right to appoint or remove the majority of the board of directors of the company;
  3. Exercises significant influence or control of the company in any other way.

Please note it is every Hong Kong company’s obligation to identify all “significant controllers” and to keep the SCR up-tp-date (including personal details of “significant controllers” and their nature of control). Where a Hong Kong company may have many companies regarding their ownership, “significant controllers” would mean the company with significant holdings in the Hong Kong company and the ultimate owner(s) of that company. Failure to comply is a criminal offence where the company and any persons at fault is liable for a fine of HK$25,000 and a possible HK$700 for each day the offence continues. Any false or misleading information may lead to a fine a “level 6” (i.e. HK$100,000) fine and 6 months imprisonment. For more details on this please read these articles from Hawksford Group Services and Baker McKenzie.

The government has introduced this amendment to address transparency issues regarding Hong Kong companies and we see this as an important step in preventing criminals from hiding behind complicated company structures, and punishing those who try to conceal their identity. The amendment comes just in time for FATF’s inspection of Hong Kong’s AML policies before the end of the year. To be honest, it should have been introduced long time ago before our reputation was greatly damaged by the Panama papers, and other instances where our institutions and entities had been abused by those who could hide their identities, and disguise the true nature of their dealings.

Business and compliance enthusiast, problem solver, road warrior, police ID check magnet, and half geek whose exploits have taken him around the United States, United Kingdom, Caribbean, India, deep into Southeast Asia and West Africa. Entered the anti-money laundering and high risk field to help develop understanding, contribute research, improve standards, prevent profiteering at the expensive of SMEs, and to protect interests of the average person.
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