New regulations under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance and
Companies(Amendment) Ordinance 2018
Hong Kong has been a member of the Financial Action Task Force on Money Laundering since 1991. Mandatory operational measures have been implemented in financial institutions to combat money laundering and the financing of terrorism and any related threats to the integrity of the international financial system.
To enhance the transparency in identifying and verifying the beneficial ownership of the companies in Hong Kong and to avoid any misuse of complex corporate structures to carry out illegal deals and transactions. Effective from 1st March, 2018, new rules of the identification of significant controller(s)1 and appointment of designated representative(s) for the maintenance of significant controllers register (hereafter "SCR") will be implemented to comply with the new regulations of the Companies (Amendment) Ordinance 2018 (hereafter "the Amendment Ordinance") and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615) (hereafter "the AMLO").
All applicable companies incorporated in Hong Kong shall comply with the new rules as follows:
1. Significant Controller(s)
Under the Amendment Ordinance, it is mandatory for all applicable companies to identify person(s) and/or entity(ies) that has/have directly or indirectly a significant control over the company.
The significant controller(s) is/are the individual(s) and/or legal entity(ies) who meet(s) one or more of the following conditions in a company and/or in a chain of ownership:
1.1 directly or indirectly holding more than 25% of the issued shares;
1.2 directly or indirectly holding the right to share in more than 25% of the capital or profits (applicable to a company without a share capital);
1.3 directly or indirectly holding more than 25% of the voting rights;
1.4 directly or indirectly holding the right to appoint or remove a majority of directors; or
1.5 holding the right to exercise, or exercising significant influence or control over the company.
2. Significant Controllers Register
After identifying the significant controller(s), all applicable companies shall create and keep the SCR that shall contain the particulars of such person(s) and/or entity(ies), including the date of becoming significant controller(s) and the nature of control over the companies. Such record will not be made public nor filed in the Companies Registry. This information will only be available to specific law enforcement officers3 upon request for an inspection.
3. Designated Representative(s)
All applicable companies have to appoint at least one natural person residing in Hong Kong or a licensed company service provider as the designated representative(s) of the companies. The duties are to assist the law enforcement officers in case of an inspection and to maintain and keep safe custody of the SCR at the registered addresses of the companies.
Companies may choose to keep the SCR in any other places in Hong Kong other than their registered addresses, provided however, such arrangement has been informed to the Companies Registry with a specified form.
Failure to comply with the above obligations will be a criminal offence. The company and all responsible people of the company are liable to a fine at level 4 (HK$25,000 or US$3,230). Where applicable, there will be a further daily fine (HK$700 or US$90).
Acting as the corporate secretary of your companies, La Nao, unless you instruct us otherwise, will act as the designated representatives and create the SCR of your companies to ensure your companies are in full compliance with the new regulations under the Amendment Ordinance and the AMLO by 1st March, 2018.
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