Lexis insights

Legal news, views and insight from LexisNexis Hong Kong

The significant controllers register regime and convictions

The obligation for companies incorporated in Hong Kong to keep a significant controllers register came into force on 1 March 2018 after new provisions were annexed to the Companies Ordinance (Cap. 622) by the Companies (Amendment) Ordinance 2018. A brief outline of this obligation and how companies may identify significant controllers under the Companies Ordinance can be found in our previous article.

In the Companies Registry’s highlights of prosecution cases dated 30 January 2019, the Registry reported the prosecution of 12 companies in November 2018 for non-compliance with the requirement to maintain a significant controllers register, among other companies and offences.

These convictions have occurred within one year of the new regime coming into force. Among other offences, the companies in question collectively failed to comply with section 653M(1), which sets out an applicable company’s obligation to keep its significant controllers register at the company’s registered office or at a prescribed place.

Penalties for failure to maintain significant controllers register

The requirement to maintain significant controllers register involves various facets of compliance and is governed strictly by the Companies Registry. By failing to comply, the company and every responsible person of the company commit a criminal offence and are each liable to different penalties. The following table shows a brief and non-exhaustive list of the penalties that the company and its responsible persons could be liable to:

Section in Companies Ordinance (Cap. 622)

Offence

Penalty

s653H

Failure to keep significant controllers register

Criminal offence

Level 4 fine of HK$25,000

Further daily fine of HK$700

s653I

Failure to include the specified particulars within significant controllers register

s653J

Entering particulars into significant controller register without confirmation by the person or entity

s653M

Failure to keep significant controllers register at the company’s registered office or prescribed place, or failure to notify the Registrar of its location

s653N

Failure to notify Registrar of any change of location of significant controllers register

s653P

Failure to take reasonable steps to identify significant controllers and notify them of their status

Criminal offence

Level 4 fine of HK$25,000

s653T

Failure to keep information up-to-date

s653X

Failure to produce significant controllers register for inspection by Companies Registry officer or law enforcement officer

s653ZE

Knowingly or recklessly making a statement or providing information that is misleading, false or deceptive in a material particular

Conviction on indictment:

Fine of HK$300,000 and 2 years imprisonment

Summary conviction: Level 6 fine of HK$100,000 and 6 months imprisonment

For more information on corporate law, please see:

Butterworths Hong Kong Company Law Handbook – 20th Edition

Hong Kong Company Law: Legislation and Commentary

Hong Kong Corporate Law

The Annotated Ordinances of Hong Kong – Companies Ordinance (Cap 622)

Lexis® Practical Guidance – Hong Kong Corporate

For enquiries about the above publications, please contact your Account Manager via sales.hk@lexisnexis.com

Contact Us