Penalty for no significant controllers register in Hong Kong

Penalty for No Significant Controllers Register

Failure to keep a Significant Controllers Register is an offence under the Companies Ordinance (Cap. 622). The maximum penalty is a fine of HK$25,000. If the offence continues, a daily fine of HK$2,000 also applies.

SCR Non-Compliance Fine

The Companies Registry can prosecute for each day the register is absent. The daily fine of HK$2,000 accumulates quickly, so a company non-compliant for several months faces a substantial total penalty. The court also has discretion to impose costs on top of the fine.

Significant Controllers Register Penalty

The penalty applies to both the company and every responsible officer. Responsible officers are directors, company secretaries and managers. If the company commits the offence with the consent, connivance or neglect of a responsible officer, that officer is also liable. An individual director can be fined personally.

Hong Kong SCR Enforcement

The Companies Registry enforces the Significant Controllers Register requirement. The Registry conducts compliance checks and can request inspection of the register at any time. Since the requirement took effect in March 2018, the Registry has actively pursued cases where companies fail to maintain or keep the register at the prescribed place in Hong Kong.

Companies Registry SCR Offence

The offence is set out in Division 2 of Part 12 of the Companies Ordinance. A company commits an offence if it fails to take reasonable steps to identify its significant controllers, fails to enter the required particulars in the register, or fails to keep the register at the registered office or another prescribed place in Hong Kong. The same penalty applies to each separate breach.

Designated Representative and Compliance

Every company must appoint at least one designated representative to assist law enforcement. This representative must be a natural person resident in Hong Kong, or a body corporate licensed under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. A company that fails to have a designated representative in place also commits an offence under the same penalty regime.

Steps to Avoid the Penalty

Maintain the register from the date of incorporation, or from 1 March 2018 for companies already existing then. The register must contain the name, address and identification details of every person who holds more than 25% of the shares or voting rights, or who otherwise exercises significant control. Keep the register at the registered office or another place in Hong Kong notified to the Registrar on Form NR2.

Review your shareholding structure at each annual return date. Update the register whenever a significant controller changes. If no person meets the 25% threshold, the company must note this fact in the register. The register is not open to public inspection, but must be produced for inspection immediately upon demand by a law enforcement officer.

What to Do If You Are Already Non-Compliant

Correct the position immediately if you have no register or an incomplete one. Delaying only increases exposure to the daily fine. Identify all significant controllers, complete the register entries, and ensure the register is kept at the prescribed place. Prompt action for a short period of non-compliance lowers the risk of prosecution, though the Companies Registry reserves the right to prosecute in all cases.

Professional advice from a licensed trust or company service provider can help bring your register into compliance quickly. A company secretary or a TCSP-licensed firm can assist with identifying significant controllers where the ownership structure is complex, and can advise on the format of the register entries under the Companies Ordinance.