Definition of a significant controller in Hong Kong

Who Is a Significant Controller in Hong Kong

A significant controller is any person who meets one or more statutory criteria under the Companies Ordinance (Cap. 622) for inclusion on a company's Significant Controllers Register. The definition covers both natural persons and legal entities.

The requirement to maintain a Significant Controllers Register took effect on 1 March 2018. Every Hong Kong-incorporated company must identify its significant controllers and record their details in the register.

Hong Kong Beneficial Owner

The term beneficial owner overlaps with the definition of a significant controller. A person who ultimately owns or controls a company, whether through direct or indirect shareholding, is a beneficial owner. The Significant Controllers Register captures these individuals and entities, making the register the primary mechanism for disclosing beneficial ownership in Hong Kong.

SCR Significant Controller

SCR stands for Significant Controllers Register. An SCR significant controller is any person recorded in that register because they satisfy one or more of the five specified conditions. The register is kept at the company's registered office or another prescribed place in Hong Kong and is not open to public inspection, though law enforcement authorities may access it.

Who Is a Significant Controller

A person qualifies as a significant controller if they meet any of these criteria:

• Hold more than 25% of the company's issued shares
• Hold more than 25% of the company's voting rights
• Have the right to appoint or remove a majority of the board of directors
• Otherwise exercise significant influence or control over the company
• Hold such rights or control as a trustee of a trust or a member of a partnership

Significant Control Criteria

The primary threshold is the 25 percent threshold applied to issued shares and voting rights. Where no single person meets this threshold, the company must look for anyone who exercises significant influence or control over the company's affairs. The company must also identify any registrable legal entity that would itself be a significant controller if it were an individual.

The company must designate a representative to assist law enforcement with access to the register. The designated representative may be a director, the company secretary, or another person appointed by the board.