The Significant Controllers Register (SCR): Who Must Keep One, the 25% Threshold, the Penalties

At a glance

The thresholds, keeping requirements, designated representative eligibility and penalties are governed by the Companies Ordinance and the Companies Registry’s latest published guidance.

Who counts as a “significant controller”?

Meeting any one of the following makes someone a significant controller:

• Holding, directly or indirectly, more than 25% of the issued shares
• Holding, directly or indirectly, more than 25% of the voting rights
• Having the right, directly or indirectly, to appoint or remove a majority of the board
• Having the right to exercise, or actually exercising, significant influence or control over the company
• Exercising, or actually exercising, significant influence or control over a trust or partnership that meets the above

In practice, nine times out of ten it is the first one — more than 25% shareholding.

Two things to note:

1. It is “more than” 25%, not “at least”. Exactly 25% does not count.

2. It includes indirect holdings. If a shareholder is another company, you have to trace up layer by layer, calculating the ultimate effective holding, until you reach a natural person. This is the laborious part for companies with complex structures.

What has to be recorded?

For a natural person: name, correspondence address, identity card or passport number, the date they became a significant controller, and the nature of the control (for example “60% shareholding”).

For a legal entity: name, registration number, registered address, legal form, the date it became a significant controller, and the nature of the control.

One more thing to record: that you took reasonable steps to identify the significant controllers — including sending notices to anyone who might be one, seeking confirmation. Many companies skip this step, and it is precisely what law enforcement asks about.

What is a designated representative, and who can be one?

Every company required to keep an SCR must appoint at least one designated representative as the contact point when law enforcement asks to inspect it.

Who can serve:

• A shareholder, director or employee of the company, who must be a natural person resident in Hong Kong; or
• A Hong Kong accounting professional, legal professional, or a licensed trust or company service provider (TCSP)

We are a licensed Hong Kong TCSP and can act as your company’s designated representative. The duties in detail: what a designated representative does.

Where is the register kept?

By default, at the registered office.

If it is kept anywhere else, the Companies Registry has to be notified on form NR2 within 15 days of first keeping it there or of the location changing. This 15-day deadline is the same family as the ones for changing a director and changing the registered address — miss it and you are in breach.

”My company has one shareholder — does it still apply?”

Yes.

However simple the structure, the register is required. A one-person company’s SCR is very short — the particulars of that one shareholder — but “short” does not mean “optional”.

In practice the most common mistake at a one-person company is not getting it wrong. It is not having one at all, on the assumption that a simple structure is outside the requirement.

What happens if you do not keep one?

Where the company and each responsible person (directors, the company secretary and others) fail to comply, it is a criminal offence: a level 4 fine of HK$25,000, with a further HK$700 per day for a continuing offence.

And it is not only a question of fines. A bank review, opening an account, a buyer’s due diligence — all of them ask for the ownership information. If it has not been kept properly, assembling it at that moment tends to produce dates that do not match the facts, and the reconstruction becomes a problem in itself.

This obligation connects to the others

Identifying the significant controllers, sending the notices, maintaining the register, appointing a designated representative, responding to inspection — these sit on the same thread as the company secretary role, the annual return and the statutory registers, and the information overlaps heavily.

Do it properly once and the structure chart you need when opening an account is already there.

Want the company secretary work, the annual return and the SCR handled together? Get started, or talk to us first.

This article is general information and does not constitute legal advice. The definition of a significant controller, the keeping requirements, designated representative eligibility and the penalties are governed by the Companies Ordinance and the Companies Registry’s latest published guidance.