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SCR stands for Significant Controllers Register (SCR). All Hong Kong companies (except listed companies) are required to keep a significant controllers register, which is only available to legally authorised organisations and not to the public.
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What needs to be done by SCR
According to the Hong Kong Company Management Ordinance, a Hong Kong company is required to fill in the SCR with details such as the name, address, identity card number, date of becoming de facto controller, and the nature of the control exerted over the company.
A significant controller can be a natural or legal person, and the information required for filing for the SCR significant controller file includes:
1. Basic information of Hong Kong company
2. Basic information of Hong Kong directors and shareholders: scanned copies of directors/shareholders and share ratios at the time of company registration, if the company's shareholders are mainland companies or overseas companies, the company's business license is required
3. If the company has made changes, the filing information is mainly based on the new register of directors and shareholders
To determine the identity of a significant controller, one of the following five conditions is sufficient:
(1) The person directly or indirectly holds more than 25% of the issued shares of the company
(2) the person directly or indirectly holds more than 25% of the voting rights of the company
and (3) the person holds, directly or indirectly, the power to appoint or remove a majority of the directors of the company
and (4) the person has the right or actual power to exert or exercise significant influence or control over the company
(5) the person has the right or exercise substantial influence or control over the activities of a trust or firm which is not a legal person, but whose trustee or member of the firm satisfies any of the first four conditions in relation to the company
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Impact and significance of SCR filings
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SCR filing enhances Hong Kong's credibility as a reliable and competitive place to do business, and helps to meet international tax compliance standards.
Therefore, SCR filing is an important means to ensure the company's compliance operations, avoid illegal operations, and protect the company's daily operations.
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Risk of not applying for SCR
With effect from 1 March 2018, companies are required to keep SCRs, and under the Companies (Amendment) Ordinance, all companies incorporated in Hong Kong (except listed companies, mainly companies limited by shares incorporated in Hong Kong) are required to identify persons who have significant control over them and keep SCR files for inspection by law enforcement officers in Hong Kong.
According to the new CO, it is the responsibility of all Hong Kong companies to keep SCRs, and those who fail to comply with SCR filings will face the following penalties:
1. Conviction: Failure to comply with this duty is a criminal offence
2. Fines: The company and each of its responsible persons will be fined up to HK$25,000 and an additional HK$700 per day
3. Punishment for falsification: If the content is false, it is a crime, and once convicted, the maximum penalty is 300,000 Hong Kong dollars and up to 2 years in prison
4. Other impacts: SCR documents are only available to Hong Kong law enforcement agencies and significant controllers themselves (Hong Kong law enforcement agencies include: the Companies Registry, the Customs and Excise Department, the Hong Kong Monetary Authority, the Hong Kong Police Force, the Immigration Department, the Inland Revenue Department, the Insurance Authority, the Independent Commission Against Corruption, and the Securities and Futures Commission)