Hong Kong’s registrar of companies is likely to require every firm incorporated in the city to disclose their beneficial owners by 2018, in a new move that follows the UK and Singapore in fostering transparency to stamp out fraud and money laundering.
“What we have in mind is that we will be requiring all Hong Kong incorporated companies to disclose their beneficial ownership and keep the information in the registers,” the city’s Registrar of Companies Ada Chung Lai-ling said in an interview with the South China Morning Post at an industry forum in Hong Kong.
The move, conveyed for the first time, follows a public consultation on enhancing transparency organised by Hong Kong’s Financial Services and the Treasury Bureau (FSTB), which ended on March 5.
It marks another move by the city to prevent money laundering and terror financing, according to the consultation paper.
If implemented, every Hong Kong-registered company, both publicly traded and privately owned, will be required to disclose their beneficial owners with significant control, regardless of whether they carry titles.
Beneficial owners are defined as individuals who either directly or indirectly hold more than 25 per cent of shares or voting rights in a company, or hold the right to appoint and remove a majority of directors, otherwise having significant influence or control in a company, the consultation paper said.
The Hong Kong incorporated TLG Movie & Entertainment Group, which is seeking to buy control of Television Broadcasts Limited (TVB), is supposed to disclose the identities of the final decision makers of its actions.
“There is some controversy over whether the information of beneficial ownership should be open to the public, or available only to competent authorities” such as law enforcement, Chung said. “We will be considering” both sides of the argument, she said.
The UK was the first country to introduce the beneficial ownership regime in June 2016, making all the information open to the public, while a Singapore law passed this month has kept the data solely to law enforcement authorities.
“This is an example of how we tackle the same issue in different ways and to learn from each other,” said Tim Moss, chief executive of Companies House UK and Registrar of Companies for England & Wales.
“This is the biggest change in transparency for a generation, if not two,” Moss said. “For the regulator, easy access to data is key to combating fraud or money laundering. The easier they can access the data -- not only about directors and shareholders but also beneficial owners -- the easier they can link things together.”
Registrars around the world are also working to simplify the registration process through technology and mobile devices.
Electronic filings dispense with excessive red tape, allowing companies to start their businesses quickly, while law enforcement agencies can check data more easily.
“For the vast majority of cases, these are good people doing good businesses,” Moss said. “The focus of many registrars is how we can maximise the benefit for those people.”