(i) 

directly or indirectly, holds more than 25% of the issued shares, capital or profits, or 

(ii) 

 directly or indirectly, holds more than 25% of the voting rights in the company;

(iii)

directly or indirectly holding the right to appoint or remove a majority of directors; or

(iv)        

having the right to exercise or actually exercising significant influence or control, or

(v) 

having the right to exercise or actually exercising significant influence or control over the activities of a trust or a firm that is not a legal person and those trustees or members must satisfy (i) to (iv) above.

 A beneficial owner who satisfies any of the above conditions (“registrable individual”) will be entered into the company’s “register of people with significant control” (“PSC register”). A registrable individual may hold an interest in a company through successive layers of holding companies in the company’s chain of ownership. Any of these legal entities, whether it is formed or incorporated in Hong Kong, is registrable under the Amendment Bill if it meets one of the conditions specified in (i) to (v) above and is an entity immediately above the company concerned in the chain of ownership, will become a registrable entity.

 3. 

Every company must keep a PSC register and must take reasonable steps to ascertain whether there is any significant controller of the company and to identify them if any. The PSC register will contain the details of a registrable individual or registrable entity such as the name, identity card or passport number, company number, correspondence or registered address, date of becoming registrable and the nature of the control over the company.

 4.

Companies must enter into the PSC register details of an authorized person as a contact point for the PSC register and to provide assistance. The authorized person can either be a natural person authorized by the company resident in Hong Kong or a locally-based designated non-financial business and professional (such as accountants, solicitors, or trust or company service providers).

 5.

The PSC register will be available for public inspection by any member of the company or person on the register without charge, or other members of the public on payment of a fee. The entry may only be removed from the PSC register and destroyed after six years from the date the individual or legal entity ceased to be the registrable subject.

 6.

Criminal sanctions will be imposed on a company and its responsible person for non-compliance with the requirements for keeping a PSC register and making the PSC register available for public inspection. Any person knowingly or recklessly makes a misleading, false or deceptive material statement in the PSC register will commit an offence and subject to a fine.

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Existing Hong Kong incorporated private companies should review their current corporate and shareholding structures to see if they want to disclose the beneficial ownerships holding more than 25% of the issued shares, voting rights directly or indirectly holding the right to appoint or remove a majority of directors; or having the right to exercise or actually exercising significant influence or control etc.

Moreover, the ultimate beneficial owners of the above Hong Kong incorporated private companies who are Mainland Chinese holding Chinese assets through offshore vehicles should also carefully review the tax implications before implementing changes on their current corporate shareholding structures. If such company holds an asset in Mainland China (such as a wholly foreign owned enterprise or a real property), any change in the foregoing holding company (regardless of the tiers and the change in percentage of the shareholdings) may trigger a reporting obligation and tax exposure in Mainland China.

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Investors should also review and determine shareholding structures carefully before they incorporate any new company in Hong Kong in future.