The SCR Register: What It Is and Why Banks Care About It

Since March 1, 2018, every company incorporated in Hong Kong is required by law to maintain a Significant Controllers Register (SCR). This register identifies the natural persons or legal entities that have significant control over the company. It was introduced as part of Hong Kong's efforts to enhance corporate transparency and comply with international anti-money laundering standards. Banks have seized on it as a critical document in their due diligence process.

What Is the Significant Controllers Register?

The SCR is a register that records the details of every person or entity that has significant control over the company. It is maintained by the company itself (not filed with any government authority) and must be kept at the company's registered office or a prescribed place in Hong Kong.

The register is not publicly accessible. However, it must be made available for inspection by law enforcement officers upon request. In practice, banks, auditors, and professional service providers routinely ask for a copy during due diligence.

Who Must Maintain an SCR?

All companies incorporated in Hong Kong under the Companies Ordinance (Cap. 622) must maintain an SCR. This includes:

• --Private companies limited by shares
• --Companies limited by guarantee
• --Unlimited companies

Listed companies are exempt because they are already subject to disclosure requirements under the Securities and Futures Ordinance. Non-Hong Kong companies (branch offices) are also exempt.

Who Qualifies as a Significant Controller?

A person is a significant controller if they meet one or more of the following five conditions:

In practice, for a typical private limited company with a single owner-director holding 100% of shares, that person is the significant controller. For a company with two equal shareholders (50/50), both are significant controllers.

Penalties for Non-Compliance

Failure to maintain an SCR is a criminal offence. The company and every responsible person (typically the directors) are liable to:

Beyond the legal penalties, a missing or incomplete SCR creates practical problems. Banks may freeze or close your account, auditors may issue a qualified opinion, and counterparties may refuse to do business with your company.

Why Banks Cross-Check the SCR

Banks in Hong Kong are required under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) to identify and verify the ultimate beneficial owners (UBOs) of their corporate clients. The SCR provides a convenient, legally mandated record of exactly this information.

During account opening, the bank will compare the information in your SCR with:

• --The details you provided on the account application form
• --The Companies Registry filing (NNC1 or latest NAR1)
• --The identification documents you submitted

Any inconsistency -- a name mismatch, a missing person, a shareholding that does not match the register of members -- will trigger additional due diligence questions or outright rejection.

During annual account reviews, banks may request an updated copy of the SCR to verify that the beneficial ownership has not changed. If you fail to provide it, or if it is outdated, the bank may restrict your account access.

How to Set Up Your SCR

Setting up the SCR is straightforward but must be done correctly:

Keeping the SCR Updated

The SCR is not a one-time exercise. It must be kept current at all times. You are required to update the register whenever:

• --A new significant controller is identified (e.g., a share transfer that pushes someone above the 25% threshold)
• --An existing significant controller ceases to qualify (e.g., shares are diluted below 25%)
• --Any particulars of a significant controller change (e.g., change of address, change of passport number)

When a change occurs, the company must take reasonable steps to identify the new significant controllers and update the register. In practice, your company secretary should handle SCR updates as part of their ongoing secretarial services.