Many jurisdictions around the world now require newly formed Companies to file a “register of beneficial owners”.
In most jurisdictions this document is filed confidentially with the Government’s Company registry and is not publicly accessible information.
If you’re looking to incorporate an “Offshore” Company and don’t want to risk your name being listed with the government of that jurisdiction as the “Beneficial Owner” of the Company there are 2 stand out jurisdictions worth considering ie Singapore (“SG”) and Hong Kong (“HK”).
Both these jurisdictions work like a tax haven jurisdiction ie they don’t tax income that is earned outside the country of incorporation (unless you incorporate in SG and bring the money INTO Singapore).
Neither jurisdiction has “registers of Beneficial owners” but rather they have a register of controllers.
Singapore’s Register of Registrable Controllers
Singapore doesn’t require its Companies to create/hold a register of beneficial owners per se but (like Hong Kong) Singapore Companies are required to keep a register of registrable controllers, and to make the information contained therein available to public agencies upon request.
A Controller is defined as an individual or a legal entity that has a “significant interest” in or “significant control” over the company.
Controller based on Significant Interest
Under Singapore (“SG ) law a controller who has significant interest in a company may include any of the following:
In the case of Companies with Share capital:
- an individual who has interest in more than 25% of the shares; or
- an individual with more than 25% of total voting power in the Company
In the case of Companies without Share capital (eg Companies Limited by Guarantee):
- An individual who has the right to share in more than 25% of the capital or profits of the Company
Controller based on Significant Control
Under SG law a controller who has significant control over a company is defined as a person who:
- holds the right to appoint or remove directors who hold a majority of the voting rights at directors’ meetings;
- holds more than 25% of the rights to vote on matters that are to be decided upon by a vote of the members of the company; or
- exercises or has the right to exercise significant influence or control over the company.
Key points about the Register of Registrable Controllers:
- The register of registrable controllers must be maintained at a prescribed place, e.g. the company’s registered office or the registered office of the registered filing agent.
- The register can be maintained in paper or electronic format.
- The register of registrable controllers is stored privately by the Company and is not accessible to the general public.
- Companies must give the Registrar and ACRA (The Accounting & Corporate Regulatory Authority) officers, as well as public agencies administering or enforcing any written law (eg the SG Commercial Affairs Department, Corrupt Practices Investigation Bureau and the Inland Revenue Authority of Singapore) access to their registers of registrable controllers upon request.
- The information therein can only be used by public agencies for the purpose of administering or enforcing the laws under their purview (e.g. investigation of money laundering offences).
- Companies will have to declare with ACRA the location of the company’s register of registrable controllers when filing the company’s annual returns or annual declaration .
- Companies can discharge their duties by sending notices to the relevant parties and recording their particulars, as well as sending further notices to any other parties that have been revealed as potential controllers. Notices can be sent and replies may be received, in electronic or hard copy format. The Company is not liable should recipients of these notices fail to respond or provide inaccurate responses.
- A controller is required to provide and update information to the Company.
Hong Kong’s Significant Controllers Register
Hong Kong (“HK”) doesn’t require its Companies to create/hold a register of beneficial owners per se but (like Singapore) HK Companies are required to keep a Significant Controller Register “SCR”), and to make the information contained therein available to public agencies upon request.
Under HK law a person is deemed to have significant control over a company if one or more of the following 5 conditions are met:
- The person holds, directly or indirectly, more than 25% of the issued shares in the company or, if the company does not have a share capital, the person holds, directly or indirectly, a right to share in more than 25% of the capital or profits of the company
- The person holds, directly or indirectly, more than 25% of the voting rights of the company
- The person holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of the company
- The person has the right to exercise, or actually exercises, significant influence or control over the company
- The person has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or a firm that is not a legal person, but whose trustees or members satisfy any of the first four conditions (in their capacity as such) in relation to the company
The SCR is NOT filed with the HK Government and need only be kept at the company’s registered office address in Hong Kong or any other Hong Kong address with prior notification filed to Companies Registry.
When requested by a law enforcement officer – for the purpose of performance of functions relating to the prevention, detection or investigation of money laundering or terrorist financing – a HK Company must at any reasonable time make its SCR available for inspection by the officer at the place at which the SCR is kept and the Company must permit the officer to make copies.
Privacy Solution – Set up a Seychelles Foundation to act as shareholder of the Company
Recently the following question was put to our senior legal adviser in HK…
“In the above scenario, and in particular given that a Seychelles Foundation is deemed via statute to be both the legal owner AND THE BENEFICIAL OWNER of any asset it holds/owns, if a Seychelles Foundation is set up to act as shareholder of a HK Company which party’s name (or which parties names) are inserted into the SCR???
The answer we received was as follows:
“Assuming a Seychelles Foundation is the sole shareholder of the HK the Foundation is the beneficiary itself until it decides to distribute benefits. Therefore, you would only need to record the name of the Foundation as the Significant Controller in the SCR.”
You might also like refer to the SCR guidelines page 25-33 in particular 10.4 to 10.6 to determine whether there might be any other entities / individuals that actually exercise a significant control over the company (even though they don’t hold shares or directorships / indirectly).
(The HK Govt “Guideline on the Keeping of Significant Controllers Registers by Companies”
is accessible via this Link: Guideline on the Keeping of Significant Controllers Registers by Companies )
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.com
DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.
