Companies Ordinance Update: The Latest to Business Confidentiality
8 minute read
As an active business owner, it’s sometimes hard to keep in touch with all the changes to Hong Kong Company Law. Some updates may not directly affect you, but we’re here to explain the ones that do. One such update will keep company directors’ personal information private in a way that was previously overlooked. In an age where your data is used like currency, it’s important to know which information is public knowledge, and which is rightfully private.
In this article, we bring you up to speed with the latest adjustments in this legal law detailing the Companies Ordinance (CO), how it relates to your business and more.
Your company directors’ personal information is stored in the Companies Register, which is managed by the Companies Registry. This can be accessed by the public.
The CO already has a set of rules to ensure only legitimate and essential access is given for such personal information, but they have yet to be implemented. The Register permits public examination for the purposes provided in section 45(1) of the CO.
This includes determining the details of a company’s directors or other officers, or the details of a person who is appointed as the liquidator or provisional liquidator in a company’s winding up. But recently, the authorities have decided that company officers’ information should be obscured from the general public in order to keep their identities safe.
The Hong Kong Companies Ordinance (Companies Act) is a set of regulations that establishes the legal boundaries within which businesses can operate in Hong Kong. This legislation includes rules on using and disclosing information such as company name, registered office, information on directors and shareholders, and more.
The company must follow the various provisions of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong). These responsibilities include timely disclosure and reporting to the Registrar of Companies of specified information about the company, its officers, and shareholders. Companies must disclose any changes in such information so that members of the public can easily access the most up-to-date information held by the Registrar of Companies.
Every business operating in Hong Kong is required by the Ordinance to keep adequate income and expenditure records, allowing the assessable profits to be easily determined.
Documents must be kept for a minimum of seven years. There is a risk of a maximum fine of HKD 100,000 if a corporation fails to comply with the Ordinance without a justifiable reason.
What are the latest changes made to this law?
The main update that has provoked reactions recently is the new inspection regime. The Register’s new inspection regime will necessitate significant technological and operational changes to the Integrated Companies Registry Information System (ICRIS).
According to the new regime, ICRIS will do the following for the Company Register:
- Around 1.7 million new documents containing protected information each year would need to be registered, before processing and streamed into the public and protected registers.
- To make around 40 million papers with protected information that have already been registered with the Register available for persons to apply and have that information masked.
To ensure that the company registration and search services are not jeopardized, the information system must be improved to allow automation and computer-aided processing.
The government is working on improving the system to better manage these new changes and revamp the Register. Hence, full rollout of this law will only take place by the end of 2023. Meanwhile, they are looking at other possible ways of putting some of the new law rulings into effect sooner by phasing in the personal data protection system.
The update means that the Companies Register can publish correspondence addresses of directors in lieu of their usual residential addresses (URAs), as well as partial identification numbers (IDNs) of directors, company secretaries, and other relevant persons in lieu of full identification numbers.
Only a few authorized persons will have access to this previously public information.
How is your business affected?
There are numerous people who see these changes as controversial, thinking that the law will technically allow directors to obscure their identities.
While the home addresses and partial personal identity numbers of directors and secretaries will be hidden from the public, a number of people will still have access to this information. Those who have access fall under these 7 categories:
- Members of the company
- Public officers or public bodies
- A person or organization appointed or empowered by law
- Practicing solicitors
- Certified accountants
- Authorized institutions under the Banking Ordinance
- Designated institutions regulated under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance
Still have questions? Let’s break it down with answers to frequently asked questions for the business owner on this topic below.
Frequently asked questions
The new law will be rolled out in three phases:
- Phase I: From 23 August 2021, companies can replace residential addresses of directors with correspondence addresses, and complete identification numbers of directors and company secretaries with partial numbers for public inspection on their own registrations.
- Phase II: From 24 October 2022, protected information in the Companies Register’s Directors Index will be replaced by correspondence addresses and partial IDNs for public viewing. Protected information contained in documents submitted for registration after the commencement of this phase will not be made public. The Companies Registry can grant access to sensitive information on directors and other individuals.
- Phase III: Come 27 December 2023, data subjects can petition to the Companies Registry to have their protected information contained in papers already registered before the start of Phase 2 shielded from public view and replaced with their correspondence addresses and partial identification numbers. To acquire access, applicants must meet specific requirements.
The newly updated Act requires the following to be published:
- Correspondence addresses of directors in lieu of their home addresses.
- Partial identification numbers of directors, company secretaries, and other relevant persons in lieu of full identification numbers.
According to the Act, only certain individuals (in the 7 categories above) will have access to full addresses and identification numbers of these members.
When the CO was issued in 2012, provisions were included for a new inspection regime, in light of growing public awareness of the need to protect personal data. The provisions highlighted that personal data should be limited only to that which is strictly necessary for legal purposes, rather than made available for the public.
One of the new provisions stipulates that a company can withhold Protected Information stores in its own registers from public inspection. That is an option if a business owner wishes to keep their business information private.
Even though the latest provisions are controversial to some, the government’s intent behind these changes puts the privacy of business owners first. This simply means that vital business information isn’t disclosed for everyone to see and share.
However, a business will have to disclose details regarding taxes and other legal procedures if necessary, but that is something that only government agencies can ask for.
If you want to withhold your company’s information from the general public, Sleek can guide you through it via our corporate secretary services. Our friendly expert team will help you secure your personal information while keeping your company compliant with the region’s laws.
If you need help or have further questions on the updates to this law, don’t hesitate to reach out to us for a free consultation today.d