<p>On January 25, 2018 in Hong Kong, it was announced that a new licensing regime for TCSP providers will enter into force on March 1, 2018 under the Anti-Money Laundering and Combating the Financing of Terrorism Act (Chapter 615) (AMLO).</p><p><span style="text-decoration: underline;"><em><strong>TCSP new licensing regime</strong></em></span></p><p>Currently, the provision of corporate and trust services in Hong Kong does not have its full regulation. The introduction of the licensing regime for trust companies was discussed in the framework of public consultations back in 2009-2010, but then nothing happened.</p><p>  Under the new regime, trust companies and persons providing such services will have to obtain a license from the Registrar. To obtain a license for the provision of such services is not just a need to meet certain criteria, but also to meet the requirements of vetting customers, collection and storage of information on their activities in accordance with anti-money laundering laws of Hong Kong.</p><p>  The registrar will have the right to grant, deny, renew, suspend or modify the terms of the license. The TCSP license will be issued for three years with the option of subsequent renewal. If there are any changes in the structure, providers of trust and corporate services will need to notify the Registrar about this within a month.</p><p>  For the trust services provision without a license after March 1, 2018, sanctions will be imposed in the form of a <span>fine not exceeding</span> 100 thousand Hong Kong dollars and imprisonment for up to six months.</p><p> </p><p><span style="text-decoration: underline;"><em><strong>Transitional period</strong></em></span></p><p>  For existing trust companies and trust managers there is a 120-day transition period. A person will be deemed to own the relevant license as of March 1, 2018, if before that date it provided corporate or trust services in Hong Kong and possessed a valid business registration certificate for these purposes. But such a license will be valid only until June 29, 2018. Person must apply for a new license for the provision of high-grade corporate and / or trust services during these 120 days.</p><p> </p><p><span style="text-decoration: underline;"><em><strong>Implementation of the new TCSP mode</strong></em></span></p><p>  To facilitate the introduction of a new licensing regime, the Hong Kong Register of Companies created a new service – Registry for Trust and Company Service Providers. The registrar started work immediately and a new website was created to provide additional information regarding the new licensing regime.</p><p>  Also, the Registrar of Companies published a circular on the new regulation regime for providers of trust and corporate services and prepared answers to frequently asked questions. From March 1, 2018, applicants for TCSP licenses can submit applications electronically on the website.</p><p> </p><p><span style="text-decoration: underline;"><em><strong>Register of persons with significant control</strong></em></span></p><p>  Another important change was the amendments adopted on January 24, 2018 to the Hong Kong law on companies that impose an obligation for all Hong Kong companies to maintain «Significant Controllers Register». This register introduction is aimed at strengthening the transparency of information on the beneficiaries of Hong Kong companies. It should be noted that the Register of persons with significant control is a strictly internal corporate document of companies registered in Hong Kong. That is, these data will not be reduced to a single centralized base and will not be publicly available (in contrast to the UK and some other countries). The company is obliged to provide access to its registry only to local government bodies at their request.</p><p>  All companies "formed and registered" in accordance with the Hong Kong Companies Regulations, including charities, financial institutions, idle companies, limited companies, and any other types of companies that are registered in Hong Kong, except for companies that are listed on the exchange, and foreign companies that are registered in accordance with Part 16 of the Hong Kong Companies Regulations.</p><p>  A natural or legal person is considered a "person with significant control" if it meets one or more of the following criteria:</p><ul><li>directly or indirectly owns more than 25% of the shares of the Hong Kong company, or more than 25% of the company's capital (for companies that do not issue shares), or has the right to receive more than 25% of the company's profits;</li><li>directly or indirectly exercises more than 25% of voting rights;</li><li>has the right to directly or indirectly appoint and remove the majority of the board of directors of the Hong Kong company;</li><li>may or may exercise significant influence and control over the management of the Hong Kong company in any other way;</li><li>may or may exercise significant influence and control over another company or trust, which in turn conforms to the previous four criteria.</li></ul><p>  Persons with significant control will be required to provide the following information:</p><ul><li>full name (in the case of a legal entity - the official name);</li><li>passport number or other identification document (in the case of a legal entity - registration number);</li><li>address of residence (in case of a legal entity - country of registration and legal address);</li><li>date from which the person received significant control over the company;</li><li>description of the legal nature of this control (as it is carried out).</li></ul><p> </p><p><span style="text-decoration: underline;"><em><strong>How to prepare SCR?</strong></em></span></p><p>  Any company subject to the SCR regime is obliged:</p><ul><li>identify their own persons with significant control;</li><li>send them written notification of the request for the necessary data (or confirmation of information) within 7 days after March 1, 2018;</li><li>Enter the date of notification in the SCR;</li><li>to enter the information received in SCR within 7 days after receiving it from a person with significant control and the date of receipt of notification from them (in case the confirmation was not received within the period of one month established by law).</li></ul><p>  Also the company is obliged to monitor the relevance of information in SCR:</p><ul><li>send a notice to a person within 7 days, knowing (or having reasonable grounds to believe) that a particular legal or natural person is a new person with significant control; in the case where the identity of a new person with significant control is unknown, it is necessary to send a notice to a third party that the company believes knows a person with significant control;</li><li>to enter information within 7 days after receiving confirmation of the person with significant control (or negative approval, if appropriate).</li></ul><p>  The register of persons with significant control must be kept in English or Chinese at the registered office of the Hong Kong company or in another prescribed place in Hong Kong. The company must inform the Registrar of the place where the SCR is stored, within 15 days after its creation or any change in the place of its storage.</p><p> </p><p><span style="text-decoration: underline;"><em><strong>Hong Kong is becoming more transparent</strong></em></span></p><p>  In addition to these changes, on February 2, 2018, the regular amendments to the Ordinance on domestic incomes were published in the Hong Kong official government publication. These changes will allow Hong Kong to implement the Convention on Mutual Administrative Assistance in Tax Matters and will ensure more effective implementation of automatic information exchange on tax issues.</p><p>  Technical amendments that relate to automatic exchange (paragraphs 5-11) do not introduce significant changes to the requirements for financial organizations to conduct inspections against customers. Since financial organizations need time to establish their systems for collecting, analyzing and communicating information, these amendments will come into force later, on January 1, 2019. In other words, the current provisions of the local legislation on automatic exchange of financial organizations will have to apply until mid-2019 (with regard to information on customer accounts for 2018), and updated - with respect to information for 2019 and beyond. The remaining amendments entered into force on the day of publication.</p>