The Law Society in January received from the Financial Services and the Treasury Bureau (“FSTB”) a consultation paper on Enhancing Transparency of Beneficial Ownership of Hong Kong Companies (“Consultation Paper”). By the Consultation Paper, the Government sought views from the public on its proposal to amend the Companies Ordinance (Cap. 622) in order to enable beneficial ownership information of companies to be captured and maintained. That served the purpose of allowing law enforcement agencies access to such information when necessary.
The Law Society noted the Government’s policy objectives to bring the regulatory regime of Hong Kong to be in line with international obligations on anti-money laundering and terrorist finance. These policy objectives underscored the above proposal.
The Company Law Committee has studied the Consultation Paper. They agreed that the above objectives were laudable and were in principle in support. However, the Committee was not convinced that Hong Kong should adopt a statutory regime for disclosure of corporate beneficial ownership; they had much reservation on the conceptual framework which underlined the Government’s proposals. They considered that enhancing the transparency of a Hong Kong company mandated by a statutory disclosure regime did not add much to the trust and confidence building process for persons engaged in business dealings. To the contrary, it would drive away investors, increase compliance costs and also create security risks. If the investigative powers of law enforcement agencies were inadequate, that can and should be addressed by enhancement of those powers, rather than imposing further burdens on law abiding investors or companies.
The above views were endorsed by the Law Society’s Council. The detailed submission on the Consultation Paper can be found at: http://www.hklawsoc.org.hk/pub_e/news/submissions/20170307.pdf.