Hong Kong has been prominent in the news in recent weeks, with the pro-democracy protests sadly turning violent over the weekend amid accusations from the Chief Executive, Chun-ying Leung, that unnamed ‘external forces’ were involved. This week, we also visit Hong Kong as part of our Behind the Paywall blog series, to examine recent changes to company law and the practical implications for investigators. As a Special Administrative Region of the People’s Republic of China (along with Macau) under the One China, Two Systems principle, Hong Kong’s Companies Registry is independent of the network of Chinese Administrations for Industry and Commerce (AICs) that handle registration on the mainland.
Famously described by Milton Friedman as the world’s greatest experiment in laissez-faire capitalism, Hong Kong has one of the lowest tax rates in the world with salary tax capped at 15% of gross income and profits tax capped at 16.5%. While it is designated as an offshore financial centre by the OECD, IMF and FSI, Hong Kong’s attraction isn’t in the promise of anonymity or relative opacity in corporate disclosures offered in our previously featured OFC, the Isle of Man. Indeed, Hong Kong scored the highest of all OFCs on our 2014 Open Data Compass ranking. Instead, the low tax environment is its chief pulling power.
Sources of information
Hong Kong’s company register is searchable online in both English and Chinese through the Integrated Companies Registry Information System (ICRIS). While users can register for a fee of HK\$500 (around £40 – the benefits of which appear to be mostly minor administrative features, such as transaction records and a message box), there is also an option to log in for free as an unregistered guest.
As a guest user, basic company information, including the English and Chinese name, registration number and date of incorporation can be obtained using the free search option. Once a company’s existence is verified, more detailed information is available for a nominal fee of HK\$ 22 (around £1.76) for a company particulars report or on a company director for HK\$ 11 (around £0.88)
By buying the company particulars report, an investigator can also obtain the registered office address of the company, share capital information, the names of the directors (in both English and Chinese) as well as their Hong Kong ID number (as well as possibly their passport number for overseas directors), and the name, ID number and address of the company secretary.
The cheaper director information report also provides in addition the director’s address and date of appointment to the company, though a fee needs to be paid for each director that you want to obtain information on.
Summary of information
A summary of the data points provided by each of these reports is in the table below:
|Data point||Free search||Company particulars||Director search|
|Company name (English and Chinese)||Yes||Yes||Yes|
|Date of incorporation||Yes||Yes||No|
|Director names (English and Chinese)||No||Yes||Yes|
|Company secretary name (English and Chinese)||No||Yes||No|
|Secretary address and ID number||No||Yes||No|
|Directors’ ID number||No||Yes||Yes|
|Date of appointment||No||No||Yes|
It might be surprising that so many personal details of directors are available for such a small fee. This is as a result of recent reforms to Hong Kong’s Companies Ordinance (Cap. 622), which were passed into law by the Hong Kong Legislative Council in July 2012 and became effective in March this year. The new Ordinance was intended to promote transparency and good corporate governance and requires all newly incorporated companies in Hong Kong to have at least one natural person as a director as well as a Hong Kong-based company secretary. Previously incorporated companies were given 6 months to make the necessary changes to become compliant. Unsurprisingly, there has been resistance to the full disclosure of director ID numbers and these may be partially redacted online in the future, though these plans seem to be currently postponed and, at the time of writing, the full details are still available.
Overall, the user experience on the Hong Kong registry feels a little clunky and outdated and it is fairly poor at advertising to a new user what will be returned with each of the paid reports. However, the reports are significantly cheaper than the paywalled data provided by many other offshore registries and, since the new Ordinance, the level of disclosure is pretty detailed. For a non-local investigator, they also allow a user to tie together the English and Chinese names of the company, directors and company secretary, which opens up further opportunities for media monitoring and searching Chinese-language data sources.
Future developments will be interesting to observe. The current legislative council has clearly invested significant legislative effort in pursuing a pro-transparency direction. With the increasing sensitivity around investigator access to corporate and directorship information in mainland China, though, it is possible that resistance to further openness will come from the direction of Beijing as well as from those in the business community who prefer a more discreet setup. In the meantime, it’s a relatively good time to do due diligence in Hong Kong.