Dormant company in Hong Kong made simple

There are many reasons why companies will choose to go dormant. Here are a few reasons:

1. Keep the company name
2. Saving the company for future use
3. Hold assets or intellectual properties
4. Lower maintenance cost (Annual Return, AGMs, Audited FS are exempted during dormancy)

A company that has no accounting transaction and has notified the CR is considered a dormant company. Please note that “Non-trading” company is not the same as a dormant company and has no legal implications.

The company would need to pass a special resolution and submits it to the Company Registry.

The definition of an accounting transaction is a transaction that is required by section 373 to be entered in the company’s accounting records, excluding a transaction arising from the payment of any fee that the company is required by an Ordinance to pay. Some examples of accounting transaction:

– Sales and purchases of goods by the company
– The assets and liabilities of the company
– Money received and expanded by the company

Please note that the cost to keep your company registered are not counted as accounting transactions.

If a company declares dormancy within 42 days of its incorporation or anniversary, the company is exempted from filing an Annual return before going dormant.

During a company’s dormancy, the preparation of an Audited Financial Statement is exempted

However, when a company’s dormant date is after the financial year end then Company is still require to prepare the audit up to the latest financial year end just passed.

After your first NIL PTR and ER is filed, the IRD may choose to hold off issuing PTR/ER for a few years. In experience, a dormant company may need to file PTR/ER once every 3 years.

A company and its subsidiary cannot falling under any of the following categories within last 5 years (Insurer, Banking institution, Securities dealer, Commodities Trading dealer, approved MPF trustee, licensed leveraged foreign exchange trader).