Annual Requirements for a Company in Hong Kong

5 minute read

A company registered in Hong Kong and its officers must ensure timely delivery of statutory returns to the authorities in compliance with the requirements of the Companies Ordinance (CO) and the Inland Revenue Ordinance (IRO).

Overview:

• Annual Return
• Audited Financial Statements
• Annual Tax Return
• Annual General Meeting
• Business Registration
• Reporting of Remuneration paid to employees

If a company fails to comply with the requirements, the company and every responsible person of the company, including every director, company secretary and manager of the company, are liable to prosecution and, if convicted, default fines.

Annual Return

A local limited liability company must deliver Annual Return (Form NAR1) to Companies Registry. Private company must annually file and submit NAR1 within 42 days of the incorporation date anniversary.  In the case of public companies, the form should be filed within 42 days of the return date, i.e. 6 months after the end of the company’s accounting reference period.  A substantially higher registration fee is payable for late delivery of the return.

Details of the company as at the anniversary date of incorporation, including registered office address, share capital, company secretary, director, shareholder and location of company record are reported in the return.  For public company and company limited by guarantee, a certified copy of the financial statements with the report of the auditors and the report of directors have to be delivered with the return. This requirement is not applicable to private companies limited by shares.

Audited Financial Statements

A company registered in Hong Kong must keep a full record of its accounting transactions. All financial transactions must be entered in the accounting records in accordance with the Hong Kong Financial Reporting Standards. It is important to perform bookkeeping at the suitable time interval applicable to the company to ensure accurate and timely update of your ledger.

The financial statements should be audited by a Certified Public Accountant in Hong Kong. The audited financial statements must include statement of financial position/balance sheet, auditor’s report, and statement of comprehensive income/profit and loss account.

The audited financial statements should be approved by the Board and adopted by the members of the company.

Annual Tax Return

Every limited company must complete and lodge the Profits Tax Return together with the supporting documents, which are its audited financial statements, tax computation with supporting schedules showing the amount of assessable profits (or adjusted loss), and other documents and information as required within the prescribed time frame.  Only small corporations as defined in the IRO and dormant companies are exempted from submitting audited financial statements.

Annual General Meeting

Each Hong Kong company must hold an Annual General Meeting (AGM) in each financial year.  Private company not a subsidiary of a public company must hold AGM within 9 months after the end of financial year (except when the first set of audited financial statements that are longer than 12 months, the AGM should be held 9 months after the anniversary of incorporation or 3 months after the financial period, whichever is later).

A company is not required to hold AGM if it is a single member company, or if everything is resolved by written resolution, or if the members of the company resolve unanimously to dispense with the holding of AGM.

Business Registration

The Business Registration Certificate (BRC) must be renewed before the anniversary date of incorporation.  The renewed BRC has to be displayed at the place of business of the company.

Reporting Of Remuneration Paid To Employees

When a Hong Kong company has employee, it must maintain payroll records and report remuneration paid to employee by submitting annual Employer’s Return for the period from 1 April to 31 March.  Income chargeable to salaries tax that should be reported by the employer includes salaries, wages, leave page, directors fee, commission, bonus, pension, education benefits, provision of place of residence to the employee.

If the company has no employee, it should report this to the Inland Revenue upon receipt of the Employer’s Return.

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