Deregistration in Hong Kong
4 minute read
Want to close your business? You may consider deregistration which is a relatively simple, inexpensive, and quick procedure for dissolving defunct solvent companies.
This guide covers all the details regarding company deregistration in Hong Kong.
- What Types Of Companies May Apply?
- What Need To Be Arranged Before The Application For Deregistration?
- What Are The Procedures And How Long Does It Take?
- What Are The Reasons To Deregister A Company?
- Can I Restore A Deregistered Company?
What Types Of Companies May Apply?
A private company or a company limited by guarantee may apply for deregistration. However, the following two types of companies are not entitled to apply for deregistration for dissolution:
- Companies specified in s749 of the Companies Ordinance (e.g. public companies, banks, insurance companies, trust companies, etc. and their holding companies during the five years immediately before the deregistration application is made)
- A registered non-Hong Kong company under Part 16 of the Companies Ordinance
A private company must be a defunct solvent company. If you are not sure what a defunct and solvent means, it is a term that describes a company that is no longer operating and has no debts or liabilities.
Know that eight types of companies that are listed in sections 749 (2) of the Companies Ordinance cover:
- Authorized institution as defined by section 2(1) of the Banking Ordinance Cap. 155
- Insurer as defined by section 2(1) and (2) of the Insurance Ordinance (Cap. 41) (Amended 12 of 2015 s. 167)
- Corporation licensed under Part V of the Securities and Futures Ordinance (Cap. 571) to conduct business in any regulated activity as defined by section 1 of Part 1 of Schedule 1 to that Ordinance
- Associated entity, within the meaning of Part VI of the Securities and Futures Ordinance (Cap. 571), of a corporation mentioned in paragraph (c)
- Approved trustee as defined by section 2(1) of the Mandatory Provident Fund Schemes Ordinance (Cap. 485)
- Company registered as a trust company under Part VIII of the Trustee Ordinance (Cap. 29)
- Company having a subsidiary that falls within the above categories
- Company that falls into the above categories at any time during 5 years immediately before the application under Section 750 is made
Under What Conditions Can An Application Be Made?
If your company meets ALL of the following conditions, the company itself, a director or a member of the company may make an application for deregistration to dissolve the company:
- All the members of the company agree to the deregistration;
- The company has not commenced operation or business, or has not been in operation or carried on business during the 3 months immediately before the application;
- The company has no outstanding liabilities;
- The company is not a party to any legal proceedings;
- The company’s assets do not consist of any immovable property situate in Hong Kong;
- If the company is a holding company, none of its subsidiary’s assets consist of any immovable property situate in Hong Kong; and
- The company has obtained a “Notice of No Objection to a Company being Deregistered” (“Notice of No Objection”) from the Commissioner of Inland Revenue.
What Need To Be Arranged Before The Application For Deregistration?
If the company will be dissolved on deregistration and, upon dissolution, all the company’s assets, if any, would be vested in the Government of the Hong Kong Special Administrative Region as bona vacantia. Therefore, before the application for deregistration, you should clear all the assets and liabilities of your company.
- If your company is a holding company of other companies, the holding relationship should be ceased before the company is deregistered;
- Dispose the stock, machine, motor vehicle, land and property (if any) etc.;
- If your company maintains bank accounts, the balances in the accounts should be cleared and then proceed the account closure after confirmed there is no more bank transactions are required e.g. receiving sale proceeds or deposits and making payment etc.;
- For the outstanding debts, your company has to settle all of that. Alternatively, the debts can be either settled by the directors, members, holding company or related companies OR waived by the creditors e.g. the directors, members, holding company or related companies.
How To Obtain The Notice Of No Objection
apply for a document called Notice of No Objection from the Commissioner of Inland Revenue Department (IRD) first. This procedure is also known as tax clearance and is the most critical part.
Your company should clear all the outstanding tax issues (e.g. any outstanding profits tax return, business registration fee, offshore claim, etc.) and pay all the necessary tax with the Inland Revenue Department. In case of no outstanding tax issues, the IRD will issue the Notice of No Objection to a Company Being Deregistered.
In order to proceed with the tax clearance, the company needs to prepare the final accounts from the last set of audited financial statements up to the business cessation date and submit it to the Inland Revenue Department. The business cessation date is a date when the company’s trading businesses ceased. Typically, that would be the date when your last invoice was paid or your last expense incurred.
What Are The Procedures And How Long Does It Take?
Once you have obtained the Notice of No Objection from the IRD, you should deliver an application for deregistration to the Registrar of Companies within 3 months from the date of issue of the Notice of No Objection, together with the required fee and the Notice of No Objection.
After the submission of the application for deregistration, an acknowledgment notice will be issued within 5 working days. The Registrar of Companies will publish a notice of the proposed deregistration in the Gazette.
If no objection is received within 3 months, the Registrar will deregister the company by publishing a second notice in the Gazette to declare that the company is deregistered on the date of the second notice. The company is dissolved on deregistration.
You will be informed by a separate letter from the Registrar. The entire process takes about 5 months.
What Are The Reasons To Deregister A Company?
Rarely do business owners hope to close their business. However, there are scenarios that lead to this outcome. A difficult situation may ensue and people just can’t get through it. There are certain circumstances (disasters, viral outbreaks, market crashes, etc.) that are just too much for some businesses to handle.
Below you can see the most frequent reasons why businesses deregister in Hong Kong.
- The business is in non-compliance with statutory obligations. In other words, it has improper administration of business affairs.
- It fails to conduct its business activities, leading to no longer being profitable.
- The business has no ability to deal with the debts.
- The business’s shareholders are arguing or falling out.
- There are procedures of corporate restructuring to which the company belongs.
Nevertheless, rest assured that whatever the reason behind the closure may be, the deregistration process for a Hong Kong company must be taken seriously and in an orderly manner.
Can I Restore A Deregistered Company?
It is possible to apply to the court for an order to restore the company. An application should be made to the Court of First Instance for the restoration of your company.
To be eligible for administrative restoration, the business’s name has to have been struck off the Companies Registry and the business must have been dissolved consequently.
These are the requirements for administrative restoration of a dissolved company:
- The company was operating or carrying on business at the time its name was struck off.
- If the company has any immovable property in Hong Kong which has become vested in the Government as bona vacantia, the Government has confirmed that it has no objection to the restoration.
- The applicant must bring up to date the records of the company kept by the Companies Registry.
Take a look at the two most common deregistering-related matters that you need to have in mind:
- Disposal of company property
- Annual returns requirements
Before you can deliver the application for your HK company deregistration, you have to ensure that you have completed the disposal of your company property correctly.
Hong Kong laws stipulate that all company property shall be considered as bona vacantia. Once the dissolution happens, all of these assets have to be held by the Hong Kong government.
When it comes to annual returns requirements, you should know that your Hong Kong business has to satisfy all compliance requirements under the Companies Ordinance until the complete deregistration occurs.
After you make the application, you are still required to complete some steps such as filing annual returns, notifying the Companies Registry if any change occurs regarding the company address, and handing out notices of changes of company secretary and directors along with their particulars for registration.
In case of failure to meet these statutory obligations, you will be liable to legal penalties.
What Statutory Obligations During And After The Deregistration Have To Observed?
Your company still has to observe its statutory obligations until it is formally dissolved on deregistration e.g. maintain registered office, company secretary, designated representative, file the Annual Returns, report of changes etc.
The director of the company immediately before the dissolution should keep the company’s statutory records for at least 6 years after the date of dissolution.
A company dissolved on deregistration still may restored by an application to the Court for the restoration of the company to the Companies Register within 20 year from the date of dissolution by its director or member or creditor.
Need help? No worries, Sleek will guide you through the whole deregistration process. Talk to us!