Dissolution of a Hong Kong Company. Service offer

Budget for closing a Hong Kong company (two options):

Time frame for closing a Hong Kong company:

A Hong Kong company can be closed either via established liquidation (winding up) procedure or strike off (deregistration). Let us inspect closer these options for cessation of the company’s business.

A company’s striking off the register is regulated by Part 15 of the Companies Ordinance (Cap. 622) – “Dissolution by Striking off or Deregistration”. In this case, we are talking about deregistration because what is known as striking off means in Hong Kong a procedure that is only carried out at the discretion of the Registrar of Companies rather than at the discretion of a company.

A Hong Kong company can be deregistered if all of the following conditions are met:

Also, before making an application for the deregistration, it is necessary to settle all matters related to the company’s property because, upon deregistration, any undistributed property is vested in the Government of the Hong Kong Special Administrative Region as bona vacantia.

The deregistration procedure includes the following steps to be taken by the company:

1. The members of the company pass a resolution to cease business.
2. The company clears all its existing obligations.
3. The bank accounts are closed.
4. The liquidation accounts are prepared.

To do this, it is necessary to provide information about the company’s activities in the financial year up to the dissolution date (copies):

• bank account statements and certificates of account closure;
• contracts and agreements made in the financial year;
• previously made contracts and agreements which continue in the financial year in question (for example, loan agreements);
• underlying documentation disclosing the business of the company in the financial year.

5. The company submits its liquidation accounts to the Inland Revenue Department and requests permission to deregister the company (which is called a Notice of No Objection to a Company being Deregistered / Notice of No Objection).

6. After receiving a Notice of No Objection from the Inland Revenue Department, the director submits to the Registrar of Companies an application for deregistration of the company (Form NDR1) with the Notice of No Objection attached and the payment of deregistration fee. This application must be submitted within 3 months from the issue date of the Notice of No Objection.

Normally, a letter acknowledging receipt of the deregistration application will be issued by the Registrar within 5 working days. The Registrar will then publish a notice of the proposed deregistration in the Gazette. If no objection to the deregistration is received within 3 months of this publication, the Registrar will deregister the company by publishing another notice in the Gazette. The date of this notice will be the company’s deregistration date.

The company can be restored within 20 years of the deregistration date (by application to court).

The voluntary liquidation of a company is regulated by a separate law – Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32). This is a complex and lengthy procedure that must be carefully planned and rigorously adhere to the statutory deadlines (for filing an application, publishing a notice in a newspaper, etc.).

Just as in the case of deregistration, the members must agree to the liquidation of the company. An official liquidator (Official Receiver) is then appointed to settle the company’s liabilities and distribute its assets, as well as deal with any other matters relating to the winding up of the company’s affairs.

Regardless of which option for closing a company is chosen, it is necessary to prepare liquidation accounts in accordance with the applicable corporate and tax laws of the Hong Kong Special Administrative Region of the People’s Republic of China.

The law requires a Hong Kong company to annually submit to the tax authorities and the Registrar financial statements that accurately reflect the company’s financial position and property status. Failure to fulfil this duty not only leads to sanctions imposed by the authorities on the company, but to serious sanctions against the company directors as well.

In particular, the following penalties apply to the director:

• makes an incorrect tax return,
• makes incorrect financial statements,
• gives incorrect information,
• fails to file a tax return within a time stipulated by law,
• fails to inform that they are subject to taxation in Hong Kong,

is liable to a fine of HKD 10 000 and a further fine of three times the undercharged tax.

If a company is managed by a non-nominee director, it is he who will be prosecuted for the offences. If nominee services are used in a company, upon receipt by the director of any requests or court summons, he is obliged to provide the court with all financial information on the company and disclose the details of the beneficial owners.

By law, beneficial owners (as persons on whose instructions the company’s appointed directors act) are “shadow directors” and incur all the above-described penalties.

If a shadow director is not a citizen of Hong Kong, further development of the situation is possible through interaction between the Hong Kong authorities and the authorities of a foreign state.

In addition to that, on 1 March 2018, the amendments to Hong Kong Companies Ordinance came into effect, introducing the Significant Controllers Registers. The Significant Controllers Register is NOT PUBLIC and is NOT FILED with any authorities. It is kept at the company’s registered office; it is available for inspection only to the company’s Significant Controllers and Hong Kong law enforcement officers during an inspection. The list of those authorized to inspect the register is given in the Ordinance and is exhaustive (the Inland Revenue Department whose no-objection always has to be sought for the closure of a company is on this list).

[1] The fees are valid as of October 2024.