Dormant Companies
In Hong Kong, a dormant company is a registered business that's not currently active or trading. It offers a way to maintain a legal entity for future use without the burden of ongoing compliance requirements.
Here's a breakdown of key points about dormant companies in Hong Kong:
Benefits:
Reduced compliance costs: Dormant companies are exempt from filing annual accounts and audit requirements.
Maintains legal status: The company remains a registered entity, useful if you plan to resume operations later.
Requirements:
No accounting transactions: The company cannot have any buying/selling of goods or services, or any income or expenditure except mandatory fees.
Official declaration: The company directors must pass a special resolution to declare dormancy and file it with the Companies Registry.
Ongoing obligations: Even as dormant, the company must maintain a registered address, appoint a company secretary and pay annual business registration fees.
Important notes:
Not automatic: A non-trading company isn't automatically considered dormant. An official declaration is required.
Tax returns: Dormant companies may still be required to file tax returns if requested by the Inland Revenue Department.
Bank accounts: Banks may close dormant company accounts after a period of inactivity.
If you're considering placing a Hong Kong company in dormant status, it's wise to consult with a corporate service provider or accountant to ensure you meet all the requirements and understand the ongoing obligations.
Dormant Company Annual Return Hong Kong
In Hong Kong, a dormant company generally does not need to file an annual return (Form NAR1) with the Companies Registry [Hong Kong Companies Registry]. This is one of the benefits of maintaining a company in dormant status.
However, there are a couple of exceptions to this rule:
Dormant declaration after the 42nd day: If your company became dormant after the 42nd day following its incorporation anniversary, then you are required to file an annual return for that year.
Ceasing dormancy: If your dormant company resumes business or engages in any accounting transactions, it ceases to be dormant. If this happens on or before the 42nd day after the anniversary of its incorporation, then an annual return needs to be filed for that year.
A Complete Guide to Declaring a Dormant Company in Hong Kong
Here's a comprehensive guide to declaring a dormant company in Hong Kong:
Understanding Dormancy
A dormant company in Hong Kong is a registered business that has no current trading activities. This status allows you to preserve the legal existence of your company for future use while minimizing compliance obligations.
Benefits of Declaring Dormancy
Reduced Costs: Dormant companies are exempt from filing annual audited accounts, saving on accounting and auditing fees.
Maintains Legal Status: The company remains a registered entity, allowing you to easily resume operations later.
Requirements for Dormancy
No Significant Accounting Transactions: The company cannot engage in buying/selling of goods or services, nor generate any income or expenses beyond mandatory fees (government registration, bank charges, etc.).
Official Declaration: A special resolution needs to be passed by the company's shareholders (at least 75% vote in favor) declaring the intention to become dormant. This resolution must be filed with the Companies Registry within 15 days.
Process for Declaring Dormancy
Hold a Shareholders' Meeting: Convene a meeting to discuss and vote on the special resolution to declare dormancy.
Pass Special Resolution: Ensure at least 75% of shareholder votes are in favor of dormancy.
Prepare and File Resolution: File the approved special resolution with the Companies Registry within 15 days of the meeting.
Ongoing Obligations for Dormant Companies
Even though filing and auditing requirements are relaxed, some obligations remain:
Maintain Registered Office: The company must have a physical address registered with the Companies Registry.
Appoint Company Secretary: A company secretary must be appointed to handle administrative duties.
Renew Business Registration Certificate: The annual business registration fee needs to be paid to maintain good standing.
File Profits Tax Return (if applicable): The Inland Revenue Department might still request tax filings, even for dormant companies.
Report Changes: Any changes in company structure (directors, shareholders) or registered address must be reported to the Companies Registry.
Important Considerations
Not Automatic: An inactive company isn't automatically considered dormant. An official declaration is mandatory.
Bank Accounts: Banks may close dormant company accounts after a period of inactivity. It's advisable to clarify their policy beforehand.
By following these steps and considerations, you can successfully declare your Hong Kong company as dormant and enjoy the benefits of reduced compliance while preserving its legal status for future use.
Here are some resources from the Hong Kong Companies Registry that you might find helpful:
How Bestar HK can Help
Bestar HK could assist you in ways related to dormant companies:
Dormancy declaration process: We might help with the process of declaring your company dormant, including preparing and filing the special resolution with the Companies Registry.
Ongoing compliance: We could advise on maintaining your dormant company's good standing, such as reminding you about renewing the business registration or reporting any changes.
Taxation: We provide guidance on potential tax filing requirements for dormant companies, even if an annual return isn't mandatory.
Resuming operations: If you plan to resume business activities in the future, Bestar HK could help with the transition out of dormancy and any associated filing requirements.
Reach out to Bestar HK to inquire about our specific services related to dormant companies in Hong Kong. We can assist you based on your specific situation.
Comments