Can I keep my accounting records outside Hong Kong

The Short Answer

Yes. You can keep your accounting records outside Hong Kong. The Companies Ordinance (Cap. 622) contains no prohibition on overseas storage. However, section 377 requires that accounts and returns sufficient to disclose the company's financial position with reasonable accuracy must be sent to and kept in Hong Kong. You cannot rely solely on records held abroad to meet your statutory obligations.

Can I Keep My Accounting Records Outside Hong Kong

Section 377 of the Companies Ordinance (Cap. 622) permits a company to keep its accounting records outside Hong Kong. The directors decide where the records are kept, and that location may be abroad. The records themselves need not remain in the territory.

The qualification comes from the same section. Where records are kept overseas, the company must send to a place in Hong Kong, usually the registered office, accounts and returns that show and explain the company's transactions and disclose its financial position with reasonable accuracy. These accounts and returns must be kept in Hong Kong for the entire period the records are held abroad.

Practically, a company storing full records overseas will need a duplicate set, or at least a summary, in Hong Kong. The Inland Revenue Department and the auditor will look for these documents during a statutory audit or a tax inspection.

Hong Kong Overseas Accounting Records

Hong Kong overseas accounting records are permitted, but directors must ensure the company can satisfy its compliance obligations from the documents held locally. The Companies Registry will not object to offshore storage provided the Hong Kong-based accounts and returns are adequate.

Directors should document the decision and the location of the records in the company's statutory books. If the records are moved, file Form NR2 (Notice of Location of Registers and Company Records) with the Companies Registry within 14 days of the move.

Keeping Accounts Abroad Hong Kong Company

When keeping accounts abroad, a Hong Kong company must ensure the accounts and returns held in Hong Kong meet the standard set out in the Companies Ordinance. The term "accounts and returns" in section 377 means documents sufficient to disclose the financial position with reasonable accuracy. This is a lower standard than full audited financial statements, but it must be enough for a director or an auditor to understand the company's state of affairs.

The seven-year retention period applies to both the overseas records and the Hong Kong-held accounts and returns. The Inland Revenue Department expects the company to produce documents covering at least seven years after the end of the relevant financial year.

Companies Ordinance Records Location

The Companies Ordinance records location is addressed by section 377 and by the requirement to notify the Registrar where registers and company records are kept. Form NR2 is the specified form for this notification. If the records are kept at the registered office, no notification is required. If they are kept elsewhere in Hong Kong or outside Hong Kong, file Form NR2.

The Significant Controllers Register has its own location requirement. It must be kept at the registered office or another prescribed place in Hong Kong. It cannot be kept abroad.

Practical Steps for Directors

If you plan to keep accounting records outside Hong Kong, take these steps:

1. Send accounts and returns to Hong Kong periodically - at least at the end of each financial year - so the company's financial position can be disclosed from documents in Hong Kong.
2. Keep those documents for seven years at the registered office or another Hong Kong address.
3. File Form NR2 if the location of the company records changes.
4. Ensure the auditor can access all records, whether in Hong Kong or overseas, within a reasonable time for the statutory audit.

The requirement to send accounts and returns to Hong Kong is ongoing. It applies for as long as the records remain outside Hong Kong, not just at year-end. A company that cannot produce sufficient Hong Kong-based documents during an audit or a tax check is in breach of the Companies Ordinance.