How do I bring a dormant company back in Hong Kong

How to Bring a Dormant Company Back to Active Status

To bring a dormant company back to active status, file a notice of cessation of dormancy with the Companies Registry, resume annual return filings, and update the Business Registration Certificate with the Inland Revenue Department.

A company is dormant under the Companies Ordinance (Cap. 622) when it has no significant accounting transactions. The moment it intends to resume trading, receive income, or enter into any transaction other than those permitted during dormancy, it must act. Reactivation involves three authorities: the Companies Registry, the Inland Revenue Department, and the company's own directors and members.

Notifying the Companies Registry

The Companies Registry requires formal notice that the company is no longer dormant. File the appropriate notification to inform the Registrar that it has ceased to be dormant. This filing ends the exemption from filing an annual return that a private dormant company holds.

Once the notice is accepted, the Companies Registry records the company's status as active. The company must then file an annual return on Form NAR1 for the period since the last return was due, or for the current year if the company has not yet passed its first return date after cessation. File Form NAR1 on time to avoid the higher registration fees that apply after 42 days from the anniversary of incorporation.

Reactivating a Dormant Company and the Annual Return

Reactivation triggers the requirement to deliver an annual return for the year the cessation occurs. A private company that declared itself dormant was exempt from delivering the annual return during that period. Once the declaration ceases, the exemption falls away.

Directors should check the company's return date, the anniversary of incorporation. The annual return is due within 42 days after that date. If the company ceased dormancy more than 42 days after the last anniversary, the late period may already have started, and the higher registration fee structure applies: HK$870 within three months, rising to HK$3,480 after nine months.

Hong Kong Company Revival and the Inland Revenue Department

Hong Kong company revival also involves the Inland Revenue Department. A dormant company that held dormant status for profits tax purposes must notify the department that it has resumed business activity. Write to the Inland Revenue Department confirming the cessation of dormancy and requesting that the profits tax return filing requirement be reinstated.

The transition from dormant company to active affects the Business Registration Certificate. If the certificate expired during the dormant period, it must be renewed. The Inland Revenue Department issues the Business Registration Certificate under the Business Registration Ordinance (Cap. 310). A company that has ceased dormancy and intends to trade must hold a valid certificate.

Companies Registry Revival Process

The Companies Registry revival process for a dormant company is straightforward compared to restoring a struck-off company. Because the company never left the register, no court order or administrative restoration application is needed. The key steps are:

1. The directors pass a board resolution recording the decision to cease dormancy.
2. The company files the notice of cessation with the Companies Registry.
3. The company files Form NAR1 for the current period together with the registration fee.
4. The company notifies the Inland Revenue Department and renews the Business Registration Certificate if required.

The company should also check that its company secretary, registered office, and directors are correctly recorded on the Companies Registry's register. If any changes occurred during the dormant period and were not filed, the company must file Form ND2A for director or secretary changes and Form NR1 for a change of registered office address.

Passing a Resolution to Cease Dormancy

The directors and members must formally resolve that the company cease its dormant status. A private company may pass a written resolution instead of holding a meeting. The resolution should record the date from which the company will no longer be dormant and authorise the directors to take the necessary filing steps.

Post-Reactivation Compliance

Once the company is active again, it must comply with all statutory requirements from that point forward. This includes preparing annual audited financial statements, filing profits tax returns on Form BIR51, maintaining the Significant Controllers Register, and keeping accounting records for seven years. The audit requirement applies because a company that has ceased dormancy will have significant accounting transactions in the period, ending the exemption from audit that applied while dormant.

The Inland Revenue Department may issue a profits tax return for the period following the cessation. The directors should prepare financial statements and appoint a practising certified public accountant registered with the HKICPA to carry out the statutory audit.