How to close a Hong Kong company

How to Close a Hong Kong Company

Deregistration is the quickest way to close a Hong Kong company, but only if the company is solvent and has no outstanding liabilities. Two main paths exist. Deregistration is for solvent companies with no assets or debts. Liquidation is for companies that are insolvent or have remaining assets to distribute. Each route involves distinct steps, authorities and forms.

Hong Kong Company Deregistration Process

For a solvent company, deregistration is the simpler and cheaper option. A private company or a company limited by guarantee applies using Form NDR1, which is submitted to the Companies Registry.

Before filing Form NDR1, the company must obtain a notice of no objection from the Commissioner of Inland Revenue. The Inland Revenue Department will only issue this notice after confirming the company has no outstanding tax liabilities and has filed all required returns, including the final profits tax return.

Deregistration is available only where the company has never commenced business or has ceased business, has no outstanding liabilities, and has all members agreeing in writing. A deregistered company is dissolved and ceases to exist as a legal entity. The process typically takes several months from the date of application.

Hong Kong Company Liquidation Process

Liquidation is required where the company cannot use deregistration, typically because it has assets, liabilities or debts. There are three types.

Members' voluntary liquidation applies to a solvent company. The directors make a declaration of solvency confirming the company can pay its debts in full within 12 months. A liquidator is then appointed to realise assets, settle liabilities and distribute any surplus to members.

Creditors' voluntary liquidation is used where the company is insolvent and cannot pay its debts in full. The creditors and members each hold meetings, and the creditors may nominate the liquidator.

Compulsory winding up is ordered by the court, most often on a creditor's petition where the company has not paid a debt. A liquidator is appointed by the court.

All liquidation routes require a liquidator, who is typically a licensed insolvency practitioner.

Form NDR1 Hong Kong

Form NDR1 is the official application for deregistration of a private company or a company limited by guarantee. It must be accompanied by the notice of no objection from the Commissioner of Inland Revenue, a statement that the company has no outstanding liabilities, and confirmation that all members agree to the deregistration.

The form is filed with the Companies Registry. The Registrar may refuse the application if any condition is not met.

Winding up a Hong Kong Company

Winding up is the legal process of closing a company through liquidation. It applies to companies that cannot use deregistration. The term covers both voluntary winding up (members' or creditors') and compulsory winding up by court order.

During winding up, the liquidator takes control of the company's assets, settles debts and distributes any remaining funds. The company ceases to carry on business except as needed for the winding up. Once the process is complete, the company is dissolved.

A final audit of the company's accounts is required in all winding up cases, and the final profits tax return must be filed with the Inland Revenue Department.

Before Closing a Hong Kong Company

Several steps must be completed before either deregistration or liquidation can proceed. Complete the final audited financial statements and file the final profits tax return. Settle all outstanding tax liabilities with the Inland Revenue Department. For deregistration, obtain the notice of no objection from the Commissioner of Inland Revenue. Cancel the Business Registration Certificate separately with the Inland Revenue Department. Ensure the company has no outstanding liabilities, including trade debts and loans.

Directors remain responsible for the company's obligations until it is formally dissolved. Simply ceasing to file annual returns or allowing the company to be struck off does not extinguish directors' duties or liabilities.