How do I make my Hong Kong company dormant

How to Make a Hong Kong Company Dormant

A Hong Kong company becomes dormant when it has no significant accounting transactions and its directors pass a resolution to declare it dormant under the Companies Ordinance (Cap. 622). Dormant status exempts a company from delivering an annual return to the Companies Registry, but other compliance obligations remain.

Conditions for Dormancy

Declare dormancy only if the company has had no significant accounting transactions since the end of its last financial year or, if it has never traded, since incorporation. A significant accounting transaction is any transaction that would be recorded in the company's accounting records. The company must have ceased business, have no liabilities, and have no intention of resuming trading. Directors must be satisfied these conditions are met before passing the resolution.

The Hong Kong Dormant Company Process

Start with a board resolution or a written resolution of the members declaring the company dormant. The resolution must record that the company has no significant accounting transactions and that the directors intend to apply for dormant status. Notify the Companies Registry by filing the annual return for the period up to the date of dormancy, if that return is already due. If the declaration is made before the annual return is due, simply file the next annual return showing the dormant status.

Declaring a Company Dormant

Directors or members pass a resolution to make the declaration. No specific statutory form exists for declaring dormancy. Record the resolution in the company's minutes and file the next annual return (Form NAR1) indicating that the company is dormant. The Companies Registry does not issue a confirmation of dormant status; the company's own records and filings are the evidence.

Companies Registry Dormant Status

The Companies Registry recognises dormant status through the annual return. A private company that has declared itself dormant is exempt from delivering an annual return for any year in which it remains dormant. The company must still file the annual return for the year in which it declared dormancy if the 42-day period after the return date had already passed. Once dormant, the company does not file further annual returns until it resumes trading.

Dormant Company Filing Requirements

A dormant company is exempt from filing an annual return, but it must still: - Maintain its statutory registers, including the register of members, register of directors, and Significant Controllers Register. - Appoint a company secretary, as the requirement under the Companies Ordinance applies regardless of operational status. - Renew its Business Registration Certificate with the Inland Revenue Department annually or every three years. - File a profits tax return if the Inland Revenue Department issues one, although a dormant company with no income should file a nil return. - Keep accounting records for seven years, even if no transactions occurred.

A dormant company is also exempt from the audit requirement under section 359 of the Companies Ordinance, provided it has no significant accounting transactions. If the company later resumes trading, it must file an annual return for the year in which it became active again and appoint an auditor.