Record keeping obligations for Hong Kong companies under Cap. 622

Statutory Basis for Record Keeping Obligations Hong Kong Companies Cap 622

Section 373 of the Companies Ordinance (Cap. 622) sets out the record keeping obligations hong kong companies cap 622. Every Hong Kong company must keep accounting records that sufficiently explain its transactions and enable the financial position to be determined with reasonable accuracy at any time. The records must also allow the directors to ensure that financial statements prepared under Cap. 622 comply with the ordinance.

This obligation applies to all companies incorporated in Hong Kong. Trading or dormant. Qualifying for an audit exemption or not. The records must be kept for seven years after the completion of the transactions or operations to which they relate.

Hong Kong Company Accounting Records Requirements

The hong kong company accounting records requirements cover a broad range of documents. Section 373 does not prescribe an exhaustive list, but the records must include invoices issued and received, receipts for payments made and collected, bank statements for all company accounts, contracts and agreements entered into by the company, delivery notes, purchase orders and credit notes, records of assets and liabilities, and records of stock held at the end of each financial year.

For a company that deals in goods, the records must also include statements of stock held at the end of each financial year and, where applicable, statements of stocktakings that support the year-end stock figures. A company that provides services must keep records showing the nature of services provided and the revenue recognised.

Retain all documentation that supports entries in the accounting system. The Companies Registry expects the records to be sufficient for an auditor to form an opinion on the financial statements. Nothing less will do.

Cap 622 Section 373 Record Retention Period

The cap 622 section 373 record retention period is seven years from the completion of the transactions or operations to which the records relate. This period runs from the date the particular transaction is completed, not from the end of the financial year. If a contract is fulfilled on 15 March 2025, keep the records until at least 15 March 2032.

Where a company is wound up, the liquidator must retain the accounting records for the same seven-year period unless the court orders otherwise. The seven-year retention period applies to both paper records and electronic records. A company that converts its paper records to digital format must ensure the electronic copies are complete and accessible for the full seven years.

Failure to keep records for the statutory period is an offence. Every director and every officer of the company who is in default commits an offence and is liable to a fine. The company secretary should maintain a retention schedule. No company records should be destroyed before the seven-year period expires.

Hong Kong Statutory Books Maintenance

The hong kong statutory books maintenance requirement is separate from but complementary to the accounting records obligation. The Companies Ordinance requires every company to maintain statutory registers at its registered office or a prescribed place in Hong Kong. These registers include the register of members (section 645), the register of directors and company secretary (section 650), the register of charges (section 341), and the register of significant controllers (since 1 March 2018).

The statutory registers must be kept in the English or Chinese language and must be available for inspection. The register of members and the register of directors and company secretary are open to public inspection. The significant controllers register is not open to public inspection but must be made available to law enforcement officers on request.

The company secretary is responsible for ensuring that the statutory registers are updated within the prescribed timeframes. Changes in directors, company secretary or registered office must be filed with the Companies Registry using the relevant forms: ND2A for director changes, NR1 for registered office changes.

Interaction with Audit Requirements

The accounting records kept under section 373 form the basis for the annual audit. Every Hong Kong incorporated company must have its financial statements audited by a practising certified public accountant registered with the Hong Kong Institute of Certified Public Accountants (HKICPA). The auditor must have access to the accounting records at all times.

If the accounting records are incomplete or are not kept for the full seven years, the auditor may qualify the audit opinion. The auditor is also required to report to the Companies Registry if the company has failed to keep adequate accounting records. That report can trigger an investigation.

Small private companies that meet the section 359 criteria and prepare financial statements under the reporting exemption (SME-FRF and SME-FRS) are still required to keep accounting records for seven years. The reporting exemption reduces the content of the financial statements. It does not reduce the record keeping obligations.

Where Records Must Be Kept: Registered Office or Prescribed Place

Section 373 requires that accounting records be kept at the company's registered office or at a prescribed place in Hong Kong. A prescribed place is any place that the directors consider appropriate, provided it is within Hong Kong. Notify the Companies Registry of the address where the records are kept if that address is not the registered office.

The statutory registers must also be kept at the registered office or a prescribed place in Hong Kong. If the registers are kept at a place other than the registered office, file a return specifying the address of that place.

Consequences of Non-compliance

Failure to comply with the record keeping obligations hong kong companies cap 622 exposes the company and its officers to penalties. Every director who is in default commits an offence and is liable on conviction to a fine of HK$300,000 and imprisonment for 12 months. The company secretary may also be liable if they were responsible for maintaining the records.

Beyond criminal penalties, the Companies Registry may strike the company off the register if it fails to maintain proper records. A struck-off company cannot carry on business. Its assets vest in the government. The directors may be personally liable for the company's debts if they continued to trade while the company was not in compliance.

The Inland Revenue Department may also impose penalties for failure to retain records for tax purposes. The Inland Revenue Ordinance (Cap. 112) requires records to be kept for seven years. The department can assess additional tax if records are missing.

Electronic Records and Digital Storage

Hong Kong law accepts electronic records as valid accounting records, provided they are accurate and accessible. A company may scan paper documents and store them digitally, but must ensure that the electronic copies are authentic and cannot be altered without detection. Maintain a backup system to prevent loss of data.

The Companies Registry has issued guidance confirming that electronic records satisfy the requirements of section 373. However, the records must be capable of being reproduced in printed form. Document the electronic storage system and ensure that it complies with the seven-year retention period.

Practical Tips for Compliance

The company secretary should establish a document retention policy that covers the types of records to be retained (invoices, receipts, bank statements, contracts), the retention period (seven years), the storage location (registered office or prescribed place), the method of storage (paper or electronic), and the destruction schedule.

Review the policy annually. The directors should confirm at each board meeting that the accounting records are being maintained properly. Give the auditor unrestricted access to the records during the audit.

A company that maintains its hong kong company accounting records requirements systematically will find it easier to prepare financial statements, respond to tax enquiries and defend any legal proceedings. The company secretary should be the point of contact for any questions about record keeping.

Summary of Key Obligations

The key obligations under section 373 of the Companies Ordinance are:

The statutory books maintenance obligation is separate. It requires registers of members, directors, company secretary, charges and significant controllers to be kept at the registered office or a prescribed place. The significant controllers register must be maintained with the assistance of the designated representative, who is responsible for responding to law enforcement requests.