What is a dormancy declaration for a Hong Kong company

Making a Dormancy Declaration in Hong Kong

A dormancy declaration is a formal statement by a company's directors that the company has had no significant accounting transactions. Under the Companies Ordinance (Cap. 622), this dormancy declaration Hong Kong process enables a private company to claim an exemption from filing the annual return (Form NAR1) with the Companies Registry. The declaration is made to the Registrar of Companies and, once accepted, relieves the company of the annual filing obligation for so long as the dormant status continues.

Hong Kong Company Dormancy Declaration

The declaration asserts that the company has not entered into any significant accounting transaction during the relevant period. A significant accounting transaction includes any transaction that would be recorded in the accounting records, other than one arising from the payment of registration fees or penalties to the Companies Registry, or from the payment of the Business Registration Certificate fee to the Inland Revenue Department. The directors must be satisfied that no such transaction has occurred before making the statement.

Declare Company Dormant Hong Kong

To declare a company dormant, the directors must pass a resolution stating that the company has had no significant accounting transactions and will not have any for the foreseeable future. The declaration must be filed with the Companies Registry, typically on the same form or accompanying the annual return for the period in which dormancy begins. The company's members must also be notified, as the declaration affects their rights to receive financial statements.

Dormancy Declaration Form

There is no dedicated single form for making the dormancy declaration. Instead, the directors' resolution is communicated to the Companies Registry as part of the annual return process. Where the company makes the declaration within 42 days of the return date (the anniversary of incorporation), the annual return for that year is filed with the declaration. If the declaration is made after that period, the annual return for the year in which dormancy is declared must still be filed before the exemption applies.

Dormant Company Declaration Process

The process requires the directors to: 1. Confirm that the company has had no significant accounting transactions. 2. Pass a board resolution to that effect. 3. File the declaration with the Companies Registry, ordinarily by attaching it to the annual return or by separate correspondence. 4. Continue to maintain accounting records for seven years, as required by the Companies Ordinance, even though no transactions occur. 5. Notify the Inland Revenue Department, as a dormant company may still be required to file a nil profits tax return (Form BIR51) unless it also qualifies for a tax dormancy concession. The Business Registration Certificate remains in force unless cancelled separately.

A dormant company that later resumes any significant accounting activity must immediately revoke the dormancy declaration and resume full compliance, including filing the next annual return on Form NAR1.