The purpose of this article is to provide an overview of the on-going statutory compliance and annual filing requirements for Hong Kong private limited companies.
Basic Ongoing Compliance Requirements
A private limited company in Hong Kong must:
- Maintain a local registered address (P.O. Box not allowed)
- Maintain a local resident company secretary (individual or body corporate)
- Maintain at least one director who is a natural person ( local or foreigner; above 18 years of age)
- Maintain at least one shareholder (person or body corporate; local or foreigner; above 18 years of age)
- Maintain an appointed auditor unless it is a company deemed as “dormant” under the Companies Ordinance (i.e. a company that has no relevant accounting transactions during a financial year).
- Notify the Companies Registry of any changes in the company’s registered particulars including registered address, particulars of shareholders, directors, company secretary, changes in share capital, etc. as follows:
- Notification of change of address of registered office – within 15 days after the date of change
- Notification of change of secretary and director (Appointment/Cessation) – within 15 days from the date of appointment or ceasing to act
- Notification of change of particulars of secretary and director – within 15 days from the date of change of particulars
- Notification of Change of Company Name – filing of statutory form NNC2 within 15 days after the passing of the special resolution to change the company name
- Notification of the passing of a special resolution or certain other resolutions – within 15 days after the passing of resolution
- Notification of any relocation of the company’s statutory books from the company’s registered office – within 15 days after the change.
- Notification of any allotment or issue of new shares – within one month after the allotment or issue.
- Renew business registration one month before expiry on an annual basis or once every three years, depending on whether your Certificate is valid for one year or three years. The Business Registration Certificate must be displayed at all times at the principal place of business for the company.
- Hold an Annual General Meeting (AGM) within 18 months from the date of incorporation; subsequent AGMs must be held every calendar year, with the interval between each AGM not exceeding 15 months. The directors must table the company’s financial accounts (i.e Profit and Loss Account and Balance Sheet) in compliance with Hong Kong’s Financial Reporting Standards (FRS) framework. A directors report must be prepared in conjunction with the annual accounts.
- Comply with annual accounts filing deadlines and requirements of Hong Kong’s Companies Registry and Tax Authority. More details on this are provided later in this article.
- Maintain the following records and documents at all times: Incorporation Certificate, Business Registration Certificate, Articles of Association, minutes of all meetings of directors and members, updated financial records, company seal, share certificates, registers (including members register, directors register and share register).
- Maintain necessary business licences, as applicable.
- Maintain accurate and detailed accounting records to enable the assessable profits of the business to be readily ascertained. All records must be retained for seven years from the transaction date. Failure to do so will attract a penalty. If the accounting records are kept outside Hong Kong, the returns must be kept in Hong Kong. Since 1st January 2005, Hong Kong has adapted a Financial Reporting Standards (FRS) framework that has been modelled on International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB).
A company’s business records must include:
- The books of accounts recording receipts and payments, or income and expenditure
- The underlying documentation necessary to verify the entries in the books of account; such as vouchers, bank statements, invoices, receipts and other relevant papers
- A record of the assets and liabilities of the business
- A daily record of all money received and expended by the business together with supporting details of the receipts or payments
Annual Filing Requirements and Deadlines
Both local and foreign companies (an incorporated subsidiary or registered branch) in Hong Kong are subject to annual filing requirements with the Inland Revenue Department (IRD) and Companies Registry. The annual filing requirements of Hong Kong private limited companies are as follows:
Filing of Annual Return with Companies Registry
A private limited company incorporated in Hong Kong under the Companies Ordinance is required to file an Annual Return signed by a director, company secretary, manager or authorized representative with the Companies Registry. However, a private company which has applied for a dormant status (i.e. a company that has no relevant accounting transactions during a financial year) under the Companies Ordinance shall be exempted from filing annual returns.
An Annual Return is a return, in a specified form, containing the particulars of the company such as the address of the registered office, shareholders, directors, secretary, etc. There is no requirement to file the financial accounts of the company with the Company Registry.
The Annual Return must be filed once in every calendar year (except in the year of its incorporation) within 42 days of the anniversary of the company’s incorporation date. Even if the information contained in the last return has not changed since, you still need to file an annual return before the due date.
Late filing attracts a higher registration fee and the company and its officers are liable to prosecution and fines.
Filing of Annual Tax Return with Inland Revenue Department (IRD)
As per Hong Kong company law, every company formed in Hong Kong, must file a Tax Return (it’s also called Profits Tax Return in Hong Kong) along with its audited accounts on an annual basis with the Inland Revenue Department of Hong Kong (“IRD”).
IRD issues Tax Return filing notifications to companies on the 1st of April every year. For the newly incorporated companies, the notification is generally sent on the 18th month of the incorporation date. Companies must file their Tax Return within one month from the date of notification. Companies can request for an extension, if needed. You may incur a payment of penalty or even prosecution, if you fail to submit your tax return by the due date.
When filing the Tax Return, the following supporting documents must also be attached:
- The company’s balance sheet, auditor’s report and Profit & Loss Account relating to the basis period
- A tax computation indicating how the amount of assessable of profits (or adjusted losses) has been arrived at
It is the responsibility of the directors of the company to ensure that the initial and ongoing compliance requirements are met with. Non-compliance can lead to fines or even prosecution. It is prudent to engage the services of a professional firm to ensure ongoing compliance with statutory rules and regulations of the Hong Kong Companies Ordinance.