|
Q:
|
What should I do to obtain the dormant status for my Hong Kong incorporated company?
|
|
A:
|
Section 5 of the Hong Kong Companies Ordinance allows a private company by passing relevant special resolution and delivering it to the Registrar to declare as a dormant company.
|
Q:
|
What benefits does a company being dormant?
|
A:
|
It allows an inactive company to be retained at a minimum maintenance cost since a dormant company under Section 447 of the Companies Ordinance is exempt from complying with the following requirements as laid down in the Companies Ordinance:
-
Section 367(4) - Securing the financial year of each of its subsidiary undertakings coincides with the company’s financial year
-
Subdivisions 3 and 4 of Division 4 of Part 9 - Preparing financial statement and director report
-
Subdivisions 2 and 3 of Division 5 of Part 9 - Appointing auditor and prepared auditor’s report
-
Section 610 - Holding of an annual general meeting
-
Section 662 - Filing of annual return
|
Q:
|
Under what circumstances can a company be deemed as dormant?
|
A:
|
A company is deemed to be dormant under Section 5 of the Companies Ordinance by passing and filing a special resolution to the Registrar of Companies as declaring the company is a dormant company.
The Company Ordinance specified that a dormant company is not allowed entering into an accounting transaction. Accounting transactions specifically exclude a transaction which arises from the payment of any fee which the company is required to pay by any Ordinance. An accounting transaction is required by section 373 to be entered in the company’s accounting records covering all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place.
In breach of the above provision, the exemption conferred to a dormant company shall cease as from the date of accounting transaction, and any shareholder of the company who know or ought to have known about the accounting transaction, and all directors of the company shall be personally liable for any debt or liability of the company arising out of the accounting transaction.
|
Q:
|
Is a dormant company still required to comply with the Companies Ordinance or other Ordinances, for example, paying annual business registration fee or filing tax return?
|
A:
|
Yes. A dormant company is required to observe other provisions in the Companies Ordinance. For instance, a dormant company is required to report the change of its directors/secretaries or their particulars to the Registrar of Companies when a change has taken place. In addition, a dormant company is still required to pay its annual business registration fee and file its tax return when required under the Business Registration Ordinance and Inland Revenue Ordinance.
|
Q:
|
Are there any companies not allowed to claim as dormant?
|
A:
|
Yes. Section 5 of the Companies Ordinance only allow a company to apply as dormant that is a private company and not a company which is any type of following:
-
An authorized institution as defined in the Banking Ordinance;
-
An insurer as defined in the Insurance Ordinance;
-
A corporation licensed as defined in the Securities and Futures Ordinance to carry on a business in any regulated activity;
-
An associated entity, as defined in the Securities and Futures Ordinance;
-
An approved trustee as defined in the Mandatory Provident Fund Schemes Ordinance;
-
A company having a subsidiary that falls within above five categories; or
-
A company that fell within the above (1) to (7) at any time during the 5 years immediately before the special resolution is passed.
|
Q:
|
How do a dormant company cease its dormant status?
|
A:
|
If a dormant company wishes to cease to be dormant, the company shall deliver to the Registrar of Companies a special resolution that the company intends to enter into accounting transaction. The company shall become active upon delivery of the said special resolution to the Registrar.
|
FAQ
