Oftentimes, one will incorporate a company in Hong Kong with the intention of conducting business but end up not doing so, their Hong Kong company becomes unused. As a result of inactivity, their company can enter a dormant state. While they are an incredibly common occurrence in Hong Kong, many individuals are not aware of the responsibilities they have in managing them. In this article, we look to provide insight towards what dormant companies are, how one can be managed and the rules surrounding them.
It is a company that does not have any accounting or financial transactions – excluding transactions that arise from the payment of any fees that the Hong Kong company is obligated to pay under a Hong Kong ordinance. For instance, annual business registration fees are still required to be paid.
They are not to be confused with non-trading companies. Non-trading companies will not have any business activities but will still have financial transactions.
To declare a dormant status, a private Hong Kong company should pass and deliver to the Registrar of Companies a special resolution declaring that the company will become dormant.
Upon passing a special resolution declaring dormancy, the company will become dormant from:
There are no rules that dictate how long a dormant can stay inactive for.
Companies with a dormant status are still obligated to comply with many of the regulations governing Hong Kong companies.
However, they also are exempted from complying with many obligations that Hong Kong companies face, specifically:
To cease a dormant status, the company must pass a special resolution declaring the intention to enter into an accounting transaction. The special resolution must then be delivered to the Registrar of Companies.
A company will then cease to be dormant when:
Any company, or subsidiary of that company, cannot claim a dormant status in Hong Kong if they are:
- Is in a controlling entity relationship with a company which is an intermediary; or
- Receives or holds in Hong Kong client assets of the intermediary as defined in the Securities Futures Ordinance
The FastLane Group is a licensed Hong Kong company secretary. We understand the statutory obligations that govern how Hong Kong companies can act and operate. We have assisted our clients in respect to all matters of a Hong Kong company – from their incorporation to their dissolution. Please contact the FastLane Group for your enquiries regarding how we can help you manage a company.
This article originated from https://fastlanepro.hk/dormant-company/