A company that is not trading may be able to become dormant under the Companies Ordinance. A dormant company is one that has had no significant accounting transaction during the period. By passing a special resolution, a qualifying company can benefit from exemptions, most notably from the statutory audit, while it remains dormant.
A copy of the special resolution must be delivered to the Companies Registry within 15 days. The company must still keep records, maintain its company secretary and registered office, and notify changes. If you have no plans to use the company again, deregistration may be cheaper and cleaner.
At a glance
- How
- Special resolution, filed within 15 days
- Main exemption
- Statutory audit
- Still required
- Company secretary, registered office, change notices, Significant Controllers Register
- Ends
- On the first significant accounting transaction
What counts as dormant
A company is dormant during any period in which it has no significant accounting transaction, meaning a transaction that must be entered in its accounting records. Certain items are disregarded, such as payments for shares taken by subscribers, and fees paid to the Companies Registry for routine filings and penalties.
Exemptions and remaining obligations
| Item | While dormant |
|---|---|
| Statutory audit | Exempt |
| Financial statements | Simplified requirements apply; check what must be prepared |
| Annual Return | A dormant private company is generally exempt while dormant; confirm before relying on it |
| Company secretary and registered office | Still required |
| Notices of change (ND2A, NR1 and others) | Still required |
| Significant Controllers Register | Still required |
| Business Registration | Check the position with the Inland Revenue Department; notify cessation if the business has ceased |
| Profits Tax Return | Must be filed if issued; the Department may agree not to issue returns while the company is dormant |
Ending dormancy
A company ceases to be dormant as soon as it has a significant accounting transaction. From that point the normal rules apply: the directors must appoint an auditor within the period required, and the company must prepare audited financial statements for that financial year and resume its normal filings.
Dormant or deregister?
| Keep dormant if | Deregister if |
|---|---|
| You plan to restart trading | You have no plans to use the company again |
| The company holds a name or licence you want to keep | The company has no assets and no liabilities |
| You may need it for a future structure | You want to stop ongoing secretarial and registration costs |
Self-check: where do you stand?
| Question | What to do |
|---|---|
| Has the company had any transactions in the period? | If yes, it may not qualify as dormant |
| Has a special resolution been passed and filed within 15 days? | If not, pass and file it |
| Are the company secretary and registered office still in place? | Keep them in place |
| Have you agreed the Business Registration and tax position? | Confirm with the Inland Revenue Department |
| Do you still need the company? | If not, consider deregistration |
- Assessing whether your company qualifies as dormant.
- Resolutions and filings to declare and end dormancy.
- Deregistration where that is the better route.
In summary
- Dormant means no significant accounting transactions.
- Audit exemption, but other obligations remain.
- Deregister if the company is no longer needed.
Official references
- Companies Ordinance (Cap. 622): dormant companies
- Companies Registry, www.cr.gov.hk
- Inland Revenue Department, www.ird.gov.hk