Viewpoints

The law governing Estate Duty in Hong Kong is set out in the Estate Duty Ordinance. Estate duty has the following characteristics: 1. It is based on the territorial principle and is thus only levied on property situate in Hong Kong. The deceased’s nationality, residence or domicile are completely irrelevant in determining whether or not an estate duty charge arises. The following examples show when a charge arises and when a charge does not arise: Bank accounts: A charge arises if the bank account is in the territory. Contract Debts: A charge arises on monies owing to the deceased by way of a contract debt if the debtor resides in Hong Kong. Registered Shares: Registered shares are located in Hong Kong if the share register is situated there. Bearer Instruments: are located at the place in which they are physically present at the time of death. Patents and Trademarks: are […]

Table of Content Part (1) Summary of Maintenance and Compliance Part (2) Filing Obligations with the Companies Registry Part (3) Change of Name Part (4) Changes to Memorandum and Articles of Association Part (5) Issue of Shares (Increase Issued and Paid up Capital) Part (6) Share Transfers Part (7) Filing of Employer’s Return (for the purpose of reporting the payment of salaries to its employees, including director(s) during the financial year) Part (8) Filing of Profits Tax Return Part (9) Application and Renewal of Business Registration Certificate Part (10) Internal Management Part (11) Keeping Proper Business Records Part (12) Accounting and Auditing Requirements of a Hong Kong Company Part (13) Application for Dormant Status Part (14) Closing Down a Company in Hong Kong by Deregistration (Strike off) Part (15) Closing Down a Company in Hong Kong by Liquidation (Winding Up)

Closing down a company in Hong Kong involves a certain number of formal steps and the overall process can take many months to complete. The most common reasons for closing a company are:  failure of the company to carry on business  company is no longer profitable  inability to pay its debts  falling out between shareholders  non-compliance with statutory requirements, including mismanagement of company affairs  corporate restructuring of the group to which the company belongs Companies can be closed down either by “Deregistration” or “Winding Up”. Although both the procedures will result in the dissolution of a company, the processes they entail are significantly different. This part deals with the liquidation of a Hong Kong private company. 1. Types of Winding up Available to a Hong Kong Company There are two paths to winding up a company in Hong Kong – voluntary winding up or […]

Closing down a company in Hong Kong involves a certain number of formal steps and the overall process can take many months to complete. The most common reasons for closing a company are:  failure of the company to carry on business  company is no longer profitable  inability to pay its debts  falling out between shareholders  non-compliance with statutory requirements, including mismanagement of company affairs  corporate restructuring of the group to which the company belongs Companies can be closed down either by “Deregistration” or “Winding Up”. Although both the procedures will result in the dissolution of a company, the processes they entail are significantly different. This part deals with deregistration of a defunct Hong Kong private company. 1. Introduction to Deregistration (Strike off) of a Hong Kong Company A Limited company, which is defunct and solvent, wants to cease its business must officially apply to […]

If you have an inactive company, or where you registered a company for a specific project but that project for whatever reasons has been postponed and you may need to use that company again in the future, it may be cost effective to declare it in dormant status. If the company is dormant it does not have to file an annual return, hold an AGM, prepare audited accounts or appoint auditors. That means savings on both time and money. Definition of Dormant Company The term “dormant” applies to a Hong Kong limited company that, in legal terms, has “no significant accounting transactions” during a financial year. It is not the same as a “non-trading company”, a term that has no legal meaning. No significant accounting transactions means no entries in the company’s accounting records. The amount paid for shares when the company is first formed and a few costs that […]

1. Book-keeping (Keeping of Books of Accounts) Requirements In accordance with the requirements of Section 121 of the Hong Kong Companies Ordinance, every company shall cause to be kept proper books of account with respect to- (1) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (2) all sales and purchases of goods by the company; (3) the assets and liabilities of the company. For the purposes of the above requirements, proper books of account shall not be deemed to be kept with respect to the matters aforesaid if there are not kept such books as are necessary to give a true and fair view of the state of the company’s affairs and to explain its transactions. The books of account shall be kept at the registered office of the company or at such other place […]

Keeping of Proper Business Records as Required by the Hong Kong Tax Authority Every year, the Hong Kong Inland Revenue Department will issue a Profits Tax Return (PTR) to every company. When the company receives the tax return, it has to complete and return it together with a copy of audited accounts and a tax computation. Only in the case that the company has not yet commenced its business or is a small size company or all operation and business are carried outside Hong Kong. However, the exemption from filing audited financial statements by the Inland Revenue Ordinance does not exemption the company from auditing of its financial statements. Therefore, every company must to prepare its account and engage a Hong Kong public accounting firm registered with HKICPA (the statutory body regulating the accounting profession in Hong Kong) to carry out an audit of the financial statements of the company. […]

Directors and Board Meetings   Responsibility for the overall management of a Hong Kong company typically rests with its board of directors. Generally, the board authorizes the actions of the company through board resolutions passed at board meetings or, if authorized by the articles, by written resolution signed by all the directors or a stated proportion of them. There is no requirement that board meetings be held in Hong Kong or at any specific intervals. Normally, reasonable notice of meetings must be given to each director, but the Articles of Association can modify this general obligation. The board of directors may delegate its powers to certain persons. A certain degree of delegation is, so far as third parties dealing with the company are concerned, normally implied in the case of managing directors and senior employees of a company.   Shareholders and Shareholder Meetings Certain decisions however must, by law, be […]

General Information Under the provisions of the Hong Kong Business Registration Ordinance, every person carrying on any business* must register his business within one month of the commencement of the business. Failure to do so may result in a fine and imprisonment. “Business” means any form of trade, commerce, craftsmanship, profession, calling or other activity carried on for the purpose of gain and also means a club. Application for Business Registration Business carried on by an individual or a partnership A new business carried on by an individual or a partnership must be registered with Business Registration Office within 1 month of its commencement. If a business is carried on by an individual, Form 1(a) should be completed. In the case of a partnership, Form 1(c) should be completed. These forms should be submitted together with photocopies of the Hong Kong identity cards or passports of the proprietor or all […]

1. Filing of Profits Tax Return and Supporting Documents A corporation carrying on a business in Hong Kong has to file a Profits Tax Return (tax return Form BIR51) for every year of assessment. The tax return must be supported by the following: (1) a certified copy of audited Balance Sheet and Profit and Loss Account and Director Report; (2) a certified copy of Auditor Report; (3) a tax computation showing how the Assessable Profits are computed from the accounting profits; (4) schedules of the following items (where applicable): (a) capital expenditure incurred, capital assets sold, depreciation charged in the accounts and assets not in use at the end of the basis period; (b) details of expenditure incurred on, and disposal proceeds of, scientific research; (c) details of expenditure incurred on refurbishment of buildings — the location and the usage of building during the year; (d) details of reserves and […]