For Hong Kong private limited company, at time of economic downturn, personal reason, or founder has accident; instead of wind-up the whole business, temporary suspension of business is also an available option, which is to apply and declare the company dormant.
Benefits of applying the Company Dormant
Company applied to become a dormant company are exempted from Annual Return filing and requirement of carrying out audits of its accounts.
Also, if the company holds certain intelligence properties, assets and/or already established with certain reputable brand names, maintaining the company at dormant status first, then take good time to find a buyer without selling the business in a hurry become a feasible option.
Conditions to apply the Company Dormant
There are several conditions that have to bear in mind before applying the Company Dormant:
All the offices, staff, and passive income shall be ceased before applying the dormant;
No accounting transaction, paying or receiving any monetary that is required to be entered in the company’s accounting record
If a company fulfill above conditions, a special resolution declaring that the company will become dormant is required to deliver to Companies Registry, however, the declaration MUST be the date of delivery or any later date, any date-back resolution will not be accepted.
Another thing to consider is about bank account, this is because, for certain banks, if there is no transaction over one year, the bank account will be terminated, which causing resuming operation with extra difficulties.
As you can see, the conditions are rather harsh, if there is an accounting transaction in relation to the company, the Company will cease to be a dormant company automatically.
Preparation of mandatory documents
Upon client determined to apply the Company become dormant and certain that no accounting transaction will appear, we can arrange the mandatory documents for filing to Companies Registry:
Special resolution – mandatory filing to submit to Companies Registry;
Directors’ resolution – mandatory internal records, mainly to approve and declare that the Company is qualified and in the interest of the Company to apply for dormancy;
Likewise, when the company cease to become dormant, no matter it is voluntary or because accounting transaction has happened passively, the Company is required to file another special resolution to Companies Registry to declare cease to become dormant, where from that point of time, the Company is required to fulfill all requirement just like a normal company.
Any additional information you would like to know, please feel free to drop us an email:- catcherbiz@outlook.com. In addition, we dig out below materials in case you need a little more insights.
FAQ – Companies Registry – Dormant Companies
Q16, 17 & 20 FAQ – Companies Registry - Annual Returns
Point 4 Advice on Completion of Profits Tax Returns – Inland Revenue Department
# Tag:- #Hong Kong Company, #Dormant / Dormancy, #Temporary suspension of business, #HK Co. Essentials Series