Deregistering a Hong Kong Company: Steps, Fees, Timeline

At a glance

Fees and form numbers are as most recently published by the Companies Registry and the Inland Revenue Department. Government fees are revised from time to time, so checking the official site once before applying is the safest move.

What deregistration is, and how it differs from “shutting up shop”

“Shutting up shop” is a commercial description. Legally, your company continues to exist until it is formally dissolved.

Deregistration is one of the routes to dissolution — suited to a solvent private company that simply does not want to carry on. It is an administrative procedure: no court involvement, low cost.

The other route is liquidation, which suits a company with debts or complicated assets. On choosing between them, see liquidation or deregistration.

The key point: both routes require you to act. Neither of them is “leave it and it will finish itself”.

Three conditions — fail one and you cannot apply

One: written agreement of all members. Not a majority — all of them. If a shareholder will not sign, this route is closed.

Two: no business carried on for at least 3 months before the application. The “not carrying on business” requirement is strict — if the company still has income or transactions, it has to genuinely stop first and wait out the three months before applying.

Three: no outstanding liabilities. That covers bank loans, amounts owed to suppliers, rent, unpaid tax, and unpaid wages. One item left unsettled and the condition fails.

In practice the third is where applications get stuck most often — many owners assume “nobody is chasing it, so there is no debt”, but unpaid tax and unfiled returns at the IRD count too.

How do you get past the IRD?

This is the slowest and most easily stalled part of the process.

You apply to the Inland Revenue Department for a Notice of No Objection to deregistration. The IRD reviews the company’s tax position — any unfiled returns, any unpaid tax, any assessments still open.

If there is anything outstanding, the IRD will not issue the notice; it will require the gaps to be filled first. At that point you may have to:

• File returns for past years (which means having the audits done for those years too)
• Settle unpaid tax and penalties
• Deal with open assessments or objections

Which is to say: the longer you leave it, the more deregistration costs, because the backlog builds year on year.

On how far that can build if a company is simply left alone, see what happens if you leave a company alone.

What happens once you have the notice?

You file the deregistration application with the Companies Registry, backed by the notice. Once the Registry receives it:

1. The application is reviewed
2. A notice is published in the Gazette so anyone with an objection can raise it
3. If the period passes with no objection, a dissolution notice is published
4. The company is formally dissolved

The notice period is statutory and cannot be shortened. So even with every document in order, the process still takes several months.

Do I still have to file things during that time?

Yes. This is the trap most people fall into.

Between the day you decide to close and the day the company is formally dissolved, six months or more may pass. Throughout that time your company still exists in law, so:

• The annual return is still due when it is due, and late filing still attracts higher registration fees and penalties
• The business registration certificate still has to be renewed
• Any tax return you receive still has to be filed
• The company secretary and registered office still have to be maintained

Plenty of people stop everything the moment they decide to close, and end up with the deregistration still not approved while a pile of penalties accumulates — which then has to be cleared before the application can succeed.

After dissolution, what happens to the records and the money?

The records still have to be kept. Dissolution does not mean the documents can be thrown away; the retention duty still falls on the former directors. For the detail, see how long records have to be kept after dissolution.

The bank account has to be dealt with before dissolution. At the moment of dissolution, any property still belonging to the company becomes bona vacantia and vests in the Government — including whatever is in the account. Getting it back means applying to the court to restore the company, which costs far more than moving the money beforehand.

So the correct order is: settle what is owed, move the funds out, close the account, and only then dissolve. For the full list, see what to settle before closing.

A clean exit is much cheaper handled early

Deregistration itself is not difficult. What makes it difficult is delay. The longer it runs, the more there is to make good at the IRD, and both time and cost rise together.

Want to close the company and not sure where to start? Talk to us — we will work out what has to be settled and what has to be made good, then take it step by step.

The conditions, forms and fees described here are as most recently published by the Companies Registry and the Inland Revenue Department, and this does not constitute legal or tax advice. Where debts or complex assets are involved, professional advice is recommended.