An inactive Hong Kong private company may be classified as "dormant". To become "dormant" the company must pass a special resolution authorising its directors to make and deliver to the Registrar a statutory declaration to the effect that the company will be treated as a dormant company. Once the necessary formalities have been complied with, the company will be exempt from complying with the requirements for holding annual general meetings, preparing and filing annual returns and carrying out audits of its accounts.

A company will be eligible to apply for dormant status if, since the date of incorporation or any other specified date, it has not entered into what is known as a "relevant accounting transaction". A "relevant accounting transaction" is a transaction which is required by section 121 of the Companies Ordinance to be entered into the company’s books of account. This includes the receipt and expenditure of money and the sale and purchase of goods, assets and liabilities, but does not include a fee which a company is required to pay by law, for example the annual business registration fee.

Prior to a company ceasing to be dormant, the directors must deliver to the Registrar a further statutory declaration that the company intends to enter into a relevant accounting transaction, at which stage the company will cease to be dormant and the normal requirements will apply again. The advantage of being able to put a company into dormancy is that the cost of maintaining the company can be significantly reduced without having to wind up or apply to the Registrar to de-register the company.

For further information, please contact us or send email to info@by-cpa.com.