Setting up Business in Hong Kong has its own advantages. However, due to some unavoidable circumstances it may be necessary to close down such businesses. Closure of Hong Kong Company is desired in case you do not wish to continue business in Hong Kong.
In case of a Company, there are two ways of closure/ dissolution, namely:
- Winding up
By far, this is the widely accepted method for Closure of Company in Hong Kong.
Applicability of Deregistration:-
The Company to apply for Deregistration should be Defunct Solvent Company. There are different rules for Insolvent Companies.
Exceptions to Deregistration:-
Following categories of Company cannot apply for Deregistration:
- an authorized institution as defined in the Banking Ordinance
- an insurer as defined in the Insurance Companies Ordinance
- a company licensed under the Securities and Futures Ordinance
- a company having a subsidiary that falls within any of the above categories, and
- a company that has fallen within any of the above categories at any time in the preceding five years
Steps for Deregistration
- Members’ agreement: All the members of company should give their consent to the Deregistration of the Company.
- Board Resolution:
The Board of Directors must pass a resolution to this effect.
- Non-commencement or cessation of Operation:
Either the company has not commenced its operation since incorporation or has not been in operation for preceding 3 months from the date of application.
- Not indebted:
The Company should discharge all its liabilities such that there are no outstanding liabilities on the date of application.
- No Legal Proceedings:
The Company should not be a party to any Legal Proceeding.
- No Immovable Hong Kong Property:
The asset of the Company should not include any immovable property situated in Hong Kong.
- Subsidiary company’s asset:
If the company is a holding company, none of its subsidiary’s assets consist of any immovable property situate in Hong Kong.
The Company is required to apply to Inland Revenue Department to obtain a Notice of No Objection to a Company being deregistered from Commissioner of Inland Revenue. It is given in Form IR1263 which can be downloaded from www.ird.gov.hk
- Apply to RoC: The Company needs to deliver following documents within 3 months from issue of NNO:
- Form NDR1(Application for Deregistration) which can be downloaded from www.cr.gov.hk
- Notice of No Objection from Commissioner of Inland Revenue.
Please note that the Company must have been regular in its annual filings in case it wishes to opt for Closure of Hong Kong Company by way of deregistration. Completion of past years’ filings is possible in Hong Kong to proceed for closure.
All other Hong Kong Companies can be dissolved by Winding Up. Winding up of a Company can be done in any of the following ways:
- Voluntary Winding Up, which may be:
Member’s Voluntary Winding Up, or
Creditor’s Voluntary Winding Up
- Compulsory Winding Up, It may happen by:
- By Order of Court, or
- By petition filed by any Creditor, Shareholder or by the Company itself by passing special resolution.
Members’ Voluntary Winding Up:
- Declaration of Solvency:
This is the major requirement of Member’s Voluntary Winding Up. The directors must hold Board Meeting and make Declaration of Solvency stating that they will be able to pay off liabilities within 12 months from commencement of Winding Up.
Send Declaration of Solvency to RoC: Such Declaration must be sent to RoC within 7 days from date of its preparation.
Appointment of Provisional Liquidator: A solicitor or a professional accountant must be appointed as a provisional Liquidator until he is appointed by shareholders and his written consent must be obtained. Such person must also notify RoC within 14 days from date of his appointment.
- Notice in Gazette: Notice of commencement of Winding up and appointment of Provisional Liquidator should be given in Official Gazette within 14 days from date of appointment of Provisional Liquidator.
- Convene Extraordinary General Meeting:
The Company must convene an EGM within 28 days from delivery of Declaration of Solvency to pass:
- Special Resolution for approving commencement of Winding Up
- Ordinary Resolution for appointing Liquidator
Notice in Gazette:
The Company should give notice in Gazette within 14 days of passing Special Resolution.
- Liquidator’s Final Account: After completion of Winding Up, Liquidator must prepare an account showing treatment and disposition of asset and liabilities.
- Final General Meeting:
The Company should hold a final general meeting notice of which must be given in Gazette before 1 month of date of meeting. Liquidator’s final accounts are presented there.
- Filing return with RoC: The Company must file the return that the meeting was held along with copy of Final accounts within one week. The RoC shall receive document and the company shall be dissolved after 3 months of such receipt.
Creditor’s Voluntary Winding Up:
If the company cannot make Declaration of Solvency then it has to proceed with Creditor’s Voluntary Winding Up. This method is chosen when Company is insolvent and does not want any Court involvement. The following is the procedure:
- Board Meeting:
The directors consider the mode of Winding Up and pass resolution to convene General Meeting.
- General Meeting: Here, again the company passes Special Resolution to approve Winding Up by Creditors and authorize directors to prepare and sign Statement of Affairs of Company, list of Creditors and other information required by Creditors.
- Creditor’s Meeting: Notice of meeting is given in Gazette. Also, it is required that one director must be present and act as chairman at the meeting. The directors are also required to protect assets between date of shareholder meeting and Creditor’s meeting.
All other steps are same as Member’s Voluntary Winding Up from point (c) to (i)
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