Dormant Companies in Hong Kong: Your Essential FAQ
- a22162
- Sep 22
- 6 min read
Hong Kong Dormant Company FAQ
A dormant company in Hong Kong can be a strategic solution for business owners who need to temporarily pause their operations without permanently closing down. This FAQ article provides key information on the concept, process, and implications of declaring a company dormant in Hong Kong.
What is a dormant company in Hong Kong?
A dormant company is a private limited company that has temporarily ceased business operations and has no significant accounting transactions. Under Section 5 of the Companies Ordinance (Cap. 622), a company is considered dormant if it has passed a special resolution and delivered it to the Companies Registry, declaring its dormant status. This status allows the company to remain a legal entity while enjoying exemptions from certain annual compliance obligations.
What counts as an "accounting transaction" for a dormant company?
An "accounting transaction" is any financial activity that must be recorded in the company's books. To be considered dormant, a company must not engage in any such transactions, with the exception of those required by law.
Transactions that are NOT allowed:
Paying vendors or service providers
Receiving income or making sales
Incurring bank charges or earning interest
Any transactions involving assets or liabilities
Transactions that ARE allowed:
Paying the annual Business Registration fee
Filing statutory forms, such as changes to company officers or the registered address
What are the main benefits of declaring a company dormant?
Reduced Compliance Costs: Dormant companies are exempt from preparing audited financial statements, appointing auditors, and filing annual returns (Form NAR1), which significantly lowers maintenance costs.
Preservation of Assets: This status allows a company to retain valuable assets, such as trademarks, intellectual property, or a company name, without the need for active trading.
Flexibility for Future: Dormancy offers a convenient way to temporarily halt operations without going through the lengthy and costly process of company dissolution. You can easily reactivate the company when market conditions improve or new opportunities arise.
What are the disadvantages or obligations of a dormant company?
Even in a dormant state, a company still has some essential obligations:
Retain Basic Structure: The company must still maintain at least one director, one shareholder, a company secretary, and a registered office in Hong Kong.
Renew Business Registration: The annual Business Registration Certificate must be renewed and the fee must be paid on time.
File Tax Returns: If the Inland Revenue Department (IRD) issues a Profits Tax Return, the company must file a "nil" return to confirm no business activity has occurred.
Update Companies Registry: Any changes to the company's officers or registered address must be reported to the Companies Registry.
How do you declare a company dormant in Hong Kong?
Check Eligibility: Ensure your company meets the criteria. It must be a private company and not one of the restricted types (e.g., financial institutions, insurers, or certain regulated entities).
Pass a Special Resolution: The company's members must pass a special resolution with a majority of at least 75% of the votes, declaring the company's intention to become dormant.
File with the Companies Registry: The directors must file the special resolution with the Companies Registry within 15 days of it being passed. The company will be officially deemed dormant either on the date of delivery or a later date specified in the resolution.
Can a dormant company have a bank account?
Yes, a dormant company can maintain a bank account. However, it is crucial that the account does not have any accounting transactions. Any bank charges or interest earned will be considered an accounting transaction, causing the company to lose its dormant status. For this reason, many companies choose to close their bank accounts before applying for dormancy.
How do you reactivate a dormant company?
To cease dormant status and resume business operations, a company must:
Pass a Special Resolution: The company's members must pass another special resolution declaring its intention to enter into accounting transactions.
File with the Companies Registry: This resolution must be delivered to the Companies Registry for registration.
It is important to note that the company will automatically cease to be dormant the moment it makes its first accounting transaction, even without notifying the Registrar. Once reactivated, the company must fully comply with all statutory obligations, including preparing and filing audited financial statements and annual returns.
How Bestar Hong Kong Can Help Dormant Companies in Hong Kong: Your Essential FAQ
Dormant Companies in Hong Kong: Your Essential FAQ
Maintaining a dormant company in Hong Kong can be a strategic move to save costs and preserve your business name for future use. However, it still comes with a set of legal obligations. This is where professional service providers like Bestar Hong Kong can provide invaluable support.
What is a dormant company and why might I need help with it?
A dormant company is a Hong Kong private limited company that has legally paused its business operations by passing a special resolution and filing it with the Companies Registry. This allows the company to be exempt from certain compliance requirements, such as filing audited financial statements.
While this status reduces compliance burdens, it doesn't eliminate them entirely. A dormant company must still:
Maintain a registered office address.
Appoint and retain a company secretary and director.
Renew its Business Registration Certificate annually.
File "nil" tax returns if a Profits Tax Return is issued by the Inland Revenue Department (IRD).
Navigating these requirements can be complex, and any misstep can lead to loss of the dormant status and incur penalties. A professional firm like Bestar Hong Kong can manage these critical tasks for you.
How can Bestar Hong Kong help me declare my company dormant?
The process of declaring a company dormant is a formal one that requires specific steps to be followed precisely. Bestar Hong Kong can assist you by:
Drafting the Special Resolution: We will prepare the necessary special resolution for your company's members to vote on, ensuring it meets all legal requirements of the Companies Ordinance (Cap. 622).
Filing with the Companies Registry: Our team will handle the timely submission of the special resolution to the Companies Registry, ensuring your company’s dormant status is officially and correctly recorded.
What ongoing support does Bestar Hong Kong provide for dormant companies?
Once your company is officially dormant, Bestar Hong Kong acts as your corporate secretarial and compliance partner to ensure you remain in good standing. Our services for dormant companies include:
Registered Office Address: Providing a statutory registered office address in Hong Kong, which is a legal requirement.
Company Secretary Services: Acting as your company secretary to fulfill this mandatory role and handle official communications.
Annual Business Registration Renewal: We manage the annual renewal of your Business Registration Certificate to prevent late fees or penalties.
"Nil" Tax Return Filing: If the IRD issues a Profits Tax Return, we will prepare and file a "nil" return on your behalf, confirming the company's lack of business activity.
Companies Registry Filings: We manage all necessary filings to update the Companies Registry on any changes to the company's particulars, such as a change of director or address.
What are the benefits of hiring Bestar for my dormant company?
Cost Savings: While the primary benefit of dormancy is reduced costs, having a professional firm manage the process ensures you avoid costly mistakes and penalties that can arise from non-compliance.
Peace of Mind: You can be confident that all legal obligations are being met, freeing you from the administrative burden of maintaining the dormant status.
Expertise and Compliance: Bestar has deep knowledge of Hong Kong's Companies Ordinance and tax regulations. We stay up-to-date on any changes, ensuring your company remains compliant at all times.
Seamless Reactivation: When you're ready to resume business, Bestar Hong Kong can handle the entire reactivation process, from passing the new special resolution to managing all the necessary filings to restore your company's active status.
Can Bestar also help me reactivate my dormant company in the future?
Absolutely. One of the main advantages of a dormant company is the ability to easily reactivate it. When you decide to resume business operations, Bestar Hong Kong can guide you through the process, including:
Passing and Filing the Special Resolution: We will draft and file the special resolution to cease dormant status with the Companies Registry.
Resuming Compliance: Once reactivated, your company must once again comply with all statutory obligations, including appointing an auditor, preparing audited financial statements, and filing annual returns. Bestar offers a full suite of services, including accounting, tax, and audit assistance, to ensure a smooth transition back to an active and compliant company.