Top Tips & FAQs for Start-ups

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Sometimes you may find yourself standing at the crossroad and struggling if you should keep going or get your company deregistered. Hence, we have prepared some clues and notes as follows for you to find your way or manage the deregistration process in the most proper way :

 

1. Should I Keep Going or Get My Company Deregistered?

If you want to continue your business, you will have to handle the fees for company secretary, registered office address, Business Registration (BR) License renewal and timely tax filing with accounts & audit report preparation in each year.

On the contrary, if you go for the deregistration direction, the above fees are also required before completion of the dissolution, with additional deregistration arrangement fees applied. Also, you will need to file your Annual Return to the Companies Registry until the deregistration process is officially accomplished. The whole process will take around 6 - 9 months.

If you are still wavering between the choices of ‘moving forward’ vs. ‘closing down’, one option you might consider is to declare the company dormant, letting the regulatory bodies know that your company does not have any current activities officially. According to the Companies Ordinance, a company will become dormant from the date of delivery of a special resolution declaring the dormant status to the Companies Registry, or any later date that is specified in the special resolution. To keep a dormant company, the minimum spending would be appointing a mandatory company secretary and settling BR fees, while the accounts & audit reports can be paused from preparing temporarily, which means you can report your company as ‘dormant’ when receiving the Profits Tax Return. However, some people will still opt to finish their accounts & audit reports every year for proper archiving and maintaining a good financial practice.

It is also suggested to maintain a registered office address (a HK registered office address is necessarily required by the Government) provided by your company secretary for a dormant company, in order to help you take care of many different letters issued by the Government during this dormancy period.

You can assess whether you will continue to run your business, declare it dormant or go for deregistration based on the company potential, and also the specified fees and time involved.

 

2. What Are the Requirements for Making a Deregistration Application?

Below are the basic requirements and conditions before making a deregistration application, and please be advised that more requirements or documentations may be requested by the Companies Registry. In order to proceed with the entire process seamlessly, it could be a wise choice to seek help from a reliable firm to take care of the whole application and make sure all regulatory requirements are being met:

All members of the company agree to the deregistration.

The company has never commenced business or operation, or has ceased operation for more than 3 months immediately before the application.

It has no outstanding liabilities which include Profits Tax, Property Tax, Stamp Duty, Business Registration License fee, fines and penalties in connection thereof and court fees.

It has obtained a written "Notice of No Objection to a Company being Deregistered" ("Notice of No Objection") from the Commissioner of the Inland Revenue Department (IRD). This includes submission of tax returns which have been issued by the IRD, and liability to notify the Commissioner of the IRD in writing that the company is chargeable to tax for any year of assessment in which a return has not been received.

 

3. Before Submitting the Application, Do I Need to File All Outstanding Annual Returns?

Yes, you should file all Annual Returns to the Companies Registry until the company has been officially dissolved. Failure to do so your company may be liable to prosecution and the application process may be suspended. Even after you have filed the deregistration application, you still need to submit the last Annual Return before the whole process for deregistration is accomplished and the company is declared to be deregistered by the Government.

However, if you company had been declared as dormant for a period of time, you were not required to deliver Annual Returns during that period; even when you go for deregistration at a later stage, those Annual Returns that were skipped do not need to be filed again. Exceptionally, a company is still required to deliver an Annual Return for the year in which it declares itself to be dormant if the effective date on which the company becomes dormant falls after the 42nd day after the anniversary of its date of incorporation.

Comparatively, at the IRD side, once you have filed the application for deregistration, you shall not be required to renew the Business Registration License, even if the whole process is not finished yet.

At Bridges, we have a professional in-house company secretarial team in here to manage every step for you, and help you comply with all legitimacy requirements during the entire course of deregistration.

 

4. What Are the Procedures for Deregistration?

If the Companies Registry finds all received documentations to be good and complete, it will issue a Letter of Approval for the deregistration application. The Registrar will then publish a Notice of the proposed deregistration in the Gazette. Generally, the Gazette Notice will be published about 3 weeks after the date of the Companies Registry's Approval Letter. You may also find the Gazette at the Government Logistics Department’s website.

If no objection is received within 3 months of the notice’s publication date, it will proceed with the deregistration process by publishing a Final Notice in the Gazette to declare the company to be deregistered and dissolved, and the applicant will be duly notified. Within 1 month of the company’s cessation, the applicant must notify the IRD in writing to apply for a cancellation of business registration.

 

5. When Do I Need to Close My Bank Account?

It is suggested that your company bank account should be closed down when you decide to proceed with deregistration. In case there are still outstanding accounts payable and receivable, you can keep the account a bit longer, but should close it on receipt of the Letter of Approval from the Companies Registry and before the notice is published in the Gazette. The Companies Registry will prompt the applicant to handle the company bank account’s balance in the Letter of Approval and ensure proper disposal of such company’s property before an official deregistration.

 

6. Can I Restore My Deregistered Company?

If you wish to restore your deregistered company, you can make an application to the Court of First Instance. However, as the restoration requires lots of know-how on regulations, you are advised to look for a professional consultation according to your situation. Once the court order is obtained and all documents are in order, it normally takes around 2 months to restore a deregistered company.

 

7. Any Duties I Should Keep Maintaining Before the Deregistration Is Completed?

For a limited company, you should continue to appoint a company secretary and possess a registered office address until the company is completely deregistered. The office address is crucial for you to keep on receiving important letters like Government letters and bank letters during the deregistration period. Also, if your company has operated with activities, it is required to prepare your last accounting and audit reports. The audited financial reports will be submitted to the IRD before the company can be deregistrated.

In order to offer you with a one-off solution, we provide the comprehensive package including acting as your company secretary, providing our address as your Government registered address for daily correspondence, preparing accounting and audit reports with tax reporting and compliance, for you to submit your outstanding tax returns and audit reports at once. Our professional team will help you manage the whole deregistration process to prevent you from facing penalties or prosecution.

 

8. Any Differences between Deregistration and Winding-up?

Both are targeted at the dissolution of company. If there are no liabilities and disputes between shareholders, deregistration is a more simple, inexpensive and fast track to dissolve a ‘clean’ company in around 6-9 months. Conversely, if the company has liabilities, you will need to consider winding-up (i.e. dissolved by liquidation) as the final step which takes longer to process in more than 1 year.

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