Hong Kong company annual requirements

Hong Kong is an attractive location for companies. As one of the world’s leading financial centers, this administrative region of China annually becomes an object of attraction for businesses of all sizes. A favorable business climate, a stable legal system and a constant flow of innovations provide companies with the best working conditions. 

However, like any other state, Hong Kong has a number of mandatory regulatory requirements necessary for the successful functioning of your business. Let’s consider the main ones in this article. 

• Annual renewal of company registration – a set of mandatory measures, including the renewal of the company’s registered address and the services of a licensed corporate secretary, a business registration certificate, filing an Annual Return with the register of companies, etc. 

• Closing of the financial year. A mandatory requirement of the Hong Kong authorities for all companies doing business in its territory. The closing of the financial year includes the preparation and audit of annual financial statements, as well as the filing of a tax return on form BIR-51.  

• Filing of personnel reports. Every company is required to file two types of reports during the year – Form 6(F)1 (wages and pension contributions) and the quarterly employment and vacancy survey conducted annually by the Census and Statistics Department. 

We will look at each point in more detail and tell you all the necessary procedures for the successful and smooth functioning of your company in Hong Kong. 

Annual renewal 

What does Hong Kong company renewal mean and involve? 

Renewal of a company is as important as its initial registration and occurs one year after the date of registration or the anniversary of the company’s foundation. Renewal obligations are related to the fulfillment of the requirements of the Companies Ordinance adopted in Hong Kong. 

There are a number of specific obligations necessary to comply with the legal requirements of Hong Kong. Every company operating in the country is required to renew its registration annually and provide up-to-date information on the functioning of the business in a timely manner. 

Timely compliance with deadlines ensures the smooth operation of the company and allows you to avoid possible legal problems. Let’s consider all the features of business registration renewal in more detail, and also highlight the key points affecting the activities of your company in Hong Kong. 

A valid legal address and its extension for a period of one year 

According to Section 658 of the Companies Ordinance, every business must have a valid registered office address in Hong Kong, which serves as the official channel of communication between the company and government agencies. Using the registered office address, the government notifies companies of all legal and corporate inquiries, as well as changes and requirements. 

Corporate Secretary 

According to the Companies Ordinance (Cap. 622), it is mandatory for all companies operating in Hong Kong to have a corporate secretary, whose office is renewed annually. It is the corporate secretary who provides the company with a registered office for a period of 1 year (until the next renewal). 

The secretary is the link between the company and government authorities. His main function is to ensure that the business complies with all regulatory requirements. In addition, his duties include keeping the business registration certificate and the Register of Controlling Persons, maintaining records of the company’s activities, timely filing of reports and notifying management of important changes (for example, in legislation), etc. 

Business Registration Certificate (BRC) 

It is mandatory for all companies operating legally in Hong Kong to obtain and renew a Business Registration Certificate (BRC). Without a valid BRC, a business has no legal right to operate in the Hong Kong administrative region, and transactions will be considered invalid. Maintaining an active certificate ensures that your company’s registration with the Hong Kong tax authorities – the Inland Revenue Department (IRD) – is up to date and confirms that your business is legally operating in the country. 

Renewal of the business registration certificate includes paying a government fee and receiving an annual updated version of the certificate. Failure to renew the certificate may result in a fine of up to HK$3,500. In the event of repeated violations, more serious sanctions are possible, up to and including temporary suspension of business activities in Hong Kong. 

Annual Return (NAR1) Reporting Form  

All companies legally operating in Hong Kong are required to file Annual Return (form NAR1) (download form) with the Companies Registry. In simple terms, this is an annual notification to the state about the changes that have occurred in your company during the year. 

Hong Kong has a strict deadline for filing an annual report – 42 days from the date of the company’s “birthday”, that is, after each anniversary. Missing the deadline for filing a NAR1 report threatens high fines, and in some cases, litigation. In order not to miss anything, contact the experts at Vita Liberta. We will help your company avoid legal risks and stay “afloat”. 

Missing the deadline for filing an annual report can result in a fine of up to HK$3,480. In addition, companies that fail to meet deadlines risk being struck off the Register, which will result in suspension of operations. In Hong Kong, there is a gradation of fines for missing the deadline for filing an annual report; let’s take a closer look at the example of a local private company. 

What changes require prompt reporting to the Hong Kong Companies Registry: 

• Any changes in directors and shareholders, including particulars, resignations and appointments, allotments. 
• Change of registered office, for example, when moving offices. 
• Change of company name. 
• Change of the company secretary. 

It is worth bearing in mind that the annual report only records your company details as of a certain date – any other changes must be reported within 14 days of their introduction. 

Payment of government fees

Payment of state fees is a mandatory procedure, the timely execution of which guarantees the legal operation of a business in Hong Kong. State fees are paid to the Inland Revenue Department and the Registry of Companies. 

The government fee for Business registration is periodically changed by the Hong Kong government in order to maintain a balance between stimulating the development of entrepreneurship and replenishing the state treasury. Here is what its recent historical trends looks like: 

The government fee for Annual Return to Hong Kong Companies Registry – HK$105. 

However, please note that these figures apply only to timely payment of fees – in case of delay, fines and an increase in the cost of state fees are possible. 

Maintaining a Significant Controllers Register 

Under the Companies Amendment Act 2018, all companies are required to keep a Significant Controllers Register (SCR), which includes persons: 

A person or entity has significant control over a company if one or more of the following conditions are met: 

1. The person holds, directly or indirectly, more than 25% of the issued shares of the company or, if the company has no share capital, an interest in more than 25% of the capital or profits of the company. 

2. The person holds, directly or indirectly, more than 25% of the voting rights of the company. 

3. The person holds, directly or indirectly, the power to appoint or remove a majority of the members of the board of directors of the company. 

4. The person has the right to exercise, or actually exercises, significant influence or control over the company. 

5. The person has the right to exercise, or actually exercises, significant influence or control over the affairs of a trust or firm which is not a legal person but the trustees or members of which satisfy any of the first four conditions in relation to the company. 

This is a closed register, which must be kept at the company’s registered address or at another address in Hong Kong, which is separately declared to the Hong Kong Companies Registry. In addition, a person responsible for storing and updating this register, the so-called Designated Representative, must be appointed. 

Only authorized government agencies (Inland Revenue Department, Police Authorities, etc.) can access it. 

Receiving notifications from government agencies 

As we mentioned above, all notifications from government agencies come to your company’s registered address. The main senders are: 

• The Census and Statistics Department sends notifications about the need to participate in the Employment and Vacancies Survey to compile statistics. 

• The Department of Labor requests a report (IR56A Employer Return) that employees are receiving remuneration in the form of wages and benefits. 

• The Inland Revenue Department sends a request for a business registration certificate and an annual tax return. 

• The Hong Kong Companies Registry notifies about the need to provide an annual report on updating the company’s information in the Registry. 

• Other government agencies – courts, Copyright, Migration, Licensing Departments, etc. can also send documents to your registered address. 

Contact us today for comprehensive corporate support of your business in Hong Kong. 

Annual General Meeting (AGM) 

A shareholder meeting is mandatory for compliance with Hong Kong corporate law. It is held after the end of the financial year within 9 months for private companies or 6 months for public companies. 

At the meeting, the company’s key controlling persons approve the financial statements, decide on dividends and appoint auditors. This is an important aspect of business: at the meeting, management and shareholders come together to decide important issues concerning the future development of the business. 

Filing Profit Tax Return (PTR) 

The profit tax return must be submitted within 30 days after the end of the company’s financial year or after the date specified on the PTR form received from the IRD. 

The company’s first financial year ends within 18 months of its registration, and subsequently, on an annual basis. 

The PTR must be accompanied by the annual financial statements. 

A mandatory requirement is the audit of the financial statements, which includes a set of measures to analyze financial documents and provide the audit report. The audit report must be attached to the annual financial statements and sent to the Hong Kong Tax Department along with PTR. 

Vita Liberta conducts the audit in accordance with all government requirements and also notifies you in advance of the deadlines for filing all necessary reports. 

Missing the reporting date for filing a tax return is a critical mistake that can cost your company significant fines (from 1,200 to 10,000 Hong Kong dollars (HKD), including an increased risk of losing the right to tax incentives and tax exemptions. 

To avoid confusion in the dates and deadlines for submitting reports, entrust this work to the professionals of Vita Liberta Limited – we will help prepare the necessary documents and notify you of their submission within a convenient time frame. 

Submission of reports on personnel 

The Hong Kong government closely monitors the employment of the workforce, so the task of each company is to provide reports on all its employees on time and in full. Let’s look at the main forms of reports. 

Form 6F1 – wages and pension contributions 

Every year, each employer is required to submit a report on Form 6(F)1 (the letter varies depending on the department of the tax authority), which indicates data on wages and contributions to the pension fund for each employee of the company. Thanks to this report, the Hong Kong Labor Department strictly monitors and controls compliance with labor laws and guarantees of the rights of employees. 

Quarterly Employment and Vacancy Survey 

The survey is conducted by the Hong Kong Census and Statistics Department and is aimed at collecting up-to-date data on the state of the Hong Kong labor market. Participation in the survey is a mandatory requirement for all companies, as it allows the government to track changes in the level of employment and make decisions on the further economic policy of Hong Kong.