Annual Regulatory Requirements for Companies in Hong Kong

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. This is an implementation of a set of statutory requirements such as extension of the company’s registered address and the services of a licensed corporate secretary, issuing a valid business registration certificate (BRC) in the Inland Revenue Department and filing an Annual Return with the Companies Registry, etc. 
• Annual financial statement, audit and Profit Tax Return. 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. If the company employs local staff, then and additional report to Mandatory Provident Fund must be provided on a monthly basis. 

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

Annua renewal 

What does Hong Kong company renewal mean and involve? 

Renewal of a company is as important as its initial registration and occurs once a year on the company’s anniversary date. Renewal obligations are related to the fulfillment of the requirements of the Companies Ordinance adopted in Hong Kong and Business Registration Ordinance (Cap. 310). 

There are a number of specific obligations necessary to comply with the legal requirements of Hong Kong. Every company operating in the city is required to renew its business registration and provide certain up-to-date information 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 company 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 address in Hong Kong, which serves as the official channel of communication between the company and government agencies. Using the registered 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. 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. Its main function is to ensure that the business complies with all regulatory requirements.  

Business Registration Certificate (BRC) 

Legal Framework 

Under the Business Registration Ordinance (Cap. 310) (“BRO”), all individuals and entities conducting business in Hong Kong, unless specifically exempted, must register their business with the Business Registration Office of the Inland Revenue Department. 

Definition of Business 

The term “business” encompasses any form of trade, commerce, craftsmanship, profession, calling, or other activities conducted for profit. This definition also includes clubs. 

Registration Obligations 

• Local Companies: Every company incorporated in Hong Kong is considered to be conducting business and must register under the BRO. 
• Foreign Companies: Non-Hong Kong companies registered under the Companies Ordinance are also deemed to be conducting business and must comply with the registration requirements. 
• Representative Offices: Any non-Hong Kong corporation with a representative or liaison office in Hong Kong must register under the BRO. 
• Property Leasing: Non-Hong Kong corporations that lease out property located in Hong Kong are required to register as well. 

Valid Business Registration 

All companies operating in Hong Kong are required to possess a valid Business Registration Certificate (BRC). This certificate, issued by the Inland Revenue Department (IRD) of Hong Kong, can be valid for either one or three years. Operating a business without a valid BRC is illegal. 

Display Requirements 

The current BRC must be prominently displayed at the business or branch location. It should be readily available for official inspection upon request. If the BRC is issued as an electronic record, a printed copy must be displayed in a visible area. 

Renewal Process 

Renewing the BRC involves paying a government fee and obtaining an updated version of the certificate annually. Failure to renew the BRC can result in a fine of up to HK$3,500. Repeated violations may lead to more severe penalties, including the 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 mandates a strict deadline for filing an annual report—42 days from the company’s anniversary date. Missing this deadline for submitting a NAR1 report can result in substantial fines and, in some cases, legal action. To ensure compliance and avoid any legal risks, contact the experts at Vita Liberta Limited. We will help your company stay compliant and operational. 

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. 

Detailed Breakdown of the Annual Return (NAR1 Form) 

The NAR1 form contains essential information about a company. Below is a detailed explanation of the sections included in the form: 

• Company Number which may be found in the top right corner of the document Certificate of Incorporation. 
• Company Name. The full name of the company, either in English or traditional Chinese, must match the name on the Certificate of Incorporation or in the Certificate of change of name. 
• Type of Company. Only three types of Hong Kong business entities are required to file the Annual Return: Public Company, Company Limited by Guarantee, Private Limited Company 
• Date of Incorporation. The official date when the company was established, as stated in the Certificate of Incorporation. 
• Address. The registered office address where the company receives official notifications from the Hong Kong government. 
• Share Capital. The invested capital is shown in the amount and value of shares, representing the contributed capital of the company. 
• Company Secretary. Information about the person or company serving as the company secretary, including name, address in Hong Kong, and contact information. It is legally required to have a company secretary. 
• Directors. Information about the directors, including full name, identity document number, and postal address. A corporate body can also serve as a director. The minimum requirement is to have at least one director. 
• Shareholders. For companies not listed on the stock market, the form includes specific details about the shareholders, such as name, identity document number, and the number of shares each holds. 

It is worth bearing in mind that the Annual Return only records your company details by a certain date (company anniversary date). 

 Any changes must be reported to Companies Registry by separate relevant notifications within 14 days of their introduction. These changes are: 

• Any alteration to the company’s name. 
• Changes to the registered office address. 
• Changes to the place of Keeping a Significant controllers Register (if kept in the place rather than registered address). 
• Change of directors 
• Change in the directors’ particulars 
• Changes in the information of the company secretary, including appointments and resignations. 

Timely and accurate reporting of these changes ensures compliance with regulatory requirements and helps maintain the company’s good standing. 

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 (SCR) 

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 and must be kept at the company’s registered address in Hong Kong. It  SCR is kept in a different address in Hong Kong, this fact must be 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. 

Designation of a Representative for Significant Controllers Register 

An applicable company must appoint at least one representative to assist with matters related to the company’s significant controllers register. 

The designated representative is responsible for providing the following assistance: 

1. Assistance to Companies Registry Officers: 
   • Facilitate the process of ascertaining whether the company complies with the relevant provisions of this Division. 
2. Assistance to Law Enforcement Officers: 
   • Aid law enforcement officers in performing their specified functions under Hong Kong law. 

By designating a representative, companies ensure compliance with legal requirements and support the enforcement of regulations related to the significant controllers register. 

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 requests to pay a business registration fee and request to file Profit 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. 

In Vita Liberta Limited we receive all such notification of our clients and promptly notify accordingly.  

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 (PTR) is a compulsory tax filing for businesses operating in Hong Kong. It serves to report a company’s revenue, expenses, and assessable profits to the Inland Revenue Department (IRD) for taxation purposes.  

All entities, including corporations, partnerships, and sole proprietorships, that earn profits in Hong Kong are required to submit a Profit Tax Return.  

Filing deadline 

The Profit Tax Return (PTR) must be submitted within 30 days after the end of the company’s financial year or by the date specified on the PTR form received from the Inland Revenue Department (IRD). 

Financial year for a Hong Kong company: 

• First Financial Year: Ends within 18 months of the company’s registration. 
• Subsequent Financial Years: End on an annual basis. 

Required accompaniments to file PTR 

• Annual Financial Statements: The PTR must be accompanied by the company’s annual financial statements. 
• Audit Report: A mandatory audit of the financial statements is required. This audit involves analyzing financial documents and producing an audit report, which must be attached to the annual financial statements and submitted to the Hong Kong Tax Department along with the PTR. 

Penalties for late filing 

• Failing to meet the reporting deadline for filing a tax return can result in significant fines ranging from HKD 1,200 to HKD 10,000. Additionally, there is an increased risk of losing eligibility for tax incentives and exemptions. 

Timely and accurate submission of the PTR, along with the required financial statements and audit report, is crucial for maintaining compliance with Hong Kong’s tax regulations and avoiding penalties. 

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.