How to Close a Company in Hong Kong: A Complete Guide

Running a business in Hong Kong offers numerous advantages, such as low taxes, a stable legal system, and the opportunity to operate in international markets. However, business processes do not always develop as planned, and sometimes circumstances arise where a company decides to cease its operations. 

Closing a company is not always a negative event. Often, it is simply a natural stage in the life of a business. When a company ceases its operations and no longer requires a legal form, one of the simplest and most cost-effective ways to end its existence is through the deregistration process. 

In this article, we will provide a detailed explanation of how the company deregistration process works in Hong Kong, the stages and requirements that need to be followed, and offer practical advice for successfully completing the process. 

When to Choose Deregistration? 

Deregistration of a company is one way to close a business in Hong Kong. This procedure is suitable for companies that are no longer engaged in commercial activities and have no outstanding obligations. For example, if a business was created for a single project and after its completion, the need for the company has ceased, deregistration would be the most logical step. 

This process is also suitable for holding companies that no longer own assets or for companies that were registered but never commenced their commercial activities. 

Deregistration is beneficial for several reasons: 

• It does not require the appointment of a liquidator. 
• It does not require compliance with the debt distribution process. 
• It has relatively low costs for closing a business. 
• It has clearly defined conditions and procedures, ensuring a high predictability of the final outcome. 
• It is a relatively quick process for closing a business. 

Deregistration is the fastest and most economical way to liquidate a company if it has no debts and assets. However, deregistration is not always a possible option. Companies with debts, assets, or ongoing legal proceedings may require more complex liquidation procedures, such as court-ordered or voluntary liquidation. 

Comparison of Company Liquidation Methods in Hong Kong 

Conditions for Deregistration 

Who can apply for company deregistration in Hong Kong? 

Applications for company deregistration in Hong Kong can be submitted by: 

• A private company or a company limited by shares. 
• A director or member of the company. 

Exceptions: 

• Companies specified in section 749, namely public companies, banks, insurance companies, pension funds, trusts, licensed companies under the Securities and Futures Ordinance, companies with subsidiaries falling under the above categories. 
• Companies registered under Part 16 of the Companies Ordinance, namely non-Hong Kong companies. 

Conditions for applying for deregistration: 

1. Consent of Members: All members of the company must unanimously agree to the decision to close the company. 
2. No Activity: The company must not have conducted any business activities in the three months immediately preceding the application. 
3. Financial Obligations: The company must not have any outstanding obligations to creditors or other parties, including the Hong Kong government. 
4. Legal Proceedings: The company must not be involved in any ongoing legal proceedings. 
5. Assets: The company’s assets must not include real estate located in Hong Kong. If the company is a holding company, the assets of its subsidiaries must also not include such real estate. 
6. Notice of No Objection: The company must obtain a “Notice of No Objection” from the tax authority, confirming there are no objections to the company’s deregistration. 

Meeting these conditions ensures the legal closure of a company in Hong Kong with minimal resistance.  

Before applying for company closure, it is also important to properly dispose of the company’s assets to prevent them from becoming the property of the Hong Kong government as bona vacantia. It is recommended to ensure that all company assets, including cash in bank accounts, vehicles, and real estate, are distributed or sold. 

This will help meet the conditions for deregistration and avoid the transfer of assets to the government. 

Before initiating the deregistration process and until its completion, the company must comply with all applicable Hong Kong company laws. This includes maintaining its active status and regular reporting to the tax authority in the standard manner. 

Main Steps of the Company Deregistration Procedure 

The deregistration process involves several steps, starting with the preparation of documents and verification of the company’s compliance with established requirements, to submitting the application and receiving official confirmation of the company’s closure. Each step requires careful attention and adherence to deadlines to avoid delays and rejections. 

Step 1: Compliance Check   

At this stage, a detailed analysis of the company is conducted: checking for debts, ensuring the company is not actively operating, confirming all shareholders are ready for deregistration, and so on. If the company has debts or outstanding obligations, they must be settled first. It is also important to obtain official confirmations of the closure of all accounts and contracts. 

Step 2: Obtaining the Notice of No Objection   

One of the key steps at the start of the process is obtaining the Notice of No Objection, which is issued by the Inland Revenue Department (IRD) and confirms that the company has no tax liabilities. The tax authority will not issue this notice if the company has any overdue obligations with the tax authority. Therefore, before submitting the relevant application to the tax authority, it is necessary to ensure that: 

• All tax returns (Profit Tax Return, PTR) have been filed. 
• Each PTR must be submitted with accompanying financial statements, which are confirmed by an auditor. 

Once all obligations to the tax authority are settled, the application form IR1263 can be prepared. The duly completed application is submitted to the Hong Kong Inland Revenue Department with a non-refundable fee of HKD 270. The processing time for the application and company review is 21 working days after receipt of the application and payment. An authorized inspector from the Inland Revenue Department will issue a Notice of No Objection or a refusal if the company has outstanding tax obligations. After resolving all outstanding issues, the applicant can resubmit the request. No additional fee is charged for resubmission. 

It is also important to note that if you cease the operations of your business or any of its branches, you must notify the Business Registration Office in writing within 1 month from the cessation date. Failure to provide such notification is an offense and may result in a fine of HKD 5,000 and imprisonment for 1 year. 

The notification must clearly state the following details: 

• Registration number of your company or branch 
• Company name and address 
• Date of cessation of business 
• Correspondence address after cessation 
• Contact phone number 

Alternatively, you can provide this information by completing form IRC 3113. Note that all business registration fees must be fully paid by the end of the year in which the cessation occurs. 

Step 3: Submitting the Deregistration Application to the Hong Kong Companies Registry 

After obtaining the Notice of No Objection for company deregistration from the Hong Kong Inland Revenue Department, you can submit the deregistration application to the Hong Kong Companies Registry.  

To do this, you need to complete form NDR1, attach the Notice of No Objection, and other required documents. 

Documents to prepare: 

• Form NDR1. 
• Non-refundable government fee of HKD 420. 
• Notice of No Objection from the Inland Revenue Department: 
• For paper applications: original notice from the Inland Revenue Department; 
• For electronic applications: certified copy of the notice, signed by the applicant, director, or company secretary. 
• The Companies Registry may request any other information and documents. 

The application can be submitted through the electronic system or in person at the Companies Registry. On average, processing the application takes up to 5 working days. 

Step 4: Notifying Creditors and Employees 

After submitting the application, all interested parties, including creditors and employees, must be notified of the planned deregistration. This is an important legal step, as creditors have the right to file objections if they believe the company has not fulfilled its obligations to them. 

1. Prepare notifications. Draft letters and documents to inform the company’s creditors, employees, and partners about the upcoming deregistration. 
2. Send notifications. All notifications must be sent 3 months before submitting the deregistration application. 
3. Obtain confirmations. Ensure that notifications are received by all creditors and interested parties. 
4. Monitor objections. For 3 months after the notice is published in the government gazette, monitor for any possible objections from creditors. 

Step 5: Publication of the Notice in the Government Gazette 

After submitting the application and notifying creditors and employees, information about the company’s deregistration must be published in the Hong Kong government gazette. This is a mandatory procedure that allows any interested parties to file objections within three months from the date of publication. 

Step 6: Receiving Confirmation of Deregistration 

After three months have passed since the publication, and in the absence of objections, the company will be officially struck off the Register. At this point, the company ceases to exist as a legal entity. 

Risks and Consequences of Deregistration 

After deregistration, the company no longer exists as a legal entity. Any assets of the company not disposed of before the completion of the procedure become the property of the state under the principle of bona vacantia. 

Key risks also include: 

• Liability of Directors   

Directors and members of the company remain responsible for any obligations that may not have been fulfilled at the time of deregistration. 

• Possibility of Company Restoration   

In case of errors during deregistration or lack of proper notification to interested parties, the company may be restored by court order within 20 years. 

• Legal Consequences for Shareholders   

Unfulfilled obligations to creditors may lead to legal proceedings against the company’s shareholders. 

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