Liquidation of a company in Hong Kong | Company formation in Hong Kong

Liquidation of a company in Hong Kong

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A Hong Kong company that plans to liquidate must first ensure that it has no outstanding obligations to government authorities in Hong Kong. Therefore, the first step is advisable to conduct an appropriate check for the presence of such unfulfilled obligations.

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In the next step, the company must prepare and file a tax return with the Hong Kong Inland Revenue Department with certified financial statements. This is necessary to comply with Hong Kong law and to receive notification of no objection from the Hong Kong Internal Revenue Service to liquidation. The final accounts of the company must indicate that the company has no outstanding obligations and that the company is ready to initiate liquidation in Hong Kong.

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Cost of company liquidation

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750 €

Company deregistration procedure

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950 €

Company liquidation procedure

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Deregistration of a company

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The most accessible and frequently used method is the deregistration of a company in Hong Kong. This method is possible if the company has never started its activity or stopped it more than 3 months ago and it has no outstanding obligations.
Pursuant to section 750 of the Companies Act, the filing of an application for deregistration of a Hong Kong company with the Hong Kong Registration Authority is subject to the following conditions:

  • All members of the company agree to deregistration.
  • The company either did not start commercial activities, or ceased such activities at least 3 months prior to filing an application for deregistration.
  • The Hong Kong company has no outstanding obligations
  • The Hong Kong company is not involved in litigation.
  • The company has no real estate in Hong Kong.
  • The company is a holding company and none of the assets of its subsidiaries, namely real estate, are located in Hong Kong.
  • The Hong Kong Inland Revenue Department does not object to deregistration.

A company applying for deregistration is required to prepare and file a tax return with the Hong Kong Inland Revenue Department with audited financial statements before it ceases to do business. This is necessary in order to comply with Hong Kong law and also to be notified of no objection. The company’s final reporting must reflect that the company has no unfulfilled obligations and its readiness to initiate the deregistration procedure in Hong Kong.

The de-registration process in Hong Kong takes on average up to 6 months.

Until the moment of official deregistration, the company is obliged to comply with all the norms of the current legislation on companies in Hong Kong, including annually submitting declarations and notices, keeping accounting and auditing, and holding meetings of directors and members.

After deregistration, and despite this fact, the obligations of the company, if any, as well as of each director, officer and member of the company must be fulfilled.

Movable and immovable property, as well as rights owned or held in trust by a Hong Kong company immediately prior to its deregistration, will be deemed unowned and will become the property of the Hong Kong government.

The de-registration procedure consists of the following steps:

  1. Submitting Form 1263 to the Hong Kong Inland Revenue Department and receiving written confirmation that there is no objection to deregistration. The standard deadline for receiving a response to a request is 21 business days.
  2. Submission of an NDR1 petition to the Hong Kong Registrar of Companies. The standard time for receiving a response to a request is approximately 5 business days.
  3. Receipt of notification of confirmation of deregistration. The standard deadline for receiving a response to a request is 21 business days.
  4. Publication in the government newspaper of Hong Kong about the deregistration of the company. Within 3 months after the publication of the notice, the creditors of the company have the right to send written objections to the removal of the company from the register.
  5. Publication of the second notice in the Hong Kong government newspaper. After that, the company is considered deregistered.

If, within 20 years after the company is deregistered (deregistered), any person officially declares that he or she has suffered losses in connection with the deregistration of the company, the company can be restored to resolve the situation.

If it is subsequently determined that the person who applied for deregistration knowingly or inadvertently provided the Registrar of Companies with false or misleading information, that official will be liable to pay a fine of up to HK $ 300,000 and will be imprisoned for up to two years.

Voluntary liquidation of a company

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Voluntary liquidation by the company’s shareholders is feasible in cases where the company is solvent and can pay off all its debts within 12 months. The proposal for liquidation is made by the director of the company, it must be approved by the decision of the participants.

Stages of voluntary liquidation of a Hong Kong company:

  • Adoption by the Board of Directors of a decision on the company’s solvency.
  • The decision by shareholders to liquidate.
  • Appointment of a liquidator – a qualified lawyer, accountant or auditor.
  • Within 2 weeks – publication of information on the appointment of a liquidator in the Hong Kong government newspaper.
  • The liquidator carries out the liquidation procedure.
  • The liquidator’s report on the repayment of all debts of the company and the distribution of assets.
  • Within a week, the minutes of the final meeting and financial statements are sent to the Hong Kong company registration authority.
  • The company is considered liquidated 3 months after the minutes were submitted to the register.

After the voluntary liquidation of a company in Hong Kong, unexpected creditors will no longer be able to claim any of the company’s assets.

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