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Sometimes things do not work out. If you want to stop your business, deregistering your Hong Kong company is the easiest and cheapest solution.
In this guide, we will explain everything you need to know about Hong Kong company deregistration, including eligibility for deregistration and the process involved.
What is company deregistration?
In simple terms, deregistration is the fact to put an end to the existence of a company.
The company is removed from the official register of companies maintained by the Hong Kong Companies Registry.
Once a Hong Kong company is deregistered, it stands dissolved and ceases to carry on business operations.
What Hong Kong companies are eligible for deregistration?
According to the Hong Kong Companies Ordinance, only private companies or companies limited by guarantee that are defunct, and solvent can be deregistered or apply for deregistration.
A company is defunct if it is no longer functioning, and solvent, if it has no outstanding liabilities or its assets, are greater than its liabilities.
What are the reasons for deregistering a Hong Kong company?
There are various circumstances that may lead a company to be deregistered. These include:
- Inability to make a profit
- Disputes between the company’s shareholders
- The decision to stop the business
- Corporate restructuring of the company or group to which the company belongs. For instance, mergers, acquisitions, or corporate takeovers may require the deregistration
- Failure to meet up with statutory compliance requirements such as filing of annual returns or maintaining a registered office address in Hong Kong
- Inability to satisfy company’s debts or other liabilities
What conditions must be met before a Hong Kong company can apply for deregistration?
Before a Hong Kong company can be deregistered, it must satisfy certain conditions at the time of application. These conditions include:
- Its members must agree to the deregistration
- The company has not commenced operation or business or has not been in operation or carried on business during the 3 months immediately before the application
- The company has no outstanding liabilities.
- The company is not a party to any legal proceedings
- The company’s assets do not consist of any immovable property located in Hong Kong
- If the company is a holding company, none of its subsidiary’s assets consist of any immovable property located in Hong Kong.
What is the process for a Hong Kong company’s deregistration?
Hong Kong company’s deregistration may be divided into two broad stages.
The first stage is obtaining a written notice of no objection from the Commissioner of Inland Revenue Department.
The second is the actual application for deregistration to the Companies Registry.
Step 1 – Obtaining a written notice of no objection from the Inland Revenue Department
The written notice of no objection is a document that confirms that the company to be deregistered has no outstanding tax liability or obligations. It is essentially a tax clearance.
To obtain this notice of no objection, the company must apply to the Inland Revenue Department in writing, usually by filling and submitting the specified form and the company’s final audited financial statements.
Upon receipt of the application, the Inland Revenue will issue the written notice of no objection if the company is cleared of all tax obligations.
Step 2 – Actual deregistration with the HK Companies Registry
Once the notice of no objection is obtained, the company or a director/member can apply to the Companies Registry for deregistration.
The application is to be in the NDR1 form and accompanied by the notice of no objection, and any other document or information the Registrar may require.
If the application is made by the company and not a director/member, it must nominate a natural person to receive the notice of the deregistration.
Within five working days of the receipt of the application and upon confirmation that the application is in order, an approval letter for the company’s deregistration will be issued to the company.
Thereafter, the Registrar will publish a notice of the proposed deregistration in the Hong Kong Gazette requesting objections to the company’s deregistration.
If no objection is received within the specified time, the Registrar will publish a final notice declaring that the company has been deregistered and a notice of deregistration is to be given to the person who applied for the deregistration of the company or the person appointed to receive such notice.
How long does it take for a Hong Kong company to be deregistered?
The deregistration process can be completed within six months. This includes the time spent in obtaining the notice of no objection from the Inland Revenue.
What is the effect of deregistration?
Upon the publication of the notice of deregistration in the Gazette by the Registrar, the deregistered company is dissolved and ceases to exist.
Any right or asset of the company is deemed bona vacantia and will be vested in the Hong Kong Government’s Special Administrative Region.
Are there any obligations to be met during or after the deregistration process?
Before the deregistration process is completed, the company to be deregistered must continue to satisfy the statutory compliance requirements under the Companies Ordinance.
For instance, the company must continue to file annual returns, maintain a registered office, notify the Companies Registry of changes in directors or company secretary, etc.
Failure to do these will attract some penalties.
After the deregistration process is completed, the liability of the deregistered company’s directors, managers, and members survives and can still be enforced.
Also, the company’s directors are required to keep the statutory records of the deregistered company for at least six years after the deregistration.
Can a deregistered Hong Kong company be restored?
A deregistered Hong Kong company can be restored.
However, this can only be done by the Registrar where the company was deregistered (i) as a result of the mistake of the Registrar, or (ii) upon the order of a court.
In the case of restoration by order of the court, such an order can only be made if an application for restoration is brought by a relevant person within twenty years of the publication of the notice of deregistration.
Such an application can be granted by the court if it appears just for the court to do so.
The restoration process may take up to two months to be completed.
Upon restoration of a deregistered company either by the Registrar or the court, the restored company is to be treated like it was always in existence and never dissolved.
Is deregistration different from striking off?
Deregistration is not the only method for bringing a Hong Kong company’s operations to an end.
Striking off is another method for dissolving a company provided in the Companies Ordinance but it differs from deregistration.
Striking off is a statutory power usually exercised by the Registrar where the Registrar is satisfied that a Hong Kong company is no longer in operation or carrying on a business.
The Registrar can remove the name of the company from the register of companies and the company stands dissolved once its name has been struck off the register.
Deregistration on the other hand is fully voluntary as it is exercised by the members of the company.
It is not imposed by statute.
However, the Registrar plays a key role in the deregistration process.
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