What if the business plan doesn’t work out?
One of the simplest ways to close down a company is to initiate the deregistration process. The Hong Kong company must submit an application with a prescribed fee. If the Inland Revenue Department has no objection to the application, the Companies Registry will take over the case and the proposed deregistration will be published in the Gazette. If the Companies Registry receive no objection within 3 months, the Registrar will declare it to be deregistered.
Effect of Dormancy
The dormancy procedure only has about 24-year history in Hong Kong. Section 5 of the Companies Ordinance governs. dormancy procedure and it only enables certain qualified Hong Kong companies to become dormant (i.e. inactive). In general, being dormant means that the company is exempt from its obligation to prepare financial statements, appointing auditor, and publishing financial records and statement.
Procedure to be Dormant
Before a Hong Kong Company can declare being dormant, it must pass and deliver a resolution to the Companies Registry as per section 5(2). If the company wants to cease its dormant status, the company has to pass a special resolution to declare its intention to enter into accounting transaction and the resolution has to be delivered for registration in time.
As an important reminder, even a company can be inactive, a dormant Hong Kong company still have to comply with some minimal formalities and regulations. For details, contact our incorporation staff.