Deregistration and Liquidation Services
Closing a business in Hong Kong holds a particular number of orderly steps, and the overall process takes some months to get completed. The costs of the process depend on how the company is being closed, which is why it is better to think carefully about it and consider it accordingly.
Are you has a company in Hong Kong that has come to a stand still where it hasn’t commenced business and you wish to close it? There are chances that you can deregister the company, and Atrix can help you to go through this lengthy process by a more efficient way.
The process of deregistering a Hong Kong company is known as “liquidation” in conventional terms. There are two usual methods of closing a company, one is by Winding it Up, and the other is going through the deregistration process, which the latter are mostly adopted by SMEs. Even though both the processes lead to the closing of the business and the dissolution of the company, the methods they entail are significantly distinct.
Requirements & Conditions to Deregister a Company
A Hong Kong private company may make an application to the Companies Registry for deregistration in Hong Kong in accordance with Section 750 of the Companies Ordinance if :
- All the members of the company agree to deregistration;
- The company has never commenced business or operation, or has ceased to carry on business or ceased operation for more than 3 months immediately before the application;
- The company has no outstanding liabilities Note 1;
- The company is not a party to any legal proceedings;
- It has no immovable property situate in Hong Kong;
- If the company is a holding company, none of its subsidiary’s assets consist of any immovable property situate in Hong Kong; and
- The application is accompanied by a written notice from the Commissioner of HKIRD that he has no objection to the company being deregistered (the "Notice of No Objection")
Atrix assists clients to prepare all the relevant documents in relation to deregistration in Hong Kong and to attend filings of all required documents with the HKIRD and the Companies Registry.
Note 1
- An audited financial statement (as at the date of cessation) and profits tax return with tax computation must be prepared and to be submitted to HKIRD for final assessment before the issue of the Notice of No Objection. We shall arrange and communicate with your existing auditor for deregistration of the company.
- Outstanding liabilities include amounts payable to creditor(s), Government fees, tax payable to HKIRD and etc.
Step of De-registration a Hong Kong company
Step 1 - Process with Inland Revenue Department
In this process, the company would need to get the notice that has been written by the Inland Revenue Department. For this, you would need to fill the Form IR1263 and submit it along with the fee to the Inland Revenue’s Commissioner. This fee is a non-refundable fee regardless the outcome of the situation and application.
Step 2 - How do I deal with Companies Registry ("CR")
After the company has received the “Notice of No Objection” from the IRD, you would then need to fill in the form along with the application for the deregistration and send it to the Registrar of Companies. The fee structure of the processes are as follows:
- Company Deregistration (CR & IRD) fees
- Company resolution of directors to dissolve the company
- Appointing Atrix as proxy
Overall procedure to de-register the Hong Kong company with the CR
Once the company has received the “Notice of No Objection” letter from the IRD, the company can proceed to de-register the company in the company Gazette. Along with this, the applicant has to submit the following to the Companies Registry:
- A properly completed form NDR1.
- The original copy of the “No Objection” Notice from the Commissioner of Inland Revenue.
- Any further information or documents that the Companies Registry of Hong Kong may request in connection with the application to deregister the company.
Step 3 - De-registration after letter of “Notice of No Objection”
With the documents in place, the company can submit these to the CR. The final steps of the de-registration would take place, as the following.
- If the Companies Registry sees that all the documentation is in right order, the process would be taken forward, and the Letter of Approval would be issued for the company’s deregistration application within five working days.
- The CR would then publish a notice of the intended deregistration in the Gazette of Hong Kong. If there have been no objection notices that were received by the Registrar within three months of publishing the announcement, it will proceed with the process to deregister the company by issuing a final notice in the Gazette announcing the business to be deregistered. Along with this, the applicant or nominated person would also be duly notified of the same.
- Upon the announcement of the final notice, the firm will be dissolved.
- The entire procedure will be executed within five months.
- Upon dissolution of the organization, all the company’s assets that also includes the balance of the credits in the bank account of the business would be deemed to be bona vacantia and would be held by the Hong Kong Government’s Special Administrative Region. You are greatly encouraged to endeavor legal or professional advice to guarantee the proper disposal of the firm’s assets before proceeding with an application to deregister the company.
- It is vital to notify the Business Registration Office of the Inland Revenue Department within one month of the date of discontinuance of business, to apply for a cancellation of Business Registration.
- Until the company has been deregistered, it is still required to adhere to compliances that include the notification of situation of registered office and the filing of annual returns.
Liquidation
Only a limited company, which is formed and registered under the Companies Ordinance, can be wound up. The term “winding-up” (or “wound-up”) bears a similar meaning of “liquidation”. It generally means that all the assets of the company would be realised (sold off and converted to cash) through a legal process in order to repay its debts. Winding-up would bring a company to an end.
Members Voluntary Liquidation ("MVL")
When a Hong Kong company is solvent (solvent company defined as a company which can settle all of its debts in full) may also be dissolved by MVL.
Key Procedures:
- Before commencing the liquidation, the company should attempt to settle all of its outstanding liabilities and minimize its asset holding in order to expedite the liquidation process.
- To convene and hold a meeting to authorize
- the issue of a certificate of solvency;
- the convening of an Extraordinary General Meeting ("EGM") to consider the passing of a resolution for liquidation.
- Obtain consent of proposed liquidator to his appointment
- Certain flings and advertising with Companies Registry and Gazette under requirement
Creditor’s Voluntary Liquidation ("CVL")
Preceding a CVL would be a situation either the company cannot pay its debts as they fall due or it has more liabilities than assets. In some circumstance, a provisional liquidator would be appointed for assets protection to the company until the meeting of creditors at which the liquidator is appointed.
Provisional Liquidator
- A solicitor; or
- Professional accountant under the Professional Accountants Ordinance
Powers and Duties of Liquidator
- Limited powers to be exercised without the sanction of the court.
- Act as custodian of the company's property and assets
- Dispose of perishable goods and take actions necessary to protect the company's assets
Director’s Power under CVL
- Under section 250A(2) of new Companies Ordinance (Cap.622), the directors may only exercise their powers with the sanction of the court and as necessary for the purpose of enabling them to call a meeting of the creditors.
- Without court sanction, dispose of perishable goods or do anything necessary to protect the company's assets.
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