Hong Kong Company Maintenance and Compliance Guide (1) - Summary of Maintenance and Compliance Obligations
1. Internal Record Keeping Requirements
(1) Annual accounts/directors' report
A profit and loss account and a balance sheet for the company must be audited by Hong Kong registered auditors and laid before the shareholders in general meeting within 18 months of incorporation and then at least once in every calendar year. There are lengthy and detailed provisions in the Companies Ordinance regarding the types of accounts to be prepared and we can supply further details on request. Generally, Hong Kong private companies having a share capital are not required to file their accounts with the Registrar.
A directors' report must be prepared in conjunction with the annual accounts. The Companies Ordinance provides a list of what this report should contain and this list includes details of contracts with the company or certain companies with which it is associated which are significant in relation to the company's business and in which any director has a material interest.
(2) Annual general meeting
An annual general meeting of the shareholders must be held within 18 months of incorporation and then at least once in every calendar year, although not later than 15 months after the last annual general meeting. (This 15 month period may be extended at the discretion of the Registrar upon payment of a fee.) An annual general meeting must be held even though there may be no accounts available for presentation to the meeting and no other relevant business to attend to.
Before the annual general meeting is held, the directors must approve the accounts and the directors' report, they may recommend a dividend and must resolve to call the annual general meeting. If all the shareholders entitled to attend and vote at the annual general meeting so agree, the meeting may be held at short notice, but otherwise at least 21 clear days' notice is required. Copies of any audited accounts to be considered at the annual general meeting must be sent to all shareholders, debenture holders and other persons so entitled not less than 21 days before the date of the meeting, unless all shareholders entitled to attend and vote at the meeting otherwise agree.
(3) Maintenance of Register of Members
Every company is required to keep a share register, which is prima facie evidence of any details required by the Companies Ordinance to be contained in the Register. Forms contained in each company kit make provision for all information required by the Ordinances. The original or copy of the Register of Members must be kept at the Registered Office in the Hong Kong. Kaizen, if appointed as Company Secretary, should be notified of any share transfers or issue of additional shares.
(4) Maintenance of Register of Transfers, Directors and Secretaries
A company is required by law to maintain these registers. They must be kept at the Registered Office of the Company. Kaizen, if appointed as company secretary, should be notified of any appointments or resignations of directors.
(5) Maintenance of Minutes and Financial Records
A company is required to keep minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members. Copies of all written resolutions consented to by the foregoing parties must also be kept.
2. External Filing and Reporting Requirements (with Companies Registry as Required Company Law Requirements)
(1) Filing of Annual Return
An Annual Return must be filed with the Registrar of Companies at least once a year (except if there has been no change in the filed particulars since the date of the last annual return, in which case a certificate confirming this fact can be filed in lieu of an annual return).
The annual return contains among other things:
- particulars of the authorised and issued share capital of the company
- the names and addresses of its directors and the secretary
- the names and addresses of its registered shareholders
- the amount secured by any registered charges.
The return must be signed by a director and the secretary of the company and must be filed within 42 days of the anniversary of the incorporation of the company. Public companies and companies limited by guarantee without a share capital must file their annual return within 42 days of the annual general meeting in each year.
(1) Filings of Changes in Particulars
(a) Filing obligations
A company must file the relevant particulars with the Registrar within the period indicated, in the event of:
- any change in the directors or secretary or in the filed particulars of any existing directors or secretary - 14 days
- any change in the location of the registered office - 14 days
- any increase in the authorised share capital - 15 days
- any relocation of the company's statutory books from the company's registered office - 14 days
- the passing of a special resolution or certain other resolutions - 15 days
- any allotment or issue of new shares (this also requires the payment of a capital fee on the amount of any premium over the nominal value at which the shares are allotted or issued) - 8 weeks
- the creation of a charge over certain types of assets or the acquisition subject to an existing charge of certain types of assets, in either case whether the asset is within or outside Hong Kong - 5 weeks.
In relation to the last two items, if the relevant particulars are not filed with the Registrar within the prescribed period, an application will have to be made to the Court for an extension of the time within which the particulars may be filed. Any such application will need to be supported by an affidavit giving an explanation as to why the particulars were not filed within the prescribed period.
(c) Change of name
To effect a change in the name of a company (which includes the adoption or abandonment of a formal English or a Chinese version of the name):
- the shareholders must approve of the change in name by special resolution
- the new name must be registered with the Registrar.
It normally takes about 14 working days from the time of the filing of the special resolution for the certificate of incorporation on change of name to be issued. The change in name is effective from the date on such certificate.
(c) Increases in authorised and issued share capital
Any increase in the authorised share capital of a company requires the approval of the shareholders. A company's articles of association typically provide for the increasing of the company's authorised share capital by way of ordinary resolution. Any increase in authorised share capital will attract a capital fee and notice of the increase must also be filed with the Registrar together with a signed copy of the resolution.
(d). Changes to memorandum or articles of association
Most of the provisions of a company's memorandum and articles of association can be changed by special resolution .
There are exceptions to this general rule. Where a company has issued different classes of shares, the special rights of any one class may, subject to the articles of association, be changed only with the approval of 75% of the holders of shares of that class. Where the special rights exist by virtue of the memorandum of association and there is no provision for alteration, all such shareholders must agree before the rights can be changed. Also, a member must agree in writing to an alteration to the memorandum or articles of association which requires that member to take or subscribe for more shares or increase his liability to contribute to the share capital of the company or otherwise pay money to the company.
A signed copy of every special resolution and every resolution varying a provision in the memorandum or articles of association must be filed with the Registrar and annexed to every copy of the memorandum and articles of association of the company issued subsequently to any such change. When the memorandum of association is amended it must be reprinted and filed with the Registrar.
2. External Filing and Reporting Requirements (with Inland Revenue Department as Required by Hong Kong Tax Laws)
(1) Renew business registration (BR) every year
No matter you actually do business or not (dormant), it is necessary to renew BR. If for any reason, you omitted any year of renewal, you still have to pay them up even you want to close the company.
(2) File Profits Tax Return
The first thing to do is select a year end. If no other reason, we suggest 31st March. As your company starts not on 1st April, your first year will not has exactly 12 months of record. The first set of Profits Tax Return will arrive around 18 months after your incorporation. However, please don't delay in doing accounting, auditing and report proactively to the IRD. Legally it is tax payer's duty and late report may lead to penalty, especially when IRD finds you're delaying government revenue. (detailed information on Profits Tax)
(3) File Employer's Return for your employees
This is to report to IRD how much salary you paid to your staff in the past year. The year end is always 31st March. To fulfill above, you need an accountant to prepare the financial statements, an auditor to issue an Auditor's Report and to file the tax returns.