A Hong Kong company can be closed by deregistration which is a two stage process requiring tax clearance from the Inland Revenue Department and approval from the Companies Registry for the company to deregister.

A company can apply for deregistration if it fulfills the following conditions

• The company has ceased business operations for more than three months or has never commenced business.
  
• The company has no assets other than bank deposits and cash.
  
• The company has no outstanding liabilities.
  
• The company is not a party to any legal proceedings.
  
• All shareholders agree to the deregistration.
  
• The company’s tax filings are up to date, the company has no outstanding tax liabilities and hence will be able to obtain a written notice of no objection to the deregistration from the Inland Revenue Department.
  

THE DEREGISTRATION PROCESS

The deregistration process commences by submitting an application for tax clearance to the Inland Revenue Department. The company can only seek approval for deregisteration from the Companies Registry once tax clearance has been obtained. The time required to complete the deregistration varies from company to company but typically the process requires up to 6 months for tax clearance and a further 5 months for approval from the Companies Registry.

It should be noted the company cannot change its shareholders, directors, company secretary or registered office address during the deregistration process. The company must hold a valid Business Registration Certificate and renew it should it become due for renewal before the deregistration is approved by the Companies Registry. The company must also continue to file an Annual Return should the filing date become due before the deregistration is approved by the Companies Registry.

It should also be noted a Hong Kong company cannot be closed by simply closing the bank account and ignoring the annual compliance requirements including renewing the Business Registration Certificate, filing an Annual Return, preparing audited accounts and filing a tax return. The company remains in existence until it is deregistered by the Companies Registry and ignoring the annual compliance requirements will be treated by the Hong Kong authorities as a deliberate act of non-compliance and will result in penalties and eventual court summons against the directors.