In this course · 5 of 8
Course 7
Prepare your yearly accounts
8 lessons · 8 min
- 1Deadline to Send Financial Statements to Members in Hong Kong
- 2What do a Hong Kong company's annual financial statements include?
- 3What is a directors' report in Hong Kong and who signs it?
- 4What Is Simplified Financial Reporting for Hong Kong SMEs?
- 5What are the size thresholds for a small private company in Hong Kong?
- 6Small Group and Eligible Private Company Tests in Hong Kong
- 7Who prepares and approves a Hong Kong company's financial statements?
- 8How should I prepare my company's books before the annual audit in Hong Kong?
The short answer
A Hong Kong private company is "small" for simplified reporting if it meets any two of three tests: revenue of HK$100 million or less, total assets of HK$100 million or less, and 100 employees or fewer (Companies Ordinance (Cap. 622) Schedule 3). To qualify or lose qualification later, it generally needs two consecutive years of passing or failing.
Schedule 3 of the Companies Ordinance sets the tests, as summarised by the Companies Registry. A small private company satisfies any two of these three:
- total annual revenue of HK$100 million or less;
- total assets of HK$100 million or less;
- 100 employees or fewer.
No member vote is needed; the company qualifies automatically.
Timing rules. HKICPA's guidance notes the general pattern: a company must pass the tests for two consecutive years to qualify (or re-qualify) in the next year, and must fail them for two consecutive years to lose qualification. New companies are tested on their first year. Special transitional rules exist when a group acquires a new subsidiary.
Exclusions. A company that is a licensed bank, licensed under Part V of the Securities and Futures Ordinance, an insurer, or a business accepting interest-bearing loans in the course of trade cannot use the exemption.
Check the tests each year; growth in assets (for example from a property purchase) can disqualify a company even if revenue is small.
Legal basis and sources
The law
- Companies Ordinance (Cap. 622), s.361 and Schedule 3
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
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