In this course · 6 of 7
Course 3
Pick your year end
7 lessons · 7 min
- 1What Is a Financial Year End in Hong Kong? (Accounting Reference Date)
- 2How do I choose the financial year end for a new Hong Kong company?
- 3How long can a Hong Kong company's first financial period be?
- 4Can I change my Hong Kong company's financial year end, and how?
- 5HKFRS, HKFRS for Private Entities or SME-FRF: Which in Hong Kong?
- 6What Is SME-FRF and Who Can Use It in Hong Kong?
- 7Who can use HKFRS for Private Entities in Hong Kong?
The short answer
Companies within the reporting exemption in section 359 of the Companies Ordinance (Cap. 622) can use the SME-FRF and SME-FRS: small private companies, small guarantee companies, qualifying groups, larger eligible private companies with 75% member approval, and single private companies with unanimous written member consent. Banks, securities firms, insurers and deposit-takers cannot.
HKICPA's guidance ties eligibility to the reporting exemption:
- Private company with no subsidiary and no parent: no size test, but all members must approve in writing each year.
- Small private company: any two of revenue of HK$100 million or less, assets of HK$100 million or less, 100 employees or fewer.
- Group of small private companies: same tests on aggregate figures.
- Small guarantee company or group: revenue of HK$25 million or less.
- Eligible private company or group: the HK$200 million version of the tests, with approval from members holding at least 75% of voting rights and no objection.
Not eligible: entities holding a banking licence; money-lending or deposit-taking businesses; corporations licensed under Part V of the Securities and Futures Ordinance; insurers (other than as agents). A holding company is also excluded if its group includes any of these.
Size-test timing: generally two consecutive years of passing to enter and two of failing to leave.
HKICPA's page does not describe the technical differences between the SME framework and full HKFRS, so ask your accountant what is simplified in your case.
Legal basis and sources
The law
- Companies Ordinance (Cap. 622), ss.359-366
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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