Does a newly incorporated Hong Kong company need an audit in its first year?

A new company has the same audit duty from its first financial year. The Ordinance gives a special route for the first auditor (s.395):

• If the company must hold an annual general meeting for the first year, the directors may appoint the first auditor at any time before that meeting.
• If it does not need an AGM (for example members approve by written resolution), the directors may appoint at any time before the appointment period for the next financial year begins.
• If the directors do not appoint, the members may appoint by resolution at a general meeting (s.396(6)), and a member can apply to the Court if nobody has been appointed (s.398).

First accounting period The first period can run for more than 12 months from incorporation. For a private company that is not a subsidiary of a public company, the deadline for laying and sending financial statements is the later of nine months after the first anniversary of incorporation and three months after the end of that period (s.431).

Deadline for the first audited accounts A private company must lay and send its first accounts by the s.431 date above. The general nine-month rule for later years is in the answer on audited accounts deadlines.

Practical tips

• Keep records from day one, including bank statements, the incorporation documents and share capital evidence.
• Agree the auditor early so the engagement covers the whole year, not only the final accounts.

A dormant company exemption is only available if the company qualifies and files the special resolution; a company that has simply not started trading is not automatically exempt.