What is the reporting exemption and SME-FRF for small Hong Kong companies?

What is it? Section 359 of the Companies Ordinance lists companies that fall within the reporting exemption. These companies follow Part 1 of Schedule 4 only (not Part 2), and the requirements for a true and fair view in ss.380(1), (2), (5) and (6) do not apply to them (s.380(7)).

SME-FRF HKICPA's SME-FRF and SME-FRS are a simpler accounting framework for qualifying small and medium-sized entities that fall within the reporting exemption. HKICPA's SME-FRF & SME-FRS page lists the qualifying criteria, which follow s.359 of the Companies Ordinance. HKICPA notes that applying the SME-FRS gives a proper presentation for SMEs but not a true and fair view.

The audit still happens The Registry's FAQ says audit is required for all companies including those in the reporting exemption. The differences are:

• The auditor does not have to give a true and fair view opinion (s.406(1)(b)).
• The accounts are simpler and need fewer notes, which can mean less audit work.

Filing If the exemption relies on members' agreement or resolution, the agreement or resolution must be delivered to the Registrar within 15 days.

Excluded Banks, insurers, SFC-licensed corporations and companies that take loans of money at interest by way of business cannot use it (s.359(4)).

This is a reporting simplification, not an exemption from audit.