What accounting duties apply to a dormant company in Hong Kong?
A qualified private company that passes a special resolution and files it with the Registrar becomes dormant and is exempt from preparing financial statements, a directors' report and an audit. It must still keep accounting records. If it enters an accounting transaction, the exemption ends.
How a company becomes dormant (s.5). A qualified private company passes a special resolution declaring that it will become dormant from a stated date, and the resolution is delivered to the Registrar. Banks, insurers, licensed securities firms and certain related companies cannot use it.
What the exemption covers (s.447). Once dormant, the company is relieved from the rules on financial statements and the directors' report, from the auditor provisions, and from the other Part 9 duties listed in that section. Companies Registry guidance confirms dormant companies are the exception to the rule that all companies must be audited.
What it does not remove. The duty to keep accounting records in section 373 is not in the exempted list. Dormant companies must also keep reporting changes of registered office, directors and company secretary, according to the Companies Registry FAQ.
When dormancy ends.
- If the company passes a special resolution that it intends to enter an accounting transaction, or
- if an accounting transaction actually takes place. In the second case, members who knew or ought to have known, and every director, are personally liable for debts or liabilities arising from that transaction (s.447(2)).
Tax and registration. The IRD accepts a profits tax return from a company that has delivered the s.5 resolution without audited financial statements, and the return itself is still filed when the IRD issues one. Business registration continues, and the fee and levy stay payable until the company is dissolved or deregistered.
Legal basis
- Companies Ordinance (Cap. 622), ss.5, 373, 447
Sources
- Companies Ordinance (Cap. 622) full text, WIPO Lex copy of the e-Legislation text
- Companies Registry: Key changes in accounts and audit under the Companies Ordinance
- Companies Registry: FAQ on dormant companies
- IRD: FAQ on completion of Profits Tax Returns (BIR51 and BIR52)
- Inland Revenue Department: A Brief Guide to Taxes 2025/26
Applies to 2026 · Last reviewed 29 October 2026
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.
Related questions
- Do I still have to keep accounting records after my Hong Kong company is dissolved?A company dissolved by deregistration or striking off leaves its former directors one duty: under s.758 of the Companies Ordinance everyone who was a director just before dissolution must make sure the company's books and papers are kept for at least 6 years after the dissolution date, or face a level 3 fine (HK$10,000). The IRD's seven-year duty no longer applies to a dissolved corporation.
- Is a Hong Kong company legally required to keep accounting records?Yes. Section 373 of the Companies Ordinance (Cap. 622) requires every company to keep accounting records that explain its transactions and show its financial position and performance at any time. Directors who fail to take all reasonable steps risk a fine of HK$300,000, and up to 12 months' jail if the failure is wilful.
- How long must a Hong Kong company keep its accounting records?Seven years. Under section 377 of the Companies Ordinance, a company must keep its accounting records for 7 years after the end of the financial year to which the last entry relates. The Inland Revenue Department separately requires business records to be kept at least 7 years after the transactions they relate to.
- What does section 51C of the Inland Revenue Ordinance require from my business?Anyone carrying on a trade, profession or business in Hong Kong must keep enough records, in English or Chinese, to work out assessable profits, and keep them for at least 7 years. Failing to do so without reasonable excuse can lead to a fine of up to HK$100,000.
- Which documents should a Hong Kong business keep for its books?Keep every document that supports an entry in your books: sales and purchase invoices, receipts, bank statements, contracts, payroll and MPF records, asset purchase papers, loan agreements, and stocktake sheets. The test is whether someone else could trace any figure back to its source.