How do the small group and "eligible private company" tests work for simplified reporting in Hong Kong?
A holding company of a group of small private companies qualifies if the group's combined revenue, assets and employees meet two of the three small-company tests. Larger "eligible" private companies or groups, up to HK$200 million, can also qualify if members holding at least 75% of the votes approve and nobody objects.
Small group. A private holding company qualifies automatically if the aggregate figures for the group meet any two of: revenue HK$100 million or less, total assets HK$100 million or less, 100 employees or fewer. The group may include non-Hong Kong companies (for financial years starting on or after 1 February 2019, per HKICPA).
Eligible private company or group. If a private company or group meets any two of: revenue HK$200 million or less, total assets HK$200 million or less, 100 employees or fewer, it can use the exemption only if:
- members holding at least 75% of the voting rights pass a resolution at a general meeting; and
- the remaining members do not vote against it (s.360).
Small guarantee companies and groups qualify automatically at HK$25 million of revenue or less.
Mixed groups of small, eligible and guarantee companies can also qualify, depending on the type of holding company.
Single-company route. A private company with no subsidiary and not itself a subsidiary can use the exemption for one year if all members agree in writing (s.359(1)(b)).
No group containing a bank, licensed securities firm, insurer or deposit-taker qualifies.
Legal basis
- Companies Ordinance (Cap. 622), ss.359-360, 364-366 and Schedule 3
Sources
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
- 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.
- Can a Hong Kong company keep its accounting records digitally or scan paper originals?Yes. The Companies Ordinance allows records in hard copy or electronic form, provided they stay available for reference and can be reproduced on paper. The IRD also accepts electronic books and scanned source documents if integrity, legibility and origin details are preserved, and no prior approval is needed.