What are the size thresholds for a small private company in Hong Kong?
A private company is automatically "small" for simplified reporting if it meets any two of three tests: revenue of HK$100 million or less, total assets of HK$100 million or less, and no more than 100 employees. A company that fails the tests must meet them for two consecutive years to qualify later.
Schedule 3 of the Companies Ordinance sets the tests, as summarised by the Companies Registry. A small private company satisfies any two of these three:
- total annual revenue of HK$100 million or less;
- total assets of HK$100 million or less;
- 100 employees or fewer.
No member vote is needed; the company qualifies automatically.
Timing rules. HKICPA's guidance notes the general pattern: a company must pass the tests for two consecutive years to qualify (or re-qualify) in the next year, and must fail them for two consecutive years to lose qualification. New companies are tested on their first year. Special transitional rules exist when a group acquires a new subsidiary.
Exclusions. A company that is a licensed bank, licensed under Part V of the Securities and Futures Ordinance, an insurer, or a business accepting interest-bearing loans in the course of trade cannot use the exemption.
Check the tests each year; growth in assets (for example from a property purchase) can disqualify a company even if revenue is small.
Legal basis
- Companies Ordinance (Cap. 622), s.361 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.