What do a Hong Kong company's annual financial statements include?
They are the statement of financial position (balance sheet), a profit and loss or comprehensive income statement, and the notes, prepared under the applicable standard. HKFRS for Private Entities also requires a statement of changes in equity and a cash flow statement; under SME-FRS the cash flow statement is optional. The notes must cover director-related disclosures.
The Companies Ordinance sets the framework; the accounting standard fills in the line items.
Legal requirements
- The statements must give a true and fair view of the financial position at year end and of the financial performance for the year, unless the company falls within the reporting exemption (s.380).
- They must follow Schedule 4 of the Ordinance and the applicable accounting standards (s.380(3)-(4)).
- The notes must disclose directors' emoluments, retirement benefits, termination payments, loans and similar dealings with directors, and directors' material interests in contracts (s.383), subject to relief for companies using simplified reporting.
- The statement of financial position must be approved and signed (s.387).
Components by standard
- HKFRS for Private Entities (s.3.17): a statement of financial position; a single statement of comprehensive income, or a separate income statement plus a statement of comprehensive income; a statement of changes in equity; a statement of cash flows; and notes with a summary of significant accounting policies.
- SME-FRS (companies in the reporting exemption using the SME-FRF): the cash flow statement is optional, and changes in equity can be shown in the notes or as a separate statement. HKICPA notes that SME-FRS statements do not give a true and fair view.
The directors' report and the auditor's report are separate documents that travel with the statements.
Legal basis
- Companies Ordinance (Cap. 622), ss.380, 383, 387
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.