Which accounting standards can a Hong Kong company use: HKFRS, HKFRS for Private Entities or SME-FRF?
There are three main options. Full HKFRS applies to all, and is mandatory for publicly accountable entities. HKFRS for Private Entities suits any entity without public accountability. The SME-FRF and SME-FRS are only for companies that qualify for the reporting exemption in section 359.
Section 380 requires financial statements to follow the accounting standards applicable to them, issued by the prescribed body (HKICPA).
| Framework | Who can use it |
|---|---|
| Full HKFRS | Any company; required for listed and other publicly accountable entities |
| HKFRS for Private Entities | Entities without public accountability that publish general purpose statements; no size test |
| SME-FRF and SME-FRS | Companies within the section 359 reporting exemption |
The Companies Registry notes that the old extra disclosure schedules were repealed so that HKFRS and SME-FRS are given statutory recognition through section 380(4).
How to choose: small private companies often use the SME framework because it is lighter. A private company that is too big for the exemption, or that wants closer alignment with full HKFRS (for lenders or a future sale), may use HKFRS for Private Entities or full HKFRS. Banks, insurers, securities firms and similar entities cannot use the lighter options.
The choice should be made with your auditor and documented in the accounting policies note. Standards are revised periodically, so ask for the version in force for your year end.
Legal basis
- Companies Ordinance (Cap. 622), s.380
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.