Does a newly incorporated Hong Kong company need an audit in its first year?
Yes. The first financial year is audited like any other. The directors can appoint the first auditor, and the first accounting period may be longer than 12 months, with its own filing timetable.
A new company has the same audit duty from its first financial year. The Ordinance gives a special route for the first auditor (s.395):
- If the company must hold an annual general meeting for the first year, the directors may appoint the first auditor at any time before that meeting.
- If it does not need an AGM (for example members approve by written resolution), the directors may appoint at any time before the appointment period for the next financial year begins.
- If the directors do not appoint, the members may appoint by resolution at a general meeting (s.396(6)), and a member can apply to the Court if nobody has been appointed (s.398).
First accounting period The first period can run for more than 12 months from incorporation. For a private company that is not a subsidiary of a public company, the deadline for laying and sending financial statements is the later of nine months after the first anniversary of incorporation and three months after the end of that period (s.431).
Practical tips
- Keep records from day one, including bank statements, the incorporation documents and share capital evidence.
- Agree the auditor early so the engagement covers the whole year, not only the final accounts.
A dormant company exemption is only available if the company qualifies and files the special resolution; a company that has simply not started trading is not automatically exempt.
Legal basis
- Companies Ordinance (Cap. 622), s.395
- Companies Ordinance (Cap. 622), s.396(6)
- Companies Ordinance (Cap. 622), s.398
- Companies Ordinance (Cap. 622), s.431
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
- Does every Hong Kong limited company need an audit?Yes. Every Hong Kong company must have an auditor for each financial year and its financial statements audited, whatever its size or whether it trades. The only company that escapes is a qualifying private company that has validly become dormant under s.5 and s.447 of the Companies Ordinance.
- Why does Hong Kong require even a small private company to be audited?Hong Kong's Companies Ordinance makes audit a universal requirement for companies, because an independent report on the accounts protects members, creditors, lenders and the tax authority. Small companies get simpler reporting rules, not an audit exemption.
- Do I still need an audit if my company had no revenue or no business activity?Yes, unless the company has formally become dormant. Having no sales does not make a company dormant in law. If it had any expenses, bank charges or other recorded transactions, the audit duty continues for that year.
- My company is loss-making. Do I still need to audit it?Yes. Profit or loss has no bearing on the audit requirement. A loss-making company is audited every year, and the auditor will also look closely at going concern.
- What is the dormant company audit exemption in Hong Kong?A qualifying private company that has become dormant under s.5 of the Companies Ordinance does not need to appoint an auditor or have its accounts audited while it stays dormant. The exemption is in s.447, not in s.448, which deals with false statements in reports.