Do I need consolidated accounts if my Hong Kong company has subsidiaries?
A holding company must normally prepare consolidated statements and have them audited. There are exceptions for wholly owned subsidiaries and, with notice, partly owned ones, and for reporting-exempt groups, which may exclude some subsidiaries.
General rule (s.379(2)) If a company is a holding company at the end of the financial year, the directors must prepare consolidated financial statements instead of single-entity ones.
Exceptions (s.379(3))
- The company is a wholly owned subsidiary of another body corporate.
- It is a partially owned subsidiary and the directors notified members in writing at least 6 months before year-end of an intention not to consolidate, and no member asked for consolidated statements by 3 months before year-end.
Small groups A holding company of a group of small private companies can fall within the reporting exemption (s.359(2)). Group limits are aggregate: revenue up to HK$100 million, total assets up to HK$100 million and no more than 100 employees (Schedule 3). Where the company falls within the exemption, one or more subsidiary undertakings may be excluded from the consolidation (s.381(2)).
Audit Consolidated accounts are still audited. Overseas subsidiaries' auditors may be needed, and the auditor may require the company to obtain information from them (s.412(4)-(6)).
Offences Directors failing to take reasonable steps to prepare compliant statements face a fine of HK$300,000 (s.379(4)).
Check the group structure with the auditor early, including any overseas entities.
Legal basis
- Companies Ordinance (Cap. 622), ss.359(2), 379, 381, 412
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 the audit cover the Significant Controllers Register?Not as a stated part of the audit report. The Significant Controllers Register is a separate Companies Ordinance duty of the company. Auditors may still ask who owns and controls the company when assessing related parties and client acceptance.
- Why does my auditor ask for ID and source-of-funds information?Audit firms are regulated for anti-money laundering and counter-terrorist financing, and AFRC inspects firms' compliance. Firms therefore verify who owns and controls a client before accepting it, which is separate from the audit tests.
- 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.