What ends a Hong Kong company's dormant status, and what are the risks?
A company stops being dormant if it passes and delivers a special resolution saying it intends to transact, or if it actually enters an accounting transaction. From then on the audit duty returns, and directors and knowing members are personally liable for debts from that transaction.
How dormancy ends (s.5(5))
- The company passes a special resolution declaring that it intends to enter an accounting transaction, and the resolution is delivered to the Registrar; or
- There is an accounting transaction involving the company (paying a fee that the law requires the company to pay is disregarded).
Consequences (s.447(2))
- The audit exemption and the other relief in s.447(1) cease from the date of the accounting transaction.
- Personal liability: every director (including a shadow director) and any member who knew, or ought to have known, about the transaction is personally liable for any debt or liability arising from that transaction.
- The company must again hold AGMs and deliver annual returns as normal, and appoint an auditor.
Practical points
- Treat the dormancy filing as a decision to stop all activity, not a way to pause audits during a slow period.
- If you intend to restart, deliver the "intention to transact" resolution first, so the exit from dormancy is orderly and documented.
- Check that no bank charges, subscriptions or other payments flow through the company account while dormant.
If the company will never trade again, deregistration or winding up may be a cleaner exit than staying dormant indefinitely.
Legal basis
- Companies Ordinance (Cap. 622), s.5(5)
- Companies Ordinance (Cap. 622), s.447(2)
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
- 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.
- How do I make my Hong Kong company dormant to avoid the audit?Check the company qualifies, pass a special resolution declaring it will become dormant from a stated date, and have the directors deliver that resolution to the Companies Registrar. Dormancy takes effect from the delivery date or the later date in the resolution.
- Does a dormant Hong Kong company still have to file a profits tax return?Dormancy under the Companies Ordinance relieves the company from audited accounts, and IRD accepts a profits tax return from it without the audited statements. It does not by itself cancel the duty to file a return when IRD issues one.
- Should I make my company dormant or deregister it (NDR1)?Dormancy keeps the company alive but pauses audit and some filings; deregistration (Form NDR1) removes it from the register. If the business is finished for good and the conditions are met, deregistration ends the yearly obligations for good.
- What if my company has no auditor, or the auditor position becomes vacant?The directors can fill a casual vacancy; if they have not done so within one month, the members can by resolution at a general meeting. If nobody is appointed, a member can apply to the Court to appoint an auditor.