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.
What it is Section 447 switches off a set of Part 9 requirements for a company that is dormant under s.5(1). Among them: the financial-statement and directors' report rules in the relevant subdivisions, the auditor appointment and auditor's report rules, the auditor's rights (ss.411-412), and the later divisions on circulating accounts and related matters. In practice a dormant company is relieved from preparing audited accounts. The Companies Registry also states that dormant companies need not hold an AGM (s.611) or file an annual return (s.663).
Conditions in outline
- The company must be a qualified private company: not a bank, insurer, SFC-licensed corporation, approved MPF trustee and so on (s.5(6)-(7)).
- Members pass a special resolution declaring dormancy and authorising the directors to deliver it to the Registrar.
- Dormancy starts on delivery or a later stated date.
Important
- It ends the moment the company has an accounting transaction (s.5(5), s.447(2)).
- After that, any member who knew or should have known, and every director, is personally liable for debts arising from the transaction.
- Some summaries cite s.448 for this exemption. That section deals with liability for untrue or misleading statements in reports; the exemption itself is in s.447.
This is the only audit exemption in the Ordinance.
Legal basis
- Companies Ordinance (Cap. 622), s.5
- Companies Ordinance (Cap. 622), s.447
- Companies Ordinance (Cap. 622), s.611
- Companies Ordinance (Cap. 622), s.663
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.
- 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.