Who qualifies for the reporting exemption, and what are the size limits?
A private company qualifies as small if it meets any two of three tests: revenue up to HK$100 million, total assets up to HK$100 million, and no more than 100 employees. Other routes exist for single-owner companies and larger eligible companies with member approval.
Routes in s.359
- Small private company: any two of: total revenue not above HK$100 million; total assets not above HK$100 million; average employees not above 100 (Schedule 3, s.1(1)).
- Private company with no subsidiary, and not itself a subsidiary: all members agree in writing for the year. No size test.
- Eligible private company: revenue and total assets up to HK$200 million (and not above 100 employees, per two of three), and members' approval by resolution (at least 75%, with no votes against, under s.360).
- Small company limited by guarantee: revenue up to HK$25 million.
- Groups of small or eligible companies under aggregate limits (ss.364-365).
Disqualification Once qualified, a company loses small status if it fails two of the three tests for two consecutive years (s.361(4)).
Excluded companies Banks, insurers, SFC-licensed corporations and companies that take loans of money at interest by way of business are excluded (s.359(4)).
Note HKICPA's current SME-FRF & SME-FRS page repeats the same thresholds: HK$100 million revenue, HK$100 million assets and 100 employees for small private companies; HK$200 million for eligible private companies; HK$25 million revenue for small guarantee companies.
Legal basis
- Companies Ordinance (Cap. 622), ss.359-366
- Companies Ordinance (Cap. 622), Schedule 3
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.