Dormant Companies in Hong Kong: How to Declare One, What You Stop Filing and What Ends It
Plenty of Hong Kong companies stop trading for a while: a project ends, a founder moves on, a holding company waits for its next deal. If nothing is happening, a private company can be declared dormant, which takes away the annual audit and annual return. But it's a status with a sharp edge: one transaction ends it. Here's how it works.
Who can be dormant
Under section 5 of the Companies Ordinance, a qualified private company can become dormant. That's any private company except regulated ones: banks, insurers, corporations licensed by the Securities and Futures Commission and their associated entities, MPF approved trustees, companies with a subsidiary of those kinds, and companies that were any of those in the past 5 years.
How to declare it
- Pass a special resolution declaring that the company will become dormant, either from the date it's delivered to the Registrar or from a later date, and authorising the directors to deliver it.
- Deliver it to the Companies Registry for registration.
The company is dormant from the date of delivery, or the later date in the resolution. The Companies Registry's FAQ explains the filing, and when an annual return is still due for the year in which the company becomes dormant.
What a dormant company stops doing
While it's dormant, section 447 switches off most of the company's financial reporting duties under Part 9 of the Ordinance, including preparing annual financial statements and a directors' report, appointing an auditor and having the accounts audited, and laying or sending them to the members. Under section 663, it also doesn't deliver an annual return.
| Declared dormant | Inactive, not declared | |
|---|---|---|
| Audited financial statements | Not required while dormant | Still required every year |
| Annual return to the Registry | Not required while dormant | Still required |
| Changes of directors, secretary, office | Still reported | Still reported |
| Ends when | There's an accounting transaction, or a resolution to start again | — |
The trap: one accounting transaction ends it
A company stops being dormant as soon as there is an accounting transaction. Section 2 defines that as any transaction that has to be entered in the company's accounting records, except paying a fee the company is required by law to pay, such as a Registry fee.
- What doesn't count: statutory fees the company has to pay.
- What can count: almost anything else that needs a bookkeeping entry. Paying a supplier, receiving money, a loan from a director, even bank charges or interest on an account that's still open: the exclusion covers only fees required by law. If you keep a bank account open, ask your adviser how to treat it.
The consequences are serious. Under section 447(2), from the date of that transaction the exemptions stop, and every director, and any member who knew or ought to have known, is personally liable for the company's debts and liabilities arising from it. The Registry suggests taking professional advice on whether a particular transaction is an accounting transaction.
What still applies
- The company still exists, with directors, a company secretary and a registered office.
- Changes still have to be reported to the Registry: a new registered office address, or changes of directors or company secretary.
- Other laws are separate. Dormancy under the Companies Ordinance doesn't by itself change the company's tax position or business registration. If the IRD sends a profits tax return, it still has to be completed and filed (see filing a profits tax return).
Before you declare: tidy up
Dormancy works best for a company with nothing left in motion. Before the resolution:
- Settle what's owed both ways, including the director's current account and any intercompany balances.
- Decide about the bank account: close it or confirm with your adviser that keeping it open won't create accounting transactions.
- Close the books to the last day of activity, with final accounts audited and filed for that period.
- Cancel subscriptions, direct debits and recurring payments that would otherwise keep running.
Waking it up
To start trading again, pass a special resolution declaring that the company intends to enter into an accounting transaction, and deliver it to the Registry. The company stops being dormant, and from then on its normal duties return: books, audited accounts and annual returns. Starting the books cleanly from the first transaction makes the first active year much easier.
Alternatives
- Keep it active if there will be any money moving at all: an audit for a company with a handful of transactions is a small job, and it avoids the personal liability risk.
- Close it if it won't be needed again, by deregistration or winding up. That's a separate process with its own conditions.
How Certanta helps
- Final books before dormancy: balances settled and the accounts closed to the last day of activity, ready for the auditor.
- A clean restart: books set up from the first transaction when the company becomes active again.
- Deadlines in your portal once the company is active, so annual filings aren't missed.
Frequently asked questions
What is a dormant company in Hong Kong?
A qualified private company that has passed a special resolution declaring itself dormant and delivered it to the Companies Registry (Companies Ordinance, section 5). It remains dormant until it has an accounting transaction or passes a resolution declaring that it intends to enter into one.
Does a dormant company need an audit?
No. While a company is dormant under section 5, section 447 exempts it from the Part 9 requirements to prepare annual financial statements, appoint an auditor and have the accounts audited. A company that is merely inactive, without the resolution, still needs audited accounts every year.
Does a dormant company file an annual return?
No, section 663 exempts it while it is dormant. The Companies Registry notes that an annual return may still be due for the year in which the company becomes dormant, depending on the effective date.
What is an accounting transaction?
A transaction that has to be entered in the company's accounting records under section 373, excluding payment of a fee the company is required by an Ordinance to pay (section 2). Almost any other movement of money can be one.
What happens if a dormant company makes a transaction?
It stops being dormant from the date of the transaction, and every director, together with any member who knew or ought to have known about it, is personally liable for the company's debts and liabilities arising from it (section 447(2)).
How does a dormant company start trading again?
By passing a special resolution declaring that it intends to enter into an accounting transaction and delivering it to the Companies Registry. Its normal duties to keep books, have accounts audited and file annual returns then apply again.
Starting again after a dormant period?
When the company starts trading again, Certanta sets up the books from the first transaction, so the accounts for the first active year are ready for the auditor.
Open the demo See pricingThis article summarises the Companies Ordinance (Cap. 622) as published on e-Legislation and the Companies Registry's FAQ on dormant companies, as at 29 October 2026. It is general information, not legal or tax advice. Whether a particular transaction is an accounting transaction depends on the facts; take advice before declaring a company dormant or while it is dormant.