A new business owner that has never run a business before or even the officer in charge can be completely new to the required paperwork. Registration of a business in Hong Kong is a challenging place to start a business and now they have to do paperwork to be in compliance.
Frequently asked questions by business owners will include what types of requirements they need to comply with, when are the deadlines and what are the consequences if the deadline is not met? This in-depth guide will provide you with a detailed list of the annual filing and compliance requirements that private limited and listed companies need to follow, whether you are a new or seasoned business owner.
Content Outline
Compliance List for Private Limited Companies
It is essential to make sure that you meet all these compliance list before finishing and submitting your annual return filings for private limited liability companies.
You will need to:
- Keep a local registered office. P.O. Box is restricted.
- Maintain the local company secretary which can be an individual or another entity.
- Maintain a local director. It could be a local person or a foreigner who is more than 18 years old.
- Have at least one shareholder which may be an individual or an entity. And if it is an individual, they must be above 18 years old.
- Hold an Annual General Meeting (AGM) every year.
- Ensure that the proper documents and records are kept such as the business registration certificate and the Articles of Association as well as the Minutes of Meeting are included.
- Ensure your accounting records are excellent and accurate, including all relevant details. This includes receipts, payments or income and expenses, invoices, bank statements, and daily records of money received. All of the documents have to be saved for 7 years from the date these transactions were made.
- Your registered address
- Information about the local director, company secretary, or shareholder
- Relocation of the company statutory books.
- Any allotment or new share issue
- Passing along new resolutions or certain resolutions.
Any kind of change to the above will have to be done within 15 days starting from the day of the appointment or the date of the change.
What Is the Annual General Meeting?
An Annual General Meeting (AGM) has to be held within the first 18 months from the date of incorporation for the present company. Then, it should be held once every calendar year but not more than 15 months from the last AGM. However, some business starts with a single employee. Often, they are excluded from the AGM requirement just like in the new Company Ordinance’s regulations.
While some of these details might be too much to recall for you, you can consult with the specialized assistance of our seasoned company secretaries from FastLane to ensure your company’s compliance list.
What Should Be Discussed During the AGM?
As one of the routine parts of the meetings, it is essential for the company director to present an updated financial report as a way of evaluating the financial health of the organization. Financial reports of the company should comply with Hong Kong Financial Reporting Standards (HKFRS).
What Are the Annual Filing Requirements?
Hong Kong’s local private limited companies and non-Hong Kong established companies are obligated to annual filing duties. So, companies have to register with the Inland Revenue Department (IRD) and the Companies Registry (CR). In this regard, both authorities operate in different ways when it comes to annual filling.
According to the Companies Registry, company officers are responsible for submitting an annual return after it is duly signed by the director, company secretary, or an authorized representative to the Company Registry. The annual return is a form for general information about the company such as the address of the registered office, shareholders, directors, chairman, and company secretary.
The Inland Revenue Department mandates companies under company law in Hong Kong to file the Annual Tax Return together with audited accounts. It is known as Profits Tax Return or a Tax Return.
What Are The Basic Procedures For An Annual Tax Return?
In most cases, IRD will inform companies of their tax filing obligations on 1st April. On the 18th month of the annual incorporation date, letter notifications will sent for newly incorporated companies.
However, the moment companies receive the notice, it is essential to file their tax returns within one month from the date of notification.
The following supporting documents will need to be attached :
- Company’s balance sheet;
- Auditor’s report
- Statement and a Profit and Loss Account related to the base period.
- Tax computation discloses the way the taxable profits are calculated.
What Are The Compliance List And Requirements For Listed Companies?
Besides filling out Form NAR1, listed companies should submit certified true copies of the company’s Financial Statements such as directors’ reports and audit reports together with Form NAR1.
Each year, your business has a different deadline for annual returns based on the commencement of the financial year of your company. According to the new Companies Ordinance (Cap. 622), if the given date is before 3 March 2014, the due date for an annual return is within 42 days after your company’s Annual General Meeting. Then, you need to send your annual report to the Registrar of Companies.
If the date is on or after 3rd March 2014, the provision of annual returns on or before the due date of each financial year to the Registrar of Companies needs to be done within a period of 42 days after the annual return date. The date of the financial statements’ return shall be 6 months after the end of the company’s accounting reference period.
Therefore, what in fact is the accounting time period? This is the period when the company’s annual financial statements are being made.
When Do I Need To File Annual Returns?
The private limited company must file its annual return every year to the Registrar of Companies within 42 days from the time of the company’s incorporation.
Will the deadline be extended if I’m not able to file my annual return on time?
Very often, business owners end up being late as they are always in a hurry. However, you will not be granted an extension if the annual return you are required to file cannot be done before the deadline.
What Is The Late Filing Penalty?
If you file your annual return late, you will have to pay higher fees for the registration. These are the fees:
| If the Annual Return is file: | Amount |
|---|---|
| More than 42 days to 3 months after the company’s return date | HK$870 |
| More than 3 months to 6 months after the company’s return date | HK$1,740 |
| More than 6 months to 9 months after the company’s return date | HK$2,610 |
| More than 9 months after the company’s return date | HK$3,480 |
Besides this, if the company fails to comply with these requirements, the director and the responsible person will be held liable for more severe offenses like prosecution and the default of the fine. Keep in mind that the highest amount to be punished is HK$50,000 per case of violation. The minimum designated daily of HK$1,000 per day will be charged for any continuing violation.
How Does The Hong Kong Government Help Companies For The Annual Filling Requirements Compliance?
Some companies may find it difficult to adapt to the different deadlines given on time. To enhance the compliance of the companies, the Registrar of Companies’ compliance program has been implemented. This information will provide the officers of the companies with general knowledge of procedures and filing requirements. It is accessible in the Publications of the Information Pamphlets Section of Companies Registration’s official website.
For newly set up organizations, a copy of the handout on ‘Compliance with the Companies Ordinance and Business Registration Ordinance’ will be issued along with the company’s Certificate of Incorporation.
Conclusion
A lot of attention is given to Hong Kong company law when it comes to annual fillings. The directors and company officers have the responsibility to ensure that the companies are in regular compliance list with the statutory obligations. When a return is provided with incomplete information and not properly signed, or it is not accompanied with the correct registration fee it will be considered as disqualified. It may ultimately lead to heavy fines as well as prosecution.
Nevertheless, FastLane is ready to help you if you don’t want to go through all those worries and stress. Our team of professional Corporate Secretary Hong Kong team can handle all the due dates and preparation of the necessary paperwork so you can run your business efficiently. Contact us now!