Closing a company in Hong Kong requires few steps, but the whole procedure will usually take several months. Depending on the company liquidation procedure the costs may vary, which is why our company formation agents in Hong Kong will offer complete information about the liquidation procedures and the steps to be followed in every case. Company liquidation in Hong Kong can be done through the deregistration process or by winding up a company. Even if both procedures will lead to company liquidation, the procedures are different hence the costs differences.
You can watch this video presented by our company registration consultants in Hong Kong to find out more about corporate liquidation in the city:
The deregistration procedure is the simplest and cheapest form of company liquidation. For the deregistration of a company certain requirements must be satisfied. The first requirement is for the company to be solvent, incorporated according to the Companies Law in Hong Kong and all company members must agree with the liquidation. The company must have stopped carrying any business activity 3 months prior the liquidation. Another requirement is for the company to have no debts and liabilities and a No Objection Letter from the Inland Revenue’s Commissioner must be obtained. Once all formalities are completed, the special form and all required documents must be submitted with the Hong Kong Trade Register. The Trade Register will verify the documents and within 5 working days it will release a Letter of Approval for deregistration. The Trade Register will publish its decision in the Gazette and within 3 months, if no objection is filed, the final notice will be published in the Gazette. Company members are also required to notify the Business Registration Office. The deregistration process takes about 5 months to complete.
Winding up is the second possibility for company liquidation in Hong Kong. Company winding up can be voluntary or compulsory. Voluntary winding up can be initiated by the company’s shareholders or by its creditors. Mainly, the procedure is the same.
A resolution stating the voluntary winding up must be voted by the board members. The resolution will be published in the Official Gazette within 14 days. The voluntary winding up may be done only if the company’s directors believe all debts can be extinguished within 12 months from the beginning of the liquidation procedure. A declaration of solvency must be drafted and submitted with the Companies Register in Hong Kong. The directors will then appoint a liquidator and then notify the Hong Kong Trade Register about his or her appointment and the start date of the liquidation procedure. The liquidator will then start the winding up procedures and submit all necessary documents according to the Companies Act in Hong Kong.
If the liquidation takes more than a year, the liquidator will convene a general meeting every year and update the members about the process. When the liquidation procedure is terminated, a final account will be drafted and submitted with the Trade Register and published in the Official Gazette.
The creditor’s voluntary winding up procedure is basically the same, except the company must advertise the creditors’ meeting for company winding up in two newspapers. The directors of the company will publish a list with all the creditors, company’s activities and the amount of money each creditor claims. The creditors will then appoint the liquidator.
Compulsory winding up will usually start if the company cannot pay a debt of at least 10,000 HK$ or more, a court decided the company must be liquidated or if the company’s board members have decided the court should wind up the company. The creditors, shareholders or the company itself may apply for liquidation by appointing an attorney. The petition must be published in the Official Gazette 7 days prior to the hearing and in minimum 2 newspapers. Once the petition is filed a provisional liquidator will be appointed at the hearing. The provisional liquidator may complete the winding up process if the property of the company does not exceed 200,000 HK$, but a liquidator and inspection committee must be appointed if the property exceeds 200,000 HK$. The liquidator will complete the winding up process and pay the creditors. Once the liquidation is completed, the company will be dissolved.