The remaining portion of this article mainly focus on the ways to close a HK limited company. A company may be dissolved by either (a) deregistration of defunct solvent companies; or (b) winding-up.
A private company, a company limited by guarantee or a director/member of a company can apply for deregistration. However, public companies, banks, insurance companies, trust companies and their holding companies within five years of applying deregistration as well as registered non-Hong Kong companies are ineligible to dissolve the company by deregistration. Deregistration is a relatively simple, inexpensive and quick procedure for dissolving defunct solvent companies. The conditions to be met when applying deregistration are:
- All members consent to the deregistration;
- Either the company has never commenced business or operation, or has ceased to carry on business/operation for more than 3 months immediately before the application;
- The company has no outstanding liabilities;
- The company is not a party to any legal proceedings;
- The company’s assets do not consist of immovable property situated in Hong Kong; and
- If the company is a holding company, and its subsidiaries’ assets do not consist of immovable property situated in Hong Kong.
An application for deregistration must be accompanied by a Notice of No Objection issued by the Commissioner of Inland Revenue. Upon dissolution, all the company’s property, if any, is vested in the Government of the Hong Kong Special Administrative Region as bona vacantia (i.e. ownerless property that passes to the Government) Although deregistration is a comparatively cheaper and simpler way to close a company, the largest drawback is that an aggrieve party (e.g. a creditor) may apply to the court for an order to restore the company. If you consider to clear all contingent liability once and for all, wind-up will be a preferred choice.