Options of closing business in Hong Kong- Winding-Up or Deregistration

COMPANY SECRETARIAL

The overall process of closing a business in Hong Kong usually takes some months before complete. The costs of the process depend on the options of closing of the business: Winding-Up or Deregistration. So it is better to think carefully about it and consider accordingly. Even though both the processes lead to the closing of the business and the dissolution of the company. However, the methods they entail are significantly distinct.

What is the difference between: Winding Up & Deregistration?

Before the deregistration process is explained, it is vital to know what is the difference between “Winding up” and “Deregistration”.  Deregistration is a comparatively simple, inexpensive and quick method for dissolving a defunct private company. But this business has to meet specific requirements in order for this to happen.

On the other hand, Winding up is the method of designating a liquidator who would settle all the accounts. Liquidator will also paying off the company’s debts. This person is also in charge of liquidating the assets of a business and distributing the surplus assets. This process involved much more complicated than de-registration, and requires more steps and parties. This can result in a longer process and higher cost for a company.

Since deregistration is relatively a simpler and easier process. So many business people preferred more and is the most common process in Hong Kong. You can close the business as you de-register it with just two steps, but only if you meet the requirements stated by the Hong Kong Government.

Which companies can apply for the deregistration?

Any Hong Kong local limited company or a local private company limited by guarantee is the one that is qualified to de-register itself. Nonetheless, these companies are listed in the Companies Ordinance under the section 749(2) or registered under the Part XI of the Companies Ordinance. Whereas, It also needs to be a company that is a defunct solvent business.

 “Defunct” here means a company that is no longer a functional company. While “solvent” means that the company does not have any debts or liabilities and can dissolve or close down easily. In short, your company needs to be clear from any debts and legal issues along with the fact that it is no longer operating.

Requirements & Conditions to Deregister a Company

Any person wants to de-registered the HK business, the company has to meet the following requirements and conditions: 

  • The company has not involved in any legal procedures.
  • There are no outstanding debts of the company.
  • There was no operation or business conduct in the company three months before the application to de-register the Hong Kong company (application made at least three months after the cessation date).
  • Every member in the business has agreed for the de-registration of the company.
  • There is no immovable property located in Hong Kong of the business.
  • In case the Hong Kong business is a holding company, none of the company’s additional property has any immovable ones that are located in Hong Kong.
  • The Hong Kong business receive the “Notice of No Objection” from the Inland Revenue’s Commissioner.

When the “Notice of No Objection” is issued, you will then need to submit application with the Company Registry to complete the whole process.

For further information, please contact us.

You may want to read: http://centreo.hk/can-close-company-hong-kong-long-will-take/

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