Accounting and Bookkeeping in Hong Kong
Apart from the profits tax returns, every company in Hong Kong must also ensure timely filing of statutory returns to the Companies Registrar in strict compliance with the Companies Ordinance (CO). These include all company records including annual returns, and any changes in the registered office address, or particulars of the company directors and company secretary. Failure to do so may result in prosecution and fines for company directors, company secretary, and any other responsible position holder in the company. The penalty (maximum) for every breach is HK$50,000, and a daily default fine of HK$1,000 for continuing offending.
Below are the major – not exhaustive – statutory returns to be filed by a Hong Kong-incorporated company to the Companies Registry.
Filing of Annual Statutory Returns in Hong Kong
1) Form NAR1 is the form to be filled and submitted, as per sections 662 and 664 of the CO. Also required are certified true copies of the company’s financial statements including the report of the auditors and the report of the directors.
- For a private company: within 42 days after the anniversary of the date of incorporation every year.
- For a company limited by guarantee: within 42 days after the company’s return date i.e. the date nine months after the end of the company’s accounting reference period. Do note that the return date for a public company is six months after the end of the company’s accounting reference period. Accounting reference period denotes the time period for which the company’s annual financial statements are to be prepared.
However, a dormant company is not required in Hong Kong to file an annual return, as per section 5(1) of the Companies Ordinance.
2) Form NR1 is the form to be filled and submitted, as per sections 658 of the CO, within 15 days after the change. This is for the change in registered office address.
3) Form ND2A is the form to be filled and submitted, as per sections 645 and 652 of the CO, within 15 days after the appointment or cessation. This is for the change (appointment/cessation) in company secretary and company director(s).
4) Form ND2B is the form to be filled and submitted, as per sections 645 and 652 of the CO, within 15 days after the change in particulars. This is for the change in particulars of company secretary and company director.
Audit Requirement in Hong Kong
Also, note that Hong Kong requires that all businesses to have their accounts audited by a certified public accountant (CPA) every year, who must be independent. This is as per Chapter 622 of Hong Kong’s Companies Ordinance.
And according to Chapter 50 of the Professional Accountants Ordinance (Chapter 50), only firms and practices registered, as well as holding a valid practicing certificate, from the Hong Kong Institute of Certified Public Accountants, are allowed to carry out company audit in Hong Kong.
Other Accounting and Bookkeeping Requirements in Hong Kong
Apart from the above, general accounting and bookkeeping compliance requirements in Hong Kong include:
- maintenance of accounts receivable and ledgers – general, accounts payable, fixed assets
- cash flow and budgeting
- financial statements and bank reconciliation
- monthly, quarterly and annual reviews
- regular management reports and financial analysis.
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