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2022-04-20 |
【4 mins Read】OneStart Weekly - Deregistration of Company

Deregistration of Company

According to the Hong Kong Companies Law, since November 11, 1999, there is no procedure for delisting in Hong Kong. Instead, there is a procedure called deregistration, which is the revocation of a company. If a Hong Kong company does not carry on business or the company has started winding-up procedures, but no one is responsible for the actual winding-up, the Registrar of Companies may, in accordance with Article 291 of the Hong Kong Companies Ordinance, publish a notice in the Government Gazette stating that Three months after publication of the notice, the company is removed from the company register and the company is deregistrated.

 

Reason for company deregistration

More than 90% of start-up companies have only one reason for deregistration, that is, they are out of money. The rest may be due to inconsistencies in ideas or unfair distribution of benefits, leading to separation, or because of conflicting control rights, the core members are killed. Recently, due to the economic downturn in the world due to the epidemic, Hong Kong's economy prospects are not as good as before, so many investors choose to immigrate or choose another country to invest in and start a business. As for the operating business, they are forced to be deregistrated.

 

Most entrepreneurs will not give up until the last minute, and they will declare the company bankrupt when they can't do it. At this time, the asset liquidation procedure must be carried out, and the remaining assets will be repaid first, and then repaid to the shareholders. Of course, you can also choose to temporarily go out of business. You don’t need to do asset liquidation when you go out of business, so you can leave a way out, but investors are usually reluctant because they have joint and several liabilities as shareholders.

 

Entrepreneurs are excited to set up a company, but they still need to calmly think about what to do when the business is not successful. If the business of the company goes from bad to worse, the entrepreneur must also consider whether it is worth continuing to operate, or carry out deregistration. In fact, there are many reasons for deregistrating a company's business, it may be due to business failure, disagreement between shareholders or partners, owner or partner change, retirement, immigration. Therefore, even if entrepreneurs are ambitious when starting a business, they still need to have a certain understanding of the methods and procedures of the company's deregistration, the reasons for the company's deregistration, and the signs of business failure.

 

Signs of a company deregistration may include:

  • Turnover and profits start to decline
  • Costs start to rise
  • Rising client delinquency rates affect liquidity
  • Liquidity is often insufficient for day-to-day operations
  • Inventory accumulated for too long
  • Corporate debt climbs

Business competition is becoming more intense or the industry and market are shrinking. To detect a crisis in early stage, the most important thing is to constantly pay attention to and review the company's operating financial situation, profits, costs, and also pay attention to cash flow, inventory and debt. Some entrepreneurs only focus on sales, do not frequently review the operation and market conditions, and completely ignore the signs of crisis, which is often the main reason for the need to deregister the company.


 

Cancellation procedure

In Hong Kong, there are two main ways to wind up a company: one is to apply for deregistration, and the other is to wind up. Closing a company by deregistration is relatively simple and is the most common method of closing a company in Hong Kong.

 

To apply for closing a company, the following conditions must be met:
1. All members of the company agree to deregister
2. The company has not yet commenced operation or business, or has not operated or carried on business within the 3 months immediately preceding the application
3. The company has no outstanding debts
4. The company is not a party to any legal process
5. The company's assets do not include real estate located in Hong Kong
6. If the company is a holding company, the assets of all subsidiaries do not include immovable property located in Hong Kong
7. The company has obtained a Notice of No Objection from the Commissioner of Inland Revenue

 

Reminders:

1. Bank Account
When the company decides to cancel, please close the bank account by yourself. If you hold trademarks or other intangible assets, you need to transfer them away before cancellation.
2. Government departments
Pay attention to the time of revocation whether to accept the replacement of the business registration certificate or submit the annual return. Generally, the application needs to be submitted 3 months before the expiration of the following year, otherwise the government has the right to require the completion of the relevant responsibilities before allowing the dissolution.
Anyone who closes up business or closes up any branch business must notify the Business Registration Office in writing within one month from the date of closing. Failure to file a notice on time is punishable by a fine of $5,000 and imprisonment for one year.

 

As for liquidation, it refers to the process of settling the company's accounts and selling the company's assets, distributing the net assets to shareholders and dissolving the company. The entire winding-up process is supervised and handled by a liquidator, and for a shareholder voluntary winding-up, the company must be able to pay its debts and be able to pay its debts in full within 12 months of the winding-up.
Shareholder Voluntary Insolvency Service
1. Act as liquidator of the company to supervise and handle the entire winding up process
2. Prepare shareholder and director resolutions, forms, notices and other relevant documents required for winding up
3. Submit all required documents to the government
4. Contact the Inland Revenue Department to obtain a tax clearance certificate
5. Posting in the Gazette after passing the relevant company resolution

 

How OneStart Business Centre can help?

OneStart OneStart Business Center is a licensed company secretary (OneStart Secretary Limited Trust or Company Service License: TC002848). It can properly arrange the closing of the company to cancel the company.
After the customer fills in the application form, return it to OneStart business centre together with a copy of the company's business registration certificate, company registration certificate and the latest annual return.
OneStart Business Center will contact the customer to verify whether the required information is complete, and follow up the procedures for deregistration of the company.
Need company deregistration services at OneStart Business Center? Call our hotline 3575 6888 or WhatsApp our professional consultants now!