Do you have a Company and need to leave Hong Kong?

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We live in turbulent times and as a result many people are making the decision either to take a leave of absence from Hong Kong (two or three years working from their home countries or from a third country such as Singapore, Thailand, Malaysia or the Middle East) or leave permanently. If you own a private company limited by shares or have a property or other assets which are owned by a company structure, you will need to decide what to do with your company before you leave Hong Kong – and of course you will need to take other shareholders wishes into consideration.

Here are some options for you to consider:

Keep the company as is and manage it from overseas. This is a good solution if you plan on returning to Hong Kong or if your company is structured to hold property or other assets, that you have not yet been able to sell. Hong Kong is a popular place to own a company, not only because of its low taxation rates but also because of its relaxed company-formation requirements. For instance, a foreign individual who resides overseas can be a sole director and shareholder of a Hong Kong company, however if you wish to ensure that you keep the value or earnings of your company or asset in Hong Kong you should ensure that you have other directors who are located in Hong Kong. A private company limited by shares must have one director (regardless of nationality and permanent residency) and either a company secretary (a Hong Kong Identity Card holder) or a Hong Kong-based comsec corporate service provider.

Transfer to dormant status. This is another good option if there’s a chance you might return to Hong Kong. A dormant company is still active but its status helps reduce costs. The transfer process is straightforward for companies that have yet to start operating. Companies that are in operation should cease doing business three months prior to the transfer application and an audit report must be completed to prove that no transactions were made during that period. Know that even if a company is dormant, it is still required to have a company secretary (a Hong Kong Identity Card holder) or a Hong Kong-based comsec corporate service provider.

Transfer share(s) and directorship. By selling a company, you can fully transfer all ownership to another party. The process can be straightforward depending on the structure and current standing of the company. Before selling, you are advised to go through a business valuation process to calculate the financial value of the company and any assets. This process involves collecting and analysing a range of metrics, such as revenue, profit and loss, as well as assessing the risks and opportunities a business faces.

Deregistration. A fourth option is to deregister the company as a legal entity. This can be a very long process (five to nine months), therefore you need to ensure that there are no pending tax liabilities and that you have signed all the necessary documents before leaving Hong Kong.

If you are a sole proprietor and would like to close your business, you should also inform the Inland Revenue Department one month before your departure and file a tax return for the relevant year(s). Before leaving Hong Kong, you are advised to have your mail redirected – simply fill out a form at your local post office and provide a forwarding address.

Sharon McEneff is the director of T8 Corporate & Business Services in DB North Plaza. T8 delivers business administration services and a one-step comsec solution enabling clients to comply with Hong Kong’s rules and regulations. For more information contact us.