Hong Kong compliance
The types of companies that may be formed and regulated under the new Companies Ordinance in Hong Kong are public and private companies limited by shares; companies limited by guarantee without a share capital and public and private unlimited companies with a share capital.
Any of the different types of companies as listed above, according to the Ordinance states that they must keep accounting records which must show and explain the company’s transactions and disclose their financial position and performance. Accounting records must contain daily entries of all sums of money received and expended by the company, and the matters of which the receipt and expenditure takes place, as well as an accurate record of the company’s assets and liabilities.
Commencing dormant status
The Ordinance states that a company is dormant if it said to have had no relevant accounting transactions during any given financial year. Accounting transaction can be defined as a transaction that is required to be entered in the company’s accounting records.
This means that a company must pass a special resolution, authorising its directors to make a statutory declaration that the company will become dormant, and deliver a copy of the declaration to the registrar. Special resolution is when the members of the company pass a resolution that is by a majority of at least 75%.
The company shall be deemed a dormant company effective as of the date of delivery. If the declaration specifies a later date for the company to become dormant, it shall be deemed dormant from the date specified.
Every company must appoint an auditor who must be a member of the Hong Kong Institute of Certified Public Accountants and hold a practicing certificate. The annual financial statements for a financial year must give a true and fair view of the financial position of the company as well as an accurate view of the performance of the company for the financial year.
The process of rendering a company as dormant effectively allows an inactive company to be retained at a minimum maintenance cost as a dormant company is exempt from the preparation of audited financial statements and appointments, as well as the removal of Auditors.
Annual general meeting
A company must hold a general meeting as its annual general meeting at the end of each financial year. In the case of a private company or a company limited by guarantee, 9 months after the end of its accounting reference period by reference to which the financial year is to be determined.
The Ordinance also holds that this does not apply to a dormant company, effectively rendering it is exempt from holding general annual meetings, unless the company enters into a financial transaction, it will stop having an effect on and after the date of the accounting transaction.
A private limited company incorporated in Hong Kong under the Ordinance is required to file an Annual Return signed by a Director, Company Secretary, Manager or Authorised Representative with the Companies Registry within 42 days after the company’s return date (excluding the year of incorporation.) This is relevant even if the information contained in the last return remains unchanged, it is still necessary to file an annual return certifying that there has been no change since the date of the last return.
The requirement to deliver an annual return for registration does not apply to a company who currently holds dormant status, however, it is still compulsory for a private company to deliver an annual return for the year in which it declares itself to be dormant if the effective date on which the company becomes dormant falls after the 42nd day of the anniversary of its date of incorporation.
Ending dormant status
A company that holds existing dormant status ceases to a dormant company by definition, if the company passes a special resolution declaring that the company intends to enter into an accounting transaction, and the resolution is delivered to the Registrar for registration; or there is an accounting transaction in relation to the company. The company will no longer be deemed dormant upon the date of said delivery or from the date of the declaration of the first accounting transaction.
Cryptocurrency & ICOs as securities & virtual commodities as per Hong Kong law
The Hong Kong Securities and Futures Commission has remarked upon the growth and popularity of Initial Coin Offerings (ICOs) for raising money not only in Hong Kong but other Asian countries. This article confirms and explains how digital tokens that are offered or sold may be defined as "securities" and as such are therefore governed by the relevant securities legislation of Hong Kong.
New licensing regulations for Trusts & Service Providers in Hong Kong
As per new regulations, all Hong Kong businesses providing Trustee Services, including Corporate Service Providers will not be able to operate without a valid trading license after March the 1st 2018. The new scheme is designed to better regulate individuals carrying out services within the financial sphere in Hong Kong and will be overseen and administered by the Hong Kong Companies Registry.
The terms of Hong Kong's new register of significant controllers and what it means for companies
As per new legislation, from March 1st 2018, every company incorporated in Hong Kong will be required to keep and maintain a register of all persons who have significant control of the company. The record must be updated as required and kept at the registered company address, even if there are no persons of significant control.
The pros & cons of European Passport-by-Investment schemes
In a bid to rebuild the dwindling economy in Cyprus shortly after the financial crisis four years ago, the government launched a passport-by-investment program to temp wealthy foreigners with citizenship in exchange for an investment of no less than €2 million into the Cyprus economy.
Using the Cyprus Non-Dom scheme for beneficial tax planning
In an attempt to improve and simplify the Cyprus tax system as well as to remain a highly compliant and attractive jurisdiction, the introduction of the non-domicile (shortened to Non-Dom) scheme aims to give Cyprus a competitive edge over other jurisdictions.
How are Cyprus banks handling the island's high rate of NPLs? Can more be done to combat them?
It is no secret that the Cyprus banking sector is struggling with the overwhelming level of Non-Performing Loans (NPLs), no matter the efforts exerted by the main banks in Cyprus by following conventional banking models to balance their profit/loss reports, NPLs remain to be the proverbial hole in the bucket.
Income tax exemptions for expats living in Cyprus: what are your options?
Situated in the Eastern Mediterranean, the Republic of Cyprus boasts a strategic geographical location at the hub of three continents; Europe, Asia and Africa and a pleasant sunny climate year round.
The UK Persons of Significant Control Register & its impact on companies
The requirement to maintain a register of people with significant influence or control, more commonly known as the PSC register was introduced to mandate all unlisted companies in the UK, including LLPs and dormant companies to maintain a register identifying those with significant control over a company.