Dissolving HK company

[IanC]

I recently got an email from SFM that I used to set up a company. I didn't end up needing it and the company never operated in any capacity or had a bank account. When renewals came up in 2019 I didn't pay and I thought that was the end of it. Never received another email from them until a few days ago. So yeah to receive an email like this set off red flags. They are asking for 2.5k euro to dissolve the company. Feels like I am being taken for a ride. Is this legit? I actually likely will need a company soon. Think it's possible to move it over to another company to manage? Which one do people recommend? Thanks for the help


I hope this email finds you well.

I am contacting you regarding the above company as we have been approached by the authorities in Hong Kong who are asking about the status of this company.

Whether you wish to renew it or not, we need to inform them.

If you do not need it, we must dissolve it immediately, failure of which the authorities could start legal action against the company and its directors/shareholders.

As director of the company the authorities can (and probably will) take legal action against you as a director for failing to render the accounts of the company, and this will imply an exposure of your name locally.

Anxious to avoid this kind of trouble to our customers, we contact you to either dissolve the company or renew it.

Thank you for telling us if we need to start the process of dissolution of the company, or if you just want to renew it.

 

[Sols]

You can abandon companies without repercussions in places like Seychelles and Belize. They just strike them off. That doesn't work in Hong Kong, where for example investors (in case you have other shareholders) are better protected and where they have the resources to prosecute people who don't file annual reports and pay government fees.

If you don't comply, the authorities will prosecute you and they will win in Hong Kong courts, at which point you start owing fees and penalties. Unless you never visit Hong Kong or have any exposure to Hong Kong again in the future, this is probably not going to affect you but it's a small price to pay to be able to invest in Hong Kong again in the future.

However, you don't need to use SFM for the dissolution. You can look around for a cheaper CPA to dissolve the company for you. There are hundreds to choose from.

The Hong Kong Institute of Certified Public Accountants might be a good place to start: The Hong Kong Institute of Certified Public Accountants

 

[IanC]

Thanks for the response. I don't have any documents in regards to the company. Asked now and they are saying they won't release until the company in good standing aka paid their bill. Do I need any documents to move to a different CPA? I will pay for it. Any idea how much something like this should cost? Annoying that I am only being made aware of it now. The fact I was the only shareholder make any difference?

 

[Sols]

Are you also the sole director of the company and do you have audited financials of the company? If so, you should be able to go to another CPA and dissolve without too much hassle, or have them do all the necessary accounting and filings for you and then dissolve.

For a totally inactive company, you can probably get by with a few thousand HKD before audit. If the company qualifies as dormant, you might not need to do an audit which would save you another several thousand HKD. I'm not sure if you can apply for that status this late but it's worth discussing with a CPA.

 

[IanC]

Sole Director. Filled declaration of consent for SFM to manage. Filled one year as NIL there was never any financial dealings taken by company. Hope that answers your questions. Not trying to be vague.

Thanks again. Any CPA you can personally recommend?

 

[Sols]

Have mainly worked with international firms and I know they tend to charge a bit more than smaller, local ones. Going over some old notes, these are some noteworthy smaller, local firms that might be budget friendly:

http://www.bycpa.com/
https://www.nova.com.hk/
https://profitaccounting.hk/en/
https://www.cheungandsiu.com/
https://www.conson.com.hk/

 

[IanC]

Yeah, price isn't really the issue. Incompetence is. Thanks for your help

 

[IanC]

Out of interest which international ones you recommend? Healy consultants?

 

[Sols]

Vistra, Appleby, BDO, and Grant Thornton.