Deregistration and Employers' Responsibilities

This article looks at the information and services about company deregistration and the responsibilities that an employer has to take afterwards, such as settling wages and MPF funds.

Deregistration with the Companies Registry

Deregistration is a summary procedure to dissolve a defunct and solvent private company or a company limited by guarantee.  Compared with the liquidation procedure, deregistration is a convenient and inexpensive means to dissolve a company. The company making the application should meet the following requirements:

• all the members of the company agree to the deregistration;
• the company has not commenced operation or business, or has not been in operation or carried on business during the 3 months immediately before the application;
• the company has no outstanding liabilities;
• the company is not a party to any legal proceedings;
• the company’s assets do not consist of any immovable property situate in Hong Kong;
• if the company is a holding company, none of its subsidiary's assets consist of any immovable property situate in Hong Kong; and
• the company has obtained a "Notice of No Objection to a Company being Deregistered" ("Notice of No Objection") from the Commissioner of Inland Revenue.

Tax Matters

You need to obtain a Notice of No Objection issued by the Inland Revenue Department when making an application to the Companies Registry for deregistration of your company. Browse the link below for the necessary procedures and download the application form.

If you cease your business or any branch business you must notify the Business Registration Office in writing within 1 month of the date of cessation. Any person who fails to submit notifications shall be guilty of an offence and shall be liable to a fine of $5,000 and to imprisonment for 1 year.

Settling Outstanding Wage and Termination Payments

Items and payments to an employee upon termination of employment usually include:

• outstanding wages;
• wages in lieu of notice, if any;
• payment in lieu of any untaken annual leave, and any pro rata annual leave pay for the current year;
• any outstanding sum of end of year payment, and pro rata end of year payment for the current payment period;
• long service payment or severance payment, where appropriate
• other payments under the employment contract, such as gratuity, provident fund, etc.

An employer who willfully and without reasonable excuse fails to pay wages and termination payments to an employee when they become due is liable to prosecution and, upon conviction, to a fine of $350,000 and to imprisonment for 3 years.

An employer is bound by the Employment Ordinance to pay Severance Payment (SP) or Long Service Payment (LSP) to an employee where applicable. After paying the SP / LSP, you can apply to your MPF scheme trustee to withdraw the relevant amount from the accrued benefits derived from your MPF mandatory contributions (and voluntary contributions, if any) to offset the SP / LSP.

Notes: This article serves as a general guide only. In case of doubt, please refer to the relevant regulations or seek legal advice from the legal profession.