All the incorporated Private Limited Companies in Hong Kong must comply with some conditions once a year, leaving the compliance regulations to a minimum. This article will explain what Annual Return (AR) is, what informations are required and how you can file it.
What is an Annual Return?
According to the Companies Ordinance chapter 622, which is the law that regulates business entities in Hong Kong, the Annual Return is the form that contains the basic details of an established company. This form is known as the NAR1 form and it should be submitted every year to the Hong Kong Companies Registry, on the day of the incorporation date or anniversary date of the Hong Kong company. The types of entities that need to file the Annual Return are Public Companies, Company Limited by Guarantee, and Private Limited Companies.
With the changes to chapter 622 of the Companies Ordinance, the Public companies and Companies Limited by Guarantee need to file their Annual Return according to the date of their financial year-end period, instead of doing it at the end of the calendar year when their General Meetings were held.
For Private Limited Companies, the Annual Return needs to be renewed every year on the date of incorporation of the company. Furthermore, the above-mentioned change does not apply, and to renew this form, the correct annual registration fee payable should be covered. In the case that the Annual Return is delivered after 42 days from the date of the anniversary, the company will breach the law. Failing to pay the annual registration fees payable in time will incur penalties. The more significant the delay in the document submission, the higher the penalty will be. For more information about the specific fees for each of the company entities, please visit the following link from the Companies Registry.
It is important to clarify that this document can be obtained after a local private company in Hong Kong is incorporated. Additionally, this document should not be confused with the annual tax declaration, which is called Profit Tax Return. The Annual Return is one of the compliance requirements for some of the Hong Kong entities that helps the authorities to keep the information and the structure of the company up to date, and it does not include the tax declaration.
🔎 Tip: Read more on our article Hong Kong Profit Tax Return Form
What information is included in the Annual Return?
As we mentioned above, the NAR1 contains the basic information of a company. Here, we will go more into detail about the sections contained in the form:
- The company number: Is the seven-digit number located in the right corner of the document, which is the same as the one in the company’s Certificate of Incorporation.
- Company name: The full name of the company, either in English or traditional Chinese. It should match the name of the Certificate of Incorporation.
- The type of company: As mentioned, only three types of Hong Kong business entities need to file the Annual Return, a Public Company, a Company Limited by Guarantee, and the Private Limited Company.
- The date of incorporation: This is the date when the company was officially established. It is included in the Certificate of Incorporation.
- Financial period to be covered: Only Public and Companies Limited by Guarantee need to fill in the specific period, which must correspond to their fiscal year.
- Address: This is the registered office address, where the company receives official notifications from the Hong Kong government.
- Share capital: the invested capital is reflected in the amount and value of shares. This amount will be regarded as contributed capital of the company.
- Company secretary: the details of the person or company occupying this role, such as name, address in Hong Kong and information contact will need to be included. It is mandatory by law to have someone fill this position.
- Directors: in this section, the particulars of the directors such as full name, identity document number, and postal address should be included. A corporate body can be a director. The minimum requirement is to have one director.
- Shareholders: for companies that are not listed in the stock market, the particular details of the shareholders, such as name, identity document number, and amount of shares that each possesses, are included.
The items mentioned in this list are the most common sections that are filled in an Annual Return. However, some sections might need to be changed according to each company’s actual situation. It is always advisable to inform your Company Secretary if any significant changes happen so the Companies Registry can have the most updated information.
How do you file your Annual Return?
As we have analyzed, to comply with the submission of the Annual Return, Hong Kong companies need to fill in the form NAR1 with all the corresponding sections that apply to their current situation and pay the annual registration fee.
Most companies ask their Company Secretary for help to fill in this form every year and do the renewal process for them. In practice, the Director of a company must sign the NAR1 for the Annual Return submission. This may become a problem if the director is not physically present in Hong Kong, which is commonly the case. Nevertheless, the Company Secretary has the option to sign the NAR1 form on behalf of the company, with the consent of the Director.
The Annual Returns are an important part of the corporate documents of your Hong Kong Private Limited Company and the company’s return date should be monitored. The owners of a company in Hong Kong also should file Annual Returns in due time. Asking the support from your Company Secretary is the best way to avoid forgetting to file your Annual Return, incurring penalty fees, and having the guidance of an expert to keep your company in compliance. If you are looking for a Company Secretary to help you maintain your company in compliance you can visit our Company Secretary Review page or get in touch with our team at email@example.com