What is deregistration?
This is a procedure by which the shareholders can apply to Companies Registry (CR) to remove the company from its register as an active company.
What is the difference between deregistration and winding-up?
They are different methods of dissolving a company.
Winding-up is a procedure in which the affairs, assets and liabilities of a company are concluded, wound-up, processed with the intention to return (if any) remaining value to its members. Assets are sold off or reclaimed and liabilities repaid before returning remaining monies to the shareholders. Different winding-up procedures are covered in a separate article.
Notwithstanding possibility of requiring an audit prior to apply for deregistration, deregistration provides a cheaper and in most circumstances a quicker mean to dissolve the company.
Striking off is used by Registrar of Companies to remove the name of a defunct company from the register.
How to apply for deregistration?
Your company must meet all of the following conditions:
– A solvent company incorporated under Companies Ordinance, other than those companies specified in section 291AA(16) or registered under Part XI of the same Ordinance.
– All members and shareholders of the company must agree to the deregistration.
– It has not commenced business or operation, or has since ceased business or operation at least 3 months before the application.
– Has no outstanding or remaining external liability or debt.
– Receives written notice of no objection to deregistration from the Commissioner of Inland Revenue.
How long does it take to dissolve a company by deregistration?
About 5-6 months – from the time a no objection to deregistration is received from the Commissioner of Inland Revenue and filing it with form DR1 with CR.
Note all bank accounts must be closed prior to the company being dissolved. Failing to do so may require a court order and legal expenses to recover monies therein.
Do I still need to file Annual Return (AR) after applying for deregistration?
YES the company must continue to file annual return until the company has been declared dissolved by CR.
Note all companies must comply with its obligations under Companies Ordinance prior to being dissolved.
Do I still need Business Registration (BR)?
Depends. One possible scenario in which the BR can be cancelled by IRD prior to its renewal is that when its next renewal date (note not payment due date) is after an application for no objection has been filed with Inland Revenue Department.
Note any remaining fee on existing BR certificate on dissolution of the company cannot be refunded.
I am a creditor of a company that has been deregistered, what can I do?
Legal recourse is available to restore or reinstate the company through courts of law. Please seek legal advice on the subject.