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A Summary on the conditions for the Reporting Exemption under the 2014 HK Companies Ordinance (Part 2)

The new Companies Ordinance (Cap 622) came into operation on 3rd March 2014. Section 359 of the new Companies Ordinance (the new CO) provides that 7 categories of companies that satisfy specified conditions can adopt simplified financial reporting (reporting exemption) in the preparation of financial statements in a financial year, as defined.1

The companies itemized from [1] to [4] have been dealt with in Part 1.

Where a group of non-excluded companies meet the conditions in terms of size of business, legal structure, or members’ consent in writing, it can make use of the reporting exemption in the preparation of the consolidated financial statements.

Given below are the conditions under which the reporting exemption is applicable under the new CO (Cap622), by each category of group companies, which consists of a holding company with one or more subsidiary companies.

[5] Group of Small Private Companies

The conditions for getting qualified as a group of small private companies are basically the same as that for a small private company, with the following exception: if, after a group is qualified as a group of small private companies, another company becomes a new member of the group in a financial year of the holding company such that either (i) each company in the group is not qualified as a small private company, or (ii) any 2 of the conditions for tests on business scale are not satisfied, the group is disqualified as a group of small private companies for the financial year and thereafter, until it meets the conditions again for a group of small private companies in a financial year. See the reference to S364(4) below.


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Content provided by China Tax & Investment Consultants Ltd
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