One of the most common questions I hear from founders is: “If my Hong Kong company is dormant, can it still hold assets or shares — or does everything have to be zero?” The short answer is: yes, a dormant company can hold assets, but you must be very careful about what actually counts as a “transaction”.
In this guide, I’ll walk you through what a dormant company in Hong Kong can and cannot do when it comes to assets and shares, and explain what “no significant accounting transaction” really means in practice.
Can a Dormant Company in Hong Kong Still Hold Assets?
Holding assets acquired before dormancy
Under Hong Kong’s Companies Ordinance, a company is considered dormant if it does not enter into any accounting transaction during a financial year, except for payments required by law (such as government filing fees).cr.gov.hk+1
This definition does not say that a dormant company must own nothing. In fact, it is quite common for a Hong Kong dormant company to:
- Hold assets or property it acquired before becoming dormant
- Own shares in subsidiaries or other investments
- Own intellectual property (IP) such as trademarks or domain names
Simply holding these existing assets does not by itself create a new accounting transaction. The key is that you are not actively buying, selling, or otherwise dealing with them in a way that generates new entries in the books.
Using a dormant company as a holding vehicle
Many groups intentionally keep a Hong Kong company dormant as a pure holding vehicle for:
- Equity stakes in operating subsidiaries
- Long-term strategic investments
- Brand and IP portfolios
As long as there are no new acquisitions, disposals, or income flows that must be recorded, the company can remain dormant while still owning valuable assets on its balance sheet.
What Counts as “No Significant Accounting Transaction”?
Legal definition of an accounting transaction
Hong Kong law defines an “accounting transaction” (for dormancy purposes) as any transaction that must be recorded in the company’s accounting records under section 373 of the Companies Ordinance, excluding transactions arising from the payment of fees the company is required by an Ordinance to pay (for example, certain government fees).cr.gov.hk+1
In plain language, that means most day-to-day financial activity does count as an accounting transaction, including:
- Receiving revenue or investment income
- Paying suppliers or service providers
- Buying or selling fixed assets or shares
The only safe “exceptions” are very narrow — primarily statutory fees.
Examples of allowed vs not allowed activity
To make this clearer, think of it this way:
Generally allowed without breaking dormancy (if this is all you do):
- Paying the Business Registration fee
- Paying other mandatory government fees required by law
Likely to break dormancy (because they create accounting transactions):
- Buying or selling shares or other investments
- Receiving dividends or interest on investments
- Paying rental, salaries, or advisory fees
- Transferring assets to or from the dormant company
So yes, a dormant company in Hong Kong can hold assets or shares, but if it starts trading those assets or receiving regular income from them, dormancy will almost certainly be broken.
Practical Scenarios: Shares, IP, and Bank Accounts
Holding shares in subsidiaries or investments
A typical scenario: you have a Hong Kong company that owns 100% of an overseas subsidiary. You decide to pause operations and make the Hong Kong company dormant.
In this case:
- The company can continue to hold the shares in the subsidiary
- It should not buy or sell additional shares during the dormancy period
- If the subsidiary pays dividends up to the dormant company, that dividend income would be an accounting transaction and could break dormancy
If you expect regular dividends or restructuring, you may be better off keeping the company active rather than trying to maintain dormant status.
Intellectual property and brand assets
Another common use case is IP:
- The dormant company owns trademarks, domain names, or software rights
- It does not actively license them out or collect royalties during the dormant period
Simply owning the IP is fine. But once you start issuing license agreements, collecting royalties, or paying significant IP-related expenses through the company, you are back in “accounting transaction” territory.
What about bank accounts?
If a dormant company keeps a bank account open, best practice is:
No incoming or outgoing transactions except unavoidable bank charges and statutory fees
No customer payments, intercompany transfers, or investment flows
Even routine bank interest or frequent charges can raise questions about whether the company is truly dormant, so many owners either:
- Accept very minimal charges and keep the account “on ice”, or
- Close the account entirely during dormancy
How to Use Dormant Status Safely
Set clear internal rules
To avoid accidentally breaking dormancy, it helps to formalize a few internal rules:
Mark the entity clearly in your internal records as “Dormant – no transactions allowed”
Inform all finance, legal, and business teams not to use that entity for invoices, contracts, or payments
Keep separate holding or operating entities for any new deals
This way, your dormant company Hong Kong can quietly hold assets without being dragged into day-to-day operations.
When to seek advice or reactivate
If you plan to:
- Sell or transfer the assets held by the dormant company
- Start receiving regular income (rent, dividends, royalties)
- Use the company again as an active holding or trading vehicle
…it’s usually better to formally reactivate the company and treat it as active, rather than trying to “squeeze” these activities into a dormant structure. A corporate services or tax advisor can help you map out the cleanest path.
Conclusion
A dormant company in Hong Kong can still hold assets or shares, and this is often a smart way to protect brand value, IP, or strategic investments while keeping recurring costs lower. The real line you must respect is not “owning nothing”, but avoiding accounting transactions beyond narrow statutory fees.
As long as the company simply “holds and sleeps” — without trading assets, receiving income, or using its bank account for active business — dormancy can be maintained. Once you want those assets to start working again, it’s time to reactivate the company and step back into full compliance, instead of risking a grey zone that regulators may not accept.
Contact information:
- Organization: BBCIncorp
- Website URL: https://bbcincorp.com/
- Email: service@bbcincorp.com
BBCIncorp's Headquarters in Hong Kong:
- Address: Office 3906, 39th, The Center, 99 Queen's Road Central, Central, Hong Kong
- Phone: (+852) 9889 3529
BBCIncorp's Office in Singapore:
- Address: 9 Raffles Place, #29-05 Republic Plaza, Singapore (048619)
- Phone: (+65) 6011 8200
BBCIncorp's Office in Vietnam:
Address: 39-41 Ngo Thi Bi Street, Him Lam Area, Tan Hung Ward, Ho Chi Minh City
Phone: 18006338
0 Comments