Ask a Hong Kong auditor whether your company needs an audit and the answer is almost always yes. Ask an Indian CA the same question about the Annual Performance Report (APR) and you may hear that their certificate is enough. Both cannot be right, and this gap causes most of the rejected APR filings on Hong Kong subsidiaries.
Hong Kong has no small-company audit exemption. Under the Companies Ordinance, every Hong Kong company must have its accounts audited every year, whatever its turnover. The only real exception is a company that has formally declared itself dormant. RBI’s unaudited route applies only where the Indian investor has no control and the host country does not require an audit, so an active Hong Kong subsidiary needs audited statements regardless of shareholding.
The audit report must be signed by a Certified Public Accountant (Practising) registered with the HKICPA and holding a current practising certificate. This rules out an Indian chartered accountant, a US CPA, a UK ACA or a Singapore ISCA member, and the firm that only prepared the accounts unless it is properly appointed and independent. Before engaging anyone, check the HKICPA public register and ask for the practising certificate number.
A dormant company still counts as an overseas investment, so an APR is still due each year. Where you control it, the cautious approach is to have a CPA (Practising) sign off the nil-activity statements, and to confirm the treatment with your AD bank before December.
On timing, a 31 March year-end matches the Indian year. A typical cycle is fieldwork from July to September, the signed report by October, and the APR sent to the AD bank in November, with 31 December as the outer limit.
AD banks usually reject filings over small mismatches. Check that the Unique Identification Number is identical everywhere, one currency is used throughout, the share capital matches your remittance records, step-down subsidiaries are disclosed, and related-party loans reconcile to the audited notes.
A late APR can be regularised with a flat late submission fee of Rs 7,500 per return if you opt for it within three years of the due date. After that, compounding is slower and costlier.
Read the complete guide here:
https://accorppartners.com/blogs/apr/apr-for-hong-kong-companies-who-can-sign-the-audit
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