AUDIT

Every company incorporated in Hong Kong is required by the Hong Kong Companies Ordinance ("HKCO") to prepare each year a profit and loss account (income statement) and a balance sheet, accompanied by a directors' report. The company is required to keep proper books of account which give a ‘true and fair view' of the company's affairs and explain its transactions for audit purpose. In addition, the HKCO requires every company in each year to hold an annual general meeting ("AGM") and not more than 15 months shall elapse between two AGMs. Provided that the company holds its first AGM within 18 months of its incorporation, it need not hold it in the year of its incorporation or in the following year.

The company is to appoint independent auditors who are certified public accountants registered with the Hong Kong Institute of Certified Public Accountants practicing in Hong Kong. The company is required to lay at its AGM an audited accounts for the period, in the case of the first account, since its incorporation, and, in any other case, since the preceding accounts. The balance sheet date of the audited accounts shall not in general exceed 9 months before the date of the AGM.

Generally, Profits Tax Return issued by the Hong Kong Inland Revenue Department ("HKIRD") must be filed annually together with the audited accounts as supporting evidence to the HKIRD.