FOR $29 a month, Simon Chan, once an aspiring entrepreneur, owns and maintains a limited company. Given the chance, he would kill it. He is a partner in a 'sleeping', or inactive, clothing company which no longer generates any business, let alone profits. It is nothing but a record at the Companies Registry. But Mr Chan, 32, can do nothing about it.
Under existing company law, Mr Chan and his three partners cannot voluntarily wind up their short-lived venture as they are still in debt. Their creditors must take legal action to liquidate their business.
'But none of our creditors - the supplier, the leasing company and decoration workers - are suing us because it is cheaper for them to leave things as they are than taking legal action against us,' Mr Chan says.
'Though our business folded earlier this year, we still have to pay the annual company registration and audit fees to the Government, about $6,000, for the next six years.' Mr Chan, now running his father's textile business, is one of an increasing number of local entrepreneurs whose small businesses have gone bust in the past 12 months. But though it has been a 'good lesson', he is one of the lucky ones: he has not gone bankrupt.
Hong Kong's bankruptcy laws - often criticised as outdated and currently under review - mean those less fortunate who have gone bankrupt, are likely to die bankrupt.
The latest Official Receiver's Office annual report shows new insolvency cases this year up by 17 per cent to 751, of which 318 were personal bankruptcies, while 433 companies wound up.