Transfer of Shares in a Hong Kong Company

What is the process of transferring of shares in Hong Kong? According to the regulations of the Hong Kong Companies Ordinance, all private limited companies of Hong Kong have some provisions in their articles concerning the task of transferring its shares. Despite the provisions, there are no particular constraints on the share transfers in the Companies Ordinance. In order to transfer shares of the company, it has to be pre-approved by the Board of directors. To start this process, the company needs to take the following steps -

• Ensure that it has prepared the share transfer form by getting it signed or noted by both the buyer (transferee), and the seller (transferor).

• Prepare the Share Transfer Form and the Sale Agreement Form for stamping.

• Deliver the Shares Transfer Form and the underlying share(s) to the company, and wait for the approval of the Board of Directors on the share transfer.

• In the process of transferring, the shares that have been stamped and the buyer’s particulars have to be confirmed for registration into the Company Registers. This is the official proof for the transfer of the company’s shares.

How to transfer existing shares of a company?

1. The transferring of shares in Hong Kong should follow the Articles of Association. In short, the change of company shareholders must be approved by other shareholders.

2. Once you receive approval from other shareholders, you can begin preparing the documents required for the transfer to take place. The documents included contract notes (bought and sold note), resolutions, sale & purchase agreement, management account, an instrument of transfer, etc.

3. Apart from these documents, the company would have to submit the latest audit report of the company, only when they have operated their business in the past.

4. If you haven’t prepared any audit report within the 6 months before the date of transfer, a certified management account (within 3 months) of the company is required.

5. As soon as you have collected all the documents, the instrument of transfer or contract notes have to be stamped by the government and a fee has to be paid. This process is considered as the stamp duty. the payment of the stamp duty would be imposed based on: total net asset value of your company or the consideration depending upon the situation, whichever is higher.

6. Once you are done with the collection of all the documents, it needs to be sent to the stamp office.

7. Once the documents have been stamped, the process of the transition of company shareholders in Hong Kong is completed.

What are documents required for processing? For preparing the documents to change the company shareholders in Hong Kong, the following documents and information have to be given:

1. Original of the latest audit report within 6 months (and/or certified latest management accounts within 3 months, if business has started);

2. A copy of the passport or identity card and residential address of the new shareholder (transferee);

3. Name of the seller (Transferor);

4. The amount of shares to be transferred;

5. Land property information (if any);

6. Sale & Purchase Agreement (if any);

7. Subsidiary’s audit report and/or certified latest management accounts (if any);

8. Resolution of distribution of dividend (if any); and

9. A copy of Articles of Association of the company.

How to impose the stamp duty on transfer of shares in Hong Kong? When you transfer the shares of a company, there will be a stamp duty imposed by the Hong Kong Government, more specifically the IRD, on the total value of the company or the par value of the shares, whichever is higher. The current rate for the stamp duty is set as 0.2% on the value of the shares. The total value of your company would be the net assets (assets minus liabilities) of the company at the share transfer date. This means for a company transferring 100% of the shares to another shareholder, and at the date of the transfer of shares is worth HKD $500,000, then the stamp duty on the transfer of shares would be HKD $1,000.