Change of company shareholders in Hong Kong – Company Restructuring

Last Update: February 2025

The shares of a company is the equity of the company, and it also represents the ownership of a business. For a corporation in Hong Kong, you can easily change the company shareholder or transfer them as well. But it is not so simple to just pass it on to a new shareholder. There are a lot of things that have to be kept in mind while transferring shares or if you want to change the company shareholders in Hong Kong.

Understanding Company Shares in Hong Kong 

As per the Hong Kong Companies Ordinance obligations, all Hong Kong private limited companies have provisions in their articles regarding the transfer of its shares. The Companies Ordinance does not heavily restrict share transfers. As a result, common methods have emerged for changing company shareholders.

• Each and every transfer of the share has to be pre-approved by the Board.
• Existing shareholders have the first right to purchase shares.

The process to Change the Company Shareholders in Hong Kong or transfer the shares is:

1. Ensure that the preconditions for rights are satisfied or waived.
2. Prepare the Share Transfer Form for it to be signed by both the seller (transferor) and the buyer (transferee).
3. Give the Shares Transfer Form and the underlying share(s) to the company, and;
4. Wait for the Board of Directors approval on the share transfer.
5. Prepare the Sale Agreement and the Share Transfer Form for stamping.
6. Upon the transfer, 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.

Change of company shareholders in Hong Kong – Transfer existing shares

If you’re transferring company shares to someone already within the organization, such as an associate or shareholder. Follow this process:

1. At first, the transfer has to be according to the articles of association. Shareholders must approve the transfer.
2. Prepare transfer documents. Collect:
   • Contract notes (buy and sell notes)
   • Instrument of transfer
   • Resolutions
   • Sale & Purchase agreement (if any)
   • Management account (if needed)
3. Obtain the company’s audit report. If the audit report is older than six months, you need a certified management account. The account must be within three months of the transfer date.
4. Collect all documents. Stamp the contract notes or instrument of transfer. This is called the stamp duty.
5. Pay stamp duty. The government bases it on the higher of the company’s net asset value or the consideration.
6. Send documents to the Stamp Office. The government stamps the documents.
7. Complete the share transfer process. After document collection, submit them to the Stamp Office. Stamping finalizes the shareholder change.

Another way to change the company shareholders – Issue new shares

Directors complete the allotment of shares Hong Kong. They issue new shares. Then, they enter the new shares into the company’s shareholder register. This includes relevant details. Shareholders approve share distributions. This happens in a general meeting. This approval is needed when the distribution is not proportional to existing holdings.The company files a return of allotment of shares Hong Kong. It discloses shareholders and members. They file it with the Companies Registry. They must file within one month of the assignment.

If the company files late, the Registrar might reject the return. This stops the change of shareholder filing. The company then needs court approval. A person can own a share beneficially, not just as the registered holder. Private companies do not publicly disclose beneficial owners. However, a subsidiary company must state its ultimate holding company. This is required in its accounts. This affects the change of shareholding in private limited company. Adding a shareholder to a limited company through new share issuance requires these steps. The process impacts the change of shareholders of a company. This is crucial for any business considering a change of shareholder.

Documents required for processing to change the Company Shareholders in Hong Kong

To change company shareholders in Hong Kong, certain documents are necessary. Specifically, whether you prepare them yourself or have Startupr do it, these documents must be provided.

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

Time Frame for Processing a Share Transfer

Share transfers in Hong Kong typically take 3 to 5 working days, depending on your schedule. The process works like this:

1. You would give the documents and the information that is needed for the transfer as per your schedule.
2. It takes us (Startupr) about one day to prepare the Bought and Sold Note, and the Instrument of Transfer along with the other documents.
3. Then the transferor and transferee are arranged to sign the transfer documents which is again as per your schedule.
4. All the original transfer documents together with the supporting documents are collected, then will be submitted to the Stamp Office for assessment. Along with this, you would have to provide stamp duty payable as well, which is also given to the Stamp Office.
5. The new share certificates are prepared and they are updated with the Register of Members, while the rest of the document set is delivered to the you.

In any case that you or both the transferor and transferee could come to Hong Kong and sign the share transfer documents. Everything can be done in 1 or 2 working days. There is a special expedite service provided by Startupr for some cases, and any additional expedite service fees will be applied.

Companies ordinance – time limit

There is a time limit to when you can pay for the stamp duty and get the stamp for the change of Company Shareholders in Hong Kong. If this is processed late, there are penalties to it. The timings for this is:

• Contract Note for sale or purchase of any Hong Kong stock – payment has to be made in 2 days after the sale or purchase if effected in Hong Kong.
• Contract Note for sale or purchase of any Hong Kong stock – payment has to be made within 30 days after the sale or purchase if effected elsewhere.
• Transfer operating as a voluntary disposition inter vivos (i.e., gift) – payment has to be made 7 days after execution, if in Hong Kong.
• Transfer operating as a voluntary disposition inter vivos (i.e., gift) – payment has to be made 30 days after execution if executed outside Hong Kong.
• Transfer of any other kind of documents related to the change of Company Shareholders in Hong Kong – payment made before execution.
• Transfer of any other kind of documents related to the change of Company Shareholders in Hong Kong – payment made 30 days after execution if executed outside Hong Kong.

Late stamping is subjected to penalty payment as mentioned below:

• Stamping delay not exceeding one month – Penalty is two (2) times the amount of stamp duty.
• Stamping delay exceeding one month but not exceeding two months – Penalty is four (4) times the amount of stamp duty.
• Stamping delay in any other case – Penalty is ten (10) times the amount of stamp duty.

To request remission of the late penalty, write a letter explaining the delay and provide supporting evidence. And if everything seems right to the collector, the person might remit entirely or partly the penalty payable depending on the individual circumstances.

Commencement of business vs no commencement of business

If the Hong Kong company is a new one and wants to change the company shareholder in Hong Kong, two situations can arise here. One is where the company has commenced business since it started and the other situation can be where the company has not yet commenced the business.

If the company has commenced business, the following documents would be needed:

• Latest audit report of the company and its subsidiary.
• Certified management accounts of the company and its subsidiary. The account must be prepared within three months of the transfer date, starting from the latest audit’s end. This happens only if the audited accounts are not up to a date within 6 months before the date of this transaction.
• A copy of the resolution of meetings of directors for dividends paid or that is payable if any. This is after the end date of the latest audited accounts and also has to specify the date on which the members of the company were entitled to the dividend.
• A copy of the Return of Allotments for an increase of the share capital, if any, after the end date of the latest audited accounts.
• Any other information and documents, where necessary, in individual cases.

Companies Without Prior Business Operations

If a company has not yet started business, and therefore lacks an audit report, it needs to provide a written confirmation. They must also submit a copy of the certificate of incorporation. The IRD often asks the director to sign a declaration. This declaration confirms the company has not conducted business. It also states the company has no subsidiaries or assets. Directors should provide accurate information. The IRD may verify this information. A false declaration leads to criminal liability.

Adding a shareholder to a limited company recently incorporated needs this specific process. This is a common situation for a change of shareholders of a company. To ensure accuracy and compliance, companies should seek expert assistance. Startupr can help with the change of shareholder process. We advise on required documents. Moreover, we also guide accurate reporting of accounting and financial statements. This is crucial for due diligence with the government.

Stamp Duty Fee

As seen above, there is a stamp duty that is needed on each Instrument of Transfer that costs about HKD 5. For the Sale Agreement, pay 0.2% of the higher of compensation or net asset value. To calculate net asset value, submit required documents to the IRD assessor. After the documents are collected, the amount of the stamp duty is calculated as:

[Amount of Consideration (or net assets of the subject company x % of interest to be transferred) x 0.1%] x 2 + HKD5

Let us take for instance, in case a business has a net asset of HKD 10,000, and half of total shares will be transferred. Then the amount of stamp duty payable would be:

(HKD10,000 x 50% x 0.1%) x 2 + HKD5 = HKD15

Navigate Share Transfers Easily with Startupr’s Guidance

In case you are not sure on how to go about it, Startupr can always help you out just like it did for the incorporation process. Despite our outline, documentation errors can delay or fail your government application. The professionals at Startupr would assist you at every step so that you find the processes easy and the process is completed on time without any hassle.

Order – Change of company shareholders

Fee (Issue new share to existing or new shareholders) – NSC1, Increase of Shares (Allotment) USD 150, Resolution of Director(s)/Shareholder(s) USD 55

Shareholder Agreement and Deed of Adherence Template

The shareholder agreement template sets out the terms of how corporate shareholders will interact with each other and what happens if one or more want to get out of the business, or something happens that forces exit of a shareholder or shutdown of the company. These documents are foundational for establishing clear expectations and preventing future disputes among shareholders. A Deed of Adherence is a document by which a person/entity becomes a party to an existing Shareholders’ Agreement.

FAQ

If you’re facing specific challenges with a change of shareholders, find answers to your questions in the section below. If you don’t find answer here, check our “frequently asked questions” or contact us.

What are company shares and why are they important?

Shares represent ownership in a company. They are equity and grant shareholders certain rights and responsibilities.

How do I change the shareholders of a company?

To change shareholders, existing members either transfer their shares. Alternatively, the company issues new shares.

What is the standard form of transfer in Hong Kong?

The Hong Kong Standard Form of Transfer is a legal document that transfers share or property ownership.

How do I transfer existing shares in Hong Kong?

You need shareholder approval, prepare transfer documents, pay stamp duty, and register the transfer with the company.

What is stamp duty and how is it calculated?

Stamp duty is a government tax on share transfers. It’s 0.2% of the higher of the consideration or net asset value, plus HKD 5.

How long does the share transfer process take?

Typically, it takes 3-5 working days. If both parties are in Hong Kong, it can be done in 1-2 days.

What is the difference between transferring existing shares and issuing new shares?

Transferring existing shares involves moving current shares to a new owner. Issuing new shares creates and distributes new shares.

What happens if the company has not yet commenced business?

The company must provide a written confirmation and a copy of the certificate of incorporation.