The transfer of shares in Hong Kong takes place according to the provisions in the company’s articles, however, it is also governed by other factors such as the taxes that apply or the execution and formal stamping of the transfer.
The Stamp Duty Ordinance, as well as other provisions issued by the Inland Revenue Department, are relevant for the transfer process.
Read below to find out more about the transfer of shares as part of the answers to a number of commonly asked questions. If you need to know more details, or have a specific situation you need addressed, our team of company formation agents in Hong Kong can assist you.
How does the transfer of shares take place in case of a private company in Hong Kong?
The transfer of shares in Hong Kong can take place at any time, when one or more shareholders wish to sell their company shares to other individuals. The company’s Articles of Association govern the process, as well as the limitations and the situations in which it can take place. The company’s internal regulations will also mean that when a shareholder wishes to sell all of his shares, thus renouncing the rights to be part of the company, he or she will need to obtain approval from the other shareholders.
Our company formation agents in Hong Kong summarize the process below:
- Request: the request to transfer the shares is lodged with the company either by the transferor or the transferee;
- Approval/refusal: once the registration is made, the company will either register the transfer within 2 months or provide notice of refusal within this period;
- Clarifications: when a transfer of shares in Hong Kong is refused, the transferee or transferor can request a statement of the reasons for the refusal;
- Certification of transfer: when an instrument for the transfer of shares within a company is approved, the company will issue a certificate that will be used as evidence that the shares which were in the name of the transferor were subject to the transfer process; in case of a private company, the share certificate on transfer is issued within 2 months and for any other company 10 days.
Please keep in mind that the aforementioned process is only briefly described and that in practice additional steps may be required. We advise transferees or transferors to discuss the process with one of our agents if they have questions.
What are the taxes for the transfer of shares in Hong Kong?
The Hong Kong Government imposes stamp duty on the transfer of shares at a 0.2% on the value of the transferred shares. When these are transferred for less than market value, this tax can be imposed according to the market value in force at the date of the transfer. In some cases, for the transfer of shares in Hong Kong, intragroup transactions may be available under certain conditions.
What is the stamping of shares transfer?
This is the process for paying the stamp duty and it takes place with the Inland Revenue Department. It involves the execution and the stamping of the contract notes which are submitted within a specific period of any sale or purchase of Hong Kong stock.
The following information is included in the contract notes: the date of the transaction, the quantity and the description of the stock, the price per unit, and information about the individual (or the representative) performing the sale or purchase of stock.
The additional documents that are also submitted for the purpose of registering the transfer instrument are the Articles of Association of the company, a certified copy of the agreement for the transfer of shares in Hong Kong (if any), as well as the last audited accounts of the company and other documents.
The time for paying the stamp duty is the following:
- – 2 days after the sale or purchase of stock, if this takes place in Hong Kong (when a contract is in place);
- – 30 days after the sale or purchase of stock, if this takes place elsewhere (when a contract is in place);
- – 7 days after execution, when the transfer is a gift and this takes place in Hong Kong.
Penalties apply for late payments and these can be as high as 2 times the amount of the stamp duty when the delay does not exceed 1 month and 10 times the stamp duty amount when the delay exceeds more than 2 months.
Contact our company formation experts for more information on the transfer of shares in Hong Kong.