The shares of a company are the equity of the company, representing the ownership of the business. In a Hong Kong Corporation, you can easily change the shareholder or transfer them, but the process to it is not that easy. A lot of things have to be kept in view if you want to proceed with changing the shareholders or transferring them.
According to the Obligations of Hong Kong Ordinance, every Hong Kong private limited company has a provision in its articles regarding the transfer of shares. However, in the company ordinance, there is no constraint on share transfer, thus the most common way to change the Company Shareholder are:
The process of changing a shareholder in Hong Kong or the transfer of shares is listed below:
When the shares of a company are already in the company and you want to transfer it to a person already associated with the business or is already a shareholder. You can know about the process from the following:
Issuing new shares in the Hong Kong company includes the allotment of shares to specific people by the directors and issue of new shares to people once it has been registered in the Company’s Shareholders register with relevant particulars.
The distribution of shares, other than allotment to existing shareholders in proportion of their existing shareholding can be done with the approval of shareholders in a general meeting. This authority can be given either for a specific allotment or any allotment in general.
A return of allotment of shares should be filed within one month of the date of assignment in the company registry disclosing the shareholders and members of the company. If the company failed to submit such records within a month, then the chances are that your request for change of company shareholders might not be approved. Then, you are required to file an application to the court of the leave to file the return after the time has passed.
A share can be beneficially held by any person other than the holder of the share who is registered in the company’s registry. However, for a private company, it is not necessary for the beneficial owner to be known by any other company on a public record. However, a subsidiary company is obligated to state in its accounts, the name of its ultimate holding company.
For preparing the documents or for our company to help you prepare the documents, the following information must be provided:
The time required for processing a share transfer usually takes 3-5 working days depending upon the schedule. The process is described below:
There is a constraint of lime for when to pay your stamp duty and get the stamps for change in the company’s shareholder in Hong Kong. If this is processed late, you will be charged penalties. The timing for paying the stamp duty is:
If you fail to pay the stamp duty before the due date, you will be liable for some penalty as mentioned below:
In the case of request of remission of the late penalty, it is to be made in writing with the complete explanations of the delay with the supporting evidence. And if satisfied, the collector might remit the entire or a part of the amount depending on your reason and the justification.
If the company in Hong Kong is a new one and whats to change its shareholders, then one out of the two situations can arise here. The first one is that the company has commenced the business since it started and the other one is where the company has not yet commenced the business. Let us take a look at both situations vividly.
If the company has already commenced the business, the following documents are required:
On the other hand, if the company has not commenced any business, no audit report is prepared since it has been recently incorporated, a written confirmation along with a supported copy of a certificate of incorporation of the business is needed.
According to our experience, a number of government agents of IRD would request the director to sign a declaration that would be given to the IRD stating that the company has never conducted any business and does not have any subsidiaries or assets. Even so, if the IRD finds that the director made a false report but declaring this, the business would be considered as criminally liable for it.
Hence, it is always suggested to have an experienced agent who can take care of all the needs and documents required just like our company does.we will advise you on the specifics for the need of transfer of share document, and how to report the accounting and financial statements in proper due diligence to the government.
As mentioned above, every document has a stamp duty that needs to be paid for each instrument of transfer that costs about HKD 5. On the other hand, you are required to pay compensation for the sales of shares at the rate of 0.2% of Net Asset Value, whichever is higher, for the sale agreement.
For calculating the net asset value for the transfer of shares, we are required to submit the above-mentioned documents to the IRD assessor for changing the company shareholders in Hong Kong.
Once the documents are collected, the stamp duty is calculated as:
[ amount of consideration (or net asset of the subject company x % of interest to be transferred) x 0.1% ] x 2 + HKD5
For instance, if a business has net assets of HKD 10,000 and a half to the total shares will be transferred, then the amount of stamp duty payable will be calculated as:
(HKD10,000 x 50% x 0.1%) x 2 + HKD5 = HKD15
In case you find any difficulties with the procedure and the process, our company can always help you out. Even though we have outlined the transfer of shares process, there can be mishaps with documentation along the way, which may delay or fail the application with the government. The professionals in our company 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