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Shares Allotment & Shares Transfer After your company is registered, you may require additional funds to expand your business.
After your company is registered, you may require additional funds to expand your business. To invite new shareholders, you can sell them your shares. Below are some important points to note and these trivial steps can be quite time consuming. Hence, it is important to appoint an experienced TCSP service provider which is capable to provide you with on-going support at an affordable cost.
“In practice, one has to queue up at the Inland Revenue Department for around 3 to 4 hours to complete the shares transfer process even though all documents are prepared and completed.”
The actual process at Inland Revenue Department is relatively complex. To begin with the share transfer procedure, the company directors have to prepare a sales agreement on the purchase of company shares. Since it is a legal document, it is ideal to have a Hong Kong lawyer to draft or review the sales agreement. Get Started HK can provide you with a general consultation in preparing the agreement and we can also connect you with a Hong Kong commercial lawyer.
After the Company agrees the terms with new investors, all parties shall sign the share agreement. The directors shall proceed to file the share transfer documents to Hong Kong Tax Department. For easy reference, the Inland Revenue Department usually requests the following documents.
The cost for share transfer documents starts at US$380 depending on complexity and number of documents needed. For details, you can reach us at info@getstarted.hk
On the sale or transfer of shares, there will be a stamp duty payable to the Government of the HKSAR. For Hong Kong stock, stamp duty is calculated as follows:-
| Nature of Document | Rate (with effect from 1 September 2001) |
|---|---|
| Contract Note for sale or purchase of Hong Kong stock | 0.1% of the amount of the consideration or of its value on every sold note and every bought note |
| Transfer operating as a voluntary disposition inter vivos | HK$5 + 0.2% of the value of the stock to be transferred |
| Transfer of any other kind | HK$5 |
| Stamping Delay | Penalty |
|---|---|
| not exceeding 1 month | 2 times the amount of stamp duty |
| exceeding 1 month but not exceeding 2 months | 4 times the amount of stamp duty |
| in any other case | 10 times the amount of stamp duty |
While company may introduce new shareholders or increase its capital by allotment of shares, selling your shares is usually more complicated. Transfer of shares is governed by Div 4 of the Companies Ordinance. For limited companies in Hong Kong, directors have discretion in approving or refusing a transfer. If the company refused registration of a transfer, the company shall provide the transferee and transferor an explanation.
Once a person becomes a member or shareholder of the company, the company needs to issue a share certificate. A share certificate generally specifies the total number of shares held by a party. According to s.155 of the Companies Ordinance, a company must issue the new share certificates within two months after the day on which the transfer is filed.
If you require assistance to complete a share transfer, feel free to contact us at info@getstarted.hk for a hustle free solution!
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