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Transfer of Shares

Shares Allotment & Shares Transfer

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.

Filing of share transfer documents

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.

  1. Cover Letter
  2. Instrument of Transfer
  3. Sold Note
  4. Bought Note
  5. Written Resolution signed by directors to approve the transactions
  6. Agreement for Share and Purchase of Shares
  7. Recent Audit Report or Management Account
  8. Company Official Documents
  9. Any other documents as the Inland Revenue Department deems appropriate.

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

Stamp Duty Estimation

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

Late Penalty

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.

Issue new share certificates after share transfer

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!