The answer first
Transferring shares in a Hong Kong company is straightforward when done properly: the parties sign transfer documents, the transfer is stamped by the Inland Revenue Department's Stamp Office, and the company updates its records.
Stamp duty is currently 0.1% of the consideration or value of the shares, whichever is higher, payable by each of the buyer and the seller, plus HK$5 on the instrument of transfer. Contract notes must be stamped within short statutory time limits, and late stamping attracts penalties that increase with the delay.
At a glance
- Stamp duty
- 0.1% per side, plus HK$5 on the instrument of transfer (government charge)
- Basis
- The higher of consideration and value
- Stamped by
- Stamp Office, Inland Revenue Department
- New share certificates
- Within 2 months of registering the transfer
- Also update
- Register of members, Significant Controllers Register, the bank
The documents
| Document | Purpose |
|---|---|
| Instrument of transfer | Transfers legal title; signed by transferor and transferee |
| Bought note and sold note | Contract notes recording the sale; signed by the buyer and seller respectively |
| Board resolution | Approves registration of the transfer, subject to the articles |
| Share certificate | Original certificate cancelled; new certificate issued to the buyer |
| Supporting valuation | Latest financial statements or valuation to support the value for stamp duty |
Calculating stamp duty
| Item | Government charge |
|---|---|
| Bought note (buyer) | 0.1% of the higher of consideration and value |
| Sold note (seller) | 0.1% of the higher of consideration and value |
| Instrument of transfer | HK$5 |
| Example: shares sold for HK$1,000,000 | HK$1,000 + HK$1,000 + HK$5 = HK$2,005 |
- Value is usually based on the company's net asset value; for companies holding property, the market value of the property is taken into account.
- Transfers for no consideration (gifts) are stamped on the value of the shares.
- Certain intra-group transfers may qualify for relief on application, subject to conditions.
Please confirmStamp duty rates and time limits are set by the Stamp Duty Ordinance and can change. We confirm the current position before each transfer.
After stamping
- The board approves registration of the transfer.
- Update the register of members.
- Cancel the old certificate and issue new certificates within 2 months.
- Update the Significant Controllers Register if control has changed.
- Report the transfer in the next Annual Return.
- Inform the bank if shareholders or significant controllers have changed.
Key takeawayBanks treat a change in ownership as a material change. Tell your bank promptly; an unreported change can lead to account restrictions.
Self-check: where do you stand?
| Question | If the answer is no |
|---|---|
| Have past share transfers been stamped? | Stamp them now; late penalties grow with time |
| Does the register of members reflect every transfer? | Update it and issue certificates |
| Is there a recent valuation or set of accounts to support value? | Prepare one before the transfer |
| Do the articles or a shareholders' agreement restrict transfers? | Check consents and pre-emption rights first |
| Has the bank been told about changes in ownership? | Notify the bank promptly |
How DBMS Global can help
- Preparing transfer documents and arranging stamping.
- Valuation support from the latest accounts.
- Updating registers, certificates and the Significant Controllers Register.
- Where a transfer is part of a wider sale or restructuring, MAP Asia Pacific and your lawyers handle the commercial terms; we handle the corporate steps.
In summary
- 0.1% per side plus HK$5, on the higher of price and value.
- Stamp within the time limits.
- Update registers, certificates and the bank.
Official references
- Stamp Duty Ordinance (Cap. 117)
- Inland Revenue Department: Stamp Office, www.ird.gov.hk
- Companies Ordinance (Cap. 622): transfer of shares and share certificates