A Hong Kong private company needs at least one shareholder, who may be an individual or a company, of any nationality and resident anywhere. Shares have no par value under the Companies Ordinance, and there is no minimum share capital. What matters is that capital is appropriate for the business and that every issue and transfer of shares is properly documented.
New shares must be reported on Form NSC1 within one month, and share transfers attract stamp duty.
The basics
- Minimum shareholders
- One (individual or body corporate)
- Maximum members (private company)
- 50, excluding employees and former employees
- Residency or nationality
- No requirement
- Minimum capital
- None
- Par value
- Abolished: shares have no nominal value
- Currency
- Any currency, or a mix
- Share certificates
- Issued within 2 months after allotment or transfer, unless the terms of issue provide otherwise
How much capital should you have?
There is no legal minimum, but capital sends a message. A company with HK$1 of capital that plans to trade millions of dollars may face questions from banks, landlords, suppliers and the Immigration Department. Consider:
- how much funding the business genuinely needs to start operating;
- whether funding will be provided as share capital or as shareholder loans, which have different consequences for repayment and for creditors;
- what banks and counterparties in your sector expect to see;
- visa requirements, where the Immigration Department assesses the investment in the business.
Share classes and rights
Most small companies start with a single class of ordinary shares carrying equal votes, dividends and rights on winding up. Later, a company may create other classes, for example preference shares for investors, or non-voting shares for family members. The rights of each class are set out in the articles of association or terms of issue, and changing class rights requires the procedures in the articles and the Companies Ordinance.
Issuing new shares
| Step | Requirement |
|---|---|
| Authority | Directors need authority from members to allot shares (by resolution or in the articles), subject to any pre-emption rights |
| Resolution | Board resolution to allot; members' resolution where required |
| Payment | Subscription money paid to the company's bank account |
| Register | Update the register of members |
| Filing | Form NSC1 (Return of Allotment) within 1 month after allotment; no government fee |
| Certificate | Issue share certificates within 2 months |
| Controllers | Update the Significant Controllers Register if control changes |
Transferring shares
- Prepare an instrument of transfer and bought and sold notes, signed by both parties.
- Pay stamp duty: currently 0.1% of the consideration or the value of the shares (whichever is higher) payable by each of the buyer and the seller, plus HK$5 on the instrument of transfer.
- Stamp within the statutory time limits; late stamping attracts penalties that increase with the delay.
- For companies holding property, the Stamp Office looks at the value of the underlying assets.
- Register the transfer, issue new certificates and update the Significant Controllers Register.
- Advising on the share structure at incorporation.
- Allotment and transfer documents, stamping and Companies Registry filings.
- Keeping the register of members and Significant Controllers Register current.
- Complex share classes, investor rights and shareholders' agreements should be drafted by lawyers; we coordinate with them.
Official references
- Companies Ordinance (Cap. 622), Parts 4 and 5
- Stamp Duty Ordinance (Cap. 117) and Inland Revenue Department Stamp Office, www.ird.gov.hk
- Companies Registry: Form NSC1, www.cr.gov.hk