Stamp Duty on Transfer of Shares of a Hong Kong Company
The transfer of shares in a Hong Kong company must be stamped. Stamp duty on contract notes are charged on the sales consideration or the fair market value., whichever is the higher. The rate of duty is 0.1% payable by each of the purchaser and seller involved in a transaction, giving an effective rate of 0.2%. Subject to the completion of the legislative process to increase the stamp duty rate, the relevant rate will be increased with effect from 1 August 2021 from 0.1% to 0.13%.
However, if the shares were transferred as voluntary disposition inter vivos or as a gift, the stamp duty to be charged is HK$5 plus 0.2% of the of the value of the stock. Subject to the completion of the legislative process to increase the stamp duty rate, the relevant rate will be increased with effect from 1 August 2021 from $5 + 0.2% to $5 + 0.26%
In evaluating the fair market value, the Stamp Duty Office will normally accept the net asset value shown by the company’s latest audited accounts. Certified management accounts of the company from the end date of the latest audited accounts made up to a date within 3 months before of transfer, if the audited accounts are not made up to a date within 6 months prior to the date of transaction. Stamp duty relief is available for the case of transfers of shares within a group of companies, where one is beneficial owner of not less than 90% of the other, or both parties are under 90% (or more) common ownership.
Capital Duty on Increase of Capital of a Hong Kong Company
The capital duty of Hong Kong company has been abolished on 1 June 2012. There is no capital duty for increase of capital for a Hong Kong company now.
Source：Hong Kong Inland Revenue Department’s website
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A private company limited by shares must have at least one shareholder and limit the number of members to 50.A menber excludes a person who is an employee of the company, and a person who was a member while being an employee of the Hong Kong company and who continues to be a member after ceasing to be such an employee.In addition, two or more persons who hold shares in the company jointly are to be regarded as 1 member.
Start from 27 December 2023, the new format Incorporation Form and Annual Return of Hong Kong company submitted to Companies Registry are required to enter a code for the description of company’s business nature in the Form. If the company carries on more than one category of business, please select the major category.
Responsibility for the overall management of a Hong Kong Company typically rests with its board of directors. Generally, the board authorises the actions of the Company through board resolutions passed at board meetings or, if authorised by the articles, by written resolution signed by all the directors or a stated proportion of them.
The transfer of legal title to shares in a Hong Kong company is effected by an "instrument of transfer". Beneficial title to shares is transferred by way of contract notes (a bought note and a sold note).Contract notes must be submitted for stamping within two days (30 days if the sale takes place outside Hong Kong) for execution.
