WHAT TO CONSIDER WHEN DOING SHARE TRANSFER FOR LIMITED COMPANY?

Reasons for doing a Share Transfer?

You have difference reasons to make a Share Transfer. Share Transfer is an official method to change the share structure of your company. For example, adding a new shareholder or changing the existing proportion of shares between shareholders.

Who you need to deal with?

According to the Companies Ordinance, shareholders of a limited company have a provision to make Share Transfer without constraints. In facts, if you want your Share Transfer process goes smoothly. Then, you have to deal with the existing shareholders and directors in advance: 

  • Before transferring shares to new shareholders in the company, as per the provision of rights, the shares have to be offered to the existing shareholders first.
  • In order to transfer shares of the company, it has to be pre-approved by the Board of directors.

Which Departments you need to notify? 

Companies Registry (CR) 

The official way to complete your company Share Transfer, you have to update company information within one month before the date of assignment:

  • The Return of allotment of shares
  • Disclosing the members and shareholders

Inland Revenue Department (IRD)

When you transfer the shares of your company. You need to notify IRD by submitting of your updated Audit Report and Management Accounts. Then IRD can identify the total value of the company and charge the stamp duty. 

  • Stamp Duty

Hong Kong Government will impose a stamp duty once you made a Transfer. The rate will be varied depends on the total value of the company or the par value of the shares, whichever is higher. 

  • Updated Audit Report and Management Accounts 

You require to provide an updated Audit Report within 6 months of the share transfer date. Or the Management Accounts within 3 months of the transfer date. In case, you don’t have an updated Audit Report or Management Report. Then you need to seek advice from your Accountant to prepare this piece of information. 

For further information, please contact us.

You may want to read: WHAT DO YOU NEED FOR A SHARE TRANSFER?

 

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