There is no need to deliver any specified form to the Registrar of Companies for reporting a transfer of shares of a company when the transfer takes place. However, the transfer of shares should be reported in the annual return first made by the company after such a transfer took place.
STAMPING PROCEDURES
Stamping of Shares Transfer
Contract Notes
Contract notes are required to be executed and stamped within a specified period after any sale or purchase of Hong Kong stocks is effected. While there is no specified format of such instruments, the Stamp Duty Ordinance (Cap.117) requires that a contract note should contain the following particulars:-
a) whether the person effecting the sale or purchase of the Hong Kong stock is acting as principal or agent and, if as agent, the name of the principal;
b) the date of the transaction and of the making of the contract note;
c) the quantity and description of such Hong Kong stock;
d) the price per unit of such Hong Kong stock and the amount of the consideration or, in the case of an exchange, particulars of the property for which such Hong Kong stock is exchanged; and
e) the date of settlement.
Contract notes are stamped by reference to the price paid. If the price paid is considered substantially below the market value of the shares, stamp duty will be assessed based on the market value of the shares as at the date of sale and purchase/transfer of the shares. The value of the stock has to be ascertained from the latest accounts of the company in respect of which share(s) therein is/are to be transferred.
Contract notes are NOT required in the case of transferring shares as a gift. In such a scenario, the instrument of transfer is chargeable to a fixed duty of $5 each plus the full ad valorem stamp duty by reference to the value of shares transferred in accordance with the basis stated above.
Supporting Documents Required
Contract notes and instruments of transfer of shares should be presented to the Stamp Office for stamping. To enable the Stamp Office to assess the proper amount of stamp duty payable, the following documents and information should be submitted together with the transfer documents:-
(a) the Articles of Association of the company of which shares are being transferred;
(b) a certified true copy of the Agreement for Sale and Purchase of the shares if there is any, or otherwise, a confirmation by way of a letter signed by either the vendor or purchaser that no such an agreement exists;
(c) a statement on whether the Company and its subsidiary/(ies) (if any) has acquired any landed property, rights to acquire landed property or investments and, if so, with a completed schedule of the landed property in the proforma as attached;
(d) the following documents if the company involved has commenced business:-
- the latest audited accounts of the company and its subsidiary/(ies) (if no consolidated accounts is prepared);
- certified management accounts of the company and its subsidiary/(ies) (if no consolidated accounts is prepared) from the end date of the latest audited accounts made up to a date within 3 months before the date of transfer, if the audited accounts are not made up to a date within 6 months prior to the date of this transaction;
- a certified copy of the Return of Allotments for increase of share capital, if any, after the end date of the latest audited accounts;
- a certified copy of the resolution of meetings of directors for dividends paid or payable, if any, after the end date of the latest audited accounts and specify the date on which members of the company were entitled to the dividend; and
- any other information and documents, where necessary, in individual case.
(e) where the company is a recently incorporated one which has not yet commenced business and that no audited accounts have been prepared, a written confirmation supported by a copy of the certificate of incorporation of the company is required.
Time for Stamping
Stamp duty is payable within the following specified time:-
Nature of Document Time for Stamping
Contract Note for sale or purchase of any Hong Kong stock: 2 days after the sale or purchase, if effected in Hong Kong; 30 days after the sale or purchase, if effected elsewhere
Transfer operating as a voluntary disposition inter vivos (i.e. gift): 7 days after execution; 30 days after execution if executed outside Hong Kong
Transfer of any other kind: before execution; 30 days after execution if executed outside Hong Kong
Late Penalty
Late stamping is subject to the payment of penalty.
Any request for remission of late penalty should be made in writing with full explanations of the delay and supporting evidence. The Collector may remit wholly or in part the penalty payable depending on individual circumstances.
Stamp duty
Stamp duty is charged on transfer of Hong Kong stock by way of sale and purchase at 0.26% (on or after 1 August 2021) of the consideration (or the market value if it is higher) per transaction. Hong Kong stock is defined as stock the transfer of which must be registered in Hong Kong.
How to stamp
The documents may be presented to the Stamp Office in person or sent by post.
You may use the 24 hours e-Stamping service to submit electronic stamping applications for contract notes and/or instrument of transfer for share transfer with not more than 4 joint transferors and/or 4 joint transferees.
Upon receipt of a stamping request and payment, the Stamp Office will issue a stamp certificate in respect of the instrument.
How Bestar can Help
Share transfer refers to the process of transferring ownership of shares in a company from one shareholder to another. Bestar can help with the following aspects of a share transfer in Hong Kong:
Agreement Drafting and Review: Bestar can assist in drafting or reviewing the share transfer agreement, which outlines the terms and conditions of the transfer, including the number of shares being transferred, the purchase consideration, and the completion date.
Due Diligence: Bestar may help conduct due diligence on the company's financial records to ensure the accuracy of the information being relied upon in the share transfer.
Regulatory Compliance: The firm can advise on any regulatory requirements that need to be met for the share transfer to be valid, such as obtaining any necessary approvals from the Companies Registry.
Tax Advice: There may be tax implications associated with a share transfer, and Bestar can advise on these matters to help minimize any potential tax liabilities.
For more specific information on how Bestar can help with share transfer in Hong Kong, contact us.
