To register a company in Hong Kong, apart from having a company name and directors, another essential factor is having registered capital. When you register your company with the Companies Registry, you need to state how much your capital will be.
Share capital in Hong Kong
Hong Kong companies have issued capital. Issued capital is the number of shares that have been issued by the company to the shareholders.
How much paid-up capital does your company need?
Hong Kong companies do not have a minimum requirement for share capital. The basic norm is to have paid up capital of HKD 1.00 represented by at least one share.
When is the capital paid?
The company’s articles of association will specify when the shares will have to be paid. The following lists when the shareholders are required to pay the company for their shares, depending on the regulations stated in the articles of association:
- At the time of the company being incorporated
- During the allotment or transfer of shares after incorporation
- At a fixed or unfixed date in the future
- Call on shares
- When the company is being wound up, to the extent that capital has been issued but remains unpaid
Call on shares procedure
A call on shares is when there is a demand by the company for the shareholder to pay an amount on shares that have been issued but have not been fully paid up by the shareholder. This can be done any time throughout the existence of the company.
The process for calls on shares is:
- Board meeting for the approval of a call resolution: The board of directors meeting will be arranged, and a resolution regarding the call will be passed. The resolution will state the date and the amount of money to be paid.
- Call list preparation: The call list is prepared by the company secretary, and includes details such as the name and address of shareholders, the number of shares held by each shareholder and the call amount.
- Call letter drafting: Once the secretary has prepared the call list, the secretary drafts a call letter with the company’s chairman. The call letter has three parts: 1) call letter proper, 2) call receipt and 3) call slip.
- Call letter issuance: The call letters will be issued to the shareholder’s registered address, and will also publish a call notice in a newspaper for the information of the shareholders.
- Bank arrangement for call money: The call money will be deposited into a call account, and once the money is received, the bankers will send the money to the company. The call letter and receipt is given back to the shareholder with a signature and stamp.
- Entries in the call list and register of members: When the call money is received, the banker will return the call letter and receipt to the members and send call slips to the company. The secretary will then record the names in the call list and register of members.
- List of defaulters preparation: If members have not paid the call money on the fixed date, the secretary will prepare a list of defaulters consisting of those members who have yet to pay. This list will be presented to the board.
Transfer of shares
The common reasons that lead to share transfer include:
- To assist in the reorganisation of a company, for example, transferring the existing shares to a new company.
- Increasing or decreasing the current number of shares because of new profit sharing or ownership arrangements.
- The owner is considering selling the company or wants to cash out by selling part of their shares.
The Hong Kong Companies Ordinance requires all Hong Kong private limited companies must have a provision in their articles of association that restricts the transfer of shares.
This provision is usually satisfied by either Directors approval being required or pre-emptive rights being given to existing shareholders when any other shareholder would like to dispose of shares in the company.
The share transfer is subject to stamping formalities. Provided that all required documents are presented, the procedure can be completed within 2-3 days.
Share transfer process
- Confirm that pre-emptive rights have been fulfilled or waived.
- Prepare the Share Transfer Form and have the transferor and transferee sign the form.
- Present the Share Transfer Form and underlying shares to the company and wait for approval from the board of directors.
- Prepare the Share Transfer Form and Sale Agreement Form for stamp duty.
- After stamping the forms, the register of members and significant controllers should be updated.
To ensure your registered capital complies with Hong Kong’s law and regulations, it is advisable to engage with Acclime’s services. We have a professional team who will be able to guide and assist you throughout the process.
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