What is the allotment of shares in Hong Kong

Allotment of Shares in Hong Kong Companies Explained

An allotment of shares is the creation and issue of new shares by a company to a person who becomes a member (shareholder). Allotment increases the company's issued share capital and adds the shareholder's name to the register of members. In Hong Kong, shares have no par value, so the directors set the issue price and the entire amount received becomes share capital.

The procedure for an allotment of shares Hong Kong companies must follow starts with a board resolution. The directors approve the allotment, specify the number of shares, the consideration payable and the allottee. The company's articles of association may contain pre-emption rights requiring that new shares be offered first to existing members before outsiders. Directors must check the articles before proceeding.

After the allotment, the company must deliver a return of allotment to the Companies Registry on Form NSC1 within one month. Form NSC1 records the number of shares allotted, the class of shares, the amount paid or credited as paid on each share, and the names of the allottees.

Form NSC1 Hong Kong

Form NSC1 is the Return of Allotment prescribed under the Companies Ordinance (Cap. 622). A company must file it with the Companies Registry every time it issues new shares. The form lists the class of shares, total number allotted, nominal value (which is always "nil" under Hong Kong's no-par-value regime), and the amount paid or unpaid per share. The director or company secretary must sign it.

Allot Shares Hong Kong Company

A company may allot shares for cash or for non-cash consideration such as property or services. Where the consideration is non-cash, the directors must value it and include details on Form NSC1. The company must also update the register of members with the new shareholder's details and the number of shares held.

Share Allotment Procedure Hong Kong

The procedure for a share allotment in Hong Kong follows these steps:

1. Board meeting or written resolution - directors approve the allotment terms and the allottee.
2. Payment of consideration - the allottee pays the subscription price.
3. Update the register of members - enter the new member's name, address and shareholding.
4. Issue a share certificate - the company issues a certificate to the new member within two months of allotment.
5. File Form NSC1 - deliver the return of allotment to the Companies Registry within one month.

Hong Kong Company Issuing Shares

When a Hong Kong company issues shares, it must ensure it does not exceed any limit in the articles of association on the number of shares that can be allotted. The directors owe fiduciary duties to the company and must not allot shares for an improper purpose, such as to frustrate a takeover or dilute an existing member without proper justification. A shareholder who believes the directors acted improperly may apply to the court.