What are bought and sold notes in Hong Kong

What Is the Purpose of the Bought and Sold Note in a Hong Kong Share Transfer?

A stockbroker or transferring party prepares a bought and sold note to record a share transaction. The buyer receives the bought note, showing the number and description of shares acquired, the consideration, and the stamp duty payable. The seller receives the sold note with the same information from the vendor's side. These documents must accompany the instrument of transfer when it is presented for stamping to the Inland Revenue Department.

Bought and Sold Note and Hong Kong Share Transfer Paperwork

The bought and sold notes support the instrument of transfer. This instrument is the legal document that passes title to the shares from seller to buyer. The Inland Revenue Department uses the bought and sold notes as transactional evidence to verify the consideration and calculate the stamp duty payable before it stamps the instrument.

Instrument of Transfer Hong Kong

The Companies Ordinance (Cap. 622) states a transfer of shares in a company limited by shares is effected by an instrument of transfer. This document alone is not sufficient for the transfer to be recorded in the company's register of members. It must first be stamped by the Inland Revenue Department. The bought and sold notes are the accompanying documents that allow the Inland Revenue Department to confirm the transaction details and collect the correct duty.

Share Transfer Documents Hong Kong

The complete set of share transfer documents for a Hong Kong company includes the instrument of transfer, the bought and sold notes, and the share certificate of the transferring shareholder. Once the Inland Revenue Department stamps the instrument of transfer and the bought and sold notes, the company's board may approve the transfer and update the register of members.

Stamp Duty Bought and Sold Notes Hong Kong

Stamp duty on a Hong Kong share transfer is charged at 0.1% of the consideration from the buyer and 0.1% from the seller, plus a fixed duty of HK$5 on the instrument of transfer. The bought and sold notes state the consideration and the duty payable, providing the Inland Revenue Department with the basis for computing the ad valorem stamp duty. The company will not update its register of members until the instrument and notes have been stamped.