Understanding paid-up capital in a Hong Kong company

Paid-Up Capital Hong Kong: What It Means for Your Company

Paid-up capital is the amount a shareholder has paid the company for shares allotted to them. It is the capital a company receives for its issued shares and records as part of its equity. When a shareholder pays in full, all issued shares are fully paid. If payment is only partial, the difference is unpaid capital and the company may make calls on shares to recover it.

Hong Kong Company Paid-Up Share Capital: No Par Value System

Hong Kong abolished par value for shares when it updated the Companies Ordinance (Cap. 622). Shares have no nominal value, and the concepts of authorised share capital and share premium no longer apply. Directors determine the price at which shares are allotted, and the whole amount received is share capital. The company records this paid-up amount, not a stated face value.

Minimum Paid-Up Capital Hong Kong: There Is None

Hong Kong imposes no minimum paid-up capital requirement for a private company limited by shares. A company may be incorporated with one share of any value, and that share need not be paid up in full immediately. The law simply requires at least one shareholder and one director. The absence of a minimum paid-up capital is a significant advantage for small businesses.

Share Capital Payment Hong Kong: How Payment Works

Consideration for shares may be cash, property, or other assets the directors agree to accept. The company issues shares, and the shareholder makes the payment. If the articles of association permit, payment may be deferred, creating unpaid capital. The company may then make calls on shares to demand payment.

Company Capital Requirements Hong Kong: At Incorporation

When a company incorporates, it files Form NNC1 with the Companies Registry. The form states the number of shares the company proposes to issue and the aggregate amount of paid-up capital. No minimum amount is required, and the company may later allot additional shares by filing Form NSC1 (return of allotment). The register of members records every shareholder's details and the amount paid for their shares. If the company opens a bank account, the bank may ask to see the paid-up capital recorded on the form, but this is a bank policy, not a legal requirement.

Paid-Up Capital and Unpaid Capital

Where shares are partly paid, the unpaid balance is a debt the shareholder owes. The company may enforce payment according to the terms of allotment or make calls on shares as the articles of association provide. The members register records each member's liability for unpaid capital.