What is share capital in Hong Kong?

Share Capital Hong Kong No Par Value System

Hong Kong operates a no-par-value regime for company shares. Shares have no nominal value. This system took effect in 2014 with the new Companies Ordinance (Cap. 622). Previously, shares had a par value stated in the articles of association. The difference between the issue price and that par value was recorded as share premium. That concept no longer applies. Every share issued by a Hong Kong company represents an equal fraction of the company's equity. The full amount received from a shareholder is recorded as share capital.

Hong Kong No Par Value Shares

Directors determine the issue price of Hong Kong no par value shares at each allotment. The price is based on the company's valuation at that time. There is no legal minimum price. No concept of a share being issued at a discount or a premium relative to any stated value exists. The abolition of par value also removed the need for a share premium account. When a company issues shares, the entire consideration received becomes share capital. This simplifies the company share capital structure and eliminates the accounting complexity that par value created.

Company Share Capital Structure

The company share capital structure in Hong Kong consists only of issued shares. There is no authorised share capital. Before the 2014 reforms, a company's constitution specified a maximum authorised amount. Directors could not exceed that limit without a members' resolution. Under Cap. 622, the articles of association may still impose a ceiling, but the Companies Registry no longer records an authorised figure. The only capital figure that appears on the public register is the issued share capital hong kong companies report on the annual return.

Issued Share Capital Hong Kong

Issued share capital hong kong is the total value received by a company for shares that have been allotted and are held by members. It is not the same as paid-up capital. If a director allots shares but the member has not yet paid the full issue price, the unpaid portion remains due and is shown as a debtor. Stamp duty on a transfer of issued shares is charged at 0.1% from the buyer and 0.1% from the seller, plus a fixed HK$5 on the instrument of transfer. It is calculated on the higher of the consideration and the value of the shares.

Hong Kong Share Allotment

A Hong Kong share allotment is the process by which directors issue new shares to a person who becomes a member. The directors must determine the consideration, which may be cash or non-cash assets. The company must file Form NSC1 (Return of Allotment) with the Companies Registry within one month of the allotment. The form must state the number of shares allotted, the amount paid or agreed to be paid, and the particulars of the allottees. If the company later buys back shares from a member, it files Form NSC2 (Return of Share Redemption or Buy-back).