Basic actions:

• The transfer has to be pre-approved by the Board of directors.
• Before transferring shares to new shareholders in the company,  the shares have to be offered to the existing shareholders.

The process of transferring the shares for changing shareholders in Hong Kong company:

• Ensure that the share transfer form is signed or noted by both the buyer (transferee), and the seller (transferor).
• Prepare the Share Transfer Form and the Sale Agreement Form for stamping.
• Bring the Shares Transfer Form and the underlying share(s) to the company, and wait for the approval of the Board of Directors on the share transfer.
• In the process of transferring, the shares that have been stamped and the buyer’s particulars have to be confirmed for registration into the Company Registers. 

• The change of company shareholders must be approved by other shareholders.
• Preparing the documents required for the transfer of shares: contract notes (bought and sold note), resolutions, sale & purchase agreement, management account, an instrument of transfer, etc.
• To submit the latest audit report of the company.
• If there was no audit report within the 6 months before the date of transfer, a certified management account (within 3 months) of the company is required.
• When all docs are collected, the instrument of transfer or contract notes have to be stamped by the government and a fee has to be paid - stamp duty.
• The payment of the stamp duty will depend on: Total Net Asset Value of your company or the Consideration depending upon the situation, whichever is higher.
• All the documents, it needs to be sent to the Stamp Office.
• Once the documents have been stamped, the process of the transition of Company Shareholders in Hong Kong is completed.

While transferring the shares of a Hong Kong company, there will be a need to pay a  stamp duty imposed by the Inland Revenue Department on the total value of the company or the par value of the shares, whichever is higher. The current rate for the stamp duty is set as 0.2% on the value of the shares.

More info on the stamp duty rates from the government website.

The total value of your company totals assets minus liabilities of the company at the share transfer date. It means that for a company to transfer 100% of the shares to another shareholder, and at the date of the transfer of shares is worth HKD $500,000, then the stamp duty on the transfer of shares would be HKD $1,000.

The Inland Revenue Department will need update audit report and management accounts in order to calculate and charge the stamp duty on the transfer of shares.

The company must provide the Audit Report within 6 months of the share transfer date, or the management accounts within 3 months of this date.  As an example, if you provide the Audit Report for the financial year ending 31 December 2019, you would be able to transfer your shares anytime before 30 June 2020 before you have to provide another set of updated financial accounts.

The issue of new company shares in a Hong Kong includes:

• Share allotment by Hong Kong company directors to particular persons.
• Shares issue to the persons after their relevant particulars is entered into the company’s register of shareholders.
• The allotment requires the prior approval of shareholders in the general meeting (GM).
• Shareholders might give their approval concerning a particular allotment or in general. If not revoked earlier, the shareholder approval expires when the next general meeting takes place.
• The return of allotment of shares have to be filed within one month of allotment. This includes disclosing the names of members and their shareholdings. After this specified time limit, the Registrar may not accept the same. The company should submit an application to the court for leave, allowing it to file the return beyond the time limit.