How do I issue/transfer shares?

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July 14, 2025

July 14, 2025

A company’s power to issue and transfer shares and the limitations are prescribed in the company’s article of association (“the Articles”) and the Companies Ordinance (Cap. 622).

The procedures of issuing and transferring shares are different, therefore it is essential to distinguish the two so you can comply with the respective requirements.

What’s the difference?

Transfer of shares	Issue of shares
Existing shareholder(s) → new / existing shareholder(s)	Company → new / existing shareholder(s)
Existing shares	New shares
Restructuring the company Cashing out shareholdings	Raising new capital developing employee share schemes
Stamp duty is payable on the transfer of shares	No Stamp Duty is payable on allotment of shares

Issue of shares

There are in general four steps to the issuance of shares.

Shareholder’s consent: In order to issue shares, you must obtain prior approval from the shareholders in a general meeting.
Second, in a private company setting, it is common that the company would offer to allot a specific number of shares to the potential allottee(s). If the offer is accepted, an allotment contract is formed.
Registration of the Allotte’s to the Companies Register of Members: After that, the company has to enter the allottee(s)’ names(s) into the register of members. Issuance is completed when the register of members is updated accordingly. This must be done in two months since the allotment of shares. Otherwise, the company would be in breach of the allotment contract.
File Return of Allotment: Last, the company must deliver the Return of Allotment (Form NSC1) to the Companies Registry within one month from the date of the allotment. Non-compliance may result in refusal by the Hong Kong Companies Register to approve the return of allotments.

If you are considering issuing new shares, you should consider the followings:

Issue price: it is usually the market value of your company’s shares. Mind though you must not issue shares on the par value (see the Companies Ordinance (Cap. 622)).
Partly paid shares: If the issue price is fully paid upon issuance of shares, the shares are considered paid up; otherwise they are partly paid. If you have a private company and adopted the model Article then only fully paid up shares can be issued.
Non-cash consideration: it is not necessary for allottees to pay in cash. However, the value of the non-cash consideration cannot be less than the issue price. Otherwise, the shares would be considered partly paid.

You may find further information on the FAQ site of the Companies Registry.

Transfer of shares

The shareholders of a Hong Kong company may choose to transfer their shares either by sale or gift to an existing or a new shareholder at any time. A share transfer may be triggered to, for instance, facilitate the restructuring of a company or the rearrangement of profit sharing or ownership etc. However, such transfer of shares must be carried out in accordance with the company’s Articles of Association and the procedure set out in the Companies Ordinance.

Before transferring shares, check your company’s Articles to see if there are any restrictions on transfer. Some common restrictions are, for example:

Pre-emptive rights / right of first refusal to existing shareholders;
Power of directors to refuse transfer of shares; and
Prerequisite that all transfers of shares must be approved by the board of directors

The process of transfer typically takes 3-5 working days. Once you have prepared and executed documents on the list below, deliver the documents and the stamp duty payable to the Inland Revenue Department (“IRD”) for stamping. Stamping service is available in physical and electronic forms. The documents required are:

Contract (Bought and Sold) notes;
Agreement for Sale and Purchase (or a confirmation letter that there is no such agreement);
The Articles or the latest copy of Annual Return (Form NAR1);
A statement regarding landed property (and a completed schedule if there is any landed property);
(The latest copy of Return of Allotment (Form NSC1) if there is an unreflected increase of share capital); and
A further list of documents if the business has commenced.

You will have to update the Register of Members of the company after the certificates of stamp are delivered to you.

Key takeaway

Transfer of shares concerns existing shares, while issuance of shares concerns the company creating new shares.
The formalities and timeframes of issuance and transfer of shares are different. You have to be aware and abide by the respective rules. Failure to do so might result in penalties or worse.

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