How to Transfer Shares in a Hong Kong Company and Stamp Duty

Steps

1. Check the articles for transfer restrictions, directors' approval or pre-emption rights (existing shareholders' right to buy transferred shares first).
2. Agree the price and sign the instrument of transfer, plus a sold note and a bought note for the sale.
3. Stamp the documents at the IRD Stamp Office. For unlisted shares, the Stamp Office can ask for the company's latest accounts or annual return to check value.
4. The company's directors approve the transfer if the articles require, update the register of members, and issue a new share certificate.
5. Update the significant controllers register if control changes.
6. Report the new members in the next annual return (NAR1). No separate form is filed with the Registry for a transfer.

Stamp duty (Hong Kong stock)

• Percentage-based (ad valorem) duty is 0.1% of the consideration or value on each of the bought note and sold note, the rate from 17 November 2023 (0.13% before).
• The instrument of transfer carries a fixed duty of HK$5. A transfer by way of gift pays HK$5 plus 0.2% of the value of the shares.
• If the price is below market value, duty can be assessed on the shares' value.
• Time to stamp: the contract notes within 2 days after the sale or purchase if made in Hong Kong (30 days if made elsewhere). The instrument of transfer must be stamped within 30 days after execution if signed outside Hong Kong. A gift transfer must be stamped within 7 days of execution.
• Late stamping costs a penalty of 2 times the duty if up to one month late, 4 times if up to two months late and 10 times beyond that, which the Collector may reduce.

Tax treatment of any gain is outside this section.