Hong Kong Company Maintenance and Compliance
Annual Requirements
1. Annual accounts/directors’ report
A profit and loss account and a balance sheet for the company
must be audited by Hong Kong registered auditors and laid
before the shareholders in general meeting within 18 months
of incorporation and then at least once in every calendar
year. There are lengthy and detailed provisions in the Companies
Ordinance regarding the types of accounts to be prepared and
we can supply further details on request. Generally, Hong
Kong private companies having a share capital are not required
to file their accounts with the Registrar.
A directors’ report must be prepared in conjunction
with the annual accounts. The Companies Ordinance provides
a list of what this report should contain and this list includes
details of contracts with the company or certain companies
with which it is associated which are significant in relation
to the company’s business and in which any director
has a material interest.
2. Annual general meeting
An annual general meeting of the shareholders must be held
within 18 months of incorporation and then at least once in
every calendar year, although not later than 15 months after
the last annual general meeting. (This 15 month period may
be extended at the discretion of the Registrar upon payment
of a fee.) An annual general meeting must be held even though
there may be no accounts available for presentation to the
meeting and no other relevant business to attend to.
Before the annual general meeting is held, the directors must
approve the accounts and the directors’ report, they
may recommend a dividend and must resolve to call the annual
general meeting. If all the shareholders entitled to attend
and vote at the annual general meeting so agree, the meeting
may be held at short notice, but otherwise at least 21 clear
days’ notice is required. Copies of any audited accounts
to be considered at the annual general meeting must be sent
to all shareholders, debenture holders and other persons so
entitled not less than 21 days before the date of the meeting,
unless all shareholders entitled to attend and vote at the
meeting otherwise agree.
3. Annual return
An Annual Return must be filed with the Registrar of Companies at least
once a year (except if there has been no change in the filed
particulars since the date of the last annual return, in which
case a certificate confirming this fact can be filed in lieu
of an annual return). The annual return contains among other
things:
• particulars of the authorised and issued share capital
of the company
• the names and addresses of its directors and the secretary
• the names and addresses of its registered shareholders
• the amount secured by any registered charges.
The return must be signed by a director and the secretary
of the company and must be filed within 42 days of the anniversary
of the incorporation of the company. Public companies and
companies limited by guarantee without a share capital must
file their annual return within 42 days of the annual general
meeting in each year.
Filings of Changes in Particulars
1. Filing obligations
A company must file the relevant particulars with the Registrar
within the period indicated, in the event of:
• any change in the directors or secretary or in the
filed particulars of any existing directors or secretary -
14 days
• any change in the location of the registered office
- 14 days
• any increase in the authorised share capital - 15
days
• any relocation of the company’s statutory books
from the company’s registered office - 14 days
• the passing of a special resolution or certain other
resolutions - 15 days
• any allotment or issue of new shares (this also requires
the payment of a capital fee on the amount of any premium
over the nominal value at which the shares are allotted or
issued) - 8 weeks
• the creation of a charge over certain types of assets
or the acquisition subject to an existing charge of certain
types of assets, in either case whether the asset is within
or outside Hong Kong - 5 weeks.
In relation to the last two items, if the relevant particulars
are not filed with the Registrar within the prescribed period,
an application will have to be made to the Court for an extension
of the time within which the particulars may be filed. Any
such application will need to be supported by an affidavit
giving an explanation as to why the particulars were not filed
within the prescribed period.
2. Change of name
To effect a change in the name of a company (which includes
the adoption or abandonment of a formal English or a Chinese
version of the name):
• the shareholders must approve of the change in name
by special resolution
• the new name must be registered with the Registrar.
It normally takes about 14 working days from the time of
the filing of the special resolution for the certificate of
incorporation on change of name to be issued. The change in
name is effective from the date on such certificate.
3. Increases in authorised and issued share capital
Any increase in the authorised share capital of a company
requires the approval of the shareholders. A company’s
articles of association typically provide for the increasing
of the company’s authorised share capital by way of
ordinary resolution. Any increase in authorised share capital
will attract a capital fee and notice of the increase must
also be filed with the Registrar together with a signed copy
of the resolution.
4. Changes to memorandum or articles of association
Most of the provisions of a company’s memorandum and
articles of association can be changed by special resolution
.
There are exceptions to this general rule. Where a company
has issued different classes of shares, the special rights
of any one class may, subject to the articles of association,
be changed only with the approval of 75% of the holders of
shares of that class. Where the special rights exist by virtue
of the memorandum of association and there is no provision
for alteration, all such shareholders must agree before the
rights can be changed. Also, a member must agree in writing
to an alteration to the memorandum or articles of association
which requires that member to take or subscribe for more shares
or increase his liability to contribute to the share capital
of the company or otherwise pay money to the company.
A signed copy of every special resolution and every resolution
varying a provision in the memorandum or articles of association
must be filed with the Registrar and annexed to every copy
of the memorandum and articles of association of the company
issued subsequently to any such change. When the memorandum
of association is amended it must be reprinted and filed with
the Registrar.
5. Share transfers
The transfer of legal title to shares in a Hong Kong company
is effected by an "instrument of transfer". Beneficial
title to shares is transferred by way of contract notes (a
bought note and a sold note).
Contract notes must be submitted for stamping within two
days (30 days if the sale takes place outside Hong Kong) of
their execution. Ad valorem stamp duty is levied on each contract
note (i.e. both the bought note and the sold note) at the
rate of HK$1.00 per HK$1,000 or part thereof, of, whichever
is the higher of the consideration paid or the value of the
shares transferred (so that the total rate of duty on a sale
of shares is effectively 0.2%) . Exemptions from stamp duty
are available for intra-group transfers. We will be pleased
to provide more detailed advice on the requirements for exemption
on request.
In the case of a private company, a copy of the latest audited
accounts (consolidated where relevant) or latest management
accounts (if audited accounts have not been prepared or if
they are not up to date) together with details of any land
and properties held and a copy of any sale and purchase agreement
must normally be submitted when the documents are lodged for
stamping. The Stamp Duty Office may also require additional
information.
The instrument of transfer attracts a HK$5 fixed duty. In
the case of a sale and purchase of shares by a person who
is not resident in Hong Kong, the ad valorem stamp duty can
be paid on the instrument of transfer in additional to the
HK$5 fixed duty if contract notes have not been made out and
stamped.
Where a transfer of the beneficial ownership is made otherwise
than by sale and purchase e.g. by way of gift, the instrument
of transfer is stampable at the fixed rate of HK$5 plus ad
valorem stamp duty of 0.2% of the value of the shares at the
date of transfer.
When there is a sale of beneficial ownership only and no
transfer of legal ownership (i.e., where the shares will remain
registered in the name of the same person as a nominee for
the beneficial owner), contract notes must be made out and
ad valorem stamp duty of 0.2% paid. An instrument of transfer
will not be required in this case but it is advisable for
there to be a declaration of trust (see below).
Ad valorem stamp duty is not payable on a transfer in registered
ownership which does not involve any change in the beneficial
ownership of the shares. Where shares are registered in the
name of a nominee, it is sensible to execute a declaration
of trust and to have the declaration of trust adjudicated
as not chargeable to duty. The fee for this is HK$20. Adjudication
can avoid later disputes with the Stamp Duty Office about
the beneficial ownership of shares.
Penalties for failure to stamp documents within the required
time range from two to ten times the amount of duty payable,
although the Collector of Stamp Revenue has power to remit
the whole or any part of any penalty in appropriate cases.
Neither the company nor any other person is permitted to act
on or in general rely in court proceedings on any stampable
instrument which is not duly stamped. An unstamped instrument
may not be registered in the company’s books.
After stamping (and compliance with any other formalities
prescribed by the articles of association), the transfer can
be registered in the statutory books of the company and a
new share certificate issued.
Share transfers are sometimes restricted by, for example,
provisions in the company’s articles of association
which require that the shares are first offered for sale to
existing shareholders.
See also:
Procedures and costs for change of company name, procedures and costs for increase of share capital, procedures and costs for allotment of shares, procedures and costs for transfer of shares
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