A Complete Guide to Hong Kong Share Transfers

As part of business life, it is common for the share capital of your company to be reorganized at some point, where you will have to transfer existing shares. This may be when you sell your business or attract a new investor. 

Understanding the Share Transfer Hong Kong Procedure

A share transfer is the movement of shares from one holder to another, usually by sale or gift. 

In Hong Kong, the transfer is documented with an instrument of transfer and stamped for stamp duty with the Inland Revenue Department. 

The company then updates legal ownership by entering the transferee in the register of members after stamping. 

Legal title is recognized when the company registers the transfer in the Register of Members (after the instrument has been duly stamped).

There is no routine filing of the transfer instrument with the Companies Registry; instead, the updated shareholdings are reflected in the company’s next annual return.

When Do Share Transfers Take Place?

Common situations where a Hong Kong company transfers shares include:

• Sale of the company or secondary sales by founders
• Group reorganisation or intra-group transfers
• New investors (angel, venture capital, private equity) coming in
• Estate or gift planning (family or succession transfers)
• Rebalancing among existing shareholders (e.g. exit, buy-out, or adjusting percentages)

Before you begin, always review the Articles of Association and any shareholders’ agreement for transfer restrictions and pre-emption rights, and follow any approval or notice procedures they require.

What Documents Are Required for a Share Transfer?

In practice, there are two layers of documents:

1. Items needed so the Stamp Office of the Inland Revenue Department (IRD) can assess stamp duty on the transfer of unlisted shares; and
2. Additional documents your company secretary or TCSP will ask for to update the register and satisfy compliance.

Core Documentation

• Instrument of Transfer
• Bought and Sold Notes / contract notes (or a Share Purchase Agreement) showing consideration and terms (not required for pure gifts; gifts are stamped on the Instrument of Transfer with HKD 5 plus 0.2% on value)
• Existing share certificate (to be delivered up and replaced)
• Board resolution approving the transfer
• Identification documents of the transferor and transferee (for KYC and internal records)

Financial and Corporate Records

• Latest audited financial statements of the company (and subsidiaries if no consolidated accounts are prepared)
• Certified management accounts if the audited accounts are not up to a date within about 6 months of the transfer
• Directors’ dividend resolutions made after the last audited accounts, if any
• Articles of Association (for a newer company) or the latest Annual Return (NAR1) plus any Return of Allotment (NSC1) for older companies
• A statement whether the company or its subsidiaries own landed property, and, if so, a Schedule of Landed Properties (IRSD102)

Transaction Details

• Name of transferor and transferee
• Class and number of shares being transferred
• Consideration for the transfer (or the basis for a gift, where no consideration is paid)
• Any waiver or consent where pre-emption rights or transfer restrictions in the Articles apply

These documents enable the Stamp Office to assess the value of the shares and calculate stamp duty, providing your company secretary with sufficient information to update the register of members and complete the share transfer properly.

Step-by-Step: How to Transfer Shares (Private Company)

Step 1: Pre-Checks and Approvals

• Review the Articles of Association and any shareholders’ agreement for transfer restrictions, pre-emption rights, or lock-ups.
• Pass a board resolution to approve the transfer and the transferee.

Step 2: Prepare and Sign Transfer Documents

• Prepare the Instrument of Transfer and Bought and Sold Notes (or SPA).
• Sign the documents. Private instruments may be executed electronically if this is valid under the Electronic Transactions Ordinance (Cap. 553) and any applicable execution or exclusion rules. Companies Registry e-forms (e.g. ND2A, NAR1) can be signed and submitted through its e-Services Portal.

Step 3: Pay Stamp Duty

• Calculate duty on the higher of the consideration or fair value.
• Pay via e-Stamping (stamp certificate) or at the Stamp Office.

e-Stamping issues a stamp certificate immediately upon payment, which you can attach to the transfer pack for company registration.

Step 4: Lodge for Registration with the Company

• Deliver the proper Instrument of Transfer to the company.
• Within 2 months after lodgement, the company must register the transfer or send a refusal notice. If the transferee or transferor requests reasons, the company must provide them within 28 days or register the transfer. Penalties apply for non-compliance.

Step 5: Issue the New Share Certificate and Update Internal Registers

• After registration, update the Register of Members and issue the new share certificate.
• Deadline: for a private company, issue the new certificate within 2 months after lodgement.
• Update the Significant Controllers Register (SCR) if a controller changes.
• If there is any director change, file Form ND2A with the Companies Registry within 15 days.

Step 6: Reflect Changes in the Annual Return (Form NAR1)

• Show the updated position in NAR1, filed within 42 days after each incorporation anniversary.

Stamp Duty on Share Transfers (2025)

Current Rate and Fixed Duty

Ad Valorem Duty (Total)

• 0.2% of the consideration or market value, whichever is higher
• (0.1% on the bought note + 0.1% on the sold note).

Instrument of Transfer

• Gift / voluntary disposition: HKD 5 plus 0.2% of the value of the stock
• Any other transfer: HKD 5 fixed duty

Late Penalties

If instruments are stamped late, the Stamp Office may charge additional stamp duty as a penalty:

• If the delay is not more than 1 month, the penalty may be up to two times the amount of stamp duty.
• If the delay is more than 1 month but not more than 2 months, the penalty may be up to four times the amount of stamp duty.
• If the delay is more than 2 months, the penalty may be up to ten times the amount of stamp duty.

Are Previous Share Certificates Still Valid?

A share certificate is evidence of a member’s title, but the company’s register of members is the primary legal record of ownership.

In practice, an older certificate will still be treated as valid evidence if:

• The company is still in existence;
• The details on the certificate (holder’s name, number and class of shares, certificate number) match the current register of members; and
• No new certificate has been issued for those same shares (for example, on a transfer, consolidation/split, or other re-issue). Once a new certificate is issued, the previous one is normally treated as cancelled.

A damaged certificate can still be valid in principle if it can be identified and matched to the register. 

However, lost or severely damaged certificates will usually be replaced under the procedures set out in the company’s Articles (for example, a statutory declaration, indemnity, and a replacement fee).

Are Share Transfers Subject to Administrative Procedures?

The sale or transfer of shares can create rights between the parties on signing, but legal title as a shareholder is only recognised when the company registers the transfer in its Register of Members after the instrument has been duly stamped.

There is no immediate filing of the transfer instrument with the Companies Registry. Changes in share ownership are instead reflected in the company’s Annual Return (Form NAR1), filed once a year.

What Happens at the End of the Share Transfer Process?

1. The transferee receives a new share certificate.
2. The Register of Members is updated.
3. The Significant Controllers Register (SCR) is updated if needed.
4. If there is any director change, Form ND2A is filed with the Companies Registry within 15 days.

How Long Does a Share Transfer Take?

Timing depends mainly on document readiness and stamp duty assessment. 

If the share transfer documents are complete and up-to-date financials are available, e-Stamping can often be completed on the same day. 

Registration of the transfer and issuance of the new share certificate then follow your company’s internal processes and the statutory timelines described above.

What If the Company Refuses to Register a Transfer?

The board may refuse to register a transfer if permitted by the Articles of Association. However, the company must:

• Send a notice of refusal to both the transferor and transferee within 2 months after the transfer is lodged; and
• Provide a statement of reasons within 28 days if the transferor or transferee requests it – or register the transfer instead.

Penalties for non-compliance: the company and any responsible officers may be liable to a Level 4 fine (HKD 25,000) plus HKD 700 per day for a continuing offence.

Additional Notes and Good Practice for Hong Kong Share Transfers

• Check pre-emption rights early and obtain written waivers from existing shareholders where required under the Articles of Association or shareholders’ agreement.
• Keep audited accounts and management accounts up to date to reduce valuation queries from the IRD when assessing stamp duty on unlisted shares.
• Maintain clean internal records so your Register of Members, Annual Return (Form NAR1), and Significant Controllers Register (SCR) stay accurate and easy to update after each share transfer.

Air Corporate can prepare the full transfer pack, handle e-Stamping, draft board papers, update the Register of Members and SCR, and file ND2A and NAR1 on schedule so every deadline is met and your transaction closes cleanly.