Complete Guide to Share Certificates of a Hong Kong Company

Any shareholder receives a share certificate at the time of its investment in a company.

This document is absolutely crucial as it evidences the shareholders’ ownership and participation in a company.

If you hold shares in a Hong Kong company, this guide explains everything you must know about your share certificate.

What is a share certificate?

A share certificate is a document issued by a company to its shareholders to evidence their ownership in that company.

A company may have one or more share certificates depending on the number of shareholders.

What information is included on a share certificate?

If you own shares of a company in Hong Kong, you should receive a share certificate with all details concerning your shares.

A share certificate normally includes the following information:

• the issuing company’s full name
• the shareholder’s names and contact address
• information on the number of shares held
• the classes or type of shares
• the share certificate number

A share certificate may include various other information.

For example, if a shareholder is restricted from selling its shares (based on the provisions of a Shareholders Agreement), it is generally a good idea to include a reference to this restriction on the share certificate.

If a shareholder holds different classes of shares of a company (for example ordinary and preference shares), it is recommended to issue separate share certificates for each class.

In the context of preference shares, it is also advised to include a brief description of the rights attached to such shares on the share certificate.

What does a shareholder certificate look like?

There is no standard or prescribed format. Please refer to the picture below for a sample of a share certificate issued by a Hong Kong company.

Share certificates issued by companies in other jurisdictions (Singapore, BVI, Delaware) usually follow the same format.

Who issues a share certificate?

A share certificate is usually prepared by the company secretary.

The company secretary normally also takes care of preparing all documents leading to the issuance of new share certificates (share allotment or share transfer documents).

Upon issuance, a share certificate shall be signed by at least two directors.

If the company has a sole director, then only one signature is required.

When to issue share certificates?

There are various occasions in which a Hong Kong company may issue share certificates to its shareholders:

• Incorporation: upon registration of a Hong Kong company, all its founding shareholders will receive a share certificate

• Share transfers: when a shareholder transfers all of its shares to purchaser, the company will issue a new share certificate for such shares in the name of the purchaser. The share certificate of the seller will be cancelled. In the event that the seller only sells part (but not all) of its shares, the original share certificate will be cancelled and be replaced by a new share certificate representing the number of shares still owned by such shareholder.

• Shares allotment: when a company allots new shares to existing or new shareholders, new share certificates will be issued accordingly.

• Loss of share certificates: when you lose share certificate of a private company, there is no formal procedure for the replacement of the share certificates. We recommend that you contact your company secretary who will be in charge of the reissuance of the share certificate.

How to keep your share certificate safe?

It is strongly advised to keep the share certificates of a company in a safe place.

To reduce the risks of loss, we recommend that your company secretary keeps such share certificates at its office together with the company’s statutory records.

You may also ask your company secretary to provide you with a certified true copy of such share certificates.

What is the difference between a share certificate and register of members?

The register of members of a Hong Kong company is a single document (usually a table) listing all shareholders of a company, their respective number of shares, the date on which they became or ceased to be shareholders of the company.

This document provides a comprehensive overview of a company’s past and current shareholding structure.

On the contrary a share certificate only evidences the ownership by a shareholder of a certain number of shares at a certain point in time.

What is the difference between a share certificate and a certificate of incumbency?

A certificate of incumbency is a document issued by a regulated third party (lawyer, public notary) and confirming certain information about a company such as its shareholders, ultimate beneficial owners, directors.

It is normally required when a company applies for the opening of a bank account, a public subsidy or a loan.

By contrast, a share certificate is issued by a company itself rather than by an independent third party.

When is a share certificate canceled?

When a person ceased to be a shareholder of a company, it shall return its share certificate to such a company.

An officer of the company (usually its company secretary) shall take care of canceling such share certificate, usually by affixing a “Cancelled” stamp on the certificate.

This officer will then update the company’s register of members to reflect the date on which such shareholder ceased own shares of the company.

You have not yet registered your Hong Kong company or opened your business account? Check our step-by-step guide to registering a company in Hong Kong in 2020.

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