Documents relating to Share Capital / Shares

Nominal value (also known as "par value") of shares is the minimum price at which shares can generally be issued. The new Companies Ordinance ("the new CO") adopts a mandatory system of no-par for all local companies having a share capital and retires the concept of par value for all shares.

The abolition of par value for the shares of all Hong Kong companies has become effective upon commencement of the new Companies Ordinance on 3 March 2014.

No. All shares issued, before, on and after the commencement date of the new Companies Ordinance on 3 March 2014 shall have no par value. The law has deemed all shares issued before the abolition to have no par value (Section 135 of the CO). There is no conversion process required from the companies.

Upon commencement of the new CO on 3 March 2014, the provisions in the Memorandum of Association of an existing company (deemed to be provisions in the Articles of Association after commencement of the new CO) relating to authorised share capital and par value of the shares are for all purposes to be regarded as deleted (section 98(4) of the new CO). The share capital of a company would be its issued share capital. There are also transitional and deeming provisions in Schedule 11 to the new CO dealing with the migration to no par.

No. There is no need to deliver any specified form for reporting a transfer of shares when the transfer takes place. However, the transfer of shares should be reported in the annual return first made by the company after such a transfer took place.

No. Under the circumstances, the change of shareholders should be reported in the next annual return.

No. There is no need to deliver a Form NSC1 to report the issue of shares to the founder members who signed the articles of association.

A Statement of Capital is in essence a “snapshot” of a company’s total subscribed capital at a particular point in time. It is included in the specified forms which are required to be delivered for registration whenever there is a change in a company’s share capital, e.g. an allotment of shares reported under Form NSC1, to ensure disclosure of up-to-date information of a company’s share capital.

As a result of migration to mandatory no-par, relevant concepts such as par value, share premium, and requirement for authorized share capital are no longer necessary and are abolished. You are no longer required to report information on authorized capital.

With the abolition of par value, "share premium" no longer exists. There is a deeming provision in the new CO to provide for the amalgamation of the existing share capital amount with the amount in the company's share premium account (section 37 of Schedule 11 to the new CO).

From the accounting point of view, what the company needs to do is to transfer the amounts standing to the credit of the share premium account and capital redemption reserve account to the share capital account on or after 3 March 2014. Financial statements for years ending on a date on or after the commencement date of the new CO (i.e. 3 March 2014) should reflect the transfer of the balances of the share premium account and capital redemption reserve account into the share capital account.

The amounts transferred from the share premium account and capital redemption reserve account should be reflected in the share capital information contained in a specified form reporting change of share capital when your company reports changes in share capital for the first time after 3 March 2014, or in the first annual return delivered for registration after 3 March 2014, whichever is earlier.