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The Companies (Amendment) Ordinance 2025 (“the Amendment Ordinance”), which has amended the Companies Ordinance (Cap. 622), seeks to introduce, among others, a new treasury share regime for listed companies. The Amendment Ordinance will commence operation on 17 April 2025.Treasury Share Regime
Listed companies may buy back shares for a variety of reasons, such as to return cash to shareholders, adjust debt-to-equity ratio, increase earnings per share, facilitate the exit of shareholders, or signal to the market that their shares are undervalued. Establishing a regulatory and legal framework for treasury shares in Hong Kong will provide greater flexibility and efficiency for listed companies to adjust their share capital through holding, selling and transferring of shares bought back for specific purposes. This will also attract quality companies to incorporate their holding entities and apply for listing in Hong Kong, thereby enhancing the competitiveness of Hong Kong as an international financial centre.
On 11 June 2024, The Stock Exchange of Hong Kong Limited (the “Exchange”) has amended its listing rules by removing the requirement for listed companies to cancel shares bought back to allow those shares to be held in treasury and providing for a framework to regulate the cancellation, resale and transfer of such shares.
In light of the amended listing rules, the Amendment Ordinance seeks to modernise the Companies Ordinance (Cap. 622) to enable listed companies to make use of the treasury share regime and bring Hong Kong generally on a par with the jurisdictions where the vast majority of the companies currently listed on the Exchange are incorporated or domiciled.
The treasury share regime is applicable to listed companies only.
The Amendment Ordinance was published in the Gazette on 17 January 2025 and is now available in this thematic section. More information relating to the implementation of the treasury share regime, including External Circular, Specified Forms, Frequently Asked Questions etc. will be available in this thematic section soon.
