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Shareholding Arrangement of Hong Kong Companies

Shareholding Arrangement of Hong Kong Companies

Table of Contents

The most common type of private limited companies in Hong Kong is the ones with shares. This type of company’s success is that the arrangements of shareholders’ agreements are straightforward and flexible.

People invest in Hong Kong companies because of their well-structured and flexible business environment for locals and foreigners. The share ownership arrangement in a private company in Hong Kong is a straightforward task to do.

In Hong Kong companies, you have to incorporate the new company at first and then go through the registration process. The process of incorporation includes many essential things which as a shareholders’ agreement.

Other things are also essential, but we will first describe the shareholders’ agreement of the Hong Kong companies registry to get complete information about this agreement works and what arrangements you have to make before the registration process.

Private companies limited in Hong Kong offer you to invest here because of many benefits and shareholders’ agreement. So let’s move toward the company shares in Hong Kong and how it works out.

Company shares in Hong Kong:

Under the Hong Kong companies ordinance law, any private company incorporated in Hong Kong can issue its shares owned by providing agreeable rights to the company’s registry. Moreover, that shareholders’ arrangement should be noted in the company’s articles.

The company’s articles are issued with associations and terms published for shares agreement. Commonly, the private limited company will give only the ordinary shares owned. However, recently, the company’s ordinance has changed some rules.

Some Hong Kong companies issue shares with distinct rights and classes rather than only issuing ordinary shares. For example, a limited company has the right to issue the shares according to its preference.

Shares owned issues by company limited:

The limited liability company issues the shares for the first time for the liability. After that, the company limited issues the shares for interest. After that, the Hong Kong company’s ordinance permits the company’s owners to issue the share capital as shares owned.

In the company’s articles, one should mention that all the shareholders present and agree that share capital is invested in a company limited as shares along with benefits, rights, and obligations.

After this agreement, the shareholder becomes the permanent member of the private company limited. Shareholders present as an owner too in Hong Kong companies. Private companies’ limited shares depend upon the %age of shares owned by shareholders.

What are the obligations, benefits, powers of the shareholders?

On a legal basis, the shareholders have the authority to the company’s shares in proportion. The following will help you know how much shareholders control the private company.

The company limited in Hong Kong offers a lot of benefits and powers to the shareholders according to their no of shares in the private company of Hong Kong. So let’s dig into the capabilities and advantages of being a shareholder in Hong Kong companies.

50% and more shareholding in Hong Kong companies:

Suppose any of the shareholders of the private companies have the 50% or more shares in the company. In that case, they can easily buy the smaller shares owned by minority shareholders of the company limited.

Moreover, the shareholder with 50% of the shares can fire the director of the private companies they are working in. Once shares are incorporated into the company’s registry, the shareholder can use those powers.

75% of shareholders in Hong Kong companies:

If the shares owned by the shareholder in the limited partnerships have the 75% of it, then he can use his powers to amend the company’s articles of association. That shareholder can lessen the share capital according to personal liability.

General partners with such an amount of shares have the authority to amend the company name. That company shareholder can buy all the private company’s shares and have the power to close down the company in Hong Kong.

100% sole shareholder:

A general partner with 100% of the company’s shares is known as the company’s sole shareholder. He has all the power to run and control the business in the Hong Kong companies registry.

Other benefits:

Other shareholders in the company all the company shareholders are responsible for working together in peace, but they have the right to use voting power. They can be divided when the company starts making profits.

Moreover, the shareholders, with mutual discussion, can get the different percentages of shares owned to gain distinct portions of rights in the company. It is obligatory to pay the share capital when the company asks them to pay.

On the other hand, along with enjoying benefits as a sole shareholder, you have to keep an eye on your business activities and keep aware of every commitment your company will make. So it is valid to say that high power comes with outstanding obligations.

Types of Shares owned in Hong Kong companies registry:

The following categories of existing shares tell about the rights that shareholders will get according to the various classes of shares held according to Hong Kong law.

Preference shares:

If you have the preference shares in the private company limited in Hong Kong, you will have no voting power. Instead, you have to agree on a fixed amount of dividends which you are paid out of profits that the company will make.

Non-voting shares:

This type of share class is issued to the company employees limited in Hong Kong. The reason is that they will get remuneration in terms of dividend payouts.

Ordinary shares:

Such shares have voting power (one voting right) from the company. If you are a shareholder with ordinary shares, you will get an equal dividend payout and equal entitlement towards the company’s asset sale.

Moreover, you can incur winding-up debts that you will pay after the company completes it. The shareholders with ordinary shares enjoy more benefits than other shareholders in the company.

Defer ordinary shares:

This type of share provides no dividend to the company’s shareholders until the other shareholders get at least the minimum amount of the company’s profit. In this class, you will acquire powers as minority shareholders.

Management shares:

In this class, the existing shares are issued to many people to increase the company’s shareholder’s voting power. Through this, the company incorporated will be maintained effectively and adequately.

Redeemable shares:

Limited companies in Hong Kong allow these shareholders to sell back their shares to the private company in need. This process can be done with the director’s discretion and agreement on the sane or high price of the shares owned.

Converting shares risks in Hong Kong private companies:

Alteration of shares owned:

According to Hong Kong law, a private company’s limited is to protect the company’s shares from alteration among shareholders of the company. Behind the alteration of shares, there is a big reason why protection is essential.

Suppose the right to alter shares is allowed. In that case, the shareholders with fewer shares will remain at risk in the company because the dominant shareholders of the Hong Kong company have the authority to amend the company’s articles of association.

The dominant shareholders of the company can amend this by passing the special resolution because they have the voting power under control.

Conversion of shares owned:

Same as the alteration of shares among a company’s shareholders cause a risk for minor shareholders, the conversion of shares also. So Hong Kong companies registry only allows the share conversion by making an extraordinary decision in a general partners meeting.

In that meeting, every company shareholder will show their agreement towards the conversion of shares owned in the company. In this way, such shareholders, even with a low number of shares, will feel secure while working in your limited company.

Hong Kong companies incorporation process:

We have mentioned earlier that registering a new company limited in Hong Kong is very easy according to Hong Kong law. However, the private limited liability company in Hong Kong requires the basic incorporation process, which further requires the basic documents under companies ordinance.

The company law of Hong Kong permits you to make a new company limited with limited partners or many parties involved. After that, it is up to your personal preference according to your business needs.

You better know whether your target company should involve many parties or limited partners. Hong Kong offers easy company laws so that investors invest in this country quickly without thinking and planning too much about securities laws etc.

It is commonly obtained company type in Hong Kong by foreign in the private liability limited company for many reasons. First, the limited liability company in Hong Kong has a separate legal entity.

The limited liability companies offer limited liability to the outside investors for day-to-day running. Moreover, the people of Hong Kong have a strong perception of a public company of this type in Hong Kong.

Having a limited liability company in Hong Kong has many benefits, and management shares are incorporated. First, you can raise the share capital of your company. The ownership transfer is more accessible than any other type of company formation in Hong Kong.

The sole shareholder has many rights in the company. You can involve relevant parties with limited partnerships in the company. This type of business entity works out perfectly for outside investors in Hong Kong.

The private limited liability company has some listing rules and statutory requirements and other securities and futures commissions that can be handled by the certified public accountants of the Hong Kong companies ordinance.

Basic requirements for limited liability companies in Hong Kong:

Incorporating limited companies in Hong Kong comes up with simple requirements that are crucial for making a new company in Hong Kong under the company’s ordinance and Hong Kong company law.

A limited partnership requires things which are listed below so that you know which items you need while planning to open limited companies in Hong Kong:

  • Company name
  • companies ordinance
  • directors discretion
  • shareholders
  • company secretary
  • share capital
  • Registered address
  • public company information
  • Taxation accounting firm
  • audited accounts for filing
  • business registration certificate
  • Annual registration fee
  • general partners meeting

You have seen that in private limited liability companies, shareholders stand out as a separate legal entity, so you can’t ignore it because you have chosen the private limited liability company with shares incorporated.

The limited companies allow you to have many shareholders, or you can stay with limited partnerships. The target company goes through all of the steps we mentioned above, and then you will be able to run your company with personal liability.

Rules for shareholding in limited liability companies:

According to the company law of Hong Kong, a private limited liability company can have shareholders according to the range they provided to you. Therefore, such notice should be taken seriously while hiring shareholders in your private company in Hong Kong.

Hong Kong company can have a minimum of one and a maximum of 50 shareholders at a time in the private company. So it works out great because you don’t have to work with the restriction of limited partners and limited partnerships.

Moreover, company law states that the target company has shareholders without the need for residency in Hong Kong. It means the target company’s shareholder can be a foreign or local person according to personal liability. Therefore, such shares incorporated in the target company will offer more people to work in your company in Hong Kong.

Another good thing is that the target company can have the same or different person for a shareholding in the company of Hong Kong. The Hong Kong company law says that the shareholder must be reached the age of 18 before becoming a shareholder in your company.

The shareholder of public companies, no matter with limited partners or limited partnerships, can be from any nation. There is no requirement for a shareholder to be a resident or national of Hong Kong.

If you want your company to have entirely local shareholders or entire foreign people as shareholders, it’s up to you 100%. There is no restriction from Hong Kong company law. The appointing of nominated shareholders in the company is permitted.

Meetings among the company’s shareholders can be held anywhere in the world. There is no restriction that such meeting(s) among shareholders should be held only in Hong Kong. The rules for shareholding are very flexible and are made by Hong Kong law.

Private limited liability company in Hong Kong:

Hong Kong company law offers many benefits and flexible shareholding among shareholders of the company. Such shares among people appear to be a great source of making a quick company in Hong Kong.

The great thing to hear is that you can convert your private company into a public company at any time by removing some restrictions from the company’s articles of association. You can make a purchase agreement for asset sale easily in Hong Kong.

The company’s share capital can be nominated in any currency without the restriction of only Hong Kong dollars. Some public company has accounting firm for paying all the debts incurred, but shares will not have the par value. In other types, the par value of shares comes with statutory requirements.

What is share sale and purchase in Hong Kong company?

The transfer of shares by buying and selling is done by the mutual decision of both parties involved. The seller will make a purchase agreement, and the transactions involved are done with audited accounts of the buyer.

The class of shares with total voting rights attached is written in the purchase agreement among buyers and sellers of such shares in the Hong Kong company. Therefore, directors’ discretion among voting shares is essential if your class of shares allows it.

Public companies in Hong Kong don’t have such restrictions and such documents for asset sales. You can do such transaction(s) with limited partners about non-voting shares. The public company offers ordinary shares to be transferred among shareholders with increasing share capital on the stock exchange.

Process of the asset sale in a separate legal entity of Hong Kong:

Ordinary shares can be sold for increasing share capital within a separate legal entity in a Hong Kong company. The process of asset sale of ordinary shares is given below:

  • Make a draft of the information memorandum based on the sale and purchase agreement of the Hong Kong company.
  • The asset sale of the Hong Kong company takes expressions from potential buyers, which will take some time.
  • In the next round of asset sales in the Hong Kong company, you make offers to the potential buyers of the asset.
  • Then make the transactions involving documentation which will also take some time to complete.
  • In the last step, you can negotiate about asset sale of Hong Kong company with some more buyers to confirm and choose the recommended party to buy that asset.


Business people find attraction in opening a new company in Hong Kong because of its flexible system and environment. The private limited liability companies with shares offer many benefits. Shareholding management is straightforward without any harsh restrictions.

You should try it if you are planning to spend your business worldwide. If today you step in Hong Kong, it is possible to make a new company in china soon. A private company in Hong Kong is the best option.

I hope that this article will guide you!