When starting or investing in a Hong Kong company, understanding the types of shares available is crucial. While most companies issue only ordinary shares, there are several other types of shares you may consider depending on your business goals, investor structure, and corporate strategy.
Knowing the differences between share types helps business owners and investors make informed decisions on ownership, dividend rights, voting power, and capital distribution. In this guide, we’ll explore the 6 common types of company shares in Hong Kong and their uses.
Key Takeaways
Understanding Shares in Hong Kong
A share represents ownership in a company and entitles shareholders to dividends, voting rights, and capital distribution depending on the class of shares held.
6 Common Share Types
In Hong Kong, companies may issue 6 main classes of shares — ordinary, preference, deferred, non-voting, redeemable, and management shares. Each type carries different rights in terms of voting power, dividend priority, and ownership control, allowing businesses to tailor their shareholding structure to strategic needs.
Ordinary vs. Preference Shares
Ordinary shares are most common, while preference shares provide priority dividends and capital repayment, making them attractive to investors.
Share Transfers and Stamp Duty
Transferring shares requires proper documentation, shareholder approvals, and timely stamp duty payment to comply with Hong Kong law.
Foreign Ownership Advantage
Hong Kong allows 100% foreign ownership, giving international entrepreneurs and investors flexibility in structuring company shareholding
What Is A Share?
A share represents a unit of ownership in the capital of a company. By holding shares, you become a shareholder and gain a legal stake in the company’s capital and profits. The number and type of shares you hold determine your influence and entitlements within the company.
Being a shareholder comes with several key rights and benefits:
- Dividends: Shareholders are entitled to receive a portion of the company’s profits in the form of dividends. The amount and timing depend on the type of share and company policies.
- Voting Rights: Shares may grant the right to vote on important company matters, such as electing directors, approving major transactions, or amending the company’s articles of association.
- Capital Distribution: In the event of company dissolution or liquidation, shareholders are entitled to a portion of the company’s remaining assets, according to their shareholding and the class of shares held.
Read: What is Share Capital in Hong Kong
Types of Shares in Hong Kong
When incorporating a company in Hong Kong, you can issue different types of shares depending on your business needs and investor preferences. Each type of share has unique rights and benefits, especially in terms of voting power, dividend distribution, and capital returns.
1. Ordinary Shares
Ordinary shares are the most common type of share issued by Hong Kong companies. They usually carry one vote per share and provide equal rights to dividends and capital distribution when the company is dissolved. Most small and medium-sized companies operate solely with ordinary shares.
2. Preference Shares
Preference shares give shareholders priority in dividend payments and capital return over ordinary shareholders. These shares are often non-voting and may sometimes be redeemable. Preference shares are usually issued to investors because they offer more predictable returns and structured benefits.
3. Deferred Ordinary Shares
Deferred ordinary shares have limited rights compared to ordinary shares. Dividends are only paid after all other classes of shares have been settled or after specific conditions are met. Deferred shareholders typically cannot vote on company matters, including director elections or management decisions.
4. Non-Voting Shares
Non-voting shares do not carry any voting rights and shareholders cannot attend general meetings. They are often issued to employees, family members, or passive investors who are entitled to dividends but do not participate in company decisions.
5. Redeemable Shares
Redeemable shares can be repurchased by the company at a later date. The redemption terms may be fixed or determined by directors, and the price is usually the same as the issue price. These shares are commonly granted to employees, allowing the company to reclaim shares when the employee leaves.
6. Management Shares
Management shares are designed to give certain shareholders extra voting rights (e.g., two votes per share) or different nominal values. They are typically issued to key decision-makers or directors who require greater influence over company matters.
Transfer of Existing Shares – Change of Company Shareholders
If you want to transfer existing shares in a Hong Kong company to another party, the process must follow the company’s articles of association and any additional requirements set out in its constituent documents. Approval from other shareholders may also be necessary before the transfer can proceed. Once approved, the transfer must also be lodged with the Hong Kong Companies Registry to ensure the change of shareholders is legally recognized.
Documents Required
To complete a share transfer, the following documents typically need to be prepared:
- Contract notes (bought and sold note)
- Instrument of transfer
- Resolutions approving the transfer
- Sales & purchase agreement (optional, if applicable)
- Latest audit report (within 6 months) or certified management accounts (within three months)
Stamp Duty Process and Calculation
After preparing the documents, the contract note and instrument of transfer must be stamped by the Hong Kong Stamp Office. Stamp duty ensures the legal validity of the transfer and is calculated as follows:
- Fixed fee: HKD 5 per instrument of transfer
- Percentage: 0.2% of the higher of the net asset value of the shares or the consideration paid
Once the documents are stamped and submitted to the Stamp Office, the transfer of shares is officially complete, and the change of company shareholders is legally recognized.
Read: Articles of Association in Hong Kong: Complete Guide for 2025
Stamp Duty Time Limit for Share Transfers
When transferring shares in a Hong Kong company, it is important to comply with the stamp duty time limits to avoid penalties. The deadlines differ depending on whether the transaction occurs within Hong Kong or overseas.
- Transactions within Hong Kong: Contract notes and instruments of transfer must be stamped within 2 days after the sale or purchase.
- Transactions outside Hong Kong: Contract notes and instruments of transfer must be stamped within 30 days after the sale or purchase.
Penalties for Late Stamping
Failing to meet the stamping deadlines can result in significant penalties:
| Delay in Stamp Duty Payment | Penalty |
| Late by up to 1 month | 2 × the stamp duty |
| Late by more than 1 month but less than 2 months | 4 × the stamp duty |
| Late by more than 2 months | 10 × the stamp duty |
Read: Comprehensive Hong Kong Stamp Duty Guide
Conclusion
Hong Kong offers exceptional flexibility for 100% foreign ownership, making it an attractive destination for international investors and entrepreneurs looking to establish or invest in a company. The ability to choose from different types of shares allows business owners to structure their company in a way that suits their ownership goals, investor arrangements, and management preferences. Selecting the right type of shares is crucial to ensure effective control, equitable profit distribution, and compliance with Hong Kong regulations.
How FastLane Group Can Help
FastLane Group provides comprehensive support for businesses and investors navigating company shares in Hong Kong. Our expertise covers every aspect of incorporation and shareholder management, including:
- Incorporation and Share Structure Advisory: Guidance on selecting the right types of shares to suit your company’s ownership, management, and investment needs.
- Share Transfers and Shareholder Changes: Assistance in preparing all necessary documents and ensuring smooth transfer of ownership in compliance with Hong Kong regulations.
- Stamp Duty Filing and Compliance: Expert handling of stamp duty calculations, filings, and deadlines to prevent penalties and ensure full legal compliance.
With extensive experience assisting both foreign investors and local businesses, FastLane Group ensures your company is structured efficiently while meeting all statutory requirements. Let us guide you in choosing the right share structure and managing shareholders for your Hong Kong company. Speak with our experts today to ensure your Hong Kong company’s shareholding and compliance are structured for long-term success.
FAQs
1. What is the most common type of share in Hong Kong companies?
The most common type of share is the ordinary share, which gives shareholders equal rights to dividends and capital distribution, as well as one vote per share in company decisions. Most Hong Kong companies are initially set up with ordinary shares only.
2. Can foreign investors own 100% of shares in a Hong Kong company?
Yes. Hong Kong allows 100% foreign ownership, meaning international investors can fully own and control a Hong Kong company without requiring local partners.
3. What are preference shares and who are they usually issued to?
Preference shares provide preferential rights to dividends and capital repayment, often before ordinary shareholders. They are typically issued to investors and usually carry limited or no voting rights.
4. How are share transfers regulated in Hong Kong?
Share transfers must comply with the company’s articles of association and may require approval from existing shareholders. Necessary documents include contract notes, instruments of transfer, resolutions, and recent financial statements. Stamp duty must also be paid to complete the transfer legally.
5. What happens if stamp duty for a share transfer is paid late?
Penalties for late stamping depend on the delay:
- Up to 1 month: 2× the stamp duty
- 1–2 months: 4× the stamp duty
- More than 2 months: 10× the stamp duty
