Allotment of Shares

When running an expanding business in Hong Kong, capital raising or changing ownership typically engages one of two significant processes: allotment of shares or share transfer. Although these two processes appear to be alike in nature upon initial impression, they have different functions and compliance requirements.

In this blog, we’ll outline the main distinctions between share allotment and transfer, and advise you on when and how to apply each—one particularly if you’re operating an SME in Hong Kong.

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    What Is an Allotment of Shares?

    Allotment of shares is the procedure by which a company allots new shares to existing or new shareholders. It raises the number of shares in the company and is usually done to raise further capital or to bring in new investors.

    Typical Situations for Share Allotment

    • Raising capital for enterprise growth
    • Issuing stocks to employees or founders
    • Welcoming new partners or buyers
    • Reorganizing organization possession

    Basic Allotment Process in Hong Kong

    • Pass a board resolution approving the allotment
    • Issue proportion certificate to the new shareholders
    • File Form NSC1 with the Companies Registry within one month
    • Update the check in of participants and share capital statistics

    Unlike share transfers, no stamp duty is payable for the allotment of shares in Hong Kong.

    What Is a Transfer of Shares?

    A share transfer is a possession alternate of existing shares from one birthday celebration to any other. This is common for shareholder exits, inheritances, or internal restructurings.

    Common Scenarios for Share Transfer

    • A shareholder exiting the organization
    • Transfer of shares among commercial enterprise partners or own family
    • Selling a part of the business ownership

    Basic Transfer Process in Hong Kong

    • Prepare and execute the Instrument of Transfer
    • Pay stamp duty (zero.2% of the consideration or internet asset fee)
    • Obtain board approval (if required with the aid of the Articles of Association)
    • File Form ND2A with the Companies Registry
    • Update proportion sign in and difficulty new share certificates

    Allotment of Shares vs Transfer of Shares: Key Differences

    Feature

    Allotment of Shares

    Transfer of Shares

    What happens

    New shares are issued

    Existing shares are reassigned

    Share capital

    Increases

    Remains the same

    Stamp duty

    Not applicable

    Applicable (0.2%)

    CR Filing

    Form NSC1

    Form ND2A

    Shareholder approval

    May be required based on company rules

    Often required under Articles of Association

    Purpose

    Raise capital, bring in new investors

    Change ownership, exit a partner

    Timing

    Effective from date of board resolution

    Effective from date of share transfer execution

     

    Which One Should Your Hong Kong SME Choose?

    Both approaches are helpful—just for different purposes. Here’s a brief guide:

    Select Allotment of Shares if you:

    • Require more capital for expansion
    • Desire to onboard new investors
    • Are introducing employee share options

    Select Transfer of Shares if you:

    • Are transferring ownership (part or complete)
    • Have a shareholder retire or leave
    • Are undergoing internal business restructuring

    Note: Both steps must be done in accordance with Hong Kong’s Companies Ordinance, and erroneous filings may result in penalties or disputes.

    FastLane HR Can Make It Easier for You

    Dealing with the allocation of shares or a transfer of shares can be legally complicated and time-consuming. At FastLane HR, we’re experts at making Hong Kong SMEs compliant and efficient.

    Our Share Services Include:

    • Preparing board resolutions and statutory forms
    • Filing with the Companies Registry
    • Updating share capital and member registers
    • Handling stamp duty on share transfers • Full compliance checks and advisory support

    Allow our professionals to handle the paperwork while you concentrate on expanding your business.

    FAQs

    1. Can I issue shares without altering my share capital?

    No. Allotment always leads to an increase in share capital.

     

    1. Is stamp duty payable for allotment of shares in Hong Kong?

    No. Stamp duty is only payable on share transfers.

     

    1. How long does a share transfer take?

    Typically, within 3–7 working days, subject to documentation and approvals.

     

    1. What forms are required for share allotment?

    Form NSC1 has to be filed with the Companies Registry within a month of allotment.

     

    1. Can I manage share changes myself as an SME owner?

    You can, but it is highly advisable to deal with a professional company such as FastLane HR to stay away from expensive compliance mistakes.

    Conclusion

    It is essential for directors and owners of businesses in Hong Kong to know the distinction between allotment of shares and transfer of shares. Whether you are raising capital or reconfiguring ownership, both processes involve certain legal procedures and implications.

    Need professional help?

    FastLane HR provides you with compliant, quick, and dependable assistance with all of your company’s share requirements. Get in touch with us today and let’s get your business moving ahead with confidence. Get in touch with FastLane HR for your business operation needs today.