Company Restructuring – Change of directors and Company Shareholders
Hong Kong offers a business-friendly environment for entrepreneurs, which makes it easy for new companies to conduct their business smoothly. Whenever you choose a business entity, you are free to choose the director and the shareholders of the company along with the location where you want to operate the business. In Hong Kong, the rules and regulations to conduct the business are flexible.
In Hong Kong, it is easy for directors to manage everyday operations and make important decisions from any corner of the world. Changing the company structure is also allowed, with adding or removing company directors being fairly easy. Therefore, Hong Kong companies can change the directors whenever they desire. The shares of the company represent the ownership of a business. Transferring shares and changing the shareholders is easy for companies.
But of course it is not so simple to just change the director or pass it to another person. There are various things that you need to consider while changing the directors, transferring shares or changing the shareholders of the company in Hong Kong. You should know every aspect in a detailed manner.
CHANGE OF COMPANY DIRECTORS
Do you need to make some significant changes to your company? Want to add new directors or change a director per the requirements of your business? In Hong Kong you are allowed to easily change the directors and Startupr can assist you with changing your company structure. Our professional and experienced team takes care of all the required steps and documents needed to file the new directors. If all the documents are in place, this process takes around 1-2 business days.
If you are changing the company structure, you need to inform all the concerned parties associated with the business such as banks or outside parties. This is so that they can update their records of the new directors on board. Also, it is important to protect your company from any unwanted risk in case of a bad split with an old director.
It is advisable for every company to have a natural director when starting the company. Later on, the company can choose and add a corporate director. After the company has been incorporated, the new director can be easily appointed for the company. If your company has had a director from the beginning, it is easy for the business to take on major decisions. In Hong Kong, one person or a company can act as a director for various other companies at the same time.
Along with this, there are some simple requirements for who can be a director of a Hong Kong company:
- Must be older than 18 years old
- Must have a valid passport
- No limitation on nationality
- No maximum cap of directors
- Must have at least one natural director
The Process for changing the directors
Once you have decided that you need to change the structure of the company, you can do that in two basic ways:
- Appointing new directors
- Suspension of directors of the company.
For any of these options, you would need a prior decision and have to follow the proper processes along with reporting them to the government. The change in company structure needs to be updated in the company’s record and would be used for any official reports in the future.
Most common situations for a change of director:
- The current director has not been responsible for their director duties and is required to be removed.
- The shareholders decide to remove a director
- The company chooses a new person to become the director
- If a director passes away
- The company appoints a non-executive director (nominee director)
What all would you require to change the current director of the company?
- The approval and signatures of all acting directors for it to be approved.
- The date of the company restructuring, as it is important for company filings.
The director information that would be required:
- Date of change of director
- The new director’s name, as it appears on their passport
- The new individual’s permanent address
- Signed director’s resolution
Once all the documents and information is ready, the process of changing the directors is smooth and straightforward.
How can Startupr help you?
Startupr will assist you in every step involved in changing the company directors. Here are some of the steps that we follow while assisting you in changing the directors of your company:
- Inform us about your desired change, whether you want the cessation of a director or you want to appointment a director. We will review your requirements and inform you about the service fees for the change of directors.
- You will need to provide us with the personal information about the new director, so that we can make the change for you. If you want to remove a director, you need to identify him/her and let us know.
- We will prepare the director’s resolution for you, and send it to you for the director’s signature and approval of the change.
What is a Director Resolution?
The Director resolution contains the consent or confirmation of all the directors for the appointment or cessation of a director. This resolution also includes the details of the new director and the date of appointment. The resolution is required to be prepared and signed by all the current directors of the company.
- After the resolution is returned, we will process the company documents to the Hong Kong Government for the change of directors.
- The government will then update their records with the provided documents for the change of director.
- After completion of all the processes, we will let you know about the change and will provide you with the company documents.
- This change of directors will also show up for the company on the next Annual Return.
Note: Since the directors are responsible people for running and representing the company, we highly recommended you to keep the latest records of the directors and update them on all the required documents.
Old records of the current company directors can create complications while filing the company’s documents to the government.
Fees for the change of directors
At Startupr, we offer a well-structured package for processing your documents and offering you all the services for the change of directors. With us, you can choose to add any other services, if you wish to. Our service fees for the change of directors is as follow:
- Appointment or Resignation of Director $150 USD
- Resolution of Director(s)/Shareholder(s) $55 USD
If you want our other services like updating director’s particulars such as address and passport number, we can help you with that too. This information is required to be latest on all the documents and government records.
CHANGE OF COMPANY SHAREHOLDERS
We understand that you may need to transfer the shares or change the shareholders. As per the Hong Kong Companies Ordinance, all Hong Kong private limited companies have provisions in their articles regarding the transfer of its shares. However, in the Companies Ordinance, there are no particular restrictions on share transfers. But to change the company’s shareholders, you need to choose from any of the below-described options:
- Every transfer of shares needs to be pre-approved by The Board.
- The shares have to be proposed to the current shareholders initially with the provision of rights.
The process to Change the Company Shareholders
To change the company shareholders, you need to follow the complete procedure. Here is the process that you are required to follow:
- Make sure that the preconditions for rights are fulfilled or waived.
- After the conditions are satisfied, you need to prepare the share transfer form and get it signed by both the seller (transferor) and the buyer (transferee).
- Now you can present the shares transfer form and the underlying share(s) to the company, and wait for the approval from the board of directors on the share transfer.
- Once the form is approved, you can begin with preparing the sale agreement and the share transfer form for the government stamping.
- Confirm the buyer’s particulars and the shares for the registration into the Companies Registry. It is the official proof of the transfer of the company’s shares.
Change of company shareholders – Transfer existing shares
Do you want to transfer the shares to a person who is already associated with your business or is already a shareholder? It can be easily done in Hong Kong. You need to follow a procedure to transfer the shares. Here is the required process:
- Firstly, make sure that the transfer is according to the Articles of Association. So, as per the Articles of Association, the change of the company shareholders has to be approved by the other shareholders in the company.
- After all the other shareholders confirm their approval, you can begin with preparing the documents for the transfer. The documents required are:
– contract notes (bought and sold note),
– the instrument of transfer, resolutions, sale
– the purchase agreement
– Audit report of the company, if it has conducted business in the past.
– a certified management account (within 3 months) of the company, if the audit report has not been prepared within 6 months before the date of transfer.
- Once these documents have been collected, you need to get the contract notes or instrument of transfer stamped by the government stamp office and pay the fees. This is referred as stamp duty.
- The stamp duty payable would be taxed based on the total net asset value of your company or the consideration, whichever is higher.
- After the documents are collected and stamped, the process of the change of company shareholders in Hong Kong is finished.
Another way to change the company shareholders – Issue new shares
Are you thinking of issuing new shares within your Hong Kong company? You need to understand what all are required to issue new share to a specific person or company in Hong Kong.The directors of the shares allot the new shares to the specified people, and these new shares are issued to these people which are entered into the register of the company’s shareholders with the relevant particulars.
With the approval of the shareholders in a general meeting, the distribution of shares, and other allotments to shareholders proportionately to their existing holdings can be done. This authorization can be given either regarding a specific allotment or allotments in general.
The company needs to file a return of the allotment of the shares, disclosing the members and the shareholders with the Companies Registry within one month of the date of assignment. And if you do not meet the time deadline, there are chances that the Registry would decline your request to approve the return of the allotments for the filing of the change of the company shareholders in Hong Kong. Hence, if the time passes, you would need to make an application again regarding the filing of the return.
In Hong Kong, a share can be owned beneficially by someone other than the holder who is registered. For a private company in Hong Kong, it is not necessary for other authorities and companies to know about the beneficial owner. Even, it is not required to be mentioned in the public record. However, a subsidiary company is required to state in its accounts the name of its latest holding company.
Commencement of business vs. no commencement of business
Is your company a new in Hong Kong and wants to change the company shareholder? It can be done! But, two situations arise in such cases.
One is where the company has started business.
The other situation is where the company has not yet commenced business.
If your company has commenced the business, you will need the following documents:
- The latest audit report of the company and its subsidiary.
- If audited accounts are not up to date from the previous 6 months, you will need the certified management accounts of the company and its subsidiary. It should be from the latest audit report made up to a date within 3 months before the date of transfer.
- A copy of the resolution of meetings of directors for dividends paid or that is payable, if any. It is required after the end date of the latest audited accounts and also has to mention the date on which the members of the company were designated the dividend.
- In case of an increment of the share capital, a copy of the Return of Allotments is required, after the end date of the latest audited accounts.
Note: If your case is specifically unique, you may need other important documents and information that is not mentioned above.
If the company has not initiated any business as of yet and has been recently incorporated, it will not have any audit report prepared. In this case, it will require a written confirmation along with a supported copy of the certificate of incorporation of the business.
At Startupr, our professional team has worked on such cases before. As per our experience, some of the government agents of the IRD would request the director to sign a declaration that would be given to the IRD. The declaration would contain that the company has never conducted any business in any part of the world and does not have any assets or subsidiaries. Moreover, if the IRD eventually finds that the director intentionally made a false report by stating this, the business would be criminally liable for it.
Hence, we recommend you to hire an experienced agency who would take care of all your needs. Startupr is one among them. Our professionals can advise you on the basics for the transfer of share documents needed in a simple yet professional manner. We will also help you in checking how to report the accounting and financial statements in proper due diligence to the government.
We realize the fact that companies change and restructuring may be required to simplify things and grow the business. This may result in a change of the directors for the company, transferring the shares or changing the shareholder.
Are you confused how to get it done in a correct and professional way? Startupr can assist you the same way like it did for you during the incorporation process. Even though we have outlined the process for share transfer, changing the director and shareholder, there can be mishaps related to the documentation which may further delay or fail the application with the government.
With years of experience in this field, we can work with you to process simple restructuring in the case of one or two directors, to more complicated cases for larger companies, transferring shares and issuing new shares as well as changing the shareholders. The professionals at Startupr would help you at every step so that you find any of the above processes easy and the process is completed on time without any hassle.
With Startupr, we take care of all the company filings and paperwork so that the service you are given related to the change of directors, share transfer and change of shareholder can be processed smoothly and in a timely manner. We are dedicated to provide you the best service available and strive to help you in changing the structure of your Hong Kong company easily.
Contact us for a quotation and further information related to any of these processes.