1. Why do we have to audit the account books before share transfer?
Stamp duty is calculated based on the company’s net chargeable asset, which is best reflected by financial statements recently audited. Internal financial statements within the last 3 months can also be used if audited financial statements are not available.
2. How is the stamp duty for share transfer computed?
At share transfer, each party is to pay stamp duty based on 0.1% of the amount of consideration, or the net assets of the subject company subjected to be transferred, plus HKD5 for each transfer.
e.g. A is to transfer 10,000 ordinary share of company X to B. The quantity of which equals to 50% of rights in the company. Company X is worth $1 million at the time of transfer. Computation of stamp duty for the subject share transfer is as follows:
($1m x 50%) x 0.1% x 2 + $5 = $1,005
A should pay stamp duty of $502.5
B should pay stamp duty of %502.5
3. What other information do I have to submit for share transfer and stamp duty calculation?
You have to provide the following documents:
1. Latest audited financial statements. If you do not have them available, you can provide the latest internal financial statements. In the case of holding companies, you have to submit a consolidated financial statement.
2. Memorandum of Association of the company
3. Certificate of Incorporation
4. A copy of the transferee’s Identity Card and address proof
5. Quantity of shares to be transferred and the corresponding considerations.
6. Agreement of share transfer (if any)