Hong Kong has kicked off 2025 with a notable update to its company law, introducing changes that will streamline corporate processes and align local practices more closely with those of other international jurisdictions.
Treasury Shares
Hong Kong companies will soon be allowed to hold repurchased shares in treasury. This brings Hong Kong in line with jurisdictions such as the Cayman Islands and BVI, which have long permitted this practice. Currently, any shares a Hong Kong company buys back must be cancelled, requiring new shares to be issued if needed later.
The upcoming amendment gives listed companies the flexibility to hold repurchased shares in treasury. These shares can then be cancelled, sold, or transferred when appropriate. This change is particularly relevant to listed companies, where share buybacks are often used as a tool to return cash to shareholders or to manage capital more effectively. While the impact on private companies may be more limited, this development addresses a long-standing gap in Hong Kong’s corporate toolkit.
Website Communications
The legislative update also modernises how companies communicate with their shareholders. Currently, the requirements for sending corporate documents are heavily paper-based and often seen as outdated and burdensome.
The new law introduces an “implied consent” approach, applicable to both listed and private companies. Once in effect, companies whose articles of association (or debenture instruments) allow website communications can issue a one-off notice to shareholders or debenture holders. After that, communications can be made via the company website unless an individual opts out.
Looking Ahead
These changes mark a positive step forward for businesses in Hong Kong. Treasury shares offer increased flexibility for listed companies, and website communications will simplify corporate administration for all. Together, they signal a continued effort to modernise Hong Kong’s company law, enhancing its appeal as a place to do business.
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