On 8 January 2025, the Legislative Council of Hong Kong passed the Companies (Amendment) Bill 2024, introducing significant changes to the Companies Ordinance (Cap. 622) (“Cap. 622”), among which (a) permitting listed companies incorporated in Hong Kong to keep the shares bought back and to be held as treasury shares (subject to certain restrictions) and (b) promoting the corporate paperless communication regime for both listed and unlisted companies in Hong Kong.
The Companies (Amendment) Ordinance 2025 was gazetted on 17 January 2025, and will take effect on 17 April 2025. This timeline allows companies sufficient time to prepare for the new arrangements.
Treasury Shares
The Companies (Amendment) Ordinance 2025 (“2025 Amendment Ordinance”) amends Cap. 622 to empower Hong Kong-incorporated companies listed on the Stock Exchange of Hong Kong Limited (the “Exchange”) to hold shares bought back as treasury shares. These companies can subsequently dispose of such treasury shares via cancellation, transfer, or sale, both on and off the market, subject to specific restrictions. Following the disposal of treasury shares, listed companies must report to the Registrar of Companies within 15 days by submitting a relevant return (e.g. revised existing Form NSC2, new Form NSC22 or new Form NSC23).
These amendments were introduced to align Cap. 622 with changes to the Rules Governing the Listing of Securities on the Exchange (“Listing Rules”), effective from 11 June 2024. The revised Listing Rules eliminated the requirement for listed companies to cancel repurchased shares, allowing them to hold them in treasury in their own name or through a nominee for future resale, provided that this is permitted by their place of incorporation and their constitutional documents. The 2025 Amendment Ordinance ensures that Hong Kong-listed companies can benefit from the treasury share regime and be on par with overseas issuers (e.g. the Cayman Islands and Bermuda) under the Listing Rules.
However, these treasury share provisions on the 2025 Amendment Ordinance apply only to listed companies. Other public and private companies will continue to have shares automatically cancelled upon redemption under section 269 of Cap. 622.
Paperless Communications
The 2025 Amendment Ordinance introduces significant enhancements to Cap. 622 by facilitating paperless corporate communication for all Hong Kong-incorporated companies. This is achieved by introducing an implied consent mechanism, which allows companies to circulate corporate communications via their websites and put in place appropriate safeguards to protect the interests of shareholders.
Under the current Cap. 622, subject to any prior agreement, a company has to obtain prior express consent from shareholders and/or debenture holders for electronic communication or by website.
The 2025 Amendment Ordinance aims to modernise Cap. 622 and the Companies (Model Articles) Notice (Cap. 622H) by streamlining notification requirements while implementing safeguards to protect shareholders' interests. If a company's articles of association states that it may disseminate corporate communication through a website, and the company has individually sent the shareholders and the debenture holders a one-off notification, informing them of the website address where communications will be available and their right to request information in electronic or hardcopy form, shareholders and debenture holders are deemed to have consented to receive communications electronically, eliminating the need for future consent requests.
This approach not only reduces operational costs and enhances efficiency but also contributes to a more environmentally friendly business environment by minimising paper usage.
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Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice. Please contact [email protected] if you have any questions about the article.