Treasury shares
The Companies (Amendment) Ordinance 2025 (“Amendment Ordinance”) amends the Companies Ordinance, Cap. 622 (“CO”) to enable Hong Kong-incorporated companies whose shares are listed on the Stock Exchange of Hong Kong Limited (“Stock Exchange”) (“Listed Companies”) to hold shares bought back as treasury shares, and cancel, transfer or sell such treasury shares on and off market subject to certain restrictions. Listed Companies disposing of the treasury shares must deliver a relevant return in the specified form to the Registrar of Companies within 15 days after the date of the disposal.
The amendments were introduced to bring the CO in line with the amendments to the Rules Governing the Listing of Securities on the Stock Exchange (“Listing Rules”) on 11 June 2024, which removed the requirement for listed companies (incorporated in Hong Kong or elsewhere) to cancel repurchased shares and permitted such listed companies to hold the repurchased shares in treasury for future resale if permitted under the laws of their places of incorporation and their constitutional documents. The Amendment Ordinance enables Listed Companies to also benefit from the new treasury share regime as other overseas issuers under the Listing Rules.
It should be noted that the amendments relating to treasury shares under the Amendment Ordinance apply only to Listed Companies. For other private and public companies incorporated under the CO, all shares redeemed or bought back will still be regarded as cancelled automatically under section 269 of the CO.
Paperless communications
The Amendment Ordinance also allows all Hong Kong-incorporated companies to adopt an implied consent mechanism for disseminating corporate communication through a website and to put in place sufficient safeguards to protect the interests of shareholders.
Under the CO, a company may, subject to, or with the prior agreement of its shareholders or debenture holders, send documents or information to the shareholders or debenture holders by electronic means such as by email or by making such documents or information available on its website.
The Amendment Ordinance seeks to modernise the CO and the Companies (Model Articles) Notice (Cap. 622H) by promoting paperless corporate communication. It amends the CO by introducing an implied consent mechanism, streamlining notification requirements and at the same time introducing appropriate safeguard measures to protect shareholders’ interests. If a company's articles of association contain a provision 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 with certain specified content (e.g., the address of the website and the person’s right to request the same information in electronic or hardcopy form), the shareholders and the debenture holders will be deemed to have agreed to the method of dissemination and the company may do so without having to seek separate consent from each shareholder in the future.
Timing
The Amendment Ordinance, which was gazetted on 17 January 2025, will come into effect on 17 April 2025. This is to allow sufficient time for companies to make preparations for the new arrangements.
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