Share Capital
Removal of Par Value of Shares (No Par Value)
Par value (also known as “nominal value”) is the minimum price at which shares can generally be issued. The par value is shown on the financial statements as the share capital of the company.
Under the existing Companies Ordinance Cap. 32, all companies incorporated in Hong Kong and having a share capital are required to have a par value ascribed to their shares (section 5(4)(a)). Companies must declare in their Memorandum of Association the maximum amount of share capital that may be issued by the company. If the price of the share are issued above the par value, the amount excess of the par value is designated as “share premium”.
The new Companies Ordinance adopts a mandatory system of no-par for all local companies having a share capital and remove the concept of par value for all shares. Upon the removal of par value system, relevant concepts such as nominal value, share premium, and requirement for authorized capital will be removed. The no par value system will apply to all shares of company incorporated in Hong Kong whether issue before or after the commencement date of the new the new Companies Ordinance.
The new Companies Ordinance contains provisions to facilitate the transition from par value shares to no par value shares. For example, any amount in the share premium account will be deemed to be part of the share capital.
Authorized Capital
Upon commencement of the new Companies Ordinance, the provisions in the Memorandum of Association of an existing company relating to authorized share capital and par value of the shares are for all purpose to be regards as deleted. The share capital of a company would be its issued share capital.
Forming a Hong Kong Company (Part 5) – Company Maintenance and Statutory Requirements