Recent Developments in Hong Kong Company Law: Key Updates for 2025

Authors: 

• David Cheng (Partner, Hong Kong)
• Macy Chu (Company Secretarial Manager, Hong Kong)

Hong Kong has witnessed significant legal and regulatory developments in 2025 affecting companies incorporated or operating in the jurisdiction. These include major reforms to the Companies Ordinance (Cap. 622) ("CO") as well as important judicial clarification on stamp duty relief for corporate transactions. This article examines four key developments: the paperless corporate communication framework, the treasury share regime for companies whose shares are listed on the Stock Exchange of Hong Kong Limited ("Stock Exchange") ("Listed Companies"), the new company re-domiciliation regime, and the Court of Final Appeal's judgment on stamp duty relief for intra-group share transfers.

1. Paperless Corporate Communication

The Companies (Amendment) Ordinance 2025 (the “Amendment Ordinance”), which commenced operation on 17 April 2025, introduces significant reforms promoting paperless corporate communication for both listed and unlisted companies incorporated in Hong Kong. This development marks an important step towards digitalisation and supports environmental sustainability objectives in corporate governance.

The Amendment Ordinance introduces an implied consent mechanism that streamlines notification requirements whilst introducing appropriate safeguard measures to protect shareholders' interests. Under this new framework, where a company's articles of association permit the dissemination of corporate communications via a website, the company may provide shareholders and debenture holders with a one-off notification containing specified information, including the website address where materials will be published and details of recipients' rights to request information in electronic or hardcopy format.

Once this one-off notification has been individually sent to shareholders and debenture holders, they will be deemed to have agreed to the method of dissemination through the website. This approach materially reduces the administrative requirements on companies, which previously needed to secure express consent from individual shareholders or send repeated notifications for each communication.

The new regime offers substantial benefits for companies of all sizes. It not only reduces operational costs associated with printing, postage, and distribution of physical documents but also enhances efficiency in corporate communications. Information can be disseminated more rapidly, ensuring shareholders receive timely access to corporate updates. Additionally, reduced paper consumption contributes to environmental sustainability goals and supports companies' environmental, social and governance (ESG) commitments.

The safeguards built into the regime ensure that shareholders' rights are protected. Recipients retain the right to opt out of electronic communication and request hardcopy or alternative electronic formats at any time. Companies must also ensure that the website where communications are posted remains accessible and that shareholders are properly notified when new documents are made available.

2. Treasury Share Regime for Listed Companies

The Amendment Ordinance commenced on 17 April 2025 also introduces a new treasury share regime specifically designed for Listed Companies in Hong Kong. This development aligns Hong Kong's corporate law with international best practices and enables Listed Companies to manage their capital structure with increased flexibility.

Prior to this amendment, Hong Kong-incorporated companies were required to cancel all shares that were bought back or redeemed under section 269 of the CO. The new treasury share regime fundamentally changes this position for Listed Companies, enabling them to hold shares bought back as treasury shares rather than automatically cancelling them. Listed Companies may subsequently cancel, transfer or sell such treasury shares on and off market, subject to certain restrictions set out in the Amendment Ordinance.

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”) made on 11 June 2024. The Listing Rules amendments removed the cancellation requirement for Listed Companies' repurchased shares and authorised holding such shares in treasury for subsequent resale. The harmonisation between the CO and Listing Rules provides a unified regulatory framework for Listed Companies.

The treasury share regime offers several strategic advantages for Listed Companies. It provides greater flexibility in capital management, allowing companies to repurchase shares during periods when they believe their shares are undervalued and subsequently resell those shares when market conditions improve, without the need to go through a formal share issuance process. This capability is particularly beneficial for managing share price fluctuations and enhancing market liquidity. Treasury shares may also be deployed for employee share schemes, corporate acquisitions, or other strategic initiatives.

It is important to note that the amendments relating to treasury shares apply only to companies whose shares are listed on the Stock Exchange. 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. This differentiation reflects the distinct regulatory frameworks and capital management requirements applicable to listed and unlisted entities.

3. Company Re-domiciliation Regime

Hong Kong has introduced an inward company re-domiciliation regime under the Companies (Amendment) (No. 2) Ordinance 2025, which came into effect on 23 May 2025. The new regime, primarily contained in Part 17A of the CO, is now accepting applications through the Companies Registry (“CR”) and establishes a streamlined and cost-effective pathway for eligible non-Hong Kong incorporated companies to transfer their domicile to Hong Kong.

The regime eliminates the need for complex court procedures or winding-up processes whilst preserving companies' legal identity and business continuity. This mechanism is particularly timely for overseas corporations, as the appeal of traditional offshore jurisdictions has diminished due to increasingly rigorous economic substance requirements. Companies with significant Asia-Pacific operations may find the regime especially beneficial, as it enables them to align their legal domicile with their operational centre and strategic priorities.

Applicants can utilise a "one-stop approach" by submitting a single application to the CR, covering both re-domiciliation and business registration requirements, with the CR normally processing and approving re-domiciliation applications within 2 weeks of receiving all necessary documents and information. For a comprehensive overview of the eligibility requirements, application process, and legal, regulatory and tax implications of the re-domiciliation regime, please refer to our detailed article "Hong Kong introduces company re-domiciliation regime" published in June 2025.

4. Stamp Duty Updates: Section 45 Relief 

The Court of Final Appeal (the “CFA”) delivered a landmark judgment in John Wiley & Sons UK2 LLP and Another v The Collector of Stamp Revenue, which has clarified the scope of stamp duty relief available under section 45 of the Stamp Duty Ordinance (Cap. 117) ("SDO") for intra-group transfers of shares ("s.45 Relief"). Section 45 of the SDO provides relief from stamp duty for transfers of shares between associated companies within the same group, subject to certain conditions being satisfied, including that one body corporate must be the beneficial owner of not less than 90% of the issued share capital of the other.

The CFA upheld the decision that s.45 Relief does not apply to limited liability partnerships ("LLPs") or other entities without share capital. The case arose from an intra-group transfer of shares in a Hong Kong company from a UK LLP (the transferor) to a US limited liability company (the transferee). The central issue was whether these entities could be considered "associated bodies corporate" within the meaning of section 45 of the SDO, specifically whether the 90% association requirement through ownership of "issued share capital" could be satisfied by entities without traditional share capital structures.

The CFA held that "issued share capital" is a well-established concept in company law that applies only to companies incorporated under companies legislation. The CFA rejected arguments that "share capital" should be interpreted broadly to encompass economically similar participation interests in other forms of corporate entities, such as membership interests in LLPs. The CFA emphasised that whilst section 45 of the SDO uses the broader term "body corporate" rather than "company", the relief remains confined to bodies corporate that possess issued share capital. The legislative history and statutory language confirmed that the 90% association requirement must be satisfied through issued share capital, which LLPs and similar entities simply do not possess.

This judgment has significant implications for corporate groups undertaking internal restructuring involving entities such as LLPs, limited partnerships, or other bodies corporate without traditional share capital structures. Corporate groups must carefully review their structures and ownership chains before claiming s.45 Relief. Where restructuring involves entities without share capital, alternative structures or intermediate steps may need to be considered to ensure that transfers occur between companies with issued share capital that satisfy the 90% beneficial ownership requirement. Professional advisers should assess whether group reorganisations can be structured to involve only companies with share capital, or whether exemptions under other provisions of the SDO might be available.

Conclusion

The 2025 reforms to the Companies Ordinance represent significant opportunities for companies to enhance their corporate governance and capital management practices. Our corporate team has extensive experience in navigating Hong Kong's corporate regulatory landscape and can provide comprehensive support across all these developments. Whether you are considering implementing paperless communications, utilising the treasury share regime, re-domiciliation to Hong Kong, planning transactions with stamp duty implications, or seeking ongoing company secretarial support, we are well-positioned to guide you through these changes.

For further advice on how these reforms may impact your company or transaction planning, please contact our corporate team.

The information given in this document concerning technical legal or professional subject matter is for guidance only and does not constitute legal or professional advice. Always consult a suitably qualified lawyer on any specific legal problem or matter. Bird & Bird assumes no responsibility for such information contained in this document and disclaims all liability in respect of such information.