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Abolition of Par Value of Shares

(I) Introduction

 
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The new Companies Ordinance (Cap. 622) ("the new CO") adopts a mandatory system of no-par for all local companies with a share capital and retires the par value of shares, in line with international trends and to provide companies with greater flexibilities in structuring their share capital.

 
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Par value (also known as "nominal value") is the minimum price at which shares can generally be issued. Before the implementation of the new CO, companies incorporated in Hong Kong and having a share capital are required to have a par value ascribed to their shares. The Administration has legislated for the migration to mandatory no-par. Relevant concepts such as nominal value, share premium, and requirement for authorised capital are no longer necessary and are abolished.

 
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The "no-par" regime has become effective upon commencement of the new CO on 3 March 2014. The migration to no-par shares applies to all local companies.

 

(II) Relevant Provisions of the new CO

 
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Section 135

 
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Part 4, Division 2 of Schedule 11

 

(III) Transitional Arrangements

 
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There are transitional and deeming provisions in Schedule 11 to the new CO relating to the move from par value shares to no-par value shares. The provisions are intended to provide legislative safeguards to ensure that contractual rights defined by reference to par value and related concepts will not be affected by the abolition of par.

 
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Nonetheless, individual companies may wish to review their particular situation to determine if they need to introduce specific changes to relevant company documents having regard to their own circumstances. The documents include the company's constitutional documents, contracts entered into by the company, trust deeds involving the company and share certificates issued by the company.

 

Frequently Asked Questions