Reduction of Share Capital in Hong Kong

Reduction of Share Capital in Hong Kong

In the dynamic business landscape of Hong Kong, companies may find themselves needing to adjust their share capital for various reasons. One such process is the reduction of share capital. Whether it's streamlining operations, financial restructuring, or other strategic considerations, this article delves into the essential steps and requirements involved in reducing share capital in Hong Kong.

The Court-Free Process for Reducing Share Capital

Companies in Hong Kong have the option to pursue a court-free process for reducing their share capital, provided they meet certain criteria and adhere to specific procedures.

Here's a breakdown of the key requirements:

Board Resolution

The process begins with approval by the company's directors. They must agree to the proposed capital reduction.

Solvency Statement

Each director plays a critical role by signing a solvency statement. This statement affirms that the company can meet its financial obligations even after the reduction in share capital.

Shareholder Approval

Within 15 days of the date of the solvency statement, the company's shareholders must pass a special resolution endorsing the reduction of share capital.

Public Notices and Forms

To inform the public and regulatory authorities, specific public notices must be published. These notices include publication in the Government Gazette, one specified Chinese newspaper, and one specified English newspaper. Additionally, certain forms, including the solvency statements in specified Form NSC17, must be filed with the Companies Registry.

Creditor and Shareholder Rights

It's essential to note that any creditor or non-approving shareholder of the company can, within 5 weeks of the special resolution's date, apply to the court to cancel the resolution. The court will then determine whether to confirm or cancel the reduction of share capital based on the merits of the application.

Filing with the Companies Registry

If no application to the court is made by creditors or non-approving shareholders, the company must file a return detailing the share capital. This filing should occur no earlier than 5 weeks and no later than 7 weeks after the special resolution's date. The reduction of share capital becomes effective upon registration of this return with the Companies Registry.

Timeline Considerations

The duration of this entire process can vary but typically takes a minimum of 2 months. The timeframe may extend to 4 or 5 months, depending on various factors, including any restrictions or delays related to external circumstances.

Crucial Documents Involved:

  • Board Resolution
  • Form NSC17 (Solvency Statement)
  • Member Resolution (to be passed within 15 days after the Solvency Statement)
  • Special Resolution
  • Public Notices in English and Chinese:
  • Notice to the Gazette: Typically, the last working day of the week after the week in which the Special Resolution is passed (with exceptions for shorter periods).
  • Notices in English and Chinese newspapers: Before the end of the week after the week in which the Special Resolution is passed.
  • Form NSC19 (to be submitted to the Companies Registry no earlier than 5 weeks and no later than 7 weeks after the Special Resolution if no objections are raised).
  • A Note on Fees: Fees associated with publishing notices in the Gazette and newspapers will depend on their size.


In conclusion, understanding the process of reducing share capital in Hong Kong is crucial for businesses seeking financial flexibility or strategic realignment.

Contact our expert to ensure compliance with local regulations and safeguarding your financial standing.

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