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Version 1: 

Step 1: Director’s resolution and file solvency statement
Interim period break 1: Within 15 days
Step 2: Passing special resolution about solvency statement and approval of capital reduction
Interim period break 2: date that falls on the last working day of the week immediately after the week in which the special resolution is passed

Step 3: Publish to Government Gazette

  • (a) stating that the company has approved a reduction of share capital;
  • (b) specifying the amount of share capital to be reduced and the date of the special resolution;
  • (c) stating where the special resolution and solvency statement are available for inspection; and
  • (d) stating that a member of the company who did not consent to or vote in favour of the special resolution or a creditor of the company may, within 5 weeks after the date of the special resolution, apply to the Court under section 220 for cancellation of the special resolution.

And at the same time, publish a notice to at least one Chinese newspaper and at least one English newspaper

Interim period break 3: after the 5-week period (but no later than 7 weeks from the date of special resolution)
Step 5: file Return of Reduction of Share Capital (NSC 19) to CR and update statutory records

Version 2:

Resources for reference:

HKIAAT Article: http://www.hkiaat.org/e-newsletter/Oct-14/technical_article/PBEIV.pdf

asked by (10.2k points)

2 Answers

0 votes

A simple model:

answered by (10.2k points)
0 votes

Another method to reduce share capital: company to buy back its own shares

  • Section 236 (1) of Company Ordinance (Cap. 622): ... , a company may buy back its own shares ...
  • CR relevant form: [NSC 2]

Requirements on company to buy back its own shares:

  • Solvency test also required if payment out of capital. Section 259 (1) of Company Ordinance (Cap. 622): Solvency statement for payment out of capital - All directors of the company must make a solvency statement that complies with Division 2 in relation to the payment out of capital.
  • Special resolution required for unlisted Companies. Section 244 (1) of Company Ordinance (Cap. 622): An unlisted company may buy back its own shares under a contract that is authorized in advance by special resolution.
  • Finance of the Payment: Section 257 (2) of Company Ordinance (Cap. 622): Payment for redemption or buy-back - Subject to subsections (3) and (4), a company may make a payment in respect of a redemption or buy-back of its own shares—
    • (a) out of the company’s distributable profits;
    • (b) out of the proceeds of a fresh issue of shares made for the purpose of the redemption or buy-back; or
    • (c) out of capital in accordance with this Subdivision.
answered by (10.2k points)