Episode Description:

The webinar introduces significant changes related to the treasury share regime and the proposed company re-domiciliation scheme in Hong Kong, focusing first on the treasury share regime that began in June 2024. The Hong Kong Stock Exchange amended its listing rules to allow repurchased shares to be held in treasury, aligning with 92% of companies incorporated in jurisdictions like the PRC, Bermuda, and Cayman Islands, where this practice is permitted.

Previously, the repurchase of shares resulted in cancellation, restricting the holding of treasury shares due to concerns about market manipulation and insider trading. Now, companies can adjust their share capital more dynamically, with treasury shares still retaining their listed status, subject to local jurisdiction laws. The second part of the presentation discusses the proposed company re-domiciliation regime, driven by a need for economic alignment and corporate governance improvements.

The new regime, aiming to simplify the re-domicile process, will allow overseas companies to retain legal status while operating under Hong Kong law, aiding those from low-tax jurisdictions seeking Hong Kong’s financial benefits. Companies must meet solvency and compliance criteria, including member approval for the re-domicile, without undergoing complex restructuring. This regime is not currently extended to companies limited by guarantee, considering a lack of demand, while the Hong Kong government will closely monitor potential outward re-domiciliation needs.

Finally, comparisons with other jurisdictions like Singapore and the UK are made, highlighting Hong Kong’s approach to avoiding economic substance tests and aligning closely with global re-domiciliation norms.