Hong Kong’s Companies (Amendment) Ordinance 2025: Treasury Shares and Paperless Communications Revolution

The Hong Kong regulatory landscape is undergoing a significant transformation with the Companies (Amendment) Ordinance 2025, introducing the long-awaited treasury shares regime and paperless corporate communications. This development represents a strategic modernization of Hong Kong’s corporate framework, enhancing its competitiveness as an international financial center while aligning with global sustainability practices.

Treasury Shares Regime: A Game-Changer for Listed Companies

On January 8, 2025, the Hong Kong Legislative Council passed the Companies (Amendment) Bill 2024, ushering in a new era for capital management flexibility for Hong Kong-incorporated listed companies^[1][2][3]. This amendment, set to come into effect on April 17, 2025, introduces a treasury shares regime that aligns Hong Kong’s regulatory framework with major financial jurisdictions worldwide.

What Are Treasury Shares?

Treasury shares are a company’s own shares that it has repurchased but chosen not to cancel. Instead, these shares are held “in treasury” for potential future use, such as resale, employee share schemes, or strategic corporate transactions.

Under the new regime, Hong Kong-incorporated listed companies will be permitted to:

• Hold repurchased shares as treasury shares rather than cancelling them automatically
• Cancel, transfer, or sell these treasury shares on and off-market, subject to specific restrictions
• Utilize these shares for future corporate actions without issuing new equity^[4][2]

This amendment harmonizes the Companies Ordinance with the Stock Exchange’s Listing Rules amendments from June 11, 2024, which already removed the requirement for listed companies to cancel shares bought back^[3].

Key Compliance Requirements

Companies leveraging the treasury shares regime must adhere to several important compliance requirements:

1. Submit specified forms to the Registrar of Companies within 15 days following any disposal of treasury shares^[2][3]
2. Include treasury shares in the denominator for shareholder disclosures under Part XV of the Securities and Futures Ordinance from April 17, 2025^[5]
3. During the holding period, all rights attached to treasury shares (including voting rights and dividends) remain suspended^[6]
4. If a listed company becomes delisted, all its treasury shares will be regarded as cancelled upon delisting^[3]

It’s important to note that this regime applies exclusively to listed companies. For private and public non-listed companies incorporated under the Companies Ordinance, redeemed or repurchased shares will continue to be automatically cancelled under section 269 of the Companies Ordinance^[2][3].

Paperless Corporate Communications: Embracing Sustainability

The second major component of the Companies (Amendment) Ordinance 2025 introduces an innovative “implied consent mechanism” for corporate communications, promoting environmental sustainability while streamlining information delivery.

Modernizing Corporate Communications

This progressive amendment enables both listed and unlisted Hong Kong companies to adopt more environmentally friendly paperless communications^[1][2]. Under the new framework:

• Companies can make information available on their websites if their articles contain provisions enabling this approach
• Members and debenture holders are deemed to have consented to receive information via website access when the company’s articles include such provisions
• Companies need only send a one-off notification to make this implied consent mechanism effective^[1]

This development represents a significant stride toward sustainable corporate governance practices in Hong Kong, potentially saving millions of sheets of paper annually across the corporate landscape.

Strategic Implications for Financial Professionals

The introduction of these amendments creates several strategic opportunities that financial professionals should be evaluating.

Capital Management Flexibility

The treasury shares regime provides unprecedented flexibility for capital structure management for Hong Kong-incorporated listed companies. By holding repurchased shares rather than cancelling them, companies can:

• Avoid dilution of existing shares, preserving shareholder value
• Enhance market stability, particularly valuable during volatile market conditions
• Adjust capital structure more efficiently in response to market dynamics^[3]

Preparation Strategies for Listed Companies

To fully leverage the new treasury shares regime, financial professionals at listed companies should consider:

1. Constitutional Alignment: Reviewing and potentially amending the company’s constitutional documents to remove any restrictions on holding and using treasury shares
2. Listing Rules Compliance: Ensuring all actions related to treasury shares comply with relevant Stock Exchange requirements
3. General Mandate Adjustments: Explicitly reflecting the treasury share regime in general mandates for issuing new shares or reselling treasury shares
4. Share Repurchase Mandate Disclosures: Including appropriate explanatory statements in share repurchase mandates regarding intentions for repurchased shares
5. Share Scheme Modifications: Considering amendments to share scheme rules to satisfy grants using treasury shares^[3]

Conclusion: Positioning Hong Kong for Continued Financial Leadership

The Companies (Amendment) Ordinance 2025 represents a significant modernization of Hong Kong’s corporate regulatory framework. By introducing the treasury shares regime and paperless communications, Hong Kong enhances its competitiveness as an international financial center while embracing sustainable business practices.

Financial professionals should be proactively preparing for these changes before their implementation on April 17, 2025, to ensure their organizations can fully capitalize on the new opportunities while maintaining regulatory compliance.

This development reinforces Hong Kong’s commitment to providing a sophisticated, flexible, and internationally competitive environment for business and investment, further cementing its position as Asia’s premier financial hub.

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References

1. https://www.jsm.com/publications/2025/hong-kong-passes-bill-enabling-listed-companies-to-hold-or-transfer-treasury-shares/  
2. https://insightplus.bakermckenzie.com/bm/mergers-acquisitions_5/hong-kong-companies-amendment-ordinance-2025    
3. https://hkytl.com/2025/03/15/companies-amendment-ordinance-2025-key-changes-opportunities/      
4. https://www.cr.gov.hk/en/legislation/co2025/tsr/overview.htm
5. https://www.aosphere.com/know-how/hong-kong-3-developments-to-note/

https://chambers.com/articles/companies-ordinance-of-hong-kong-will-include-a-treasury-share-regime-for-listed-companies