When may valuation be needed?
Business or share valuation may be relevant when shares in a private Hong Kong company are transferred, when consideration may not reflect market value, during probate or succession administration, in family arrangements, or where an overseas tax authority or court requires evidence of value.
Hong Kong stock transfers and stamp duty
For a transfer of Hong Kong stock, the Stamp Office may assess duty by reference to the consideration or market value, depending on the instrument and circumstances. For unquoted shares, value cannot normally be verified from an exchange price, so the company’s accounts, management information, assets, liabilities and transaction terms may become important.
A valuation prepared for a commercial transaction is not automatically suitable for stamping. Confirm the relevant date, interest transferred, rights attached to the shares, consideration structure, related-party context and the specific information requested by the Stamp Office or advisers.
Probate, succession and family arrangements
Valuation may help executors, administrators, beneficiaries and family shareholders understand the value of a private-company interest at a relevant date. The work may also support negotiations, equalisation among beneficiaries, family governance, trust or succession planning, or a dispute over ownership and value.
The valuer should understand whether the conclusion concerns the whole company or a particular shareholding, and whether control, transfer restrictions, shareholder agreements, key-person dependence or marketability are relevant.
Information commonly requested
- Transfer instrument, sale agreement or succession documents
- Cap table, share rights and shareholder agreements
- Audited financial statements and recent management accounts
- Details of properties, investments, loans and non-operating assets
- Related-party balances and contingent liabilities
- Forecasts where future earnings are relevant
- Valuation date and reason that date applies
Coordinate the professional team
Stamp duty, probate, tax and succession matters involve legal and procedural questions that a valuer should not determine alone. Agree the valuation instruction with the lawyer, accountant, tax adviser, executor or other responsible party so that the report answers the right question and uses the right date and subject interest.
Primary Hong Kong sources
- IRD Stamp Office — Guidelines for Valuation of Unquoted Shares
- IRD — Share Transfer Instruments e-Stamping FAQ
- IRD — Estate Duty and abolition arrangements