How does your company distribute profits to its shareholders? How do you make money as a business owner? If your company is incorporated, the most common method is through the distribution of dividends.

In this article, we’ll look at how dividends are paid in Hong Kong and some of the considerations you should make if you’re planning to pay dividends.

What is a dividend and how does it work in Hong Kong?

What is a dividend?

To put it simply, a dividend is a payment made to shareholders from your company’s profits. You can pay dividends in cash, shares, or other types of assets (i.e., property, stock, bond, etc)

Hong Kong companies usually pay dividends twice a year, although some may choose to pay quarterly or even monthly.

How do dividends work?

When a company makes a profit, the board of directors may decide to share some of that profit with shareholders in the form of a dividend.

Before paying dividends, the company will announce a record date and a payment date. The record date is the date that the company uses to determine which shareholders are eligible to receive the dividend. The payment date is the date on which the dividend is actually paid.

You can pay dividends to shareholders with various methods, whether by using a cheque, electronic funds transfer, or reinvestment plan (DRIP). It is up to you to choose the most suitable and tax-effective way to distribute your company dividend

Another method is issuing a dividend warrant – a certificate that entitles the shareholders to receive a dividend payment.

What are the benefits of paying dividends in Hong Kong

Most companies prefer paying dividends to shareholders because of certain reasons:

  • It is a way to return capital to shareholders without having to sell company assets
  • Dividend payments help companies attract and retain investors
  • Paying dividends to shareholders signals to the market that your company is doing well

Moreover, if you’re the director of a company, paying dividends to help you to:

  • Avoid conflict with shareholders over how company profits should be distributed
  • Boost your chances of getting re-elected as a director
  • Reduce the amount of company tax you have to pay

However, there are also some considerations you should take into account before paying dividends, such as:

  • Whether your company can afford to pay a dividend
  • Impact of dividend payments on your company’s share price
  • Hong Kong tax implications of paying a dividend

To get more understanding of taxation for dividends in Hong Kong, make sure you check our related article here.

How to pay dividends in Hong Kong

You can start paying dividends to shareholders once your company is registered and has obtained a tax identification number. If it is not, you will need to set up a subsidiary in Hong Kong to do so.

To pay dividends to your shareholders, there are a few things you need to determine first:

  • Frequency of dividend payment – will it be a one-time payment or an annual one?
  • How much you will pay per share – this is determined by the company’s Board of Directors
  • The dividend payment date – the exact date you issue dividends

Step 1: Set up a Hong Kong bank account

As dividend payments must be paid in Hong Kong currency, it’s necessary that you set up a Hong Kong bank account for dividend payments. This helps remove the burden of currency exchange for your company and provides your Hong Kong shareholders with a more convenient way to receive their dividends.

Along with that, dividend payments must be reported on your company’s annual return, so having a bank account makes it easier for you to record transactions and keep track of cash flow.

Hong Kong has a number of reputable banks that offer excellent banking services. When opening a bank account in Hong Kong, you will need to provide the following information:

  • Company name
  • Hong Kong Company Registration Number
  • The name of the person authorized

Step 2: Determine the payment method

There are two ways to pay dividends in Hong Kong: through a cheque or through an electronic funds transfer (EFT).

If you are paying by cheque, you will need to print the cheques and have them sent to the shareholders.

However, today’s climate has highlighted the need for companies to consider alternatives to cheque payments due to stationery waste, postage costs, and environmental impact.

Many companies implement cheque-less or EFT for dividend payment, which proves to be quicker, and more environmental-friendly. Issuing dividends directly into shareholders’ bank accounts also removes any reliance on base stock suppliers and postal service providers.

If you are paying by EFT, you will need to provide the shareholders with your bank account information.

Step 3: Declare your dividend payment

You’ll need to declare the dividend payment by submitting a declaration form with the Inland Revenue Department (IRD), which includes the following information:

  • company’s name and registered address
  • date of the dividend declaration
  • description of the dividend payment, including the amount and currency
  • names and addresses of the shareholders who will receive the dividend payment
  • types of dividend (i.e. cash, stock, or asset)
  • any other relevant information required by the IRD

The IRD will review the declaration and, once approved, will issue a dividend payment warrant to your company, allowing you to distribute the funds to your shareholders.

Step 4: Make your dividend payment

The final step is to pay the dividend. This can be done by transferring cash or shares to the shareholders’ bank accounts or by issuing them new shares.

If you are paying a cash dividend, make sure that you have enough cash in your company’s bank account to cover the dividend payments.

In case you pay dividends in form of new shares, you need to inform your shareholders in advance and carefully check the ownership, as well as the number of shares in your company to avoid any internal conflict.


A dividend payment in Hong Kong can be a complex process, but it is important to understand the various steps in order to make the process as smooth as possible. By following the guidelines in this article, you should be able to pay dividends in Hong Kong without any problems.

You can get all the support and advice you need, plus all your questions about Hong Kong dividend payments answered with BBCIncorp. Feel free to get in touch with us via, or chat with our friendly consultant.

Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.

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