Companies incorporated in Hong Kong can be public or private, and can be limited by guarantee or by shares. Under the Hong Kong Companies Ordinance, a company that is neither a private company nor a company limited by guarantee is a public company.
A Hong Kong Public Limited Company (PLC) is limited by shares but, unlike a Hong Kong Private Limited Company, its shares and debentures may be offered to the public and it can have more than 50 shareholders.
Most Hong Kong Public Limited Companies are derived from medium to large private companies that want to expand their investor base and raise capital from the public. A PLC has access to capital markets and can offer its shares for sale to the public through a recognised stock exchange. It can also issue advertisements offering any of its securities for sale to the public.
Many public companies are listed on the Stock Exchange of Hong Kong Limited (SEHK) and are subject to additional regulations such as the SEHK Rules Governing the Listing of Securities and the Codes on Takeovers and Mergers and Share Buy-backs. These are issued by the Hong Kong Securities and Futures Commission (SFC) in consultation with the Takeovers and Mergers Panel.
The ownership of most Hong Kong public companies is highly concentrated. Generally, they are controlled by families or small groups of shareholders. As a result, Hong Kong PLCs are rarely subject to hostile takeovers and changes of ownership are generally effected through the sale of a controlling stake in a company by its controlling shareholder(s). The purchaser is then obliged to make a mandatory general offer. Depending on the response of the minority shareholders, this may or may not result in the privatisation of the company. If the objective is to privatise a public company, this can be achieved by making a general offer followed by a compulsory acquisition process where the dissenting or non-responsive shareholders are bought out.