In most cases, privatisation is usually proposed by the controlling shareholder, offering to buy out shares from minority shareholders either in cash or securities (with or without a cash option). If the privatisation is successful, the listed company will apply to the Stock Exchange of Hong Kong Limited (SEHK) for delisting.

There are many reasons for privatisation. For instance, inactive trading or trading at a significant discount to the net asset value per share; inability to meet the public float requirements; or cost required to maintain listing status.

A listed company may be privatised by way of a "General Offer" or a "Scheme of Arrangement".

A controlling shareholder proposes a general offer to all other shareholders to buy their shares. For companies incorporated in Hong Kong, if the controlling shareholder (including persons acting in concert with it) collectively acquires 90% of the disinterested shares (shares not owned by the controlling shareholder or those acting in concert) within a designated period, they will obtain the right to compulsorily acquire the remaining shares. If the target is incorporated overseas, the privatisation process will have to be conducted in compliance with the laws of the relevant jurisdiction.

The controlling shareholder requests the company to propose to its shareholders a scheme of arrangement to cancel all the shares held by the minority shareholders in accordance with the company law of the jurisdiction in which the company is incorporated. The scheme must be voted upon by shareholders. If the scheme is approved, it is binding on all shareholders and the shares held by minority shareholders will be cancelled, resulting in the controlling shareholder holding 100% voting rights of the company.

The company must convene a shareholders’ meeting for the privatisation by scheme of arrangement. At the shareholders’ meeting, approval must be secured from at least 75% of the disinterested shareholders attending either in person or by proxy, calculated based on their voting rights, and no more than 10% of the disinterested shareholders vote against the resolution.

If a privatisation proposal by way of a general offer has reached the stage of a compulsory acquisition, or if a privatisation proposal by way of a scheme of arrangement has been approved by both the shareholders and the court, the shareholders will have to accept the proposal as it is binding on all shareholders. Generally, their shares will be automatically cancelled and they will receive consideration in accordance with the terms and conditions of the privatisation proposal.