Share Equity Compensation Suffice Instead of Cash Salary?

Will equity compensation suffice instead of cash?

To what extent can salary be replaced with performance-based equity compensation in case of a Hong Kong employment visa?

No one has asked me this type of question about compensation for employees for about 17 years now so I’m grateful to the questioner for raising it as she did.

Practice Update 2026 – This content must be read in light of changes to ImmD practice since it was first published

Historically, in Will Performance-Based Equity Compensation Suffice Instead of Cash Compensation for a Hong Kong Employment Visa?, early-stage startups and boot-strapped commercial ventures routinely attempted to sponsor key foreign talent by offering stock options, future profit shares, or sweat equity in lieu of conventional cash salaries. Stephen Barnes, the Hong Kong Visa Geeza, addressed whether the Immigration Department (ImmD) would accept speculative equity or performance-linked incentives to satisfy the mandatory remuneration test under the General Employment Policy (GEP). As Barnes clarified, the statutory baseline requires remuneration to be broadly commensurate with prevailing market rates for comparable roles in Hong Kong.

While equity grants and variable bonuses could serve as supplementary sweeteners to round out an executive package, ImmD has never accepted illiquid, unvested equity or purely performance-contingent promises as a substitute for guaranteed base cash remuneration. Case officers need to see tangible, guaranteed income sufficient to ensure the professional can maintain themselves independently without becoming a public charge or living in penury, meaning a solid, predictable base cash salary was always an inescapable prerequisite for GEP approval.

“Startups love to preach the gospel of equity upside, but the Director of Immigration doesn’t accept stock options to cover your rent or pay for your groceries in Wan Chai. As set out in our definitive analysis, GEP Work Visa Policy Enters a New Era, ImmD’s assessment of employment remuneration has hardened beyond recognition. In today’s hyper-vigilant vetting environment, relying on speculative paper wealth or back-loaded performance payouts is an immediate death sentence for a work visa petition. Case officers now demand verifiable proof of guaranteed, market-aligned cash liquidity flowing through legitimate corporate payroll and supported by local MPF contributions. If a sponsoring entity cannot substantiate the liquid reserves to pay a competitive base salary in cold, hard Hong Kong dollars, ImmD will view the entire enterprise as commercially unviable.”

Stephen Barnes –  The Hong Kong Visa Geeza

Today, this assessment has tightened into an uncompromising standard of corporate liquidity, as detailed in GEP Work Visa Policy Enters a New Era. Amid heightened scrutiny across all employment-based immigration streams, ImmD actively cross-checks the employer’s audited accounts, current bank statements, and tax returns to ensure the business possesses sufficient deployed capital to sustain the promised guaranteed cash remuneration over the entire visa term.

Structuring a compensation package heavily around performance-based equity or conditional payouts now triggers immediate suspicion that the role is contrived, that the sponsor lacks operational substance, or that the applicant is an undercapitalised founder attempting to disguise an entrepreneur investment as employment. To secure GEP approval, sponsoring employers must provide a fixed cash salary that stands up to prevailing market benchmarks on its own merits, leaving stock grants and equity participation to exist purely as secondary incentives rather than the foundational pillar of the foreign professional’s livelihood.

QUESTION

I have successfully registered a business and been awarded an investment visa in Hong Kong.

The company is a start up with limited capital but big plans.

I have identified an individual I’d like to employ, have no doubt he would pass the approvability test, and don’t expect to have issues around quotas.

However my business cannot yet afford to pay a meaningful salary.

I’d like to compensate the individual with equity until such time as the business is generating enough revenue to pay market salaries – a situation both parties are completely happy with.

Is there any ability to sponsor an employment visa given this arrangement?

ANSWER

What a truly excellent question. And I’m sure that most entrepreneurs that have successfully secured an investment visa might at some stage look for the assistance of a third party foreign national to come into Hong Kong to assist them in their plans, and are obviously looking at an equity for compensation arrangement if that will in fact pass muster with the immigration department.

So the essential answer to the question is that yes, it is possible to have equity as a component for the compensation instead of salary, but it must not replace the salary under the General Employment Policy. The approvability test is effectively meaning that the Immigration Department are looking for a basic salary, and that basic salary should come in at the minimum levels, give or take HKD16,000 a month.

So if the value of this time is to be compensated in such a way that anything over the HKD16,000 a month is going to be reflected in an equity grant, then the Immigration Department should buy into that. So probably without too many questions asked on the basis that it’s properly documented and for all practical purposes, the party that’s receiving the equity grant is being compensated ostensibly for the professional nature of the contribution that he’s making.

So ensure that there’s a basic salary and anything above that compensated with equity grant should be fine. Of course, hanging above all of this writ larger were is what the Immigration Department will make of the application when it comes in. Given that, you’ve, I assume, just recently had an investment visa approved, did the potential for this engagement of this foreign national was it reflected in the representations that were made to the Immigration Department as part of your investment visa application? So will this come as a surprise to them or was it anticipated at all times? And how far along have you actually been able to progress your business since the fact of your investment visa approval in accordance with what the Immigration Department were expecting of you when they granted your approval.

So you need to look at where you are in the business,in addition to the individual special skills, knowledge and experience of Elliot and not really available in home to understand how the Immigration Department might respond to this questions such as, you know, have you recruited anybody else locally or is in fact this your first employee?

And as I say, if it is your first employee, was it anticipated in the business plan that the department saw from you originally? So take his application in the round when you’re considering structuring your argument, but also anticipate that as long as he’s getting the basic salary of about HKD16,000 a month with, the balance of his compensation being reflected in an equity grant it should be fine. I don’t imagine that you have too many problems. Okay.

I hope this helps.

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