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Stamp Duty Exemption on Delivery of Hong Kong Stocks as Consideration for the Allotment or Redemption of a Share or Unit of an Authorized Open-ended Collective Investment Scheme
Monday, 11 March 2019 04:00

On 7 January 2019, the Inland Revenue Department released a Stamping Circular which is about Stamp Duty Exemption on Delivery of Hong Kong Stocks as Consideration for the Allotment or Redemption of a Share or Unit of an Authorized Open-ended Collective Investment Scheme.

Effective from 30 July 2018 (“Relevant Date”), the Securities and Futures (Amendment) Ordinance 2016 (“the Amendment Ordinance”) amended the Stamp Duty Ordinance (Cap. 117) (“SDO”). Stamp duty for the sale and purchase of Hong Kong stocks in consideration of the allotment or redemption of shares or units of an authorized open-ended collective investment scheme is exempted.

Authorized open-ended collective investment scheme (“the Scheme”) means an open-ended collective investment scheme authorized under section 104 of the Securities and Futures Ordinance (Cap. 571)

Open-ended collective investment scheme, which in turn means a collective investment scheme the shares or units of which may be repurchased or redeemed at the request of any of its shareholders or unit holders—

(a)    at a price calculated wholly or mainly by reference to the net asset value of the scheme; and

(b)    in accordance with the frequency for repurchase or redemption, requirements and procedures set out in the offering document or constitutive documents of the scheme.

On or after the Relevant Date, given that the value of the Hong Kong stock is proportionate to the value of the share or unit, the stamp duty is exempted for making and execution of a contract note for the allotment or redemption of a share or unit of the Scheme. Also, the instrument of transfer effected for such purpose is not required to be stamped or endorsed under the SDO.

If the value of the Hong Kong stock sold or purchased is equivalent to the asset value of the Scheme which the allotted or redeemed share or unit represents as at the date of allotment and redemption, the allotment or redemption is considered to be proportionate.

Source:

http://www.ird.gov.hk/eng/new/

(News Archives from HKIRD)

https://www.elegislation.gov.hk/

(Hong Kong e-legislation)

 
Three concessionary tax measures from Year of assessment 2018/19
Friday, 18 January 2019 09:12

With the passage of the Inland Revenue (Amendment) (No. 5) Bill 2018 by the Legislative Council on 14 November 2018, the three concessionary tax measures proposed in the 2018-19 Budget were became effective as followings:

  1. Electing for personal assessment (PA) of married persons
    Currently: Election for personal assessment must be made by husband and wife jointly. Separate taxation for the couple is not applicable under PA
    With effect from year of assessment 2018/19: husband and wife are with the option of electing for PA separately.
  2. Expenditure on Environmental Protection Facilities
    Currently: A deduction at 20% of the expenditure is allowed in each of the 5 consecutive years commencing from the year in which the expenditure is incurred.
    With effect from year of assessment 2018/19:  Full deduction is allowed during the basis period in which the capital expenditure incurred for procuring environmental protection installations is incurred.
  3. Tax exemption for debt instruments under the Qualifying Debt Instrument (QDI) Scheme
    Currently: interest income and trading profits derived from a debt instrument issued in Hong Kong with an original maturity of less than 7 years but not less than 3 years are subject to a concessionary tax rate equivalent to 50% of the normal profits tax rate.
    With effect from year of assessment 2018/19:  The scope of tax exemption for debt instruments under the QDI Scheme would be extended.  
    Please refer to https://www.ird.gov.hk/eng/tax/bus_qdi.htm for the updated list of Qualifying Debt Instruments.

The above information was extracted from the press release of Hong Kong Inland Revenue Department. For more information, please visit the website:

https://www.ird.gov.hk/eng/tax/bus_pft.htm#a08

 
Reanda Hong Kong names three new partners in 2019
Thursday, 10 January 2019 06:30

Reanda Hong Kong is pleased to announce the promotion of three new partners to the firm, effective 1 January 2019. These individuals bring years of collective professional experience and expertise gathered from delivering a wide range of international projects across different industries. The new partners are: May Ko, Janet Chik and Nelson Tsang.

Reanda Hong Kong believes that it is vital to continue investment in people so the firm has the right level of expertise and experience in place to deliver value to clients in the ever-changing landscape. The promotions definitely highlight the depth and breadth of talent the firm has as well as reflect the firm’s continued investment in people.

Introducing Reanda Hong Kong's new partners – next generation of partners to bolster the firm’s practice

May Ko has over 20 years' experience in auditing, finance and administration with specialism in auditing and taxation. May is experienced in tax planning and auditing for companies in Hong Kong. She is the firm’s Ethics Leader who is responsible for reviewing and implementing of the firm’s quality assurance policy on ethics. In addition to her professional work for clients, she also provides training on accounting and auditing. May has worked in Reanda Hong Kong for 23 years, having joined the firm as an audit junior in 1996.

Janet Chiks  audit career spans over 20 years and has a wealth of experience in overseeing audits of pre-listing and listed companies as well as medium to large private entities. She has a wide portfolio of clients, including many regulated corporations as well as manufacturing, trading and construction companies. Janet has been with Reanda Hong Kong since 1997.

Nelson Tsang has over 15 years of experience in accounting, auditing, taxation and capital market in Hong Kong. He started his career in an international accounting firm and acquired vast experience in handling the audit of listed companies, MNCs, due diligence, M&A and IPO projects over a wide range of industries. He then worked in a listed company as an internal audit manager and as an equity analyst in an investment firm. His diverse background gives him thoughtful insights in helping clients of different countries and industries with practical and comprehensive advices.

These new partners will bring Reanda Hong Kong’s total number of partners to eight as of January 2019.

May Ko
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Janet Chik
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Nelson Tsang
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New Corporate Governance Code and Related Listing Rules
Thursday, 10 January 2019 02:50

On 1 January 2019, “Consultation Conclusions on Review of the Corporate Governance Code and Related Listing Rules” (Consultation Conclusions), new amendments to the Code and related Listing Rules issued by the Stock Exchange of Hong Kong Limited (HKEX) will come into effect.  The main changes included relate to independent non-executive directors (INEDs) include requiring greater disclosure on the process of their identification as a possible INED, their potential contribution to the board including diversity and their time commitment.  It will be mandatory for listed companies to have and to disclose their board diversity and nomination policies.  The criteria determining an INED’s independence has also been enhanced.

(A)  Independent Non-executive Directors

The role of nomination committee is critical for ensuring the board comprises directors with an appropriate balance of skills, experience and diversity of perspectives and its work with focusing independence and board diversity of Independent non-executive directors. For INED holding seventh or more listed company directorship, the listed companies are required to state in the circular to shareholders accompanying the resolution to elect its reasons for proposed INED would be able to devote sufficient time to the board.

Increasing in cooling off period will be implemented as following:-

- Persons with material interests in principal business activities require one-year period.

- Former professional advisers require two-year period.

- Former partners of listed company’s audit firm before they can be members of the audit committee require two-year period.

It also suggest to include a note for inclusion of person’s immediate family member in the assessment of a proposed INED’s independence and recommended best practice for an INED’s cross-directorships or significant links with other directors in the Corporate Governance Report.

(B)Nomination policy

Disclosure of nomination policy should be included in Mandatory Disclosure Requirement.

(C)  Directors’ attendance at meetings

Generally directors should attend general meetings to gain and develop a balanced understanding of the views of shareholders. Independent non-executive directors excluding non-executive directors and executive directors should meet with the Chairman at least annually.

(D) Dividend policy

Listed companies require disclosure of their dividend policies in annual reports.

More details may refer to the website of HKEX.

 

 

 

 
SFC’s statement on regulatory framework for investing in virtual assets
Friday, 04 January 2019 06:36

On 1 November 2018, the Securities and Futures Commission (SFC) published a speech, which includes the regulatory framework for virtual asset portfolio managers, fund distributors and trading platform operators.

Demand in investment in virtual assets, such as “cryptocurrency,” “crypto-asset” or “digital token,” increases in recent years. Such investments normally via unknown funds and unlicensed trading platforms have significant risks. The increasing investments draw the attention of SFC.

Although the virtual assets have several characteristics of money, including durability, divisibility, portability, limited supply and uniformity, the creditability of the virtual assets is very limited. The core value of virtual assets is acceptability of virtual assets in the illegal or unauthorized transactions. On the other hand, the increase in similar virtual assets will further weaken the “limited supply”, and then the creditability and value of the existing virtual assets. If the creditability of such virtual assets continues to deteriorate, to the extreme, they may only have the value of commemorative coins of IT technicians.

The investors of virtual assets may lack of any protection as virtual assets may fall outside the scope of SFC’s oversight under the existing regulations in Hong Kong. The speech illustrated (i) the regulatory approach of SFC for virtual asset portfolio managers and fund distributors; (ii) SFC’s intention to explore regulation to platform operators.

 
Hong Kong partner Mr. Tanny Yu elected as President of the Society of Chinese Accountants & Auditors (SCAA)
Monday, 31 December 2018 07:59

Reanda International is delighted to announce that Mr. Tanny Yu, partner of Reanda Hong Kong, has been elected to the President of the Society of Chinese Accountants & Auditors (“SCAA”) for a term of one year after the conclusion of the Society's Annual General Meeting on 14 December.

The SCAA is an incorporated body of professional accountants in Hong Kong established since 1913. Nowadays, SCAA has some 1,500 members including ordinary members who are practising accountants (auditors having practicing certificates and are qualified to sign audit reports) and affiliate members who are non-practising accountants. Their ordinary members, who are audit partners, represent a significant number of practising firms of accountants in Hong Kong. The SCAA aims to provide a platform for professional development and to serve as a technical support partner for members and their staff. In addition to its core role in the accounting industry, the SCAA has been catering to the care and needs of the community in Hong Kong.

The SCAA celebrated its 105th anniversary by organizing the first World Chinese Accountants Conference in Hong Kong in June 2018. The Chief Executive and the Financial Secretary of Hong Kong Special Administrative Region were the event’s Guests of Honor. Furthermore, the SCAA has received more than 8,000 attendants in 2018 in various seminars, forums, visits and other activities.

On this occasion, Reanda International would like to extend our congratulations to Tanny on achieving this professional milestone.

 
Delisting and Other Rule Amendments by The Stock Exchange of Hong Kong Limited
Friday, 26 October 2018 03:51

In May 2018, The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) published the conclusions to the consultation paper in September 2017 which sets out amendments relating to the delisting framework under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for both the Main Board and GEM (the “Amendments”).

The purpose of the Amendments was to establish an effective delisting framework which facilitates timely delisting of issuers that no longer meet the continued listing criteria and provide certainty to the market on the delisting process. An effective delisting framework would also incentivize suspended issuers to act promptly towards resumption, and provide a deterrent effect against issuers from committing material breaches of the Rules. This would address the issue of prolonged suspension of trading in issuers’ listed securities, and was in the interest of maintaining the quality and reputation of the Hong Kong market.

Major amendments to the Listing Rules include:

  • Added a separate delisting criterion to allow the Stock Exchange to delist an issuer after its continuous suspension a prescribed period (18 months for Main Board and 12 months for GEM).
  • Specified a new delisting process of which The Stock Exchange may (i) publish a delisting notice and give the issuer a period of time to remedy the relevant issues to avoid delisting, or (ii) delist the issuer immediately in appropriate circumstances. This new process applies to all the existing delisting criteria in Main Board Listing Rule 6.01.
  • Removed Practice Note 17 to the Main Board Listing Rules as the new delisting process will also apply to issuers without sufficient operations or assets previously covered by the practice note.
  • Proposed transitional arrangements for issuers whose securities are under suspension immediately before the effective date of the Amendments, and other minor Rule amendments relating to delisting.
  • Proposed separately a number of Rule changes relating to the suspension requirements, in the interests of keeping trading suspension to the shortest duration possible.

The amended Main Board and GEM Listing Rules have taken effect from 1 August 2018.

 
Automatic Exchange of Financial Account Information in Tax Matters implemented between the Mainland and Hong Kong
Tuesday, 02 October 2018 09:49

An arrangement on automatic exchange of financial account information in tax matters between the Mainland and Hong Kong was effective from 6 September 2018.

The automatic exchange of financial account information in tax matters is a global tax co-operation initiative which mandates financial institutions to identify financial accounts held by tax residents of jurisdictions and collects relevant information for reporting to the tax authority.

As of the end of August 2018, 149 jurisdictions (including Hong Kong) have undertaken to implement the automatic exchange of financial account information.

Hong Kong has activated automatic exchange relationships with 49 jurisdictions on the basis of bilateral competent authority agreements or a multilateral competent authority agreement under the Convention on Mutual Administrative Assistance in Tax Matters. Hong Kong will conduct automatic exchange of financial account information with the Mainland and 49 jurisdictions for the first time in late September 2018.

Hong Kong will deliver its obligations to implement the automatic exchange of financial account information in tax matters in accordance with the Common Reporting Standard promulgated by the Organisation for Economic Co-operation and Development. Hong Kong Inland Revenue Department will exchange the relevant information with its counterparts in the jurisdictions concerned on an annual basis.

 


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