HSBC 2007 Annual Report Download - page 463

461
Taxation of capital gains
Gains realised by an eligible US holder on the sale or
other disposition of shares or ADSs normally will
not be subject to UK taxation unless at the time of
the sale or other disposition the holder carries on a
trade, profession or vocation in the UK through a
branch or agency or permanent establishment and
the shares or ADSs are or have been used, held or
acquired for the purposes of such trade, profession,
vocation, branch or agency or permanent
establishment. Such gains will be included in income
for US tax purposes, and will be long-term capital
gains if the shares or ADSs were held for more than
one year. A long-term capital gain realised by an
individual holder generally is subject to US tax at a
maximum rate of 15 per cent.
Stamp duty and stamp duty reserve tax –
ADSs
If shares are transferred into a clearance service or
depository receipt (‘ADR’) arrangement (which will
include a transfer of shares to the Depository) UK
stamp duty and/or stamp duty reserve tax will be
payable. The stamp duty or stamp duty reserve tax is
generally payable on the consideration for the
transfer and is payable at the aggregate rate of
1.5 per cent.
The amount of stamp duty reserve tax payable
on such a transfer will be reduced by any stamp duty
paid in connection with the same transfer.
No stamp duty will be payable on the transfer
of, or agreement to transfer, an ADS, provided that
the ADR and any separate instrument of transfer or
written agreement to transfer remain at all times
outside the UK, and provided further that any such
transfer or written agreement to transfer is not
executed in the UK. No stamp duty reserve tax will
be payable on a transfer of, or agreement to transfer,
an ADS effected by the transfer of an ADR.
On a transfer of shares from the Depository to a
registered holder of an ADS upon cancellation of the
ADS, a fixed stamp duty of £5 per instrument of
transfer will be payable by the registered holder of
the ADR cancelled.
US backup withholding tax and information
reporting
Distributions made on shares and proceeds from the
sale of shares or ADSs that are paid within the US,
or through certain financial intermediaries to US
holders, are subject to information reporting and may
be subject to a US ‘backup’ withholding tax unless,
in general, the US holder complies with certain
certification procedures or is a corporation or other
person exempt from such withholding. Holders that
are not US persons generally are not subject to
information reporting or backup withholding tax, but
may be required to comply with applicable
certification procedures to establish that they are not
US persons in order to avoid the application of such
information reporting requirements or backup
withholding tax to payments received within the US
or through certain financial intermediaries.
History and development of HSBC
1865 The founding member of the HSBC Group,
The Hongkong and Shanghai Banking
Corporation, is established in both Hong
Kong and Shanghai.
1959 The Mercantile Bank of India Limited and
The British Bank of the Middle East, now
HSBC Bank Middle East Limited, are
purchased.
1965 A 51 per cent interest (subsequently increased
to 62.14 per cent) is acquired in Hang Seng
Bank Limited. Hang Seng Bank is the fourth-
largest listed bank in Hong Kong by market
capitalisation.
1980 A 51 per cent interest in Marine Midland
Banks, Inc., now HSBC USA, Inc, is acquired
(with the remaining interest acquired in
1987).
1981 The Hongkong and Shanghai Banking
Corporation incorporates its then existing
Canadian operations. HSBC Bank Canada
subsequently makes numerous acquisitions,
expanding rapidly to become the largest
foreign-owned bank in Canada and the
seventh-largest overall at 31 December 2007.
1987 A 14.9 per cent interest in Midland Bank plc,
now HSBC Bank plc, one of the UK’s
principal clearing banks, is purchased.
1991 HSBC Holdings plc is established as the
parent company of the HSBC Group.
1992 HSBC purchases the remaining interest in
Midland Bank plc.
1993 As a consequence of the Midland acquisition,
HSBC’s Head Office is transferred from
Hong Kong to London in January.
1997 HSBC assumes selected assets, liabilities and
subsidiaries of Banco Bamerindus do Brasil
S.A., now HSBC Bank Brazil, following the
intervention of the Central Bank of Brazil,
and in Argentina completes the acquisition of