HSBC 2009 Annual Report Download - page 484

HSBC HOLDINGS PLC
Shareholder Information (continued)
Taxation of shares and dividends / History of HSBC
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ordinary income the fair market value of such shares
on the dividend payment date, and the tax basis of
those shares will equal such fair market value.
Subject to certain exceptions for positions that
are held for less than 61 days or are hedged, and
subject to a foreign corporation being considered a
‘qualified foreign corporation’ (which includes not
being classified for US federal income tax purposes
as a passive foreign investment company), certain
dividends (‘qualified dividends’) received by an
individual US holder before 2011 generally will be
subject to US taxation at a maximum rate of 15 per
cent. Based on the company’s audited financial
statements and relevant market and shareholder
data, HSBC Holdings does not anticipate being
classified as a passive foreign investment company.
Accordingly, dividends paid on the shares generally
should be treated as qualified dividends.
Taxation of capital gains
Gains realised by a 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 before
2011 generally will be 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.