e_dipn13a_Interest Expense_s16(2ABC)

Exemption for market makers of debt instruments 37

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ore than half in nominal value of the issued share capital; or a financial institution or an overseas financial institution. Exemption for Market Makers of Debt Instruments 37. Section 16(2G) provides for an exemption from the interest deduction restriction under section 16(2C) in respect of debentures or debt instruments. The restriction does not apply where under an arrangement interest on debentures or debt instruments is payable to a market maker who holds such debentures or instruments in the ordinary course of conduct of his trade, profession or business in respect of market making, notwithstanding that the market maker is a person connected with the issuer. 20 38. The purpose of holding the debentures or debt instruments must be for providing liquidity for such securities. Under normal circumstances, long-term or substantial holdings of the securities will not be considered as consistent with market making activities. For this purpose, a holding of over 5% of an issue for a period of over 3 months will not be taken as a holding of the securities in the ordinary course of conduct of market making activities, unless the Commissioner is satisfied that there are reasonable explanations for doing so. 39. who – To qualify for the exemption, the market maker must be a person is a licensed or registered dealer of securities under the Securities and Futures Ordinance (Cap. 571), or in a major financial centre outside Hong Kong recognized by the Commissioner; in the ordinary course of conduct of the market making business, holds himself out as being willing to buy and sell securities for his own account and on a regular basis; and is actively involved in market making in securities issued by a wide range of unrelated institutions. APPLICATION OF THE GENERAL ANTI-AVOIDANCE PROVISION (SECTION 61A) 40. While the conditions and restrictions on interest expenses deduction under section 16 lay down specific rules governing the interest deduction scheme, compliance with such rules and conditions does not preclude the applicatio...
View Full Document

This note was uploaded on 03/11/2010 for the course BBA B415 taught by Professor Mrli during the Spring '10 term at Academy of Art University.

Ask a homework question - tutors are online