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e_dipn13a_Interest Expense_s16(2ABC)

Marketed 16 the two conditions relating to the

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Unformatted text preview: ion under section 105 of the Securities and Futures Ordinance. Marketed 16. The two conditions relating to the interest deduction on debt instruments resemble closely the corresponding provisions that prevailed immediately before the 2004 Amendment Ordinance. The only major difference is that debt instruments (other than those issued under an agreement or arrangement with the approval of the Securities and Futures Commission) that qualify for interest deduction have to be actually marketed in Hong Kong or in a major financial centre recognized by the Commissioner. This means that to satisfy the condition, not only should the instrument be marketable, there should also be some actual marketing activities conducted when, or shortly after, the instrument is issued. 17. Whether an instrument has been marketed is a matter of fact to be determined by reference to the common market practices. The followings are some of the conditions the existence of which may indicate that the instrument has been marketed – (i) road-shows or meetings with potential investors are conducted before the issue of the instrument;. research reports on the issuer are published by major market participants; the instrument is rated by reputable credit rating agencies, e.g. Standard and Poor’s, Moody’s, Fitch IBCA, etc.; the instrument is cleared through one of the recognized clearing systems, e.g. the CMU (Central Moneymarkets Unit) of the Hong Kong Monetary Authority, Euroclear, Clearstream, etc.; the description of the instrument is displayed on major real-time financial information networks, e.g. Reuters, Bloomberg, Telerate, etc.; (ii) (iii) (iv) (v) 8 (vi) one or more market participants agree to quote bid prices on the instrument under normal market conditions; evidence that shows the existence of trading of the instrument in the secondary markets, e.g. transaction records in the clearing systems. (vii) Issue of debentures or instruments through associated corporation 18. As before, condition (f) will also be satisfied where the borrowing is from an associated corporation and the moneys borrowed in the hands of the associated corporation arose entirely from the proceeds...
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