Chapter: 32  COMPANIES ORDINANCE

Schedule Num: 10  Version Date 01/12/2005

ACCOUNTS

TENTH SCHEDULE

[sections 2B, 48B, 79F, 79H,  79K, 79O, 123, 126, 129D,

141, 157HA, 161B & 360]

(Amended 28 of 2003 s. 117; 12 of 2005 s. 17)

Preliminary

1. Paragraphs 2 to 12 apply to the balance sheet and 13 to 17 to the profit and loss account, and are subject to the exceptions and modifications provided for by Part II in the case of a holding or subsidiary company and by Part III in the case of companies of the classes there mentioned; and this Schedule has effect in addition to the provisions of sections 161 to 161C of this Ordinance.  <* Note - Exp. X-Ref.: Sections 161, 161A, 161B, 161BA, 161C *>

PART I

GENERAL PROVISIONS AS TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

Balance Sheet

2. The authorized share capital, issued share capital, liabilities and assets shall be summarized, with such particulars as are necessary to disclose the general nature of the assets and liabilities, and there shall be specified-

(a) any part of the issued capital that consists of redeemable shares, the earliest and latest dates on which the company has power to redeem those shares, whether those shares must be redeemed in any event or are liable to be redeemed at the option of the company and whether any (and, if so, what) premium is payable on redemption;  (Amended L.N. 188 of 1993)

(b) so far as the information is not given in the profit and loss account, any share capital on which interest has been paid out of capital during the financial year, and the rate at which interest as been so paid;

(c) the amount of the share premium account;

(d) particulars of any redeemed debentures which the company has power to reissue.

3. There shall be stated under separate headings, so far as they are not written off,-

(a) the preliminary expenses;

(b) any expenses incurred in connexion with any issue of share capital or debentures;

(c) any sums paid by way of commission in respect of any shares or debentures;

(d) any sums allowed by way of discount in respect of any debentures; and

(e) the amount of the discount allowed on any issue of shares at a discount.

4. (1) The reserves, provisions, liabilities and assets shall be classified under headings appropriate to the company's business:

Provided that-

(a) where the amount of any class is not material, it may be included under the same heading as some other class; and

(b) where any assets of one class are not separable from assets of another class, those assets may be included under the same heading.

(2) Fixed assets, current assets and assets that are neither fixed nor current shall be separately identified.

(3) The method or methods used to arrive at the amount of the fixed assets under each heading shall be stated.

5. (1) The method of arriving at the amount of any fixed asset shall, subject to sub-paragraph (2), be to take the difference between-

(a) its cost or, if it stands in the company's books at a valuation, the amount of the valuation; and

(b) the aggregate amount provided or written off since the date of acquisition or valuation, as the case may be, for depreciation or diminution in value;

and for the purposes of this paragraph the net amount at which any assets stand in the company's books at 1st October 1975 (after deduction of the amounts previously provided or written off for depreciation or diminution in value) shall, if the figures relating to the period before 1st October 1975 cannot be obtained without unreasonable expense or delay, be treated as if it were the amount of a valuation of those assets made at 1st October 1975 and, where any of those assets are sold, the said net amount less the amount of the sales shall be treated as if it were the amount of a valuation so made of the remaining assets.

(2) Sub-paragraph (1) shall not apply-

(a) to assets for which the figures relating to the period beginning with 1st October 1975 cannot be obtained without unreasonable expense or delay;

or

(b) to assets the replacement of which is provided for wholly or partly-

(i) by making provision for renewals and charging the cost of replacement against the provision so made; or

(ii) by charging the cost of replacement direct to revenue; or

(c) to any listed investments or to any unlisted investments of which the value as estimated by the directors is shown either as the amount of the investments or by way of note; or  (Amended 6 of 1984 s. 259)

(d) to goodwill, patents or trade marks.

(3) For the assets under each heading whose amount is arrived at in accordance with sub-paragraph (1), there shall be shown-

(a) the aggregate of the amounts referred to in paragraph (a) of that sub-paragraph; and

(b) the aggregate of the amounts referred to in paragraph (b) thereof.

(4) As respects the assets under each heading whose amount is not arrived at in accordance with sub-paragraph (1) because their replacement is provided for as mentioned in sub-paragraph (2)(b), there shall be stated-

(a) the means by which their replacement is provided for; and

(b) the aggregate amount of the provision (if any) made for renewals and not used.

6. The aggregate amounts respectively of reserves and provisions (other than provisions for depreciation, renewals or diminution in value of assets) shall be stated under separate headings:

Provided that-

(a) this paragraph shall not require a separate statement of either of the said amounts which is not material; and

(b) the Financial Secretary may direct that it shall not require a separate statement of the amount of provisions where he is satisfied that that is not required in the public interest and would prejudice the company, but subject to the condition that any heading stating an amount arrived at after taking into account a provision (other than as aforesaid) shall be so framed or marked as to indicate that fact.

7. (1) There shall also be shown (unless it is shown in the profit and loss account or a statement or report annexed thereto, or the amount involved is not material)-

(a) where the amount of the reserves or of the provisions (other than provisions for depreciation, renewals or diminution in value of assets) shows an increase as compared with the amount at the end of the immediately preceding financial year, the source from which the amount of the increase has been derived; and

(b) where-

(i) the amount of the reserves shows a decrease as compared with the amount at the end of the immediately preceding financial year; or

(ii) the amount at the end of the immediately preceding financial year of the provisions (other than provisions for depreciation, renewals or diminution in value of assets) exceeded the aggregate of the sums since applied and amounts still retained for the purposes thereof; the application of the amounts derived from the difference.

(2) Where the heading showing the reserves or any of the provisions aforesaid is divided into sub-headings, this paragraph shall apply to each of the separate amounts shown in the sub-headings instead of applying to the aggregate amount thereof.

8. If an amount is set aside for the purpose of its being used to prevent undue fluctuations in charges for taxation, it shall be stated.

9. (1) There shall be shown under separate headings-

(a) the aggregate amounts respectively of the company's listed investments and unlisted investments;  (Amended 6 of 1984 s. 259)

(b) if the amount of the goodwill and of any patents and trade marks or part of that amount is shown as a separate item in or is otherwise ascertainable from the books of the company, or from any contract for the sale or purchase of any property to be acquired by the company, or from any documents in the possession of the company relating to the stamp duty payable in respect of any such contract or the conveyance of any such property, the said amount so shown or ascertained so far as not written off or, as the case may be, the said amount so far as it is so shown or ascertainable and as so shown or ascertained, as the case may be;

(c) the aggregate amount of any outstanding loans made under the authority of section 47C(4)(b) and (c);  (Amended 68 of 1995 s. 2)

(d) the aggregate amount of bank loans and overdrafts, and the aggregate amount of loans, other than bank loans or overdrafts, made to the company which-

(i) are repayable otherwise than by instalments and fall due for repayment after the expiration of the period of 5 years beginning with the day next following the expiration of the financial year; or

(ii) are repayable by instalments any of which fall due for payment after the expiration of that period;

(e) the aggregate amount which is recommended for distribution by way of dividend.

(2) Nothing in head (b) of sub-paragraph (1) shall be taken as requiring the amount of the goodwill, patents and trade marks to be stated otherwise than as a single item.

(3) The heading showing the amount of the listed investments shall be subdivided, where necessary, to distinguish the investments as respects which there has, and those as respects which there has not, been granted a listing on a recognized stock market.  (Amended 6 of 1984 s. 259; 10 of 1987 s. 11; 5 of 2002 s. 407)

(4) In relation to each loan falling within head (d) of sub-paragraph 1) (other than a bank loan or overdraft), there shall be stated by way of note (if not otherwise stated) the terms on which it is repayable and the rate at which interest is payable thereon:

Provided that if the number of loans is such that, in the opinion of the directors, compliance with the foregoing requirement would result in a statement of excessive length, it shall be sufficient to give a general indication of the terms on which the loans are repayable and the rates at which interest is payable thereon.

10. Where any liability of the company is secured otherwise than by operation of law on any assets of the company, the fact that that liability is so secured shall be stated, but it shall not be necessary to specify the assets on which the liability is secured.

11. Where any of the company's debentures are held by a nominee of or trustee for the company, the nominal amount of the debentures and the amount at which they are stated in the books of the company shall be stated.

12. (1) The matters referred to in the following sub-paragraphs shall be stated by way of note, or in a statement or report annexed, if not otherwise shown.

(2) The number, description and amount of any shares in the company which any person has an option to subscribe for, together with the following particulars of the option, that is to say-

(a) the period during which it is exercisable;

(b) the price to be paid or shares subscribed for under it.

(3) The amount of any arrears of fixed cumulative dividends on the company's shares and the period for which the dividends or, if there is more than one class, each class of them are in arrear.

(4) Particulars of any charge on the assets of the company to secure the liabilities of any other person, including, where practicable, the amount secured.

(5) The general nature of any other contingent liabilities not provided for and, where practicable, the aggregate amount or estimated amount of those liabilities, if it is material.

(6) Where practicable the aggregate amount or estimated amount, if it is material, of contracts for capital expenditure, so far as not provided or and, where practicable, the aggregate amount or estimated amount, if it is material, of capital expenditure authorized by the directors which has not been contracted for.

(7) In the case of fixed assets under any heading whose amount is required to be arrived at in accordance with paragraph 5(1) (other than unlisted investments) and is so arrived at by reference to a valuation, the years (so far as they are known to the directors) in which the assets were severally valued and the several values, and, in the case of assets that have been valued during the financial year,-  (Amended 6 of 1984 s. 259)

(a) the names of the persons who valued them or particulars of their qualifications for doing so, and

(b) the bases of valuation used by such persons.

(8) If there are included amongst fixed assets under any heading (other than investments) assets that have been acquired during the financial year, the aggregate amount of the assets acquired as determined for the purpose of making up the balance sheet, and if during that year any fixed assets included under a heading in the balance sheet made up with respect to the immediately preceding financial year (other than investments) have been disposed of or destroyed, the aggregate amount thereof as determined for the purpose of making up that balance sheet.

(9) Of the amount of fixed assets consisting of land, how much is ascribable to-

(a) land in Hong Kong in each of the following categories-

(i) land held on long lease;

(ii) land held on medium-term lease;

(iii) land held on short lease;

(b) land outside Hong Kong in each of the following categories-

(i) land held freehold;

(ii) land held on long lease;

(iii) land held on medium-term lease;

(iv) land held on short lease.

(10) If in the opinion of the directors any of the current assets have not a value, on realization in the ordinary course of the company's business, at least equal to the amount at which they are stated, the fact that the directors are of that opinion.

(11) The aggregate market value of the company's listed investments where it differs from the amount of the investments as stated, and the stock exchange value of any investments of which the market value is shown (whether separately or not) and is taken as being higher than their stock exchange value.  (Amended 6 of 1984 s. 259)

(12) If a sum set aside for the purpose of its being used to prevent undue fluctuations in charges for taxation has been used during the financial year for another purpose, the amount thereof and the fact that it has been so used.

(13) If the amount carried forward for stock in trade or work in progress is material for the appreciation by its members of the company's state of affairs or of its profit or loss for the financial year, the manner in which that amount has been computed.

(14) The basis on which other currencies have been converted into the currency in which the balance sheet is expressed, where the amount of the assets or liabilities affected is material.

(15) The basis on which the amount, if any, set aside for Hong Kong profits tax is computed.

(16) Except in the case of the first balance sheet laid before the company after 1st October 1975, the corresponding amounts at the end of the immediately preceding financial year for all items shown in the balance sheet other than any item the amount for which is shown-

(a) in pursuance of sub-paragraph (8), or

(b) as an amount the source or application of which is required by paragraph 7 to be shown.

Profit and Loss Account

13. (1) There shall be shown-

(a) the amount charged to revenue by way of provision for depreciation, renewals or diminution in value of fixed assets;

(b) the amount of the interest on loans of the following kinds made to the company (whether on the security of debentures or not), namely, bank loans, overdrafts and loans which, not being bank loans or overdrafts,-

(Amended L.N. 283 of 1986)

(i) are repayable otherwise than by instalments and fall due for repayment before the expiration of the period of 5 years beginning with the day next following the expiration of the financial year; or

(ii) are repayable by instalments the last of which falls due for payment before the expiration of that period;

and the amount of the interest on loans of other kinds so made (whether on the security of debentures or not);

(c) the amount of the charge to revenue for taxes imposed by the Inland Revenue Ordinance (Cap 112) and, if that amount would have been greater but for relief from double taxation, the amount which it would have been but for such relief, and the amount of the charge for taxation imposed outside Hong Kong of profits, income and (so far as charged to revenue) capital gains;

(d) the amounts respectively provided for redemption of share capital and for redemption of loans;

(e) the amount, if material, set aside or proposed to be set aside to, or withdrawn from, reserves;

(f) subject to sub-paragraph (2), the amount, if material, set aside to provisions other than provisions for depreciation, renewals or diminution in value of assets or, as the case may be, the amount, if material, withdrawn from such provisions and not applied for the purposes thereof;

(g) the amounts respectively of income from listed investments and income from unlisted investments;  (Amended 6 of 1984 s. 259)

(h) if a substantial part of the company's revenue for the financial year consists in rents from land and buildings, the amount thereof (after deduction of ground-rents, rates and other out-goings);

(i) the amount, if material, charged to revenue in respect of sums payable in respect of the hire of plant and machinery;

(j) the aggregate amount of the dividends paid and proposed.

(2) The Financial Secretary may direct that a company shall not be obliged to show an amount set aside to provisions in accordance with sub-paragraph (1)(f), if he is satisfied that that is not required in the public interest and would prejudice the company, but subject to the condition that any heading stating an amount arrived at after taking into account the amount set aside as aforesaid shall be so framed or marked as to indicate that fact.

(3) If, in the case of any assets in whose case an amount is charged to revenue by way of provision for depreciation or diminution in value, an amount is also charged by way of provision or renewal thereof, the last-mentioned amount shall be shown separately.

(4) If the amount charged to revenue by way of provision for depreciation or diminution in value of any fixed assets (other than investments) has been determined otherwise than by reference to the amount of those assets as determined for the purpose of making up the balance sheet, that fact shall be stated.

14. The amount of any charge arising in consequence of the occurrence of an event in a preceding financial year and of any credit so arising shall, if not included in a heading relating to other matters, be stated under a separate heading.

15. The amount of the remuneration of the auditors shall be shown under a separate heading, and for the purposes of this paragraph, any sums paid by the company in respect of the auditors' expenses shall be deemed to be included in the expression "remuneration".

16. (1) The matters referred to in sub-paragraphs (2) to (4) shall be stated by way of note, if not otherwise shown.

(2) The turnover for the financial year, except in so far as it is attributable to the business of banking or to business of such other class as may be prescribed for the purposes of this sub-paragraph.

(3) If some or all of the turnover is omitted by reason of its being attributable as aforesaid, the fact that it is so omitted.

(4) The method by which turnover stated is arrived at.

17. (1) The matters referred to in sub-paragraphs (2) to (6) shall be stated by way of note, if not otherwise shown.

(2) If depreciation or replacement of fixed assets is provided for by some method other than a depreciation charge or provision for renewals, or is not provided for, the method by which it is provided for or the fact that it is not provided for, as the case may be.

(3) The basis on which the charge for Hong Kong profits tax is computed.

(4) Any special circumstances which affect liability in respect of taxation of profits, income or capital gains for the financial year or liability in respect of taxation of profits, income or capital gains for succeeding financial years.

(5) Except in the case of the first profit and loss account laid before the company after 1st October 1975 the corresponding amounts for the immediately preceding financial year for all items shown in the profit and loss account.

(6) Any material respects in which any items shown in the profit and loss account are affected-

(a) by transactions of a sort not usually undertaken by the company or otherwise by circumstances of an exceptional or non-recurrent nature; or

(b) by any change in the basis of accounting.

PART II

SPECIAL PROVISIONS WHERE THE COMPANY IS

A HOLDING OR SUBSIDIARY COMPANY

Modifications of and Additions to Requirements as to Company's own Accounts

18. (1) This paragraph shall apply where the company is a holding company, whether or not it is itself a subsidiary of another undertaking.  (Amended 12 of 2005 s. 17)

(2) The aggregate amount of assets consisting of shares in, or amounts owing (whether on account of a loan or otherwise) from, the company's subsidiaries, distinguishing shares from indebtedness, shall be set out in the balance sheet separately from all the other assets of the company, and the aggregate amount of indebtedness (whether on account of a loan or otherwise) to the company's subsidiaries shall be so set out separately from all its other liabilities and-

(a) the references in Part I to the company's investments (except those in paragraphs 12(8) and 13(4)) shall not include investments in its subsidiaries required by this paragraph to be separately set out; and

(b) paragraphs 5, 13(1)(a) and 17(2) shall not apply in relation to fixed assets consisting of interests in the company's subsidiaries,

(3) There shall be shown by way of note on the balance sheet or in a statement or report annexed thereto the number, description and amount of the shares in and debentures of the company held by its subsidiaries or their nominees, but excluding any of those shares or debentures in the case of which the subsidiary is concerned as personal representative or in the case of which it is concerned as trustee and neither the company nor any subsidiary thereof is beneficially interested under the trust, otherwise than by way of security only for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

(4) Where group accounts are not submitted, there shall be annexed to the balance sheet a statement showing-

(a) the reasons why subsidiaries are not dealt with in group accounts;

(b) the net aggregate amount, so far as it concerns members of the holding company and is not dealt with in the company's accounts, of the subsidiaries' profits after deducting the subsidiaries' losses (or vice versa)-

(i) for the respective financial years of the subsidiaries ending with or during the financial year of the company; and

(ii) for their previous financial years since they respectively became the holding company's subsidiary;

(c) the net aggregate amount of the subsidiaries' profits after deducting the subsidiaries' losses (or vice versa)-

(i) for the respective financial years of the subsidiaries ending with or during the financial year of the company; and

(ii) for their other financial years since they respectively became the holding company's subsidiary;  so far as those profits are dealt with, or provision is made for those losses, in the company's accounts;

(d) any qualifications contained in the report of the auditors of the subsidiaries on their accounts for their respective financial years ending as aforesaid, and any note or saving contained in those accounts to call attention to a matter which, apart from the note or saving, would properly have been referred to in such a qualification, in so far as the matter which is the subject of the qualification or note is not covered by the company's own accounts and is material from the point of view of its members;

or, in so far as the information required by this sub-paragraph is not obtainable, a statement that it is not obtainable:

Provided that the Financial Secretary may, on the application or with the consent of the company's directors, direct that in relation to any subsidiary this sub-paragraph shall not apply or shall apply only to such extent as may be provided by the direction.

(5) Sub-paragraph (4)(b) and (c) shall apply only to profits and losses of a subsidiary which may properly be treated in the holding company's accounts as revenue profits or losses, and the profits or losses attributable to any shares in a subsidiary for the time being held by the holding company or any other of its subsidiaries shall not (for that or any other purpose) be treated as aforesaid so far as they are profits or losses for the period before the date on or as from which the shares were acquired by the company or any of its subsidiaries, except that they may in a proper case be so treated where-

(a) the company is itself the subsidiary of another undertaking; and

(b) the shares were acquired from that undertaking or a subsidiary of it;

and for the purpose of determining whether any profits or losses are to be treated as profits or losses for the said period the profit or loss for any financial year of the subsidiary may, if it is not practicable to apportion it with reasonable accuracy by reference to the facts, be treated as accruing from day to day during that year and apportioned accordingly.  (Amended 12 of 2005 s. 17)

(6) Where group accounts are not submitted, there shall be annexed to the balance sheet a statement showing, in relation to the subsidiaries (if any) whose financial years did not end with that of the company-

(a) the reasons why the company's directors consider that the subsidiaries' financial years should not end with that of the company; and

(b) the dates on which the subsidiaries' financial years ending last before that of the company respectively ended or the earliest and latest of those dates.

19. (1) The balance sheet of a company which is a subsidiary of another undertaking, whether or not it is itself a holding company, shall show the aggregate amount of its indebtedness to all undertakings of which it is a subsidiary or a fellow subsidiary and the aggregate amount of indebtedness of all such undertakings to it, distinguishing in each case between indebtedness in respect of debentures and otherwise, and the aggregate amount of assets consisting of shares in fellow subsidiaries.

(2) For the purposes of this paragraph a company shall be deemed to be a fellow subsidiary of another undertaking if both are subsidiaries of the same undertaking but neither is the other's subsidiary. (Amended 12 of 2005 s. 17)

Consolidated Accounts of Holding Company and Subsidiaries

20. Subject to the following paragraphs of this Part, the consolidated balance sheet and profit and loss account shall combine the information contained in the separate balance sheets and profit and loss accounts of the holding company and of the subsidiaries dealt with by the consolidated accounts, but with such adjustments (if any) as the directors of the holding company think necessary.

21. Subject as aforesaid and to Part III, the consolidated accounts shall, in giving the said information, comply so far as practicable, with the requirements of this Ordinance as if they were the accounts of an actual company.

22. Sections 161 and 161B shall not, by virtue of paragraphs 20 and 21, apply for the purpose of the consolidated accounts.

23. Paragraph 7 shall not apply for the purpose of any consolidated accounts laid before a company with the first balance sheet so laid after 1st October 1975.

24. In relation to any subsidiaries of the holding company not dealt with by the consolidated accounts-

(a) Paragraph 18(2) and (3) shall apply for the purpose of those accounts as if those accounts were the accounts of an actual company of which they were subsidiaries; and

(b) there shall be annexed the like statement as is required by paragraph 18(4) where there are no group accounts, but as if references therein to the holding company's accounts were references to the consolidated accounts.

25. In relation to any subsidiaries (whether or not dealt with by the consolidated accounts), whose financial years did not end with that of the company, there shall be annexed the like statement as is required by paragraph 18(6) where there are no group accounts.

PART III

EXCEPTIONS FOR SPECIAL CLASSES OF COMPANY

26. (1) A banking company shall not be subject to the requirements of Part

I other than-

(a) as respects its balance sheet, those of paragraphs 2 and 3, paragraph 4 (so far as it relates to assets), paragraph 9 (except sub-paragraphs (1)(d) and (4)), paragraphs 10 and 11 and paragraph 12 (except sub-paragraphs (7), (8), (9), (11) and (12)); and

(b) as respects its profit and loss account, those of sub-paragraph (1)(h) and (j) of paragraph 13, paragraphs 14 and 15 and sub-paragraphs (1) and (5) of paragraph 17;

but, where in its balance sheet reserves or provisions (other than provisions for depreciation, renewals or diminution in value of assets) are not stated separately, any heading stating an amount arrived at after taking into account a reserve or such a provision shall be so framed or marked as to indicate that fact, and its profit and loss account shall indicate by appropriate words the manner in which the amount stated for the company's profit or loss has been arrived at.

(2) The accounts of a banking company shall not be deemed, by reason only of the fact that they do not comply with any requirements of Part I from which the company is exempt by virtue of this paragraph, not to give the true and fair view required by this Ordinance.

(3) In this paragraph the expression "banking company" means any company which carries on banking business and holds a valid banking licence granted under the Banking Ordinance (Cap 155) authorizing it to do so in Hong Kong.  (Amended 27 of 1986 s. 137)27. (1) An insurance company shall not be subject to the following requirements of Part I, that is to say-

(a) as respects its balance sheet, those of paragraphs 4 to 7, sub-paragraphs (1)(a) and (3) of paragraph 9 and sub-paragraphs (4), (5) and (7) to (11) of paragraph 12;

(b) as respects its profit and loss account, those of paragraph 13 (except sub-paragraph (1)(b), (c), (d) and (j)) and paragraph 17(2);

but, where in its balance sheet reserves or provisions (other than provisions for depreciation, renewals or diminution in value of assets) are not stated separately, any heading stating an amount arrived at after taking into account a reserve or such a provision shall be so framed or marked as to indicate that fact, and its profit and loss account shall indicate by appropriate words the manner in which the amount stated for the company's profit or loss has been arrived at:

Provided that the Financial Secretary may direct that any such insurance company whose business includes to a substantial extent business other than insurance business shall comply with all the requirements of Part I or such of them as may be specified in the direction and shall comply therewith as respects either the whole of its business or such part thereof as may be so specified.

(2) Where an insurance company is entitled to the benefit of this paragraph, then any wholly owned subsidiary thereof shall also be so entitled if its business consists only of business which is complementary to insurance business of the classes carried on by the insurance company.

(3) The accounts of a company shall not be deemed, by reason only of the fact that they do not comply with any requirement of Part I from which the company is exempt by virtue of this paragraph, not to give the true and fair view required by this Ordinance.

(4) For the purposes of this paragraph a company shall be deemed to be the wholly owned subsidiary of an insurance company if it has no members except the insurance company and the insurance company's wholly owned subsidiaries and its or their nominees.

28. (Repealed 3 of 1997 s. 61)

29. Where a company entitled to the benefit of any provision contained in this Part is a holding company, the reference in Part II to consolidated accounts complying with the requirements of this Ordinance shall, in relation to consolidated accounts of that company, be construed as referring to those requirements in so far only as they apply to the separate accounts of that company.

PART IV

INTERPRETATION OF SCHEDULE

30. (1) For the purposes of this Schedule, unless the context otherwise requires,-

(a) the expression "provision" shall, subject to sub-paragraph (2), mean any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy;

(b) the expression "reserve" shall not, subject as aforesaid, include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability or any sum set aside for the purpose of its being used to prevent undue fluctuations in charges for taxation;

and in this paragraph the expression "liability" shall include all liabilities in respect of expenditure contracted for and all disputed or contingent liabilities.

(2) Where-

(a) any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, not being an amount written off in relation to fixed assets before 1st October 1975; or

(b) any amount retained by way of providing for any known liability, is in excess of that which in the opinion of the directors is reasonably necessary for the purpose, the excess shall be treated for the purposes of this Schedule as a reserve and not as a provision.31. For the purposes aforesaid,-

(a) the expression "listed investment" (means an investment as respects which there has been granted a listing on a recognized stock market, or on any stock exchange of repute outside Hong Kong, and the expression "unlisted investment" shall be construed accordingly;

(Amended 6 of 1984 s. 259; 10 of 1987 s. 11; 5 of 2002 s. 407)

(b) the expression "lease" includes an agreement for a lease;

(c) in relation to land in Hong Kong-

(i) the expression "long lease" means a lease in the case of which either-

(A) the portion of the term for which it was granted remaining unexpired at the end of the financial year is not less than 50 years, or

(B) if the lease is a renewable Government lease, the portion of the said term remaining unexpired at the said date when added to the term for which the lessee is entitled to renew the lease amounts to a period of not less than 50 years from the said date;  (Amended 29 of 1998 s. 105)

(ii) the expression "medium-term lease" means a lease in the case of which either-

(A) the portion of the term for which it was granted remaining unexpired at the end of the financial year is less than 50 years but not less than 10 years, or

(B) if the lease is a renewable Government lease, the portion of the said term remaining unexpired at the said date when added to the term for which the lessee is entitled to renew the lease amounts to a period of less than 50 years but not less than 10 years from the said date;  (Amended 29 of 1998 s. 105)

(iii) the expression "short lease" means a lease which is not a long or a medium-term lease;

(d) in relation to land outside Hong Kong-

(i) the expression "long lease" () means a lease in the case of which the portion of the term for which it was granted remaining unexpired at the end of the financial year is not less than 50 years,

(ii) the expression "medium-term lease" means a lease in the case of which the portion of the term for which it was granted remaining unexpired at the end of the financial year is less than 50 years but not less than 10 years,

(iii) the expression "short lease" means a lease which is not a long or a medium-term lease;

(e) a loan shall be deemed to fall due for repayment, and an instalment of a loan shall be deemed to fall due for payment, on the earliest date on which the lender could require repayment or, as the case may be, payment if he exercised all options and rights available to him.

(Tenth Schedule added 80 of 1974 s. 22)

Our latest offshore news
30/09/2006
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on Offshore Companies, Incorporations,
Jurisdictions, etc..
23/10/2007
A company operating in Hamburg, Beiersdorf Aktiengesellschaft has recently announced entering a share purchase agreement with a BVI-incorporated Global Source Investments Limited and Hong Kong-incorporated C-BONS Holding (International) Limited.
02/07/2007
Hong Kong Financial Secretary Henry Tang suggests that issuing renminbi-denominated financial bonds in Hong Kong will reinforce its banking status. Monetary Authority Chief Executive Joseph Yam has also commented on this issue.
20/06/2007
According to the data released by the Census & Statistics Department of Hong Kong, the BVI is one of the top destinations for Hong Kong's external factor income outflow and inflow in Quarter 1 of 2007.
15/06/2007
The government of Hong Kong has published its final report on the public consultation on tax reform to provide recommendations about exploring some options aimed at the development and enlargement of narrow tax base in Hong Kong.
02/06/2007
On May 28, 2007, the launch of Unsolicited Electronic Messages Ordinance from June 1 was announced by Hong Kong's Commerce, Industry & Technology Bureau. The Ordinance is to be carried out in 2 phases.
20/05/2007
At the Swiss Private Bankers' Association's meeting, Hong Kong Financial Secretary Henry Tang invited swiss bankers to use Hong Kong as a regional base for managing their businesses in Asia.
12/05/2007
At the Hong Kong Economic and Trade Office Seminar named "Hong Kong - New Opportunities as an International Financial Centre", Joseph Yam announced a strategy to make a greater Hong Kong's contribution to the reform and liberalisation of the Mainland China and to maintain the status of Hong Kong as an international financial centre.
27/04/2007
On April 25, 2007, Hong Kong Financial Secretary Henry Tang told legislators that from 2004 to 2005 growth in Hong Kong's combined fund-management business was on 25%.
12/04/2007
According to the Global Financial Centers Index (GFCI), Hong Kong is the 3rd most competitive financial centre in the world.
30/03/2007
India's largest public sector bank in terms of aggregate business, Canara Bank announced that it is opening the 1st branch in Hong Kong, which is an expanding move for the bank.
12/03/2007
At the 14th APEC SME Ministerial Meeting, Director-General of the Hong Kong Trade & Industry department, stated that Hong Kong's favourable business environment is underpinned by the rule of law, free flow of capital and information, a low and simple tax regime, an independent judiciary and an efficient government.
21/02/2007
According to the announcement made by the Hong Kong Monetary Authority (HKMA) on February 7, 2007, Hong Kong's official foreign currency reserve assets amounted to the total of USD 133.7 billion in the end of January 2007.
09/02/2007
Hong Kong Monetary Authority announced the amount of official foreign currency reserve assets on the end of January 2007, which totalled at USD 133.7 billion.
01/02/2007
Rewrite of the Companies Ordinance will bring substantial benefits to Hong Kong, especially in strengthening competitiveness of the jurisdiction and its status as a global business and financial centre.
29/01/2007
Hong Kong is to receive benefits from increased links with the market of mainland China, as stated by Hong Kong Monetary Authority Chief Executive.
26/01/2007
New Anti-Money Laundering rules are introduced by Hong Kong's Security Bureau. Customers' identities and record transactions of HK$ 8 000 dollars or more must be verified by remittance agents and money changers.
17/01/2007
The Heritage Foundation has ranked Hong Kong as the freest economy in the world for the 13th consecutive year. It is followed by Singapore and Australia.
06/01/2007
Comparing to 2005, property sale and purchase agreements in Hong Kong in 2006 fell 19.9%. This fact was released on January 4, 2007 by the Land Registry.
03/01/2007
Financial Secretary of Hong Kong, Henry Tang understands people's high expectations for the 2007-2008 Budget, however, he suggests the necessity of a balance between the interests of different parties when devising it.
21/12/2006
In November, inflation in Hong Kong accelerated to 2.2% on higher clothing, housing and food prices. To compare this figure, the Census and Statistics Department indicates 2% inflation in October.
08/11/2006
According to the IMF, the economy of Hong Kong is expected to grow by 6% this year and maintain growth of 5% in 2007. The IMF stated that growth prospects will depend on the management and expanding the evolving financial integration with the Mainland.
30/10/2006
In Hong Kong, two new banking regulations have been gazetted to be tabled at the Legislative Council on November 1. These are the Banking (Capital) Rules and Banking (Disclosure) Rules. The rules are to be in force from January 1, 2007.
18/10/2006
According to the UN's World Investment Report 2006, Hong Kong attracted USD 35.9 billion in foreign direct investment (FDI) last year, up 5.6% on 2004. So, Hong Kong is the 2nd-largest FDI destination in Asia after China, which amassed USD 72.4 billion.
16/10/2006
Hong Kong is likely to refuse discussing joining the EU's tax information-sharing scheme applied under the Savings Tax Directive. The EU would like to sign the Agreement and include information-sharing there.
25/11/2007
Recently, the Seychelles International Business Authority has sponsored Asia Offshore Association (AOA) Conference in Vietnam, and International Tax Planning Association (ITPA) meeting in Hong Kong.