Hong Kong Ordinances

COMPANIES ORDINANCE - SECT 48C

Merger relief

Merger Relief

(1) With the exception made by section 48D(6), this section applies where the
issuing company has secured at least a 90 per cent equity holding in another
company in pursuance of an arrangement providing for the allotment of
equity shares in the issuing company on terms that the consideration for the
shares allotted is to be provided-

   (a)  by the issue or transfer to the issuing company of equity  shares in
        the other company; or

   (b)  by the cancellation of any such shares not held by the issuing
        company.

(2) If the equity shares in the issuing company allotted in pursuance of the
arrangement in consideration for the acquisition or cancellation of
equity shares in the other company are issued at a premium, section 48B does
not apply to the premiums on those shares.

(3) Where the arrangement also provides for the allotment of any shares in the
issuing company on terms that the consideration for those shares is to be
provided by the issue or transfer to the issuing company of non-equity shares
in the other company or by the cancellation of any such shares in that company
not held by the issuing company, relief under subsection (2) extends to any
shares in the issuing company allotted on those terms in pursuance of the
arrangement.

(4) Subject to subsection (5), the issuing company is to be regarded for the
purposes of this section as having secured at least a 90 per cent equity
holding in another company in pursuance of such an arrangement as is mentioned
in subsection (1) if in consequence of an acquisition or cancellation of
equity shares in that company (in pursuance of that arrangement) it holds
equity shares in that company (whether all or any of those shares were
acquired in pursuance of that arrangement, or not) of an aggregate nominal
value equal to 90 per cent or more of the nominal value of that company's
equity share capital.

(5) Where the equity share capital of the other company is divided into
different classes of shares, this section does not apply unless the
requirements of subsection (1) are satisfied in relation to each of those
classes of shares taken separately.

(6) Shares held by a company which is the issuing company's holding company or
subsidiary, or a subsidiary of the issuing company's holding company, or by
its or their nominees, are to be regarded for the purposes of this section as
held by the issuing company.

(7) In relation to a company and its shares and capital, the following
definitions apply for the purposes of this section-

"arrangement" (安排) means any agreement, scheme or arrangement, including
an arrangement sanctioned under section 166 or 237;

"equity shares" (權益股份) means shares comprised in the company's issued
share capital (excluding any part of such capital which carries no right to
participate beyond a specified amount in a distribution of either profits or
capital);

"non-equity shares" (非權益股份) means shares (of any class) not so
comprised. (Added 30 of 1999 s. 5)

"arrangement" (安排)

"equity shares" (權益股份)

"non-equity shares" (非權益股份)