Bond Corporation International Limited
review, conditions more restrictive than those embodied in the "spirit" of the existing legislation were imposed. For example, if a "foreign interest" was to be restricted in its beneficial ownership of shares to a level below 49%, then BCIL is of the view that this would not only be contrary to the understanding of BCIL at the time it made its investment in HK-TVB, but also would represent a departure from the existing "spirit" of the Television Ordinance which the Government has indicated, on a number of occasions, it is committed to maintain.
2.
We also discussed the issue of how, particularly in a corporate context, one should determine whether a given corporation is to be classified as what I will term a "Hong Kong entity". Clearly, if a company is properly categorised as a "Hong Kong entity", then it is not to be treated as a foreign interest, with the result that there will not be any limitation on the level of its ownership of shares in any relevant company.
It is BCIL's contention that a "Hong Kong entity" should be determined by reference to the following criteria:
the place of incorporation together with
'central control and management' so that if a majority of a Hong Kong-incorporated company's directors are resident in Hong Kong, and the management of the company, both through its Board's meetings and by its executive officers, is conducted in Hong Kong, the company will be a Hong Kong entity.
To the extent that it is considered necessary to supplement the above test by consideration of the overall shareholding structure of the company, then it is BCIL's further contention that provided at least 50% of such shares are held by Hong Kong persons, such company should be treated as a "Hong Kong entity" so long as it is both incorporated in Hong Kong and has its 'central control and management' located in Hong Kong.
In the case of a publicly listed company, it is submitted that, so long as shares are genuinely in the "public domain" and any given shareholding interest is below a certain threshold (e.g. 5%), such shareholding should automatically be taken into account for the purpose of calculating the 50% interest described above.
3.
Finally, in our discussions, we touched upon the distinction which I believe should be drawn, for the purposes of calculating the relevant level of foreign
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