8.
9.
The Final Offer is not being made, directly or indirectly, in the US, or by use of the United States mails or by any means or instrumentality (including, without limitation, facsimile transmission, telex and telephone) of United States interstate or foreign commerce or of any facility of a United States national securities exchange, and the Final Offer cannot be accepted by any such use, means or instrumentality or from within the United States. Copies of this Final Offer Document and the accompanying Form of Acceptance and Supplementary Listing Particulars are not being mailed or otherwise distributed or sent in or into the US, and persons receiving such documents (including custodians, nominees and trustees) must not distribute or send them in, into or from the US and doing so may render invalid any related purported acceptance of the Final Offer. Further details in this regard are contained in paragraph (vi) of Part B and in Part C of Appendix I to this document.
The new HSBC Holdings shares and the new HSBC Holdings bonds have not been, and will not be, registered under the United States Securities Act of 1933 (as amended). In addition, the new HSBC Holdings bonds are subject to US tax law requirements. Accordingly, such securities may not be offered, sold or delivered, directly or indirectly, in or into the US.
The Final Offer is subject to the conditions and further terms set out or referred to in Appendix I to this document and in the Form of Acceptance.
Management and employees
The employment rights, including pension rights, of the management and employees of the Midland group will be fully safeguarded.
The HSBC Holdings group has a policy of filling posts in the group by searching in all group companies for the best qualified person. This will open up new career opportunities for Midland employees.
Midland share option schemes
The Final Offer extends to any Midland shares unconditionally allotted or issued while the Final Offer remains open for acceptance (or by such earlier date as HSBC Holdings may decide) including any Midland shares unconditionally allotted or issued pursuant to the exercise of options granted under the Midland share option schemes.
If the Final Offer becomes or is declared unconditional in all respects, HSBC Holdings proposes to offer option holders the ability to convert their outstanding options over Midland shares into options over new HSBC Holdings shares having an equivalent value to those Midland shares.
Taxation
10.
(a)
Capital gains tax
Liability to UK taxation in respect of capital gains will depend on the individual circumstances of Midland shareholders.
(i) Acceptance of the Final Offer with no Cash Election
Midland shareholders who accept the Final Offer and receive new HSBC Holdings shares and new HSBC Holdings bonds in exchange for their Midland shares will not be treated as having made a disposal of Midland shares for the purposes of UK taxation of capital gains (except, possibly, to the extent that cash is received in respect of fractional entitlements). Clearance has been given under section 138 Taxation of Chargeable Gains Act 1992, so this treatment will apply to shareholders irrespective of the size of their holding of Midland shares or debentures.
(ii) Cash Election
Midland shareholders who make a Cash Election will, to the extent that they receive new HSBC Holdings shares, be treated in the manner set out in sub-paragraph (i) above. To the extent that they receive cash consideration, they will be treated as making a disposal for the purposes of UK taxation of capital gains. This may result in a liability to UK taxation on capital gains for Midland shareholders who are resident and/or ordinarily resident in the UK, or who carry on a business in the UK through a branch or agency to which the Midland shares are attributable. Any chargeable gain or allowable loss on such disposal would be calculated taking into account the allowable indexed original cost to the holder for capital gains purposes of acquiring the relevant Midland shares, or, in appropriate cases, the indexed value of the Midland shares on 31 March 1982.
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