Pre-IPO structuring

Many businesses have been in existence for years before IPO was even contemplated. Unfortunately this often means that either the structure is no longer suitable for listing purposes or tax compliance requires tightening. 

Examples of where we can assist in helping companies and their investors in the pre-IPO process include:

• Reviewing current structures from a tax compliance perspective, considering the Hong Kong Stock Exchange now requires the IPO sponsor to visit the relevant tax bureau in person and review source information relating to tax. In addition, the Stock Exchange regularly requires clearances from the relevant tax bureau.
• Assistance with restructuring, to establish a suitable listing vehicle above the main operating group.
• Assisting with business mergers. In many cases, businesses need to be combined prior to IPO, as they are owned by different family members.
• Assistance with restructuring the business operations for tax efficiency or risk management. For example, due to Circular 601on the applicability of tax treaty benefits for dividends, interest and royalties, it is necessary to ensure that there is enough substance in the holding company to enjoy treaty benefit.
• Reviewing the problems associated with permanent establishment, especially in relation to China.

For further information please contact Gary James or Winnie Tsui in our Hong Kong office.