e-News

Issue May 2020


BMS Corporate Services Limited is a licensed Trust & Company Service Provider (“TCSP”) in Hong Kong. With over 30 years of professional experience, we provide a full range of corporate services, including company secretarial, accounting and payroll outsourcing services, to our clients. Corporate and business rules change rapidly, and our e-News serves to provide you with updates on the relevant topics.



Economic Substance Legislation in the British Virgin Islands (“the BVI”)

 
In response to efforts by the European Union (“EU”) and the Organization for Economic Cooperation and Developments (“OECD”) to curb harmful tax approaches and enhance tax transparency, the major offshore jurisdictions worldwide have introduced their “economic substance” laws. In BVI, the Economic Substance (Companies and Limited Partnerships) Act, 2018 (the “Act”) became effective on 1 January 2019.

In the context of the economic substance regime, EU and OECD identify 9 geographically mobile “Relevant Activities”, namely:
  • Banking
  • Insurance
  • Fund management
  • Finance and leasing
  • Headquarters
  • Shipping
  • Holding company
  • Intellectual property
  • Distribution and service centres
The Act requires a relevant BVI entity that engages in one or more of the Relevant Activities to maintain an appropriate level of economic substance in the BVI, and to report certain information on its activities (including tax residency, turnover, staff size, expenditure amount, address, etc.) to its registered agent on an annual basis. The agent has to report such information to the BVI authorities through a specific portal within 6 months after the reporting period.

For BVI entities incorporated before 1 January 2019, the first reporting period runs from 30 June 2019 to 29 June 2020, the immediate reporting deadline will be 29 December 2020. Companies incorporated on or after 1 January 2019 have to comply with the Act immediately. Penalties for non-compliance include fines and striking off.
 

Hong Kong’s Employment Support Scheme

 
In April 2020, the Hong Kong government announced a HK$137.5 billion package of measures to relieve financial burdens of individuals and businesses in reaction to the COVID-19 outbreak. A key component of the package is the Employment Support Scheme (“ESS”), which allocates HK$80 billion to provide subsidies to employers, enabling them to retain employees and continue to pay wages.

To be eligible for the ESS, private sector employers must have already been making regular Mandatory Provident Fund (“MPF”) contributions (or have set up an Occupational Retirement Scheme) for employees. They must also provide an undertaking that they will use the full amount of the subsidies received to pay wages, and that they will not lay off any employees during the subsidy period. The subsidy amount is 50% of actual monthly wages for the 6 months from June to November 2020, and is capped at HK$9,000 per employee per month.

Self-employed persons who have made MPF contributions will receive a one-off subsidy of $7,500. Employers in other sectors which are not fully covered by MPF schemes (such as catering, construction and transport) will be assisted in the sector-specific schemes.
 

Hong Kong’s New Requirements on Environmental,
Social and Governance (“ESG”)

 
The Hong Kong Stock Exchange (“HKEx”) has introduced new ESG reporting requirements for financial years beginning on or after 1 July 2020. Key points include:
  • Mandatory Disclosure – A new category called “Mandatory Disclosure Requirements” has been added, requiring mandatory disclosures of matters such as board involvement, materiality assessment and reporting principles.
  • “Comply or Explain” - All previously “Recommended” disclosures have been upgraded to follow the “Comply or Explain” basis. (It should be noted that, where an aspect is immaterial or irrelevant to a company, “giving explanations” should not be viewed as secondary to “compliance”.)
  • Environmental Targets Disclosure - The environmental KPIs have been amended to include disclosure of environmental targets and the steps taken to achieve them.
  • Climate Change Provision - A new ESG aspect “climate change” has been added along with additional related disclosures.
  • Report Format - Disclosure can be made either as part of the annual report, or in a separate ESG report. It must be published on the HKEx’s and the company’s own website.
  • Timing - ESG reports must be published within 5 months after the end of the financial year.
In view of the more stringent ESG reporting requirements, issuers should familiarize themselves with the amendments as soon as possible.
 


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  Position Contact Email

James Lai Director (852) 3151 1211 James.Lai@bmshk.com.hk
 
Zoe Pak Associate Director
(Company Secretarial Services)
(852) 3151 1210 Zoe.Pak@bmshk.com.hk
 
Gloria Ng Manager
(Trade Services)
(852) 3151 1212 GNg@bmshk.com.hk
 
Gladys Cheung Manager
(Company Secretarial Services)
(852) 3151 1218 Gladys.Cheung@bmshk.com.hk
 

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This information is of a general nature only and is not intended to be relied upon, nor to be a substitute for, specific professional advice. No responsibility for loss arising from acting on or refraining from action as a result of any of this information can be accepted. No reader should act on the basis of this information without obtaining independent professional advice with regard to their particular circumstances.