or controlled in Hong Kong”; one should consider the management or control of the bank instead of that of the branch in Hong Kong only. Hong Kong will continue to discuss with the Mainland on this point with a view to reaching a consensus.
While the term “normally managed or controlled” has a broader
meaning than that of “central management and control”, in principle, a
company will only be a resident of business operations or control. Regard will be had to factors such
the place in which it actually exercises its The conclusion is wholly one of fact. as the nature of business operated by the
company, mode of operation, whether it has a permanent staff in Hong Kong, and whether Hong Kong is the place
directors meets to formulate policy.
Where by reason of the definitions adopted by both Sides, a
company is a resident of both Sides, its resident status will be determined in accordance with paragraph 3 of Article 4, that is, the company shall be deemed to be a resident only of the Side in which its place of effective management is
The term “place of effective management” refers to the place where
key management and strategic decisions that are necessary for the conduct of the company’s business are in substance made. Under normal circumstances, it is the place where the most senior persons of a company formulate the
direction and work plans of the company.
A company can have only one
place of effective management at any one time.
Resident persons other than individuals and companies
It is stated in paragraph 1(2)(iv) of Article 4 that any other person
constituted under the laws of Hong Kong, or if constituted outside Hong Kong, being normally managed or controlled in Hong Kong, will be considered to be a resident of Hong Kong. In Hong Kong, partnerships are the mode most likely to be encountered. In determining whether a trust, partnership or any other body of persons is normally managed or controlled in Hong Kong, the criteria are the same as those adopted in determining the resident status of a company.