Background and case history
The Appellants, John Wiley & Sons UK2 LLP ("LLP 2"), an LLP registered in the United Kingdom, and Wiley International LLC ("HoldCo"), a limited liability company formed in Delaware of the United States, are members of the same group. LLP 2 is 100% beneficially owned by another LLP registered in the UK, John Wiley & Sons UK LLP ("LLP 1"), which in turn is 100% beneficially owned by HoldCo.
As part of an internal group restructuring, LLP 2 transferred the entire issued share capital of John Wiley & Sons (HK) Limited ("HK Co") to HoldCo ("Share Transfer") in April 2019. The Appellants claimed intra-group stamp duty relief in respect of the contract notes for the Share Transfer pursuant to section 45 of the SDO. Their claim was rejected by the Collector of Stamp Revenue ("Collector"), who assessed stamp duty chargeable on the contract notes on the basis that LLP 2 and HoldCo were not associated bodies corporate within the meaning of section 45 of the SDO, as LLP 2 as an LLP did not have "issued share capital". Dissatisfied with the Collector's assessment, the Appellants lodged an appeal to the District Court (DC).
Judgment of the DC3
In July 2022, the DC held, in the favour of the Appellants, that LLP 2 and HoldCo were associated bodies corporate within the meaning of section 45 of the SDO. In arriving at its decision, the DC adopted a purposive approach to statutory interpretation and decided that (i) "issue" means having been legally given to those entitled to it in a legally completed transaction; and (ii) a body corporate would have "share capital" so long as the capital of the body corporate was divided into quantifiable portions with all shares together making up 100% of the total capital value. The Collector then appealed to the CA.
Judgment of the CA
In July 2024, the CA allowed the Collector's appeal and held that the expression "issued share capital" is a well-established concept under company law and therefore should be interpreted to bear the same meaning as employed in the company law context in the absence of any contrary indication. The CA held that, even though the current SDO replaced the term "company with limited liability" with "body corporate", the legislative intent remained that intra-group relief would only be available for associated companies which satisfied the 90% issued share capital association requirement. The Appellants' submission that "share capital" signified "a class of participation interest and income of the corporation issuing it" was rejected for being vague and uncertain with no historical support.
The CA held that intra-group stamp duty relief under section 45 of the SDO would be limited to associated companies with issued share capital. Since an LLP does not issue shares, the capital paid by its members cannot be regarded as "issued share capital" under section 45 of the SDO. Intra-group stamp duty relief is therefore not available to the Appellants.
The matter was then brought before the CFA, which finally dismissed the appeal by its judgment handed down on 16 June 2025.
The CFA's judgment
The CFA, having examined the legislative history of section 45 of the SDO, rejected the Appellants' submissions and upheld the CA's interpretation of the term "issued share capital". The CFA also accepted the CA's suggestion that, as a starting point (without seeking to provide an exhaustive definition), the term may be understood to mean the total monetary value of the consideration paid or agreed to be paid by the shareholders in return for shares of a company as having been issued. As LLPs, by their nature, do not issue or allot shares, they do not have "issued share capital". That being the case, the Appellants could not satisfy the association requirement under section 45 of the SDO and therefore would not be entitled to intra-group stamp duty relief.
Key takeaways
The CFA's judgment confirms that that an LLP, which does not issue or allot shares, will not be regarded as having "issued share capital" for the purposes of intra-group stamp duty relief. This brings finality to the issue. It remains to be seen whether the Hong Kong government may consider any legislative amendment to the SDO to extend relief to LLPs (as Singapore did) or other foreign entities which do not issue or allot shares.
Businesses considering or undertaking group restructurings involving the transfer of Hong Kong stock or immoveable property in Hong Kong where the transferor and/or the transferee is, or whose ownership needs to be traced through, a foreign entity should carefully assess any Hong Kong stamp implications and consider their eligibility to intra-group stamp duty relief in light of the CFA's decision.
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1 The CFA's judgment can be accessed here: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=169656.
2 The CA's judgment can be accessed here: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=161104.
3 The DC's judgment can be accessed here: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=145761&currpage=T.
