Intra-group transfer of shares



Our client is the Hong Kong regional headquarter of a French international group. Among the Hong Kong regional headquarter portfolio of investments are shares in a Delaware joint-venture company (USA) subject to the US “partnerships” taxation rules. After internal review of the group structure, the group’s management decided to transfer those shares to an investment holding in France. The key factor for this internal decision was taking in consideration the fact that the USA and France have entered into a convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital (double tax treaty), whereas the USA and Hong Kong have no such convention.



The transaction contemplated raised two challenges:

  • Inclusive budget. – as an intra-group transfer of shares, which would not involve any negotiations of clauses, the budget had to be inclusive of all questions that had to be dealt with: corporate authorizations for each of the seller, buyer and target company (right of first refusal and agreement); possible tax consequences for the seller and choice of the applicable law for the transaction documents;
  • US correspondent needed. – identifying a correspondent law firm to assist with Delaware law aspects of the transaction, which would be happy to do so on a budget consistent with ours and providing a fast turn-around.



Our experience of cross-borders transactions and more specifically our firm’s capacity to assist with corporate questions under French and Hong Kong law enable us to offer a fixed fee for the drafting of the corporate authorizations as well as transaction documents (share purchase agreement and shareholder’s loans refinancing), except for US corporate and tax questions. The budget included coordination with the buyer company tax lawyer if needed.

Within 48hours of requesting a quote from our regular correspondent in New York, we received confirmation that his firm could assist on a fixed fee basis as well. Our correspondent also provided preliminary advice on US tax consequences of the transaction.



The corporate authorizations – including for the target company in the USA – and initial draft transaction documents were ready within ten business days after receiving all information requested from client. Client reviewed the tax consequences of the transaction directly with its usual US tax consultant. The documentation was finalized after reception of the sale price defined by the US tax consultant.

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