FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
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Insolvency of the Issuer<br />
The Issuer is neither subject to the provisions of the French Commercial Code relating to bankruptcy and<br />
insolvency proceedings, nor to the provisions of the French Monetary and Financial Code relating to<br />
credit institutions (établissements de crédit), investment companies (entreprises d’investissement) or<br />
investment funds (organismes de placement collectif en valeurs mobilières) and its liquidation may only be<br />
effected in accordance with the French Monetary and Financial Code and the Issuer Regulations (see<br />
‘‘The Issuer’’).<br />
Change of law<br />
The structure of the issue of the Notes is based on French law and French tax, regulatory and<br />
administrative practice in effect as at the date of this Offering Circular having due regard to the expected<br />
tax treatment of all relevant entities under such law and practice. No assurance can be given as to the<br />
impact of any possible change to French law and French tax, regulatory or administrative practice after<br />
the date of this Offering Circular.<br />
Changes to the Basel Capital Accord (Basel II)<br />
In June 2004, the Basel Committee on Banking Supervision (the ‘‘Committee’’) published Basel II, which<br />
will replace the 1988 Capital Accord and contains a new set of standards for determining the minimum<br />
capital requirements for banking organisations and places enhanced emphasis on market discipline and<br />
sensitivity to risk. It is the intention of the Committee that, for the most part, the new framework will be<br />
available for implementation by member jurisdictions by the end of 2006. However, for more advanced<br />
approaches to risk measurement, implementation will not occur until the end of 2007. In addition a capital<br />
floor may be imposed on some banks until 2009. In order for the new framework to be put into effect for<br />
credit and financial institutions in Europe it will need to be implemented via an EU Capital Adequacy<br />
Directive, proposals for which have been presented by the European Commission. Basel II may, amongst<br />
other things, affect the risk-weighting of the Notes in respect of certain investors if those investors are<br />
regulated in a manner which will be affected by the new framework. Consequently, prospective purchasers<br />
should consult their own advisers as to the consequences of, and the effect on them of, the implementation<br />
of Basel II.<br />
4. Risks relating to Taxation<br />
French corporate income status of the Borrowers<br />
The Borrowers have different corporate forms. They consist of sociétés à responsabilité limité (each, an<br />
‘‘SARL’’), sociétés par actions simplifiées (each, an ‘‘SAS’’) and sociétés civiles immobilières (each, an<br />
‘‘SCI’’).<br />
Each Borrower that is an SARL or an SAS is liable to French corporate income tax.<br />
Under French tax law, an SCI is deemed to be a transparent entity, subject to certain exceptions which do<br />
not apply to the Borrowers. Accordingly, the shareholders of a Borrower that is incorporated as an SCI<br />
include their share of the profits or losses realised by that Borrower in their taxable income and are<br />
directly liable vis-à-vis the French tax authorities for the payment of French income tax due on those<br />
taxable profits, if any.<br />
Interest paid by the Borrowers to the Issuer<br />
Pursuant to current French tax legislation, interest paid by the Borrowers to the Issuer on the Commercial<br />
Mortgage Loans is not subject to withholding tax in France.<br />
French corporate income status of the Issuer<br />
The Issuer is exempt from French corporate income tax on income (including interest income) realised<br />
within the framework of its legal purpose.<br />
Withholding Tax in respect of the Notes and the Hedging Agreements<br />
In the event that withholding taxes are imposed in respect of payments to Noteholders of amounts due<br />
pursuant to the Notes (as to which see the section entitled ‘‘Taxation’’ below), neither the Issuer nor any<br />
Paying Agent nor any other person will be obliged to pay any additional amounts to Noteholders or to<br />
otherwise compensate Noteholders for the reduction in the amounts which they will receive as a result of<br />
such withholding or deduction. If such a withholding or deduction is required to be made, the Issuer will<br />
have the option (but not the obligation, unless the Borrowers have exercised their rights to prepay the<br />
Commercial Mortgage Loans in such circumstances and in certain circumstances subject to the consent of<br />
the Borrowers) of redeeming all outstanding Notes in full at their Principal Amount Outstanding<br />
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