Lion Limited (Lion Ltd) is an investment holding company incorporated in the British Virgin Islands (BVI). Its board of directors comprises members belonging to a Chan family residing in Hong Kong. Most of the top-level policies and the implementation of decisions are discussed between the board members and top management in Hong Kong.

Currently, Lion Ltd has a wholly owned Hong Kong subsidiary named Tiger Limited (Tiger Ltd), which was acquired by Lion Ltd in April 1996. It is managed and operating in Hong Kong and its principal business activity is trading of shoes and apparel. Tiger Ltd also holds 100% equity interest in another Hong Kong-incorporated company called CatLimited (Cat Ltd), and 20% equity interest in a company registered in Guangzhou called Mao Limited ("Mao Ltd).

Cat Ltd, which is centrally managed in Hong Kong, was set up by Tiger Ltd in early 2000s, at which time Cat Ltd directly acquired an office building in Shanghai. Such building is still owned by Cat Ltd as of today and used by the group. Mao Ltd is a limited function manufacturing enterprise in Guangzhou, and owns a factory building located in Guangzhou which is its major asset.

The management of Lion Ltd was recently approached by an unrelated Cayman Island company, Fish Limited (Fish Ltd). Fish Ltd proposed to acquire 100% equity interest in Tiger Ltd together with the 20% equity interest in Mao Ltd, but not any equity interest in Cat Ltd. The proposed acquisition was approved by the board in principle, except that an internal restructuring exercise would need to be conducted to spin off Cat Ltd prior to the acquisition. The following two steps illustrate the process of the acquisition:

Step 1: Tiger Ltd would transfer its 100% equity interest in Cat Ltd to Lion Ltd. The consideration would be determined based on an independent valuation report and would be settled by Lion Ltd by cash.

Step 2: Lion Ltd would then dispose of its 100% equity interest in Tiger Ltd to Fish Ltd. This deal is expected to be completed before the Lunar New Year in 2023.

1. Pertaining to the proposed acquisition by Fish Ltd and the current holding structure

of Lion Ltd as well as the mode of operations of its group companies, discuss the relevant Hong Kong Profits Tax and Stamp Duty implications arising from each step of the acquisition, in particular the transfer of Tiger Ltd from Lion Ltd to Fish Ltd (Step 2).