>The Stamp Duty (Exemption) (No. 2) Order 2020 ('Exemption Order') has been amended by the Stamp Duty (Exemption) (No. 2) (Amendment) Order 2021 ('Amendment Order') which was gazetted on 25 January 2021 and is deemed to have come into operation retrospectively on 1 March 2020.

The Exemption Order, which exempts from stamp duty for qualifying loan or financing agreements relating to the restructuring or rescheduling of existing business loans or financing, has been amended by the Amendment Order in the following respects -

  1. The deletion of the word "business" in paragraph 2(1) of the Exemption Order so that the exemption applies to instruments or financing agreements for the restructuring or rescheduling of a "loan or financing" whereas previously, the instrument or agreement had to relate to the restructuring or rescheduling of a "business loan or financing";
  2. The deadline for execution of the instrument or agreement has been extended from 31 December 2020 to 30 June 2021;
  3. The imposition of a new qualifying criterion whereby the loan instrument or financing agreement relating to the restructuring or rescheduling must not contain an element of additional value to the original amount of the loan or financing; in other words, increasing the amount of a loan or financing will disqualify the instrument or agreement from stamp duty exemption under the Exemption Order; and
  4. Any "relevant document" may now be submitted in support of the application for exemption whereas previously "a letter of offer between the financier and the borrower for the restructuring or rescheduling" had to be submitted.

Arising from the amendments under the Amendment Order, the revised conditions that have to be fulfilled to qualify for exemption under the Exemption Order are as follows -

  1. An application must be submitted for the exemption;
  2. The loan instrument or financing agreement relating to the restructuring or rescheduling of a loan or financing must be executed on or after 1 March 2020 but no later than 30 June 2021;
  3. The existing loan instrument or financing agreements must be duly stamped under item 22 or item 27 of the First Schedule to the Stamp Act 1949;
  4. The loan instrument or financing agreement relating to the restructuring or rescheduling must not contain an element of additional value to the original amount of the loan or financing; in this regard, a new paragraph 2A has been inserted into the Exemption Order to clarify that accrued interest or profit arising from the restructured or rescheduled payments does not constitute additional value to the original amount of the loan or financing as aforesaid; and
  5. The application for exemption must be accompanied by any relevant document relating to the restructuring or rescheduling of the relevant loan or financing.

Comments

The extension of the deadline for execution of the instrument or agreement for the restructuring or rescheduling of the loan or financing to 30 June 2021 and the relaxation of two of the qualifying criteria for stamp duty exemption are measures that will be welcomed by business owners who have yet to finalise the restructuring or rescheduling of their loans or financing or who have been adversely affected by the Government's imposition of the various forms of movement control orders from 13 January 2021 (MCO 2.0).

Our Alert on the Exemption Order can be read here.

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