Annual Financial Report - 35

RNS Number : 4169J

HSBC Holdings PLC

30 March 2010

 



	Page
Information about the enforceability of judgements made in the US .......................	472
Exchange controls and other limitations affecting equity security holders .............	472
Fourth interim dividend for 2008 ..................	472
Fourth interim dividend for 2009 ..................	472
Interim dividends for 2010 .............................	473
Dividends on the ordinary shares of HSBC Holdings .......................................................	473
American Depositary Shares ........................	474
Nature of trading market ................................	475
Shareholder profile .........................................	476
Memorandum and Articles of Association	476
Annual General Meeting ...............................	477
Interim Management Statements and Interim results ..............................................	478
Shareholder enquiries and communications ........................................................................	478
Investor relations ...........................................	479
Where more information about HSBC is available .......................................................	480
Taxation of shares and dividends ................	480
History and development of HSBC .............	482
Organisational structure ................................	484

Information about the enforceability of judgements made in the US

HSBC Holdings is a public limited company incorporated in England and Wales. Most of HSBC Holdings' Directors and executive officers live outside the US. As a result, it may not be possible to

serve process on such persons or HSBC Holdings in the US or to enforce judgements obtained in US courts against them or HSBC Holdings based on civil liability provisions of the securities laws of the US. There is doubt as to whether English courts would enforce:

·      certain civil liabilities under US securities laws in original actions; or

·     judgements of US courts based upon these civil liability provisions.

In addition, awards of punitive damages in actions brought in the US or elsewhere may be unenforceable in the UK. The enforceability of any judgement in the UK will depend on the particular facts of the case as well as the laws and treaties in effect at the time.

Exchange controls and other limitations affecting equity security holders

There are currently no UK laws, decrees or regulations which would prevent the import or export of capital or remittance of distributable profits by way of dividends and other payments to holders of HSBC Holdings' equity securities who are not residents of the UK. There are also no restrictions under the laws of the UK or the terms of the Memorandum and Articles of Association of HSBC Holdings concerning the right of non-resident or foreign owners to hold HSBC Holdings' equity securities or, when entitled to vote, to do so.

Fourth interim dividend for 2008

The market value of HSBC Holdings ordinary shares on the first day that the scrip dividend shares in respect of the fourth interim dividend for 2008 were traded on the London Stock Exchange was more than 15 per cent greater than the cash equivalent value used to calculate the scrip dividend entitlements. The market value of each HSBC Holdings share for the purposes of UK income tax and capital gains tax calculations on 6 May 2009 was £5.3129 and the cash equivalent value used to calculate scrip dividend entitlements was £3.906.

Accordingly, the UK HM Revenue and Customs will substitute the market value of £5.3129 per scrip dividend share for UK income tax and capital gains tax purposes for the cash equivalent value of £3.906 per scrip dividend share.

A replacement Notional Tax Voucher was sent on 3 June 2009 to shareholders on the Principal Register in the UK who elected for the scrip dividend alternative in respect of the fourth interim dividend for 2008.

Fourth interim dividend for 2009

The Directors have declared a fourth interim dividend for 2009 of US$0.10 per ordinary share. Information on the scrip dividend scheme and currencies in which shareholders may elect to have the cash dividend paid will be sent to shareholders on or about 30 March 2010. The timetable for the dividend is:

Announcement ................................................................................................................................................	1 March 2010
Shares quoted ex-dividend in London, Hong Kong, Paris and Bermuda ..............................................................	17 March 2010
ADSs quoted ex‑dividend in New York .............................................................................................................	17 March 2010
Record date in Hong Kong ...............................................................................................................................	18 March 2010
Record date in London, New York, Paris and Bermuda1 ....................................................................................	19 March 2010
Mailing of Annual Report and Accounts 2009 and/or Annual Review 2009, Notice of Annual General Meeting and dividend documentation .........................................................................................................................	30 March 2010
Final date for receipt by registrars of forms of election, Investor Centre electronic instructions and revocations of standing instructions for scrip dividends ........................................................................................................	22 April 2010
Exchange rate determined for payment of dividends in sterling and Hong Kong dollars ....................................	26 April 2010
Payment date: dividend warrants, new share certificates or transaction advices and notional tax vouchers mailed and shares credited to stock accounts in CREST ...........................................................................................	5 May 2010

1  Removals to and from the Overseas Branch register of shareholders in Hong Kong will not be permitted on this date.

Interim dividends for 2010

The Board has adopted a policy of paying quarterly interim dividends on the ordinary shares. Under this policy it is intended to have a pattern of three equal interim dividends with a variable fourth interim dividend. It is envisaged that the first interim dividend in respect of 2010 will be US$0.08 per ordinary share. The proposed timetables for the dividends in respect of 2010 are:

	Interim dividends for 2010
	First		Second		Third		Fourth
Announcement ..........................................	4 May 2010		2 August 2010		1 November 2010		28 February 2011
Shares quoted ex-dividend in London, Hong Kong, Paris and Bermuda ..............	19 May 2010		18 August 2010		17 November 2010		16 March 2011
ADSs quoted ex-dividend in New York .......	19 May 2010		18 August 2010		17 November 2010		16 March 2011
Record date in Hong Kong .........................	20 May 2010		19 August 2010		18 November 2010		17 March 2011
Record date in London, New York, Paris and Bermuda1 ................................................	21 May 2010		20 August 2010		19 November 2010		18 March 2011
Payment date .............................................	7 July 2010		6 October 2010		12 January 2011		5 May 2011

1  Removals to and from the Overseas Branch Register of shareholders in Hong Kong will not be permitted on these dates.

Dividends on the ordinary shares of HSBC Holdings

HSBC Holdings has paid dividends on its ordinary shares every year without interruption since it became the HSBC Group holding company by a scheme of arrangement in 1991. The dividends declared, per ordinary share, in respect of each of the last five years were:

		First             interim		Second             interim		Third             interim		Fourth             interim1		Total2
2009	US$ ..................................	0.080		0.080		0.080		0.100		0.340
	£ .......................................	0.048		0.050		0.048		0.062		0.208
	HK$ .................................	0.620		0.620		0.620		0.775		2.635
2008	US$ ...................................	0.180		0.180		0.180		0.100		0.640
	£ .......................................	0.090		0.100		0.124		0.069		0.383
	HK$ ..................................	1.403		1.398		1.395		0.775		4.971
2007	US$ ...................................	0.170		0.170		0.170		0.390		0.900
	£ .......................................	0.085		0.084		0.086		0.194		0.449
	HK$ ..................................	1.328		1.322		1.325		3.041		7.016
2006	US$ ...................................	0.150		0.150		0.150		0.360		0.810
	£ .......................................	0.082		0.079		0.078		0.183		0.422
	HK$ ..................................	1.164		1.167		1.168		2.799		6.298
2005	US$ ...................................	0.140		0.140		0.140		0.310		0.730
	£ .......................................	0.077		0.079		0.079		0.169		0.404
	HK$ ..................................	1.088		1.086		1.085		2.403		5.662

1  The fourth interim dividend for 2009 of US$0.10 per share has been translated into pounds sterling and Hong Kong dollars at the closing rate on 31 December 2009. The dividend will be paid on 5 May 2010.

2  The above dividends declared are accounted for as disclosed in Note 12 on the Financial Statements.

Dividends are declared in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, sterling and Hong Kong dollars, or, subject to the Board's determination that a scrip dividend is to be offered in respect of that dividend, may be satisfied in whole or in part by the issue of new shares in lieu of a cash dividend.

American Depositary Shares

A holder of HSBC Holdings' American Depositary Shares ('ADS's) may have to pay, either directly or indirectly (via the intermediary through whom their ADSs are held) fees to the Bank of New York Mellon as depositary. Fees may be paid or recovered in several ways: by deduction from amounts distributed; by selling a portion of the distributable property; by annual charge deducted from dividend distributions, by directly invoicing the holder, or by charging the intermediaries who act for them. The fees for which the holders of the HSBC ADSs will be responsible include:

For:	HSBC ADS holders must pay:
Each issuance of HSBC ADSs, including as a result of a distribution of shares (through stock dividend or stock split or rights or other property)	US$5.00 (or less) per 100 HSBC ADSs or portion thereof
Each cancellation of HSBC ADSs, including if the deposit agreement terminates	US$5.00 (or less) per 100 HSBC ADSs or portion thereof
Transfer and registration of shares on HSBC's share register from the holder's name to the name of The Bank of New York Mellon or its agent when the holder deposits or withdraws shares	Registration or transfer fees (of which there currently are none)
Conversion of non-US currency to US dollars	Charges and expenses incurred by The Bank of New York Mellon with respect to the conversion
Each cash distribution to HSBC ADS holders	US$0.02 or less per ADS
Cable, telex and facsimile transmission expenses	As provided in the Deposit Agreement
Transfers or issues of HSBC ordinary shares to the depositary in exchange for HSBC ADSs	Subject to the exceptions described in the 'Stamp duty and stamp duty reserve tax' paragraphs in the Shareholder Information section on page 481, stamp duty or stamp duty reserve tax equal to 1.5 per cent (rounded up, in the case of stamp duty, to the nearest £5) of the amount of the consideration given for the transfer, or the value of the shares if there is no such consideration, or their issue price
Distribution of securities to holders of deposited securities which are distributed by the depositary to ADS holders	A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs
Any charges incurred by the depositary or its agents for servicing the deposited securities	As applicable

The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

The depositary has agreed to reimburse HSBC for expenses incurred in the administration and maintenance of the ADS programme. There are limits on the amount of expenses for which the depositary will reimburse the Company. The amount of reimbursement available is not tied to the amount of fees the depositary collects from holders of ADSs. In respect of the year ended 31 December 2009, the depositary reimbursed a total of US$301,218 to HSBC relating to the administration of the programme, as detailed below:

Category of expense	2009                US$
Stock exchange listing fees ................................................................................................................................	104,906
Fulfilment costs .................................................................................................................................................	196,312
- shareholder meeting costs (printing and distribution of materials and vote tabulation) ................................	21,785
- beneficial holder searches ............................................................................................................................	167,300
- sundry costs including: postage and envelopes for mailing annual and interim financial reports, dividend warrants, electronic filing of US Federal tax information, mailing required tax forms, stationery, postage, facsimile and telephone calls ......................................................................................................................	7,227

Nature of trading market

HSBC Holdings ordinary shares are listed or admitted to trading on the London Stock Exchange, the Hong Kong Stock Exchange ('HKSE'), Euronext Paris, the New York Stock Exchange ('NYSE') and the Bermuda Stock Exchange. HSBC Holdings maintains its principal share register in England and overseas branch share registers in Hong Kong and Bermuda (collectively, the 'share register').

As at 31 December 2009, there were a total of 220,089 holders of record of HSBC Holdings ordinary shares on the share register.

As at 31 December 2009, a total of 17,422,388 of the HSBC Holdings ordinary shares were registered in the HSBC Holdings' share register in the name of 14,267 holders of record with addresses in the US. These shares represented 0.10 per cent of the total HSBC Holdings ordinary shares in issue.

As at 31 December 2009, there were 9,613 holders of record of ADSs holding approximately 154 million ADSs, representing approximately 768 million HSBC Holdings ordinary shares. 9,419 of these holders had addresses in the US, holding approximately 153.5 million ADSs, representing 767.7 million HSBC Holdings ordinary shares. As at 31 December 2009, approximately 4.4 per cent of the HSBC Holdings ordinary shares were represented by ADSs held by holders of record with addresses in the US.

The following table shows, for the years, calendar quarters and months indicated, the highest and lowest prices for the HSBC Holdings ordinary shares and ADSs. These are based on mid-market prices at close of business on the London Stock Exchange, HKSE, Euronext Paris, NYSE and the Bermuda Stock Exchange, as adjusted for the 5-for-12 rights issue completed in April 2009.

Past share price performance should not be regarded as a guide to future performance.

High and low mid-market closing prices

	London				Hong Kong				New York				Paris				Bermuda
	US$0.50 shares				US$0.50 shares				ADSs1				US$0.50 shares				US$0.50 shares
	High		Low		High		Low		High		Low		High		Low		High		Low
	pence		pence		HK$		HK$		US$		US$		euro		euro		US$		US$
2009 ...................	761		304		98.0		30.6		64.0		22.0		8.6		3.3		12.5		4.6
2008 ...................	809		534		125.4		67.4		79.5		41.3		10.3		5.5		15.9		8.0
2007 ...................	840		700		140.6		119.2		90.3		74.8		12.4		9.7		17.6		14.8
2006 ...................	896		796		139.1		114.5		89.3		73.0		13.2		11.5		17.6		14.7
2005 ...................	828		719		122.8		110.5		77.8		70.3		12.0		10.3		15.4		14.1
2009
4th Quarter ..........	761		668		98.0		85.3		64.0		54.9		8.6		7.5		12.5		11.0
3rd Quarter ..........	730		493		91.8		61.4		59.5		39.9		8.1		5.7		11.6		8.2
2nd Quarter ..........	578		411		70.8		42.9		45.5		29.5		6.6		4.4		9.2		6.9
1st Quarter ...........	594		304		71.8		30.6		45.0		22.0		6.3		3.3		8.6		4.6
2008
4th Quarter ..........	809		534		113.7		67.4		74.9		41.3		10.3		5.5		14.4		8.0
3rd Quarter ..........	801		624		119.2		103.8		76.2		65.2		10.2		7.7		14.9		12.8
2nd Quarter ..........	782		676		125.4		111.2		79.5		69.4		9.9		8.4		15.9		14.1
1st Quarter ...........	734		621		121.2		96.1		75.9		63.4		9.8		8.2		15.0		12.6
	London				Hong Kong				New York				Paris				Bermuda
	US$0.50 shares				US$0.50 shares				ADSs1				US$0.50 shares				US$0.50 shares
	High		Low		High		Low		High		Low		High		Low		High		Low
	pence		pence		HK$		HK$		US$		US$		euro		euro		US$		US$
2010
January ...............	740		660		92.4		83.6		59.3		53.5		8.3		7.6		11.6		10.7
2009
December ............	726		680		93.8		86.5		60.2		55.3		8.1		7.7		12.0		11.2
November ...........	761		668		98.0		85.3		64.0		55.3		8.6		7.5		12.5		11.0
October ...............	723		671		90.4		85.7		58.3		54.9		7.8		7.5		11.7		11.0
September ...........	730		640		91.8		80.7		59.5		52.0		8.1		7.4		11.6		11.4
August .................	672		627		86.4		77.7		55.8		52.5		7.9		7.4		11.2		10.5
July .....................	606		493		77.1		61.4		50.7		39.9		7.1		5.7		9.6		8.2

1  In New York each ADS represents 5 underlying ordinary shares.

Stock symbols

HSBC Holdings ordinary shares trade under the following stock symbols:

London Stock Exchange	HSBA
Hong Kong Stock Exchange	5
New York Stock Exchange (ADS)	HBC
Euronext Paris	HSB
Bermuda Stock Exchange	HSBC

Shareholder profile

At 31 December 2009 the share register recorded the following details:

Ordinary shares held	Number of shareholders		Total    shares held
1-100 ....................................................................................................................................	33,140		1,041,849
101-400 ................................................................................................................................	31,295		7,610,861
401-500 ................................................................................................................................	8,047		3,620,690
501-1,000 .............................................................................................................................	32,745		23,569,774
1,001-5,000 ..........................................................................................................................	73,547		171,133,596
5,001-10,000 ........................................................................................................................	18,792		131,845,068
10,001-20,000 ......................................................................................................................	10,858		151,471,115
20,001-50,000 ......................................................................................................................	6,541		201,655,152
50,001-200,000 ....................................................................................................................	3,210		296,820,337
200,001-500,000 ..................................................................................................................	757		238,071,012
500,001 and above ................................................................................................................	1,157		16,181,367,314
Total .....................................................................................................................................	220,089		17,408,206,768

Memorandum and Articles of Association

The disclosure under the caption 'Memorandum and Articles of Association' contained in HSBC Holdings' Annual Reports on Form 20-F for the years ended 31 December 2000 and 2001 is incorporated by reference herein, together with the disclosure below.

Interested directors

Subject to the provisions of the Companies Act 2006 and provided that the Articles are complied with, a Director, notwithstanding his office:

·     may enter into or otherwise be interested in any contract, arrangement, transaction or proposal with HSBC Holdings or in which HSBC Holdings is otherwise interested;

·     may hold any other office or place of profit under HSBC Holdings (except that of auditor or auditor of a subsidiary of HSBC Holdings) in conjunction with the office of Director and may act by himself or through his firm in a professional capacity for HSBC Holdings, and in any such case on such terms as to remuneration and otherwise as the Board may arrange;

·     may be a director or other officer, or employed by, or a party to any transaction or arrangement with or otherwise interested in, any company promoted by HSBC Holdings or in which HSBC Holdings is otherwise interested or as regards which HSBC Holdings has any powers of appointment; and

·     shall not be liable to account to HSBC Holdings for any profit, remuneration or other benefit realised by any such office, employment, contract, arrangement, transaction or proposal or from any interest in any body corporate and no such contract, arrangement, transaction, proposal or interest shall be avoided on the grounds of any such interest or benefit nor shall the receipt of any such profit, remuneration or any other benefit constitute a breach of his or her duty under the Companies Act 2006 not to accept benefits from third parties.

Since 1 October 2008, the Board may authorise any matter proposed to it which would, if not so authorised, involve a breach by a Director of his or her duty to avoid conflicts of interest under the Companies Act 2006, including, without limitation, any matter which relates to a situation in which a Director has, or can have, an interest which conflicts, or possibly may conflict, with the interest of HSBC Holdings (including the exploitation of any property, information or opportunity, whether or not HSBC Holdings could take advantage of it, but excluding any situation which cannot reasonably be regarded as likely to give rise to a conflict of interest). Any such authorisation will be effective only if:

·     any requirement as to quorum at the meeting at which the matter is considered is met without counting the Director in question or any other interested Director; and

·     the matter was agreed to without their voting or would have been agreed to if their votes had not been counted.

The Board may (whether at the time of the giving of the authorisation or subsequently) make any such authorisation subject to any limits or conditions it expressly imposes but such authorisation is otherwise given to the fullest extent permitted. The Board may vary or terminate any such authorisation at any time.

A Director shall be under no duty to HSBC Holdings with respect to any information which he obtains or has obtained otherwise than as a Director of HSBC Holdings and in respect of which he has a duty of confidentiality to another person.

Retirement

There is no mandatory retirement age for Directors of HSBC Holdings.

Annual General Meeting

The 2010 Annual General Meeting will be held at the Barbican Hall, Barbican Centre, London EC2 on Friday, 28 May 2010 at 11 am.

An informal meeting of shareholders will be held at 1 Queen's Road Central, Hong Kong on Monday, 24 May 2010 at 4.30 pm.

All resolutions considered at the 2009 Annual General Meeting were passed on a poll as follows:

		Total votes
Resolution		For1		Against		Vote withheld2
1	To receive the Report and Accounts for 2008 ...............................	7,901,287,647		40,358,760		35,340,460
2	To approve the Directors' Remuneration Report for 2008 ...........	7,060,582,014		681,527,638		233,742,167
3	To re-elect the following as Directors:
	(a).. S A Catz ................................................................................	7,929,542,903		22,920,267		31,655,980
	(b).. V H C Cheng ..........................................................................	7,941,676,475		11,270,381		31,134,247
	(c).. M K T Cheung .......................................................................	7,939,025,380		11,377,699		33,777,308
	(d).. J D Coombe ...........................................................................	7,935,388,445		13,017,095		35,791,573
	(e).. J L Durán................................................................................	7,940,220,049		12,282,606		31,706,996
	(f)... R A Fairhead ..........................................................................	7,937,758,292		14,728,893		31,726,248
	(g).. D J Flint ................................................................................	7,912,074,791		37,587,208		34,389,735
	(h).. A A Flockhart .......................................................................	7,929,977,258		17,696,949		36,519,295
	(i)... W K L Fung ...........................................................................	7,827,043,012		66,722,011		90,363,781
	(j)... M F Geoghegan ......................................................................	7,908,649,043		38,351,123		37,448,198
	(k).. S K Green ..............................................................................	7,791,903,013		56,527,889		135,700,002
	(l)... S T Gulliver ...........................................................................	7,907,643,866		35,501,686		39,631,531
	(m). J W J Hughes-Hallett .............................................................	7,935,557,101		16,848,745		31,718,789
	(n).. W S H Laidlaw .......................................................................	7,936,661,889		13,720,447		33,737,012
	(o).. J R Lomax .............................................................................	7,925,965,357		26,348,115		31,806,338
	(p).. Sir Mark Moody-Stuart ..........................................................	7,936,652,035		15,533,759		31,931,899
	(q).. G Morgan ..............................................................................	7,937,695,742		12,657,251		33,729,241
	(r)... N R N Murthy .......................................................................	7,939,721,249		12,600,587		31,798,598
	(s)... S M Robertson .......................................................................	7,939,561,457		12,763,612		31,776,474
	(t)... J L Thornton .........................................................................	7,939,757,360		12,291,883		31,909,754
	(u).. Sir Brian Williamson ..............................................................	7,939,497,300		12,796,977		31,784,282
4	To reappoint the Auditor at remuneration to be determined by the Group Audit Committee .............................................................	7,885,940,600		38,605,986		52,015,387
5	To authorise the Directors to allot shares ......................................	7,865,611,572		80,639,173		32,860,563
6	To disapply pre-emption rights (Special Resolution) .....................	7,898,555,932		52,061,875		29,723,057
7	To authorise the Company to purchase its own Ordinary Shares ....	7,866,095,619		20,259,041		92,366,735
8	To alter the Articles of Association with effect from 1 October 2009 (Special Resolution) ...................................................................	7,950,959,375		5,013,812		24,681,152
9	To approve general meetings (other than annual general meetings) being called on 14 clear days' notice (Special Resolution) ..........	7,769,003,251		178,874,096		32,468,298

1  Includes discretionary votes.

2  A 'Vote withheld' is not a 'vote' in law and is not counted in the calculation of the votes 'For' and 'Against' the resolution.

Interim Management Statements and Interim results

Interim Management Statements are expected to be issued on 7 May 2010 and 5 November 2010. The interim results for the six months to 30 June 2010 are expected to be issued on 2 August 2010.

Shareholder enquiries and communications

Enquiries

Any enquiries relating to shareholdings on the share register, for example transfers of shares, change of name or address, lost share certificates or dividend cheques, should be sent to the Registrars at the address given below. The Registrars offer an online facility, Investor Centre, which enables shareholders to manage their shareholding electronically.

Principal Register:		Hong Kong Overseas Branch Register:		Bermuda Overseas Branch Register:
Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ United Kingdom Telephone: [phone] Email via website: www.investorcentre.co.uk/contactus		Computershare Hong Kong Investor   Services Limited Hopewell Centre Rooms 1712-1716, 17th Floor 183 Queen's Road East Hong Kong Telephone: [phone] Email: [e-mail]		Corporate Shareholder Services The Bank of Bermuda Limited 6 Front Street Hamilton HM 11 Bermuda Telephone: [phone] Email: bob.bda.shareholder.services@ bob.hsbc.com
Investor Centre: www.investorcentre.co.uk		Investor Centre: www.computershare.com/hk/investors		Investor Centre: www.computershare.com/investor/bm

Any enquiries relating to ADSs should be sent to the depositary:

BNY Mellon Shareowner Services

PO Box 358516

Pittsburgh, PA 15252-8516

USA

Telephone (US): 1 877 283 5786

Telephone (International): 1 201 680 6825

Email: [e-mail]

Website: www.bnymellon.com/shareowner

Any enquiries relating to shares held through Euroclear France, the settlement and central depositary system for Euronext Paris, should be sent to the paying agent:

HSBC France

103, avenue des Champs Elysées

75419 Paris Cedex 08

France

Telephone: [phone]

Email: [e-mail]

Website: www.hsbc.fr

If you have been nominated to receive general shareholder communications directly from HSBC Holdings, it is important to remember that your main contact in terms of your investment remains as it was (so the registered shareholder, or perhaps custodian or broker, who administers the investment on your behalf). Therefore any changes or queries relating to your personal details and holding (including any administration thereof) must continue to be directed to your existing contact at your investment manager or custodian. HSBC Holdings cannot guarantee dealing with matters directed to it in error.

Further copies of this Annual Report and Accounts 2009 may be obtained by writing to the following departments:

For those in Europe, the Middle East and Africa:		For those in Asia-Pacific:		For those in the Americas:
Group Communications HSBC Holdings plc 8 Canada Square London E14 5HQ UK		Group Communications (Asia) The Hongkong and Shanghai Banking Corporation Limited 1 Queen's Road Central Hong Kong		Internal Communications HSBC - North America 26525 N Riverwoods Boulevard Mettawa Illinois 60045 USA

 

Electronic communications

Shareholders may at any time choose to receive corporate communications in printed form or to receive a notification of their availability on HSBC's website. To receive future notifications of the availability of a corporate communication on HSBC's website by email, or revoke or amend an instruction to receive such notifications by email, go to www.hsbc.com/ecomms. If you provide an email address to receive electronic communications from HSBC, we will also send notifications of your dividend entitlements by email. If you received a notification of the availability of this document on HSBC's website and would like to receive a printed copy of it, or if you would like to receive future corporate communications in printed form, please write or send an email to the appropriate Registrars at the address given above. Printed copies will be provided without charge.

Chinese translation

A Chinese translation of this Annual Report and Accounts 2009 is available upon request after 30 March 2010 from the Registrars:

Computershare Hong Kong Investor Services Limited Hopewell Centre, Rooms 1712-1716, 17th Floor 183 Queen's Road East Hong Kong

Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ UK

Please also contact the Registrars if you wish to receive Chinese translations of future documents or if you have received a Chinese translation of this document and do not wish to receive such translations in future.

Investor relations

Enquiries relating to HSBC's strategy or operations may be directed to:

Manager Investor Relations HSBC Holdings plc 8 Canada Square London E14 5HQ UK		SVP Investor Relations HSBC North America Holdings Inc. 26525 N. Riverwoods Boulevard Mettawa, Illinois 60045 USA		Head of Investor Relations, Asia-Pacific The Hongkong and Shanghai Banking Corporation Limited 1 Queen's Road Central Hong Kong
Telephone:              44 (0)20 7991 8041		1 224 544 4400		852 2822 4908
Facsimile: 44 (0)845 587 0225		1 224 552 4400		852 2537 5109
Email:      [e-mail]		[e-mail]		[e-mail]

Where more information about HSBC is available

This Annual Report and Accounts 2009, and other information on HSBC, may be viewed on HSBC's website: www.hsbc.com.

Reports, statements or information that HSBC Holdings files with the Securities and Exchange Commission are available at www.sec.gov. Investors can also request hard copies of these documents upon payment of a duplicating fee, by writing to the SEC at the Office of Investor Education and Advocacy, 100 F Street N.E., Washington, DC 20549-0123 or by emailing [e-mail]. Investors should call the Commission at [phone] if they require further assistance. Investors may also obtain the reports and other information that HSBC Holdings files at www.nyse.com (telephone number (1) 212 656 3000).

Taxation of shares and dividends

Taxation - UK residents

The following is a summary, under current law, of the principal UK tax considerations that are likely to be material to the ownership and disposition of shares. The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a holder of shares. In particular, the summary deals principally with shareholders who are resident in the UK for UK tax purposes and only with holders who hold the shares as investments and who are the beneficial owners of the shares, and does not address the tax treatment of certain classes of holders such as dealers in securities. Holders and prospective purchasers should consult their own advisers regarding the tax consequences of an investment in shares in light of their particular circumstances, including the effect of any national, state or local laws.

Taxation of dividends

Currently no tax is withheld from dividends paid by HSBC Holdings. However, dividends are paid with an associated tax credit which is available for set-off by certain shareholders against any liability they may have to UK income tax. Currently, the associated tax credit is equivalent to 10 per cent of the combined cash dividend and tax credit, i.e. one‑ninth of the cash dividend.

For individual shareholders who are resident in the UK for taxation purposes and liable to UK income tax at the basic rate, no further UK income tax liability arises on the receipt of a dividend from HSBC Holdings. Individual shareholders who are liable to UK income tax at the dividend higher rate or additional rate (which applies for the tax year 2010-11 and subsequent years) on UK dividend income (currently 32.5 per cent and 42.5 per cent) are taxed on the combined amount of the dividend and the tax credit. The tax credit is available for set‑off against the higher rate and additional rate liability. Individual UK resident shareholders are not entitled to any tax credit repayment.

Although non-UK resident shareholders are generally not entitled to any repayment of the tax credit in respect of any UK dividend received, some such shareholders may be so entitled under the provisions of a double taxation agreement between their country of residence and the UK. However, in most cases no amount of the tax credit is, in practice, repayable.

Information on the taxation consequences of the HSBC Holdings scrip dividends offered in lieu of the 2008 fourth interim dividend and the first, second and third interim dividends for 2009 was set out in the Secretary's letters to shareholders of 31 March, 3 June, 1 September and 1 December 2009. In the case of the 2008 fourth interim dividend, the difference between the cash dividend foregone and the market value of the scrip dividend exceeded 15 per cent of the market value. Accordingly, the amount of the dividend income chargeable to tax, and, the acquisition price of HSBC Holdings US$0.50 ordinary shares (the 'shares') for UK capital gains tax purposes, was the market value of £5.39 per share. In each other case the difference was less than 15 per cent and the price of the shares was the cash dividend foregone.

Taxation of capital gains

The computation of the capital gains tax liability arising on disposals of shares in HSBC Holdings by shareholders subject to UK tax on capital gains can be complex, partly depending on whether, for example, the shares were purchased since April 1991, acquired in 1991 in exchange for shares in The Hongkong and Shanghai Banking Corporation Limited, or acquired subsequent to 1991 in exchange for shares in other companies.

For capital gains tax purposes, the acquisition cost for ordinary shares is adjusted to take account of subsequent rights and capitalisation issues. Any capital gain arising on a disposal by a UK company may also be adjusted to take account of indexation allowance. If in doubt, shareholders are recommended to consult their professional advisers.

Inheritance tax

Shares or ADSs held by an individual whose domicile is determined to be the US for the purposes of the United States-United Kingdom Double Taxation Convention relating to estate and gift taxes (the 'Estate Tax Treaty') and who is not for such purposes a national of the UK will not, provided any US Federal estate or gift tax chargeable has been paid, be subject to UK inheritance tax on the individual's death or on a lifetime transfer of shares or ADSs except in certain cases where the shares or ADSs (i) are comprised in a settlement (unless, at the time of the settlement, the settlor was domiciled in the US and was not a national of the UK), (ii) is part of the business property of a UK permanent establishment of an enterprise, or (iii) pertains to a UK fixed base of an individual used for the performance of independent personal services. In such cases, the Estate Tax Treaty generally provides a credit against US Federal tax liability for the amount of any tax paid in the UK in a case where the shares or ADSs are subject to both UK inheritance tax and to US Federal estate or gift tax.

Stamp duty and stamp duty reserve tax

Transfers of shares by a written instrument of transfer generally will be subject to UK stamp duty at the rate of 0.5 per cent of the consideration paid for the transfer, and such stamp duty is generally payable by the transferee.

An agreement to transfer shares, or any interest therein, normally will give rise to a charge to stamp duty reserve tax at the rate of 0.5 per cent of the consideration. However, provided an instrument of transfer of the shares is executed pursuant to the agreement and duly stamped before the date on which the stamp duty reserve tax becomes payable, under the current practice of UK HM Revenue and Customs it will not be necessary to pay the stamp duty reserve tax, nor to apply for such tax to be cancelled. Stamp duty reserve tax is generally payable by the transferee.

Paperless transfers of shares within CREST, the UK's paperless share transfer system, are liable to stamp duty reserve tax at the rate of 0.5 per cent of the consideration. In CREST transactions, the tax is calculated and payment made automatically. Deposits of shares into CREST generally will not be subject to stamp duty reserve tax, unless the transfer into CREST is itself for consideration. Following the case pursued by HSBC before the European Court of Justice (Case C-569/07 HSBC Holdings plc and Vidacos Nominees v The Commissioners for HM

Revenue & Customs) HMRC now accepts that the charge to SDRT at 1.5 per cent on the issue of shares to a depositary receipt issuer or a clearance service located within the European Union is prohibited. HMRC has invited claims from individuals for repayment for any such tax paid in the last six years.

Taxation - US residents

The following is a summary, under current law, of the principal UK tax and US federal income tax considerations that are likely to be material to the ownership and disposition of shares or ADSs by a holder that is a resident of the US for US federal income tax purposes (a 'US holder'). The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a holder of shares or ADSs. In particular, the summary deals only with US holders that hold shares or ADSs as capital assets, and does not address the tax treatment of holders that are subject to special tax rules, such as banks, tax-exempt entities, insurance companies, dealers in securities or currencies, persons that hold shares or ADSs as part of an integrated investment (including a 'straddle') comprised of a share or ADS and one or more other positions, and persons that own, directly or indirectly, 10 per cent or more of the voting stock of HSBC Holdings. This discussion is based on laws, treaties, judicial decisions and regulatory interpretations in effect on the date hereof, all of which are subject to change. Under the current income tax treaty between the UK and the US, US holders are no longer entitled to claim a special foreign tax credit in respect of dividends.

Holders and prospective purchasers should consult their own advisers regarding the tax consequences of an investment in shares or ADSs in light of their particular circumstances, including the effect of any national, state or local laws.

Any US federal tax advice included in this Annual Report is for informational purposes only; it was not intended or written to be used, and cannot be used, for the purpose of avoiding US federal tax penalties.

Taxation of dividends

A US holder must include cash dividends paid on the shares or ADSs in ordinary income on the date that such holder or the ADS depositary receives them, translating dividends paid in UK pounds sterling into US dollars using the exchange rate in effect on the date of receipt. A US holder that elects to receive shares in lieu of a cash dividend must include in

ordinary income the fair market value of such shares on the dividend payment date, and the tax basis of those shares will equal such fair market value.

Subject to certain exceptions for positions that are held for less than 61 days or are hedged, and subject to a foreign corporation being considered a 'qualified foreign corporation' (which includes not being classified for US federal income tax purposes as a passive foreign investment company), certain dividends ('qualified dividends') received by an individual US holder before 2011 generally will be subject to US taxation at a maximum rate of 15 per cent. Based on the company's audited financial statements and relevant market and shareholder data, HSBC Holdings does not anticipate being classified as a passive foreign investment company. Accordingly, dividends paid on the shares generally should be treated as qualified dividends.

Taxation of capital gains

Gains realised by a US holder on the sale or other disposition of shares or ADSs normally will not be subject to UK taxation unless at the time of the sale or other disposition the holder carries on a trade, profession or vocation in the UK through a branch or agency or permanent establishment and the shares or ADSs are or have been used, held or acquired for the purposes of such trade, profession, vocation, branch or agency or permanent establishment. Such gains will be included in income for US tax purposes, and will be long-term capital gains if the shares or ADSs were held for more than one year. A long-term capital gain realised by an individual holder before 2011 generally will be subject to US tax at a maximum rate of 15 per cent.

Stamp duty and stamp duty reserve tax - ADSs

If shares are transferred into a clearance service or depository receipt ('ADR') arrangement (which will include a transfer of shares to the Depository) UK stamp duty and/or stamp duty reserve tax will be payable. The stamp duty or stamp duty reserve tax is generally payable on the consideration for the transfer and is payable at the aggregate rate of 1.5 per cent.

The amount of stamp duty reserve tax payable on such a transfer will be reduced by any stamp duty paid in connection with the same transfer.

No stamp duty will be payable on the transfer of, or agreement to transfer, an ADS, provided that the ADR and any separate instrument of transfer or written agreement to transfer remain at all times outside the UK, and provided further that any such transfer or written agreement to transfer is not executed in the UK. No stamp duty reserve tax will be payable on a transfer of, or agreement to transfer, an ADS effected by the transfer of an ADR.

On a transfer of shares from the Depository to a registered holder of an ADS upon cancellation of the ADS, a fixed stamp duty of £5 per instrument of transfer will be payable by the registered holder of the ADR cancelled.

US backup withholding tax and information reporting

Distributions made on shares and proceeds from the sale of shares or ADSs that are paid within the US, or through certain financial intermediaries to US holders, are subject to information reporting and may be subject to a US 'backup' withholding tax unless, in general, the US holder complies with certain certification procedures or is a corporation or other person exempt from such withholding. Holders that are not US persons generally are not subject to information reporting or backup withholding tax, but may be required to comply with applicable certification procedures to establish that they are not US persons in order to avoid the application of such information reporting requirements or backup withholding tax to payments received within the US or through certain financial intermediaries.

History and development of HSBC

1865	The founding member of the HSBC Group, The Hongkong and Shanghai Banking Corporation, is established in both Hong Kong and Shanghai.
1959	The Mercantile Bank of India Limited and The British Bank of the Middle East, now HSBC Bank Middle East Limited, are purchased.
1965	A 51 per cent interest (subsequently increased to 62.14 per cent) is acquired in Hang Seng Bank Limited. Hang Seng Bank is the fourth-largest listed bank in Hong Kong by market capitalisation.
1980	A 51 per cent interest in Marine Midland Banks, Inc., now HSBC USA, Inc, is acquired (with the remaining interest acquired in 1987).
1981	The Hongkong and Shanghai Banking Corporation incorporates its then existing Canadian operations. HSBC Bank Canada subsequently makes numerous acquisitions, expanding rapidly to become the largest foreign-owned bank in Canada.

1987	A 14.9 per cent interest in Midland Bank plc, now HSBC Bank plc, one of the UK's principal clearing banks, is purchased.
1991	HSBC Holdings plc is established as the parent company of the HSBC Group.
1992	HSBC purchases the remaining interest in Midland Bank plc.
1993	As a consequence of the Midland acquisition, HSBC's Head Office is transferred from Hong Kong to London in January.
1997	HSBC assumes selected assets, liabilities and subsidiaries of Banco Bamerindus do Brasil S.A., now HSBC Bank Brazil, following the intervention of the Central Bank of Brazil, and in Argentina completes the acquisition of Grupo Roberts, now part of HSBC Bank Argentina S.A.
1999	HSBC acquires Republic New York Corporation, subsequently merged with HSBC USA, Inc., and Safra Republic Holdings S.A.
2000	HSBC completes its acquisition of 99.99 per cent of the issued share capital of Crédit Commercial de France S.A., now HSBC France.
2002	HSBC acquires 99.59 per cent of Grupo Financiero Bital, S.A. de C.V., the holding company of what is now HSBC Mexico.
2003	HSBC acquires Household International, Inc., now HSBC Finance Corporation.
2003	HSBC acquires Banco Lloyds TSB S.A.-Banco Múltiplo in Brazil and the country's leading consumer finance company, Losango Promotora de Vendas Limitada.
2004	HSBC Bank USA, Inc. merges with HSBC Bank & Trust (Delaware) N.A. to form HSBC Bank USA, N.A.
2004	The acquisition of The Bank of Bermuda Limited is completed.

2004	HSBC acquires Marks and Spencer Retail Financial Services Holdings Limited, which trades as Marks and Spencer Money ('M&S Money') in the UK.
2004	HSBC acquires 19.9 per cent of Bank of Communications, and Hang Seng Bank acquires 15.98 per cent of Industrial Bank.
2005	HSBC increases its holding in Ping An Insurance to 19.9 per cent, having made its initial investment in 2002. Ping An Insurance is the second-largest life insurer and the third-largest property and casualty insurer in mainland China.
2005	HSBC Finance completes the acquisition of Metris Companies Inc., making HSBC the fifth-largest issuer of MasterCard and Visa cards in the USA.
2006	HSBC acquires Grupo Banistmo S.A. ('Banistmo'), the leading banking group in Central America, through a tender offer to acquire 99.98 per cent of the outstanding shares of Banistmo.
2007	HSBC's three associates in mainland China, Industrial Bank, Ping An Insurance and Bank of Communications, issue new shares. HSBC does not subscribe and, as a result, its interests in the associates' equity decrease from 15.98 per cent to 12.78 per cent, from 19.90 per cent to 16.78 per cent and from 19.90 per cent to 18.60 per cent, respectively. Subsequently, HSBC increases its holding in Bank of Communications from 18.60 per cent to 19.01 per cent.
2007	HSBC is named the successful bidder in a government auction to acquire the assets, liabilities and operations of The Chinese Bank in Taiwan.
2008	HSBC completes the sale of its seven French regional banks.
2009	In May, HSBC completes the acquisition of 88.89 per cent of PT Bank Ekonomi Raharja Tbk in Indonesia for US$608 million in cash and, in August, increases its holding to 98.96 per cent at a total cost of US$680 million.

 

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