Clause 10

by deleting subsection (3A) and substituting the following subsection:“(3A) Notwithstanding subsections (3) and (6) —

no dividend paid on any share of a preferential nature shall be exempt from tax in the hands of the shareholder;

any dividend paid on any share of a preferential nature shall be deemed as interest income of the shareholder if the dividend is paid by a company —

which has not been subjected to the provisions of section 44 of the Income Tax Act (Cap. 134) in force immediately before 1st January 2003; or

which before 1st January 2003 had been subjected to the provisions of section 44 of that Act in force immediately before that date and the dividend is paid on or after —

the 44A balance of the company referred to in section 44A of that Act becomes nil;

the company exercises the option referred to in section 44(6A) of that Act; or

31st December 2007,whichever is the earliest; and

any dividend paid on any share of a preferential nature shall be deemed as interest expense of the company if the company so elects.”; and

by deleting the words “in the same proportions as the shareholders were entitled to payment of the dividends giving rise to the debit” in the 3rd, penultimate and last lines of subsection (4) and substituting the words “in accordance with the proportion of their shareholdings in the company”.