Tyco Shareholders Reject Reincorporation To The United States

by Amanda Banks, Tax-News.com, London

29 March 2004

Shareholders of industrial firm Tyco voted overwhelmingly in favour of maintaining the firm’s incorporation in Bermuda during its annual shareholders’ meeting last Thursday.

According to an announcement made by the company last week, 93% of the voting shares chose to reject a move to reincorporate in the United States, which was proposed in a bid to remove the "the negative stigma of being lumped in with tax avoiders".

The vote additionally rejected the arguments of some shareholders that Bermudian law does not give them adequate legal protection in the event of fraud.

Tyco’s board was also against the proposals, and sought to persuade investors by stating that a move back to the United States would increase the company's tax rate from 28% to around 36%, an event which would hurt the firm’s earnings and potentially wipe up to $5 billion from its value.

Ed Breen, Tyco's chairman and chief executive, said accusations that the company was dodging tax were “not founded in fact”.

The news was received positively by investors on Wall Street, with Tyco shares rising 4% on the back of the announcement.

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