Bermuda-based Lancashire Holdings Limited has received approval from its shareholders to proceed with its previously announced plan to move its tax residence to the UK. The company, which operates subsidiaries in both Bermuda and the UK, announced the move at the end of July, following a review of its Bermuda tax residence.
Over the years Bermuda has been the destination of choice for a number of UK companies seeking greater financial freedom and lower taxes. However, UK financial authorities have been reviewing the situation and have published a number of proposals for reforming the tax code to make the UK a more hospitable domicile for companies.
Lancashire said the latest proposals for the reform of the UK’s Controlled Foreign Companies (CFC) rules, had determined its decision to seek shareholder approval to implement “changes in the Company’s bye-laws to allow the conduct of board and shareholder business in the UK in anticipation of the Company’s move to UK tax residence in 2012.”
The shareholders also approved a resolution that “confers authority on the Company to allot and issue common shares for cash in an amount up to 10 percent of the Company’s issued share capital at the date of the SGM notice (an aggregate nominal value of US$8,430,121) on a non pre-emptive basis.”
Lancashire’s Chairman Martin Thomas explained that the “vote permitting the issue of up to 10 percent of shares on a non pre-emptive basis recognizes and affirms the approach to capital management that the Company has consistently and successfully deployed since its inception in 2005. It gives the Company the ability to raise capital rapidly to take best advantage of underwriting opportunities, whilst avoiding the inevitable procedural delay of a UK rights issue.
“This helps place the Company on a more even footing with its international competitors, and is an important tool in the Company’s capital management strategy. The amendments permitting board meetings to be held in the UK will help the Company more effectively benefit from the anticipated move in tax residence at the start of 2012. The flexibility afforded by these positive votes is a clear benefit to the Company going forward.”
Moving the company’s tax domicile to the UK, however, doesn’t mean that Lancashire is abandoning Bermuda. In announcing its intentions in July the bulletin noted that it would not be “required to move its place of incorporation in order to qualify for the temporary period exemption, and currently intends to remain incorporated in Bermuda. Its Bermuda-based insurance subsidiary will continue to operate and be incorporated in Bermuda.”
Source: Lancashire Group
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