Tyco investors back tax-friendly Bermuda domicile

Friday, March 26, 2004

NORTH HAVEN, USA: Tyco International Ltd shareholders on Thursday rejected a proposal to scrap the conglomerate's tax-friendly incorporation in Bermuda after warnings that such a move could reduce the company's market capitalization by $5 billion. 

According to Reuters, in an annual meeting at Tyco's U.S. Surgical business, 93 percent of the votes cast favored keeping the Bermuda incorporation. 

Tyco came under intense pressure last year from some investors to abandon its Bermuda incorporation after scandal and criminal indictments against former top leaders threw the conglomerate into turmoil. 

Critics say a Bermuda domicile does not offer shareholders the same protection against corporate dishonesty as a U.S.-based corporation. 

Tyco became a Bermuda company in 1997 but keeps only a nominal staff in Bermuda. Its key executive operations are based in New Hampshire, Boca Raton, Florida and New Jersey.

Nevertheless, the Bermuda incorporation allows Tyco to have a lower tax rate than American rivals. Some U.S. lawmakers want to close that loophole and have blasted Bermuda incorporations as unpatriotic. 

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