At the Extraordinary General Meeting of Stolt-Nielsen S.A. (Stolt-Nielsen) the 16 November 2010 Folketrygdfondet voted against the merger/ amalgamation between Stolt-Nielsen S.A. and Stolt-Nielsen Limited. The board of directors had put forward a proposal to merge with a Bermuda incorporated company in order to relocate Stolt-Nielsen S.A. from Luxemburg to Bermuda.
Stolt-Nielsen´s rationale behind the proposal was due to changes in Luxemburg tax regime. Stolt-Nielsen has since its formation been subject to favourable taxation, however, changes in Luxemburg law would end the current tax regime. By changing the domicile of Stolt-Nielsen to Bermuda, the company would be subject to a tax regime similar to the tax regime that had been applicable in Luxemburg.
In the opinion of Folketrygdfondet the information rendered in connection with the extraordinary general meeting did not demonstrate that the relocation was in the best interest of all shareholders. Although Bermuda law offers a favourable tax-free regime for Stolt-Nielsen Ltd, no further assessments or discussions were made in respect of alternatives that may have similar effects.
The main concern of Folketrygdfondet was, however, that the relocation would reduce the shareholders´ ability to influence the corporate governance of the company. Under Bermuda law, the approval of the shareholders is not required for decisions on dividend payments, share buyback programs or share issues without pre-emption rights. As for the appointment and removal of directors, Bermuda law provides for further rights entrusted to the board of directors rather than requiring that such decisions are approved by the shareholders. Folketrygdfondet believes that such rights should vest with the shareholders and accordingly that the relocation is disadvantageous with regard to the shareholder´s influence.
Furthermore, the company did not provided a clear and direct comparison between the company´s existing governance practise and governance practice that would result from the relocation. On this background Folketrygdfondet would not be able to make a fully informed decision regarding the transaction.
Based on the above outline, Folketrygdfondet voted against the proposed merger/amalgamation.
Folketrygdfondet has requested that the minutes from the meeting reflect the position of Folketrygdfondet.