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Tax an issue behind Richina move

Monday 24th November 2003

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Tax advantages, operating in a share market more comfortable with investments in China and gaining greater access to the larger capital markets of Asia are key benefits driving Richina Pacific to seek shareholder approval to migrate its incorporation to Bermuda, and eventually relocate its primary listing to Singapore.

Currently, the company is liable for New Zealand taxation on its operations in China.

Once migration to Bermuda and Singapore is complete, it will only be liable for New Zealand tax on the property and construction activities of locally based Mainzeal.

No tax will be paid in Bermuda or Singapore, while we will also be able to take advantage of tax holidays negotiated with China authorities when we established our two operations there.

After some difficult years establishing our leather and entertainment businesses in China, they are now viable and have significant prospects for growth and an increase in earnings.

We are also seeking new Asian opportunities.

Without migrating, the tax concessions available in China will be of limited value to Richina shareholders.

While important, tax advantages are not the only reason for relocating from New Zealand.

As a company our future lies in Asia, and to achieve our full potential we need greater access to Asian capital markets and more exposure to international investors who are comfortable with investing in China.

We do not believe it is possible to achieve these while based in New Zealand, and reporting in New Zealand dollars.

Already more than 55% of our shares are held by people or organisations who primarily trade or operate in US dollars, and 90% of our net tangible assets are based in China.

Bermuda offers us the advantages of reporting in US dollars, yet has a business environment and a legislative framework based on the English system.

This combination of factors will hopefully reward shareholders with an improved and more liquid share price.

If shareholders approve the migration, the company will initially retain its primary listing on the New Zealand exchange, but will in time seek to move the primary listing to Singapore with a secondary listing in New Zealand.

Annual reports will continue to be distributed, but stated in US dollars, and annual meetings will continue to be held in New Zealand.

It is also our intention to restructure our governance model so that each operating business (including New Zealand based Mainzeal) will have a separate operating board. Forming part of these boards will be members of the parent board, the CEO and locally based independent directors.

Notice of the Shareholders meeting, together with an Explanatory Statement, which provides full details of the proposals, were mailed to shareholders today.

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


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