BP 2010 Annual Report Download - page 137

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Additionalinformationforshareholders
Additional information for shareholders
Materialcontracts
On6August2010,BPenteredintoatrustagreementwith
JohnSMartin,JrandKentDSyverud,asindividualtrustees,andCitigroup
Trust-Delaware,N.A.,ascorporatetrustee(theTrustAgreement)which
establishedtheDeepwaterHorizonOilSpillTrust(theTrust)tobefundedin
theamountof$20billion(thetrustfund)overtheperiodtothefourth
quarterof2013.Thetrustfundisavailabletosatisfylegitimateindividual
andbusinessclaimsadministeredbytheGulfCoastClaimsFacility(GCCF),
stateandlocalgovernmentclaimsresolvedbyBP,naljudgmentsand
settlements,stateandlocalresponsecosts,andnaturalresourcedamages
andrelatedcosts.Fines,penaltiesandclaimsadministrationcostsarenot
coveredbythetrustfund.UnderthetermsoftheTrustAgreement,BPhas
norighttoaccessthefundsoncetheyhavebeencontributedtothetrust
fund.BPwillreceivefundsfromthetrustfundonlyuponitsexpiration,if
thereareanyfundsremainingatthatpoint.BPhastheauthorityunderthe
TrustAgreementtopresentcertainresolvedclaims,includingnatural
resourcedamagesclaimsandstateandlocalresponseclaims,totheTrust
forpayment,byprovidingthetrusteeswithalltherequireddocuments
establishingthatsuchclaimsarevalidundertheTrustAgreement.However,
anysuchpaymentscanonlybemadeontheauthorityofthetrusteeand
anyfundsdistributedarepaiddirectlytotheclaimants,nottoBP.TheTrust
AgreementisgovernedbythelawsoftheStateofDelaware.
On30September2010,BPenteredapledgeandcollateral
agreementinfavourofJohnSMartin,JrandKentDSyverud(thePledge
Agreement),whichpledgedcertainGulfofMexicoassetsascollateralfor
thetrustfundfundingobligation.Thepledgedcollateralconsistsofan
overridingroyaltyinterestinoilandgasproductionofBP’sThunderHorse,
Atlantis,MadDog,GreatWhiteandMars,UrsaandNaKikaassetsinthe
GulfofMexico.Awholly-ownedcompanycalledVeranoCollateralHoldings
LLC(Verano)hasbeencreatedtoholdtheoverridingroyaltyinterest,which
iscappedat$1.25billionperquarterand$17billionintotal.Veranohas
pledgedtheoverridingroyaltyinteresttotheTrustascollateralforBP’s
remainingcontributionobligationstotheTrust.BPcontributedafurther
$2billiontothetrustfundsincethisarrangementwasestablished,thereby
reducingtheamountofthepledgeto$15billionattheendoftheyear.An
eventofdefaultunderthePledgeAgreementwillariseifBPfailstomake
anycontributionundertheTrustAgreementwhendueorotherwisefailsto
observecertainotherobligations,subjecttospeciedcureperiods.
Followinganeventofdefault,thetrusteeswillbeentitledtoexerciseall
remediesassecuredpartiesinrespectofthecollateral,includingreceiptof
royaltyinterestsfromthepledgedassets,havingallorpartofthelimited
liabilitycompanyinterestsregisteredinthetrustees’nameandsellingthe
collateralatpublicorprivatesale.ThePledgeAgreementisgovernedbythe
lawsoftheStateofTexas.
Exchangecontrols
TherearecurrentlynoUKforeignexchangecontrolsorrestrictionson
remittancesofdividendsontheordinarysharesorontheconductofthe
company’soperations.
Therearenolimitations,eitherunderthelawsoftheUKorunder
thecompany’sArticlesofAssociation,restrictingtherightofnon-resident
orforeignownerstoholdorvoteBPordinaryorpreferencesharesinthe
company.
Taxation
ThissectiondescribesthematerialUSfederalincometaxandUKtaxation
consequencesofowningordinarysharesorADSstoaUSholderwho
holdstheordinarysharesorADSsascapitalassetsfortaxpurposes.It
doesnotapply,however,tomembersofspecialclassesofholderssubject
tospecialrulesandholdersthat,directlyorindirectly,hold10%ormoreof
thecompany’svotingstock.Inaddition,ifapartnershipholdsthesharesor
ADSs,theUSfederalincometaxtreatmentofapartnerwillgenerally
dependonthestatusofthepartnerandthetaxtreatmentofthe
partnershipandmaynotbedescribedfullybelow.
AUSholderisanybenecialownerofordinarysharesorADSsthat
areforUSfederalincometaxpurposes(i)acitizenorresidentoftheUS,
(ii)aUSdomesticcorporation,(iii)anestatewhoseincomeissubjecttoUS
federalincometaxationregardlessofitssource,or(iv)atrustifaUScourt
canexerciseprimarysupervisionoverthetrust’sadministrationand
oneormoreUSpersonsareauthorizedtocontrolallsubstantialdecisions
ofthetrust.
ThissectionisbasedontheInternalRevenueCodeof1986,as
amended,itslegislativehistory,existingandproposedregulations
thereunder,publishedrulingsandcourtdecisions,andthetaxationlawsof
theUK,allascurrentlyineffect,aswellastheincometaxconvention
betweentheUSandtheUKthatenteredintoforceon31March2003(the
Treaty).Theselawsaresubjecttochange,possiblyonaretroactivebasis.
Thissectionisfurtherbasedinpartontherepresentationsofthe
DepositaryandassumesthateachobligationintheDepositAgreement
andanyrelatedagreementwillbeperformedinaccordancewithitsterms.
ForpurposesoftheTreatyandtheestateandgifttaxConvention
(the‘EstateTaxConvention’),andforUSfederalincometaxandUK
taxationpurposes,aholderofADRsevidencingADSswillbetreatedasthe
ownerofthecompany’sordinarysharesrepresentedbythoseADRs.
ExchangesofordinarysharesforADRsandADRsforordinaryshares
generallywillnotbesubjecttoUSfederalincometaxortoUKtaxation
otherthanstampdutyorstampdutyreservetax,asdescribedbelow.
InvestorsshouldconsulttheirowntaxadviserregardingtheUS
federal,stateandlocal,theUKandothertaxconsequencesofowningand
disposingofordinarysharesandADSsintheirparticularcircumstances,
andinparticularwhethertheyareeligibleforthebenetsoftheTreaty.
Taxation of dividends
UKtaxation
UndercurrentUKtaxationlaw,nowithholdingtaxwillbedeductedfrom
dividendspaidbythecompany,includingdividendspaidtoUSholders.A
shareholderthatisacompanyresidentfortaxpurposesintheUKor
tradingintheUKthroughapermanentestablishmentgenerallywillnotbe
taxableintheUKonadividenditreceivesfromthecompany.A
shareholderwhoisanindividualresidentfortaxpurposesintheUK
issubjecttoUKtaxbutentitledtoataxcreditoncashdividendspaid
onordinarysharesorADSsofthecompanyequaltoone-ninthofthe
cashdividend.
USfederalincometaxation
AUSholderissubjecttoUSfederalincometaxationonthegrossamount
ofanydividendpaidbythecompanyoutofitscurrentoraccumulated
earningsandprots(asdeterminedforUSfederalincometaxpurposes).
Dividendspaidtoanon-corporateUSholderintaxableyearsbeginning
before1January2013thatconstitutequalieddividendincomewillbe
taxabletotheholderatamaximumtaxrateof15%,providedthatthe
holderhasaholdingperiodintheordinarysharesorADSsofmorethan
60daysduringthe121-dayperiodbeginning60daysbeforetheex-dividend
dateandmeetsotherholdingperiodrequirements.Dividendspaidbythe
companywithrespecttothesharesorADSswillgenerallybequalied
dividendincome.
BPAnnualReportandForm20-F2010 135