Holiday Inn 2015 Annual Report Download - page 167

Exchange controls and restrictions
on payment of dividends
There are no restrictions on dividend payments to US citizens.
Although there are currently no UK foreign exchange control
restrictions on the export or import of capital or the payment of
dividends on the ordinary shares or the ADSs, economic sanctions
which may be in force in the UK from time to time impose restrictions
on the payment of dividends to persons resident (or treated as so
resident) in or governments of (or persons exercising public functions
in) certain countries.
Other than economic sanctions which may be in force in the UK from
time to time, there are no restrictions under the Articles or under
English law that limit the right of non-resident or foreign owners to
hold or vote the ordinary shares or the ADSs. In addition, the Articles
contain certain limitations on the voting and other rights of any holder
of ordinary shares whose holding may, in the opinion of the Directors,
result in the loss or failure to secure the reinstatement of any licence
or franchise from any US governmental agency held by Six Continents
Hotels, Inc. or any subsidiary thereof.
Taxation
This section provides a summary of material US federal income
tax and UK tax consequences to the US holders, described below,
of owning and disposing of ordinary shares or ADSs of the Company.
This section addresses only the tax position of a US holder who holds
ordinary shares or ADSs as capital assets. This section does not,
however, discuss all of the tax considerations that may be relevant
to any particular US holder, such as the provisions of the Internal
Revenue Code of 1986, as amended (IR Code) known as the Medicare
Contribution tax or tax consequences to US holders subject to special
rules, such as:
• certain financial institutions;
• insurance companies;
• dealers and traders in securities who use a mark-to-market
method of tax accounting;
• persons holding ordinary shares or ADSs as part of a straddle,
conversion transaction, integrated transaction or wash sale,
or persons entering into a constructive sale with respect to
the ordinary shares or ADSs;
• persons whose functional currency for US federal income tax
purposes is not the US dollar;
• partnerships or other entities classified as partnerships for
US federal income tax purposes;
• persons liable for the alternative minimum tax;
• tax-exempt organisations;
• persons who acquired the Company’s ADSs or ordinary shares
pursuant to the exercise of any employee stock option or otherwise
in connection with employment; or
• persons who, directly or indirectly, own 10 per cent or more of the
Company’s voting stock.
This section does not generally deal with the position of a US holder
who is resident in the UK for UK tax purposes or who is subject to
UK taxation on capital gains or income by virtue of carrying on a
trade, profession or vocation in the UK through a branch, agency
or permanent establishment to which such ADSs or ordinary shares
are attributable (‘trading in the UK’).
As used herein, a ‘US holder’ is a person who, for US federal income
tax purposes, is a beneficial owner of ordinary shares or ADSs and is:
(i) a citizen or individual resident of the US; (ii) a corporation, or other
entity taxable as a corporation, created or organised in or under the
laws of the US, any state therein or the District of Columbia; (iii) an
estate whose income is subject to US federal income tax 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 authorised to control all substantial decisions of the trust.
This section is based on the IR Code, its legislative history, existing and
proposed regulations, published rulings and court decisions, and on
UK tax laws and the published practice of HM Revenue and Customs
(HMRC), all as of the date hereof. These laws, and that practice, are
subject to change, possibly on a retroactive basis.
This section is further based in part upon the representations of
the ADR Depositary and assumes that each obligation in the deposit
agreement and any related agreement will be performed in accordance
with its terms. For US federal income tax purposes, an owner of ADRs
evidencing ADSs will generally be treated as the owner of the underlying
shares represented by those ADSs. For UK tax purposes, in practice,
HMRC will also regard holders of ADSs as the beneficial owners of the
ordinary shares represented by those ADSs (although case law has cast
some doubt on this). The discussion below assumes that HMRC’s
position is followed.
Generally, exchanges of ordinary shares for ADSs, and ADSs for
ordinary shares, will not be subject to US federal income tax or UK
taxation on capital gains, although UK stamp duty reserve tax (SDRT)
may arise as described below.
The US Treasury has expressed concerns that parties to whom ADSs
are pre-released before shares are delivered to the depositary, or
intermediaries in the chain of ownership between holders and the
issuer of the securities underlying the ADSs, may be taking actions that
are inconsistent with the claiming of foreign tax credits by US holders of
ADSs. Such actions would also be inconsistent with the claiming of the
preferential rates of tax, described below, for qualified dividend income.
Accordingly, the availability of the preferential rates of tax for qualified
dividend income described below could be affected by actions taken by
parties to whom the ADSs are pre-released.
Investors should consult their own tax advisors regarding the US
federal, state and local, the UK and other tax consequences of owning
and disposing of ordinary shares or ADSs in their particular
circumstances.
The following disclosures assumes that the Company is not, and will
not become, a positive foreign investments company (PFIC), as
described below.
Taxation of dividends
UK taxation
Under current UK tax law, the Company will not be required to
withhold tax at source from dividend payments it makes.
A US holder who is not resident for UK tax purposes in the UK and
who is not trading in the UK will generally not be liable for UK taxation
on dividends received in respect of the ADSs or ordinary shares.
Shareholder information
STRATEGIC REPORT GOVERNANCE GROUP FINANCIAL STATEMENTS ADDITIONAL INFORMATIONPARENT COMPANY FINANCIAL STATEMENTS
165IHG Annual Report and Form 20-F 2015