Vistaprint 2010 Annual Report Download - page 38

country from which the income is reallocated does not agree with the reallocation, both countries
could tax the same income, resulting in double taxation.
We will pay taxes even if we are not profitable on a consolidated basis, which would cause
increased losses and further harm to our results of operations.
The intercompany service and related agreements among Vistaprint N.V. and our direct and
indirect subsidiaries in general guarantee that the subsidiaries realize profits. As a result, even if the
Vistaprint group is not profitable on a consolidated basis, the majority of our subsidiaries will be
profitable and incur income taxes in their respective jurisdictions. If we are unprofitable on a
consolidated basis, as has been the case in some prior periods, this structure will increase our
consolidated losses and further harm our results of operations.
Provisions of our Articles of Association, the Articles of Association of the independent
foundation, Stichting Continuïteit Vistaprint, Dutch law and the call option we granted to the
independent foundation may make it difficult to replace or remove management and may
inhibit or delay a change of control, including a takeover attempt that might result in a
premium over the market price for our ordinary shares, and dilute your voting power.
Our Articles of Association, or Articles, limit our shareholders’ ability to suspend or dismiss the
members of our management board and supervisory board or to overrule our supervisory board’s
nominees to our management board and supervisory board by requiring a vote of two-thirds of the
votes cast representing more than 50% of the outstanding ordinary shares to do so under most
circumstances. As a result, there may be circumstances in which shareholders may not be able to
remove members of our management board or supervisory board even if holders of a majority of our
ordinary shares favor doing so.
Our Articles also allow us to issue preferred shares. We have established an independent
foundation, Stichting Continuïteit Vistaprint, or the “Foundation,” and granted the Foundation a call
option pursuant to which the Foundation may acquire a number of preferred shares equal to the same
number of ordinary shares then outstanding. The objective of the Foundation is to serve the interests
of Vistaprint N.V. and its stakeholders, which includes but is not limited to shareholders. In carrying
out this objective, the Foundation may acquire, own and vote our preferred shares in order to maintain
the independence, continuity or identity of Vistaprint N.V. If the Foundation were to exercise the call
option, it may prevent a change of control or delay or prevent a takeover attempt, including a takeover
attempt that might result in a premium over the market price for our ordinary shares. Exercise of the
preferred share option would also effectively dilute the voting power of our outstanding ordinary shares
by one-half.
In addition, our management board may issue preferred shares up to an amount equal to the
number of ordinary shares under our authorized share capital. We must seek authorization from our
shareholders at least once every five years for our management board to issue preferred shares.
We have limited flexibility with respect to certain aspects of capital management.
Dutch law requires shareholder approval for the issuance of ordinary shares and for our
management board to limit or exclude shareholders’ preemptive rights under Dutch law. In August
2009, our shareholders granted our supervisory board and management board the authority to issue
ordinary shares as the boards determine appropriate without obtaining specific shareholder approval
for each issuance, but this authorization is limited to the number of ordinary shares under our
authorized share capital and expires in August 2014. We intend to seek re-approval from our
shareholders before the 2014 expiration date. Additionally, subject to specified exceptions, Dutch law
grants preemptive rights to existing shareholders to subscribe for new issuances of shares and
reserves for approval by shareholders many corporate actions, such as the approval of dividends.
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