BT 2011 Annual Report Download - page 173

170
ADDITIONAL INFORMATION INFORMATION FOR SHAREHOLDERS
(l) Disclosure of interests in shares
Under the Financial Services and Markets Act 2000 and the UK Disclosure and Transparency Rules there is a statutory obligation on a person
who acquires or ceases to have a notifiable interest in the relevant share capital of a public company like BT to notify the company of that
fact. The disclosure threshold is 3%. These Rules also deal with the disclosure by persons of interests in shares or debentures of companies in
which they are directors and certain associated companies. Under section 793 of the 2006 Act (referred to in (a) above), BT may ascertain
the persons who are or have within the last three years been interested in its shares and the nature of those interests. The UK City Code on
Takeovers and Mergers also imposes strict disclosure requirements with regard to dealings in the securities of an offeror or offeree company
on all parties to a takeover and also on their respective associates during the course of an offer period.
Material contracts
Excluding contracts entered into in the ordinary course of business, no contracts have been entered into in the two years preceding the date
of this document by BT or another member of the group which are, or may be, material to the group or contain a provision under which a
member of the group has an obligation or entitlement which is, or may be, material to BT or such other member of the group.
Taxation (US Holders)
This is a summary only of the principal US federal income tax and UK tax consequences of the ownership and disposition of ordinary shares
or ADSs by US Holders (as defined below) who hold their ordinary shares or ADSs as capital assets. It does not address all aspects of US
federal income taxation and does not address aspects that may be relevant to persons who are subject to special provisions of US federal
income tax law, including US expatriates, insurance companies, tax-exempt organisations, banks, regulated investment companies, financial
institutions, securities broker-dealers, traders in securities who elect a mark-to-market method of accounting, persons subject to alternative
minimum tax, investors that directly, indirectly or by attribution own 10% or more of the outstanding share capital or voting power of BT,
persons holding their ordinary shares or ADSs as part of a straddle, hedging transaction or conversion transaction, persons who acquired
their ordinary shares or ADSs pursuant to the exercise of options or otherwise as compensation, or persons whose functional currency is not
the US Dollar, amongst others. Those holders may be subject to US federal income tax consequences different from those set forth below.
For the purposes of this summary, a US Holder is a beneficial owner of ordinary shares or ADSs that, for US federal income tax purposes, is: a
citizen or individual resident of the United States; a corporation (or other entity taxable as a corporation for US federal income tax purposes)
created or organised in or under the laws of the United States or any political subdivision thereof; an estate the income of which is subject to
US federal income taxation regardless of its sources, or a trust if a US court can exercise primary supervision over the administration of the
trust and one or more US persons are authorised to control all substantial decisions of the trust. If a partnership holds ordinary shares or
ADSs, the US tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partner
in a partnership that holds ordinary shares or ADSs is urged to consult its own tax advisor regarding the specific tax consequences of owning
and disposing of the ordinary shares or ADSs.
In particular, this summary is based on (i) current UK tax law and the practice of Her Majesty’s Revenue & Customs (HMRC) and US law and
US Internal Revenue Service (IRS) practice, including the Internal Revenue Code of 1986, as amended, existing and proposed Treasury
regulations, rulings, judicial decisions and administrative practice, all as currently in effect and available, (ii) the United Kingdom–United
States Convention relating to estate and gift taxes, and (iii) the United Kingdom–United States Tax Convention that entered into force on
31 March 2003 and the protocol thereto (the Convention), all as in effect on the date of this Annual Report, all of which are subject to
change or changes in interpretation, possibly with retroactive effect.
US Holders should consult their own tax advisors as to the applicability of the Convention and the consequences under UK, US federal, state
and local, and other laws, of the ownership and disposition of ordinary shares or ADSs.
Taxation of dividends
Under current UK tax law, BT will not be required to withhold tax at source from dividend payments it makes. Unless a US Holder of ordinary
shares or ADSs is resident in or ordinarily resident for UK tax purposes in the UK or unless a US Holder of ordinary shares or ADSs carries on a
trade, profession or vocation in the UK through a branch or agency, or, in the case of a company, a permanent establishment in the UK, the
holder should not be liable for UK tax on dividends received in respect of ordinary shares and/or ADSs.
For US federal income tax purposes, a distribution will be treated as ordinary dividend income. The amount of the distribution includible in
gross income of a US Holder will be the US Dollar value of the distribution calculated by reference to the spot rate in effect on the date the
distribution is actually or constructively received by a US Holder of ordinary shares, or by the Depositary, in the case of ADSs. A US Holder
who converts Sterling into US Dollars on the date of receipt generally should not recognise any exchange gain or loss. A US Holder who does
not convert Sterling into US Dollars on the date of receipt generally will have a tax basis in Sterling equal to their US Dollar value on such
date. Foreign currency gain or loss, if any, recognised by the US Holder on a subsequent conversion or other disposition of Sterling generally
will be US source ordinary income or loss. Dividends paid by BT to a US Holder will not be eligible for the US dividends received deduction
that may otherwise be available to corporate shareholders.
For purposes of calculating the foreign tax credit limitation, dividends paid on the ordinary shares or ADSs will be treated as income from
sources outside the US and generally will constitute ‘passive income’. The rules relating to the determination of the foreign tax credit are
very complex. US Holders who do not elect to claim a credit with respect to any foreign taxes paid in a given taxable year may instead claim
a deduction for foreign taxes paid. A deduction does not reduce US federal income tax on a dollar for dollar basis like a tax credit. The
deduction, however, is not subject to the limitations applicable to foreign credits.
There will be no right to any UK tax credit or to any payment from HMRC in respect of any tax credit on dividends paid on ordinary
shares or ADSs.
OVERVIEWBUSINESS REVIEWFINANCIAL REVIEWREPORT OF THE DIRECTORSFINANCIAL STATEMENTSADDITIONAL INFORMATION