Garmin 2010 Annual Report Download - page 43

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these shareholders may be able to determine the outcome of corporate actions requiring shareholder approval,
such as mergers and acquisitions. This level of ownership may have a significant effect in delaying, deferring or
preventing a change in control of Garmin and may adversely affect the voting and other rights of other holders of
our common shares.
On June 27, 2010 we completed the redomestication of the place of our incorporation from the Cayman Islands
to Sitzelad the Redoestiatio. As a esult of ieased shaeholde appoal euieets ude
Swiss law, we have less flexibility than we previously had as a Cayman Islands company with respect to certain
aspects of capital management.
Siss la allos ou shaeholdes atig at a shaeholdes eetig to authoize shae apital that a e
issued by the board of directos ithout appoal of a shaeholdes eetig, ut this authoizatio is liited to
% of the eistig egisteed shae apital ad ust e eeed  a shaeholdes eetig ee to eas.
Additionally, subject to specified exceptions, including the exceptions described in our articles of association, Swiss
law grants preemptive rights to existing shareholders to subscribe for new issuances of shares and other securities.
Swiss law does not provide as much flexibility as Cayman Islands law in the various terms that can attach to
different classes of shares either. For example, while the board of directors of a Cayman Islands company can
authorize the issuance of preferred stock without shareholder approval, we will not be able to issue preferred
stock without the approval of 66 2/3% of the votes represented and a majority of the par value of the shares
represented at a general meeting of our shareholders. Swiss law also reserves for approval by shareholders many
corporate actions over which our board of directors previously had authority under Cayman Islands law. For
example, dividends must be approved by shareholders at the general meeting of our shareholders.
The par value of our shares is higher following the Redomestication. As a result, we have less flexibility than we
previously had as a Cayman Islands company with respect to certain aspects of capital management.
The par value of our shares is 10 Swiss francs per share, compared to a par value of $0.005 per share
when we were a Cayman Islands company. Under Swiss law, we may not issue shares below par value. In the
event we need to raise equity capital at a time when the trading price of our shares is below the par value of the
shares, we will be unable to issue shares. In addition, we will not be able to issue options under our benefits plans
with an exercise price below the par value, which would limit the flexibility of our compensation arrangements.
We are subject to various Swiss taxes following the Redomestication.
Although we do not expect Swiss taxes to materially affect our worldwide effective corporate tax rate, we
are subject to additional corporate taxes in Switzerland following the Redomestication. Switzerland imposes a
corporate federal income tax for holding companies at an effective tax rate of 7.83%, although we should be
etitled to a patiipatio elief that i ost ases ill effetiel eliiate a Siss taatio o the pofits of
our subsidiaries paid by them to us as dividends as well as on capital gains related to the sale of participations. We
also are subject to a Swiss issuance stamp tax levied on our share issuances, other than in connection with
qualifying restructurings, or increases of our equity at a rate of 1% of the fair market value of the issuance or
increase. In addition, we are subject to some other Swiss indirect taxes (e.g., VAT, Swiss issuance stamp tax on
certain debt instruments and Swiss securities transfer stamp tax).
We may not be able to make distributions or repurchase shares without subjecting you to Swiss withholding tax.
If we are unable to make distributions, if any, through a reduction of par value or to pay dividends, if any,
out of qualifying capital contribution reserves, then any dividends paid by us will generally be subject to a Swiss
federal withholding tax at a rate of 35%. The withholding tax must be withheld from the gross distribution and paid
to the Swiss Federal Tax Administration. A U.S. holder that qualifies for benefits under the Convention between
the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to
Taxes on Income may apply for a refund of the tax withheld in excess of the 15% treaty rate (or in excess of the 5%
reduced treaty rate for qualifying corporate shareholders with at least 10% participation in our voting stock, or for
a full refund in case of qualified pension funds). Payment of a capital distribution in the form of a par value