Royal Caribbean Cruise Lines 2014 Annual Report Download - page 36

Royal Caribbean Cruises Ltd. 35
PART I
future with respect to the identity, residence or hold-
ings of our direct or indirect shareholders, trading
volume or trading frequency of our shares, or relevant
foreign tax laws of Liberia or Malta such that they no
longer qualify as equivalent exemption jurisdictions,
that could affect our eligibility for the Section 883
exemption. Accordingly, there can be no assurance
that we will continue to be exempt from United States
income tax on United States source shipping income
in the future. If we were not entitled to the benefit of
Section 883, we and our subsidiaries would be subject
to United States taxation on a portion of the income
derived from or incidental to the international opera-
tion of our ships, which would reduce our net income.
Additionally, portions of our business are operated
by companies that are within tonnage tax regimes of
the U.K. and Malta. Further, some of the operations of
these companies are conducted in jurisdictions where
we rely on tax treaties to provide exemption from tax-
ation. To the extent the tonnage tax laws of these
countries change or we do not continue to meet the
applicable qualification requirements or if tax treaties
are changed or revoked, we may be required to pay
higher income tax in these jurisdictions, adversely
impacting our results of operations.
As budgetary constraints continue to adversely impact
the jurisdictions in which we operate, increases in
income tax regulations or tax reform affecting our
operations may be imposed.
We are not a United States corporation and our
shareholders may be subject to the uncertainties of
a foreign legal system in protecting their interests.
Our corporate affairs are governed by our Articles
of Incorporation and By-Laws and by the Business
Corporation Act of Liberia. The provisions of the
Business Corporation Act of Liberia resemble provi-
sions of the corporation laws of a number of states
in the United States. However, while most states have
a fairly well developed body of case law interpreting
their respective corporate statutes, there are very
few judicial cases in Liberia interpreting the Business
Corporation Act of Liberia. As such, the rights and
fiduciary responsibilities of directors under Liberian
law are not as clearly established as the rights and
fiduciary responsibilities of directors under statutes or
judicial precedent in existence in certain United States
jurisdictions. For example, the right of shareholders
to bring a derivative action in Liberian courts may be
more limited than in United States jurisdictions. There
may also be practical difficulties for shareholders
attempting to bring suit in Liberia and Liberian courts
may or may not recognize and enforce foreign judg-
ments. Thus, our public shareholders may have more
difficulty in protecting their interests with respect
to actions by management, directors or controlling
shareholders than would shareholders of a corpora-
tion incorporated in a United States jurisdiction.
Litigation, enforcement actions, fines or penalties
could adversely impact our financial condition or
results of operations and/or damage our reputation.
Our business is subject to various United States and
international laws and regulations that could lead to
enforcement actions, fines, civil or criminal penalties
or the assertion of litigation claims and damages. In
addition, improper conduct by our employees, agents
or joint venture partners could damage our reputation
and/or lead to litigation or legal proceedings that could
result in civil or criminal penalties, including substan-
tial monetary fines. In certain circumstances it may
not be economical to defend against such matters
and/or a legal strategy may not ultimately result in us
prevailing in a matter. Such events could lead to an
adverse impact on our financial condition or results
of operations.
Provisions of our Articles of Incorporation, By-Laws
and Liberian law could inhibit others from acquiring us,
prevent a change of control, and may prevent efforts
by our shareholders to change our management.
Certain provisions of our Articles of Incorporation and
By-Laws and Liberian law may inhibit third parties
from effectuating a change of control of the Company
without Board approval which could result in the
entrenchment of current management. These include
provisions in our Articles of Incorporation that pre-
vent third parties, other than A. Wilhelmsen AS and
Cruise Associates, from acquiring beneficial owner-
ship of more than 4.9% of our outstanding shares
without the consent of our Board of Directors.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Information about our cruise ships, including their size
and primary areas of operation, may be found within
the Operating Strategies—Fleet upgrade, maintenance
and expansion section and the Operations—Cruise
Ships and Itineraries section in Item 1. Business. Infor-
mation regarding our cruise ships under construction,
estimated expenditures and financing may be found
within the Future Capital Commitments and Funding
Needs and Sources sections of Item 7. Management’s
Discussion and Analysis of Financial Condition and
Results of Operations.