Seagate copies XL in seeking Ireland move

Computer storage maker Seagate
Technology Inc. is planning to move the place of incorporation of its parent
company from the Cayman Islands to Ireland.

Seagate has been incorporated in
the Cayman Islands since 10 August 2000, but has no employees in Cayman.

Seagate’s physical headquarters is
located in Scotts Valley, CA.

The plans, detailed in a filing
with the US Securities and Exchange Commission, come just a few weeks after a
similar announcement by Bermuda-based insurer XL.

Seagate’s SEC filing echoes the
reasons given for the transaction in XL’s filing with the regulator.

Seagate chairman, president and CEO
Steve Luczo wrote in the proxy statement: “While our tenure [in the Cayman Islands]
has served us and our shareholders well, there are compelling reasons that
support a move to Ireland at this time.”

He cited specifically the “negative
publicity regarding, and criticism of, companies that conduct business in the
US but are domiciled in countries that have low rates of, or no direct taxation
and as a consequence do not have a substantial network of double taxation (or
similar) treaties with the US or with many of the countries where we have
operations.”

Furthermore, Mr. Luczo wrote,
“legislative and regulatory bodies in various jurisdictions, including the US,
have actively considered proposals and/or introduced legislation that, if
enacted, could increase our tax burden if we remained incorporated in the
Cayman Islands.”

XL also named the image of offshore
centres in general and the risk of a potentially higher tax burden, both
locally and internationally, as reasons for seeking a new domicile.

Seagate’s criteria in opting for
Ireland also mirrored those of XL.

The filing lists Ireland’s
political stability as a result of strong international relationships, such as the
country’s EU and OECD membership, a low level of taxation and a large network
of double taxation treaties including the US as well as the shareholder
friendly legal system as main factors for wanting to move the seat of the
group’s parent company to Ireland.

Like for most US companies that are
domiciling or investing in Europe the fact that Ireland is a common law
jurisdiction and the only English-speaking member of the Eurozone was also a
factor, the filing showed.

The move will be subject to
approval by Seagate shareholders and the courts of the Cayman Islands.

Data from the Cayman Islands
company registry indicates that re-domiciling out of Cayman has not yet become
a major trend. In 2009, 71 companies delisted from the register to move their
place of incorporation elsewhere. While the number was slightly higher than the
68 companies in 2008 it was still lower than the 85 companies that left Cayman
in 2007.

However, Seagate is the second
large high-profile company to announce such a move in 2010, blaming the image
of offshore centres.

Meanwhile, new company
registrations have declined significantly in 2009. It cannot be determined
whether the image of and potential legislation against the use of offshore
centres contributed to the decline.

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