Telecommunications company UTStarcom Inc has announced plans for a reorganisation that will move its place of incorporation from Delaware to the Cayman Islands.
The reorganisation would involve a merger with a newly formed subsidiary, following which the company would become a wholly owned subsidiary of UTStarcom Cayman.
The merger requires the affirmative vote of a majority of the Company’s outstanding common stock.
The Cayman holding company will be taxed as a United States corporation.
However, in a filing with the SEC the company said it expects to qualify as a foreign private issuer for reporting purposes to the SEC. As a result, the companies’ compliance operating costs should be reduced.
More details on the reorganisation will be issued in a later proxy statement.
UTStarcom provides IP-based end-to-end networking solutions, such as set-top boxes and other television signal transmission technology, and international service and support in China.
The company has its operational headquarters in Beijing and research and development operations in China and India.
The company was founded in 1991 and listed on NASDAQ in 2000,
International investors into China have traditionally favoured structuring their investments via holding companies or special purpose vehicles domiciled in Cayman, particularly for larger investments or more complex structures.
Cayman Islands’ vehicles are also popular for the establishment of offshore funds and listing entities for IPOs on Asian stock exchanges.
The shares of UTStarcom Cayman are expected to be listed on the NASDAQ. About 22.3 per cent of all foreign companies listed on NASDAQ are registered in the Cayman Islands.