RiskMetrics Issues FAQs for Tax and Governance Havens

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On January 4, 2010, RiskMetrics issued a set of Frequently Asked Questions on Tax and Governance Havens: International Incorporation Issues.

RiskMetrics identifies the following countries as tax and governance havens:

  • Anguilla
  • Antigua/Barbuda
  • Bahamas
  • Barbados
  • Cayman Islands
  • Guernsey
  • Isle of Man
  • Jamaica
  • Jersey
  • Liberia
  • Marshall Islands
  • Mauritius
  • Monaco
  • Netherland Antilles
  • Panama
  • Virgin Islands (UK)

So what exactly is the consequence for a company to be incorporated in a tax and governance haven? RiskMetrics’ policy response depends on the type of company involved.  Further details along with some examples involving director elections are set forth on page 3 of the FAQs.

RiskMetrics also stats that some countries traditionally thought of as tax havens (such as Switzerland, Luxembourg and Ireland) are not included in the above list because they do not meet both conditions, i.e., they are tax havens, but they do not qualify as governance havens since they have well-defined corporate laws and codes and do not offer the governance flexibility of the governance havens listed. As such, these countries would fall under RiskMetrics’ international voting guidelines.

In the FAQs RiskMetrics indicates that certain companeis are incorporated in these traditional tax havens that do not also qualify as governance havens and may be listed in the U.S. However, RiskMetrics is unwilling to apply its policies on a one-off basis to companies incorporated in such countries that are listed in the U.S. and not to the rest of the companies incorporated there for which sufficient information necessary to undertake a U.S. policy-style analysis is unavailable.

So for companies that had reincorporated to places like Switzerland or Ireland and were hoping RiskMetrics might be persuaded this yer to apply the U.S. policies to their proxies, it looks like they’ll have to wait a bit longer.  Interestingly, RiskMetrics concludes  the FAQs by looking at the results of its issuer and institution surveys about what policies to apply and concludes that there appears to be no consensus.  I take that to mean that until there is a clear desire to have U.S. listed companies that happen to be incorporated in tax havens that are not also governance havens analyzed under U.S. policies, as demonstrated by its annual survey, RiskMetrics will be unlikely to change its position regarding what policy it will apply to such companies.

Full text of the FAQs can be found on RiskMetrics’ website at:



edwardhauder.com Blog Now iPhone and Touch Screen Mobile Phone Optimized

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edwardhauder.com is now optimized for touch screen mobile phones, including the iPhone, iPod Touch, BlackBerry Storm, Google Android, etc. Simply go to the site from your mobile phone’s browser and you’ll be able to switch between the mobile optimized version of the blog and the regular them.  The control for switching back and forth is located at the bottom of the main page.

Let Ed know if you find this feature useful and if you’d like to see a full-blown mobile app for the blog.


Transition Guidance for SEC’s New Proxy Disclosure Rules Issued

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Earlier today the SEC issued several Compliance & Disclosure Interpretations (C&DIs) that provide guidance to companies on how to transition to the final proxy disclosure rules issued on December 16, 2009.  There had been a number of questions regarding how and when the new rules would apply.

  • For companies with fiscal years ending on or after December 20, 2009, they will have to file their Form 10-K and proxy statement in compliance with the new rules.
  • If a company is not required to comply with the new rules, it can do so voluntarily so long as it complies with all the other requirements applicable to the form it files.
  • If a company is becoming subject to the securities disclosure rules and files a registration statement on or after December 20, 2009, it would have to comply with the new Regulation S-K amendments for such registration statement to be declared effective on or after February 28, 2010.
  • As to the Form 8-K requirements applicable to the reporting of shareholder voting results, these will apply to any meeting that takes place on or after February 28, 2010.

The full text of the C&DIs can be found at: