Monday, July 20, 2009

Friends Provident rejects tax dodging

From the Financial Task Force blog:

British life insurance company Friends Provident is doing something unusual in today’s business environment – not only has it shunned moving offshore to a low tax jurisdiction, it’s insisting that another company move onshore too before it’ll consider a merger. From the Guardian:

"Insurer Friends Provident today set out terms for a merger with Clive Cowdery’s buyout vehicle Resolution. The deal would scupper Resolution’s plans to pay a select band of executives 10% of annual profits and base the new company in a tax haven.

Friends Provident said it was prepared to enter talks with Resolution, but only if the merged business retained its name, remained listed on the London Stock Exchange and paid tax in the UK. Friends, which was founded by Quakers in 1832, would take over Resolution and become the holding company for a merged group."

But why would Friends Provident insist on something like that? Well, perhaps their rejection of Resolution’s bid to takeover Friends Provident earlier this week might offer some insight:

"On Monday, Friends cited Resolution’s governance structure as a reason for rejecting the company’s takeover approach, describing it as “significantly different from recognised public company best practice”.

Resolution is registered in Guernsey, a well known tax haven/secrecy jurisdiciton, where the company contracts out the management of itself to a partnership located in London consisting of its top executives. Clearly the only reason that Resolution is “based” in Guernsey is for tax purposes.

It’s nice to see a company like Friends Provident stand up for what’s right.

Fingers crossed - but are Friends Provident at the leading edge of a new revolution in corporate responsibility? Well, it would be nice if it were so. The battle between Friends and Resolution ("a listed cash shell") continues.


Blogger LegallyMum said...

..."Guernsey, a well known tax haven/secrecy jurisdiction"....

Hardly!! If you want secrecy about your affairs, you would do well to steer clear of Guernsey! Regulations are tighter, and new TIEAs are being signed, it seems, monthly at present. Guernsey provides the opportunity to incorporate various structures, at tax rates that are more favourable than in other centres. However, if you consider its regulations, it is far better regulated than the City of London. So perhaps Friends Provident are opting for the less well regulated, and less policed option by refusing to do business with Guernsey-registered companies!

4:16 am  

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