RBS 2009 Annual Report Download - page 384

Shareholder information continued
RBS Group Annual Report and Accounts 2009382
Inheritance tax
In relation to PROs held through DTC (or any other clearing system), the
UK inheritance tax position is not free from doubt in respect of a lifetime
transfer, or death of, a US Holder who is not domiciled nor deemed to
be domiciled in the UK for inheritance tax purposes; HM Revenue &
Customs is known to consider that the situs of securities held in this
manner is not necessarily determined by the place where the securities
are registered. In appropriate circumstances, there may be a charge to
UK inheritance tax as a result of a lifetime transfer at less than market
value by, or on the death of, such US Holder. Inheritance tax is not
generally chargeable on gifts to individuals made more than seven
years before the death of the donor. However, exemption from, or a
reduction of, any such UK tax liability may be available under the Estate
Tax Treaty (see below). US Holders should consult their professional
advisers in relation to such potential liability. PROs beneficially owned by
an individual, whose domicile is determined to be the United States for
the purposes of the Estate Tax Treaty and who is not a national of the
UK, will not be subject to UK inheritance tax on the individual’s death or
on a lifetime transfer of the PRO, except in certain cases where the PRO
(i) is comprised in a settlement (unless, at the time of the settlement, the
settlor was domiciled in the United States and was not a national of the
UK); (ii) is part of the business property of a UK permanent
establishment of an enterprise; or (iii) pertains to a UK fixed base of an
individual used for the performance of independent personal services.
The Estate Tax Treaty generally provides a credit against US federal
estate or gift tax liability for the amount of any tax paid in the UK in a
case where the PRO is subject to both UK inheritance tax and US
federal estate or gift tax.
Stamp duty and SDRT
No stamp duty, SDRT or similar tax is imposed in the UK on the issue,
transfer or redemption of the PROs.
Passive Foreign Investment Company considerations
A foreign corporation will be a PFIC in any taxable year in which, after
taking into account the income and assets of the corporation and
certain subsidiaries pursuant to applicable ‘look-through rules’, either (i)
at least 75% of its gross income is ‘passive income’ or (ii) at least 50%
of the average value of its assets is attributable to assets which
produce passive income or are held for the production of passive
income. The company does not believe that it was a PFIC for its 2009
taxable year. Although interest income is generally passive income, a
special rule allows banks to treat their banking business income as non-
passive.
To qualify for this rule, a bank must satisfy certain requirements
regarding its licensing and activities. The company believes that it
currently meets these requirements. The company’s possible status as a
PFIC must be determined annually, however, and may be subject to
change if the company fails to qualify under this special rule for any
year in which a US Holder holds ordinary shares, non-cumulative dollar
preference shares, ordinary ADSs, preference ADSs or PROs. If the
company were to be treated as a PFIC in any year during which a US
Holder holds ordinary shares, non-cumulative dollar preference shares,
ordinary ADSs, preference ADSs or PROs, US Holders would generally
be subject to adverse US federal income tax consequences. Holders
should consult their own tax advisers as to the potential application of
the PFIC rules to the ownership and disposition of the company’s
ordinary shares, non-cumulative dollar preference shares, ordinary
ADSs, preference ADSs or PROs.
Exchange controls
The company has been advised that there are currently no UK laws,
decrees or regulations which would prevent the import or export of
capital, including the availability of cash or cash equivalents for use by
the Group, or the remittance of dividends, interest or other payments to
non-UK resident holders of the company’s securities.
There are no restrictions under the Articles of Association of the
company or under UK law, as currently in effect, which limit the right of
non-UK resident owners to hold or, when entitled to vote, freely to vote
the company’s securities.
Memorandum and Articles of Association
The company’s Memorandum and Articles of Association as in effect at
the date of this annual report are registered with the Registrar of
Companies of Scotland. The Articles of Association were last amended
on 15 December 2009.
Incorporation and registration
The company was incorporated and registered in Scotland under the
Companies Act 1948 as a limited company on 25 March 1968 under the
name National and Commercial Banking Group Limited. On 10 March
1982, it changed its name to its present name and was registered under
the Companies Acts 1948 to 2006 as a public company with limited
liability. The company is registered under Company No. SC 45551.
Code of conduct
As discussed on page 210, the Group has adopted a code of conduct
applicable to all Group employees, which will be provided to any person
without charge, upon request, by contacting Group Secretariat at the
telephone number listed on page 388.