RBS 2010 Annual Report Download - page 435

Disposal (including redemption)
Adisposal (including redemption) of PROs by a non-corporate US Holder
will not give rise to any liability to UK tax on capital gains unless the US
Holder carries on a trade (which for this purpose includes a profession or
avocation) in the UK through a branch or agency and the PROs are, or
have been, held or acquired for the purposes of that trade, carried on
through such branch or agency.
Atransfer of PROs by a US Holder will not give rise to a charge to UK tax
on accrued but unpaid interest payments, unless the US Holder is an
individual or other non-corporate taxpayer and at any time in the relevant
year of assessment or accounting period carries on a trade, profession or
vocation in the UK through a branch or agency to which the PROs are
attributable.
Annual tax charges
Corporate US Holders of PROs may be subject to annual UK tax charges
(or relief) by reference to fluctuations in exchange rates and in respect of
profits, gains and losses arising from the PROs, but only if such corporate
US Holders carry on a trade in the UK through a UK permanent
establishment to which the PROs are attributable.
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 (PFIC) considerations
Aforeign 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 2010 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 companyhas 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 28 April 2010.
Incorporation and registration
The companywas 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, and changed its
name to The Royal Bank of Scotland Group Limited on 3 September
1979. On 10 March 1982 it was re-registered under the Companies Acts
1948 to 1980 as a public company with limited liability. The company is
registered under Company No. SC45551.
Code of conduct
As discussed on page 231, 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 443.
433RBS Group 2010
Shareholder information