BP 2011 Annual Report Download - page 170

168 BP Annual Report and Form 20-F 2011
Additional information for shareholders
Market prices for the ordinary shares on the LSE and in after-hours trading
off the LSE, in each case while the NYSE is open, and the market prices for
ADSs on the NYSE, are closely related due to arbitrage among the various
markets, although differences may exist from time to time due to various
factors, including UK stamp duty reserve tax.
On 17 February 2012, 838,650,908 ADSs (equivalent to
approximately 5,031,905,448 ordinary shares or some 26.51% of the total
issued share capital, excluding shares held in treasury) were outstanding
and were held by approximately 109,640 ADS holders. Of these, about
108,369 had registered addresses in the US at that date. One of the
registered holders of ADSs represents some 811,108 underlying holders.
On 17 February 2012, there were approximately 303,020 holders
of record of ordinary shares. Of these holders, around 1,585 had registered
addresses in the US and held a total of some 4,331,996 ordinary shares.
Since certain of the ordinary shares and ADSs were held by brokers
and other nominees, the number of holders of record in the US may not
be representative of the number of beneficial holders or of their country of
residence.
Material contracts
On 6 August 2010, BP entered into a trust agreement with John S Martin,
Jr and Kent D Syverud, as individual trustees, and Citigroup Trust-Delaware,
N.A., as corporate trustee (the Trust Agreement) which established the
Deepwater Horizon Oil Spill Trust (the Trust) to be funded in the amount of
$20 billion (the trust fund) over the period to the fourth quarter of 2013. The
trust fund is available to satisfy legitimate individual and business claims
administered by the Gulf Coast Claims Facility (GCCF), state and local
government claims resolved by BP, final judgments and settlements, state
and local response costs, and natural resource damages and related costs.
Fines, penalties and claims administration costs are not covered by the trust
fund. Under the terms of the Trust Agreement, BP has no right to access
the funds once they have been contributed to the trust fund. BP will receive
funds from the trust fund only upon its expiration, if there are any funds
remaining at that point. BP has the authority under the Trust Agreement to
present certain resolved claims, including natural resource damages claims
and state and local response claims, to the Trust for payment, by providing
the trustees with all the required documents establishing that such claims
are valid under the Trust Agreement. However, any such payments can
only be made on the authority of the trustee and any funds distributed are
paid directly to the claimants, not to BP. The Trust Agreement is governed
by the laws of the State of Delaware.
On 30 September 2010, BP entered a pledge and collateral
agreement in favour of John S Martin, Jr and Kent D Syverud (the Pledge
Agreement), which pledged certain Gulf of Mexico assets as collateral
for the trust fund funding obligation. The pledged collateral consists of an
overriding royalty interest in oil and gas production of BP’s Thunder Horse,
Atlantis, Mad Dog, Great White and Mars, Ursa and Na Kika assets in the
Gulf of Mexico. A wholly-owned company called Verano Collateral Holdings
LLC (Verano) has been created to hold the overriding royalty interest, which
was capped at $1.25 billion per quarter and $17 billion in total. Verano
pledged the overriding royalty interest to the Trust as collateral for BP’s
remaining contribution obligations to the Trust. An event of default under
the Pledge Agreement arose if BP failed to make any contribution under
the Trust Agreement when due or otherwise failed to observe certain other
obligations, subject to specified cure periods. Following an event of default,
the trustees were entitled to exercise all remedies as secured parties in
respect of the collateral, including receipt of royalty interests from the
pledged assets, having all or part of the limited liability company interests
registered in the trustees’ name and selling the collateral at public or
private sale. The Pledge Agreement was governed by the laws of the State
of Texas. On 9 November 2011 the Pledge Agreement and the related
overriding royalty interest conveyance and mortgage were amended and
restated (such documents collectively referred to as the Amended and
Restated Pledge Agreement) to change the overriding royalty interest
effective as of 1 October 2011 to $14.7 billion. Beginning on 2 January
2012, and on the first business day of each subsequent calendar quarter,
the overriding royalty interest is recalculated as the remaining outstanding
contributions owed by BP to the Trust as of that date multiplied by a factor
of 1.45. On 2 January 2012 the overriding royalty interest was recalculated
as $7.1 billion. The Amended and Restated Pledge Agreement also
changed the definition of an event of default to be a failure by BP to make
required payments pursuant to the terms of the Trust Agreement.
Exchange controls
There are currently no UK foreign exchange controls or restrictions on
remittances of dividends on the ordinary shares or on the conduct of the
company’s operations.
There are no limitations, either under the laws of the UK or under
the company’s Articles of Association, restricting the right of non-resident
or foreign owners to hold or vote BP ordinary or preference shares in the
company.
Taxation
This section describes the material US federal income tax and UK taxation
consequences of owning ordinary shares or ADSs to a US holder who
holds the ordinary shares or ADSs as capital assets for tax purposes.
It does not apply, however, to members of special classes of holders
subject to special rules and holders that, directly or indirectly, hold 10%
or more of the company’s voting stock. In addition, if a partnership holds
the shares or ADSs, the US federal income tax treatment of a partner will
generally depend on the status of the partner and the tax treatment of the
partnership and may not be described fully below.
A US holder is any beneficial owner of ordinary shares or ADSs that
is for US federal income tax purposes (i) a citizen or resident of the US, (ii)
a US domestic corporation, (iii) an estate whose income is subject to US
federal income taxation regardless of its source, or (iv) a trust if a US court
can exercise primary supervision over the trust’s administration and one or
more US persons are authorized to control all substantial decisions of the
trust.
This section is based on the Internal Revenue Code of 1986,
as amended, its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, and the taxation laws
of the UK, all as currently in effect, as well as the income tax convention
between the US and the UK that entered into force on 31 March 2003
(the ‘Treaty’). These laws are subject to change, possibly on a retroactive
basis. This section is further based in part on the representations of the
Depositary and assumes that each obligation in the Deposit Agreement
and any related agreement will be performed in accordance with its terms.
For purposes of the Treaty and the estate and gift tax Convention
(the ‘Estate Tax Convention’,) and for US federal income tax and UK
taxation purposes, a holder of ADRs evidencing ADSs will be treated as
the owner of the company’s ordinary shares represented by those ADRs.
Exchanges of ordinary shares for ADRs and ADRs for ordinary shares
generally will not be subject to US federal income tax or to UK taxation
other than stamp duty or stamp duty reserve tax, as described below.
Investors should consult their own tax adviser regarding the US
federal, state and local, UK and other tax consequences of owning and
disposing of ordinary shares and ADSs in their particular circumstances,
and in particular whether they are eligible for the benefits of the Treaty.
Taxation of dividends
UK taxation
Under current UK taxation law, no withholding tax will be deducted from
dividends paid by the company, including dividends paid to US holders.
A shareholder that is a company resident for tax purposes in the UK
or trading in the UK through a permanent establishment generally will
not be taxable in the UK on a dividend it receives from the company. A
shareholder who is an individual resident for tax purposes in the UK is
subject to UK tax but entitled to a tax credit on cash dividends paid on
ordinary shares or ADSs of the company equal to one-ninth of the
cash dividend.