James Hardies Industries NV (JHX) said it would seek shareholder approval to move its corporate domicile from the Netherlands to Ireland and transform the business into a form of European corporation known as a Societas Europaea. The company said the move would provide greater certainty for James Hardie to obtain benefits under the US/Ireland Treaty than is the case under the US/Netherlands Treaty.
The homebuilding materials giant also confirmed it had been reviewing the corporate domicile for some time.
James Hardie said the primary factors behind the review were a need for senior managers to be able to spend more time with the company’s operations, and past difficulties related to qualifying for benefits under the tax treaty between the United States and the Netherlands.
CEO Louis Gries said the proposal would not change the overall commitment of James Hardie to make contributions to the Asbestos Injuries Compensation Fund (AICF). However, if a contribution is due to the AICF in the company's 2011 financial year, the costs associated with the proposal and with the transfer of the intellectual property would most likely reduce the amount of the company's contribution in that year.
James Hardie said implementing the proposal is expected to have medium and long-term benefits for the AICF, as the company's Irish domicile is anticipated to result in reduced tax payments relative to those payable in the Netherlands.
The company said the costs of the transaction would be in the range of approximately US$55 million to US $71 million, of which US$14 million had already been spent.
James Hardies’ European operations are to remain in Amsterdam, while it has been proposed that the corporate secretariat, treasury and intellectual property functions be based in Dublin.
The company’s directors unanimously recommend that shareholders vote in favour of the proposal, with an Extraordinary General Meeting to be held on Friday, 21 August to consider stage one of the proposal. If implemented the James Hardie said an explanatory memorandum seeking approval for stage two would be distributed in late 2009.
Implementation of the proposal remains subject to satisfying certain regulatory and other conditions.
At 1011 AEST, James Hardie shares were trading down 3c to $4.12.
