Business News

Sagicor shareholders to vote on redomicile at May AGM

Mar 10, 2016

Shareholders of Sagicor Financial Corporation (SFC) are expected to vote on whether the financial services company should relocate its registered office from Barbados to an investment grade location at this year’s annual general meeting (AGM) in May, SFC group president and CEO, Dodridge Miller, disclosed on Tuesday. 

At the AGM, the Sagicor board expects to make a single recommendation to shareholders on the relocation, Miller said.

In a story first reported in the Business Guardian in January 2015, Miller disclosed that the board of Sagicor—the holding company for the pan-Caribbean group—had approved a recommendation from the management to prepare a plan to relocate, called redomicile, its registered office from Barbados to an investment-grade jurisdiction.

SFC’s decision to relocate its registered office was triggered by the December 2014 downgrade of Barbados by Standard and Poor’s (S&P), which led to the rating agency downgrading Sagicor entities.

The downgrading of SFC’s credit rating increases the interest rate that the company must pay when it accesses money on the international capital market.

For example, Sagicor issued a seven-year, US$320 million bond at 8.875 per cent in August 2015. That bond was at a substantially higher rate than the ten-year US$150 million, 7.5 per cent May 2006 bond that it partly refinanced.

T&T is one of at least five countries that is being considered as the proposed location of SFC’s registered office. The others are the United States, Luxembourg, United Kingdom and Ireland. In its 2014 annual report, Sagicor disclosed that 51.33 per cent of the company’s outstanding shares are held by companies and individuals resident in T&T.

Responding to questions from the Business Guardian last week, Miller said the company is at the final stage of its evaluation and expects to make a recommendation to its shareholders at its upcoming AGM in May 2016.

The SFC president said the final decision to relocate rests with the Sagicor shareholders, who are expected to vote on the matter when they attend at the AGM. He said the question that “may be placed” before the shareholders is likely to be in the form of a “Yes/No” vote as in: Do you agree to re-domicile SFC from Barbados to Country A.”

Miller also said: “Subject to one final piece of tax advice, we are ready to make a single recommendation to our shareholders.”

Asked whether it is possible that the outcome of the process could be a decision to maintain domicile in Barbados—as was the case of global bank HSBC, which decided to maintain its domicile in London—Miller said: “The drivers of the decision for the two companies are somewhat different. HSBC, as I understood it, was concerned with the possibility of a changing regulatory and taxation environment in London. That concern has since abated. 

“Sagicor, on the other hand, is concerned fundamentally with the declining credit rating of its current domicile Barbados. We do not expect any dramatic improvement in this rating over the medium term. Our recommendation to re-domicile is not likely to change.”

Sagicor had originally said that the process of arriving at a recommendation would have been completed by the end of 2015.

Explaining this delay, Miller said that the relocation of a corporate head office “is an unusual event for a Caribbean company and it therefore took the company, regulators, tax authorities and tax advisers a bit longer to consider all of the relevant implications.”

Sagicor, which was previously named Barbados Mutual, has been domiciled in Barbados since 1840.