CAYMAN ISLANDS/March 16, 2010/PR Newswire/ - Garmin Ltd. (NASDAQ: GRMN) announces that its board of directors has unanimously approved moving the place of incorporation of the company from the Cayman Islands to Switzerland. Garmin’s shareholders will be asked to vote in favor of the proposed change in place of incorporation, also known as a redomestication, at a shareholders meeting, which is expected to be held on May 20, 2010. The redomestication will also be subject to approval of the Grand Court of the Cayman Islands. If the redomestication is approved by Garmin shareholders and the Grand Court of the Cayman Islands, it is expected that a new Swiss company, also called Garmin Ltd., would replace the existing Cayman Islands company as the ultimate public holding company of the Garmin group and each shareholder will receive one share of the Swiss company for each share held of the Cayman Islands company.
The original parent company of the Garmin group was Garmin Corporation, a company incorporated in Taiwan. Under the legal framework of Taiwan at the time of Garmin’s initial public offering in 2000, it was not practical for Garmin Corporation to offer its shares in the United States. Therefore, Garmin Ltd. was formed in the Cayman Islands in July 2000 as a holding company for Garmin Corporation in order to facilitate the listing of its shares on the NASDAQ stock market in the United States.
“Following a thorough review, we have determined that it is in the best interest of Garmin and its shareholders to change the jurisdiction of incorporation of our group parent company to Switzerland,” said Dr. Min Kao, chairman and CEO of Garmin Ltd. “Switzerland is centrally located in Europe in close proximity to our major Western and Eastern European markets.”
“Garmin’s footprint in Europe has grown considerably, through the acquisition of our distributors in ten European countries during the last four years, plus our recent establishment of an office in Poland. The Swiss office will provide a base for expansion of certain corporate functions in Europe and a more favorable structure from which it would be possible to acquire or partner with European businesses. We believe that the change of our jurisdiction of incorporation will enhance our global business operations and reputation consistent with our status as an international company with significant operations in Asia, North America, as well as Europe. Switzerland also offers a well-developed corporate, legal and regulatory environment with an extensive network of tax treaties with other countries,” said Kao.
Garmin does not expect that the redomestication will have any material impact on its financial results. Assuming completion of the redomestication, shares of the Swiss company would be listed on the NASDAQ Global Select Market under the symbol “GRMN”, the same symbol under which Garmin shares are currently listed. The Swiss company would remain subject to the U.S. Securities and Exchange Commission (“SEC”) reporting requirements, the mandates of the Sarbanes-Oxley Act and the applicable corporate governance rules of NASDAQ. In addition, the Swiss company would continue to report its consolidated financial results in U.S. dollars and under U.S. generally accepted accounting principles.
Details of the proposed redomestication are provided in Garmin’s preliminary proxy statement, filed today with the SEC.
Since Swiss law does not permit shareholder rights plans, Garmin Ltd’s board of directors has approved an amendment, subject to the approval of the redomestication by Garmin’s shareholders and the Grand Court of the Cayman Islands, to change the expiration date of the rights issued under the company’s shareholder rights plan from October 31, 2011 to the effective date of the redomestication to Switzerland, which is currently expected to be June 27, 2010. Accordingly, as of the effective date of the redomestication, the rights under such plan will expire and no longer be outstanding.
Garmin Ltd. also announces that its board of directors has approved the payment of a 2010 annual cash dividend in the amount of $1.50 per share, a one-time increase from $0.75 per share. The dividend is payable to shareholders of record on April 15, 2010 and will be paid on April 30, 2010. The one-time increase of the annual dividend to $1.50 per share is reflective of the company’s strong cash position and expected ongoing cash generation in 2010. “We remain confident in our long-term ability to grow our business and remain committed to research and development to fuel growth and innovation in the coming years, but given our strong 2009 results and cash position, we can also provide this one-time increase in our annual dividend,” said Dr. Min Kao, chairman and CEO of Garmin Ltd. The timing of the 2010 annual dividend payment has been changed from the usual date in December due to the proposed redomestication which, under Swiss law, would otherwise require that another shareholder meeting of the new Swiss company be convened to approve the dividend after the redomestication is completed.