Responding to recent Swiss law changes that define ceilings on
executive pay and toughen immigration regulations, the Board of
Directors of security systems maker
Tyco International Ltd.
) has approved a plan to transfer of its headquarters from
Switzerland to "business friendly" Ireland.
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Pending shareholder approval, the relocation of the company's
place of incorporation is expected to wrap up before the end of
the calendar year.
Switzerland's Minder Initiative
Switzerland, famed for its favorable tax structure, stable
politics and business friendly laws, has recently affected
changes in its regulatory environment that are of mounting
concern to the business community.
Per a proposal known as the Minder Initiative, the authorities
have imposed tough corporate governance regulations on Swiss
companies. The new laws direct shareholders of public companies
to vote for caps on executive pay and prohibit undue compensation
schemes for new and departing managers.
Consequently, Ireland is turning out to be a favored destination
for companies seeking new tax domiciles.
According to Tyco, these proposals restrict its capacity to reap
the benefits of managerial talent, thus harming its
competitiveness and jeopardizing shareholder interests.
After careful consideration, the Board determined that Ireland
has a comparatively more stable business environment than
Switzerland, which will be favorable for Tyco's operations.
Moreover, its validated legal and regulatory framework and
corporate governance standards will be highly conducive to Tyco's
business, and will aid in maximizing shareholder welfare over the
The move is expected to be tax-neutral and will not have a
material effect on financial results in the near term.
Tyco which already has operations in Ireland, believes this move
hopes to assist in a strategic expansion of Tyco's footprint in
the European island.
Tyco currently holds a Zacks Rank #4 (Sell). Other stocks in the
Diversified Operations industry that are worth considering
Federal Signal Corp.
Icahn Enterprises, L.P.
Noble Group Ltd.
). All of these stocks carry a Zacks Rank #1 (Strong Buy).