Oilfield services giant
Weatherford International Ltd.
) share price fell almost 1% on the announcement that its board
of directors has approved the relocation its legal domicile to
Ireland from Switzerland.
The incorporation under the Irish law will strengthen
Weatherford's activities and facilitate operations at the lowest
possible cost. It will also boost the company's ability to
rapidly and efficiently carry out and progress on its
transformational path. The move will enable the company to retain
and further attract the finest personnel in the industry.
The company's strategy emphasizes on expansion of its core
businesses and selling off its non-core assets. Weatherford's
future success rests on successful execution of its planned
The New-York listed drilling company, which has maintained its
main operational office in Houston after it moved to Switzerland
five years ago, will put forward the proposal for shareholders
approval at an extraordinary general meeting in June. If the
shareholders give consent to the proposal, the Swiss Weatherford
parent company would merge into a new subsidiary called
Weatherford Ireland. The new company would assume the role of a
publicly traded parent of Weatherford's companies and retain its
tax residency in Switzerland. It would continue to report to U.S.
Along with the merger, Weatherford also plans to delist its
shares from the SIX Swiss Exchange and NYSE Euronext Paris.
An order passed by the Swiss Federal Council in Nov 2013, allows
the company's shareholders to give binding votes on executive and
board member compensation, beginning next year.
It forbids severance payments to retiring top brass. For years,
the Swiss law has given investors an advantage in corporate
affairs. For example, one rule allows investors to expel
directors without giving a cause if they gather two-thirds of
shareholder voting rights.
Per the company, these new rules could lead to confusing and
conflicting proposals to its shareholders and contradict the
disclosures on pay in U.S Securities and Exchange Commission.
Therefore, Weatherford has decided to conduct its annual general
meeting in Sep 2014 as an Irish company, subject to shareholders
consent of proposal in Jun 2014.
Weatherford carries a Zacks Rank #3 (Hold). Other stocks in the
oil and gas industry looking good with the Zacks Rank #1 (Strong
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