Thomson Reuters announced on April 14 that shareholders who are taxable outside Canada have the option to opt out of the company’s proposed return of capital. The company stated that this alternative may be preferable for shareholders subject to income tax in jurisdictions other than Canada.
The reminder is important as it gives certain shareholders a choice regarding their participation in a special cash distribution and share consolidation, which could affect their tax obligations. Canadian resident shareholders are generally not eligible to opt out, while eligibility criteria for others are outlined by the company.
According to Thomson Reuters, the proposed transactions include a special cash distribution totaling US$605 million, or about US$1.36 per common share, and a proportional consolidation of outstanding common shares. Shareholders who choose to opt out will not receive the cash distribution but will still participate in the share exchange and consolidation process, resulting in an increased equity and voting interest relative to participating shareholders.
Non-registered holders should follow instructions from their banks or brokers if they wish to opt out, while registered holders must submit completed forms to Computershare Trust Company of Canada before 5:00 p.m. EDT on April 27. The company emphasized that any shareholder not eligible or choosing not to opt out does not need to take further action.
Thomson Reuters also highlighted that both Canadian and U.S. tax consequences related to these transactions can be complex. The company encouraged all affected shareholders “to review the Circular and related materials carefully and to consult their financial, tax and legal advisors before making a decision with respect to the transactions, including any decision to opt out of the return of capital.” Details regarding conversion ratios, share consolidation calculations, eligibility requirements for opting out, and additional assistance contacts were provided through official channels including www.thomsonreuters.com.
The company noted that forward-looking statements in its announcement depend on several assumptions such as shareholder approval and are subject to risks described in filings with securities regulators.
