DEF: Cushman & Wakefield Proposes Bermuda Redomiciliation for Efficiency

Cushman & Wakefield plc seeks shareholder approval for a revised plan to redomicile its parent company to Bermuda, aiming for over $3 million in annual savings and enhanced corporate governance.

Summary

• Company proposes to redomicile its parent company from England and Wales to Bermuda via a Scheme of Arrangement.
• The move aims to reduce administrative burden and associated costs of dual regulation in the U.S. and U.K.
• Anticipated annual savings are estimated to be more than US$3 million from reduced administrative, accounting, tax, and legal complexity.
• Total costs for the redomiciliation process are approximately US$4 million, expected to be recouped in 12 to 18 months.
• The redomiciliation is also an opportunity to better align corporate governance with the expectations of its largely U.S. shareholder base under Bermuda's more adaptable corporate law.
• Revised governance proposals include phased-in board declassification over three years, continued ability for shareholders to remove directors for any reason, and removal of supermajority voting for certain actions.
• The Board commits not to issue preference shares for defensive or anti-takeover purposes without shareholder approval.
• Shareholders will vote on the Scheme and related resolutions at three back-to-back meetings on October 16, 2025.
• The Scheme requires approval by a majority in number representing 75% or more in value of shares at the Court Meeting, and 75% of votes cast at the General Meeting for Scheme Resolutions.
• Advisory votes on governance changes (board declassification, business combinations, preference share authorization) are non-binding.
• The redomiciliation is not tax-driven and is expected to be generally tax-neutral for U.K. and U.S. federal income tax purposes for shareholders.
• New Cushman & Wakefield Shares will be listed on the NYSE under the symbol CWK, replacing existing shares on a one-for-one basis.

Sentiment

Score: 7

Explanation: The filing outlines a strategic move aimed at significant cost savings and improved corporate governance, addressing previous shareholder feedback. While there are inherent risks with any structural change and potential for less shareholder protection in some areas under Bermuda law, the overall tone is positive, emphasizing efficiency and long-term value creation. The unanimous board recommendation and clear financial benefits contribute to a moderately positive sentiment.

Positives

• Expected annual savings of over US$3 million from reduced administrative, accounting, tax, and legal complexity.
• Recoupment of the US$4 million redomiciliation costs anticipated within 12 to 18 months.
• Improved corporate governance alignment with the largely U.S. shareholder base under Bermuda's business-friendly corporate law.
• Declassification of the Board, allowing annual election of directors, enhancing accountability.
• Continued ability for shareholders to remove directors for any reason between annual meetings.
• Removal of supermajority voting requirements for amending governing documents and effecting certain business combinations, increasing flexibility.
• Commitment from the Board not to issue preference shares for defensive or anti-takeover purposes without shareholder approval.
• Maintenance of strong corporate governance, stable corporate structure, and capital flexibility.
• Redomiciliation is generally tax-neutral for U.K. and U.S. federal income tax purposes for shareholders.
• No material impact expected on day-to-day operations, services, management, board, or employee base.

Negatives

• Shareholder rights will change under Bermuda law, which may, in certain circumstances, afford less protection compared to English law.
• The Board may delay or abandon the Scheme at any time prior to the Effective Date, even after shareholder approval.
• The Court's approval of the Scheme is discretionary and not guaranteed, and it may impose conditions or modifications.
• If preference shares are issued, they could adversely affect voting rights, asset distribution in liquidation, or result in dilution of common shares.
• Bermuda's limited network of international tax treaties may present incremental tax risk to New Cushman & Wakefield and its subsidiaries.
• U.S. investors may face difficulties enforcing judgments against New Cushman & Wakefield, its directors, and officers in Bermuda.
• The New Cushman & Wakefield Bye-laws restrict shareholders from bringing certain legal actions against officers and directors unless fraud or dishonesty is involved.
• Certain U.K. holders (small companies for Chapter 2 of Part 9A of the CTA) will be liable for U.K. corporation tax on distributions from New Cushman & Wakefield.

Risks

• Anticipated benefits of the Redomiciliation, including cost savings and governance improvements, may not be fully realized.
• Shareholder rights will change as a result of the Redomiciliation and Bermuda law and may, in certain circumstances, afford less protection to shareholders as New Cushman & Wakefield shareholders.
• If preference shares are issued following adoption of the New Cushman & Wakefield Bye-laws, they may have rights, preferences, and privileges that adversely affect the New Cushman & Wakefield Shares or other securities.
• If the Court does not approve the Scheme, Cushman & Wakefield will be unable to effect the Redomiciliation, or the Court may impose conditions, modifications, or amendments.
• The market price, trading volume, and volatility for the New Cushman & Wakefield Shares may differ from those for the Cushman & Wakefield Shares.
• The Board may choose to delay or abandon the Scheme and the Redomiciliation at any time prior to the Effective Date, even after shareholder approval has been obtained.
• Certain transactions with directors of New Cushman & Wakefield will not be subject to shareholder approval under Bermuda law, though NYSE and SEC requirements will continue to apply.
• Legislation enacted in Bermuda as to economic substance (ES Act) may affect operations, potentially requiring increased substance in Bermuda and incurring additional costs.
• New Cushman & Wakefield may have future exposure to changes in its tax residency, potentially leading to unexpected tax liabilities.
• Bermuda's limited network of international tax treaties may present an incremental tax risk to New Cushman & Wakefield, its subsidiaries, and their cash flow.
• Future changes to tax laws, including those related to the OECD's BEPS project and Bermuda's CITA (15% corporate income tax), could adversely affect New Cushman & Wakefield's financial position through increasing tax liabilities.
• Certain U.K. holders (small companies for Chapter 2 of Part 9A of the CTA) may be liable for U.K. corporation tax on distributions received in respect of New Cushman & Wakefield Shares.
• U.S. investors may have difficulty enforcing judgments against New Cushman & Wakefield, its directors, and its officers due to the absence of reciprocal treaties and differences in public policy between the U.S. and Bermuda.
• The New Cushman & Wakefield Bye-laws restrict shareholders from bringing certain legal actions against officers and directors unless the act or failure to act involves fraud or dishonesty or a gain, personal profit, or advantage to which such director or officer is not legally entitled.
• Ownership and transfer of the New Cushman & Wakefield Shares could be restricted if the New Cushman & Wakefield Shares are delisted from the NYSE, as BMA general permission for free transferability is conditional on NYSE listing.

Future Outlook

The company anticipates that the redomiciliation will facilitate long-term shareholder value creation by reducing administrative burdens and costs, aligning corporate governance with U.S. shareholder expectations, and maintaining capital flexibility. It expects to recoup the one-time redomiciliation costs within 12 to 18 months through annual savings of over US$3 million. The company remains committed to its European businesses and does not foresee material changes to day-to-day operations or employee base.

Management Comments

• "We are pleased to present Shareholders with revised proposals to redomicile our parent company from England and Wales to Bermuda."
• "We believe our revised proposals address the feedback we have received from Shareholders, while preserving the anticipated benefits of the Redomiciliation for Cushman & Wakefield and Shareholders."
• "The principal objective of the Redomiciliation is to facilitate Shareholder value creation by reducing the administrative burden and associated costs of dual regulation in the U.S. and the U.K."
• "By moving to Bermuda, the Company estimates that it will save more than US$3 million annually from reduced administrative, accounting, tax, and legal complexity."
• "The Redomiciliation is also an opportunity to better align our corporate governance with the expectations of our largely U.S. Shareholder base under the more adaptable and business-friendly corporate law of Bermuda, while allowing us to maintain strong corporate governance, a stable corporate structure, and capital flexibility."
• "The Board unanimously recommends that you vote FOR each of the Resolutions proposed at the Court Meeting, the General Meeting and the Shareholders Meeting."

Industry Context

The proposed redomiciliation reflects a broader trend among multinational corporations to optimize corporate structures for efficiency and governance, particularly in response to evolving regulatory landscapes. The move to Bermuda, a jurisdiction known for its business-friendly corporate law and stable legal environment, aligns with practices seen in other U.S. publicly listed companies seeking to streamline operations and reduce compliance costs. The company's decision to declassify its board also aligns with current corporate governance trends favoring increased director accountability through annual elections, a preference often expressed by institutional investors.

Comparison to Industry Standards

• The move to Bermuda aligns with a trend among U.S. publicly listed companies; as of December 31, 2024, over 30 companies listed on NYSE or NASDAQ with market capitalization exceeding US$1 billion were organized in Bermuda, with eight exceeding US$10 billion.
• The declassification of the Board, allowing annual election of directors, aligns with the current trend in corporate governance away from classified boards, a preference of many institutional investors.
• The proposed corporate governance structure under Bermuda law, including the ability to issue preference shares and the absence of statutory pre-emption rights, is consistent with common U.S. public company terms, offering greater flexibility in capital raising and management compared to English law.

Corporate Governance

Related Party Transactions

• Following redomiciliation, New Cushman & Wakefield will remain subject to NYSE Section 312.03 requirements for shareholder approval of related party transactions, including those exceeding 1% or 5% of shares/voting power, or resulting in a change of control.
• The company's written Related Party Transaction Policies, guided by NYSE and SEC rules, will continue to apply, with the audit committee responsible for evaluating and approving such transactions.
• SEC disclosure requirements for related party transactions (exceeding US$120,000 with material interest from related persons) will continue to apply.
• Bermuda law requires shareholder approval for loans or guarantees to directors or their connected persons (subject to limited exceptions), but does not require approval for substantial property transactions.

Stakeholder Impact

• Shareholders: Expected long-term value creation through cost savings and improved governance; changes in rights under Bermuda law (potentially less protection in some areas); continued NYSE listing and SEC regulation.
• Employees: No material impact expected on job losses or relocation of existing personnel.
• Management/Board: Directors and executive officers will transition to New Cushman & Wakefield with unchanged responsibilities and compensation; new indemnification provisions align with U.S. customary practices.
• Customers/Suppliers: No material impact expected on day-to-day operations, services, or client offerings.
• Creditors: Outstanding debt securities and existing bank credit facilities of the Cushman & Wakefield Group will remain in place; New Cushman & Wakefield will not be a guarantor or additional borrower under these facilities.

Next Steps

• Shareholders to vote on the Scheme and related resolutions at the Court Meeting, General Meeting, and Shareholders Meeting on October 16, 2025.
• If approved, the company will make a subsequent application to the Court for sanction of the Scheme and confirmation of the capital reduction.
• The Scheme is expected to become effective in the fourth quarter of 2025.
• New Cushman & Wakefield Shares will be listed on the NYSE, trading under the symbol CWK, on the trading day following the Effective Date.
• Cushman & Wakefield will request delisting of its shares from the NYSE and file a Form 15 with the SEC to terminate registration and suspend reporting obligations.
• New Cushman & Wakefield will continue to file periodic and current reports with the SEC (Forms 10-K, 10-Q, 8-K).
• Cushman & Wakefield will be re-registered as a private limited company and intends to dissolve as soon as reasonably practicable after redomiciliation.
• New Cushman & Wakefield will adopt and assume existing equity incentive plans or make other arrangements for outstanding awards.
• The deadline for shareholder proposals for New Cushman & Wakefield's first Annual General Meeting following redomiciliation will be disclosed in a subsequent SEC filing.

Key Dates

Recommendation

The proposed redomiciliation to Bermuda is a strategic move aimed at generating significant annual cost savings and streamlining corporate governance, which are generally positive for long-term shareholder value. The board's unanimous recommendation and the clear financial benefits (US$3M annual savings, 12-18 month recoupment) support the rationale. However, the previous failure to secure supermajority approval for the original proposal highlights potential shareholder skepticism or concerns, and the shift to Bermuda law introduces changes in shareholder rights that could be perceived as less protective in certain circumstances. While the company has addressed some feedback, the non-binding nature of some governance votes and the inherent risks associated with such a structural change warrant a cautious 'hold' stance until the successful implementation and initial impacts are observed. The potential for preference share issuance, even with management's commitment, also introduces a degree of uncertainty regarding future dilution or capital structure changes.

Keywords

Redomiciliation, Corporate Governance, Cost Savings, Bermuda, SEC Filing, Shareholder Value, NYSE Listing, Board Declassification, Preference Shares, Tax Neutrality, Cushman & Wakefield