DEF: Cushman & Wakefield Proposes Redomiciliation to Bermuda for Enhanced Governance and Cost Efficiency

Cushman & Wakefield plc is seeking shareholder approval to redomicile its parent company from England and Wales to Bermuda, aiming to reduce administrative burdens, lower costs, and align corporate governance with its predominantly U.S. shareholder base.

Summary

• Cushman & Wakefield plc (CWK) is proposing to change its parent company's jurisdiction of incorporation from England and Wales to Bermuda through a Scheme of Arrangement.
• The primary objectives are to reduce administrative burden and associated costs of dual regulation (U.S. and U.K. vs. U.S. and Bermuda) and to align corporate governance with U.S. shareholder expectations under Bermuda's business-friendly corporate law.
• The redomiciliation is not tax-driven, and the tax residence of operating subsidiaries will not change.
• The company expects no material impact on day-to-day operations, services, management, board of directors, or employee base.
• Shareholders will exchange their existing Cushman & Wakefield Shares for an equivalent number of New Cushman & Wakefield Shares on a one-for-one basis, with no additional payment required.
• The New Cushman & Wakefield Shares will continue to be listed on the NYSE under the same ticker symbol, CWK.
• The Scheme requires approval from shareholders at three back-to-back meetings on July 15, 2025: a Court Meeting, a General Meeting, and a Shareholders Meeting.
• The Court Meeting requires approval by a majority in number representing 75% or more in value of shares present and voting; the General Meeting requires 75% of votes cast for key resolutions.
• Advisory votes on governance changes (Board declassification, director removal for cause, business combination thresholds, preference share authorization) are non-binding but will inform the Board's decision on adopting New Cushman & Wakefield Bye-laws.
• The redomiciliation is expected to become effective in the second half of 2025, subject to shareholder and court approvals, and regulatory clearances.
• As of May 22, 2025, there were approximately 231,462,585 Cushman & Wakefield Shares outstanding, with a closing price of $9.62 per share on the NYSE.

Sentiment

Score: 8

Explanation: The document presents a clear and well-reasoned strategic move aimed at improving corporate efficiency, governance, and capital flexibility, with explicit benefits outlined. While risks are disclosed, they are presented as inherent to such a transaction rather than immediate threats, and the board's unanimous recommendation suggests confidence in the positive outcome.

Positives

• Expected reduction in administrative burden and associated costs due to simpler dual regulation between the U.S. and Bermuda compared to the U.S. and U.K.
• Alignment of corporate governance with the expectations of a largely U.S. shareholder base under Bermuda's more adaptable and business-friendly corporate law.
• Greater flexibility in capital management, including dividends, distributions, and share buybacks, as Bermuda law does not have a 'distributable reserves' requirement like English law.
• Elimination of the 0.5% U.K. stamp duty on share buybacks, leading to potential cost savings.
• Absence of statutory pre-emption rights in Bermuda provides greater flexibility and speed in future equity capital raising activities.
• The exchange of shares is intended to be tax-free for U.S. federal income tax purposes for exchanging holders.
• The transaction will be accounted for as an internal reorganization under common control, meaning no revaluation of Cushman & Wakefield's assets and liabilities.
• The company's day-to-day operations, services, management, board, and employee base are not expected to be materially affected.

Risks

• The anticipated benefits of the redomiciliation, such as reduced administrative burden and costs, may not be fully realized.
• Shareholder rights will change under Bermuda law and the new bye-laws, potentially affording less protection in certain circumstances compared to English law.
• The issuance of preference shares, if authorized, could adversely affect the voting rights, liquidation value, or result in dilution for common shareholders, and could be used as an anti-takeover measure.
• The High Court of Justice of England and Wales may not approve the Scheme, or may impose conditions, modifications, or amendments that could delay or prevent the redomiciliation.
• The Board retains the discretion to delay or abandon the Scheme and the redomiciliation at any time prior to the Effective Date, even after shareholder approval.
• The market price, trading volume, and volatility for the New Cushman & Wakefield Shares may differ from those of the current shares.
• Bermuda's economic substance legislation (ES Act) could require increased substance in Bermuda if New Cushman & Wakefield is deemed to be carrying on a 'relevant activity' other than a holding entity, potentially increasing costs.
• New Cushman & Wakefield may have future exposure to changes in its tax residency or unexpected tax liabilities if tax laws or practices change.
• Bermuda's limited network of international tax treaties may result in incremental tax risks, such as withholding taxes on intercompany distributions, that would otherwise be minimized under the U.K.'s treaty network.
• Future changes to tax laws, including those arising from the OECD's BEPS Pillar Two project and Bermuda's CITA, could adversely affect the company's financial position through increased tax liabilities.
• Certain U.K. corporate holders (small companies) may become liable for U.K. corporation tax on distributions received from New Cushman & Wakefield.
• U.S. investors may face difficulties enforcing judgments obtained in U.S. or U.K. courts against New Cushman & Wakefield or its directors and officers in Bermuda.
• The New Cushman & Wakefield Bye-laws generally restrict shareholders from bringing legal action against officers and directors unless the act involves fraud, dishonesty, or illegal personal gain.
• Ownership and transfer of New Cushman & Wakefield Shares could be restricted if the shares are delisted from the NYSE, as the Bermuda Monetary Authority (BMA) approval would then be required for non-resident transfers.

Future Outlook

Cushman & Wakefield expects to complete the redomiciliation in the second half of 2025. Following the transaction, New Cushman & Wakefield will continue to be listed on the NYSE under the symbol CWK, prepare financial statements in accordance with U.S. GAAP, and file periodic and current reports with the SEC. The company anticipates no material changes to its day-to-day operations, services, management, board, or employee base, and remains committed to its businesses in the U.K. and Europe.

Management Comments

• Michelle MacKay, CEO: "We are proposing to redomicile our parent company from England and Wales to Bermuda... 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."
• Michelle MacKay, CEO: "The Redomiciliation will also allow us to 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 a stable corporate structure and capital flexibility."
• Michelle MacKay, CEO: "The Redomiciliation is not tax driven and our subsidiaries jurisdictions of tax residence will not be changing."
• Noelle J. Perkins, EVP, Chief Legal Officer & Secretary: "Your vote is important, regardless of the number of Cushman & Wakefield Shares you own."
• The Board unanimously recommends that shareholders vote FOR each of the Resolutions proposed at the Court Meeting, the General Meeting, and the Shareholders Meeting.
• All members of the Board and executive officers intend to vote in favor of all proposed resolutions.

Industry Context

The proposed redomiciliation aligns with a trend among U.S. publicly listed companies to incorporate in Bermuda, which offers a stable corporate legal environment and a corporate law framework often more familiar to U.S. shareholders. As of December 31, 2024, over 30 companies listed on NYSE or NASDAQ with market capitalization exceeding $1 billion were organized in Bermuda, including eight with over $10 billion market capitalization, indicating a recognized and utilized jurisdiction for corporate domicile.

Comparison to Industry Standards

• **Share Buybacks:** English law requires shareholder-approved contracts and imposes a 0.5% stamp duty on buybacks, limiting flexibility. Bermuda law does not have these restrictions, offering greater flexibility and cost savings, aligning with common U.S. corporate practices.
• **Dividends and Distributions:** English law requires sufficient 'distributable reserves' (accumulated realized profits minus losses), which can restrict capital returns. Bermuda law only requires solvency tests, providing greater flexibility in returning capital to shareholders, consistent with many U.S. companies.
• **Supermajority Requirements:** English law imposes 75% supermajority votes for certain corporate matters (e.g., articles amendments, pre-emption rights disapplication). Bermuda law generally requires only a simple majority for most actions, offering greater flexibility for New Cushman & Wakefield to amend its bye-laws or pursue value-enhancing transactions.
• **Mergers/Business Combinations:** English law does not provide for statutory mergers (only schemes of arrangement or tender offers), which can be complex and require supermajority votes. Bermuda law allows statutory mergers, a common U.S. business combination transaction, providing more flexibility.
• **Preference Shares:** English law requires shareholder resolutions for creating new classes of preference shares and for their non-pre-emptive issuance. Bermuda law allows the Board to designate and issue preference shares without further shareholder approval (subject to advisory vote outcome), offering greater flexibility for financing and acquisitions, consistent with common U.S. terms.
• **Pre-emption Rights:** English law imposes statutory pre-emption rights on new equity issues for cash, requiring shareholder waivers (75% vote) that expire after five years. Bermuda law does not impose such rights, enhancing capital raising flexibility and reducing administrative burden, aligning with U.S. public company norms.
• **Board Declassification:** The proposed declassification of the Board to allow annual election of all directors aligns with a current trend in corporate governance and addresses institutional investor preferences for increased director accountability, moving away from the classified board structure common under English law.
• **Director Removal:** The proposed 'for cause' removal standard for directors between annual meetings, while different from English law's 'with or without cause' standard, is presented as a measure to ensure board stability and protect long-term strategic vision, especially in the context of an annually elected board.

Management Changes

Corporate Governance

Related Party Transactions

• Under Bermuda law, non-cash transactions between New Cushman & Wakefield and its directors or connected persons will generally not require shareholder approval, unlike under English law.
• New Cushman & Wakefield's related party transactions will be governed by its related party transactions policy and NYSE listing requirements.
• Bermuda law requires shareholder approval for certain loans or guarantees to directors or their connected persons (90% consent of voting rights).
• The New Cushman & Wakefield Bye-laws will require shareholder approval for certain business combination transactions involving related parties if not approved by the Board.

Stakeholder Impact

• **Shareholders:** Will hold shares in a Bermuda-incorporated entity with similar economic and voting interests but different legal rights and protections under Bermuda law. May experience reduced administrative costs and increased capital flexibility. Tax implications are generally favorable for the exchange, but individual tax situations vary.
• **Employees:** No material impact on job losses or relocation. Existing equity incentive plans will be assumed by New Cushman & Wakefield, with awards converting to New Cushman & Wakefield Shares under similar terms.
• **Customers:** No material impact on client offerings or services is expected.
• **Suppliers:** No material impact on supplier relationships is expected.
• **Creditors:** Outstanding debt securities and existing bank credit facilities of the Cushman & Wakefield Group will remain in place, with New Cushman & Wakefield not becoming 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 July 15, 2025.
• Company to make a subsequent application to the High Court of Justice of England and Wales for approval of the Scheme and confirmation of the capital reduction.
• New Cushman & Wakefield Shares to be authorized for listing on the NYSE, with trading expected to commence on the business day after the Effective Date.
• Cushman & Wakefield (the current parent company) will be delisted from the NYSE and re-registered as a private limited company, with eventual dissolution intended.
• New Cushman & Wakefield will continue to file periodic and current reports with the SEC under the U.S. Exchange Act.

Key Dates

Recommendation

Keywords

Redomiciliation, Corporate Governance, SEC Filing, Proxy Statement, Shareholder Vote, Bermuda, United Kingdom, NYSE, Cushman & Wakefield, Real Estate Services, Corporate Restructuring, Tax Implications, Capital Management, Risk Management