An exploration stage mining company headquartered in Spokane, Washington that favours a move to Bermuda is to ask its shareholders to approve a re-domiciliation to the island.

Gold Reserve Inc, which exists under the laws of the province of Alberta, is to put a plan of arrangement before its shareholders next month in the form of a special resolution.

If approved by shareholders, and given final approval by the Alberta court, the company will continue into Bermuda as Gold Reserve Ltd.

The company explained its rationale for the plan of arrangement in an information circular sent to shareholders.

“The board believes that the arrangement is beneficial to the company and its shareholders because the company will receive more favourable tax treatment in Bermuda.

“The company has no significant business operations in Canada. As a result, there is no reason for it to be incorporated and reside there and thereby be potentially subject to Canadian income taxes or for it to bear the compliance costs associated with being a Canadian resident for tax purposes.”

It added: “Under existing Canadian tax law, the company incurs corporate income tax on its worldwide net income. After the arrangement, Gold Reserve Bermuda would be subject to Bermuda tax laws and would only be taxable in Canada if any portion of its worldwide income was attributable to Canada.

“Currently, the company does not expect that a material portion of its worldwide income will be attributable to Canada. By completing the arrangement, the company will be able to take advantage of the favourable tax treatment afforded to Bermuda exempted companies under Bermuda law.

“At the present time, Gold Reserve Bermuda would not be subject to Bermuda tax computed on profit, income, any capital assets, gain or appreciation, or any tax in the nature of an estate duty or inheritance, in each case payable by a Bermuda exempted company or any of its shareholders who are not resident in Bermuda.

“When management of the company determined that it would be beneficial for the company to continue its existence outside of Canada, the company evaluated a number of potential alternate jurisdictions that were considered favourable bases for an international operation from tax, legal, cost, reputation and other perspectives.

“Bermuda was selected because it is a well-developed, and politically and economically stable, international business and financial centre with a large number of public companies incorporated within its jurisdiction, and its corporate laws are based in English law and well-regarded as being based in sound legal and business principles.

“From an investment perspective, Bermuda was deemed favourable because of its limited foreign ownership and investment restrictions.”

The company acknowledged that the Corporate Income Tax Act 2023 is to come into force in Bermuda on January 1, 2025, but said: “It is unlikely that Gold Reserve Bermuda will satisfy the definition of ‘In Scope MNE Group’ and therefore will not be subject to the imposition of corporate tax in Bermuda as of the date of the continuance.”

The company’s board of directors has recommended that shareholders vote in favour of the arrangement resolution at the special meeting to be held on September 16.

The directors and officers of the company would remain unchanged should the plan of arrangement receive final approval, the company said.