BP Annual Report and Form 20-F 2011 - Company Reporting

Additional information for shareholdersMarket prices for the ordinary shares on the LSE and in after-hours tradingoff the LSE, in each case while the NYSE is open, and the market prices forADSs on the NYSE, are closely related due to arbitrage among the variousmarkets, although differences may exist from time to time due to variousfactors, including UK stamp duty reserve tax.On 17 February 2012, 838,650,908 ADSs (equivalent toapproximately 5,031,905,448 ordinary shares or some 26.51% of the totalissued share capital, excluding shares held in treasury) were outstandingand were held by approximately 109,640 ADS holders. Of these, about108,369 had registered addresses in the US at that date. One of theregistered holders of ADSs represents some 811,108 underlying holders.On 17 February 2012, there were approximately 303,020 holdersof record of ordinary shares. Of these holders, around 1,585 had registeredaddresses in the US and held a total of some 4,331,996 ordinary shares.Since certain of the ordinary shares and ADSs were held by brokersand other nominees, the number of holders of record in the US may notbe representative of the number of beneficial holders or of their country ofresidence.Material contractsOn 6 August 2010, BP entered into a trust agreement with John S Martin,Jr and Kent D Syverud, as individual trustees, and Citigroup Trust-Delaware,N.A., as corporate trustee (the Trust Agreement) which established theDeepwater Horizon Oil Spill Trust (the Trust) to be funded in the amount of$20 billion (the trust fund) over the period to the fourth quarter of 2013. Thetrust fund is available to satisfy legitimate individual and business claimsadministered by the Gulf Coast Claims Facility (GCCF), state and localgovernment claims resolved by BP, final judgments and settlements, stateand local response costs, and natural resource damages and related costs.Fines, penalties and claims administration costs are not covered by the trustfund. Under the terms of the Trust Agreement, BP has no right to accessthe funds once they have been contributed to the trust fund. BP will receivefunds from the trust fund only upon its expiration, if there are any fundsremaining at that point. BP has the authority under the Trust Agreement topresent certain resolved claims, including natural resource damages claimsand state and local response claims, to the Trust for payment, by providingthe trustees with all the required documents establishing that such claimsare valid under the Trust Agreement. However, any such payments canonly be made on the authority of the trustee and any funds distributed arepaid directly to the claimants, not to BP. The Trust Agreement is governedby the laws of the State of Delaware.On 30 September 2010, BP entered a pledge and collateralagreement in favour of John S Martin, Jr and Kent D Syverud (the PledgeAgreement), which pledged certain Gulf of Mexico assets as collateralfor the trust fund funding obligation. The pledged collateral consists of anoverriding royalty interest in oil and gas production of BP’s Thunder Horse,Atlantis, Mad Dog, Great White and Mars, Ursa and Na Kika assets in theGulf of Mexico. A wholly-owned company called Verano Collateral HoldingsLLC (Verano) has been created to hold the overriding royalty interest, whichwas capped at $1.25 billion per quarter and $17 billion in total. Veranopledged the overriding royalty interest to the Trust as collateral for BP’sremaining contribution obligations to the Trust. An event of default underthe Pledge Agreement arose if BP failed to make any contribution underthe Trust Agreement when due or otherwise failed to observe certain otherobligations, subject to specified cure periods. Following an event of default,the trustees were entitled to exercise all remedies as secured parties inrespect of the collateral, including receipt of royalty interests from thepledged assets, having all or part of the limited liability company interestsregistered in the trustees’ name and selling the collateral at public orprivate sale. The Pledge Agreement was governed by the laws of the Stateof Texas. On 9 November 2011 the Pledge Agreement and the relatedoverriding royalty interest conveyance and mortgage were amended andrestated (such documents collectively referred to as the Amended andRestated Pledge Agreement) to change the overriding royalty interesteffective as of 1 October 2011 to $14.7 billion. Beginning on 2 January2012, and on the first business day of each subsequent calendar quarter,the overriding royalty interest is recalculated as the remaining outstandingcontributions owed by BP to the Trust as of that date multiplied by a factorof 1.45. On 2 January 2012 the overriding royalty interest was recalculatedas $7.1 billion. The Amended and Restated Pledge Agreement alsochanged the definition of an event of default to be a failure by BP to makerequired payments pursuant to the terms of the Trust Agreement.Exchange controlsThere are currently no UK foreign exchange controls or restrictions onremittances of dividends on the ordinary shares or on the conduct of thecompany’s operations.There are no limitations, either under the laws of the UK or underthe company’s Articles of Association, restricting the right of non-residentor foreign owners to hold or vote BP ordinary or preference shares in thecompany.TaxationThis section describes the material US federal income tax and UK taxationconsequences of owning ordinary shares or ADSs to a US holder whoholds the ordinary shares or ADSs as capital assets for tax purposes.It does not apply, however, to members of special classes of holderssubject to special rules and holders that, directly or indirectly, hold 10%or more of the company’s voting stock. In addition, if a partnership holdsthe shares or ADSs, the US federal income tax treatment of a partner willgenerally depend on the status of the partner and the tax treatment of thepartnership and may not be described fully below.A US holder is any beneficial owner of ordinary shares or ADSs thatis for US federal income tax purposes (i) a citizen or resident of the US, (ii)a US domestic corporation, (iii) an estate whose income is subject to USfederal income taxation regardless of its source, or (iv) a trust if a US courtcan exercise primary supervision over the trust’s administration and one ormore US persons are authorized to control all substantial decisions of thetrust.This section is based on the Internal Revenue Code of 1986,as amended, its legislative history, existing and proposed regulationsthereunder, published rulings and court decisions, and the taxation lawsof the UK, all as currently in effect, as well as the income tax conventionbetween the US and the UK that entered into force on 31 March 2003(the ‘Treaty’). These laws are subject to change, possibly on a retroactivebasis. This section is further based in part on the representations of theDepositary and assumes that each obligation in the Deposit Agreementand any related agreement will be performed in accordance with its terms.For purposes of the Treaty and the estate and gift tax Convention(the ‘Estate Tax Convention’,) and for US federal income tax and UKtaxation purposes, a holder of ADRs evidencing ADSs will be treated asthe owner of the company’s ordinary shares represented by those ADRs.Exchanges of ordinary shares for ADRs and ADRs for ordinary sharesgenerally will not be subject to US federal income tax or to UK taxationother than stamp duty or stamp duty reserve tax, as described below.Investors should consult their own tax adviser regarding the USfederal, state and local, UK and other tax consequences of owning anddisposing of ordinary shares and ADSs in their particular circumstances,and in particular whether they are eligible for the benefits of the Treaty.Taxation of dividendsUK taxationUnder current UK taxation law, no withholding tax will be deducted fromdividends paid by the company, including dividends paid to US holders.A shareholder that is a company resident for tax purposes in the UKor trading in the UK through a permanent establishment generally willnot be taxable in the UK on a dividend it receives from the company. Ashareholder who is an individual resident for tax purposes in the UK issubject to UK tax but entitled to a tax credit on cash dividends paid onordinary shares or ADSs of the company equal to one-ninth of thecash dividend.168 BP Annual Report and Form 20-F 2011