JPMorgan European P - DocumentCloud
For the attention of Mr Marius Kohl Administration des Contributions Directes Bureau d'imposition Societes VI 18, rue du Fort Wedell L-2982 Luxembourg
PrkcwalcrhouscCoopers Socic.\tc.\ a rcsponsabilitc.\ llmitee Rh iseur d'cntrepriscs 400, route d'Esch B.P. 1443 L-1014 Luxembourg Telephone ~352 494848-1 Facsimile +352 494848-2900 www.pwc.com/Ju mfo(allu.pwc.com
11 February 2009 References: DDRH/FCYR/MAAI/JO 1u09001M-JEGI
JPMorgan European Property Holding Luxembourg 1 S.a r.l. (2005 2405 999) JPMorgan European Property Holding Luxembourg 2 S.a r.l. (2005 2422 249) JPMorgan European Property Holding Luxembourg 3 S.a r.l. (2005 2405 980) JPMorgan European Property Holding Luxembourg 4 S.a r.l. (2005 2405 972) JPMorgan European Property Holding Luxembourg 5 S.a r.1. (2005 2405 964) JPMorgan European Property Holding Luxembourg 7 S.a r.L (2007 2460 082) JP Morgan European Property Holding Luxembourg 8 S.a r.l. (name a nd incorporation of the company still to be determined)
Dear Mr Kohl, For and on behalf of our client, the JPMorgan European Property Fund (hereafter "the EPF"), we are pleased to submit for your review and approval the Luxembourg tax treatment of the following holding and financing structure, already discussed with you during our meeting held on 3 December 2008. We also refer to the EPF holding and financing structure approved by you in our letters dated 24 May and 25 August 2006 (referenced DDRH/PASNQ2706048M-CHBR and DDRH/PASNQ2706159M-CH BR respectively - the "2006 letters"). This letter is an addendum to the 2006 letters. Alternatively, we would be pleased to receive your written comments on this structure. The EPF is currently divided into three Sub-funds, the Sub-funds A, B and C. In addition to these existing Sub-funds, the EPF has recently had approval from the CSSF to launch a new Sub-fund, the Sub-fund D. As a general remark, the holding and financing structure of the Sub-fund D will be similar to the Sub-fund B.
ll.C.S. Luxembourg B 65 477 - TVi\ I UI 7564447
A
Facts and structure
A.1
Holding structure The Sub-fund D will set up three new Maltese companies, which will in tum provide equity ("Malta9") and loans (via "MaltalO" and "Malta I l ") to a newly incorporated Luxembourg company, JPMorgan European Property Holding Luxembourg 7 S.a r.l. (hereafter "LuxCo7"). 2
A.2
In addition, to isolate Sub-fund D investors from exposures related to investments in real estate securities, it is currently envisaged that the Sub-funds A, B and C may in the future indirectly own a new Luxembourg company, JPMorgan European Property Holding Luxembourg 8 S.a r.l. (hereafter "LuxCo8"), into which Sub-fund D investors would not be investing directly or indirectly. It should be noted that LuxCo8 has not been incorporated and is not yet part of the investment structure. Once LuxCo8 is in place, we would advise you in due course of the activity and denomination of this company.
Financing structure
A.2.1 .JPMorgan European Property Holding Luxembourg 7 S.a r.l. 3
Consistent with our letter dated 24 May 2006, LuxCo7 will receive so called "equity loans" from a Maltese financing vehicle, part of the Sub-fund D, i.e. interest bearing loans having a 1% interest rate. With the funds received, LuxCo7 will acquire equity in JPMorgan European Property Holding Luxembourg 2 and JPMorgan European Property Holding Luxembourg 5 (hereafter "LuxCo2" and "LuxCo5" respectively). New classes of shares (the class D shares) will be issued by LuxCo2 and by LuxCo5 to track the profit returns to LuxCo7.
4
ln addition to this holding activity, LuxCo7 may also grant classic interest bearing loans or equity loans to LuxCo2 and LuxCoS. In both alternatives, LuxCo7 would remain in a "borrow to on-lend" position.
A.2.2 .JPMorgan European Property Holding L uxembourg 8 S.a r.l 5
Should LuxCo8 be set up, each of Sub-funds A, B and C would grant "equity loan" financing to JPMorgan European Property Holding Luxembourg 1, 3 and 4 (hereafter "LuxCo 1", "LuxCo3" and "LuxCo4" respectively). The three companies would then acquire shares in LuxCo8. The share capital of LuxCo8 would be divided into three classes of shares, each of them being related to a specific top Sub-fund original investor (i.e. class A, B and C shares).
(2)
6
LuxCo8 would receive either equity loans or interest bearing loans to carry out its acquisitions, and would operate in the same manner as outlined for LuxCo2 and LuxCo5 in the 2006 letters.
7
For your convenience, you will find enclosed to this Jetter a chart summarising the aforementioned holding and financing structures in a diagrammatic form (Appendix 1).
B
Luxembourg tax analysis
8.1
Tax residency
8
8.2
Application of the participation exemption regime for withholding tax purposes 9
8.3
Profits realised by LuxCo7 will be distributed as dividends to Malta9. Malta9 is a Maltese resident company incoq>orated under the legal form of "Kumpanijita' Responsibilita' Limitata" and thus within the scope of article 2 of the EU Parent Subsidiary Directive (90/435/EEC), as amended. Hence the dividends described above will be exempt from Luxembourg withholding tax in accordance with article 147 2 . LITL, provided all the conditions regarding level and period of ownership set out in article I 47 LITL are fulfilled.
On-lending activity and taxable margin
B.3.1 At the level of LuxCo7 I 0 As noted above, LuxCo7 will be indirectly financed by the FCP via two Maltese companies. Funds obtained will be on-lent to LuxCo2 and LuxCo5 which in turn will lend the monies to the relevant SPVs or perform an equity acquisition. 11 The aggregate amount of loans to be granted by the FCP to the different Luxembourg entities involved in the investment structure will exceed EUR I87.5 million. Taking into account the features of the borrow to on-lend loans, the spread realised by LuxCo7 will be considered as at arm's length provided it would amount to not less than 0.09375% of the aggregate principal amount involved in the transactions.
(3)
B.3.2 At the level ofLuxCo8 12 As mentioned above, it is anticipated that LuxCo8 might receive either "equity loans" or interest bearing loans to perform its investments. LuxCo8 would mainly take equity participations in RE companies. Incidentally, it might use some of the funds received to further on-lend them. In the latter case, no margin should be left at the level of LuxCo8. Indeed, as the funds would have been originally routed via LuxCo 1, LuxCo3 or LuxCo4, a margin would be left at their respective level in accordance with the provisions of the 2006 letters.
B.4 Debt-to-equity ratio B. 4.1 1 % loans and 1 % Luxembourg equity financing loans 13 According to Luxembourg practice, a 85/15 debt-to-equity ratio needs to be respected for related party debt used by a Luxembourg company to invest in equity/participations. The above notwithstanding, based on Luxembourg tax practice, the debt-to-equity ratio is respected if the agreed and paid interest on debt financing participations does not, in aggregate, exceed 85% of the applicable market interest. As regards the 1% loans granted to the Luxembourg holding companies, the position is taken that an interest rate of 1%, applying to all borrowings used to finance participations, is below the threshold of 85% of the applicable market interest rate. Thus, following the terminology of our letter dated 24 May 2006, the interest payments on the l % loans and the 1% Luxembourg equity financing loans will be fully tax deductible and will not trigger dividend withholding tax as a constructive dividend.
B.4.2 Borrow to on-lend loans 14 Debts used to subsequently grant loans to other entities are disregarded for debtto-cquity ratio purposes. Consequently interest paid on the financing arrangements which are subsequently on-lent will not be reclassified as dividend payments for corporate income tax, municipal business tax and withholding tax purposes. Therefore, such interest paid will be fully deductible for corporate income tax and municipal business tax purposes, and will not be subject to any withholding tax.
(4)
Taking into account the importance of the above for our client, we would greatly appreciate your written confirmation of the above treatment. We remain at your disposal for further information and thank you for the attention that you will give to our request. Yours sincerely,
David Roach Partner
Jorge Garcia Arregui Senior Manager
Appendices Appendix 1: Appendix 2:
Structure chart Advance Tax Agreements dated 24 May 2006 (reference DDRH/PASA/Q2706048M-CHBR) and 25 A ugust 2006 (reference DDRH/PASA/Q2706159M-CHBR).
' Le prepose u bureau d'impositi01 Societes 6 Mariu Kohl Luxembourf 1e
771is tax agreement is based on rhe facts as presented to Pricf aterhouseCoopers S.a r. I. as ar the dare the advice was given. 711e agreement is dependelll on specific facts and circumstances and, wy not be appropriate to another party than the 011efor which it was prepared. 111is wx agreeme/1/ was prepared with only the interes}~ of the JPMorgan European Property Fund l11.1.e111bo11rg companies in I mind. and was 1101 planned or carried 0111 in contemplarion of any use by any other party. PricewarerhouseCoopers S.a r.I.. ils partners, employees and or agents. neither owe nor accept any duty ofcare \ r any responsibility to any other party, whether in conrracl or i11 rorl (including wirhout /imitation. negligence or breach of sratuto1y dilly) however arising, and shall not be liable in respect of any loss. damage or expense of whatever nature which is caused 10 any other party.
\
(5)
PrleewaterhouscCoopcn responsablUte llmittt Reviscur d 'enlreprises 400, route d'Esch B.P. 1443 L· I 0 I 4 Luxembourg Telephone+ 352 494848-1 Facsimile +352 494848-2900 Soc:l~t I
To the attention of Mr Marius Kohl Administration des Contributions Directes Bureau Societes VI 18, rue du Fort Wedell L - 2982 Luxembourg
25 August 2006
References: DDRH/PASA/Q2706159M-CHBR
JPMorgan European Property Holding Luxembourg 1 S.a r.l. (2005 2405 999) JPMorgan European Property Holding Luxembourg 2 S.a r.l. (2005 2422 249) JPMorgan European Property Holding Luxembourg 3 S.a r.I. (2005 2405 980) JPMorgan European Property Holding Luxembourg 4 S.a r.l. (2005 2405 972) JPMorgan European Property Holding Luxembourg 5 S.a r.I. (2005 2405 964) Dear Mr Kohl, We refer to our letter dated 24 May 2006 (ref: DDRH/PASA/Q2706048M-CHBR (copy comprises Enclosure 2) relating to the Real Estate Fund structure JP Morgan is implementing. Aspects of the holding structure are being subject to further minor modifications to assist the ease of its operation, and we would like to inform you of these and to confirm that we have your approval to the modifications. Please find attached as Enclosure 1 an update to the structure as it stands now.
I
Facts
The Fund has committed itself to a regular rebalancing process as at the end of each quarter of each calendar year. The amount of money invested by the three Sub-funds through the structure will change, and so might the entitlements in profits to be allocated to the Sub-funds. On the basis of this commitment, and as noted in our letter of 24 May 2006 (page 2, last bullet), it is necessary for shares in the lower tier Luxembourg companies LuxCo 2 and LuxCo 5, in which each of the three Sub-funds have indirect ownership interests, to shift ownership regularly. The same will need to be achieved for the debt financing within the structure (i.e., using the terminology of our letter dated 24 May 2006, for "the 1% Luxem bourg equity financing loans", for "the 1% Joans", and for other borrowing and lending, i.e. on back-to-back terms).
R.C.S. Luxembourg B 65 477 • TVA LU 17564447
Taking into consideration the burdens of such procedure. and the potential inaccuracy of a rebalancing based on the minimum nominal amount of shares in a Luxembourg S.a r.1., instead, the "lower tier Luxembourg companies" LuxCo 2 and LuxCo 5 will create classes of shares that provide for differing dividend rights. depending on the investment made by each of the Sub-funds. Correspondingly, depending on the investment by the particular Sub-funds as a proportion of the overall investments by the Sub-funds, a quarterly rebalancing of the loans granted and received within the structure will take place. ln more detail. the following is intended: •
LuxCo 2 will have a share capital of EUR 1,060,720 divided into three (A, B, and C) classes of shares. The class A of shares with an aggregate par value of EUR 353,573 will be allocated to and held by LuxCo 1, the class B and C of shares having an aggregate par value of EUR 353,573 and EUR 353,574 respectively will be allocated to and held by LuxCo 3 and LuxCo 4, respectively. Consequently, the class A shares will represent the equity stake of Sub-fund A, and the class B and C shares the equity stakes of Sub-funds Band C, respectively.
•
Sub-fund A will never have an interest in investment projects owned by LuxCo 5. LuxCo 5 will have a share capital of EUR J2,500 divided into two (B and C) classes of shares. The class B of shares with an aggregate par value of EUR 6,250 will be allocated to and held by LuxCo 3, the C-class of shares having the same aggregate par value will be allocated to and held by LuxCo 4. Consequently, the class B shares will represent the equity stake of Sub-fund B and the class C shares will represent the equity stake of Sub-fund C.
•
The classes of shares will not be used as a mechanism to repatriate profits derived from specific investment projects (tracking stocks), but they will bear different dividend rights. According to the proposed amendments of the Articles of LuxCo 2 and LuxCo 5 those differing dividend rights will be calculated as follows:
"Article seven - Distribution Right of Units All units of the Company will be ultimately held by JPMorgan European Property Fund Management Company S.A. (the Ma11agement Company ), acting for Jlte account, and in its capacity as management company. of JPMorgan European Property Fund, a Luxembourg fonds commun de placement (the Fund) in respect of certain of its sub~funds. All the units of a particular class of units within the Company will be ultimately held by a sub-fund of the Fund (the Participati11g Sub-Fund) and all units of the Company will be held by 'f!r nature w/r/clr Is caused to a11y other party.
(6)
Structure chart
Appendix 1
·r l
--
Sub.fUnd
•
A
FCP
= ~
, .._,, LllllCD7
Cius A Stiarts
Class8 SharcJ
Cltl:HA
Sheres
Class C Shires
I~ ..-eal 4:.St•le .ecuritltt
Lu•Co5
non-testticted F ren
PrkcwalcrhouscCoopers Socic.\tc.\ a rcsponsabilitc.\ llmitee Rh iseur d'cntrepriscs 400, route d'Esch B.P. 1443 L-1014 Luxembourg Telephone ~352 494848-1 Facsimile +352 494848-2900 www.pwc.com/Ju mfo(allu.pwc.com
11 February 2009 References: DDRH/FCYR/MAAI/JO 1u09001M-JEGI
JPMorgan European Property Holding Luxembourg 1 S.a r.l. (2005 2405 999) JPMorgan European Property Holding Luxembourg 2 S.a r.l. (2005 2422 249) JPMorgan European Property Holding Luxembourg 3 S.a r.l. (2005 2405 980) JPMorgan European Property Holding Luxembourg 4 S.a r.l. (2005 2405 972) JPMorgan European Property Holding Luxembourg 5 S.a r.1. (2005 2405 964) JPMorgan European Property Holding Luxembourg 7 S.a r.L (2007 2460 082) JP Morgan European Property Holding Luxembourg 8 S.a r.l. (name a nd incorporation of the company still to be determined)
Dear Mr Kohl, For and on behalf of our client, the JPMorgan European Property Fund (hereafter "the EPF"), we are pleased to submit for your review and approval the Luxembourg tax treatment of the following holding and financing structure, already discussed with you during our meeting held on 3 December 2008. We also refer to the EPF holding and financing structure approved by you in our letters dated 24 May and 25 August 2006 (referenced DDRH/PASNQ2706048M-CHBR and DDRH/PASNQ2706159M-CH BR respectively - the "2006 letters"). This letter is an addendum to the 2006 letters. Alternatively, we would be pleased to receive your written comments on this structure. The EPF is currently divided into three Sub-funds, the Sub-funds A, B and C. In addition to these existing Sub-funds, the EPF has recently had approval from the CSSF to launch a new Sub-fund, the Sub-fund D. As a general remark, the holding and financing structure of the Sub-fund D will be similar to the Sub-fund B.
ll.C.S. Luxembourg B 65 477 - TVi\ I UI 7564447
A
Facts and structure
A.1
Holding structure The Sub-fund D will set up three new Maltese companies, which will in tum provide equity ("Malta9") and loans (via "MaltalO" and "Malta I l ") to a newly incorporated Luxembourg company, JPMorgan European Property Holding Luxembourg 7 S.a r.l. (hereafter "LuxCo7"). 2
A.2
In addition, to isolate Sub-fund D investors from exposures related to investments in real estate securities, it is currently envisaged that the Sub-funds A, B and C may in the future indirectly own a new Luxembourg company, JPMorgan European Property Holding Luxembourg 8 S.a r.l. (hereafter "LuxCo8"), into which Sub-fund D investors would not be investing directly or indirectly. It should be noted that LuxCo8 has not been incorporated and is not yet part of the investment structure. Once LuxCo8 is in place, we would advise you in due course of the activity and denomination of this company.
Financing structure
A.2.1 .JPMorgan European Property Holding Luxembourg 7 S.a r.l. 3
Consistent with our letter dated 24 May 2006, LuxCo7 will receive so called "equity loans" from a Maltese financing vehicle, part of the Sub-fund D, i.e. interest bearing loans having a 1% interest rate. With the funds received, LuxCo7 will acquire equity in JPMorgan European Property Holding Luxembourg 2 and JPMorgan European Property Holding Luxembourg 5 (hereafter "LuxCo2" and "LuxCo5" respectively). New classes of shares (the class D shares) will be issued by LuxCo2 and by LuxCo5 to track the profit returns to LuxCo7.
4
ln addition to this holding activity, LuxCo7 may also grant classic interest bearing loans or equity loans to LuxCo2 and LuxCoS. In both alternatives, LuxCo7 would remain in a "borrow to on-lend" position.
A.2.2 .JPMorgan European Property Holding L uxembourg 8 S.a r.l 5
Should LuxCo8 be set up, each of Sub-funds A, B and C would grant "equity loan" financing to JPMorgan European Property Holding Luxembourg 1, 3 and 4 (hereafter "LuxCo 1", "LuxCo3" and "LuxCo4" respectively). The three companies would then acquire shares in LuxCo8. The share capital of LuxCo8 would be divided into three classes of shares, each of them being related to a specific top Sub-fund original investor (i.e. class A, B and C shares).
(2)
6
LuxCo8 would receive either equity loans or interest bearing loans to carry out its acquisitions, and would operate in the same manner as outlined for LuxCo2 and LuxCo5 in the 2006 letters.
7
For your convenience, you will find enclosed to this Jetter a chart summarising the aforementioned holding and financing structures in a diagrammatic form (Appendix 1).
B
Luxembourg tax analysis
8.1
Tax residency
8
8.2
Application of the participation exemption regime for withholding tax purposes 9
8.3
Profits realised by LuxCo7 will be distributed as dividends to Malta9. Malta9 is a Maltese resident company incoq>orated under the legal form of "Kumpanijita' Responsibilita' Limitata" and thus within the scope of article 2 of the EU Parent Subsidiary Directive (90/435/EEC), as amended. Hence the dividends described above will be exempt from Luxembourg withholding tax in accordance with article 147 2 . LITL, provided all the conditions regarding level and period of ownership set out in article I 47 LITL are fulfilled.
On-lending activity and taxable margin
B.3.1 At the level of LuxCo7 I 0 As noted above, LuxCo7 will be indirectly financed by the FCP via two Maltese companies. Funds obtained will be on-lent to LuxCo2 and LuxCo5 which in turn will lend the monies to the relevant SPVs or perform an equity acquisition. 11 The aggregate amount of loans to be granted by the FCP to the different Luxembourg entities involved in the investment structure will exceed EUR I87.5 million. Taking into account the features of the borrow to on-lend loans, the spread realised by LuxCo7 will be considered as at arm's length provided it would amount to not less than 0.09375% of the aggregate principal amount involved in the transactions.
(3)
B.3.2 At the level ofLuxCo8 12 As mentioned above, it is anticipated that LuxCo8 might receive either "equity loans" or interest bearing loans to perform its investments. LuxCo8 would mainly take equity participations in RE companies. Incidentally, it might use some of the funds received to further on-lend them. In the latter case, no margin should be left at the level of LuxCo8. Indeed, as the funds would have been originally routed via LuxCo 1, LuxCo3 or LuxCo4, a margin would be left at their respective level in accordance with the provisions of the 2006 letters.
B.4 Debt-to-equity ratio B. 4.1 1 % loans and 1 % Luxembourg equity financing loans 13 According to Luxembourg practice, a 85/15 debt-to-equity ratio needs to be respected for related party debt used by a Luxembourg company to invest in equity/participations. The above notwithstanding, based on Luxembourg tax practice, the debt-to-equity ratio is respected if the agreed and paid interest on debt financing participations does not, in aggregate, exceed 85% of the applicable market interest. As regards the 1% loans granted to the Luxembourg holding companies, the position is taken that an interest rate of 1%, applying to all borrowings used to finance participations, is below the threshold of 85% of the applicable market interest rate. Thus, following the terminology of our letter dated 24 May 2006, the interest payments on the l % loans and the 1% Luxembourg equity financing loans will be fully tax deductible and will not trigger dividend withholding tax as a constructive dividend.
B.4.2 Borrow to on-lend loans 14 Debts used to subsequently grant loans to other entities are disregarded for debtto-cquity ratio purposes. Consequently interest paid on the financing arrangements which are subsequently on-lent will not be reclassified as dividend payments for corporate income tax, municipal business tax and withholding tax purposes. Therefore, such interest paid will be fully deductible for corporate income tax and municipal business tax purposes, and will not be subject to any withholding tax.
(4)
Taking into account the importance of the above for our client, we would greatly appreciate your written confirmation of the above treatment. We remain at your disposal for further information and thank you for the attention that you will give to our request. Yours sincerely,
David Roach Partner
Jorge Garcia Arregui Senior Manager
Appendices Appendix 1: Appendix 2:
Structure chart Advance Tax Agreements dated 24 May 2006 (reference DDRH/PASA/Q2706048M-CHBR) and 25 A ugust 2006 (reference DDRH/PASA/Q2706159M-CHBR).
' Le prepose u bureau d'impositi01 Societes 6 Mariu Kohl Luxembourf 1e
771is tax agreement is based on rhe facts as presented to Pricf aterhouseCoopers S.a r. I. as ar the dare the advice was given. 711e agreement is dependelll on specific facts and circumstances and, wy not be appropriate to another party than the 011efor which it was prepared. 111is wx agreeme/1/ was prepared with only the interes}~ of the JPMorgan European Property Fund l11.1.e111bo11rg companies in I mind. and was 1101 planned or carried 0111 in contemplarion of any use by any other party. PricewarerhouseCoopers S.a r.I.. ils partners, employees and or agents. neither owe nor accept any duty ofcare \ r any responsibility to any other party, whether in conrracl or i11 rorl (including wirhout /imitation. negligence or breach of sratuto1y dilly) however arising, and shall not be liable in respect of any loss. damage or expense of whatever nature which is caused 10 any other party.
\
(5)
PrleewaterhouscCoopcn responsablUte llmittt Reviscur d 'enlreprises 400, route d'Esch B.P. 1443 L· I 0 I 4 Luxembourg Telephone+ 352 494848-1 Facsimile +352 494848-2900 Soc:l~t I
To the attention of Mr Marius Kohl Administration des Contributions Directes Bureau Societes VI 18, rue du Fort Wedell L - 2982 Luxembourg
25 August 2006
References: DDRH/PASA/Q2706159M-CHBR
JPMorgan European Property Holding Luxembourg 1 S.a r.l. (2005 2405 999) JPMorgan European Property Holding Luxembourg 2 S.a r.l. (2005 2422 249) JPMorgan European Property Holding Luxembourg 3 S.a r.I. (2005 2405 980) JPMorgan European Property Holding Luxembourg 4 S.a r.l. (2005 2405 972) JPMorgan European Property Holding Luxembourg 5 S.a r.I. (2005 2405 964) Dear Mr Kohl, We refer to our letter dated 24 May 2006 (ref: DDRH/PASA/Q2706048M-CHBR (copy comprises Enclosure 2) relating to the Real Estate Fund structure JP Morgan is implementing. Aspects of the holding structure are being subject to further minor modifications to assist the ease of its operation, and we would like to inform you of these and to confirm that we have your approval to the modifications. Please find attached as Enclosure 1 an update to the structure as it stands now.
I
Facts
The Fund has committed itself to a regular rebalancing process as at the end of each quarter of each calendar year. The amount of money invested by the three Sub-funds through the structure will change, and so might the entitlements in profits to be allocated to the Sub-funds. On the basis of this commitment, and as noted in our letter of 24 May 2006 (page 2, last bullet), it is necessary for shares in the lower tier Luxembourg companies LuxCo 2 and LuxCo 5, in which each of the three Sub-funds have indirect ownership interests, to shift ownership regularly. The same will need to be achieved for the debt financing within the structure (i.e., using the terminology of our letter dated 24 May 2006, for "the 1% Luxem bourg equity financing loans", for "the 1% Joans", and for other borrowing and lending, i.e. on back-to-back terms).
R.C.S. Luxembourg B 65 477 • TVA LU 17564447
Taking into consideration the burdens of such procedure. and the potential inaccuracy of a rebalancing based on the minimum nominal amount of shares in a Luxembourg S.a r.1., instead, the "lower tier Luxembourg companies" LuxCo 2 and LuxCo 5 will create classes of shares that provide for differing dividend rights. depending on the investment made by each of the Sub-funds. Correspondingly, depending on the investment by the particular Sub-funds as a proportion of the overall investments by the Sub-funds, a quarterly rebalancing of the loans granted and received within the structure will take place. ln more detail. the following is intended: •
LuxCo 2 will have a share capital of EUR 1,060,720 divided into three (A, B, and C) classes of shares. The class A of shares with an aggregate par value of EUR 353,573 will be allocated to and held by LuxCo 1, the class B and C of shares having an aggregate par value of EUR 353,573 and EUR 353,574 respectively will be allocated to and held by LuxCo 3 and LuxCo 4, respectively. Consequently, the class A shares will represent the equity stake of Sub-fund A, and the class B and C shares the equity stakes of Sub-funds Band C, respectively.
•
Sub-fund A will never have an interest in investment projects owned by LuxCo 5. LuxCo 5 will have a share capital of EUR J2,500 divided into two (B and C) classes of shares. The class B of shares with an aggregate par value of EUR 6,250 will be allocated to and held by LuxCo 3, the C-class of shares having the same aggregate par value will be allocated to and held by LuxCo 4. Consequently, the class B shares will represent the equity stake of Sub-fund B and the class C shares will represent the equity stake of Sub-fund C.
•
The classes of shares will not be used as a mechanism to repatriate profits derived from specific investment projects (tracking stocks), but they will bear different dividend rights. According to the proposed amendments of the Articles of LuxCo 2 and LuxCo 5 those differing dividend rights will be calculated as follows:
"Article seven - Distribution Right of Units All units of the Company will be ultimately held by JPMorgan European Property Fund Management Company S.A. (the Ma11agement Company ), acting for Jlte account, and in its capacity as management company. of JPMorgan European Property Fund, a Luxembourg fonds commun de placement (the Fund) in respect of certain of its sub~funds. All the units of a particular class of units within the Company will be ultimately held by a sub-fund of the Fund (the Participati11g Sub-Fund) and all units of the Company will be held by 'f!r nature w/r/clr Is caused to a11y other party.
(6)
Structure chart
Appendix 1
·r l
--
Sub.fUnd
•
A
FCP
= ~
, .._,, LllllCD7
Cius A Stiarts
Class8 SharcJ
Cltl:HA
Sheres
Class C Shires
I~ ..-eal 4:.St•le .ecuritltt
Lu•Co5
non-testticted F ren
