Extract to table

trade or business is required to withhold tax on the allocable share of such income attributable to its foreign partners

This is a gating item for the formation process and must be tracked with the highest priority

One significant additional tax cost associated with the Offshore blocker structure must be noted

The tax consequences of the blocker liquidation to the shareholders — including the recognition of gain or loss on the surrender of stock in the liquidating blocker entity — must be carefully planned and coordinated with the investors' tax counsel

The state-level tax exposure of both blocker entities is addressed in detail in the companion State Tax Nexus and Withholding Analysis Memo and must be factored into the overall tax leakage projections provided to the blocker investors

The bylaws (or a separate shareholders' agreement between Meridian and Ashford) should include the following provisions: • Information rights: each shareholder shall have the right to receive quarterly financial statements, annual audited financial statements, and copies of all tax returns filed by the Domestic blocker; • Consent rights: material transactions by the Domestic blocker (including the incurrence of indebtedness, amendments to the Certificate of Incorporation, changes to the authorized capital structure, and the merger, dissolution, or liquidation of the blocker) shall require the approval of shareholders holding at least 75% of the outstanding shares (which, under the current allocation, would require the consent of Meridian); • Minority protections: certain enumerated actions shall require the approval of each shareholder, regardless of its percentage interest, including amendments to the shareholders' agreement, changes to the dividend distribution policy, and transactions with affiliates; and • Restrictions on transfer: shares in the Domestic blocker shall not be transferable without the consent of the other shareholder(s) and compliance with applicable securities laws