MultiChoice Group Limited has announced a significant development in its ongoing tax dispute with the Nigerian Federal Inland Revenue Service (FIRS). The settlement, reached between MultiChoice, MultiChoice Nigeria (MCN), and MultiChoice Africa Holdings BV (MAH), marks a pivotal moment in resolving the tax assessments raised by FIRS in April and June 2021.
Settlement Terms
Under the terms of the agreement, MultiChoice, MCN, and MAH have reached a ‘without prejudice or precedent’ settlement, bringing an end to all disputes with FIRS. The settlement involves a total tax payment of NGN35.4 billion (approximately US$37.3 million), which will be paid by MCN and MAH. This payment will offset against the security deposits and good faith payments made to date.
Implications for Shareholders
Shareholders of MultiChoice should take note of the company’s ability to reduce the voting rights of shares, as outlined in its memorandum of incorporation. This measure is aimed at ensuring compliance with statutory requirements in South Africa. MultiChoice has the authority to limit the aggregate voting power of shares held by foreigners to South Africa to 20% of the total voting power in the company.
To achieve this, MultiChoice will presume that all shares deposited through the American Depositary Share (ADS) facility are owned or held by foreigners to South Africa. Additionally, shareholders with addresses outside of South Africa on MultiChoice’s register will be considered foreigners to South Africa, unless they can provide satisfactory proof to the MultiChoice board.
Conclusion
The settlement with FIRS represents a significant milestone for MultiChoice as it resolves tax matters in Nigeria. The company’s commitment to compliance and transparency underscores its dedication to maintaining a strong and sustainable business environment.
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