Verses AI Inc 6-K, filed Mar 26, 2025
Verses AI Inc. (VRSSF)
About this 6-K
Verses AI Inc filed this 6-K on March 26, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2025
Commission File Number: 000-56692
VERSES AI INC.
(Translation of registrant’s name into English)
205 - 810 Quayside Drive
New Westminster, British Columbia
Canada V3M 6B9
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
| ☐ Form 20-F | ☒ Form 40-F |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VERSES AI INC. | ||
| By: | /s/ Kevin Wilson | |
| Name: | Kevin Wilson | |
| Title: | Executive Vice President - Finance and Accounting | |
| Date: March 26, 2025 | ||
EXHIBIT INDEX
Exhibit 99.1
VERSES Demonstrates Smart Building Energy Optimization
Exhibition Showcases Multi-Agent Smart Grid Automation and Efficiency Management
VANCOUVER, British Columbia, March 18, 2025 — VERSES AI Inc. (CBOE:VERS) (OTCQB:VRSSF) (“VERSES’’ or the “Company”) a cognitive computing company specializing in next-generation intelligent software systems, announces the completion and exhibition of its work on sustainable building management, or smart homes, for the invite-only Turing Grand Challenge at AI UK 20251 on March 17th and 18th.
“We believe the challenge with today’s rule-based energy control systems, such as smart homes, is that they are reactive and don’t take into account other variables like hyper-local weather, multiple energy sources (grid, solar, battery), carbon emissions or room occupancy, and therefore they really aren’t ‘smart’,” said VERSES CEO, Gabriel René. “In this exhibition, we show how multiple agents working together can better predict which actions to take, given various trade-offs to achieve a desired goal. This might include deciding to switch a source of power from solar to electrical or preemptively adjust heating and cooling temperature based on weather conditions, occupancy, cost or efficiency goals.”
According to the US Department of Energy, buildings are responsible for 40% of global energy consumption and roughly one- third of that is wasted at a cost of $150 billion annually.2
The VERSES exhibit, entitled EcoNet: a Multi-Agent Active Inference System for Urban Energy Optimisation, is a joint effort between VERSES researchers and University College London (UCL), that addresses a key aspect of the environment and sustainability objectives of Turing Grand Challenge, which seeks to develop AI systems that can reduce the impacts of climate change by managing energy use effectively.
“We believe this demonstration of autonomous multi-agent coordination in a complex dynamic system like energy management is an ideal showcase for Genius,” said CTO Hari Thiruvengada. “While this specific use case is applicable from studio apartments all the way up to skyscrapers and to large industrial buildings, the more general problem that Genius is designed to solve is generating reliable predictions in the face of complex, uncertain and changing conditions that can be applied across enterprises universally.”
The Company expects to share further details regarding the results of this test in an upcoming blog at Verses.ai.
About VERSES
VERSES is a cognitive computing company building next-generation intelligent software systems modeled after the wisdom and genius of Nature. Designed around first principles found in science, physics and biology, our flagship product, Genius™, is a suite of tools for machine learning practitioners to model complex dynamic systems and generate autonomous intelligent agents that continuously reason, plan, and learn. Imagine a Smarter World that elevates human potential through technology inspired by Nature. Learn more at verses.ai, LinkedIn, and X.
On behalf of the Company
Gabriel René, Founder & CEO, VERSES AI Inc.
Press Inquiries: press@verses.ai
Investor Relations Inquiries
U.S., Matthew Selinger, Partner, Integrous Communications, mselinger@integcom.us 415-572-8152
Canada, Leo Karabelas, President, Focus Communications, info@fcir.ca 416-543-3120
About UCL
Founded in 1826 in the heart of London, UCL is London’s leading multidisciplinary university, with more than 16,000 staff and 50,000 students from over 150 different countries.
Media contact
Matt Midgley
Tel: +44 (0)20 3108 6995
Email: m.midgley [at] ucl.ac.uk
1 https://verses.atlassian.net/wiki/spaces/RDLAB/pages/1068400658/UK+Turing+Institute+-+Grand+Challenge+-+Demo+UK+2025
2 https://www.energy.gov/articles/doe-announces-46-million-boost-energy-efficiency-and-slash-emissions-residential-and
Exhibit 99.2
VERSES® Announces Commercial Partnership with AI Driller for Smarter Oil and Gas Operations
Predictive Capabilities of Genius™ to Enable Safer and Smarter Drilling Solutions for the Oil and Gas Industry
VANCOUVER, British Columbia, March 21, 2025 — VERSES AI Inc. (CBOE:VERS) (OTCQB:VRSSF) (“VERSES’’ or the
“Company”), a cognitive computing company specializing in next generation intelligent agent systems, announces that AI Driller, a leading AI solutions company focused on providing a comprehensive operational platform for safer and smarter drilling and completions solutions for the oil and gas industry, has joined the Genius commercial program. AI Driller customers include large global and national oil and gas companies, independent operators, drilling contractors and boutique engineering firms.
“At AI Driller, we provide a suite of best-in-class solutions for safer and smarter operations to the global leaders of the oil and gas industry,” said Marat Zaripov CEO, Founder at AI Driller, Inc. “We strive to continually innovate, and we believe that by partnering with VERSES and leveraging Genius, we can offer even smarter and more predictable optimization and outcomes resulting in improved investment returns (ROI) for our customers. We look forward to this developing relationship as both companies seek to create a safer and smarter world through next generation AI solutions.”
“We are excited for the opportunity to partner with AI Driller to demonstrate the power of Genius to a new vertical, the oil and gas industry,” said Michael Wadden, VERSES Chief Commercial Officer. “AI Driller’s products already improve communication, performance and decision-making with data for the oil drilling industry, and we believe that by adding Genius, we can make that performance even better. In high-stakes drilling, every decision counts. It is essential to monitor key metrics to streamline rate-of-penetration, anticipate equipment maintenance needs, and reduce collision risks to avoid incidents.Genius empowers AI Driller to capture their domain knowledge and use it to develop Agents that learn to predict the right course of action and scale safer, more efficient, and cost-effective drilling operations for its customers.”
Upon successful completion of phase 1, building and testing Genius Agents on high-value drilling use cases, both parties anticipate the execution and announcement of a reseller agreement to provide Genius to the AI Driller global customer base.
About VERSES
VERSES is a cognitive computing company building next-generation intelligent software systems modeled after the wisdom and genius of Nature. Designed around first principles found in science, physics and biology, our flagship product, Genius, is a suite of tools for machine learning practitioners to model complex dynamic systems and generate autonomous intelligent agents that continuously reason, plan, and learn. Imagine a Smarter World that elevates human potential through technology inspired by Nature. Learn more at verses.ai, LinkedIn, and X.
About AI Driller
AI Driller, Inc. is a US-based software company transforming the oil and gas industry through the power of artificial intelligence. Its AI Cloud platform leverages advanced machine learning algorithms and intelligent data processing to provide operators worldwide with real-time data analytics, compliance monitoring, well planning, automated reporting, and performance optimization. Designed with a user-friendly interface, AI Driller enhances decision-making, boosts operational efficiency, and streamlines processes across rigs and frac fleets, centralizing operations, cutting costs, and ensuring consistency in drilling and completions projects. You can explore more about AI Driller at aidriller.com and Linkedin.
On behalf of the Company
Gabriel René, Founder & CEO, VERSES AI Inc.
Press Inquiries: press@verses.ai
Investor Relations Inquiries
U.S., Matthew Selinger, Partner, Integrous Communications, mselinger@integcom.us 415-572-8152
Canada, Leo Karabelas, President, Focus Communications, info@fcir.ca 416-543-3120
Cautionary Note Regarding Forward-Looking Statements
When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. Although VERSES believes, in light of the experience of their respective officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in the forward-looking statements and information in this press release are reasonable, undue reliance should not be placed on them because the parties can give no assurance that such statements will prove to be correct. The forward-looking statements and information in this press release include, among other things, statements regarding the assumption that the predictive capabilities of Genius is expected to enable safer and smarter drilling solutions for the oil and gas industry; that the Genius platform is expected to be transformative for the oil and gas industry; that Genius is expected to allow AI Driller to scale across their global installed base; and that upon successful completion of phase 1, building and testing Genius Agents on high-value drilling use cases, Verses and AI Driller anticipate the execution and announcement of a reseller agreement.
There are risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward- looking statements and information. In making the forward-looking statements in this news release, the Company has applied various material assumptions. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. There are a number of important factors that could cause VERSES’ actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors may include, among other things, that the predictive capabilities of Genius will enable safer and smarter drilling solutions for the oil and gas industry; that the Genius platform will be transformative for the oil and gas industry; that Genius will allow AI Driller to scale across their global installed base; and that upon successful completion of phase 1, building and testing Genius Agents on high-value drilling use cases, Verses and AI Driller will execute and announce the signing of a reseller agreement. The Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of its securities or its financial or operating results (as applicable).
Additionally, forward-looking statements involve a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of the Company to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking statements. Such risks include, without limitation: the risk that the predictive capabilities of Genius will not enable safer and smarter drilling solutions for the oil and gas industry; that the Genius platform will not be transformative for the oil and gas industry; that Genius will not allow AI Driller to scale across their global installed base; and that phase 1, building and testing Genius Agents on high-value drilling use cases will not be successful and Verses and AI Driller will not execute nor announce the signing of a reseller agreement as anticipated by management or at all. VERSES cautions that the foregoing list of material factors is not exhaustive. When relying on VERSES’ forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. VERSES has assumed that the material factors referred to in the previous paragraph will not cause such forward- looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. The forward-looking information contained in this press release represents the expectations of VERSES as of the date of this press release and, accordingly, are subject to change after such date. VERSES does not undertake to update this information at any particular time except as required in accordance with applicable laws.
Exhibit 99.3
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
FOR HOLDERS OF OUR SUBORDINATE VOTING SHARES
The following is a summary of certain material U.S. federal income tax considerations of the ownership and disposition of the Verses AI Inc. Class A Subordinate Voting Shares (the “Subordinate Voting Shares”) but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the United States Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder and administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax considerations different from those set forth below. We have not sought, and do not intend to seek, any ruling from the U.S. Internal Revenue Service (“IRS”), with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS or a court will agree with such statements and conclusions.
Unless the context otherwise requires, references in this summary to the “Company”, “we”, “us” and “our” includes Verses AI Inc. and each of its material subsidiaries, as the context requires.
This summary also does not address the tax considerations arising under the laws of any U.S. state or local jurisdiction, non-U.S., or under any U.S. non-income tax laws (e.g., estate or gift tax) or the Medicare tax. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:
| ● | banks, insurance companies, regulated investment companies, real estate investment trusts or other financial institutions; |
| ● | persons subject to the alternative minimum tax; |
| ● | accrual method taxpayers subject to special tax accounting rules under Section 451(b) of the Code; |
| ● | tax-exempt organizations and government organizations; |
| ● | “qualified foreign pension funds” as defined in Section 897(1)(2) of the Code, entities all of the interests of which are held by qualified foreign pension funds and tax-qualified retirement plans; |
| ● | controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax; |
| ● | brokers or dealers in securities or currencies; |
| ● | traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; |
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| ● | persons who own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below); |
| ● | certain former citizens or long-term residents of the United States; |
| ● | persons who hold the Subordinate Voting Shares as a position in a hedging transaction, “straddle,” “conversion transaction,” synthetic security, or other risk reduction transaction; |
| ● | persons who hold or receive our Subordinate Voting Shares pursuant to the exercise of any option or otherwise as compensation; |
| ● | persons who do not hold the Subordinate Voting Shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment); or |
| ● | persons deemed to sell the Subordinate Voting Shares under the constructive sale provisions of the Code. |
In addition, if a partnership (or other entity or arrangement classified as a pass-through or disregarded entity for U.S. federal income tax purposes) holds our Subordinate Voting Shares, the tax treatment of a partner or member in the partnership or other entity generally will depend on the status of the partner or member and upon the activities of the partnership or other entity or arrangement. A partner or member in a partnership that will hold our Subordinate Voting Shares should consult his, her or its own tax advisor regarding the tax considerations of the purchase, ownership and disposition of our Subordinate Voting Shares through a partnership or other entity or arrangement.
You are urged to consult your tax advisor with respect to the application of all aspects of United States tax laws to your particular situation, including without limitation any tax considerations of the purchase, ownership and disposition of our Subordinate Voting Shares arising under the U.S. federal gift or estate tax rules or under the laws of any state, local, non-U.S. or other taxing jurisdiction or under any applicable tax treaty.
Classification as a United States Corporation for United States Federal Income Tax Purposes
Although we are, and will continue to be, a Canadian corporation, we are classified as a United States domestic corporation for United States federal income tax purposes under Section 7874(b) of the Code and are subject to United States federal income tax on our worldwide income. The remaining discussion assumes that we will be classified as a domestic corporation for all United States federal income tax purposes.
United States Holders
The following discussion applies to you if you are a “United States Holder.” As used herein, the term “United States Holder” means a beneficial owner of our Subordinate that is, for United States federal income tax purposes, any of the following:
● an individual citizen or resident of the United States;
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● a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
● an estate the income of which is subject to United States federal income taxation regardless of its source; or
● a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.
Taxation of Distributions
The Company has never declared nor paid cash dividends on the Subordinate Voting Shares, and does not currently anticipate paying any dividends on the Subordinate Voting Shares. However, if we do make distributions on the Subordinate Voting Shares, any gross amount of distributions to United States Holders of those shares (including any amounts withheld to reflect Canadian withholding taxes) will be taxable as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, the distribution will first be treated as a tax-free return of capital, causing a reduction in your tax basis, and to the extent the amount of the distribution exceeds your tax basis, the excess will be treated as capital gain realized on a sale or exchange of the Subordinate Voting Shares, as described under “—Taxation of Capital Gains” below.
Dividends distributed to a United States Holder that is a taxable corporation will generally qualify for the dividends received deduction if certain conditions (including the requisite holding period) are satisfied. Dividends distributed to a non-corporate United States Holder will generally constitute “qualified dividend income” that under current law will be subject to United States federal income tax at long-term capital gain rates, if certain conditions (including the requisite holding period) are satisfied. If the requisite conditions are not satisfied, corporate United States Holders generally would be subject to United States federal income tax on the entire dividend amount; non-corporate United States Holders generally would be subject to United States federal income tax on such dividend at ordinary income tax rates instead of the reduced rates that apply to “qualified dividend income.”
The amount of any dividend paid in Canadian dollars will equal the United States dollar value of the Canadian dollars received calculated by reference to the exchange rate in effect on the date the dividend is received by you, regardless of whether the Canadian dollars are converted into United States dollars. If the Canadian dollars received as a dividend are converted into United States dollars on the date they are received, you generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the Canadian dollars received as a dividend are not converted into United States dollars on the date of receipt, you will have a basis in the Canadian dollars equal to their United States dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the Canadian dollars will be treated as United States source ordinary income or loss.
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Dividends received by you generally will not be subject to United States withholding tax, but may be subject to Canadian withholding tax. In the event we pay any dividends, they will be treated as income from sources within the United States for purposes of the foreign tax credit rules under the Code. Accordingly, United States Holders generally will not be able to claim a credit for any Canadian tax withheld unless, depending on the circumstances, such United States Holders have an excess foreign tax credit limitation. The application of foreign tax credit rules is highly complex. A prospective investor is encouraged to consult its own tax advisors regarding all aspects of the application of those rules in this context.
Taxation of Capital Gains
For United States federal income tax purposes, you generally will recognize taxable gain or loss on any sale or exchange of the Subordinate Voting Shares in an amount equal to the difference between the amount realized for the Subordinate Voting Shares and your tax basis in the Subordinate Voting Shares. Such gain or loss will generally be capital gain or loss and will generally be long-term capital gain or loss if you have held the Subordinate Voting Shares for more than one year. Long-term capital gains of non-corporate United States Holders are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by United States Holders will generally be treated as United States source gain or loss. Consequently, United States Holders may not be able to use the foreign tax credit arising from any Canadian tax imposed on the disposition of the Subordinate Voting Shares unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources. The application of foreign tax credit rules is highly complex. A prospective investor is encouraged to consult its own tax advisors regarding all aspects of the application of those rules in this context.
Information Reporting and Backup Withholding
In general, information reporting requirements may apply to dividends paid to a United States Holder and to the proceeds of the sale or other disposition of the Subordinate Voting Shares, unless the United States Holder is an exempt recipient. Backup withholding may apply to such payments if the United States Holder fails to provide a taxpayer identification number (generally, on a properly completed IRS Form W-9) or a certification of exempt status, or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn). Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the United States Holder’s U.S. federal income tax liability, provided that the holder timely furnishes the required information to the IRS.
Non-U.S. Holder
The following discussion applies to you if you are a “non-U.S. holder.” For purposes of this discussion, you are a “non-U.S. holder” if you are a beneficial owner of our Subordinate Voting Shares that, for U.S. federal income tax purposes, is neither a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) nor:
| ● | an individual who is a citizen or resident of the United States; |
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| ● | a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States or any political subdivision thereof, or otherwise treated as such for U.S. federal income tax purposes; |
| ● | an estate whose income is subject to U.S. federal income tax regardless of its source; or |
| ● | a trust (x) whose administration is subject to the primary supervision of a U.S. court and that has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (y) that has made a valid election under applicable Treasury Regulations to be treated as a U.S. person. |
Taxation of Distributions
As described in the section titled “Dividend Policy,” we have never declared nor paid cash dividends on our Subordinate Voting Shares, and we do not currently anticipate paying any dividends on our Subordinate Voting Shares. However, if we do make distributions on our Subordinate Voting Shares, those payments will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, the excess will constitute a return of capital and will first reduce your basis in our Subordinate Voting Shares, but not below zero, and then will be treated as gain from the sale of stock as described below under “-Gain on Disposition of Subordinate Voting Shares.”
Subject to the discussions below regarding effectively connected income, backup withholding and Foreign Account Tax Compliance Act, or FATCA, withholding, any dividend paid to you generally will be subject to U.S. federal withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income tax treaty between the United States and your country of residence. In order to receive a reduced treaty rate, you must provide us or the applicable paying agent with an IRS Form W-8BEN or W-8BEN-E or other appropriate version of IRS Form W-8 certifying qualification for the reduced rate. We may withhold up to 30% of the gross amount of the entire distribution even if the amount constituting a dividend, as described above, is less than the gross amount to the extent provided for in the Treasury Regulations. A non-U.S. holder of shares of our Subordinate Voting Shares may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds our Subordinate Voting Shares through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our paying agent, either directly or through other intermediaries.
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Dividends received by you that are treated as effectively connected with your conduct of a U.S. trade or business (and, if required by an applicable income tax treaty, that are attributable to a permanent establishment or fixed base maintained by you in the United States) are generally exempt from the 30% U.S. federal withholding tax if you satisfy applicable certification and disclosure requirements, subject to the discussions below regarding backup withholding and FATCA withholding. In order to obtain this exemption, you must provide us with a properly executed IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying that such dividends are effectively connected with your conduct of a trade or business within the United States. Such effectively connected dividends, although not subject to U.S. federal withholding tax, generally are taxed at the same rates applicable to U.S. persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business also may be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty between the United States and your country of residence. You should consult your tax advisor regarding the tax consequences of the ownership and disposition of our Subordinate Voting Shares, including the application of any applicable tax treaties that may provide for different rules.
Gain on Disposition of Subordinate Voting Shares
Subject to the discussions below regarding backup withholding and FATCA withholding, you generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our Subordinate Voting Shares unless:
| ● | the gain is effectively connected with your conduct of a U.S. trade or business (and, if an applicable income tax treaty so provides, the gain is attributable to a permanent establishment or fixed base maintained by you in the United States); |
| ● | you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or |
| ● | we are a United States real property interest by reason of our status as a “United States real property holding corporation,” or a USRPHC, for U.S. federal income tax purposes at any time within the five-year period preceding the disposition or your holding period, whichever period is shorter, and either (i) the Company’s Subordinate Voting Shares have ceased to be regularly traded on an established securities market or (ii) a non-U.S. holder has owned or is deemed to have owned, at any time within the five-year period preceding the disposition or the non-U.S. holder’s holding period, whichever period is shorter, more than 5% of our Subordinate Voting Shares. |
We believe that we are not currently and will not become a USRPHC for U.S. federal income tax purposes, and the remainder of this discussion so assumes. However, because the determination of whether we are a USRPHC depends on the fair market value of our United States real property interests relative to the fair market value of our U.S. and worldwide real property interests plus our other assets used or held for use in a trade or business, there can be no assurance that we will not become a USRPHC in the future. If the third bullet point above applies to a non-U.S. holder, the non-U.S. holder generally will be taxed on its net gain derived from the disposition of Subordinate Voting Shares at the U.S. federal income tax rates applicable to United States persons (as defined in the Code). In addition, a buyer of such stock from a non-U.S. holder may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition.
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If you are a non-U.S. holder described in the first bullet above, you generally will be required to pay tax on the gain derived from the sale (net of certain deductions and credits) under regular U.S. federal income tax rates applicable to U.S. persons, and a corporate non-U.S. holder described in the first bullet above also may be subject to the branch profits tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. If you are an individual non-U.S. holder described in the second bullet above, you will be subject to tax at 30% (or such lower rate specified by an applicable income tax treaty) on the net gain derived from the sale, which gain may be offset by U.S. source capital losses for the year, provided you have timely filed U.S. federal income tax returns with respect to such losses. You should consult your tax advisor regarding any applicable income tax or other treaties that may provide for different rules.
Backup Withholding and Information Reporting
Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address and the amount of tax withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of residence.
Payments of dividends on or of proceeds from the disposition of our Subordinate Voting Shares made to you may be subject to backup withholding at the applicable statutory rate (currently, 24%) unless you establish an exemption, for example, by properly certifying your non-U.S. status on a properly completed and signed IRS Form W-8BEN, W-8BEN-E or IRS Form W-8ECI (or successor form) or otherwise establish an exemption. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person.
Backup withholding is not an additional tax; rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.
Additional Withholding Requirements under the Foreign Account Tax Compliance Act
Sections 1471 through 1474 of the Code and the Treasury Regulations and other official IRS guidance issued thereunder, or, collectively, FATCA, generally impose a U.S. federal withholding tax of 30% on dividends on, and subject to the discussion below, the gross proceeds from a sale or other disposition of, our Subordinate Voting Shares, paid to a “foreign financial institution” (as specially defined under these rules), unless such institution enters into an agreement with the U.S. government to, among other things, withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding the U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are non-U.S. entities with U.S. owners) or otherwise establishes an exemption. A foreign financial institution must certify its compliance with FATCA by delivering a completed and signed IRS Form W-8BEN-E to us, along with such other documentation as may be required to establish such institution’s exemption from FATCA withholding.
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FATCA also generally imposes a U.S. federal withholding tax of 30% on dividends on, and, subject to the discussion below, the gross proceeds from a sale or other disposition of, our Subordinate Voting Shares paid to a “non-financial foreign entity” (as specially defined under these rules) unless such entity provides the withholding agent with a certification identifying the substantial direct and indirect U.S. owners of the entity, certifies that it does not have any substantial U.S. owners, or otherwise establishes an exemption. A non-financial foreign entity must certify its status as such and identify any substantial U.S. owners of the entity by delivering a completed and signed IRS Form W-8BEN-E to us, along with such other documentation as may be required to establish such entity’s exemption from FATCA withholding. The purpose of FATCA is to insure that foreign entities receiving payments from U.S. sources disclose all of their direct or indirect U.S. owners.
Proposed U.S. Treasury Regulations would eliminate possible FATCA withholding on the gross proceeds from a sale or other disposition of the Subordinate Voting Shares, and may be relied upon by taxpayers until final regulations are issued.
The withholding tax under FATCA will apply regardless of whether the payment otherwise would be exempt from withholding tax, including under the exemptions described above for effectively connected income and under applicable tax treaties. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of FATCA withholding taxes. An intergovernmental agreement for FATCA between the United States and the non-U.S. holder’s country of residence may modify the requirements described in this section. Prospective investors should consult with their own tax advisors regarding the application of FATCA withholding to their investment in, and ownership and disposition of, our Subordinate Voting Shares.
The preceding discussion of U.S. federal income tax considerations is for general information only. It is not tax advice to investors in their particular circumstances. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state and local and non-U.S. tax considerations of purchasing, owning and disposing of our Subordinate Voting Shares, including the consequences of any proposed change in applicable laws.
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