A Tax Asset Protection Rights Agreement between ComScore, Inc. (NASDAQ:SCOR) and American Stock Transfer & Trust Company has been entered into by the Board of Directors of the former with a view to offsetting comScore’s future taxable income. It will do this by utilizing its net operating loss carry forwards and other tax attributes.
There is also a provision in the plan which requires an independent committee of the Board of Directors to undertake an annual review to find out whether maintaining the plan continues to be in the stockholders’ best interests.
Amending the Certificate of Incorporation
At the 2017 Annual Meeting of Stockholders, an approval from the stockholders for the plan will be sought. During the same meeting stockholder approval to amend comScore’s certificate of incorporation in order to implement stock transfer restrictions will also be requested.
By the close of 2016, comScore had about $290 million in Net Operating Loss carryforwards, according to management. Expiry of the NOL carryfowards is expected to occur at various times with some as early as 2022 and others as late as 2035.
The ability of comScore to make use of tax benefits in order to offset future taxable income, however, stands to be limited should there be a change of ownership. That would be the case if, at any time during the prior three years, the one or more ‘5% shareholders’ increased their ownership by more than 50% over the lowest percentage owned by such stockholders.
Tax benefit preservation
The goal of the plan is therefore the preservation of the company’s tax benefits by deterring transfers of the common stock of comScore in order to prevent a change of ownership. Besides following the plan, comScore may also employ other ways all in its efforts to preserve the tax assets. For each outstanding share of comScore’s common stock, the firm’s Board of Directors has also declared a dividend to stockholders who will be appearing in the register as of February 18, 2017.
On Thursday, shares of comScore Inc rose by 2.22 percent to close the day at $23.50.