Allocations to Shareholders Clause Samples
The "Allocations to Shareholders" clause defines how a company's profits, losses, and other financial items are distributed among its shareholders. Typically, this clause outlines the method for allocating income, such as in proportion to each shareholder's ownership percentage, and may specify timing or conditions for such allocations. By establishing clear rules for financial distributions, this clause ensures fairness and transparency, preventing disputes and misunderstandings among shareholders regarding their entitlements.
Allocations to Shareholders. (a) Items of income, deduction, gain, loss or credit of each Series will be allocated for federal income tax purposes among the Shareholders of that Series in a manner so as to reflect equitably amounts credited or debited to each Shareholder's Book Capital Account for that Series for the current and prior taxable years (or relevant portions of those years). Allocations under this Section 11.02(a) will be made in accordance with the principles of Sections 704(b) and 704(c) of the Code, and in conformity with Treasury Regulations promulgated under these sections, or the successor provisions to such sections and Treasury Regulations.
(b) The Directors shall provide each Shareholder that is a regulated investment company, as defined in Section 851(a) of the Code, information that will enable it to take into account its share of items of taxable income, gain, loss and deduction as they are taken into account by the Series in order to facilitate compliance with Code Section 4982.
(c) Any income tax withholding or other withholding of taxes required by law with respect to the allocable share of income of, or distributions to, a Shareholder shall be accounted for as a distribution to and charged to the Book Capital Account of such Shareholder at the time of payment of such taxes to the applicable taxing authority. The Directors may always retain from the assets belonging to a Series such amount as they may deem necessary to pay the liabilities belonging to that Series.
(d) Allocations under Section 11.02(a) may be adjusted at any time by the Directors to the extent the Directors determine in good faith that such adjustments (i) would more equitably reflect the economic allocations hereunder or (ii) would otherwise be in the overall best interests of the Shareholders of a Series.
(e) All decisions for each Series relating to tax matters, including, without limitation, whether to make any tax elections (including the election under Section 754 of the Code), the positions to be taken on each Series' tax returns and the settlement or further contest or litigation of any audit matters raised by the Internal Revenue Service or any other taxing authority, will be made by the Directors in their sole discretion. The Directors shall designate a "tax matters partner" for each Series for purposes of the Code; provided, however, that each such tax matters partner shall take no action (other than ministerial actions) without the consent of the Directors.