UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.       )

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

o		Preliminary Proxy Statement		o		Confidential, for Use of the Commission Only
þ		Definitive Proxy Statement				(as permitted by Rule 14a-6(e)(2))
o		Definitive Additional Materials
o		Soliciting Material Under §240.14a-12

Willis Group Holdings Limited

N/A

Payment of Filing Fee (Check the appropriate box):

þ		No fee required.
o		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	(1)		Title of each class of securities to which transaction applies:
	(2)		Aggregate number of securities to which transaction applies:
	(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
	(4)		Proposed maximum aggregate value of transaction:
	(5)		Total fee paid:

o		Fee paid previously with preliminary materials.
o		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	(1)		Amount previously paid:
	(2)		Form, Schedule or Registration Statement No.:
	(3)		Filing Party:
	(4)		Date Filed:

 

November 2, 2009

 

Dear Shareholder:

 

On December 11, 2009, at 9:00 a.m. Eastern Time, we will hold a special court-ordered meeting of the holders of our common shares at our New York office, located at One World Financial Center, 200 Liberty Street, New York, New York 10281-1003.

 

Our board of directors has approved, and is submitting to the holders of our common shares for their approval, a proposal that would result in your holding shares in an Irish company rather than a Bermuda company. The proposed scheme of arrangement under Bermuda law will effectively change our place of incorporation from Bermuda to Ireland. Following our move to Ireland, the number of shares you will own in Willis Group Holdings Public Limited Company, the Irish company, will be the same as the number of common shares you held in Willis Group Holdings Limited, the Bermuda company, immediately prior to the completion of the transaction, and your relative economic interest in Willis will remain unchanged. The special court-ordered meeting to approve the scheme of arrangement is being held in accordance with an order of the Supreme Court of Bermuda issued on October 23, 2009, which Bermuda law required us to obtain prior to holding the meeting. If the holders of our common shares approve the scheme of arrangement at the meeting, we will be required to make a subsequent application to the Supreme Court of Bermuda seeking sanction of the scheme of arrangement. This application is expected to be heard on December 18, 2009.

 

After the completion of the transaction, the Irish company will continue to conduct the same business operations as conducted by the Bermuda company before the transaction. We expect the shares of the Irish company to be listed on the New York Stock Exchange (“NYSE”) under the symbol “WSH,” the same symbol under which your common shares are currently listed. Upon completion of the transaction, we will remain subject to the U.S. Securities and Exchange Commission reporting requirements, the mandates of the Sarbanes-Oxley Act and the applicable corporate governance rules of the NYSE, and we will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. generally accepted accounting principles. We will also comply with any additional reporting requirements of Irish law.

 

If the scheme of arrangement is approved, we will also ask you at the meeting to approve a proposal to create “distributable reserves,” which are required under Irish law in order to permit us to continue to pay quarterly dividends following the transaction. Approval of the “distributable reserves” proposal is not a condition to proceeding with the scheme of arrangement.

 

Under U.S. federal income tax law, the holders of our common shares generally should not recognize any gain or loss on the transaction.

 

This proxy statement provides you with detailed information regarding the transaction. We encourage you to read this entire document carefully. You should carefully consider “Risk Factors” beginning on page 25 for a discussion of risks before voting at the meeting.

 

The transaction cannot be completed without (1) the affirmative vote of a majority in number of the holders of our common shares present and voting on the proposal, whether in person or by proxy, representing 75% or more in value of the common shares present and voting on the proposal, whether in person or by proxy and (2) the approval of the Supreme Court of Bermuda. Your board of directors recommends that you vote to approve all of the proposals on the agenda.

 

Please mark, date, sign and return the enclosed proxy card in the enclosed, postage-paid envelope as promptly as possible, or appoint a proxy to vote your shares by using the Internet or by telephone, as described in the attached proxy statement, so that your shares may be represented at the special court-ordered meeting and voted in accordance with your wishes.

If you have any questions about the meeting, or if you require assistance, please call Mellon Investor Services LLC, our proxy solicitor, at 1 (866) 281-4492 (toll-free in the U.S.) or 1 (201) 680-6897 (call collect).

 

Sincerely,

 

Joseph J. Plumeri
Chairman and Chief Executive Officer

 

Willis Group Holdings Limited
Canon’s Court
22 Victoria Street
Hamilton HM 12
Bermuda

 

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the transaction or determined if this proxy statement is truthful or complete. Any representation to the contrary is a criminal offense.

 

The proxy statement is dated November 2, 2009 and is first being mailed to shareholders on or about November 4, 2009.

NOTICE OF SPECIAL COURT-ORDERED MEETING OF COMMON SHAREHOLDERS
IN THE SUPREME COURT OF BERMUDA
CIVIL JURISDICTION (COMMERCIAL COURT)
2009: NO. 347

 

IN THE MATTER OF WILLIS GROUP HOLDINGS LIMITED
AND IN THE MATTER OF SECTION 99 OF THE COMPANIES ACT 1981

NOTICE OF MEETING OF WILLIS GROUP HOLDINGS LIMITED
COMMON SHAREHOLDERS TO BE HELD ON DECEMBER 11, 2009

 

To the holders of common shares of Willis Group Holdings Limited:

 

Willis Group Holdings Limited, a company organized under the laws of Bermuda (“Willis-Bermuda”), will hold a special court-ordered meeting of the holders of its common shares at One World Financial Center, 200 Liberty Street, New York, New York 10281-1003, commencing at 9:00 a.m. Eastern Time, on December 11, 2009 to vote:

 

1. to approve a scheme of arrangement substantially in the form attached as Annex A to the accompanying proxy statement (the “Scheme of Arrangement”). If the Scheme of Arrangement is approved and becomes effective, it will effect a transaction (the “Transaction”) pursuant to which your common shares of Willis-Bermuda will be cancelled and you will receive, on a one-for-one basis, new ordinary shares of an Irish company named Willis Group Holdings Public Limited Company (“Willis-Ireland”); and

 

2. if the Scheme of Arrangement is approved, to approve the creation of distributable reserves of Willis-Ireland (through the reduction of the entire share premium account of Willis-Ireland or such lesser amount as may be determined by the board of directors of Willis-Ireland) that was previously approved by Willis-Bermuda and the other current shareholders of Willis-Ireland (as described in the accompanying proxy statement). We refer to this proposal as the “distributable reserves proposal.”

 

If any other matters properly come before the meeting or any adjournments or postponements of the meeting occur, the persons named in the proxy card will vote the shares represented by all properly executed proxies in their discretion.

 

All registered holders of Willis-Bermuda common shares at the close of business on October 30, 2009 are entitled to notice of, and to vote at, the special court-ordered meeting and any adjournments or postponements thereof.

 

The accompanying proxy statement and the accompanying proxy card are first being sent to Willis-Bermuda common shareholders on or about November 4, 2009.

 

Either an admission ticket or proof of ownership of common shares, as well as a form of personal identification and proof of address, must be presented in order to be admitted to the meeting. If you are a shareholder of record, your admission ticket is attached to the accompanying proxy card. If you plan to attend the meeting, please vote your proxy, but keep the admission ticket and bring it to the meeting together with a form of personal identification and proof of address. If your shares are held in the name of a bank, broker or other holder of record and you plan to attend the special court-ordered meeting of Willis-Bermuda common shareholders, you must present proof of your ownership of common shares, such as a bank or brokerage account statement, together with a form of personal identification and proof of address, to be admitted to the meeting. If you would rather have an admission ticket, you can obtain one by following the instructions in the accompanying proxy statement. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted at the meeting.

 

The special court-ordered meeting of Willis-Bermuda common shareholders is being held in accordance with an order of the Supreme Court of Bermuda issued on October 23, 2009, which Bermuda law required us to obtain prior to holding the meeting. If Willis-Bermuda common shareholders approve the Scheme of Arrangement at the meeting, we will make a subsequent application to the Supreme Court of Bermuda seeking sanction of the Scheme of Arrangement, which must be obtained as a condition to the Scheme of Arrangement becoming effective. We expect the sanction hearing to be held on December 18, 2009 at the Supreme Court of

Bermuda in Hamilton, Bermuda. If you are a Willis-Bermuda common shareholder who wishes to appear in person or by counsel at the sanction hearing and present evidence or arguments in support of or opposition to the Scheme of Arrangement, you may do so. In addition, the Supreme Court has wide discretion to hear from interested parties. Willis-Bermuda will not object to the participation in the sanction hearing by any Willis-Bermuda common shareholder who holds shares through a broker.

 

This notice incorporates the accompanying proxy statement.

 

By Order of the Board of Directors
Adam G. Ciongoli
Secretary

 

Dated: November 2, 2009

 

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL COURT-ORDERED MEETING, PLEASE PROMPTLY RETURN YOUR SIGNED PROXY IN THE ENCLOSED ENVELOPE OR DIRECT THE VOTING OF YOUR COMMON SHARES BY INTERNET OR BY TELEPHONE AS DESCRIBED ON YOUR PROXY CARD.

 

The accompanying proxy statement incorporates documents by reference. Please see “Where You Can Find More Information” beginning on page 113 for a listing of documents incorporated by reference. These documents are available to any person, including any beneficial owner, upon request from the Company Secretary, c/o Office of the General Counsel, Willis Group Holdings Limited, One World Financial Center, 200 Liberty Street, New York, New York 10281-1003. To ensure timely delivery of these documents, any request should be made by December 1, 2009. The exhibits to these documents will generally not be made available unless they are specifically incorporated by reference in the accompanying proxy statement.

TABLE OF CONTENTS

 

Table of Contents

 

 

WILLIS GROUP HOLDINGS LIMITED
Canon’s Court
22 Victoria Street
Hamilton HM 12
Bermuda

 

 

 

 

PROXY STATEMENT

 

 

 

 

For the Special Court-Ordered Meeting of Common Shareholders
to be held on December 11, 2009

 

 

 

 

This proxy statement is furnished to the common shareholders of Willis Group Holdings Limited (sometimes referred to herein as “Willis-Bermuda”) in connection with the solicitation of proxies on behalf of the board of directors of Willis-Bermuda to be voted at Willis-Bermuda’s special court-ordered meeting of common shareholders (the “meeting” or “special court-ordered meeting”) to be held on December 11, 2009, and any adjournments or postponements thereof, at the times and places and for the purposes set forth in the accompanying Notice of Special Court-Ordered Meeting of Common Shareholders. This proxy statement and the accompanying proxy card are first being sent to Willis-Bermuda common shareholders on or about November 4, 2009. Please mark, date, sign and return the enclosed proxy card to ensure that all of your shares are represented at the special court-ordered meeting.

 

Shares represented by valid proxies will be voted in accordance with instructions contained therein or, in the absence of such instructions, at the proxy’s discretion. You may revoke your proxy at any time before it is exercised at the special-court ordered meeting by voting in person at the meeting. You may also submit another properly signed, later-dated proxy (including an Internet or telephone proxy) or notify our Secretary in writing before the special court-ordered meeting that you are revoking your proxy, which proxy or notice must be received no later than 5:00 p.m. Eastern Time on December 9, 2009. If you hold your shares beneficially, please follow the procedures required by your broker to revoke a proxy. You should contact your broker directly for more information on these procedures.

 

The board of directors has fixed the close of business on October 30, 2009 as the record date for determination of common shareholders entitled to notice of, and to vote at, the meeting and any adjournments or postponements thereof. As of the record date, there were 168,339,157 common shares of Willis-Bermuda issued and outstanding.

 

All shareholders are invited to attend the special court-ordered meeting of Willis-Bermuda common shareholders. Either an admission ticket or proof of ownership of common shares, as well as a form of personal identification and proof of address, must be presented in order to be admitted to the meeting. If you are a shareholder of record, your admission ticket is attached to the enclosed proxy card. If you plan to attend the meeting, please vote your proxy, but keep the admission ticket and bring it to the meeting together with a form of personal identification and proof of address.

 

If your shares are held in the name of a bank, broker or other holder of record and you plan to attend the special court-ordered meeting of Willis-Bermuda common shareholders, you must present proof of your ownership of common shares, such as a bank or brokerage account statement, together with a form of personal identification and proof of address, to be admitted to the meeting. If you would rather have an admission ticket, you can obtain one in advance by mailing a written request, along with proof of your ownership of common shares, to:

 

Company Secretary

c/o Office of the General Counsel

Willis Group Holdings Limited

One World Financial Center

200 Liberty Street

New York, New York 10281-1003

 

We are seeking your approval at the special court-ordered meeting of a scheme of arrangement (the “Scheme of Arrangement”) under Bermuda law that will result in you owning ordinary shares of Willis Group Holdings Public Limited Company, a company incorporated in Ireland and currently a subsidiary of Willis Group Holdings Limited (“Willis-Ireland”), instead of common shares of Willis-Bermuda.

 

As explained in more detail below, the Scheme of Arrangement will effect a transaction (the “Transaction”), pursuant to which your common shares of Willis-Bermuda will be cancelled and you will receive, on a one-for-one basis, new ordinary shares of Willis-Ireland.

 

The Transaction involves several steps. Willis-Bermuda, the Bermuda company whose common shares you currently own, formed Willis-Ireland as a direct subsidiary on September 24, 2009. On October 20, 2009, we petitioned the Supreme Court of Bermuda to order the calling of the meeting of Willis-Bermuda common shareholders to approve the Scheme of Arrangement. On October 23, 2009, the Supreme Court of Bermuda ordered us to seek your approval of the Scheme of Arrangement. We will hold the special court-ordered meeting to approve the Scheme of Arrangement on December 11, 2009. If we obtain the necessary approval from Willis-Bermuda’s common shareholders, the Supreme Court of Bermuda will hold a second hearing expected to be held on December 18, 2009, to sanction the Scheme of Arrangement (the “Sanction Hearing”). Assuming we receive the necessary approvals from Willis-Bermuda’s common shareholders and the Supreme Court of Bermuda and the conditions to consummation of the Transaction are satisfied (and we do not abandon the Transaction), we will file the court order sanctioning the Scheme of Arrangement with the Bermuda Registrar of Companies, at which time the Scheme of Arrangement will become effective.

 

Various steps of the Transaction will effectively occur simultaneously at the “Transaction Time.” We currently expect the Scheme of Arrangement to become effective at 6:59 p.m. Eastern Time on December 31, 2009, which we refer to as the “Transaction Time” and which we anticipate will be after the close of trading on the New York Stock Exchange (“NYSE”) on the day the Scheme of Arrangement becomes effective and before the opening of trading on the NYSE on the next business day.

 

At the Transaction Time, the following steps of the Transaction will effectively occur simultaneously:

 

1. All Willis-Bermuda common shares in issue shall be cancelled and shall cease to exist.

 

2. Willis-Ireland will issue ordinary shares on a one-for-one basis to the holders of Willis-Bermuda common shares that have been cancelled; provided, however, we will not issue Willis-Ireland ordinary shares in substitution for common shares held by Willis-Bermuda (other than shares held by Willis-Bermuda by or for the benefit of certain equity incentive plans).

 

3. In consideration for the issuance by Willis-Ireland of its ordinary shares to the Willis-Bermuda common shareholders as set forth in paragraph 2 above, Willis-Bermuda will allot and issue a number of fully-paid Willis-Bermuda common shares to Willis-Ireland that is equal to the number of Willis-Ireland ordinary shares issued to the holders of Willis-Bermuda common shares that were cancelled as set forth in paragraph 2 above.

 

4. All previously outstanding ordinary shares of Willis-Ireland, which prior to the Transaction Time will be held by Willis-Bermuda and its nominees, will be acquired by Willis-Ireland and cancelled for no consideration in accordance with a resolution passed by Willis-Bermuda and the other current shareholders of Willis-Ireland.

 

As a result of the Transaction, the common shareholders of Willis-Bermuda will become shareholders of Willis-Ireland, and Willis-Bermuda will become a wholly-owned subsidiary of Willis-Ireland.

 

In connection with the completion of the Transaction, Willis-Ireland will assume, on a one-for-one basis, Willis-Bermuda’s existing obligations to deliver shares under our equity incentive and other similar equity awards. Willis-Ireland will also assume the obligations of Willis-Bermuda as a guarantor under the indentures governing our outstanding notes and will assume the obligations of a parent entity under the indentures. Please see “Proposal Number One: The Transaction — Supplemental Indentures.” In addition, any securities issued by

 

At October 30, 2009, 168,339,157 common shares of Willis-Bermuda were issued and outstanding and an additional 7,342 common shares were held in treasury.

 

There currently are no fractional shares held of record and we do not expect there to be any such fractional shares held of record immediately prior to the Transaction Time.

 

The following diagram depicts our organizational structure immediately before and after the Transaction. The diagram does not depict any legal entities owned by Willis-Bermuda nor any aspects of the Reorganization that take place immediately after the Transaction Time.

 

 

In this Proxy Statement, we sometimes refer to Willis-Bermuda before the Transaction and Willis-Ireland after the Transaction as “Willis,” “we,” “us,” or “our.”

 

 

 

 

 

 

Company Secretary
c/o Office of the General Counsel
Willis Group Holdings Limited
One World Financial Center
200 Liberty Street
New York, New York 10281-1003

 

 

 

 

 

Mellon Investor Services LLC
480 Washington Boulevard
Jersey City, New Jersey 07310-1900
Phone: 1 (866) 281-4492 (toll-free in the U.S.)
Phone: 1 (201) 680-6897 (call collect)

 

SUMMARY

 

Parties to the Transaction

 

The Transaction

 

Reasons for the Transaction

	•	As we continue to grow our business internationally, we believe that moving to Ireland will facilitate future business expansion. We have had company operations serving a wide range of clients in Ireland since 1903. Currently, we have approximately 300 employees in Ireland and we are one of the largest insurance brokers in Ireland. If the Transaction becomes effective, we intend to hire additional employees in Ireland to assist with board meetings and other head office functions.
	•	Ireland has strong international relationships as a member of the EU and a long history of international investment and long-established commercial relationships, trade agreements and tax treaties with the other EU member states, the U.S. and other countries around the world where we do business. Ireland is also a founding member of the OECD. As a result, we believe Ireland offers a stable long-term legal and regulatory environment with the financial and legal infrastructure to meet our needs, and that changing our jurisdiction of incorporation to Ireland may:

	•	improve our position with respect to various OECD and EU withholding and other tax proposals that could adversely affect companies incorporated in certain jurisdictions outside the OECD or the EU;
	•	improve our position with respect to certain U.S. federal and state legislative and regulatory proposals;
	•	permit favorable EU tax directives to apply to us; and
	•	permit us to maintain a competitive worldwide effective corporate tax rate.

	•	Ireland, like Bermuda, the UK and the U.S., is an English-speaking common law jurisdiction. As such, we believe its legal system is less prescriptive and more flexible than those of civil law jurisdictions and also more familiar to us and our shareholders.
	•	Ireland permits the payment of dividends in U.S. dollars.
	•	Ireland is the only English-speaking member of the eurozone.

	•	your rights as a shareholder will change due to differences between Bermuda and Irish law and between the governing documents of Willis-Bermuda and Willis-Ireland;
	•	our effective tax rate may increase whether we effect the Reorganization or not;
	•	legislative and regulatory action could materially and adversely affect us regardless of whether we complete the Reorganization;
	•	the Reorganization may result in additional costs even if it is not completed;

	•	potential changes may be required to the terms of our indentures in connection with obtaining any appropriate consents, waivers and/or supplemental indentures required or necessary in connection with the Reorganization;
	•	we may choose to abandon the Transaction;
	•	if the distributable reserves proposal is not approved, Willis-Ireland may not be able to pay dividends or repurchase shares following the Transaction;
	•	increased shareholder voting requirements in Ireland will reduce our flexibility in some aspects of capital management and our ability to amend the articles of association;
	•	the board of directors may be subject to takeover regulation under Irish law not necessarily applicable in Bermuda;
	•	the transfer of Willis-Ireland shares after the Transaction may be subject to Irish stamp duty;
	•	dividends paid following the Transaction may be subject to Irish dividend withholding tax or Irish income tax; and
	•	the market for Willis-Ireland shares may differ from the market for Willis-Bermuda shares.

 

Tax Considerations

 

Rights of Shareholders

 

Stock Exchange Listing

 

Court Sanction of the Scheme of Arrangement

 

Creation of Distributable Reserves

 

Market Price and Dividend Information

 

No Appraisal Rights

 

Accounting Treatment of the Transaction

 

Special Court-Ordered Meeting

 

Recommendation of the Board of Directors

 

Required Vote

 

Proxies

	•	using the Internet or telephone to appoint proxies to cast their vote by following the instructions on the enclosed proxy card; or
	•	completing, signing and returning the enclosed proxy card.

	•	by notifying Willis-Bermuda’s Secretary in writing at: Company Secretary, c/o Office of the General Counsel, Willis Group Holdings Limited, One World Financial Center, 200 Liberty Street, New York, New York 10281-1003 or by email to shareholder@willis.com, which notice must be received no later than 5:00 p.m. Eastern Time on December 9, 2009;
	•	by submitting another properly signed proxy card with a later date or another Internet or telephone proxy at a later date, which proxy must be received no later than 5:00 p.m. Eastern Time on December 9, 2009; or
	•	by voting in person at the meeting.

 

Selected Historical Financial and Other Data

		Period Ended December 31, March 31, and June 30,
																						At and for the Quarters
		At and for the Years Ended,																				Ended,
		2004				2005				2006				2007				2008				1st Q 2009				2nd Q 2009
										(In millions, except per share amounts)
Statement of Operations Data
Total revenues		$	2,275			$	2,267			$	2,428			$	2,578			$	2,834			$	930			$	784
Salaries and benefits (including share-based compensation of $20, $18 $18, $33, $40)			(1,218	)			(1,384	)			(1,457	)			(1,448	)			(1,642	)			(480	)			(443	)
Other operating expenses			(391	)			(405	)			(454	)			(460	)			(605	)			(138	)			(139	)
Regulatory settlements			—				(51	)			—				—				—				—				—
Depreciation expense			(41	)			(43	)			(49	)			(52	)			(54	)			(14	)			(14	)
Amortization of intangible assets			(6	)			(11	)			(14	)			(14	)			(36	)			(24	)			(23	)
Gain on disposal of London headquarters			—				—				102				14				7				—				—
Net gain (loss) on disposal of operations			11				78				(4	)			2				—				—				—
Operating income			630				451				552				620				504				274				165
Interest expense			(22	)			(30	)			(38	)			(66	)			(105	)			(38	)			(43	)
Premium on redemption of subordinated notes			(17	)			—				—				—				—				—				—
Income from continuing operations before income taxes, interests in earnings of associates			591				421				514				554				399				236				122
Income taxes			(197	)			(143	)			(63	)			(144	)			(97	)			(62	)			(31	)
Interest in earnings of associates, net of tax			15				14				16				16				22				26				—
Discontinued Operations, net of tax			—				—				—				—				—				1				—
Non-controlling interest, net of tax			(7	)			(11	)			(18	)			(17	)			(21	)			(8	)			(4	)
Net income attributable to Willis-Bermuda		$	402			$	281			$	449			$	409			$	303			$	193			$	87
Earnings per Share — Basic		$	2.56			$	1.75			$	2.86			$	2.82			$	2.05			$	1.16			$	0.52
Continuing Operations			2.56				1.75				2.86				2.82				2.05				1.15				0.52
Discontinued Operations			—				—				—				—				—				0.01				—
Earnings per Share — Diluted		$	2.42			$	1.72			$	2.84			$	2.78			$	2.05			$	1.16			$	0.52
Continuing Operations			2.42				1.72				2.84				2.78				2.05				1.15				0.52
Discontinued Operations			—				—				—				—				—				0.01				—
Average number of shares outstanding
— basic			157				161				157				145				148				167				168
— diluted			166				163				158				147				148				167				168

		Period Ended December 31, March 31, and June 30,
																						At and for the Quarters
		At and for the Years Ended,																				Ended,
		2004				2005				2006				2007				2008				1st Q 2009				2nd Q 2009
										(In millions, except per share amounts)
Balance Sheet Data (as of period end)
Goodwill		$	1,491			$	1,507			$	1,569			$	1,648			$	3,275			$	3,272			$	3,267
Other intangible assets			60				77				87				78				682				652				637
Total assets			11,641				12,194				13,378				12,969				16,402				17,103				17,867
Net assets(1)			1,432				1,281				1,496				1,395				1,895				2,080				2,158
Total long-term debt			450				600				800				1,250				1,865				2,480				2,390
Common shares and additional paid-in capital			817				557				388				41				886				893				907
Total Willis-Bermuda stockholders’ equity			1,412				1,256				1,454				1,347				1,845				2,027				2,114
Other Financial Data
Capital expenditures		$	49			$	32			$	55			$	185			$	94			$	17			$	21
Cash dividends declared per common share		$	0.75			$	0.86			$	0.94			$	1.00			$	1.04			$	0.26			$	0.26

(1)		As an intermediary, we hold funds in a fiduciary capacity for the account of third parties, typically as a result of premiums received from clients that are in transit to insurance carriers and claims due to clients that are in transit from insurance carriers. We report premiums, which are held on account of, or due from policyholders, as assets with a corresponding liability due to the insurance carriers. Claims held by, or due to, us which are due to clients are also shown as both assets and liabilities of ours. All those balances due or payable are included in accounts receivable and payable on the balance sheet. Investment income is earned on those funds during the time between the receipt of the cash and the time the cash is paid out. Fiduciary cash must be kept in certain regulated bank accounts subject to guidelines, which vary according to legal jurisdiction. These guidelines generally emphasize capital protection and liquidity. Fiduciary cash is not available to service our debt or for other corporate purposes.

 

Unaudited Summary Pro Forma Financial Information

 

Before you decide how to vote, you should consider carefully the following risk factors in addition to the other information contained in this proxy statement and the documents incorporated by reference, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2008, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009 and our subsequent filings with the SEC.

 

Your rights as a shareholder will change as a result of the Transaction.

 

Because of differences between Irish law and Bermuda law and differences between the governing documents of Willis-Ireland and Willis-Bermuda, your rights as a shareholder will change if the Transaction is completed. For a description of these differences, please see the comparison chart of your rights as a common shareholder of Willis-Bermuda against your rights as an ordinary shareholder of Willis-Ireland, located in “Comparison of Rights of Shareholders and Powers of the Board of Directors.”

 

Our effective tax rate may increase whether we effect the Reorganization or not.

 

While the Reorganization is not anticipated to have any material impact on our effective tax rate, there is uncertainty regarding the tax policies of the jurisdictions where we operate (which include the potential legislative actions described below), and our effective tax rate may increase and any such increase may be material. Additionally, the tax laws of Ireland and other jurisdictions could change in the future, and such changes could cause a material change in our effective tax rate.

 

Legislative and regulatory action could materially and adversely affect us.

 

If the transaction is not completed, our tax position could be adversely impacted by changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof by any tax authority following the Transaction. For example, legislative action may be taken by the U.S. Congress which, if ultimately enacted, could override tax treaties upon which we rely or could broaden the circumstances under which we would be considered a U.S. resident regardless of whether we complete the Transaction, each of which could materially and adversely affect our effective tax rate and cash tax position. We cannot predict the outcome of any specific legislative proposals. However, if proposals were enacted that had the effect of disregarding all or some of the Transaction or limiting our ability to take advantage of tax treaties between Ireland and other jurisdictions (including the U.S.), we could be subjected to increased taxation. In addition, any future amendments to the current income tax treaties between Ireland and other jurisdictions could subject us to increased taxation.

 

As an Irish company following the Transaction, we will be required to comply with numerous Irish and EU legal requirements. Compliance with Irish and EU laws and regulations may incur additional costs and have a material and adverse effect on Willis’ financial condition and results of operations.

 

There continues to be negative publicity regarding, and criticism of, companies that conduct business in the U.S. and in other countries but are domiciled in countries that do not have a substantial network of commercial, tax and other treaties and trade agreements. We may become subject to criticism in connection with our proposed move to Ireland.

 

The Transaction will result in additional direct and indirect costs, even if it is not completed.

 

We will incur additional costs as a result of the Transaction, although we do not expect these costs to be material. Willis-Ireland has been incorporated in Ireland and is subject to Irish law. Our intention is that we will hold all of our regularly scheduled board of directors meetings and annual general meetings of shareholders in Ireland. We also expect to incur costs and expenses, including professional fees, to comply with Irish corporate and tax laws and financial reporting requirements. In addition, we expect to incur attorneys’ fees, accountants’ fees, filing fees, mailing expenses and financial printing expenses in connection with the Transaction, even if the Scheme of Arrangement is not approved or completed. The Transaction also

may negatively affect us by diverting attention of our management and employees from our operating business during the period of implementation and by increasing other administrative costs and expenses.

 

We cannot guarantee that changes would not be made to the terms of our indentures in connection with obtaining the supplemental indentures required or necessary for the Reorganization.

 

We expect to seek consents or waivers and/or enter into supplemental indentures with respect to our existing indentures under which Willis-Ireland and/or certain of its subsidiaries will guarantee the obligations of the issuers of our notes and assume the obligations of a parent entity under the indentures. One of the conditions to consummation of the Transaction is that Willis-Ireland enter into the supplemental indentures on terms acceptable to us, although we may waive this condition. Please see “Proposal Number One: The Transaction — Conditions to Consummation of the Transaction.” Although we expect that no material change would be made to the terms of our indentures in connection with obtaining the supplemental indentures, we cannot guarantee that there would not be any such change. Please see “Proposal Number One: The Transaction — Supplemental Indentures.”

 

We may choose to abandon or delay the Transaction.

 

We may abandon or delay the Transaction at any time prior to the Scheme of Arrangement becoming effective by action of our board of directors, even after the special court-ordered meeting and the sanction of the Supreme Court of Bermuda. While we currently expect to complete the Transaction as soon as practicable after obtaining shareholder approval of the Scheme of Arrangement at the meeting, our board of directors may delay the Transaction for a significant time or may abandon the Transaction after the meeting because, among other reasons, the Transaction is no longer in our best interest or the best interests of our shareholders or may not result in the benefits we expect, or our estimated cost of the Transaction increases. Additionally, we may not be able to obtain the requisite shareholder or court approvals. Please see “Proposal Number One: The Transaction — Amendment, Termination or Delay.”

 

If the common shareholders of Willis-Bermuda do not approve the distributable reserves proposal, Willis-Ireland may not be able to pay dividends or repurchase shares following the Transaction. In addition, there is no guarantee that Irish High Court approval of the creation of distributable reserves will be forthcoming.

 

Under Irish law, dividends must be paid and share repurchases must generally be funded out of “distributable reserves,” which Willis-Ireland will not have immediately following the Transaction Time. Please see “Description of Willis Group Holdings Public Limited Company Share Capital — Dividends” and ‘‘— Share Repurchases, Redemptions and Conversions.” If the Scheme of Arrangement is approved, the common shareholders of Willis-Bermuda will also be asked at the special court-ordered meeting to approve the creation of distributable reserves of Willis-Ireland (through the reduction of the entire share premium account of Willis-Ireland or such lesser amount as may be determined by the board of directors of Willis-Ireland), in order to permit us to continue to pay quarterly dividends and repurchase shares following the Transaction. Approval of the distributable reserves proposal is not a condition to the Transaction, but is required under Irish law to continue our existing dividend payments. Accordingly, if the common shareholders of Willis-Bermuda approve the Scheme of Arrangement but do not approve the distributable reserves proposal, and the Transaction is consummated, Willis-Ireland may not have sufficient distributable reserves to pay dividends or to repurchase shares following the Transaction.

 

In addition, the creation of distributable reserves requires the approval of the Irish High Court. Although we are not aware of any reason why the Irish High Court would not approve the creation of distributable reserves, the issuance of the required order is a matter for the discretion of the Irish High Court and there is no guarantee that such approval will be forthcoming. Even if the Irish High Court does approve the creation of distributable reserves, it may take substantially longer than we anticipate and the Irish High Court may not approve the reduction of the entire share premium amount of Willis-Ireland. Please see “Proposal Number Two: Creation of Distributable Reserves.”

As a result of different shareholder voting requirements in Ireland relative to Bermuda, we will have less flexibility with respect to certain aspects of capital management than we now have.

 

Under Bermuda law, our directors may issue, without shareholder approval, any common shares authorized in our memorandum of association that are not already issued. Irish law allows shareholders to authorize a board of directors to subsequently issue shares without shareholder approval for a period of five years. Additionally, subject to specified exceptions, Irish law grants statutory pre-emption rights to existing shareholders to subscribe for new issuances of shares for cash, but allows shareholders to authorize the waiver of such statutory pre-emption rights. In advance of the Transaction, the current shareholders of Willis-Ireland will have provided such authority to issue shares and waived these statutory pre-emption rights for a period of five years in each case. These authorizations must be renewed by the shareholders every five years and we cannot guarantee that these authorizations will always be approved, which could limit our ability to issue equity and thereby adversely affect the holders of our debt securities. As a result of these Irish law requirements, situations may arise where the flexibility we now have in Bermuda would have provided benefits to our shareholders that will not be available in Ireland.

 

As a result of different shareholder voting requirements in Ireland relative to Bermuda, we will have less flexibility with respect to our ability to amend our constituent documents than we now have.

 

Under Bermuda law and our current bye-laws, our bye-laws may be amended by the vote of the holders of a majority of the outstanding shares, except for certain enumerated provisions. Irish law requires a special resolution of 75% of the shareholder votes cast at a general meeting for any amendment to the articles of association of Willis-Ireland. As a result of this Irish law requirement, situations may arise where the flexibility we now have in Bermuda would have provided benefits to our shareholders that will not be available in Ireland. Please see “Comparison of Rights of Shareholders and Powers of the Board of Directors — Amendment of Governing Documents.”

 

After the Transaction, attempted takeovers of Willis-Ireland will be subject to the Irish Takeover Rules and subject to review by the Irish Takeover Panel.

 

We will become subject to the Irish Takeover Rules, under which the board of directors of Willis-Ireland will not be permitted to take any action which might frustrate an offer for Willis-Ireland ordinary shares once the board of directors has received an approach which may lead to an offer or has reason to believe an offer is imminent. Further, it could be more difficult for Willis-Ireland to obtain shareholder approval for a merger or negotiated transaction after the Transaction because the shareholder approval requirements for certain types of transactions differ, and in some cases are greater, under Irish law than under Bermuda law. Please see “Comparison of Rights of Shareholders and Powers of the Board of Directors — Capitalization,” ‘‘— Pre-emption Rights, Share Warrants and Share Options” and “— Distributions and Dividends; Repurchases and Redemptions.”

 

After the Transaction, a future transfer of your Willis-Ireland ordinary shares may be subject to Irish stamp duty.

 

In certain circumstances, the transfer of shares in an Irish incorporated company will be subject to Irish stamp duty which is a legal obligation of the buyer. This duty is currently at the rate of 1% of the price paid or the market value of the shares acquired, if higher. However, transfers of book-entry interests in DTC representing Willis-Ireland shares should not be subject to Irish stamp duty. Accordingly, transfers by shareholders who hold their Willis-Ireland ordinary shares beneficially through brokers which in turn hold those shares through DTC, should not be subject to Irish stamp duty on transfers to holders who also hold through DTC. This exemption is available because our shares are traded on a recognized stock exchange in the U.S. Any transfer of Willis-Ireland ordinary shares which is subject to Irish stamp duty will not be registered in the name of the buyer unless an instrument of transfer is executed by or on behalf of the seller, is duly stamped and is provided to our transfer agent. Although in the majority of transactions there should be no stamp duty because the transaction is effected by transfer of book-entry interest through DTC, this additional risk for the buyer could adversely affect the price of our shares.

Any transfer of Willis-Ireland shares that is subject to Irish stamp duty will not be registered in the name of the buyer unless an instrument of transfer is duly stamped and provided to our transfer agent. Willis-Ireland’s articles of association allow Willis-Ireland, in its absolute discretion, to create an instrument of transfer and pay (or procure the payment of) any stamp duty payable by a buyer. In the event of any such payment, Willis-Ireland is (on behalf of itself or its affiliates) entitled to (i) seek reimbursement from the buyer or seller (at its discretion), (ii) set-off the amount of the stamp duty against future dividends payable to the buyer or seller (at its discretion), and (iii) claim a lien against the Willis-Ireland shares on which it has paid stamp duty. Parties to a share transfer may assume that any stamp duty arising in respect of a transaction in Willis-Ireland shares has been paid unless one or both of such parties is otherwise notified by us.

 

After the Transaction, dividends received by you may be subject to Irish dividend withholding tax.

 

In certain circumstances, as an Irish tax resident company, Willis-Ireland may be required to deduct Irish dividend withholding tax (currently at the rate of 20%) from dividends paid to its shareholders. Shareholders resident in “relevant territories” (including countries that are EU member states (other than Ireland), the U.S. and other countries with which Ireland has signed a tax treaty whether that treaty has been ratified or not) should not be subject to Irish withholding tax provided that, in each case, they complete certain tax forms. However, some shareholders may be subject to withholding tax, which could adversely affect the price of Willis-Ireland’s shares. Please see “Material Tax Considerations — Irish Tax Considerations — Withholding Tax on Dividends.”

 

After the Transaction, dividends received by you could be subject to Irish income tax.

 

Dividends paid in respect of Willis-Ireland shares will generally not be subject to Irish income tax where the beneficial owner of these dividends is exempt from dividend withholding tax, unless the beneficial owner of the dividend has some connection with Ireland other than his or her shareholding in Willis-Ireland. Willis-Ireland shareholders who receive their dividends subject to Irish dividend withholding tax will generally have no further liability to Irish income tax on the dividend unless the beneficial owner of the dividend has some connection with Ireland other than his or her shareholding in Willis-Ireland. Please see “Material Tax Considerations — Irish Tax Considerations — Income Tax on Dividends Paid on Willis Shares.”

 

Willis recommends that each shareholder consult his or her own tax advisor as to the tax consequences of holding shares in and receiving dividends from Willis.

 

The market for the Willis-Ireland shares may differ from the market for the Willis-Bermuda shares.

 

We intend to list the Willis-Ireland ordinary shares on the NYSE under the symbol “WSH,” the same trading symbol as the Willis-Bermuda common shares. The market price, trading volume or volatility of the Willis-Ireland ordinary shares could be different than those of the Willis-Bermuda shares.

 

We have included in this document and in the documents incorporated by reference in this proxy statement, “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are intended to be covered by the safe harbors created by those laws. These forward-looking statements include information about possible or assumed future results of our operations. All statements, other than statements of historical facts, included in this document that address activities, events or developments that we expect or anticipate may occur in the future, including such things as business strategies, competitive strengths, goals, the benefits of new initiatives, growth of our business and operations, plans and references to future successes are forward-looking statements. Political, economic, climatic, currency, tax, regulatory, competitive, and other factors could cause actual results to differ materially from those anticipated in the forward-looking statements. Also, when we use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “probably,” or similar expressions, we are making forward-looking statements.

 

The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For additional factors see also those factors discussed under “Risk Factors” and “Proposal Number One: The Transaction — Background and Reasons for the Transaction” and elsewhere in this proxy statement, as well as those in the documents that we incorporate by reference into this proxy statement (including, without limitation, the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2008, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009, and subsequent SEC filings, all of which are available online at www.sec.gov or on our website at www.willis.com). There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. We expressly disclaim any obligation to update these forward-looking statements other than as required by law.

 

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and therefore also the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included in this document, our inclusion of this information is not a representation or guarantee by us that our objectives and plans will be achieved.

 

The Transaction will effectively change our place of incorporation from Bermuda to Ireland.

 

As explained in more detail below, the Scheme of Arrangement on which we are asking you to vote will effect the Transaction, which is part of a broader Reorganization.

 

The Transaction involves several steps. On September 24, 2009, Willis-Bermuda, the Bermuda company whose common shares you currently own, formed Willis-Ireland as a direct subsidiary. On October 20, 2009, we petitioned the Supreme Court of Bermuda to order the calling of a meeting of Willis-Bermuda common shareholders to approve the Scheme of Arrangement. On October 23, 2009, the Supreme Court of Bermuda ordered us to seek your approval of the Scheme of Arrangement. We will hold the special court-ordered meeting to approve the Scheme of Arrangement on December 11, 2009. If we obtain the necessary shareholder approval, the Supreme Court of Bermuda will hold the Sanction Hearing, which is expected to be held on December 18, 2009, to sanction the Scheme of Arrangement. Assuming we receive the necessary approvals from Willis-Bermuda’s shareholders and the Supreme Court of Bermuda and the conditions to consummation of the Transaction are satisfied (and we do not abandon the Transaction), we will file the court order sanctioning the Scheme of Arrangement with the Bermuda Registrar of Companies, at which time the Scheme of Arrangement will be effective. Various steps of the Transaction will effectively occur simultaneously at the Transaction Time, which we anticipate will be after the close of trading on the NYSE on the day the Scheme of Arrangement becomes effective, and before the opening of trading on the NYSE on the next business day.

 

At the Transaction Time, the following steps of the Transaction will effectively occur simultaneously:

 

1. All Willis-Bermuda common shares in issue shall be cancelled and shall cease to exist.

 

2. Willis-Ireland will issue ordinary shares on a one-for-one basis to the holders of Willis-Bermuda common shares that have been cancelled; provided, however, we will not issue Willis-Ireland ordinary shares in substitution for common shares held by Willis-Bermuda (other than shares held by Willis-Bermuda by or for the benefit of certain equity incentive plans).

 

3. In consideration for the issuance by Willis-Ireland of its ordinary shares to the Willis-Bermuda common shareholders as set forth in paragraph 2 above, Willis-Bermuda will allot and issue a number of fully-paid Willis-Bermuda common shares to Willis-Ireland that is equal to the number of Willis-Ireland ordinary shares issued to the holders of Willis-Bermuda common shares that were cancelled as set forth in paragraph 2 above.

 

4. All previously outstanding ordinary shares of Willis-Ireland, which prior to the Transaction Time will be held by Willis-Bermuda and its nominees, will be acquired by Willis-Ireland and cancelled for no consideration in accordance with a resolution passed by Willis-Bermuda and the other current shareholders of Willis-Ireland.

 

As a result of the Transaction, the common shareholders of Willis-Bermuda will become shareholders of Willis-Ireland, and Willis-Bermuda will become a wholly-owned subsidiary of Willis-Ireland.

 

In connection with the completion of the Transaction, Willis-Ireland will assume, on a one-for-one basis, Willis-Bermuda’s existing obligations in connection with awards granted under Willis-Bermuda’s equity incentive plans and other similar equity awards. Willis-Ireland will also assume the obligations of Willis-Bermuda as a guarantor under the indentures governing our outstanding notes and will assume the obligations of a parent entity under the indentures. In addition, any securities issued by Willis-Bermuda or its subsidiaries that are convertible, exchangeable or exercisable into common shares of Willis-Bermuda will become convertible, exchangeable or exercisable, as the case may be, into ordinary shares of Willis-Ireland. Further, after the Transaction we expect to transfer the assets of Willis-Bermuda to Willis-Ireland and/or a subsidiary of Willis-Ireland and thereafter liquidate or dissolve Willis-Bermuda, as required by Willis-Bermuda’s bye-laws.

At October 30, 2009, 168,339,157 common shares of Willis-Bermuda were issued and outstanding and an additional 7,342 common shares were held in treasury.

 

There currently are no fractional shares held of record and we do not expect there to be any such fractional shares held of record immediately prior to the Transaction Time.

 

We are currently incorporated in Bermuda, where we have been incorporated since February 8, 2001. While our tenure in Bermuda has served Willis-Bermuda and its shareholders well, the board of directors has had cause to revisit the decision regarding the location of our place of incorporation and determined that it no longer remained appropriate to be located in Bermuda because proposals have from time to time been made and/or legislation has been introduced to change the U.S. tax laws that, if enacted, could increase our tax burden. In addition, the OECD has issued a statement whereby they are expected to use tax policy to address certain tax haven issues. Also, there continues to be negative publicity regarding, and criticism of, companies that are domiciled in countries that do not have a substantial network of commercial, tax and other treaties and trade agreements.

 

After considering various factors and reviewing a number of different countries, our board of directors determined that it was advisable to change the jurisdiction of incorporation of the parent company of Willis to Ireland.

 

Our board of directors’ determination that Ireland is the preferred choice for the domicile of the Willis parent company followed a study by management and outside advisors, and was reached based on many factors, including the following, in addition to those described above:

 

 

 

 

We cannot assure you that the anticipated benefits of the Reorganization will be realized. In addition to the potential benefits described above, the Reorganization will expose you and us to some risks. These risks include the following:

 

 

Please see the discussion under “Risk Factors.” Our board of directors has considered both the potential advantages of the Transaction and the associated risks and has approved the Scheme of Arrangement and recommends that the shareholders vote for the Scheme of Arrangement.

 

The Scheme of Arrangement may be amended, modified or supplemented at any time before or after its adoption by the common shareholders of Willis-Bermuda at the special court-ordered meeting. However, after adoption, no amendment, modification or supplement may be made or effected that legally requires further approval by Willis-Bermuda’s shareholders without obtaining that approval.

 

At the Sanction Hearing, the Supreme Court of Bermuda may impose such conditions as it deems appropriate in relation to the Scheme of Arrangement, but may not impose any material changes without the joint consent of Willis-Bermuda and Willis-Ireland. Willis-Bermuda may, subject to U.S. securities law constraints, consent to any modification of the Scheme of Arrangement on behalf of the shareholders which the Supreme Court of Bermuda may think fit to approve or impose.

 

The board of directors of Willis-Bermuda may terminate the Scheme of Arrangement and abandon the Transaction, or delay the Transaction, at any time prior to the effectiveness of the Scheme of Arrangement, without obtaining the approval of Willis-Bermuda’s shareholders, even though the Scheme of Arrangement may have been approved by such shareholders and sanctioned by the Supreme Court of Bermuda and all other conditions to the Transaction may have been satisfied, if the board of directors determines that such course is in our best interests.

Unless the Scheme of Arrangement has become effective on or before March 31, 2010, or such later date, if any, as Willis-Bermuda may agree and the Supreme Court of Bermuda may allow, the Scheme of Arrangement will lapse by its terms and not come into effect.

 

The Transaction will not be completed unless, among other things, the following conditions are satisfied or, if allowed by law, waived:

 

 

Pursuant to Section 99 of the Bermuda Companies Act 1981 (the “Bermuda Companies Act”), the Scheme of Arrangement must be sanctioned by the court in Bermuda. This requires Willis-Bermuda to file a petition (the “Petition”) for the Scheme of Arrangement with the Supreme Court of Bermuda. Prior to the mailing of this proxy statement, Willis-Bermuda obtained directions from the Supreme Court of Bermuda providing for the convening of a meeting of Willis-Bermuda’s shareholders and other procedural matters regarding the meeting and the Supreme Court of Bermuda proceeding, including a date upon which the Supreme Court of Bermuda will hear the Petition. A copy of the Supreme Court of Bermuda’s directions is attached as Annex D to this proxy statement. Subject to the common shareholders of Willis-Bermuda approving the Scheme of Arrangement with the vote required by the Bermuda Companies Act, a Sanction Hearing will be required to hear the Petition and sanction the Scheme of Arrangement. At the Sanction Hearing, the Supreme Court of Bermuda may impose such conditions as it deems appropriate in relation to the Scheme of Arrangement, but may not impose any material changes without the joint consent of Willis-Bermuda and Willis-Ireland. Willis-Bermuda may, subject to U.S. securities law constraints, consent to any modification of the Scheme of Arrangement on behalf of the shareholders which the Supreme Court of Bermuda may think fit to approve or impose. In determining whether to exercise its discretion and sanction the Scheme of Arrangement, the Supreme Court of Bermuda will determine, among other things, whether the Scheme of Arrangement is fair to Willis-Bermuda’s shareholders. We expect the Sanction Hearing to be held on December 18, 2009 at the Supreme Court of Bermuda in Hamilton, Bermuda. If you are a common shareholder who wishes to appear in person or by counsel at the Sanction Hearing and present evidence or arguments in support of or opposition to the Scheme of Arrangement, you may do so. In addition, the Supreme Court of Bermuda has wide discretion to hear from interested parties. Willis-Bermuda will not object to the participation in the Sanction Hearing by any common shareholder who holds shares through a broker. In

accordance with its terms, the Scheme of Arrangement will become effective as soon as a copy of the Order of the Supreme Court of Bermuda sanctioning the Scheme of Arrangement has been delivered to the Registrar of Companies of Bermuda for registration as required by Section 99 of the Bermuda Companies Act. Please see “— Conditions to Consummation of the Transaction” for more information on the conditions to the Transaction.

 

At the special court-ordered meeting, Willis-Bermuda’s shareholders will be asked to approve the Scheme of Arrangement, substantially in the form attached as Annex A to this proxy statement. If the shareholders approve the Scheme of Arrangement, then Willis-Bermuda will apply for sanction of the Scheme of Arrangement at the Sanction Hearing. We encourage you to read the Scheme of Arrangement in its entirety for a complete description of its terms and conditions.

 

Once the Scheme of Arrangement is effective, the Supreme Court of Bermuda will have exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute which arises out of or is connected with the terms of the Scheme of Arrangement or its implementation or out of any action taken or omitted to be taken under the Scheme of Arrangement or in connection with the administration of the Scheme of Arrangement. A common shareholder who wishes to enforce any rights under the Scheme of Arrangement after such time must notify Willis-Bermuda in writing of its intention at least five business days prior to commencing a new proceeding. After the Transaction Time, no shareholder may commence a proceeding against Willis-Ireland or Willis-Bermuda in respect of or arising from the Scheme of Arrangement except to enforce its rights under the Scheme of Arrangement where a party has failed to perform its obligations under the Scheme of Arrangement.

 

When under any provision of the Scheme of Arrangement a matter is to be determined by Willis-Bermuda, then Willis-Bermuda will have discretion to interpret those matters under the Scheme of Arrangement in a manner that it considers fair and reasonable, and its decisions will be binding on all concerned.

 

The issuance of Willis-Ireland shares to Willis-Bermuda’s shareholders in connection with the Transaction will not be registered under the Securities Act. Section 3(a)(10) of the Securities Act exempts securities issued in exchange for one or more outstanding securities from the general requirement of registration where the terms and conditions of the issuance and exchange of such securities have been approved by any court of competent jurisdiction after a hearing upon the fairness of the terms and conditions of the issuance and exchange at which all persons to whom such securities will be issued have a right to appear and to whom adequate notice of the hearing has been given. In determining whether it is appropriate to sanction the Scheme of Arrangement, the Supreme Court of Bermuda will consider at the Sanction Hearing whether the terms and conditions of the Scheme of Arrangement are fair to Willis-Bermuda’s shareholders. The Supreme Court of Bermuda has fixed the date and time for the Sanction Hearing, which is expected to be held at the Supreme Court of Bermuda in Hamilton, Bermuda, on December 18, 2009. The Willis-Ireland shares issued to Willis-Bermuda common shareholders in connection with the Transaction will be freely transferable, except for restrictions applicable to certain “affiliates” of Willis-Bermuda under the Securities Act, as follows:

 

 

Persons who may be deemed to be affiliates of Willis-Bermuda and Willis-Ireland for these purposes generally include individuals or entities that control, are controlled by, or are under common control with, Willis-Bermuda and Willis-Ireland and would generally not be expected to include shareholders who are not executive officers, directors or significant shareholders of Willis-Bermuda and Willis-Ireland.

 

We have not filed a registration statement with the SEC covering any resales of the Willis-Ireland shares to be received by Willis-Bermuda’s shareholders in connection with the Transaction. Willis-Ireland intends to file certain post-effective amendments to existing effective registration statements of Willis-Bermuda concurrently with the completion of the Transaction.

 

Upon consummation of the Transaction, the ordinary shares of Willis-Ireland will be deemed to be registered under Section 12(b) of the Exchange Act, by virtue of Rule 12g-3 under the Exchange Act, without the filing of any Exchange Act registration statement.

 

If the Scheme of Arrangement is approved by the requisite shareholder vote and sanctioned by the Supreme Court of Bermuda and the other conditions to the consummation of the Transaction are satisfied (and we do not abandon the Transaction), the Scheme of Arrangement will become effective upon our filing of the court order sanctioning the Scheme of Arrangement with the Bermuda Registrar of Companies. Various steps of the Transaction will occur effectively simultaneously at the Transaction Time, which we anticipate will be 6:59 p.m. Eastern Time on December 31, 2009. The expected timetable for the Transaction is set forth in Annex E to this proxy statement.

 

In the event the conditions to the Transaction are not satisfied, the Transaction may be abandoned or delayed, even after approval by Willis-Bermuda’s shareholders and the sanction of the Supreme Court of Bermuda. In addition, the Transaction may be abandoned or delayed by our board of directors at any time prior to the Scheme of Arrangement becoming effective, without obtaining the approval of Willis-Bermuda’s shareholders, even though the Scheme of Arrangement may have been approved by Willis-Bermuda’s shareholders and sanctioned by the Supreme Court of Bermuda and all other conditions to the Transaction may have been satisfied. Please see “— Amendment, Termination or Delay.”

 

When the Transaction is completed, the executives and directors of Willis-Bermuda immediately prior to the completion of the Transaction will be the executives and directors of Willis-Ireland. Willis-Ireland’s memorandum and articles of association, as they will be in effect after the Transaction, provide for a single class of directors, just as Willis-Bermuda currently has, and Willis-Ireland’s directors will be subject to re-election at the 2010 annual general meeting of Willis-Ireland.

 

Willis-Bermuda’s bye-laws require it to indemnify any director, alternate director, officer and member of a committee constituted under the bye-laws and any resident representative against all liabilities incurred or suffered by such person as a director, alternate director, officer and committee member or resident representative. The bye-laws further provide that such indemnified persons shall be indemnified out of Willis-Bermuda’s funds against all liabilities incurred in defending any proceedings, whether civil or criminal, in which judgment is given in his favor, or in which he or she is acquitted, or in connection with any application under the Bermuda Companies Act in which relief from liability is granted to him by the court. The Willis-Bermuda bye-laws also require Willis-Bermuda to pay reasonable expenses incurred in a proceeding in advance of the final disposition of any such proceeding, provided that the indemnified person undertakes to repay Willis-Bermuda if it is ultimately determined that such person was not entitled to indemnification.

 

Willis-Ireland’s articles of association contain similar indemnification and expense advancement provisions, although the scope of the indemnification provided to Willis-Ireland’s directors and Secretary is limited in accordance with the Irish Companies Acts. For information on the limitations on the ability of an Irish

company to indemnify its directors or its Secretary, please see “Comparison of Rights of Shareholders and Powers of the Board of Directors — Indemnification of Directors and Officers; Insurance.”

 

In addition, due to the difference between Irish and Bermuda law and in connection with the Transaction, we expect that each of Willis-Ireland and Willis North America Inc., or such other subsidiary of Willis-Ireland as the board of directors deem appropriate, will enter into indemnification agreements (or deed poll indemnities) with or as to each of Willis-Ireland’s directors and certain officers, as well as with individuals serving as directors or officers of our subsidiaries, providing for the indemnification of, and advancement of expenses to, these persons. We expect and intend that the indemnification and expense advancement provided under these indemnification agreements (or deed poll indemnities) will be substantially similar to that currently afforded by Willis-Bermuda under its bye-laws to its directors and officers and those serving at its request in other capacities as described above.

 

Please see “Comparison of Rights of Shareholders and Powers of the Board of Directors — Indemnification of Directors and Officers; Insurance.”

 

Except for the indemnification arrangements described above, no person who has been a director or executive officer of Willis-Bermuda at any time since the beginning of the last fiscal year, or any associate of any such person, has any substantial interest in the Transaction, except for any interest arising from his or her ownership of securities of Willis. No such person is receiving any extra or special benefit not shared on a pro rata basis by all other holders of common shares of Willis-Bermuda.

 

The special court-ordered meeting will be conducted in accordance with the directions of the Supreme Court of Bermuda. The presence in person or by proxy of the holders of at least 50% of the Willis-Bermuda common shares outstanding and entitled to vote at the meeting constitutes a quorum for the conduct of business. Abstentions and broker non-votes will be counted as present for purposes of determining whether there is a quorum in respect of the proposals. A broker “non-vote” occurs when a nominee (such as a broker) holding shares for a beneficial owner abstains from voting on a particular proposal because the nominee does not have discretionary voting power for that proposal and has not received instructions from the beneficial owner on how to vote those shares. Assuming the presence of a quorum at the meeting, the Scheme of Arrangement must be approved by a majority in number of the holders of the Willis-Bermuda common shares present and voting on the proposal, whether in person or by proxy, representing 75% or more in value of the Willis-Bermuda common shares present and voting on the proposal, whether in person or by proxy. Please see “The Special Court-Ordered Meeting — Record Date; Voting Rights; Vote Required for Approval.” Our board of directors has approved the Scheme of Arrangement and recommends that shareholders vote “FOR” approval of all of the proposals.

 

Other than the Scheme of Arrangement, we are not aware of any other governmental approvals or actions that are required to complete the Transaction other than compliance with U.S. federal and state securities laws and Bermuda and Irish corporate law. We do not believe that any significant regulatory approvals will be required to effect the Transaction.

 

Under Bermuda law, none of the common shareholders of Willis-Bermuda has any dissenters’ rights or right to an appraisal of the value of their shares or receive payment for them in connection with the Transaction.

 

Assuming the Transaction becomes effective, your Willis-Bermuda common shares will be cancelled and Willis-Ireland ordinary shares will be issued to you without any action on your part, regardless of whether you currently hold Willis-Bermuda common shares in certificated form. All of Willis-Ireland’s shares will be issued in uncertificated book-entry form. Consequently, if you currently hold Willis-Bermuda common shares in certificated form, following the Transaction, your share certificates will cease to have effect as documents or evidence of title and you may disregard such certificates. The transfer agent will make an electronic book-entry in your name and will mail you a statement evidencing your ownership of Willis-Ireland shares.

 

Willis-Bermuda paid dividends totaling $1.03 per share on its common shares in the fiscal year 2008. Willis normally pays dividends on a quarterly basis to shareholders of record on March 31, June 30, September 30 and December 31. For the quarter ended June 30, 2009, the board of directors declared a regular quarterly cash dividend on Willis’ common stock of $0.26 per share, or an annual rate of $1.04 per share. The dividend was paid on October 12, 2009 to shareholders of record on September 30, 2009. Please see “Market Price and Dividend Information.” Future dividends, if any, on the Willis-Bermuda common shares and/or Willis-Ireland ordinary shares will be at the discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that the board of directors may deem relevant, as well as our ability to pay dividends in compliance with the Bermuda Companies Act or Irish law, as applicable.

 

Under Irish law, dividends must be paid out of “distributable reserves,” which Willis-Ireland will not have immediately following the Transaction Time but which we are taking steps to create. Please see “Risk Factors,” “Description of Willis Group Holdings Public Limited Company Share Capital — Dividends” and “Proposal Number Two: Creation of Distributable Reserves.”

 

For a description of the Irish tax rules relating to dividends, please see “Material Tax Considerations — Irish Tax Considerations.”

 

We have a variety of equity incentive plans, deferred compensation plans, and other plans, agreements, awards and arrangements outstanding that provide for options, restricted shares or other rights to purchase or receive shares of Willis-Bermuda (or the right to receive benefits or amounts by reference to those shares). We refer to these plans, agreements, awards and arrangements as our equity incentive plans. Some of our equity incentive plans are sponsored by Willis-Bermuda, and others are sponsored by some of our subsidiaries or affiliates.

 

In furtherance of the Transaction, our equity incentive plans require amendments or other modifications. For instance, if the Transaction is completed, Willis-Ireland will assume, on a one-for-one basis, Willis-Bermuda’s existing obligations to deliver shares under our equity incentive plans (as they may be amended or modified to take into account the Transaction and, if applicable, subject to any necessary governmental approvals for tax purposes in specified jurisdictions). To the extent Willis-Bermuda currently sponsors those equity incentive plans, Willis-Ireland will assume or adopt those equity incentive plans. At the same time, equity incentive plans sponsored by subsidiaries or other affiliates are expected to continue to be sponsored by those subsidiaries or other affiliates, even though Willis-Ireland will assume some obligations under those equity incentive plans. The amendments or other modifications will be necessary, among other things, to: (i) facilitate the assumption or adoption by Willis-Ireland of the various equity incentive plans it will sponsor or various rights, duties or obligations under the equity incentive plans; (ii) provide that shares of Willis-Ireland will be issued, acquired, purchased, held, available or used to measure benefits or calculate amounts as appropriate under the equity incentive plans, instead of shares of Willis-Bermuda; and (iii) provide for the appropriate substitution of Willis-Ireland in place of references to Willis-Bermuda under the equity incentive plans. Shareholder approval of the Scheme of Arrangement will also constitute shareholder approval

of these amendments or modifications and the relevant adoption and assumption of the equity incentive plans by Willis-Ireland.

 

Willis-Bermuda’s common shares are currently listed on the NYSE. There is currently no established public trading market for the ordinary shares of Willis-Ireland. We intend to file an application so that, immediately following the Transaction Time, the ordinary shares of Willis-Ireland will be listed on the NYSE under the symbol “WSH,” the same symbol under which the Willis-Bermuda common shares are currently listed. We do not plan for Willis-Ireland’s ordinary shares to be listed on the Irish Stock Exchange at the present time.

 

Under U.S. GAAP, the Transaction represents a transaction between entities under common control. Assets and liabilities are transferred at carrying value between entities under common control. Accordingly, the assets and liabilities of Willis-Ireland will be reflected at their carrying amounts in the accounts of Willis-Bermuda at the Transaction Time.

 

In connection with the Reorganization, we expect Willis-Ireland to seek consents or waivers and/or enter into supplemental indentures to the indentures governing the following notes issued by current subsidiaries of Willis-Bermuda: (i) the 5.125% senior notes, 5.625% senior notes, 6.20% senior notes and 7.00% senior notes issued by Willis North America Inc. and (ii) the 12.875% senior notes issued by Trinity Acquisition PLC. We expect the supplemental indentures will provide that Willis-Ireland and/or certain of its subsidiaries will guarantee the obligations of the issuer and assume the obligations of a parent entity under the indentures. One of the conditions to consummation of the Transaction is that we obtain consents or waivers and/or enter into supplemental indentures on terms acceptable to us, although we may waive this condition. Please see “— Conditions to Consummation of the Transaction.” Although we expect that no material change would be made to the terms of the indentures in connection with entering into the supplemental indentures, we cannot guarantee that there would not be any such change.

 

Upon completion of the Transaction, we will remain subject to SEC reporting requirements, the mandates of the Sarbanes-Oxley Act and the corporate governance rules of the NYSE, and we will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. GAAP. We will also comply with any additional reporting requirements of Irish law.

 

Willis-Bermuda currently is not a “foreign private issuer” within the meaning of the rules promulgated under the Exchange Act, and we do not currently believe that Willis-Ireland will qualify as a “foreign private issuer” upon completion of the Transaction. The definition of a “foreign private issuer” has two parts — one based on a company’s percentage of U.S. resident shareholders and the other on its business contacts with the U.S. An organization incorporated under the laws of a foreign country qualifies as a foreign private issuer unless both parts of the definition are satisfied as of the last business day of its most recently completed second fiscal quarter. We believe Willis-Bermuda currently satisfies the shareholder test because more than 50% of our outstanding voting securities are held by U.S. residents, and we currently expect that Willis-Ireland will meet the shareholder test upon the completion of the Transaction. The business contacts test requires that any of the following be true with respect to the organization incorporated under the laws of a foreign country: (i) the majority of its executive officers or directors are U.S. citizens or residents; (ii) more than 50% of its assets are located in the U.S.; or (iii) its business is administered principally in the U.S. Willis-Bermuda currently meets the business contacts test, and we currently expect that Willis-Ireland will meet the business contacts test upon the completion of the Transaction. However, Willis-Ireland could fail to satisfy the shareholder test and/or the business contacts test at some time in the future and, as a result, qualify

for status as a foreign private issuer. If that occurs, Willis-Ireland would be exempt from certain requirements applicable to U.S. public companies, including:

 

 

In addition, Willis-Ireland would then be allowed to:

 

 

Under Irish law, Willis-Ireland requires “distributable reserves” in its unconsolidated balance sheet prepared in accordance with the Irish Companies Acts to enable it to make distributions (including the payment of cash dividends) to its shareholders or to buy back shares. Distributable reserves generally means the accumulated realized profits of Willis-Ireland less accumulated realized losses of Willis-Ireland and includes reserves created by way of capital reduction. Please see “Description of Willis Group Holdings Public Limited Company Share Capital — Dividends” and “— Share Repurchases, Redemptions and Conversions.” Immediately following implementation of the Transaction, the unconsolidated balance sheet of Willis-Ireland will not contain any distributable reserves, and “shareholders’ equity” in such balance sheet will be comprised entirely of “share capital” (equal to the aggregate par value of the Willis-Ireland shares issued in the Transaction) and “share premium” (resulting from the issuance of Willis-Ireland shares in the Transaction). The current shareholders of Willis-Ireland (which are Willis-Bermuda and its nominees) have passed a resolution that would create distributable reserves following the Transaction by converting to distributable reserves all of the share premium of Willis-Ireland (or such lesser amount as may be determined by the board of directors of Willis-Ireland). We expect that the distributable reserves of Willis-Ireland created in this manner will be approximately $4 billion.

 

The common shareholders of Willis-Bermuda are being asked at the special court-ordered meeting, pending the approval of the Scheme of Arrangement, to approve the creation of distributable reserves of Willis-Ireland (through the reduction of the entire share premium account of Willis-Ireland or such lesser amount as may be determined by the board of directors of Willis-Ireland) that was previously approved by Willis-Bermuda and the other current shareholders of Willis-Ireland. The distributable reserves proposal requires the affirmative vote of holders of a simple majority of the Willis-Bermuda common shares present in person or by proxy at the meeting and voting on the proposal. Please see “The Special Court-Ordered Meeting — Record Date; Voting Rights; Vote Required for Approval.” Our board of directors has approved the distributable reserves proposal and recommends that shareholders vote “FOR” approval of all of the proposals.

 

If the common shareholders of Willis-Bermuda approve the creation of distributable reserves and the Transaction is completed, we will seek to obtain the approval of the Irish High Court, which is required for the creation of distributable reserves to be effective, as soon as practicable following implementation of the Transaction. The approval of the Irish High Court is expected to be obtained within three to six weeks of the consummation of the Transaction.

 

Approval of the distributable reserves proposal is not a condition to the Transaction, but is required under Irish law to continue our existing dividend payments. Accordingly, if the common shareholders of Willis-Bermuda approve the Scheme of Arrangement but do not approve the distributable reserves proposal, and the Transaction is consummated, Willis-Ireland may not have sufficient distributable reserves to pay dividends or to repurchase shares following the Transaction. In addition, although we are not aware of any reason why the Irish High Court would not approve the creation of distributable reserves, there is no guarantee that such approval will be forthcoming. Even if the Irish High Court does approve the creation of distributable reserves, it may take substantially longer than we anticipate and the Irish High Court may not approve the reduction of the entire share premium amount of Willis-Ireland. Please see “Risk Factors.”

 

The information presented under the caption “— U.S. Federal Income Tax Considerations” below is a discussion of the material U.S. federal income tax consequences to U.S. holders and non-U.S. holders (as defined below) of the Transaction and of investing in the Willis-Ireland shares received in the Transaction. The information presented under the caption “— Irish Tax Considerations” is a discussion of the material Irish tax consequences of the Transaction and of investing in the Willis-Ireland shares. The information presented under the caption “— UK Tax Considerations” is a discussion of the material UK tax consequences of the Transaction and of investing in the Willis-Ireland shares. The information presented under the caption “— Bermuda Tax Considerations” is a discussion of the material Bermuda tax consequences of the Transaction.

 

You should consult your tax advisor regarding the applicable tax consequences to you of the Transaction and investing in the Willis-Ireland shares under the laws of the U.S. (federal, state and local), Ireland, UK, Bermuda and any other applicable foreign jurisdiction in light of your particular circumstances, including the effects of any changes in tax laws or regulations after the date of this proxy statement.

 

In General

 

The following discussion sets forth the material U.S. federal income tax consequences of the Transaction to Willis-Bermuda shareholders as of the date hereof. This discussion does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction, or under any U.S. federal laws other than those pertaining to income tax.

 

This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), the regulations promulgated thereunder and court and administrative rulings and decisions in effect on the date of this document. These laws may change, possibly retroactively, and any change could affect the continuing validity of this discussion.

 

This discussion addresses only those holders that hold their Willis-Bermuda shares solely as capital assets within the meaning of Section 1221 of the Code. It does not address all of the U.S. federal income tax consequences that may be relevant to you in light of your particular circumstances or if you are subject to special treatment under U.S. federal income tax laws, including if you are:

 

 

 

This discussion assumes that neither Willis-Bermuda nor Willis-Ireland is currently, or was in the years preceding the Transaction (or will become), a “passive foreign investment company” under the Code (a “PFIC”). Neither Willis-Bermuda nor Willis-Ireland will request a ruling from the Internal Revenue Service (“IRS”) as to the U.S. federal income tax consequences of the Transaction, post-Transaction ownership and disposition of Willis-Ireland shares or any other matter. There can be no assurance that the IRS will not challenge any of the U.S. federal income tax consequences described below and that a court would not uphold such challenge.

 

As used in the remainder of this discussion, the term “U.S. holder” means a beneficial owner of Willis-Bermuda shares (or record owner that does not hold such shares on behalf of another person), or, after the completion of the Transaction, Willis-Ireland shares, that is, for U.S. federal income tax purposes:

 

 

A “non-U.S. holder” is any beneficial owner of Willis-Bermuda shares (or record owner that does not hold such shares on behalf of another person), or after the completion of the Transaction, Willis-Ireland shares, that is not a partnership for U.S. federal income tax purposes and is not a U.S. holder. For purposes of this summary, “holder” or “shareholder” means either a U.S. holder or a non-U.S. holder or both, as the context may require.

 

If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds the Willis-Bermuda or Willis-Ireland shares, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Willis-Bermuda shares, you should consult your tax advisors.

 

THIS SUMMARY IS NOT A SUBSTITUTE FOR AN INDIVIDUAL ANALYSIS OF THE TAX CONSEQUENCES OF THE TRANSACTION TO YOU. WE URGE YOU TO CONSULT A TAX ADVISOR REGARDING THE PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE TRANSACTION IN LIGHT OF YOUR OWN PARTICULAR SITUATION.

 

Material Tax Consequences to U.S. Holders

 

The Transaction

 

The U.S. holders who own shares of Willis-Ireland immediately after the Transaction and who received such shares in cancellation of their shares of Willis-Bermuda should generally recognize no gain or loss in the Transaction pursuant to Section 354 of the Code. The tax basis of the Willis-Ireland shares received by the U.S. holders in the Transaction should be equal to the adjusted tax basis of their Willis-Bermuda shares held prior to the Transaction. The holding period for the Willis-Ireland shares received by U.S. holders should include the period those holders held their Willis-Bermuda shares. U.S. holders who hold their Willis-Bermuda shares with differing tax bases or holding periods are urged to consult their tax advisors with regard to identifying the tax bases and holding periods of the particular Willis-Ireland shares received in the Transaction. Additionally, under applicable Treasury regulations, no U.S. holder should be required to file a “gain recognition agreement” with the IRS solely as a result of the Transaction.

Ownership of Willis-Ireland Shares following the Transaction

 

Distributions on Willis-Ireland Shares.  The gross amount of distributions on Willis-Ireland shares (including any amounts withheld to reflect Irish withholding tax) should be taxable as dividends to the extent paid out of Willis-Ireland’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles). Such income (including withheld taxes) should be includable in a U.S. holder’s gross income as ordinary income on the day it is actually or constructively received under U.S. federal income tax principles. Note that non-corporate holders of shares of Willis-Ireland who receive such dividends are not eligible for the dividends-received deduction allowed to corporations under the Code.

 

With respect to non-corporate U.S. holders, certain dividends received in taxable years beginning before January 1, 2011 from a qualified foreign corporation may be subject to reduced rates of taxation. A qualified foreign corporation includes a foreign corporation that is eligible for the benefits of a comprehensive income tax treaty with the U.S. which the U.S. Treasury Department determines to be satisfactory for these purposes and which includes an exchange of information provision. The U.S. Treasury Department has determined that the current income tax treaty between the U.S. and Ireland meets these requirements, and Willis-Ireland believes it is eligible for the benefits of that treaty. A foreign corporation is also treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares that are readily tradable on an established securities market in the U.S. U.S. Treasury Department guidance indicates that Willis-Ireland shares, which are expected to be listed on the NYSE immediately following the Transaction, are readily tradable on an established securities market in the U.S. There can be no assurance that Willis-Ireland shares will be considered readily tradable on an established securities market in later years. Non-corporate holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of Willis-Ireland’s status as a qualified foreign corporation. In addition, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met.

 

Subject to certain conditions and limitations, Irish withholding taxes on dividends may be treated as foreign taxes eligible for credit against a U.S. holder’s U.S. federal income tax liability. For purposes of calculating the foreign tax credit, distributions paid on Willis-Ireland shares that are treated as dividends for U.S. federal income tax purposes may be treated as income from sources outside the U.S., in which case such income would generally constitute passive category income. Further, in certain circumstances, if a U.S. holder:

 

 

such U.S. holder will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on the Willis-Ireland shares. The rules governing the foreign tax credit are complex. U.S. holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

 

To the extent that the amount of any distribution exceeds Willis-Ireland’s current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax principles, the distribution should first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the Willis-Ireland shares (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized on a subsequent disposition of the shares), and the balance in excess of adjusted basis should be taxed as capital gain recognized on a sale or exchange. Consequently, such distributions in excess of Willis-Ireland’s current and accumulated earnings and profits would generally not give rise to foreign source income and a U.S. holder would generally not be able to use the foreign tax credit arising from any Irish withholding tax imposed on such distributions unless such credit can be applied (subject to applicable limitations) against U.S. federal income tax due on other foreign source income in the appropriate category for foreign tax credit purposes. U.S. holders who hold their Willis-Ireland shares with differing tax bases are urged to consult their tax advisors in determining the consequences of distributions which exceed Willis-Ireland’s current and accumulated earnings and profits.

Sale, Exchange or Other Taxable Disposition of Willis-Ireland Shares.  For U.S. federal income tax purposes, a U.S. holder should recognize gain or loss on any sale or exchange of Willis-Ireland shares in an amount equal to the difference between the amount realized for the shares and the U.S. holder’s tax basis in such shares. Such gain or loss should generally be capital gain or loss. Capital gains of individuals, but not corporations, derived with respect to capital assets held for more than one year may be eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized should generally be treated as U.S. source gain or loss.

 

Passive Foreign Investment Company Rules

 

Willis-Bermuda believes that it was not a PFIC (generally, a foreign corporation that has a specified percentage of “passive” income or assets, after the application of certain “look-through” rules) for U.S. federal income tax purposes for its 2009 taxable year and it does not expect Willis-Ireland to become a PFIC in the foreseeable future. However, because PFIC status depends on the composition of a company’s income and assets and the market value of its assets from time to time, there can be no assurance that Willis-Ireland will not be a PFIC for any taxable year. If Willis-Bermuda was or Willis-Ireland is a PFIC for any taxable year during which a U.S. holder held Willis-Bermuda shares or holds Willis-Ireland shares, certain adverse tax consequences could apply to such U.S. holder.

 

Treatment of Certain Irish Taxes

 

Any stamp duty or Irish capital acquisitions tax imposed on a U.S. holder as described below under the heading “— Irish Tax Considerations” should not be creditable against U.S. federal income taxes, although a U.S. holder may be entitled to deduct such taxes, subject to applicable limitations under the Code. U.S. holders should consult their tax advisors regarding the tax treatment of these Irish taxes.

 

Material Tax Consequences to Non-U.S. Holders

 

The Transaction

 

For U.S. federal income tax purposes, the non-U.S. holders who own shares of Willis-Ireland immediately after the Transaction, and who received such shares in cancellation of their shares of Willis-Bermuda, should generally recognize no gain or loss in the Transaction pursuant to Section 354 of the Code. In addition, such non-U.S. holders should not be subject to withholding tax on any realized gain with respect to the Transaction.

 

Ownership of Willis-Ireland Shares

 

Non-U.S. holders of Willis-Ireland shares generally should not be subject to U.S. federal income or withholding tax on dividend income from Willis-Ireland and should not be subject to U.S. federal income or withholding tax on any gain recognized on a subsequent disposition of Willis-Ireland shares, unless:

 

 

Information Reporting and Backup Withholding

 

U.S. holders that own at least five percent by vote or value of Willis-Bermuda shares immediately before the Transaction should be required to file certain section 368 reorganization statements.

 

In general, information reporting should apply to any subsequently declared dividend payments in respect of Willis-Ireland shares and the proceeds from the sale, exchange or redemption of such shares that are paid within the U.S. (and in certain cases, outside the U.S.), unless the holder is an exempt recipient such as a corporation. Backup withholding tax may apply to such payments if the holder fails to certify its U.S. status

and taxpayer identification number or other exempt status on Form W-9 (or conforming substitute statement) or fails to report in full dividend and interest income.

 

Any amounts withheld under the backup withholding rules should be allowed as a refund or a credit against a holder’s U.S. federal income tax liability provided the required information is furnished to the IRS.

 

In order not to be subject to backup withholding imposition on a subsequent disposition of Willis-Ireland shares, or dividends paid on those shares, a non-U.S. holder may be required to certify such person’s foreign status (on an applicable W-8, or conforming substitute statement) or otherwise establish an exemption.

 

Scope of Discussion

 

The following is a general summary of the main Irish tax considerations applicable to certain investors who are the beneficial owners of Willis-Ireland shares. It is based on existing Irish law and practices in effect on the date of this proxy statement and on discussions and correspondence with the Irish Revenue Commissioners. Legislative, administrative or judicial changes may modify the tax consequences described below.

 

The statements do not constitute tax advice and are intended only as a general guide. Furthermore, this information applies only to Willis-Ireland shares held as capital assets and does not apply to all categories of shareholders, such as dealers in securities, trustees, insurance companies, collective investment schemes and shareholders who have, or who are deemed to have, acquired their Willis-Ireland shares by virtue of an office or employment. This summary is not exhaustive and shareholders should consult their own tax advisors as to the tax consequences in Ireland, or other relevant jurisdictions of the Transaction, including the acquisition, ownership and disposition of the Willis-Ireland shares.

 

Irish Tax on Chargeable Gains

 

The receipt by Willis-Bermuda common shareholders of Willis-Ireland shares as consideration for the cancellation of their Willis-Bermuda shares in the Transaction should not give rise to a liability to Irish tax on chargeable gains for persons that are not resident or ordinarily resident in Ireland for Irish tax purposes and do not hold such shares in connection with a trade carried on by such holder in Ireland through a branch or agency.

 

The issuance, pursuant to the Transaction, of Willis-Ireland shares to holders of Willis-Bermuda shares who are resident or ordinarily resident for tax purposes in Ireland, or who hold their shares in connection with a trade carried on by such holder in Ireland through a branch or agency, should be treated as falling within the relief for a reorganization for the purposes of taxation of chargeable gains. Accordingly, the Willis-Ireland shares issued to holders of Willis-Bermuda shares in accordance with their entitlements as holders of Willis-Bermuda shares should be treated as the same asset and as acquired at the same time as the Willis-Bermuda shares. Shareholders should consult their own tax advisor if they believe they may be subject to Irish tax.

 

Withholding Tax on Dividends

 

Distributions made by Willis-Ireland will generally be subject to dividend withholding tax (“DWT”) at the standard rate of income tax (currently 20%) unless one of the exemptions described below applies, which we believe should be the case for the majority of our shareholders. DWT (if any) arises in respect of dividends paid by Willis-Ireland, as it is tax resident in Ireland. For DWT purposes, a dividend includes any distribution made by Willis-Ireland to its shareholders, including cash dividends, non-cash dividends and additional stock or units taken in lieu of a cash dividend. Willis-Ireland is responsible for withholding DWT at source and forwarding the relevant payment to the Irish Revenue Commissioners.

 

Certain shareholders (both individual and corporate) are also entitled to an exemption from DWT. In particular, a non-Irish resident shareholder is not subject to DWT on dividends received from Willis if the shareholder is:

 

 

 

and provided that, in all cases noted above but subject to the matters described below, the shareholder has provided the appropriate forms to his or her broker (and the relevant information is further transmitted to Willis-Ireland or any qualifying intermediary appointed by Willis-Ireland) (in the case of shares held beneficially), or to Willis’ transfer agent (in the case of shares held directly).

 

Prior to paying any dividend, Willis-Ireland will put in place an agreement with an entity which is recognized by the Irish Revenue Commissioners as a “qualifying intermediary” which satisfies one of the Irish requirements for dividends to be paid free of DWT to certain shareholders who hold their shares through DTC, as described below. The agreement will generally provide for certain arrangements relating to cash distributions in respect of those shares of Willis-Ireland that are held through DTC (the “Deposited Securities”). The agreement will provide that the qualifying intermediary shall distribute or otherwise make available to Cede & Co., as nominee for DTC, any cash dividend or other cash distribution to be made to holders of the Deposited Securities, after Willis-Ireland delivers or causes to be delivered to the qualifying intermediary the cash to be distributed.

 

Willis-Ireland and its qualifying intermediary will rely on information received directly or indirectly from brokers and its transfer agent in determining where shareholders reside, whether they have provided the required U.S. tax information and whether they have provided the required Irish DWT forms, as described below. Shareholders who are required to file Irish forms in order to receive their dividends free of DWT should note that such forms are valid for five years and new forms must be filed before the expiration of that period in order to continue to enable them to receive dividends without DWT. Links to the various Irish Revenue Commissioners’ forms are available at http://www.revenue.ie/en/tax/dwt/forms/index.html.

 

For a list of “relevant territories” as defined for the purposes of DWT, please see Annex C to this proxy statement.

 

Shares Held by U.S. Resident Shareholders

 

Dividends paid on Willis-Ireland shares that are owned by residents of the U.S. should not be subject to Irish withholding tax, subject to the completion and delivery of the relevant forms.

 

Residents of the U.S. who hold their shares through DTC and who have a U.S. address should be entitled to receive dividends without Irish dividend withholding tax. To provide proof of a U.S. address, U.S. Willis-Ireland shareholders should have a Form W-9 on file with their broker. Residents of the U.S. who held their shares directly on September 21, 2009, and who continue to hold their shares directly can rely on the Form W-9 they have submitted to the company. Other residents of the U.S. who acquired all of their shares after September 21, 2009 and who are holders of record will need to file an Irish DWT form with our transfer agent to receive dividends without Irish withholding tax.

Shares Held by Residents of “Relevant Territories” Other Than the U.S.

 

Dividends paid to Willis-Ireland shareholders who are residents of countries that are EU member states (other than Ireland) or other countries with which Ireland has signed a tax treaty whether that treaty has been ratified or not (other than the U.S.) should not be subject to Irish withholding tax, as long as such shareholders have provided Irish DWT forms to our current qualifying intermediary (for shares held through DTC) or our transfer agent (for shares held directly). We refer to these countries, together with the U.S., as “relevant territories,” a list of which is included as Annex C to this proxy statement.

 

In addition, these shareholders who held shares on September 21, 2009 should generally receive dividends paid on or before September 30, 2010 without any Irish withholding tax if they have submitted a Form W-8 confirming their residence in a “relevant territory” to our current qualifying intermediary (for shares held through DTC) or our transfer agent (for shares held directly).

 

If any shareholder who is resident in a “relevant territory” receives a dividend subject to DWT, he or she may make an application for a refund from the Irish Revenue Commissioners on the prescribed form.

 

Please note that this exemption from DWT does not apply to a Willis-Ireland shareholder that is resident or ordinarily resident in Ireland or to a body corporate that is under the control, whether directly or indirectly, of a person or persons who is or are resident in Ireland, but other exemptions may apply.

 

However, it may be possible for such a shareholder to rely on a double tax treaty to limit the applicable DWT.

 

Shares Held by Residents of Ireland

 

Certain Irish tax resident corporate shareholders, pension schemes, and collective investment undertakings are entitled to an exemption from DWT in respect of dividend payments on their Willis-Ireland shares. Most other Irish tax resident or ordinarily resident shareholders will be subject to DWT in respect of dividend payments on their Willis-Ireland shares.

 

Shareholders that are residents of Ireland but are entitled to receive dividends without DWT must complete the appropriate Irish forms and provide them to our qualifying intermediary (for shares held through DTC) or our transfer agent (for shares held directly). Shareholders who are resident or ordinarily resident in Ireland or are otherwise subject to Irish tax should consult their own tax advisor.

 

Shares Held by Other Persons

 

Willis-Ireland shareholders who do not reside in “relevant territories” or in Ireland will usually be subject to DWT, but there are a number of other exemptions that could apply on a case-by-case basis. Dividends paid to such shareholders will be paid subject to DWT unless the relevant shareholder has provided the appropriate Irish DWT form to our qualifying intermediary (for shares held through DTC) or our transfer agent (for shares held directly). Willis recommends that such shareholders to whom an exemption applies complete the appropriate Irish forms and provide them to our qualifying intermediary or our transfer agent, as the case may be, as soon as possible.

 

If any shareholder who is not a resident of a “relevant territory” or Ireland but is exempt from withholding receives a dividend subject to DWT, he or she may make an application for a refund from the Irish Revenue Commissioners on the prescribed form.

 

Income Tax on Dividends Paid on Willis Shares

 

Irish income tax (if any) arises in respect of dividends paid by Willis-Ireland, as it is tax resident in Ireland.

 

A shareholder who is not resident or ordinarily resident in Ireland and who is entitled to an exemption from DWT, generally has no Irish income tax liability on a dividend from Willis-Ireland unless he or she holds their Willis shares through a branch or agency in Ireland through which a trade is carried on.

Willis-Ireland shareholders that are not resident nor ordinarily resident in Ireland and do not hold their shares through a branch or agency in Ireland, are generally liable to Irish income tax on dividends received from Willis-Ireland unless they are entitled to exemption from DWT. However, the DWT deducted by Willis-Ireland discharges such liability to Irish income tax provided that the shareholder furnishes the statement of DWT imposed to the Irish Revenue Commissioners.

 

Irish resident or ordinarily resident shareholders may be subject to Irish tax and/or levies on dividends received from Willis-Ireland. Such shareholders should consult their own tax advisor.

 

Capital Acquisitions Tax

 

Irish capital acquisitions tax (“CAT”) comprises principally of gift tax and inheritance tax. CAT could apply to a gift or inheritance of Willis-Ireland ordinary shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because Willis-Ireland ordinary shares are regarded as property situated in Ireland as the share register of Willis must be held in Ireland. The person who receives the gift or inheritance has primary liability for CAT.

 

CAT is levied at a rate of 25% above certain tax-free thresholds. The appropriate tax-free threshold is dependent upon (1) the relationship between the donor and the donee and (2) the aggregation of the values of previous gifts and inheritances received by the donee from persons within the same group threshold. Gifts and inheritances passing between spouses are exempt from CAT.

 

Stamp Duty

 

Irish stamp duty (if any) is only payable in respect of the transfer of Willis-Ireland shares and not Willis-Bermuda shares. Irish stamp duty is currently 1% of the price paid or the market value of the shares acquired, if higher.

 

No stamp duty should be payable on the cancellation of the common shares of Willis-Bermuda or the issue of Willis-Ireland ordinary shares under the Transaction.

 

For the majority of transfers of Willis-Ireland ordinary shares, we do not expect there to be any Irish stamp duty as transfers of book-entry interests in DTC representing Willis-Ireland shares should not be subject to Irish stamp duty. Accordingly, transfers by shareholders who hold their Willis-Ireland shares beneficially through brokers, which in turn hold those shares through DTC, should not be subject to Irish stamp duty on transfers to holders who also hold through DTC. Transfers by shareholders who hold their shares other than through DTC, will be subject to Irish stamp duty, which is a legal obligation of the buyer. Accordingly, we recommend that all directly registered shareholders open broker accounts so they can transfer their Willis-Bermuda shares into a broker account to be held through DTC as soon as possible, and in any event prior to the Transaction Time. This will cause their Willis-Ireland shares to be held through DTC from the Transaction Time. We also recommend that any person who wishes to acquire Willis-Ireland shares after completion of the Transaction acquires such Willis-Ireland shares beneficially through a broker account to be held through DTC.

 

Any transfer of Willis-Ireland shares that is subject to Irish stamp duty will not be registered in the name of the buyer unless an instrument of transfer is duly stamped and provided to our transfer agent. Willis-Ireland’s articles of association allow Willis-Ireland, in its absolute discretion, to create an instrument of transfer and pay (or procure the payment of) any stamp duty payable by a buyer. In the event of any such payment, Willis-Ireland is (on behalf of itself or its affiliates) entitled to (i) seek reimbursement from the buyer or seller (at its discretion), (ii) set-off the amount of the stamp duty against future dividends payable to the buyer or seller (at its discretion), and (iii) claim a lien against the Willis-Ireland shares on which it has paid stamp duty. Parties to a share transfer may assume that any stamp duty arising in respect of a transaction in Willis-Ireland shares has been paid unless one or both of such parties is otherwise notified by us.

 

In General

 

The following statements summarize certain UK tax implications of the Transaction. They are based on current UK legislation and an understanding of current Her Majesty’s Revenue and Customs (“HM Revenue & Customs”) published practice as at the date of this document. The paragraphs are intended as a general guide and, except where express reference is made to the position of non-residents, apply only to Willis-Bermuda shareholders who are resident and, if individuals, ordinarily resident and domiciled in the UK for tax purposes. They relate only to such Willis-Bermuda shareholders who hold their existing Willis-Bermuda shares, and who will hold their Willis-Ireland shares directly as an investment (other than under an individual savings account) and who are absolute beneficial owners of those Willis-Bermuda shares. These paragraphs do not deal with share owners, such as persons who hold or who have acquired Willis-Bermuda shares or Willis-Ireland shares in the course of trade or by reason of their, or another’s, employment, or collective investment schemes and insurance companies.

 

If you are in any doubt as to your taxation position or if you are resident or otherwise subject to taxation in any jurisdiction other than the UK, you should consult an appropriate professional advisor immediately.

 

Material Tax Consequences to UK Holders

 

Taxation of Income

 

The Transaction should not be treated as involving a distribution subject to UK tax as income.

 

Taxation of Chargeable Gains on the Scheme of Arrangement

 

The Transaction should be treated as a reconstruction for purposes of UK taxation of chargeable gains under certain specified conditions. Accordingly, a Willis-Bermuda shareholder holding five percent or less of the issued share capital of Willis-Bermuda who receives Willis-Ireland shares under the Transaction should be treated as not having made a disposal of his or her Willis-Bermuda shares. Instead “roll-over” treatment should apply, which means that the Willis-Ireland shares should be treated as the same asset as the Willis-Bermuda shares in respect of which they are issued and treated as acquired at the same time as those Willis-Bermuda shares, and for the same acquisition cost.

 

If a Willis-Ireland shareholder, alone or together with persons connected with him, holds more than five percent of the Willis-Bermuda shares, such a Willis shareholder should be eligible for the “roll-over” treatment described above only if the Transaction is effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to capital gains tax or corporation tax. Clearance has not been sought by Willis from HM Revenue & Customs under section 138 Taxation of Chargeable Gains Act 1992 that HM Revenue & Customs is satisfied that the Transaction will be effected for bona fide commercial reasons and will not form part of such a scheme or arrangement. A Willis-Bermuda shareholder holding more than five percent of Willis-Bermuda shares is advised to consult his or her tax advisor with regard to their own specific circumstances.

 

Transaction in Securities

 

Willis-Bermuda shareholders should not suffer a counter-acting tax assessment under the transactions in securities rules in sections 703 et seq. of the Income and Corporation Taxes Act 1988 and sections 682 et seq. of the Income Tax Act 2007 by reference to the Transaction.

 

No application for clearance has been sought from HM Revenue & Customs under section 707 of the Income and Corporation Taxes Act 1988 or section 701 of the Income Tax Act 2007 in relation to the Transaction, in that the Transaction in securities legislation will not apply. If you are in any doubt on this aspect you should consult a professional advisor accordingly.

 

Your attention is drawn to section 720 Income Tax Act 2007 (transfer of assets abroad) which can impute income of a non-UK resident company to its ultimate owners. If you are in any doubt on these issues you are advised to seek appropriate professional advice.

 

Stamp Duty and Stamp Duty Reserve Tax (“SDRT”)

 

No stamp duty or SDRT should be payable by Willis-Bermuda shareholders as a result of the cancellation of Willis-Bermuda shares and the issue of Willis-Ireland shares under the Transaction.

 

Taxation of Chargeable Gains on Subsequent Disposal of Willis-Ireland Shares

 

Liability to UK tax on chargeable gains will depend on the individual circumstances of Willis-Ireland shareholders.

 

A disposal of Willis-Ireland shares by a Willis-Ireland shareholder who is resident in the UK may, depending on individual circumstances (including the availability of exemptions and relief(s)), give rise to a chargeable gain or allowable loss for the purposes of the UK taxation of chargeable gains.

 

On the basis that the Transaction should be treated as a reconstruction for purposes of UK taxation of chargeable gains, there should be no change to the basis of taxation and the calculation of any future gain or loss from holding a Willis-Ireland share compared to a Willis-Bermuda share.

 

Individuals

 

For individuals, there is a single rate of charge to capital gains tax at 18%. The principal factors which will determine the extent to which a capital gain arising from the disposal of Willis-Ireland shares will be subject to capital gains tax are the level of the annual exemption (£10,100 for the 2009/2010 tax year) of tax-free capital gains in the tax year in which the disposal takes place, the extent to which the Willis-Ireland shareholder realizes any other capital gains in that year and the extent to which the Willis-Ireland shareholder has incurred capital losses in that or any earlier tax year. All gains and losses are to be calculated in sterling terms using spot rates for acquisition and disposal.

 

Companies

 

For a corporate Willis-Ireland shareholder, any chargeable gain will be included in its profits chargeable to corporation tax and will be taxed at the appropriate rate of corporation tax (currently a maximum of 28%). For the purposes of calculating a chargeable gain but not an allowable loss arising on any disposal or part disposal of Willis-Ireland shares by a corporate Willis-Ireland shareholder, indexation allowance on the relevant proportion of the original allowable cost will continue to be available until the Willis-Ireland shares are disposed of. Broadly speaking, indexation allowance increases the acquisition cost of an asset for tax purposes in line with the rise in the retail prices index, except that indexation allowance cannot be used to create or increase a loss for tax purposes.

 

Certain chargeable gains can be exempt form corporation tax where the holder owns at least 10% of the ordinary share capital of Willis-Bermuda and other conditions are met. Each shareholder is advised to consult their tax advisor in relation to their specific circumstances.

 

The Willis-Ireland Reduction of Capital

 

The Willis-Ireland reduction of capital should not have any UK tax consequences for Willis-Ireland shareholders. It should be treated as a reorganization of the share capital of Willis-Ireland and, accordingly, will not result in a disposal by Willis-Ireland shareholders in any of their shares in Willis-Ireland.

 

Receipt of Dividends

 

Dividends received from Willis-Ireland

 

A Willis-Ireland shareholder who:

 

(a) is resident, ordinary resident and domiciled in the UK; or

 

(b) carries on a trade in the UK through a UK branch or agency or, in the case of a corporate share owner, a permanent establishment in connection with which their Willis — Ireland shares are held,

should generally be subject to UK income tax (at rate of 10%, in the case of those who are not higher rate taxpayers and 32.5%, in the case of higher rate taxpayers) or corporation tax (at the prevailing rates of corporation tax, currently a maximum of 28% — but see below for dividends exempt from corporation tax in certain circumstances), as the case may be, on the gross amount of any dividends paid by Willis-Ireland before deduction of Irish withholding tax (if any). UK-resident Willis-Ireland shareholders may be able to apply for an exemption from withholding taxes under Irish domestic law or the UK-Ireland double tax treaty. Please see “— Irish Tax Considerations — Withholding Tax on Dividends” for a description of Irish tax consequences of the payment of dividends by Willis-Ireland.

 

HM Revenue & Customs will generally give credit for any Irish dividend withholding tax withheld from the payment of a dividend (if any) and not recoverable from the Irish tax authorities against the income tax or corporation tax payable by the relevant Willis-Ireland shareholder in respect of the dividend (such credit being limited to the UK-Ireland double tax treaty rate). This is subject to the detailed rules of UK tax law and practice regarding the availability and calculation of any such credit.

 

Individuals

 

An individual Willis-Ireland shareholder who is resident for tax purposes in the UK and who owns a shareholding of less than 10% in Willis-Ireland should, for dividends received from Willis-Ireland, be entitled to a non-repayable tax credit. The value of the tax credit will be one-ninth of the amount of the dividends paid by Willis-Ireland and the tax credit is added to the amount paid to compute the gross amount of the dividend paid by Willis-Ireland. The gross amount of the dividend will be regarded as the top slice of the Willis-Ireland shareholder’s income and will be subject to UK income tax as set out above. The tax credit should be available to set against such holder’s liability (if any) to tax on the gross amount of the dividend.

 

A UK resident individual holder of Willis-Ireland shares who is not liable to income tax in respect of the gross dividend should not be entitled to reclaim any part of the tax credit referred to above. A UK resident shareholder who is liable to income tax at the finance year 2009/10 basics rate should be subject to income tax on the dividend at 10% of the gross dividend so that the tax credit will satisfy in full such shareholder’s liability to income tax on the dividend. A UK resident individual shareholder liable to income tax at the higher rate will generally be subject to income tax on the gross amount of the dividend before the deduction of Irish withholding tax at the finance year 2009/10 tax rate of 32.5%, but should be able to set off the Irish tax credit (if available) against this liability. The effect of that set off of the Irish tax credit is such that a holder should have to account for additional tax equal to one quarter of the net cash dividend received (as noted above, UK resident shareholders of Willis-Ireland shares may be able to apply for an exemption from withholding taxes under Irish domestic law).

 

Companies

 

Dividends received by UK corporate investors on overseas investments are generally subject to UK corporation tax at differing rates depending on the size of the corporate investor. The Finance Act 2009, includes legislation which in certain circumstances modifies this basic position and allows a UK tax resident company to receive (gross of any withholding tax suffered) overseas dividends free of any liability to UK corporation tax on the amount received. In this context, it is anticipated that a relevant circumstance could apply to exempt a UK resident corporate holder of Willis-Ireland shares from UK corporation tax on the receipt of any dividend. However, each shareholder is advised to consult their tax advisor in relation to their specific circumstances.

 

The Transaction should not result in any income tax consequences under Bermuda law to Willis-Bermuda or Willis-Ireland or their respective shareholders.

 

The following description of Willis-Ireland’s share capital is a summary. This summary is subject to the Irish Companies Acts and the complete text of Willis-Ireland’s memorandum and articles of association substantially in the form attached as Annex B to this proxy statement. We encourage you to read those laws and documents carefully.

 

There are differences between Willis-Bermuda’s memorandum of association and bye-laws and Willis-Ireland’s memorandum and articles of association as they will be in effect after the Transaction, especially relating to changes (i) that are required by Irish law (i.e., certain provisions of the Willis-Bermuda bye-laws were not replicated in the Willis-Ireland articles of association because Irish law would not permit such replication, and certain provisions were included in the Willis-Ireland articles of association although they were not in the Willis-Bermuda bye-laws because Irish law requires such provisions to be included in the articles of association of an Irish public limited company), or (ii) that are necessary in order to preserve the current rights of shareholders and powers of the board of directors of Willis following the Transaction. See “Comparison of Rights of Shareholders and Powers of the Board of Directors.” Except where otherwise indicated, the description below reflects Willis-Ireland’s memorandum and articles of association as those documents will be in effect upon completion of the Transaction.

 

Authorized Share Capital.  The authorized share capital of Willis-Ireland is €40,000 divided into 40,000 ordinary shares with a nominal value of €1 per share and US$575,000 divided into 4,000,000,000 ordinary shares with a nominal value of US$0.000115 per share and 1,000,000,000 preferred shares with a nominal value of US$0.000115 per share. The authorized share capital includes 40,000 ordinary shares with a nominal value of €1 per share in order to satisfy statutory requirements for all Irish public limited companies commencing operations.

 

Willis-Ireland may issue shares subject to the maximum prescribed by its authorized share capital contained in its memorandum and articles of association. The authorized share capital may be increased or reduced by way of an ordinary resolution of Willis-Ireland’s shareholders. The shares comprising the authorized share capital of Willis-Ireland may be divided into shares of such nominal value as the resolution shall prescribe. As a matter of Irish company law, the directors of a company may issue new ordinary or preferred shares without shareholder approval once authorized to do so by the articles of association of the company or by an ordinary resolution adopted by the shareholders at a general meeting. An ordinary resolution requires the approval of over 50% of the votes of a company’s shareholders cast at a general meeting. The authority conferred can be granted for a maximum period of five years, at which point it must be renewed by the shareholders of the company by an ordinary resolution. Because of this requirement of Irish law, the articles of association of Willis-Ireland authorize the board of directors of Willis-Ireland to issue new ordinary or preferred shares without shareholder approval for a period of five years from the date of adoption of such articles of association, which is expected to be effective on December 31, 2009.

 

The rights and restrictions to which the ordinary shares will be subject will be prescribed in Willis-Ireland’s articles of association. Willis-Ireland’s articles of association entitle the board of directors, without shareholder approval, to determine the terms of the preferred shares issued by Willis-Ireland. The Willis-Ireland board of directors is authorized, without obtaining any vote or consent of the holders of any class or series of shares, unless expressly provided by the terms of that class or series or shares, to provide from time to time for the issuance of other classes or series of preferred shares and to establish the characteristics of each class or series, including the number of shares, designations, relative voting rights, dividend rights, liquidation and other rights, redemption, repurchase or exchange rights and any other preferences and relative, participating, optional or other rights and limitations not inconsistent with applicable law.

 

Irish law does not recognize fractional shares held of record. Accordingly, Willis-Ireland’s articles of association do not provide for the issuance of fractional shares of Willis-Ireland, and the official Irish register of Willis-Ireland will not reflect any fractional shares.

Issued Share Capital.  Immediately prior to the Transaction, the issued share capital of Willis-Ireland will be €40,000, comprised of 40,000 ordinary shares, with nominal value of €1 per share (the “Euro Share Capital”). In connection with the consummation of the Transaction, the Euro Share Capital will be acquired by Willis-Ireland and will then be cancelled by Willis-Ireland. Willis-Ireland will simultaneously issue a number of ordinary shares with a nominal value of $0.000115 each that is equal to the number of Willis-Bermuda common shares that will be cancelled as part of the Transaction, including with respect to common shares held by Willis-Bermuda; provided however, common shares held by Willis-Bermuda (other than shares held by Willis-Bermuda by or for the benefit of certain equity incentive plans) shall not receive Willis-Ireland ordinary shares in substitution for them. All shares issued upon completion of the Transaction will be issued as fully-paid up.

 

Under Irish law certain statutory pre-emption rights apply automatically in favor of shareholders where shares are to be issued for cash. However, Willis-Ireland has opted out of these pre-emption rights in its articles of association as permitted under Irish company law. Because Irish law requires this opt-out to be renewed every five years by a special resolution of the shareholders, Willis-Ireland’s articles of association provide that this opt-out must be so renewed. A special resolution requires the approval of not less than 75% of the votes of Willis-Ireland’s shareholders cast at a general meeting. If the opt-out is not renewed, shares issued for cash must be offered to pre-existing shareholders of Willis-Ireland pro rata to their existing shareholding before the shares can be issued to any new shareholders. The statutory pre-emption rights do not apply where shares are issued for non-cash consideration (such as in a stock-for-stock acquisition) and do not apply to the issue of non-equity shares (that is, shares that have the right to participate only up to a specified amount in any income or capital distribution).

 

The articles of association of Willis-Ireland provide that, subject to any shareholder approval requirement under any laws, regulations or the rules of any stock exchange to which Willis-Ireland is subject, the board is authorized, from time to time, in its discretion, to grant such persons, for such periods and upon such terms as the board deems advisable, options to purchase such number of shares of any class or classes or of any series of any class as the board may deem advisable, and to cause warrants or other appropriate instruments evidencing such options to be issued. The Irish Companies Acts provide that directors may issue share warrants or options without shareholder approval once authorized to do so by the articles of association or an ordinary resolution of shareholders. The Willis-Ireland board may issue shares upon exercise of warrants or options without shareholder approval or authorization (up to the relevant authorized share capital limit). In connection with the Transaction, Willis-Ireland will assume, on a one-for-one basis, Willis-Bermuda’s existing obligations to deliver shares under our equity incentive plans, warrants or other rights pursuant to the terms thereof.

 

The Irish Companies Acts prohibit an Irish company from allotting shares for “nil” or no consideration. Accordingly, the nominal value of the shares issued upon the lapse of restrictions or the vesting of any restricted stock unit, performance shares awards, bonus shares or any other share-based grants must be paid pursuant to the Irish Companies Acts.

 

Willis-Ireland will be subject to the rules of the NYSE and the Code that require shareholder approval of certain equity plan and share issuances.

 

Under Irish law, dividends and distributions may only be made from distributable reserves. Distributable reserves generally means the accumulated realized profits of Willis-Ireland less accumulated realized losses of Willis-Ireland and includes reserves created by way of capital reduction. In addition, no distribution or dividend may be made unless the net assets of Willis-Ireland are equal to, or in excess of, the aggregate of Willis-Ireland’s called up share capital plus undistributable reserves and the distribution does not reduce Willis-Ireland’s net assets below such aggregate. Undistributable reserves include the share premium account, the capital redemption reserve fund and the amount by which Willis-Ireland’s accumulated unrealized profits,

so far as not previously utilized by any capitalization, exceed Willis-Ireland’s accumulated unrealized losses, so far as not previously written off in a reduction or reorganization of capital.

 

The determination as to whether or not Willis-Ireland has sufficient distributable reserves to fund a dividend must be made by reference to “relevant accounts” of Willis-Ireland. The “relevant accounts” will be either the last set of unconsolidated annual audited financial statements or other financial statements properly prepared in accordance with the Irish Companies Acts, which give a “true and fair view” of Willis-Ireland’s unconsolidated financial position and accord with accepted accounting practice. The relevant accounts must be filed in the Companies Registration Office (the official public registry for companies in Ireland).

 

Although Willis-Ireland will not have any distributable reserves immediately following the Transaction Time, we are taking steps to create such distributable reserves. Please see “Risk Factors” and “Proposal Number Two: Creation of Distributable Reserves.”

 

The mechanism as to who declares a dividend and when a dividend shall become payable is governed by the articles of association of Willis-Ireland. Willis-Ireland’s articles of association authorize the directors to declare such dividends as appear justified from the profits of Willis-Ireland without the approval of the shareholders at a general meeting. The board of directors may also recommend a dividend to be approved and declared by the shareholders at a general meeting. The board of directors may direct that the payment be made by distribution of assets, shares or cash and no dividend issued may exceed the amount recommended by the directors. The dividends can be declared and paid in the form of cash or non-cash assets.

 

The directors of Willis-Ireland may deduct from any dividend payable to any member all sums of money (if any) payable by such member to Willis-Ireland in relation to the shares of Willis-Ireland.

 

The directors of Willis-Ireland are also entitled to issue shares with preferred rights to participate in dividends declared by Willis-Ireland. The holders of such preferred shares may, depending on their terms, rank senior to the Willis-Ireland ordinary shares in terms of dividend rights and/or be entitled to claim arrears of a declared dividend out of subsequently declared dividends in priority to ordinary shareholders.

 

For information about the Irish tax issues relating to dividend payments, please see “Material Tax Considerations — Irish Tax Considerations.”

 

Overview

 

Willis-Ireland’s articles of association provide that any ordinary share which Willis-Ireland has acquired or agreed to acquire shall be converted into a redeemable share. Accordingly, for Irish company law purposes, the repurchase of ordinary shares by Willis-Ireland can technically be effected as a redemption of those shares as described below under “— Repurchases and Redemptions by Willis-Ireland.” If the articles of association of Willis-Ireland did not contain such provision, repurchases by Willis-Ireland would be subject to many of the same rules that apply to purchases of Willis-Ireland shares by subsidiaries described below under “— Purchases by Subsidiaries of Willis-Ireland,” including the shareholder approval requirements described below and the requirement that any on-market purchases be effected on a “recognized stock exchange.” Except where otherwise noted, when we refer elsewhere in this proxy statement to repurchasing or buying back ordinary shares of Willis-Ireland, we are referring to the redemption of ordinary shares by Willis-Ireland pursuant to such provision of the articles of association or the purchase of ordinary shares of Willis-Ireland by Willis-Ireland or a subsidiary of Willis-Ireland, in each case in accordance with the Willis-Ireland articles of association and Irish company law as described below.

 

Repurchases and Redemptions by Willis-Ireland

 

Under Irish law, a company can issue redeemable shares and redeem them out of distributable reserves (which are described above under “— Dividends”) or the proceeds of a new issue of shares for that purpose. Although Willis-Ireland will not have any distributable reserves immediately following the Transaction Time, we are taking steps to create such distributable reserves. Please see “Risk Factors” and “Proposal Number

Two: Creation of Distributable Reserves.” The issue of redeemable shares may only be made by Willis-Ireland where the nominal value of the issued share capital that is not redeemable is at least 10% of the nominal value of the total issued share capital of Willis-Ireland. All redeemable shares must also be fully-paid and the terms of redemption of the shares must provide for payment on redemption. Redeemable shares may, upon redemption, be cancelled or held in treasury. Based on the provision of Willis-Ireland’s articles described above, shareholder approval will not be required to redeem Willis-Ireland shares.

 

Willis-Ireland may also be given an additional general authority to purchase its own shares on-market which would take effect on the same terms and be subject to the same conditions as applicable to purchases by Willis-Ireland’s subsidiaries as described below.

 

The board of directors of Willis-Ireland will also be entitled to issue preferred shares which may be redeemed at the option of either Willis-Ireland or the shareholder, depending on the terms of such preferred shares. Please see “— Capital Structure — Authorized Share Capital” above for additional information on preferred shares.

 

Repurchased and redeemed shares may be cancelled or held as treasury shares. The nominal value of treasury shares held by Willis-Ireland at any time must not exceed 10% of the nominal value of the issued share capital of Willis-Ireland. Willis-Ireland cannot exercise any voting rights in respect of shares held as treasury shares. Treasury shares may be cancelled by Willis-Ireland or re-issued subject to certain conditions.

 

Purchases by Subsidiaries of Willis-Ireland

 

Under Irish law, it may be permissible for an Irish or non-Irish subsidiary to purchase shares of Willis-Ireland either on-market or off-market. A general authority of the shareholders of Willis-Ireland (by way of ordinary resolution) is required to allow a subsidiary of Willis-Ireland to make on-market purchases of Willis-Ireland shares. However, as long as this general authority has been granted, no specific shareholder authority for a particular on-market purchase by a subsidiary of Willis-Ireland shares is required. Prior to the Transaction Time, we expect Willis-Bermuda together with the nominee shareholders of Willis-Ireland to authorize the purchase of Willis-Ireland shares by subsidiaries of Willis-Ireland, such that Willis-Ireland’s subsidiaries will be authorized to purchase shares in an aggregate amount approximately equal to the then remaining authorization under the existing Willis-Bermuda share repurchase program. This authority will expire no later than 18 months after the date on which it takes effect.

 

In order for a subsidiary of Willis-Ireland to make an on-market purchase of Willis-Ireland’s shares, such shares must be purchased on a “recognized stock exchange.” The NYSE, on which the shares of Willis-Ireland will be listed following the Transaction, is not currently specified as a recognized stock exchange for this purpose by Irish company law. It is possible that the Irish authorities will take appropriate steps in the near future to add the NYSE to the list of recognized stock exchanges. For an off-market purchase by a subsidiary of Willis-Ireland, the proposed purchase contract must be authorized by special resolution of the shareholders of Willis-Ireland before the contract is entered into. The person whose shares are to be bought back cannot vote in favor of the special resolution and, for at least 21 days prior to the special resolution, the purchase contract must be on display or must be available for inspection by shareholders at the registered office of Willis-Ireland.

 

The number of shares held by the subsidiaries of Willis-Ireland at any time will count as treasury shares and will be included in any calculation of the permitted treasury share threshold of 10% of the nominal value of the issued share capital of Willis-Ireland. While a subsidiary holds shares of Willis-Ireland, it cannot exercise any voting rights in respect of those shares. The acquisition of the shares of Willis-Ireland by a subsidiary must be funded out of distributable reserves of the subsidiary.

 

Existing Share Repurchase Program

 

The board of directors of Willis-Bermuda has previously authorized a program to repurchase up to one billion of its common shares. Prior to the consummation of the Transaction, we expect (i) the board of directors of Willis-Ireland to authorize the repurchase of Willis-Ireland shares by Willis-Ireland and its

subsidiaries and (ii) Willis-Bermuda and its nominee shareholders of Willis-Ireland to authorize the purchase of Willis-Ireland shares by subsidiaries of Willis-Ireland, such that Willis-Ireland and its subsidiaries will be authorized to purchase shares in an aggregate amount approximately equal to the then remaining authorization under the existing Willis-Bermuda share repurchase program.

 

As noted above, because repurchases of Willis-Ireland shares by Willis-Ireland can technically be effected as a redemption of those shares pursuant to the articles of association, such repurchases may be made whether or not the NYSE is a “recognized stock exchange” and shareholder approval for such repurchases will not be required.

 

However, because purchases of Willis-Ireland shares by subsidiaries of Willis-Ireland may be made only on a “recognized stock exchange” and only if the required shareholder approval has been obtained, we expect that the shareholder authorization for purchases by subsidiaries of Willis-Ireland described above will be effective as of the later of (i) the Transaction Time and (ii) the date on which the NYSE becomes a recognized stock exchange for this purpose. This authorization will expire no later than 18 months after the date on which it takes effect and we expect that we would seek shareholder approval to renew this authorization at future annual general meetings.

 

Under Willis-Ireland’s articles of association, the board may resolve to capitalize any amount for the time being standing to the credit of any of Willis-Ireland’s reserves (including any capital redemption reserve fund or share premium account) or to the credit of profit and loss account for issuance and distribution to shareholders as fully-paid up bonus shares on the same basis of entitlement as would apply in respect of a dividend distribution.

 

Under its articles of association, Willis-Ireland may by ordinary resolution consolidate and divide all or any of its share capital into shares of larger nominal value than its existing shares or subdivide its shares into smaller amounts than is fixed by its articles of association.

 

Willis-Ireland may, by ordinary resolution, reduce its authorized share capital in any way. Willis-Ireland also may, by special resolution and subject to confirmation by the Irish High Court, reduce or cancel its issued share capital in any way. The distributable reserves proposal discussed above in “Proposal Number Two: Creation of Distributable Reserves” involves a reduction of share capital, namely the share premium account of Willis-Ireland, for purposes of Irish law.

 

Willis-Ireland will be required to hold an annual general meeting within 18 months of incorporation and at intervals of no more than 15 months thereafter, provided that an annual general meeting is held in each calendar year following the first annual general meeting and no more than nine months after Willis-Ireland’s fiscal year-end. Willis-Ireland plans to hold an annual general meeting in 2010 if the Transaction is consummated. Under Irish law, the first annual general meeting of Willis-Ireland is permitted to be held outside Ireland. Thereafter, any annual general meeting may be held outside Ireland if a resolution so authorizing has been passed at the preceding annual general meeting. We intend to hold annual general meetings in Ireland if the Transaction is consummated. Because of the fifteen-month requirement described in this paragraph, Willis-Ireland’s articles of association include a provision reflecting this requirement of Irish law. Please see “Comparison of Rights of Shareholders and Powers of the Board of Directors — Annual Meetings of Shareholders” below.

Notice of an annual general meeting must be given to all shareholders of Willis-Ireland and to the auditors of Willis-Ireland. The articles of association of Willis-Ireland provide for a minimum notice period of 21 days, which is the minimum permitted under Irish law.

 

The only matters which must, as a matter of Irish company law, be transacted at an annual general meeting are the presentation of the annual accounts, balance sheet and reports of the directors and auditors, the appointment of auditors and the fixing of the auditor’s remuneration (or delegation of same). If no resolution is made in respect of the reappointment of an auditor at an annual general meeting, the previous auditor will be deemed to have continued in office.

 

Directors are elected by the affirmative vote of a majority of the votes cast by shareholders at an annual general meeting and serve until the next following general meeting. Any nominee for director who does not receive a majority of the votes cast is not elected to the board.

 

Extraordinary general meetings of Willis-Ireland may be convened by (i) the chairman of the board of directors, (ii) the board of directors, (iii) on requisition of the shareholders holding not less than 10% of the paid up share capital of Willis-Ireland carrying voting rights or (iv) on requisition of Willis-Ireland’s auditors. Extraordinary general meetings are generally held for the purposes of approving shareholder resolutions of Willis-Ireland as may be required from time to time. At any extraordinary general meeting only such business shall be conducted as is set forth in the notice thereof.

 

Notice of an extraordinary general meeting must be given to all shareholders of Willis-Ireland and to the auditors of Willis-Ireland. Under Irish law, the minimum notice periods are 21 days notice in writing for an extraordinary general meeting to approve a special resolution and 14 days notice in writing for any other extraordinary general meeting. Because of the 21 day and 14 day requirements described in this paragraph, Willis-Ireland’s articles of association include provisions reflecting these requirements of Irish law.

 

In the case of an extraordinary general meeting convened by shareholders of Willis-Ireland, the proposed purpose of the meeting must be set out in the requisition notice. Upon receipt of this requisition notice, the board of directors has 21 days to convene a meeting of Willis-Ireland’s shareholders to vote on the matters set out in the requisition notice. This meeting must be held within two months of the receipt of the requisition notice. If the board of directors does not convene the meeting within such 21 day period, the requisitioning shareholders, or any of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting, which meeting must be held within three months of the receipt of the requisition notice.

 

If the board of directors becomes aware that the net assets of Willis-Ireland are half or less of the amount of Willis-Ireland’s called-up share capital, the directors of Willis-Ireland must convene an extraordinary general meeting of Willis-Ireland’s shareholders not later than 28 days from the date that they learn of this fact. This meeting must be convened for the purposes of considering whether any, and if so what, measures should be taken to address the situation.

 

The presence, in person or by proxy, of the holders of at least 50% of the Willis-Ireland ordinary shares outstanding constitutes a quorum for the conduct of business. No business may take place at a general meeting of Willis-Ireland if a quorum is not present in person or by proxy. The board of directors has no authority to waive quorum requirements stipulated in the articles of association of Willis-Ireland. Abstentions and broker non-votes will be counted as present for purposes of determining whether there is a quorum in respect of the proposals. A broker “non-vote” occurs when a nominee (such as a broker) holding shares for a beneficial owner abstains from voting on a particular proposal because the nominee does not have discretionary voting power for that proposal and has not received instructions from the beneficial owner on how to vote those shares.

 

Willis-Ireland’s articles provide that all resolutions shall be decided by a poll. Every shareholder shall have one vote for each ordinary share that he or she holds as of the record date for the meeting. Voting rights may be exercised by shareholders registered in Willis-Ireland’s share register as of the record date for the meeting or by a duly appointed proxy of such a registered shareholder, which proxy need not be a shareholder. Where interests in shares are held by a nominee trust company this company may exercise the rights of the beneficial holders on their behalf as their proxy. All proxies must be appointed in the manner prescribed by Willis-Ireland’s articles of association. The articles of association of Willis-Ireland permit the appointment of proxies by the shareholders to be notified to Willis-Ireland electronically in such manner as may be approved by the board.

 

In accordance with the articles of association of Willis-Ireland, the directors of Willis-Ireland may from time to time cause Willis-Ireland to issue preferred shares. These preferred shares may have such voting rights as may be specified in the terms of such preferred shares (e.g., they may carry more votes per share than ordinary shares or may entitle their holders to a class vote on such matters as may be specified in the terms of the preferred shares).

 

Treasury shares will not be entitled to be voted at general meetings of shareholders.

 

Irish company law requires “special resolutions” of the shareholders at a general meeting to approve certain matters. A special resolution requires the approval of not less than 75% of the votes of Willis-Ireland’s shareholders cast at a general meeting where a quorum is present. This may be contrasted with “ordinary resolutions,” which require a simple majority of the votes of Willis-Ireland’s shareholders cast at a general meeting.

 

Examples of matters requiring special resolutions include:

 

 

Any variation of class or series rights attaching to the issued shares of Willis-Ireland is addressed in the articles of association of Willis-Ireland as well as the Irish Companies Acts and must be in accordance with the articles of association be approved by ordinary resolution of the class or series affected.

 

Under Irish law, shareholders have the right to: (i) receive a copy of the memorandum and articles of association of Willis-Ireland and any act of the Irish Government which alters the memorandum of association of Willis-Ireland; (ii) inspect and obtain copies of the minutes of general meetings and resolutions of Willis-Ireland; (iii) inspect and receive a copy of the register of shareholders, register of directors and secretaries, register of directors’ interests and other statutory registers maintained by Willis-Ireland; (iv) receive copies of balance sheets and directors’ and auditors’ reports which have previously been sent to shareholders prior to an annual general meeting; and (v) receive balance sheets of a subsidiary company of Willis-Ireland which have previously been sent to shareholders prior to an annual general meeting for the preceding 10 years. The auditors of Willis-Ireland will also have the right to inspect all books, records and vouchers of Willis-Ireland. The auditors’ report must be circulated to the shareholders with Willis-Ireland’s financial statements prepared in accordance with Irish law 21 days before the annual general meeting and must be read to the shareholders at Willis-Ireland’s annual general meeting.

 

There are a number of mechanisms for acquiring an Irish public limited company, including:

 

(a) a court-approved scheme of arrangement under the Irish Companies Acts. A scheme of arrangement with shareholders requires a court order from the Irish High Court and the approval of: (i) 75% of the voting shareholders by value; and (ii) 50% in number of the voting shareholders, at a meeting called to approve the scheme;

 

(b) through a tender offer by a third party for all of the shares of Willis-Ireland. Where the holders of 80% or more of Willis-Ireland’s shares have accepted an offer for their shares in Willis-Ireland, the remaining shareholders may be statutorily required to also transfer their shares. If the bidder does not exercise its “squeeze out” right, then the non-accepting shareholders also have a statutory right to require the bidder to acquire their shares on the same terms. If shares of Willis-Ireland were listed on the Irish Stock Exchange or another regulated stock exchange in the EU, this threshold would be increased to 90%; and

 

(c) it is also possible for Willis-Ireland to be acquired by way of a merger with an EU-incorporated public company under the EU Cross-Border Merger Directive 2005/56. Such a merger must be approved by a special resolution. If Willis-Ireland is being merged with another EU public company under the EU Cross-Border Merger Directive 2005/56 and the consideration payable to Willis-Ireland’s shareholders is not all in cash, Willis-Ireland’s shareholders may be entitled to require their shares to be acquired at fair value.

 

Under Irish law, there is no requirement for a company’s shareholders to approve a sale, lease or exchange of all or substantially all of a company’s property and assets.

 

Generally, under Irish law, shareholders of an Irish company do not have dissenters or appraisal rights. Under the European Communities (Cross-Border Mergers) Regulations 2008 governing the merger of an Irish public limited company and a company incorporated in the European Economic Area, a shareholder (i) who voted against the special resolution approving the merger or (ii) of a company in which 90% of the shares is held by the other company the party to the merger of the transferor company has the right to request that the company acquire its shares for cash.

 

Under the Irish Companies Acts, there is a notification requirement for shareholders who acquire or cease to be interested in five percent of the shares of an Irish public limited company. A shareholder of Willis-Ireland must therefore make such a notification to Willis-Ireland if as a result of a transaction the shareholder will be interested in five percent or more of the shares of Willis-Ireland; or if as a result of a

transaction a shareholder who was interested in more than five percent of the shares of Willis-Ireland ceases to be so interested. Where a shareholder is interested in more than five percent of the shares of Willis-Ireland, any alteration of his or her interest that brings his or her total holding through the nearest whole percentage number, whether an increase or a reduction, must be notified to Willis-Ireland. The relevant percentage figure is calculated by reference to the aggregate nominal value of the shares in which the shareholder is interested as a proportion of the entire nominal value of Willis-Ireland’s share capital. Where the percentage level of the shareholder’s interest does not amount to a whole percentage this figure may be rounded down to the next whole number. All such disclosures should be notified to Willis-Ireland within five business days of the transaction or alteration of the shareholder’s interests that gave rise to the requirement to notify. Where a person fails to comply with the notification requirements described above no right or interest of any kind whatsoever in respect of any shares in Willis-Ireland concerned, held by such person, shall be enforceable by such person, whether directly or indirectly, by action or legal proceeding. However, such person may apply to the court to have the rights attaching to the shares concerned reinstated.

 

In addition to the above disclosure requirement, Willis-Ireland, under the Irish Companies Acts, may by notice in writing require a person whom Willis-Ireland knows or has reasonable cause to believe to be, or at any time during the three years immediately preceding the date on which such notice is issued, to have been interested in shares comprised in Willis-Ireland’s relevant share capital to: (i) indicate whether or not it is the case; and (ii) where such person holds or has during that time held an interest in the shares of Willis-Ireland, to give such further information as may be required by Willis-Ireland including particulars of such person’s own past or present interests in shares of Willis-Ireland. Any information given in response to the notice is required to be given in writing within such reasonable time as may be specified in the notice.

 

Where such a notice is served by Willis-Ireland on a person who is or was interested in shares of Willis-Ireland and that person fails to give Willis-Ireland any information required within the reasonable time specified, Willis-Ireland may apply to court for an order directing that the affected shares be subject to certain restrictions. Under the Irish Companies Acts, the restrictions that may be placed on the shares by the court are as follows:

 

(a) any transfer of those shares, or in the case of unissued shares any transfer of the right to be issued with shares and any issue of shares, shall be void;

 

(b) no voting rights shall be exercisable in respect of those shares;

 

(c) no further shares shall be issued in right of those shares or in pursuance of any offer made to the holder of those shares; and

 

(d) no payment shall be made of any sums due from Willis-Ireland on those shares, whether in respect of capital or otherwise.

 

Where the shares in Willis-Ireland are subject to these restrictions, the court may order the shares to be sold and may also direct that the shares shall cease to be subject to these restrictions.

 

Irish Takeover Rules and Substantial Acquisition Rules

 

A transaction by virtue of which a third party is seeking to acquire 30% or more of the voting rights of Willis-Ireland will be governed by the Irish Takeover Panel Act 1997 and the Irish Takeover Rules made thereunder and will be regulated by the Irish Takeover Panel. The “General Principles” of the Irish Takeover Rules and certain important aspects of the Irish Takeover Rules are described below.

General Principles

 

The Irish Takeover Rules are built on the following General Principles which will apply to any transaction regulated by the Irish Takeover Panel:

 

 

Mandatory Bid

 

If an acquisition of shares were to increase the aggregate holding of an acquirer and its concert parties to shares carrying 30% or more of the voting rights in Willis-Ireland, the acquirer and, depending on the circumstances, its concert parties would be required (except with the consent of the Irish Takeover Panel) to make a cash offer for the remaining outstanding shares at a price not less than the highest price paid for the shares by the acquirer or its concert parties during the previous 12 months. This requirement would also be triggered by an acquisition of shares by a person holding (together with its concert parties) shares carrying between 30% and 50% of the voting rights in Willis-Ireland if the effect of such acquisition were to increase the percentage of the voting rights held by that person (together with its concert parties) by 0.05% within a twelve-month period. A single holder (that is, a holder excluding any parties acting in concert with the holder) holding more than 50% of the voting rights of a company is not subject to this rule.

 

Voluntary Bid; Requirements to Make a Cash Offer and Minimum Price Requirements

 

A voluntary offer is an offer that is not a mandatory offer. If a bidder or any of its concert parties acquire ordinary shares of Willis-Ireland within the period of three months prior to the commencement of the offer period, the offer price must be not less than the highest price paid for Willis-Ireland ordinary shares by the bidder or its concert parties during that period. The Irish Takeover Panel has the power to extend the “look back” period to 12 months if the Irish Takeover Panel, having regard to the General Principles, believes it is appropriate to do so.

 

If the bidder or any of its concert parties has acquired ordinary shares of Willis-Ireland (i) during the period of 12 months prior to the commencement of the offer period which represent more than 10% of the total ordinary shares of Willis-Ireland or (ii) at any time after the commencement of the offer period, the offer shall be in cash (or accompanied by a full cash alternative) and the price per Willis-Ireland ordinary share shall be not less than the highest price paid by the bidder or its concert parties during, in the case of (i), the

period of 12 months prior to the commencement of the offer period and, in the case of (ii), the offer period. The Irish Takeover Panel may apply this rule to a bidder who, together with its concert parties, has acquired less than 10% of the total ordinary shares of Willis-Ireland in the 12 month period prior to the commencement of the offer period if the Irish Takeover Panel, having regard to the General Principles, considers it just and proper to do so.

 

An offer period will generally commence from the date of the first announcement of the offer or proposed offer.

 

Substantial Acquisition Rules

 

The Irish Takeover Rules also contain rules governing substantial acquisitions of shares which restrict the speed at which a person may increase his or her holding of shares and rights over shares to an aggregate of between 15% and 30% of the voting rights of Willis-Ireland. Except in certain circumstances, an acquisition or series of acquisitions of shares or rights over shares representing 10% or more of the voting rights of Willis-Ireland is prohibited, if such acquisition(s), when aggregated with shares or rights already held, would result in the acquirer holding 15% or more but less than 30% of the voting rights of Willis-Ireland and such acquisitions are made within a period of seven days. These rules also require accelerated disclosure of acquisitions of shares or rights over shares relating to such holdings.

 

Frustrating Action

 

Under the Irish Takeover Rules, the board of directors of Willis-Ireland is not permitted to take any action which might frustrate an offer for the shares of Willis-Ireland once the board of directors has received an approach which may lead to an offer or has reason to believe an offer is imminent except as noted below. Potentially frustrating actions such as (i) the issue of shares, options or convertible securities, (ii) material disposals, (iii) entering into contracts other than in the ordinary course of business or (iv) any action, other than seeking alternative offers, which may result in frustration of an offer, are prohibited during the course of an offer or at any time during which the board has reason to believe an offer is imminent. Exceptions to this prohibition are available where:

 

(a) the action is approved by Willis-Ireland’s shareholders at a general meeting; or

 

(b) with the consent of the Irish Takeover Panel where:

 

(i) the Irish Takeover Panel is satisfied the action would not constitute a frustrating action;

 

(ii) the holders of 50% of the voting rights state in writing that they approve the proposed action and would vote in favor of it at a general meeting;

 

(iii) in accordance with a contract entered into prior to the announcement of the offer; or

 

(iv) the decision to take such action was made before the announcement of the offer and either has been at least partially implemented or is in the ordinary course of business.

 

For other provisions that could be considered to have an anti-takeover effect, please see above at “— Authorized Share Capital” (regarding issuance of preferred shares), “— Pre-emption Rights, Share Warrants and Share Options” and “— Disclosure of Interests in Shares,” in addition to “— Corporate Governance,” “Comparison of Rights of Shareholders and Powers of the Board of Directors — Election of Directors,” “ — Vacancies on Board of Directors,” “ — Removal of Directors,” “ — Shareholder Consent to Action Without Meeting,” “ — Amendment of Governing Documents” and “ — Director Nominations; Proposals of Shareholders” below.

 

The articles of association of Willis-Ireland allocate authority over the management of Willis-Ireland to the board of directors. The board of directors may then delegate the management of Willis-Ireland to committees (consisting of members of the board or other persons) or executives, but regardless, the directors

will remain responsible, as a matter of Irish law, for the proper management of the affairs of Willis-Ireland. Willis-Ireland will replicate the existing committees that are currently in place for Willis-Bermuda which include an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee. It also is the intention of Willis-Ireland to adopt Willis-Bermuda’s current Corporate Governance Guidelines.

 

The legal and commercial name of Willis-Ireland is Willis Group Holdings public limited company. Willis-Ireland was incorporated in Ireland, as a public limited company on September 24, 2009 with company registration number 475616. Willis-Ireland’s fiscal year ends on December 30 and Willis-Ireland’s registered address is Grand Mill Quay, Barrow Street, Dublin 4, Ireland.

 

Willis-Ireland’s duration will be unlimited. Willis-Ireland may be dissolved and wound up at any time by way of a shareholders’ voluntary winding up or a creditors’ winding up. In the case of a shareholders’ voluntary winding-up, a special resolution of shareholders is required. Willis-Ireland may also be dissolved by way of court order on the application of a creditor, or by the Companies Registration Office as an enforcement measure where Willis-Ireland has failed to file certain returns. The articles of association of Willis-Ireland also provide for a voluntary winding up to be effected by way of a unanimous vote of the shareholders.

 

The rights of the shareholders to a return of Willis-Ireland’s assets on dissolution or winding up, following the settlement of all claims of creditors, may be prescribed in Willis-Ireland’s articles of association or the terms of any preferred shares issued by the directors of Willis-Ireland from time to time. The holders of preferred shares in particular may have the right to priority in a dissolution or winding up of Willis-Ireland. If the articles of association contain no specific provisions in respect of a dissolution or winding up then, subject to the priorities or any creditors, the assets will be distributed to shareholders in proportion to the paid-up nominal value of the shares held. Willis-Ireland’s articles provide that the ordinary shareholders of Willis-Ireland are entitled to participate pro rata in a winding up, but their right to do so may be subject to the rights of any preferred shareholders to participate under the terms of any series or class of preferred shares.

 

Holders of ordinary shares of Willis-Ireland will not have the right to require Willis-Ireland to issue certificates for their shares. Willis-Ireland will only issue uncertificated ordinary shares.

 

We intend to file an application with the NYSE to list the Willis-Ireland ordinary shares that holders of Willis-Bermuda common shares will receive in the Transaction. We expect that, immediately following the Transaction Time, the Willis-Ireland ordinary shares will be listed on the NYSE under the symbol “WSH,” the same symbol under which your Willis-Bermuda common shares are currently listed. We do not plan for Willis-Ireland’s ordinary shares to be listed on the Irish Stock Exchange at the present time.

 

The Willis-Ireland ordinary shares have no sinking fund provisions.

 

The shares to be issued in the Transaction will be duly and validly issued and fully-paid.

 

Willis-Ireland’s share register will be maintained by its transfer agent. Registration in this share register will be determinative of membership in Willis-Ireland. A shareholder of Willis-Ireland who holds shares

beneficially will not be the holder of record of such shares. Instead, the depository (for example, Cede & Co., as nominee for DTC) or other nominee will be the holder of record of such shares. Accordingly, a transfer of shares from a person who holds such shares beneficially to a person who also holds such shares beneficially through a depository or other nominee will not be registered in Willis-Ireland’s official share register, as the depository or other nominee will remain the record holder of such shares.

 

A written instrument of transfer is required under Irish law in order to register on Willis-Ireland’s official share register any transfer of shares (i) from a person who holds such shares directly to any other person, (ii) from a person who holds such shares beneficially to a person who holds such shares directly, or (iii) from a person who holds such shares beneficially to another person who holds such shares beneficially where the transfer involves a change in the depository or other nominee that is the record owner of the transferred shares. An instrument of transfer also is required for a shareholder who directly holds shares to transfer those shares into his or her own broker account (or vice versa). Such instruments of transfer may give rise to Irish stamp duty, which must be paid prior to registration of the transfer on Willis-Ireland’s official Irish share register. However, a shareholder who directly holds shares may transfer those shares into his or her own broker account (or vice versa) without giving rise to Irish stamp duty provided there is no change in the ultimate beneficial ownership of the shares as a result of the transfer and the transfer is not made in contemplation of a sale of the shares.

 

Any transfer of Willis-Ireland shares that is subject to Irish stamp duty will not be registered in the name of the buyer unless an instrument of transfer is duly stamped and provided to our transfer agent. Willis-Ireland’s articles of association allow Willis-Ireland, in its absolute discretion, to create an instrument of transfer and pay (or procure the payment of) any stamp duty payable by a buyer. In the event of any such payment, Willis-Ireland is (on behalf of itself or its affiliates) entitled to (i) seek reimbursement from the buyer or seller (at its discretion), (ii) set-off the amount of the stamp duty against future dividends payable to the buyer or seller (at its discretion), and (iii) claim a lien against the Willis-Ireland shares on which it has paid stamp duty. Parties to a share transfer may assume that any stamp duty arising in respect of a transaction in Willis-Ireland shares has been paid unless one or both of such parties is otherwise notified by us.

 

Willis-Ireland’s articles of association as they will be in effect after the Transaction delegate to Willis-Ireland’s Secretary the authority to execute an instrument of transfer on behalf of a transferring party.

 

In order to help ensure that the official share register is regularly updated to reflect trading of Willis-Ireland shares occurring through normal electronic systems, we intend to regularly produce any required instruments of transfer in connection with any transactions for which we pay stamp duty (subject to the reimbursement and set-off rights described above). In the event that we notify one or both of the parties to a share transfer that we believe stamp duty is required to be paid in connection with such transfer and that we will not pay such stamp duty, such parties may either themselves arrange for the execution of the required instrument of transfer (and may request a form of instrument of transfer from Willis-Ireland for this purpose) or request that Willis-Ireland execute an instrument of transfer on behalf of the transferring party in a form determined by Willis-Ireland. In either event, if the parties to the share transfer have the instrument of transfer duly stamped (to the extent required) and then provide it to Willis-Ireland’s transfer agent, the buyer will be registered as the legal owner of the relevant shares on Willis-Ireland’s official Irish share register (subject to the matters described below).

 

If Willis-Bermuda is under a contractual obligation to register or to refuse to register the transfer of a share to any person, the board shall act in accordance with such obligation and register or refuse to register the transfer of a share to such person, whether or not it is a fully-paid share or a share on which Willis-Bermuda has a lien. Subject to the previous sentence, the directors of Willis-Ireland have general discretion to decline to register an instrument of transfer of a share whether or not it is a fully-paid share or a share on which Willis-Bermuda has a lien.

 

The registration of transfers may be suspended by the directors at such times and for such period, not exceeding in the whole 30 days in each year, as the directors may from time to time determine.

 

Your rights as a common shareholder of Willis-Bermuda and the relative powers of Willis-Bermuda’s board of directors are governed by Bermuda law and Willis-Bermuda’s memorandum of association and bye-laws. After the Transaction, you will become a shareholder of Willis-Ireland, and your rights and the relative powers of Willis-Ireland’s board of directors will be governed by Irish law and Willis-Ireland’s memorandum and articles of association as they will be in effect after the Transaction.

 

Many of the principal attributes of Willis-Bermuda’s common shares and Willis-Ireland’s ordinary shares will be similar. However, there are differences between what your rights are under Bermuda law and what they will be after the Transaction under Irish law. In addition, there are differences between Willis-Bermuda’s memorandum of association and bye-laws and Willis-Ireland’s memorandum and articles of association as they will be in effect after the Transaction, especially as it relates to changes (i) that are required by Irish law (i.e., certain provisions of the Willis-Bermuda bye-laws were not replicated in the Willis-Ireland articles of association because Irish law would not permit such replication, and certain provisions were included in the Willis-Ireland articles of association although they were not in the Willis-Bermuda bye-laws because Irish law requires such provisions to be included in the articles of association of an Irish public limited company), or (ii) that are necessary in order to preserve the current rights of shareholders and powers of the board of directors of Willis following the Transaction.

 

The following discussion is a summary of material changes in your rights resulting from the Transaction. This summary does not cover all of the differences between Irish law and Bermuda law affecting companies and their shareholders or all the differences between Willis-Bermuda’s memorandum of association and bye-laws and Willis-Ireland’s memorandum and articles of association. This summary is subject to the complete text of the relevant provisions of the Irish Companies Acts, the Bermuda Companies Act, Willis-Bermuda’s memorandum of association and bye-laws and Willis-Ireland’s memorandum and articles of association as they will be in effect after the Transaction. We encourage you to read those laws and documents carefully.

 

The form of Willis-Ireland’s memorandum and articles of association substantially as they will be in effect after the Transaction are attached as Annex B to this proxy statement. For information as to how you can obtain Willis-Bermuda’s memorandum of association and bye-laws, please see “Where You Can Find More Information.” Except where otherwise indicated, the discussion of Willis-Ireland below reflects Willis-Ireland’s memorandum and articles of association as those documents will be in effect upon completion of the Transaction.

 

COMPARISON OF CORPORATE GOVERNANCE PROVISIONS