Shareholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure

21.       Shareholders' equity

Authorized common stock

The authorized stock of Shire plc as at December 31, 2012 was 1,000,000,000 ordinary shares and 2subscriberordinary shares.

Dividends

Under Jersey law, Shire plc is entitled to make payments of dividends from its accumulated profits and other distributable reserves. At December 31, 2012 Shire plc's distributable reserves were approximately $9.5 billion.

Treasury stock

The Company records the purchase of its own shares by the EBT and under share buy-back program as a reduction of shareholders' equity based on the price paid for the shares. At December 31, 2012, the EBT held 3.8 million ordinary shares (2011: 4.6 million; 2010: 4.4 million) and 1.1 million ADSs (2011: 2.4 million; 2010: 3.2 million) and shares held under share buy-back program were 2.7 million ordinary shares (2011: nil; 2010: nil) and 0.3 million ADSs (2011: nil; 2010: nil). During the year to December 31, 2012 a total of 4.5 million(2011: 2.7 million; 2010: 0.02 million) ordinary shares and 0.9 million(2011: 0.8million; 2009: 0.02 million) ADSs had been purchased for total consideration of $205.8 million (2011: $151.8 million; 2010: $1.7 million), including stamp duty and broker commission.

Share buy-back Program

During the year the Company has commenced a share buy-back program, for the purpose of returning funds to shareholders, of up to $500 million through both direct purchases of ordinary shares and through the purchase of ordinary shares underlying American Depositary Receipts (“ADRs”). The purchases have been made through independent third parties who maketheir trading decisions independently of, and uninfluenced by the Company. The independence of the third parties enables the Company to continue to purchase ordinary shares (including ordinary shares underlying ADRs) during close periods and other prohibited periods, should they arise.

During the year ending December 31, 2012 the Company made on-market repurchases totaling 3,631,571 Ordinary shares at a cost of $106.5 million (including transaction costs). This represents 0.65% of the issued share capital of the Company as at the year end. The program covers purchases of Ordinary Shares for cancellation or to be held as treasury shares, in accordance with the authority renewed by shareholders at the Company's Annual General Meeting (“AGM”) on April 24, 2012, when the Company was authorized to make market purchases of up to 56,253,208 of its own Ordinary Shares. That authority will expire at the 2013 AGM and in accordance with usual practice a resolution to renew it for another year will be proposed.The shares purchased to date are held as treasury shares.

Income Access Share Arrangements (“IAS Trust”)

Shire has put into place income access arrangements which enable ordinary shareholders, other than ADS holders, to choose whether they receive their dividends from Shire, a company tax resident in the Republic of Ireland, or from Shire Biopharmaceutical Holdings (“Old Shire”), a Shire group company tax resident in the UK.

Old Shire has issued one income access share to the Income Access Trust (the “IAS Trust”) which is held by the trustee of the IAS Trust (the “Trustee”). The mechanics of the arrangements are as follows:

• If a dividend is announced or declared by Shire plc on its ordinary shares, an amount is paid by Old Shire by way of a dividend on the income access share to the Trustee, and such amount is paid by the Trustee to ordinary shareholders who have elected (or are deemed to have elected) to receive dividends under these arrangements. The dividend which would otherwise be payable by Shire plc to its ordinary shareholders will be reduced by an amount equal to the amount paid to its ordinary shareholders by the Trustee.
• If the dividend paid on the income access share and on-paid by the Trustee to ordinary shareholders is less than the total amount of the dividend announced or declared by Shire plc on its ordinary shares, Shire plc will be obliged to pay a dividend on the relevant ordinary shares equivalent to the amount of the shortfall. In such a case, any dividend paid on the ordinary shares will generally be subject to Irish withholding tax at the rate of 20% or such lower rate as may be applicable under exemptions from withholding tax contained in Irish law.
• An ordinary shareholder is entitled to make an income access share election such that she/he will receive his/her dividends (which would otherwise be payable by Shire plc) under these arrangements from Old Shire.
• An ordinary shareholder who holds 25,000 or fewer ordinary shares at the first record date after she/he first becomes an ordinary shareholder, and who does not make a contrary election, will be deemed to have made an election (pursuant to the Shire plc articles of association) such that she/he will receive his/her dividends under these arrangements from Old Shire.

The ADS Depositary has made an election on behalf of all holders of ADSs such that they will receive dividends from Old Shire under the income access share arrangements. Dividends paid by Old Shire under the income access share arrangements will not, under current legislation, be subject to any UK or Irish withholding taxes. If a holder of ADSs does not wish to receive dividends from Old Shire under the income access share arrangements, she/he must withdraw his/her ordinary shares from the ADS program prior to the dividend record date set by the Depositary and request delivery of the Shire plc ordinary shares. This will enable him/her to receive dividends from Shire plc (if necessary, by making an election to that effect).

It is the expectation, although there can be no certainty, that Old Shire will distribute dividends on the income access share to the Trustee for the benefit of all ordinary shareholders who make (or are deemed to make) an income access share election in an amount equal to what would have been such ordinary shareholders' entitlement to dividends from Shire plc in the absence of the income access share election. If any dividend paid on the income access share and or paid to the ordinary shareholders is less than such ordinary shareholders' entitlement to dividends from Shire plc in the absence of the income access share election, the dividend on the income access share will be allocated pro rata among the ordinary shareholders and Shire plc will pay the balance to these ordinary shareholders by way of dividend. In such circumstances, there will be no grossing up by Shire plc in respect of, and Old Shire and Shire plc will not compensate those ordinary shareholders for, any adverse consequences including any Irish withholding tax consequences.

Shire will be able to suspend or terminate these arrangements at any time, in which case the full Shire plc dividend will be paid directly by Shire plc to those ordinary shareholders (including the Depositary) who have made (or are deemed to have made) an income access share election. In such circumstances, there will be no grossing up by Shire plc in respect of, and Old Shire and Shire plc will not compensate those ordinary shareholders for, any adverse consequences including any Irish withholding tax consequences.

In the year ended December 31, 2012Old Shire paid dividends totaling $81.5 million (2011: $67.6 million; 2010: $58.3 million) on the income access share to the Trustee in an amount equal to the dividend Shire ordinary shareholders would have received from Shire.