Message-ID: <20542632.1075859838620.JavaMail.evans@thyme> Date: Wed, 2 May 2001 04:19:00 -0700 (PDT) From: stephen.douglas@enron.com To: mark.haedicke@enron.com Subject: RE: Canadian Retail Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Stephen H Douglas X-To: Mark E Haedicke X-cc: X-bcc: X-Folder: \Mark_Haedicke_Jun2001\Notes Folders\Notes inbox X-Origin: Haedicke-M X-FileName: mhaedic.nsf If consenting to corporate action and doing so habitually then yes. -----Original Message----- From: Haedicke, Mark Sent: Tuesday, May 01, 2001 6:55 PM To: Douglas, Stephen H. Subject: RE: Canadian Retail Is signing a unanimous consent in Houston an issue? Mark Stephen H Douglas/ENRON@enronXgate 05/01/2001 05:08 PM To: Peter Keohane/CAL/ECT@ECT, Mark E Haedicke/HOU/ECT@ECT cc: Vicki Sharp/HOU/EES@EES Subject: RE: Canadian Retail Mark Powell's recollection of the reasoning behind having an all-Canadian officer and director slate is correct and we generally like to isolate all of the business decision makers of a foreign subsidiary in the country where the subsidiary is incorporated. The concern is that having officers and directors located outside of the country of incorporation of the subsidiary could provide a basis for a country other than the one where the subsidiary is incorporated to assert taxing jurisdiction (the PE issue). That said, I appreciate the control concern and so long as the authority of the non-Canadian Director is never exercised outside of Canada (of course, this presents a proof issue) having a non-Canadian Director is permissible (from a tax perspective, that is). Let me know whether such a restriction would be compatible with the expressed control concern. Steve. (x30938) -----Original Message----- From: Keohane, Peter Sent: Tuesday, May 01, 2001 12:08 PM To: Haedicke, Mark Cc: Douglas, Stephen H.; Sharp, Vicki Subject: Re: Canadian Retail I don't think there is a bright line, so that should not be a problem per se. The idea was to make it as "Canadian" as possible for tax purposes. I would of course defer to Steve. From: Mark E Haedicke on 05/01/2001 11:15 AM CDT To: Peter Keohane/CAL/ECT@ECT, Stephen H Douglas/Enron@EnronXGate cc: Vicki Sharp/HOU/EES@EES Subject: Canadian Retail Steve and Peter: From a control point of view, we should have at least one director based in Houston. Does that present any significant tax risk? Let us know. Mark Haedicke ----- Forwarded by Mark E Haedicke/HOU/ECT on 05/01/2001 11:11 AM ----- Mark Powell 05/01/2001 10:24 AM To: David W Delainey/HOU/EES@EES, Rob Milnthorp/CAL/ECT@ECT, James Derrick/Enron@EnronXGate, Mark E Haedicke/HOU/ECT@ECT, Vicki Sharp/HOU/EES@EES, Peter Keohane/CAL/ECT@ECT cc: Beth Apke/HOU/EES@EES, Morris Richard Clark/Enron@EnronXGate, Andrew Wu/HOU/EES@EES Subject: Canadian Retail A. Corporate Structure - To facilitate the meshing of EES' existing Canadian affiliate (Enron Energy Services Canada Co. Ltd. ("EES Canada")) and Enron Canada Corp.'s mass market retail venture (Enron Direct Limited Partnership ("Enron Direct Canada")), I propose a simple corporate structure as follows: Enron Direct Canada's business will be set up as a subsidiary of EES Canada. This will involve: a. a general conveyance of the assets of Enron Direct Canada to its general partner, Enron Direct Canada Corp.; b. the sale of the shares of Enron Direct Canada Corp. from Enron Canada Corp. to EES Canada; and c. a services agreement whereby Enron Canada Corp. provides key services to Enron Direct Canada. By setting up Enron Direct Canada as a distinct subsidiary of EES Canada, both entities will continue to operate as they do today. As such, (i) Enron Direct Canada will continue to be operated by the staff currently in place in Calgary, but within the EES corporate structure, and (ii) EES Canada's existing business will continue to be operated as it is currently. B. Governance - I understand from Peter that a few years back, it was decided, for corporate law and, more importantly, tax-related "permanent establishment" issues, that all directors and officers of Enron Canada Corp. would be Canadian-resident employees of Enron Canada Corp. Accordingly, Enron Canada Corp. was re-organized with a nominee board of directors now consisting of Rob (as the senior Canadian commercial employee) and Peter (as the senior Canadian legal employee) with officers being the Vice-Presidents or Managing Directors in Canada responsible for the various commercial or commercial-support groups. Following this model, Rob Milnthorp and an employee from the legal department would appear to be the appropriate directors of the EES' Canadian subsidiaries. In the short term, the Iegal employee/designee would be me; however, the new lawyer hired to work for Enron Direct Canada would assume the role. With respect to the officers, no changes are required with respect to Enron Direct Canada. With respect to EES Canada, I propose that Rob be appointed as the Chairman, President and CEO and I be appointed as Secretary for the interim. Unless I hear otherwise, I will proceed on the basis of these proposals. Regards, Mark Powell