Pre-Effective Pricing Amendment
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 487 Form S-6 to Effective Amendment 206± 869K
2: EX-99 Memorandum of Changes 1 6K
4: EX-99.2A Opinion Regarding Legality 2± 8K
3: EX-99.A1 Trust Agreement 49± 180K
7: EX-99.C2 Consent of Evaluator 1 6K
5: EX-99.C4A Opinion Regarding Federal Tax Status 4± 17K
6: EX-99.C4B Opinion Regarding New York Tax Status 2± 9K
8: EX-99.C4C Opinion Regarding U.K. Tax Status 6± 20K
EX-99.C4C — Opinion Regarding U.K. Tax Status
LINKLATERS LLP
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LONDON EC2Y 8HQ
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katie.price@linklaters.com
First Trust Portfolios L.P.
120 East Liberty Drive
Suite 400
Wheaton, IL 60187
31 December 2008
Our Ref Katie Price
Dear Sirs
GLOBAL TARGET 15 PORTFOLIO 1ST QUARTER 2009 SERIES FT 1900
1. We have acted as special United Kingdom (UK) taxation advisers
in connection with the issue of units (Units) in the Global
Target 15 Portfolio 1st Quarter 2009 Series FT 1900 (the
Trust) on the basis of directions given to us by Chapman and
Cutler LLP, counsel to yourselves.
2. This opinion is limited to UK taxation law as applied in
practice on the date hereof by HM Revenue & Customs (HMRC) and
is given on the basis that it will be governed by and construed
in accordance with English law as enacted.
3. For the purpose of this opinion, the only documentation which we
have examined is a draft prospectus for FT 1900 dated 2 October
2008 (the Prospectus) comprising the Trust and the 1st Quarter
2009 Series of 18 further unit trusts (together the Funds) and
a draft information supplement dated 23 December 2008 (the
Information Supplement) relating to the same. We have been
advised by Chapman and Cutler LLP that there will be no material
differences between the Prospectus and the final prospectus and
the Information Supplement and the final information supplement,
in each case to be issued for the Funds and to be dated 31
December 2008. Terms defined in the Prospectus bear the same
meaning herein.
4. We have assumed for the purposes of this opinion that:
4.1 a holder of Units (Unit holder) is, under the terms of
the Indenture governing the Trust, entitled to have paid to
him (subject to a deduction for annual expenses, including
total applicable custodial fees and certain other costs
associated with foreign trading and annual Trustees,
Sponsors, portfolio supervisory, evaluation and
administrative fees and expenses) his pro rata share of all
the income which arises to the Trust from the investments
in the Trust, and that, under the governing law of the
Indenture, this is a right as against the assets of the
Trust rather than a right enforceable in damages only
against the Trustee;
4.2 for taxation purposes the Trustee is not a UK resident and
is a US resident;
4.3 the general administration of the Trust will be carried out
only in the US;
4.4 no Units are registered in a register kept in the UK by or
on behalf of the Trustee;
4.5 the Trust is not treated as a corporation for US tax
purposes;
4.6 the structure, including the investment strategy of the
Trust, will be substantially the same as that set out in
the Prospectus; and
4.7 each Unit holder is neither resident nor ordinarily
resident in the UK (and has not been resident or ordinarily
resident in the UK), nor is any such Unit holder carrying
on a trade in the UK through a branch or agent in the UK
or, in the case of a body corporate, through a permanent
establishment in the UK.
5. We understand that the portfolio of the Trust will consist of
the common stock of the five companies with the lowest per share
stock price of the ten companies in each of the Dow Jones
Industrial Average, the Financial Times Industrial Ordinary
Share Index and the Hang Seng Index respectively having the
highest dividend yield in the respective index as at the close
of business on the business day prior to the date of the final
prospectus to be issued for the Funds in respect of the stocks
comprised in the Dow Jones Industrial Average and two business
days prior to the date of the final prospectus to be issued for
the Funds in respect of the stocks comprised in the Financial
Times Industrial Ordinary Share Index and the Hang Seng Index;
and that the Trust will hold such common stocks for a period of
approximately fifteen months, after which time the Trust will
terminate and the stocks will be sold. We address UK tax issues
in relation only to the common stocks of companies in the
Financial Times Industrial Ordinary Share Index comprised in the
portfolio of the Trust (the UK Equities).
6. A new double taxation treaty between the US and the UK (the New
Treaty) took effect from 31 March 2003. Under the terms of the
previous double taxation treaty between the US and the UK, where
a dividend which carried a tax credit to which an individual
resident in the UK was entitled under UK law was paid by a UK
resident company to a qualifying US resident, there were
circumstances whereby that qualifying US resident could be
entitled, on making a claim to the HMRC, to a payment of part of
that tax credit. Under the terms of the New Treaty, a
qualifying US resident will not be entitled to any payment of a
tax credit in respect of dividends paid on UK equities.
7. The Trust may be held to be trading in stock rather than holding
stock for investment purposes by virtue, inter alia, of the
length of the time for which the stock is held. If the stock is
purchased and sold through a UK resident agent, then, if the
Trust is held to be trading in such stock, profits made on its
subsequent disposal may, subject to 8 below, be liable to UK tax
on income.
8. Under current law, the Trusts liability to UK tax on such
profits will be limited to the amount of tax (if any) withheld
from the Trusts income provided such profits derive from
transactions carried out on behalf of the Trust by a UK agent
where the following conditions are satisfied:
8.1 the transactions from which the profits are derived are
investment transactions. The Finance Bill 2008, published
on 27 March 2008, contains provision to enable HMRC to
designate transactions as investment transactions for
this purpose. HMRC will have such power from Royal Assent
(expected in June/July 2008) and we understand that a list
of investment transactions will be published on HMRCs
website. We would expect the activities of the UK agent in
relation to the Trust continue to qualify as investment
activities for these purposes;
8.2 the agent carries on a business of providing investment
management services;
8.3 the transactions are carried out by the agent on behalf of
the Trust in the ordinary course of that business;
8.4 the remuneration received by the agent is at a rate which
is not less than that which is customary for the type of
business concerned;
8.5 the agent acts for the Trust in an independent capacity.
The agent will act in an independent capacity if the
relationship between the agent and the Trust, taking
account of its legal, financial and commercial
characteristics, is one which would exist between
independent persons dealing at arms length. This will be
regarded as the case by the HMRC if, for example, the
provision of services by the agent to the Trust (and any
connected person) does not form a substantial part of the
agents business (namely where it does not exceed 70 per
cent. of the agents business, by reference to fees or some
other measure if appropriate).
In addition, this condition will be regarded as satisfied
by the HMRC if interests in the Trust, a collective fund,
are freely marketed;
8.6 the agent (and persons connected with the agent) do not
have a beneficial interest in more than 20 per cent. of the
Trust's income derived from the investment transactions
(excluding reasonable management fees paid to the agent);
and
8.7 the agent acts in no other capacity in the UK for the
Trust.
Further, where stock is purchased and sold by the Trust through
a UK broker in the ordinary course of a brokerage business
carried on in the UK by that broker, the remuneration which the
broker receives for the transactions is at a rate which is no
less than that which is customary for that class of business and
the broker acts in no other capacity for the Trust in the UK,
profits arising from transactions carried out through that
broker will not be liable to UK tax.
Accordingly, provided the conditions are satisfied, unless a
Unit holder, being neither resident nor ordinarily resident in
the UK, has a presence in the UK (other than through an agent or
a broker acting in the manner described above) in connection
with which the Units are held, the Unit holder will not be
charged to UK tax on such profits.
9. It should be noted that the UK tax liability of non-resident
companies is determined by reference to a "permanent
establishment" rather than a "branch or agency." Should the
Trust comprise a company for UK tax purposes, subject to the
conditions in paragraph 8 above, its agent will not be
considered the permanent establishment of the Trust and,
accordingly, the Trust will not be liable to UK tax on income
save as described in paragraph 8. Where the Trust is not a
company for UK tax purposes, the preceding analysis in paragraph
8 applies.
10. If the Trustee has a presence in the UK then it is technically
possible that income or gains of the Trust could be assessed
upon the Trustee, whether arising from securities (which
includes stock) or from dealings in those securities. We
understand that the Trustee has a permanent establishment in the
UK. However, we consider that any such risk should be remote
provided that the UK permanent establishment of the Trustee will
not have any involvement with establishing or managing the Trust
or its assets nor derive income or gains from the Trust or its
assets.
11. Where the Trustee makes capital gains on the disposal of the UK
Equities, a Unit holder will not be liable to UK capital gains
tax on those gains.
12. UK stamp duty will generally be payable at the rate of 0.5 per
cent. of the consideration (rounded up to the nearest multiple
of 5) in respect of a transfer of the shares in UK incorporated
companies or in respect of transfers to be effected on a UK
share register. UK stamp duty reserve tax will generally be
payable on the entering into of an unconditional agreement to
transfer such shares, or on a conditional agreement to transfer
such shares becoming unconditional, at the rate of 0.5 per cent.
of the consideration to be provided. A liability to stamp duty
reserve tax will generally be cancelled where stamp duty is paid
on transfer. The tax will generally be paid by the purchaser of
such shares.
No UK stamp duty or stamp duty reserve tax should be payable, by
the Trust or a Unit holder, on an agreement to transfer Units
nor on a transfer of Units.
13. It should be noted that on 1 July 2005 the EU Savings Directive
came into effect. The Directive concerns the taxation of savings
income and requires Member States to provide to the tax
authorities of the other Member States details of payments of
interest and other similar income paid by a person to an
individual in another Member State. Dividend payments are not
regarded as "savings income" for these purposes and as none of
the unit holders nor the Trustees will be resident in any Member
State, the EU Savings Directive should not apply to the Trust.
14. In our opinion the taxation paragraphs contained on page 80 of
the Prospectus under the heading "United Kingdom Taxation," as
governed by the general words appearing immediately under that
heading, which relate to the Trust and which are to be contained
in the final prospectus to be issued for the Funds, represent a
fair summary of material UK taxation consequences for a US
resident holder of Units in the Trust.
15. This opinion is addressed to you on the understanding that you
(and only you) may rely upon it in connection with the issue and
sale of the Units (and for no other purpose).
This opinion may not be quoted or referred to in any public
document or filed with any governmental agency or other person
without our written consent. We understand that it is intended
to produce a copy of this opinion to the Trustee. We consent to
the provision of this opinion to the Trustee and confirm that,
insofar as this opinion relates to the UK tax consequences for
the Trust and US persons holding Units in the Trust, the Trustee
may similarly rely upon it in connection with the issue and sale
of Units. However you should note that this opinion does not
consider the UK tax consequences for the Trustee arising from
its duties in respect of the Trust under the Indenture.
We consent further to the reference which is to be made in the
prospectus to be issued for the Trust to our opinion as to the
UK tax consequences to US persons holding Units in the Trust.
Yours faithfully
Linklaters LLP
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