- 14 -
Organization and Operation of MFE and MFE N.V.
In 1970, Mast Industries, Inc. (MII) organized Mast
Industries (Far East) Ltd. (MFE) as a Hong Kong corporation. At
all times here pertinent, MFE had its headquarters and principal
place of business in Hong Kong. MFE is a “controlled foreign
corporation” (of petitioner) within the meaning of section
957(a).
MFE is a contract manufacturer for petitioner. It operates
throughout Asia, manufacturing or contracting for the manufacture
of garments to be sold by petitioner's stores.
MFE declared no significant dividends from the early 1980s
through 1993, resulting in accumulated earnings and profits in
excess of $330 million at the end of 1993.
On January 12, 1993, the directors of MFE resolved to
organize and capitalize MFE N.V. Among the stated purposes were:
“engaging in group financing activities and providing for a means
of investing and reinvesting liquid assets and funds.” The
directors of MFE further resolved to make a capital contribution
to MFE N.V. of $175 million. MFE N.V. had no employees during
January 1993. On January 28, 1993, MFE transferred $175 million
by wire to MFE N.V. That $175 million was used to purchase the
MFE N.V. CDs.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011