Benefits of Making Business in Kiribati | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN KIRIBATI WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN KIRIBATI WWW.MERGERSCORP.COM

4. Country Overview Kiribati, officially Republic of Kiribati, island country in the central Pacific Ocean. The 33 islands of Kiribati, of which only 20 are inhabited, are scattered over a vast area of ocean. Kiribati extends 1,800 miles (2,900 km) eastward from the 16 Gilbert Islands, where the population is concentrated, to the Line Islands, of which 3 are inhabited. In between lie the islands of the Phoenix group, which have no permanent population. Total land area is 313 square miles (811 square km). The capital and government centres are at Ambo, Bairiki, and Betio, all islets of South Tarawa in the northern Gilberts. Kiribati and Tuvalu were formerly joined as the Gilbert and Ellice Islands Colony.

5. Executive Summary Kiribati is for travellers – those who have a passion for exploring and discovering, people who like an adventure off the tourist trail to places where few have been before, and people who want to understand a country – not just see it. Situated in the equatorial pacific, in the east Kiribati offers world class fishing (both game and bone fishing) from Kiritimati Island. In the west is the Gilbert Group of islands, which offer amazing and unique cultural experiences. The country’s capital of Tarawa has historic sites and artefacts where one of the bloodiest battles of World War II , the Battle of Tarawa.

6. Introduction – Doing business in Kiribati Kiribati is ranked 164 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Kiribati deteriorated to 164 in 2019 from 158 in 2018. Ease of Doing Business in Kiribati averaged 129 from 2008 until 2019, reaching an all time high of 164 in 2019 and a record low of 79 in 2009. source: World Bank Kiribati, in common with other small island atoll states, faces significant challenges because of its remoteness, lack of scale and vulnerability to external shocks and environmental stress. Internal and external remoteness as well as weakness in the business climate has kept the private sector small. This constrains economic growth and puts a strain on public finances. .

7. Conducting business in Kiribati The Business Regulatory Centre at MCIC administers certain types of legislation, including the Registration of Business Names Act (1988), Companies Ordinance (Cap10A, 1979), Moneylenders’ Act (1988), and Foreign Investment Act (1985). Businesses in Kiribati can operate as the following legal entities: Sole Trader, Partnership, Private Limited Liability Company, or Cooperative (see Box 6 for a definition of each). It is essential to have good local knowledge and contacts before starting work in Kiribati. Someone on the ground who can help with networks and follow up is very useful to keep things moving – this includes assisting with the importation of equipment and supplies (because of difficulties with freight).

8. Taxation in Kiribati There is personal income tax , which is set at 25 percent of gross income for the first US$36,000 and at 35 percent for amounts in excess of this. Normal company tax is based on a flat rate of 25 percent of net profit for the first US$36,000 and 35 percent for amounts above this. Tax on dividends paid to overseas investors is 30 percent, except for dividends paid to an Australian resident, where the rate is 15 percent.

9. Trade Kiribati is the 194th largest export economy in the world. In 2017, Kiribati exported $51.5M and imported $92.4M, resulting in a negative trade balance of $40.9M. In 2017 the GDP of Kiribati was $185M and its GDP per capita was $2.18k. The top exports of Kiribati are Non-fillet Frozen Fish ($31.9M), Copra ($7.52M), Fish Fillets ($6.47M), Coconut Oil ($2.02M) and Live Fish ($1.27M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($10.3M), Other Prepared Meat ($3.65M), Processed Tobacco ($3.16M), Iron Structures ($2.58M) and Netting ($2.41M).

10. Banking in Kiribati The ANZ Bank (Australia and New Zealand Banking Group Ltd) is the only International banking company in Kiribati with operating branches on South Tarawa and Kiritimati Island. On South Tarawa, ATMs are accessible at Betio, Bairiki, Bikenibeu ANZ Bank branches and at the gate of Tungaru Central Hospital in Nawerewere. On Kiritimati Island you can access the ATM at Ronton. An amount of $5000 cash is permitted to be carried by a visitor when traveling to Kiribati. Major foreign currencies and travelers cheques can be exchanged at the ANZ Bank. Credit Cards: VISA & Master Cards are currently the only major credit cards accepted in Kiribati but there is limited acceptance where there are no credit card facilities.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com