MIAMI -- The AFL-CIO, which owned 400 Carnival Corp. shares at the end of fiscal year 2002, will ask Carnival Corp. shareholders to vote to change the company's jurisdiction of incorporation from Panama to the U.S.

The union federation's proposal will be presented at Carnival's annual meeting in Southampton, England, on June 23.

In a May 14 Carnival Corp. filing, the AFL-CIO said reincorporating in the U.S. would "improve ... corporate governance and reassure its investors that they enjoy the necessary legal protections."

The union pointed specifically to recent actions by Tyco Int'l and Global Crossing, which switched their jurisdiction of incorporations to offshore locations, which it said "brought significant attention to the lack of investor protection in these jurisdictions ... [and] have been strongly criticized by elected officials."

The Carnival board of directors recommended shareholders vote against the proposal and stated that a change in incorporation would result in a "very significant decrease in ... after-tax income."

Cruise lines, with the exception of niche operators like Cruise West and the now-defunct American Classic Voyages, are incorporated in foreign countries like Panama, Liberia and Bermuda.

According to U.S. tax laws, companies in qualifying jurisdictions are exempt from federal income tax on certain U.S. source income derived from the international operation of ships, Carnival said in the filing.


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