Benefits of Making Business in Nauru | Buy & Sell Business

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

4. Country Overview Nauru, island country in the southwestern Pacific Ocean. It consists of a raised coral island located in southeastern Micronesia, 25 miles (40 km) south of the Equator. The island is about 800 miles (1,300 km) northeast of the Solomon Islands; its closest neighbour is the island of Banaba, in Kiribati, some 200 miles (300 km) to the east. Nauru has no official capital, but government offices are located in the district of Yaren. Nauru is a speck in the Pacific about 3,000 km (1,800 miles) northeast of Australia with 10,000 citizens and little economy since the depletion of its rich phosphate mines in the 1980s.

5. Executive Summary The official language spoken in Nauru are Nauruan that is spoken by 93% of population. While the other languages spoken are English 2% (widely understood, spoken, and used for most government and commercial purposes), other 5% (includes- Kiribati 2% and Chinese 2%) Agriculture (with the exception of coffee and copra plantations along the coastal and lagoon perimeters), fishing, manufacturing, and tourism are of minor value to the overall economy. However, Nauru has an exclusive economic zone extending 200 miles (320 km) offshore. The sale of commercial fishing licenses began to bring in a steady revenue during the 1990s.

6. Introduction – Doing business in Nauru The island state of Nauru in the western Pacific Ocean has a strong GDP per capita of US$7,770 (2012) for a small island; this is because of its phosphate reserves. Fishing, tourism and financial services are cited as the sectors that will provide growth in the future as there is very limited potential for agriculture – the only fertile areas are the narrow coastal belt and the land surrounding the Buada lagoon.

7. Conducting business in Nauru Nauru’s focus is now primarily on the development of offshore companies for foreign investment. As a result, Nauru has become an important area for offshore company formation. It provides several benefits to those who want to establish IBCs in the country. Few of the most important advantages for Nauru offshore companies are listed below: -Nauru is completely free from all types of taxes and the offshore companies are not required to pay any taxes on their profit -Laws in the country ensure privacy for all the banking information related to offshore companies. -Usually it takes around 2 business days to establish an offshore company.

8. Taxation in Nauru This Act came into effect from 1 July 2016. There are three taxes imposed under BTA - small business tax (SBT), business profits tax (BPT) and non-resident tax (NRT). 1. SBT is imposed at a rate of 2.5% on the gross revenue of a non-resident individual who conducts business solely in Nauru with annual gross revenue not exceeding $250,000. 2. BPT is imposed on the taxable income of a person who conducts business in Nauru. The rate to be applied is determined by the entity type, the residency status of the entity and the turnover of the entity. 3. NRT is imposed at a rate of 20% on a non-resident person who has derived interest, royalties or insurance premiums from sources in Nauru. Consolidated Business Tax Act (as of 20 January 2020):

9. Trade Nauru is the 201st largest export economy in the world. In 2017, Nauru exported $24.7M and imported $35.6M, resulting in a negative trade balance of $10.9M. In 2017 the GDP of Nauru was $113M and its GDP per capita was $14.2k. The top exports of Nauru are Calcium Phosphates ($17.2M), Hydrogen ($998k), Other Printed Material ($586k), Transmissions($389k) and X-Ray Equipment($277k), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Electric Generating Sets ($2.69M), Poultry Meat ($1.69M), Refined Petroleum ($1.35M), Frozen Bovine Meat ($993k) and Office Machine Parts ($834k).

10. Banking in Nauru The Nauru has no central bank, and uses the Australian dollar as the legal tender. Despite its history as a tax-haven and off-shore banking centre, Nauru has very few financial services and no formal financial sector remaining; the Bank of Nauru and the Republic of Nauru Finance Corporation went bankrupt and ceased operations in the early 2000s and all offshore banks had their licences revoked by the Nauru government in 2004. The country essentially operates as a cash economy.

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