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## 8. Share capital and additional paid in capital (continued) 

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

## CONSOLIDATED WATER CO. LTD. 

(Expressed in United States dollars) 

Stockholders are advised that under the provisions of the Land Holding Companies Share Transfer Tax Law of the Cayman Islands, transfer tax is payable on the transfer of shares in the Company. The amount of transfer tax payable under the provisions of this Law is computed by reference to the proportion of the total market value of land, as valued by the Government, attributable to each share in issue (“the taxable value”). The tax payable by the transferor per share transferred is at the rate of 7.5% to 9.0% of the taxable value. 

In August 1997 the Company established a Class ‘B’ stock option plan designed to deter coercive takeover tactics. Pursuant to this plan, holders of ordinary shares of common stock and redeemable preferred stock were granted options which entitle them to purchase 1/100 of a share of Class ‘B’ stock at an exercise price of $37.50 if a person or group acquires or commences a tender offer for 20% or more of the Company’s ordinary shares of common stock. Option holders (other than the acquiring person or group) will also be entitled to buy, for the $37.50 exercise price, ordinary shares of the Company’s common stock with a then market value of $75.00 in the event a person or group actually acquires 20% or more of the Company’s ordinary shares of common stock. Options may be redeemed at $0.01 under certain circumstances. 30,000 of the Company’s authorized but unissued ordinary shares have been reserved for issue as Class ‘B’ stock. The Class ‘B’ stock rank pari passu with the ordinary shares of common stock for dividend and voting rights. As at December 31, 2000, no Class ‘B’ stock options have been exercised or redeemed. 

## 9. Expenses 

<img src='content_image/82704.jpg'>

Direct expenses relate to the production and distribution of water, indirect expenses represent the administrative costs of the Company. 

