Goldman Sachs Announces Adoption of Tax Benefit Preservation Plan

The Goldman Sachs Group, Inc. disclosed in a recent 8-K filing that it has adopted a shareholder rights plan aimed at safeguarding stockholder value by preserving its net capital loss carryforwards and other tax attributes under the Internal Revenue Code of 1986. The plan, known as the Section 382 Rights Plan, is designed to prevent an “ownership change” as defined by Section 382 of the Code, which could limit the company’s ability to utilize its valuable Carryforwards.

As of September 30, 2024, Goldman Sachs estimated holding approximately $109 million in Carryforwards, crucial for reducing future federal income tax expenses related to capital gains. Should an ownership change occur, where 5-percent shareholders increase ownership by more than 50 percentage points over a rolling three-year period, the company’s capacity to benefit from these Carryforwards would be significantly curtailed.

The Section 382 Rights Plan serves as a deterrent against any individual or group acquiring beneficial ownership exceeding 4.99% of Goldman Sachs’ common stock without the Board’s approval. This plan, in effect, discourages stockholders from accumulating or acquiring additional shares without consent.

To implement the plan, the Board initiated a dividend issuance of one “right” under the Section 382 Rights Plan for each outstanding share of the company’s common stock. This issuance will be granted to shareholders of record as of February 7, 2025. The rights, initially trading with the common stock, will become exercisable if an entity acquires 4.99% or more of the outstanding shares, permitting holders (excluding the acquiring party) to purchase additional shares at a 50% discount.

The rights under the plan are set to expire on January 28, 2028, subject to ratification at Goldman Sachs’ 2025 Annual Meeting of Stockholders. The Board retains the authority to cancel the plan earlier if deemed necessary for Carryforwards preservation or if no forward utilization of Carryforwards is possible.

Many public companies, like Goldman Sachs, with substantial tax assets have adopted similar rights plans to protect these assets. While the plan may not entirely mitigate risks of an ownership change, it underscores the company’s commitment to safeguarding its tax advantages while ensuring that strategic decisions align with shareholders’ best interests.

For further details surrounding the Section 382 Rights Plan, Goldman Sachs will provide additional information in a Form 8-K and Registration Statement on Form 8-A to be filed with the Securities and Exchange Commission.

About Goldman Sachs Group, Inc.
Goldman Sachs Group, Inc. (NYSE: GS) is a prominent global financial institution engaged in a diverse range of financial services, including investment banking, asset management, and securities services. The company is headquartered in New York City and is listed on the New York Stock Exchange under the symbol GS. More information about Goldman Sachs can be found on their official website.

Efforts to reach Goldman Sachs for comment on these recent developments were not immediately returned.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read The Goldman Sachs Group’s 8K filing here.

About The Goldman Sachs Group

The Goldman Sachs Group, Inc, a financial institution, provides a range of financial services for corporations, financial institutions, governments, and individuals worldwide. It operates through Global Banking & Markets, Asset & Wealth Management, and Platform Solutions segments. The Global Banking & Markets segment provides financial advisory services, including strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings, and spin-offs; and relationship lending, and acquisition financing, as well as secured lending, through structured credit and asset-backed lending and involved in financing under securities to resale agreements.