Despite controversy in the United States about companies moving to Bermuda to save taxes, toolmakers Cooper Industries yesterday officially reincorporated from Ohio and has moved its official headquarters to the Island.

But a spokesman for the company revealed that Cooper was not even opening an office in Bermuda and will simply use the services of its registered agent AS&K Services Ltd. -- and will not have a single employee on the Island.

In a Press release yesterday Cooper Industries said that its reincorporation in Bermuda has been completed and was effective at the opening of the day's trading on the New York Stock Exchange.

On May 15 shareholders of Cooper Industries, one of Houston's largest manufacturing companies, voted 9-to-1 on Tuesday to change its place of incorporation from Ohio to Bermuda.

With no remaining regulatory hurdles, Cooper expected to be a Bermuda company as soon as possible after the close of business May 21, and the announcement of the completion of the deal was made yesterday.

Cooper Industries is one of several Houston companies reincorporating in Bermuda or the Cayman Islands, primarily to save on taxes on foreign income.

The United States is one of just a handful of countries that taxes foreign income.

Cooper Industries is a $4.2 billion-per-year company that makes electrical products, tools and hardware.

The move comes at a time that many US companies have already or are considering the move to Bermuda or other tax-friendly jurisdictions.

But the US Congress has been looking at ways to discourage the trend, and so far four separate bills have been introduced in Washington with a view to penalise or stop US companies that move.

Stanley Works of New Britain, Connecticut had a shareholder vote to move accepted, but the following furore over the move has pushed them to have a second vote after legal action was taken to prove the vote was not valid.

In Cooper's case, of the 93 million shares eligible to vote, 68.3 percent voted in favour while 6.3 percent voted against.

Thus 90.8 percent of the 69.9 million shares that were voted at last Tuesday's special meeting were in favour, spokesman John Breed said.

The lone dissent at the meeting here was from an investor who complained about having to pay capital gains tax on shares he bought long ago, which have appreciated in value.

Because the United States taxes companies based on place of incorporation rather than the source of income, companies such as Cooper are at a competitive disadvantage, said Chairman, President and Chief Executive Officer H. John Riley Jr.

He said foreign competitors are gobbling up domestic companies. Mr. Riley cited an article in Congressional Quarterly saying that from 1998 through 2000, 80 percent of all transactions of $300 million or more were foreign companies buying U.S. firms.

Houston companies have been particularly active in moving their places of incorporation, although this does not affect the headquarters location.

On May 1, Noble Drilling, a major offshore drilling contractor, became a Cayman Islands company after gaining 96 percent approval in a late April vote.

Noble said it needed to be able to compete with Transocean and GlobalSantaFe, both Houston companies that for some time have been incorporated in the Cayman Islands.

Nabors Industries, the largest land-based oil and gas driller, and Weatherford International, a major oil-field services company, both have scheduled June votes on reincorporating.

Veritas DGC of Houston is working to acquire Norwegian company Petroleum Geo-Services, which would result in a seismic industry giant that would be incorporated in the Cayman Islands.

Cooper Industries estimates that re-incorporating in Bermuda will add $55 million per year to cash flow and 58 cents per share to annual earnings.

Before start of trading yesterday, all shares of Cooper Industries outstanding common stock were automatically converted to shares of Cooper Industries Ltd. common stock and traded under the symbol CBE.

Shares of Cooper were at $41.19 in early trading Wednesday, up 26 cents, or 0.6 percent.

After the announcement last week of the reincorporation its stock gained 85 cents per share to close at $43.45, bringing the gain for the year to date to 24 percent.

Additional information about Cooper is available on the company's Internet site: www.cooperindustries.com .