Covidien Ltd. (COV) shareholders have approved shifting the medical company's place of incorporation to Ireland from Bermuda, a move that could carry tax protections but also get Covidien kicked out of the Standard & Poor's 500 index.

The change now requires approval from the Supreme Court of Bermuda, which Covidien expects to receive June 4, the company said Thursday following a shareholders' meeting. The company will thereafter be known as Covidien Plc, but it will retain its stock symbol on the New York Stock Exchange.

Covidien, which makes a host of medical products, is currently incorporated in Bermuda by way of Tyco International Ltd. (TYC), from which the company separated in 2007. Covidien decided to leave Bermuda because of worries about potential changes in U.S. tax rules that would limit benefits enjoyed by companies in such countries that don't have tax treaties with the U.S., among other changes.

"If enacted, we determined that these proposals, due to their potentially wide-ranging scope, could have a material and adverse impact on the Company and its shareholders," Covidien said in a proxy filing with the Securities and Exchange Commission in late April.

Moving to the U.S. would have boosted the company's effective tax rate, hurting earnings. The company decided Ireland, where it already has a substantial presence, was a better fit.

Covidien's top executives are in Mansfield, Mass., where the company's U.S. operations are based. But it also has six facilities and nearly 2,000 employees in Ireland. It had already moved its tax residency there and is using "Dublin" datelines on its press releases.

Despite the protective benefits of the move, it also carries a potential drawback: getting kicked out of major indexes including the S&P 500, which could trigger automatic selling among big shareholders. Covidien noted some instances where companies were dropped by S&P after leaving the Cayman Islands for Switzerland, indicating Covidien's similar move could yield the same result.

S&P's U.S. index requirements include U.S. incorporation, but S&P can at its discretion admit companies that are widely considered to be effectively based here despite official headquarters in an off-shore locale. Moving from Bermuda to a much more developed market in western Europe may blur that line, however.

S&P hasn't made any announcement on whether it will drop Covidien. Spokesman Dave Guarino said an announcement would come after the firm's index committee meets and makes a decision.

Getting dropped means "institutional investors that are required to track the performance of the S&P 500 or 100 or such other indices or the funds that impose those qualifications would be required to sell their shares, which we expect would adversely affect the price of our shares," Covidien said in the proxy filing.

The company has also said, however, that it expects to recover from any devaluation that occurs after the move.

Covidien shares recently traded up 45 cents, or 1.4%, to $34.54.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com