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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 get on June 4, the company said Thursday following a shareholders' meeting. The company will thereafter be known as "Covidien Plc", but it will retain the same trading 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 the U.S. that would limit tax treaty benefits to companies in countries without 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 recently.

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.

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 12 cents to $34.21.

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