Global Business Magazine - January 2012

gbm January 2012

global business magazine

EUROPE AFTER THE VETO AUSTERITY AHEAD AS EUROPE PREPARES TO SLASH DEFICITS

internatiOnaL FiduCiary SerViCeS

gLOBaL teCHnOLOgy tranSFer

COrPOrate MigratiOn guide

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INSIDE This Month:

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Business Talk As we embark on 2012, the number one issue remains the fate of the eurozone and what the UK will do next, and our cover story tackles the EU treaty and the UK’s position.

Our 2012 Fiduciary Services Report covers the Isle of Man as a well-diversified offshore financial centre, Gibraltar as a jurisdiction for international tax structures, wealth planning for UK high-net-worth individuals, and Cyprus as an ideal financial and business hub.

Our immigration focus looks at UK immigration rules, the US Fairness for High Skilled Immigrants Act, setting up business in New Zealand, an overview of Indian visas and an update on temporary work permits in Canada.

We tackle the issue of international business crime, examining the future of fraud, data theft, the digital frontier, and market abuse in the EU. With technology transfer (TT) having the potential to solve some of the challenges of the recession, we cover TT in the EU, German TT and IP protection, the Vietnam patent system, IP in Taiwan and leveraging technology to your advantage.

With a recent surge in cross-border mergers, we examine investment risk, M&A business beyond borders, opportunities and risks, winning global markets, and diversity, intelligence and experience.

The first of our country focuses is Switzerland - an important economic and political place to weather the recessional storm, we look at the ‘Too Big to Fail’ legislation, commercial opportunities and a launch pad for start-ups. Indonesia is second - with the global economic gravity shifting toward the Asia Pacific region, why Indonesia is determined to become a more prominent player worldwide. Finally, Mauritius - Africa’s preferred investment gateway We look at the carbon markets, the Clean Development Mechanism and the future of climate change mitigation. And we also have articles on the benefits of graduates, investment tips, Donald Trump’s success story, a technology review of tablets, and lists of upcoming business conferences and admissions to the London Stock Exchange.

And if Christmas didn’t fill you up enough, our luxury brand series covers restaurants that could add a little extra to your holiday weight.

Contact Us:

Global Business Magazine Corporate ABM Tel. 0044 (0) 121 666 6613 admin@gbmonline.net For our full Terms and Conditions please visit www.gbmonline.net

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The opinions expressed in GBM do not necessarily reflect those of the editors, publishers or their agents. The information provided in GBM is general and may not be applied to a specific situation. GBM does not purport to provide legal or other professional advice and takes no responsibility for actions taken on the basis of information provided herein. Legal advice should always be sought before taking any such action. Laws and government policies are constantly changing and accordingly GBM takes no responsibility for the accuracy or currency of the information provided herein. If you require particular information you are advised to consult with the article’s author or seek legal advice.

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eurOPe aFter tHe VetO - auSterity aHead aS eurOPe PrePareS tO SLaSH deFiCitS

europe after the Veto Austerity ahead as Europe prepares to slash deficits There have been thousands of words of analysis and comment written since David Cameron vetoed the amended EU treaty on closer fiscal integration at the beginning of December. Much of this analysis focuses on the political ramifications of the veto. The picture for business is only just beginning to emerge.

The treaty amendment was intended to fix what Angela Merkel called the “structural faults” in the EU that have seen a growing disparity between the North and South of the eurozone in the past 15 years. Whether this amendment would have solved Europe’s problems remains a matter of debate, with Martin Wolf of the Financial Times referring to the proposed measures as “disastrous” and a “failure to transcend the defects of the original construction.” With the amendment blocked, efforts have turned to a new intergovernmental agreement.

The leaders of the European Union member states are currently thrashing out a draft of this agreement and it is widely hoped that it will be formally adopted by March 2012. Initial details of this “treaty between governments” indicate that, if ratified, it will enshrine a new era of austerity throughout the European Union. While the draft includes proposals for more lending and support from the European Central Bank (ECB), it also proposes strict new rules about the level of

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structural debt that EU Member States can run up. Where passed, annual structural deficits for member states will be capped at 0.5% of GDP. Any member state with a public deficit greater than 3% will be compelled to submit an “economic partnership plan” detailing budgetary plans and structural reforms to the European Commission and the Council of Europe. There will also be “automatic sanctions” for any member state that doesn’t abide by these rules.

The eurozone is one of the world’s strongest currency zones in many respects. Its fiscal deficit runs at 4% (compared to the USA’s 10%) and it can finance the debts of all of its members without resorting to external sources of funding. But the disparities between the “North” and “South” have been growing and the member states with the weakest economies are vulnerable to external market pressures. “The countries north of the Alps have excess savings, but Northern European savers do not want to finance indebted Southern European countries like

Italy, Spain, and Greece,” said Daniel Gros, Director of the Centre for European Policy Studies, “That is why the risk premium on Italian and other Southern European debt had risen at one time to 5%, and why, at the same time, the German government can issue short-term debt at negative real interest rates.

Northern Europeans’ reluctance to invest in their southern neighbours is the problem behind the problem.”

The hope is that by placing the member states around the Mediterranean on a northernEuropean austerity diet, the markets will be reassured as to the viability of the eurozone as a long term project. Not everyone is convinced. Financial institutions are already preparing for a return of the drachma, running simulations of how they would trade a modified euro and any number of new currencies in the $4 trillion-a-day foreign exchange market. Banks and other FX industry participants recently told Reuters they have been analysing their ability to start trading new currencies soon after they are announced. ICAP CEO David Rutter said that “Chatter in the market and the discussions with our customers have increased significantly about [currency pairs in the Euro],” and that after tests in November to ensure that a new drachma could be traded against the dollar and the euro, “We've taken additional steps to test the remaining currency pairs as well.”

The Greek Prime Minister Lucas Papademos is the former ECB Vice President who helped bring the country into the euro a decade ago.

“Greece belongs to Europe and there is no concept of Europe without Greece,” he told the Greek parliament on the 6th of December.

“But our participation in the euro means rules and obligations that must be abided by.” He has a difficult job persuading his compatriots against a backdrop of a youth unemployment rate of 40%, the worst slump in the Greek economy since the Second World War, and Greek savers sending their assets abroad at the fastest rate for ten years.

Even if the northern diet does work to insulate the eurozone against further shocks, it will come at a cost for the region as a whole. ECB President Mario Draghi said that the austerity programmes necessary to cut government debt will inevitably cause economic contraction within the eurozone.

"What we want is that this contraction to be short-term and we want to activate all the channels that would enable confidence to return to markets, spreads to go down, costs of credit to go down, ultimately for jobcreation to take off."

Several commentators foresee a severe recession if these measures are adopted.

The Financial Stability Board, the voice of the world’s monetary authorities, estimates that there will be a 2.4 trillion euro monetary crunch in the coming months as European

UK manufacturing might be marginalised if Britain is not represented at key debates

banks rein in lending. Add this to the fiscal shock of aggressive deficit elimination and you have a recipe for “the Medieval leech-cure treatment [that] can only drain the lifeblood from large parts of wasted Euroland,” according to Ambrose EvansPritchard, International business editor of the Telegraph.

While David Cameron maintains that the veto was necessary to protect the City of London, the manufacturing sector feels very exposed to the new austerity regime. Ian Rodgers of the manufacturing body UK Steel voiced his concerns that the interests of UK manufacturing might be marginalised if Britain is not represented at key debates.

Furthermore, the UK manufacturing sector is likely to suffer if the Eurozone goes into a further, prolonged recession, with more than half of UK manufacturing output going to the continent.

Ratifying a “treaty between governments” European Council President Herman Van Rompuy said that the leaders of 26 Member States have indicated that they wish to sign up to the new agreement, “pending consultation with their parliaments.”

But this consultation may prove to be an insurmountable stumbling block to universal ratification of the agreement.

While Britain is the only country that vetoed

the treaty amendment, other countries like the Netherlands, Ireland and Sweden are now voicing their doubts. Their governments may need to call referendums, or to undertake some hard political bargaining, to push through ratification. The Czech Republic and Hungary have both asked for more time to consider the agreement.

Slovakia’s general election early next year is likely to be fought largely on the basis of the new treaty.

Denmark, the next country to hold the rotating EU presidency, is already facing internal calls for a referendum from both ends of the political spectrum. Danish MEP Soren Sondergaard voiced concerns about the transfer of fiscal sovereignty that would result from the new agreement. He also made it clear that the Danish electorate was unlikely to support the tougher new rules.

"We only just had an election where the central topic of debate was how to exit the crisis. There were two options on the table: austerity or public investment, and it was the public-investment side that won,” he said in a recent interview with EUobserver.

In France too, there response to the entente is not universally cordiale. “I would refuse this treaty,” socialist candidate for the French Presidency François Hollande said recently, “Why do we need to include a constitutional requirement or, worse still, sanctions from the European Court of Justice in this new January 2012 • GBM • 5

eurOPe aFter tHe VetO - auSterity aHead aS eurOPe PrePareS tO SLaSH deFiCitS

treaty?” He voiced concerns that the most vulnerable members of the eurozone would be hardest hit by the agreement.

Angela Merkel insists that the measures in the agreement are necessary, “to correct structural faults that came about during the creation of the economic and monetary union,” but Ian Buruma, Professor of Democracy and Human Rights at Bard College writing in Die Welt on the 11th of December, is only in partial agreement.

“Jacques Delors, one of the architects of the euro, now claims that his idea for a single currency was good, but that its ‘execution’ was flawed, because the weaker countries were allowed to borrow too much. But, fundamentally, the crisis is political. When sovereign states have their own currencies, citizens are willing to see their tax money go to the weakest regions. That is an expression of national solidarity [but] there is no ‘European people.’”

It’s not yet clear whether the 27 national governments will have the political clout or appetite to ratify an agreement that mandates solidarity in austerity.

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The pressure to act mounts Once signed, the new agreement is likely release an estimated 1 trillion euros worth of lending, which would be enough to stabilise Italian and Spanish bonds. The proposed new agreement makes provisions to accelerate and enlarge the European Stability Mechanism (ESM), a proposed 500bn Euro system that would be deployed to protect the Euro against currency shocks. The ESM will come into force when Member States that represent 90% of the capital commitment have ratified it. The new agreement calls for a deadline of July 2012 and a debate on whether the proposed capitalisation of 500bn euros is sufficient.

The new agreement would also release a further 200bn euros to the IMF to support the most indebted members of the Eurozone. Chief of the IMF, Christine Lagarde welcomed this deal as “a really good step in the right direction.” Any delay in the agreement is also a delay to the implementation of these stability measures.

Even assuming a smooth passage through the national parliaments, the treaty between

governments will take at least three months to pass. But time is not on the EU’s side. "The pressure that bond markets will be experiencing [in the first quarter of 2012] is really very, very significant if not unprecedented," said ECB President, Mario Draghi, in testimony to the European Parliament.

Is Britain isolated?

Certainly relationships with the rest of the EU have been warmer. Members of the European Parliament have been telling their British colleagues that the annual rebate will be “on the menu” in the next parliamentary session. But Britain hasn’t been frozen out yet. Shortly after the veto, German foreign minister Guido Westerwelle requested to meet British Foreign Secretary William Hague and Deputy Prime Minister Nick Clegg. The talks were mostly about Europe but included international themes such as the instability in Syria and the Iranian nuclear program according to the German Foreign Ministry. A German diplomatic source said "we should not expect anything dramatic but it's quite helpful to keep open the dialogue.

It's important to have Britain as a partner."

Britain has also been invited to participate in talks on the proposed agreement with the other 26 members of the European Union.

European diplomats are anxious to foster British involvement in the process because the new fiscal agreement may need to deploy institutions that involve all 27 member states such as the European Commission. Dutch Prime Minister Mark Rutte told the Dutch parliament that "My goal is to keep Britain involved… They will be an observer when drawing up the agreements between the 26 (EU countries), the 17-plus (eurozone countries)."

But a British government spokesman, when asked about observer status, said: "We wouldn't put it like that.” A spokesman for David Cameron added: "We're going there because we're one of the 27. We've been asked to go there. This is an ad hoc group of officials, they're preparing an international agreement, and we want to fully participate in discussions."

Will the new agreement save Europe?

If the new agreement is adopted as a treaty between governments, fiscal austerity becomes a matter of law rather than policy within the EU. “By enshrining in national and international law the need for balanced budgets and near-zero structural deficits, [Europe] has outlawed expansionary fiscal policy,” said Paul Mason, Economics Editor of the BBC Newsnight programme. This

removes one of the weapons in the economic arsenal of the eurozone and, potentially, the EU as a whole depending on how widely the agreement is adopted.

According to Ambrose Evans-Pritchard, International business editor of the Telegraph, the measures still fail to address the single most significant structural fault in the eurozone. “It is not remotely a fiscal union. There will be no joint debt issuance, no EU treasury, no shared budgets, and no fiscal transfers to regions in trouble,” he wrote in an editorial on the 11th December.

“They are rewriting the Treaties, yet still refuse to correct the most dangerous single

failure in the construction of monetary union: the lack of a lender of last resort. Why bother to put pen to paper at all?”

The new agreement may contain the necessary measures to save the euro, even if it does make it through national parliaments.

But what does it mean for the eurozone as a whole? Paul Mason, Economics Editor of the BBC Newsnight programme again: “Opinion among the economists and business people I speak to is divided: some think the fiscally united eurozone can overcome the short-term dip that will now happen and emerge as a strong, globally competitive area. Others think it's set for catastrophic breakdown.”

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MaurtiuS: aFriCa’S PreFerred inVeStMent gateWay

Mauritius: Africa’s preferred investment gateway Once overlooked by international investors, Africa is now seen as an increasingly attractive destination for private equity investment. The potential for highly profitable foreign investment in Africa is enormous, with opportunities in every sector of the economy. Africa has gone through a remarkable decade of economic transformation and the once ‘dormant lion’ is now wide-awake and at its peak with new opportunities for investors around the globe.

Many believe that Africa has initiated its economic take-off, much like China 30 years ago, and India 20 years ago.

Investment in Africa, as with any crossborder investment, also presents many challenges including investment protection issues and fiscal uncertainty. This is why the structuring of cross-border investments requires careful consideration of the most appropriate investment vehicle to structure the investment, together with the choice of the most favourable jurisdiction to set-up this vehicle.

Strategically located in the Indian Ocean at the crossroad of international investments, Mauritius is drawing on long-established links with India and Africa to position itself as a natural conduit for exponential growth in the emerging Africa and Asia trade corridor.

Mauritius is widely heralded as the ‘gateway to Africa’, and despite the talks about the impact of the Indian Direct Tax Code, it is still the preferred route for investment into India.

Its wide network of treaties (35 in force while another six await ratification) and simple and favourable tax regime make it a preferred bridging step between the Western World and the emerging markets of Africa, India and China. However, professionals of the area acknowledge that Mauritius has more going for it than just tax and sandy beaches.

As a leading international financial services centre, Mauritius has developed a fine brand of professional workforce rivalling European and Western jurisdictions. Mauritius is now an attractive jurisdiction for firms looking to capitalise on opportunities within this field. It has recently liberalised its legal services market to enable foreign law firms to establish local offices or joint ventures alongside Mauritian lawyers. The Mauritian authorities are keen to engage with a wider international legal sector in-country with the effect of further stimulating investor confidence in the market. Mauritius is also positioning itself as a regional centre for international dispute resolution and is actively promoting for international legal practitioners to represent parties and to act as arbitrators in international commercial arbitrations in Mauritius.

Mauritius combines the traditional advantages of a traditional offshore financial centre (there is no capital gains tax, no withholding tax, no capital duty on issued capital, confidentiality of company

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information, exchange liberalisation and free repatriation of profits and capital, etc) with the ability for treaty-based tax planning through its network of double taxation avoidance treaties (DTAs). Where a DTA applies, this results in interesting and attractive tax planning opportunities that include: reduction in withholding taxes on dividends, interest and royalties and exemption from capital gains tax, among others.

When it comes to Africa, although treaty benefits vary country by country, generally capital gains are taxed at rates of as much as 35%. Most of the Mauritius treaties restrict the taxing of capital gains to that of the country of residence of the seller, and as there is no capital gains tax in Mauritius, the potential tax saving is significant.

The treaties will also generally reduce (sometimes completely eliminate) withholding taxes on dividends, interests or royalties paid to non-residents. The majority of African states impose withholding taxes on dividends, interests and royalties at rates varying between 10% and 20%. Using a Mauritius investment vehicle potentially results in significant potential tax savings.

Mauritius is a member of the major African regional organisations providing preferential access to markets in the Africa region such as the African Union, Southern African Development Community (SADC), among others. Its membership in these regional organisations, and being a signatory to all the major African conventions, can make Mauritius the best offshore financial service centre for establishing any fund or other vehicle for investment into Africa, especially with regard to treatment of the investments.

While fully belonging to Africa, Mauritius is a reference in the region. It has been ranked 1st for the second successive year in the African Region in the World Bank Doing Business Survey, has achieved an economic freedom score of 76.2, making its economy the 12th freest in World Index of Economic Freedom 2011 of the Heritage Foundation, and has been among the top 25 global off shoring platform in the At Kearney Offshoring Index, among others.

It therefore cannot be overlooked by anyone contemplating an investment in Africa.

In order to benefit from the DTA, the investment should be made by a resident of Mauritius, generally through a global business category 1 company (GBC1).

Even where there is no DTA, it may still be advantageous to structure the investment holding entity in Mauritius as a global business company category 2 (GBC2), akin to an international business company (IBC), it benefits from all the other fiscal and non-fiscal advantages that Mauritius provides with the exception of treaty benefits.

Additionally, it can be converted to a GBC1 as and when a DTA becomes in force with the target jurisdiction. The GBC2 is not considered resident in Mauritius and is exempt from taxation.

Mauritius has signed investment promotion and protection agreements (IPPAs) with 15 African countries, one of which (South Africa) is in force. Among others, these provide for free repatriation of investment capital and returns, guarantee against expropriation, and a most favoured nation rule with respect to the treatment of investors.

Axis Fiduciary Ltd Mr Assad Abdullatiff Managing Director Tel: 230) 213 1111 Fax: 230) 213 3333 assad.abdullatiff@axis.mu. www.axis.mu

gLOBaL teCHnOLOgy tranSFer rePOrt 2012

IP Technology transfer

TII – The global gateway to innovation In these difficult times of economic recession, intensified global competitiveness and continuing shameful poverty in many parts of the world, technology transfer is seen as having powerful potential to solve some of these challenges.

Companies need to survive and compete, and millions of people all over the world pin their hopes on technology to enhance their standard of living and fight disease and hunger. At the same time, innovation seems to be on everyone’s lips. Searching, finding and implementing new ways, processes, products, methods and approaches to tackle complex problems is the important mission of technology transfer professionals and innovation support providers all over the world.

TII is Europe’s premier association of technology transfer and innovation support organisations. Founded in 1984 with the support of the European Community, TII set as its mission to promote high standards in the provision of innovation support and technology transfer services to firms and to share professional experience and good practice, with a view to developing the knowledge economy, improving quality of life and boosting the wealth creation process.

Today, TII comprises more than 200 members from 40 countries covering all aspects of the innovation support value chain.

TII’s membership spans from Luxembourg, where it manages its operations, to all over Europe and all the way to Mexico, the US and Australia. Among TII’s membership, one can find innovation and technology transfer consultancies, intellectual asset advisers, technology transfer offices of universities and research centres, regional development organisations, chambers of commerce, science parks, innovation centres, business incubators, consultancy practices, government ministries and agencies, as well as sectorial professional associations.

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TII works hard through its activities, services and initiatives in order to support its diversified membership in sharing professional experience and good practice, exploiting business opportunities and helping them to collaborate in their technology transfer and innovation assignments.

More specifically, TII offers its members a library of downloadable tools and good practice, an alphabetical listing of members by country, an online registration facility for events, as well as links to useful technology transfer and innovation websites. It also publishes via its blog a monthly newsletter on major new developments in innovation policy and practice, mostly at European level. Through its LinkedIn discussion group the association promotes the creation and sharing of new project ideas (most often in response to calls for proposals published under the EU’s Framework Programme for Research, Development and Innovation) and their development through collaborative Web 2.0 applications.

But this is not all: TII members have the additional benefit of participating in various groups and collaborative initiatives that help them undertake their tasks and mission. For example, the TII Brussels Group organises information meetings held in Brussels to discuss current bidding opportunities under the EU Framework programmes. The TII Knowledge Vine Group is another webbased initiative that allows members to circulate one-sentence requests with a view to identifying within the network potential partners, expertise, technologies and market intelligence.

Benchmarking and good practice are another two areas in which TII helps it members to raise standards and acquire new knowledge and know how. TII’s response to these needs was the formation of the Quality Net and good practice exchange initiatives.

The first initiative consists of a peer visit programme to benchmark operating efficiency in member organisations and to explore opportunities for joint project applications and international funding schemes. The second one involves good practice workshops held each year to showcase state-of-the-art methods and tools that improve the innovation process and encourage, for example, sciencebased entrepreneurship. This activity is supplemented by the occasional publication of members’ books on an innovation-related subject. One example is the The Business Platform: Entrepreneurship and management in the early stages of a firm’s development

by Prof Magnus Klofsten of Linköping University in Sweden.

Professional development and capacity building are an integral part of most associations’ programme of activities, and TII is no different in this respect. Its main training activity takes place at its annual Summer School, a five-day skills development course for technology transfer and innovation support professionals.

Recurrent themes include creativity techniques, the business assessment of early-stage new technologies, TT negotiation techniques and new product development.

Another capacity building activity is the TII Innovation Tool Fair, which revolves around short presentations or ‘pitches’ of methodologies and tools that have been

Costas Y Konis PhD, member of the board TII - Technology Innovation International 3 rue Aldringen L-1118 Luxembourg www.tii.org Christine Robinson, secretary general cr@tii.org

developed and tested by innovation experts to facilitate the management of different aspects of the innovation process, such as tools to assess the innovation capacity of companies or for managing knowledge transfer from universities and research centres.

Stimulating the creation of university spinoffs, science-based businesses and academic entrepreneurship is another area of major concern for TII and its members. To help them discover centres of excellence at first hand and to network and learn from their developers, TII introduced its Innovation Tour concept, which comprises site visits to leading innovation support and technology transfer centres in a chosen region of Europe.

While all activities and services to members have been developed for a specific purpose, TII’s core activity is its annual conference, which is held in a different location each year.

In 2011, the conference was held in Nizhny Novgorod, Russia, while the 2012 flagship event is scheduled to take place on 25-27 April in the Danish capital, Copenhagen.

The Annual Conference offers a vibrant meeting place and a unique opportunity for members and non- member organisations and individual professionals to network and source new knowledge on the latest developments in their field.

The Conference includes plenary sessions with keynote speakers covering stateof-the art topics in the innovation and technology transfer field, parallel sessions and workshops on specialised themes, the demonstration of tools and technologies and visits to R&D sites and high-tech installations as well as networking and social events.

Professionalism, knowledge and integrity are key values and key characteristics of TII’s unique membership community. In their daily efforts to provide high quality services, every individual and institutional member of TII undertakes to abide by TII’s code of conduct. The code reminds members to maintain confidentiality with respect to their assignments and clients, to provide independent and impartial advice, to maintain the highest standards of personal conduct and to uphold the good reputation of their profession.

made in the whole interlocking system of new technology development, technology transfer, academia-industry relations, innovation support and policy. Many challenges must be addressed too.

Better use of technology, in order to reduce poverty and its implications on global equity for security and stability, more efficient use of natural resources such as fossil fuels, renewables, conservation, the application of a new generation of online tools for business processes, product co-creation, the development of meaningful metrics and reward systems for innovation and TT are only a few of the critical challenges facing the technology transfer and innovation support community. One should add to this the need for multinationals to work in a supporting role with other actors and players and the need to attract young people into science and technology.

All of these challenges have to be addressed against a background of pressure on Europe to catch up with the US and to outstrip the technological advances being made by China and India.

TII follows closely the current important trends in technology transfer and innovation, informing its members in an appropriate and timely way and using their expertise and wisdom in order to contribute to formulating policy, solving problems and exploiting opportunities.

Two of the most important trends that seriously bring into question the historic advantage of the EU and the US are: open innovation - inter-corporate collaboration and the inward and outward sourcing of new ideas for new product development and how this fits with regulation and how intellectual property rights can be protected; and, dispersal of R&D - 75% of new R&D sites will be in China or India during the next decade.

their strategy for competing with low wage economies. One way to achieve this is by increased specialisation and moving up the value chain: there is a supporting role that innovation service providers, such as TII members, must perform if they are to provide added value to their clients.

While TII recognises that more and more firms are being priced out of large areas of manufacturing and many services, there are still opportunities for success, since globalisation places a new premium on creativity and design, non-technological innovation and developing the knowledge base.

There is no doubt that there is still a lot of work to be done.

Europe’s 2020 Strategy has at its core the Innovation Union Flagship Initiative, which provides a roadmap as to how Europe should tackle the innovation challenges it faces.

According to the plan, this will be achieved through a strategic approach integrating research and innovation policies and system actors. Its vision is to make the EU an Innovation Union where “fast-growing innovative firms strive to create new, high added value jobs and where innovation offers products and solutions responding to society’s needs and expectations”.

TII’s ambition is to continue playing a key role in this process by supporting its members, who are change and improvement agents, to achieve their individual goals and to work towards creating the modern mix of a global economy in which Europe occupies a strong position.

Another important challenge for developed economies is defining and developing

TII is well aware that there are many improvements to be

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gLOBaL teCHnOLOgy tranSFer rePOrt 2012

ASTP and technology transfer in Europe “Technology Transfer in Europe, the bottom line”.

By Anders Haugland, President ASTP and Managing Director BTO Norway

Background: The European Association of European Science & Technology Transfer Professionals (ASTP) was started in 2000 in The Hague. It began as an initiative of a multinational group of technology transfer (TT) practitioners to meet and share experiences on a regular basis. This resulted in a non-profit, members funded and members focused association. Today we have 600 individual members from 42 countries mostly from Europe. Best practices are exchanged at bi-annual conferences and training is given at bi annual training courses and master classes held throughout Europe. The Board of ASTP is made up of Managing Directors of TTO’s (technology transfer offices) from around Europe and is strictly volunteer... The mission of ASTP is to professionalize and promote technology and knowledge transfer between the European science base and industry.

In order to inform the readers in the most efficient and clear manner on TT and the role that ASTP plays in this process, I feel it is necessary to clarify and define what TT is. The most common definition is “the process of developing practical applications for scientific research. It is a term used to describe a formal transfer of rights (IP) to use and commercialize new discoveries and innovations resulting from scientific

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research to another party”. Many times you hear technology transfer (TT) and knowledge transfer (KT) mentioned in the same breath or even interchanged with one another. By definition knowledge transfer is “comprised of capturing and transmitting research findings, skills and competence from those who generate them to those who transform them into economic outcomes either explicitly (patents) or tacitly (knowhow). It includes both commercial and non-commercial activities such as research collaborations, consultancy work, licensing, the creation of spin-offs, and mobility of researchers and the publication of scientific articles”. It is estimated that 2/3 of TT is in the Healthcare sector. This is due to the need to protect intellectual property as the investments in the Healthcare sector are significant given the business model. An important part of TT and KT is helping new start up companies “get off the ground” usually build around a new technology or process with the inventor as the scientific director. Important for the readers of this article are that venture capital (VC) plays a crucial role in this. Often a TT manager at a TTO will have several start ups under their supervision at one time. The TT manager is therefore an important contact for VC’s as their goal are the same, the success of the company, financial for the VC, successful

transfer of technology into practical use for the TTmanager.

No matter which definition you choose the basic principle is the same the world over. The transfer of research generated by public funds from academia to industry (business) for practical use, by tech-transfer offices (TTO’s) at universities. Though this principle holds true on a global scale there are cultural and political differences that any prospective investor should be aware of. Much of what is perceived as “best practice” in tech-transfer comes from the US. In America universities are run much like businesses and are seen not only as centers for education but profit centers for the knowledge that is created there. It is not an accident that Silicon Valley is located close to Stanford University. The collaboration between academia and industry in the US is very high indeed, much more so than in Europe. European universities and through them the research they do is funded more by public funds than in the US where industry plays a bigger role in funding research.

The European “science base” therefore is seen less as a profit center and more of a knowledge center. This does not mean that Europe lags behind the US in tech-transfer but is measured in a different way. Every few years a survey is done by AUTM (Association

of University Technology Managers) a US based association and ASTP. We cooperate with them on this and compare results. It is quite clear from past results that in the US more technology licenses are given and in Europe more start up companies are created per TTO. From this we can conclude that TT in Europe is seen more as an economic development vehicle for government than a profit center. This has been verified as well by the European Commission in 2007. They argue after years of researching this topic that "making better use of publicly funded R&D is a significant problem" in the EU. This has been incorporated into the European Research Area program (ERA). Their studies show the same results as the AUTM /ASTP surveys. There report reveals that an average university in Europe generates far fewer inventions and patents compared to its North American counterparts. While science has become increasingly important for innovation and thus competitiveness, the European Commission argues that increasing access to knowledge by sharing research results and improving knowledge transfer between public research and industry was identified as one of the key factors to sustainable growth.

Having said this I feel that European TT is improving and growing every year. When TT

has been introduced it often follows a certain pattern: build up, centralized, distributed, and centralized with satellites (thematic). It starts from simple services and grows new tasks. But the placement in the “innovation ecosystems” will differ from country to country, sometimes region to region mainly due to historical/cultural reasons. I predict the net effect for the TTO’s will be growth in the years to come because it is still growing organically in Europe. Every year more TTO’s are started.

ASTP has assisted in this expansion in Europe by sharing the best practices of TT managers with a vast amount of experience that are willing to share with the more junior practitioners just starting. Our training programs are divided in fundamental and advanced categories to meet the needs of our members with various levels experience.

This has led to an improvement in the professionalization of the TT process and

increased the chances of success. Our future role will continue this as well as developing into a more facilitating one than in the past.

Our member’s services are expanding to include providing a political platform for TT in Europe by cooperating with other like minded associations and national TT networks to create a platform for national and European TT topics. Some of these national networks have been around for years, their roles are changing and some TTO are still forming in regions such as Central and Eastern Europe. ASTP aims stay relevant in the years to come; we will initiate new task forces and develop adapted products to meet individual, institutional, governmental and regional needs related to TT. All can learn from one another and add weight to each others arguments for improving the TT process, which, in the end, improves everyone’s life, everyone’s “bottom line”.

ASTP Stationsweg 28 2312 AV Leiden, The Netherlands e-mail: office@astp.net www.astp.net contact Mr. Jeffrey Blair, Business Development & Strategy

January 2012 • GBM • 13

GERMANY

gLOBaL teCHnOLOgy tranSFer rePOrt 2012

SJ Berwin LLP Dr Axel Walz Senior associate Tel: +49 (0) 89 890 81 0 axel.walz@sjberwin.com www.sjberwin.com

SJ Berwin LLP Michael Knospe Partner Tel: +49 (0) 89 890 81 0 michael.knospe@sjberwin.com www.sjberwin.com

Technology transfer and IP protection in Germany Research and development Research and development (R&D) is the fundamental basis in the value chain of technological products. In contrast to larger businesses having specialised R&D departments, smaller and medium-sized companies do often not dispose of their own R&D capacities. In this regard, contract research organisations (CROs) will generally be the suitable cooperation partners. This is particularly true for pharmaceutical companies, as marketing authorisations for new drugs and medical devices are granted on the basis of investigational results obtained from the conduct of clinical trials.

In particular, the conduct of international multi-centre clinical trials is hardly possible without the assistance by a CRO. Further, R&D projects are often conducted in cooperation with competitors or suppliers.

Being at the edge of new technologies and succeeding in the often strong global competition may require the use of joint resources and knowledge of companies specialising in the same markets - in particular, in case certain industries need to develop new technologies to overcome established industry standards. An example is the energy sector, which for regulatory reasons is forced to explore new energy sources to replace nuclear power. The joint R&D efforts in the automotive sector concerning the development of new engine technologies are another example.

From our experience, for the cooperation with external research partners as well as for joint R&D projects with competitors and suppliers three cornerstones of business success in the technology transfer sector are: to provide for a clear attribution of intellectual property (IP) rights; to only carry out R&D activities on the basis of clear written agreements that provide for a clear and comprehensible definition

14 • GBM • January 2012

of the mutual rights and obligations; and, during the drafting and negotiation process, it is essential to consider eventual competition law concerns that might arise in case a contractual provision could result in a restriction of competition. German competition law in general provides for the same legal standards as set out by European law. The European Commission Regulation No 1217/2010 on R&D agreements also has to be taken into account in particular. To avoid any pitfalls during the often complex negotiation and drafting process, it is consequently strongly advisable to seek legal expert advice to enforce your company’s interest on the one side but also to avoid liability risks on the other.

Protection of technology and IP

pay attention to avoid anti-competitive agreements that are not justified from the competition law perspective. In Germany, the European Commission Regulation No 772/2004 on technology transfer is the major regulatory framework to be taken into account. The sale of IP is an alternative way to capitalise IP. However, copyright cannot be transferred under German law.

An appropriate exclusive and unlimited licence may provide for a substitute solution in this regard. In addition, when licensing and selling IP, the companies concerned should consider an eventual merger control clearance requirement. Merger control clearance might be required if the respective IP constitutes an existing market position and if the statutory turnover thresholds are fulfilled.

To provide for a profitable return on R&D investments, corresponding new products need to be protected adequately taking into account the conditions in the relevant markets as well as the business strategy of each company, its competitors, customers and potential infringers. As a member of all important international treaties concerning the protection of IP, Germany provides for a strong protection of national and international companies.

Enforcement of IP rights

In particular, at the early stage of the development of new products and technologies, IP protection is not only about the registration of IP Rights, but also requires sufficient protection of confidential information. German law provides only for an insufficient statutory legal basis in this regard. Providing for a protection of confidential information via contractual arrangements is therefore essential.

From the procedural perspective, litigation in Germany is highly efficient as, in comparison with other countries, legal costs are rather low and the proceedings are rather quick.

There are separate courts to rule on the validity of IP Rights and on the enforcement.

Enforcement courts generally have to assume the validity of registered IP Rights (eg, a patent or a trademark). A particularity of the German enforcement system is the admissibility of ex parte injunctions. In cases of urgency, German courts may award an injunction without the alleged infringer having been informed of the claims raised against him in advance. A full oral hearing will then be held after the injunction was granted.

Transfer of technology and IP A company intending to capitalise its IP may do so by licensing or by selling its IP. IP may also serve as a loan security (eg, ‘sale-and-licence-back agreements’). In the case of IP licensing, in addition to standard contract related questions, companies should

Building up strong and valuable IP protection further requires that appropriate enforcement action will be taken against infringing products and business practices.

Germany does have specialised IP courts.

For example, regarding the enforcement of patents, in particular the District Courts of Munich, Düsseldorf and Mannheim enjoy an internationally recognised reputation.

Germany is therefore a good place to enforce a company’s IP Rights.

Technology Transfer In India Exponential growth of technology in India has played a significant role in all round development and growth of Indian economy. It is heartening to realize that India continues to grow at a rapid pace, even though the government recently reduced its annual G.D.P. growth projection from 9% to 8 % for the current fiscal year ending March 2012.

The Government of India with effect from 16th December, 2009 has liberalized its policy for foreign technology collaborations (FTCs). The government’s intention for the change in policy is to freely promote the transfer of state-of-art technology into the country. More than 9000 foreign technology collaborations and technology transfer agreements have been approved from the year 1991 till date. Major sectors attracting foreign technology collaborations are electrical equipments, industrial machinery, chemicals and transportation industry.

FTCs and investments under the

About the patent system in Vietnam Vietnamese Intellectual Property Law came into effect on 1 July 2006 and was revised in 2009.

Vietnam has joined the Patent Cooperation Treaty (PCT) for patent registration since 1993.

Before 1991, the patent system of Vietnam was similar to the former Soviet Union invention author certificate system. The invention author certificate system could not encourage inventors to create more inventions satisfying the technological needs of country.

Therefore, the Vietnamese legal system of invention was changed from the invention author certificate system into the same patent system as in western countries.

Vietnam accepts protection for patent as well as for utility solutions. Any invention can be patented if it meets three criteria: novelty, inventive step and applicability. For utility solution, it is required to meet two criteria, such as novelty and applicability.

The procedure of filing patent

same can be made through two routes: the automatic route and the government route. Under the automatic route the foreign investor or the Indian company does not require any approval by the Reserve Bank of India or Government of India. Under the government route, prior approval of Government of India through foreign investment promotion board (FIPB) is required.

Today, payments for FTCs by means of royalty, lump sum fee for transfer of technology are permitted under the automatic route, subject to the condition that such payments are as per Foreign Exchange Management (Current Account Transactions) Rules, 2000.

This is a significant relaxation in the old policy which has helped remove the restrictions on outbound remittances of royalties and lump sum fee for transfer of technology and use of intellectual property rights.

In case the non-resident investor has existing technology transfer agreement or technology collaboration in place as on January 12, 2005, any new applications and utility solution applications comprises some stages from the examination as to form (which takes one month from the filing date) and publication (with a term of 19 months counted from the priority date) to the examination as to substance (with a term of 18 months counted from the receiving date of request for the examination as to substance or from the publication date if the request is filled before publication of the application).

A request for examination as to substance must be filed within 42 months counted from the earliest priority date. The term for filling a request can be extended on reasonable basis, but may not exceed six months.

Vietnam also accepts conversion from the invention application into the utility solution application when the result of substantive examination shows that the invention application does not meet the inventive criteria. The applicant has the right to convert the mentioned application into a utility solution application subject to payment of fee.

proposals in the same field for investment in respect of technology transfer or technology collaboration would need approval under the government route. The onus to provide the requisite justification that the new proposal will not jeopardize the existing technology transfer or technology collaboration partner would lie equally on the technology supplier and the technology recipient, being the parties to the new technology transfer proposal.

There are some investments that would be exempted from Government approval even though the non-resident investor may have a technology transfer agreement or technology collaboration in the same field.

The exempted investments are the investments made by Venture Capital Fund registered under Securities and Exchange Board of India; investments made by multi-national financial institutions; FTCs wherein investment by either of the parties is less than three percent and where the existing joint venture is defunct/ sick.

In 2010, Vietnam received 3,582 patent applications (of which there were 306 domestic patent applications - about 8.5%) and 299 applications for a utility solutions patent (of which there were 215 domestic patent applications - about 72%).

In the plan for Vietnamese economic growth in the term 2011-2015, the Vietnamese government hopes that the number of patent applications will increase by about 15%.

The government is especially encouraging the increase in the number of domestic patent applications and the improvement of their qualities.

Established in 2003, Ahoa Law Office is a reliable agent in Vietnam for foreign companies operating in the following areas: execution and following up of patent registration procedures; conducting search on patentability; legal advice and consultation on patent licensing and technology transfer; and, proceeding IP enforcement activities regarding patent infringements.

INDIA

Anand and Anand First Channel Building Plot No 17 A, Sector 16 A, Film City Noida 201301, INDIA T + 91 120 405 9300 F + 91 120 424 3056 Safir Anand safir@anandandanand.com Meghmala Ashutosh Sharma meghmala@anandandanand.com www.anandandanand.com

VIETNAM

Ahoa Law Office 181/3 Cach Mang Thang Tam Str, Dist 3, Ho Chi Minh City, Vietnam Ms Nguyen Minh Huong Chief attorney Tel: 84 8 38342 361; HP: 84 903650925 ambys-saigon@hcm.fpt.vn; nmhuong05@gmail.com nminhhuong@hcm.fpt.vn www.ahoa.com.vn

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gLOBaL teCHnOLOgy tranSFer rePOrt 2012

TAIWAN

CF Tsai +886 225 856688 ext 200 cft@deepnfar.com.tw

IP in Taiwan Intellectual property (IP) legislation in Taiwan is quite stable as the congress is uneasy about enacting an amended law as it always has evergreen hot topics to debate. The law has, however, been revised several times since 1949 to adapt it to the advanced legislations in the major industrialised countries.

The Taiwan IP Office is prone to frequently revise its regulations, which needs no legislation before the congress, in order to better cope with the needs of IP users. Currently, an amended patent law, pending for over ten years, was eventually enacted in November 2011.

Deep & Far’s clients are often categorised as high-tech. We won the Shing Tzung Suu Tzy No 45 decision in the IP Court 98 [2009] (45 decision), which is a landmark because in the past the Taiwan IPO (TIPO) patent practices held that once a patent is issued, it is no longer possible for a patentee to derive a feature from the description into the claims in order that the

UK AND THE EU

Matthew Smith, patent attorney matthew.smith@mewburn.com Mewburn Ellis LLP, 33 Gutter Lane, London, EC2V 8AS +44 (0)20 7776 5300 www.mewburn.com

Technology transfer’ is a term of two halves.

‘Technology’: Researching, developing and protecting innovations - technology is the foundation upon which your success will be built. ‘Transfer’: Leveraging technology to your best advantage, whether it be by forming new spin out companies or ventures, seeking investment in new research projects, or assigning or licensing rights for exploitation.

Technology is best protected in the form of intellectual property (IP). Some IP rights come into existence automatically. One example is copyright. Stronger, ‘registered’ rights, such as patents, registered trademarks and registered designs, need to be actively sought. Especially in the case of patents, it is vital that the protection is sought before the technical innovation to be protected is made public.

Securing ownership and protection of IP is just as important as with any other type of property. Being aware of the IP you own, and its importance

16 • GBM • January 2012

issued claims can stay away from a newly cited prior art in the invalidating proceedings.

Such improper practices have damaged a number of valuable patents in the past. As a consequence of this 45 decision, it is believed that practices will improve in future.

As a result of promotions of the government and IP practitioners, companies are increasingly recognising the importance of protecting their IPs. Lower price becomes an important factor in IP services, perhaps because most of the companies here are OEM- or ODM-directed to have relatively lower gross profits, and a lot of patent firms are competing in winning services from them. As IPC judges often comment, the patent specification and/or the claims are not well prepared. Everyone knows a lower price cannot secure a high quality product or service.

Although we cannot predict whether such high failing rate in patent infringement suits could have a profound impact on the popular realities that businesses

to your business, is vital.

Consider: What IP is available to you? Where do you need protection, and what for? How can you best use your IP? ‘Technology transfer’ is only part of wider IP strategy - planning from an early stage what must be protected, how it must be protected, and where it must be protected.

A strong IP strategy provides a business with the opportunity to gain exclusivity in their IP, allowing them to maximise the return on their investment in creating the IP. Do not forget that your competitors may well have their own IP rights. It is important to be aware of the impact that rights of others could have: at worst, halting your activities completely. Prudent businesses will have in place strategies for dealing with this.

In every part of your IP strategy, Mewburn Ellis LLP has the expertise to help. We are experienced in all stages of the IP lifecycle: from the birth of new ideas (and consideration

want a lower price or demand even more free services, and law firms try very hard to win more service opportunities by cutting their prices or offering more free services, we are confident there is existing a certain extent of need or desire in quality services.

Moreover, the local industries tend to protect themselves from being accused of patent infringement rather than use the IP as a weapon to earn profits or overtake their competitors so that either most of the companies or most patent firms do not seem to deem it important to have or to provide offensive IP weapons.

This is especially true for the traditional industrial sectors.

Meanwhile, the recent economic crisis has meant that companies have had to become more conservative in deploying an offensive patent, as well as in enforcing their IPs. In the wake of the recession, IP disputes involving patent and trade secrets decreased, while those for trademark and copyright appear increasing.

of which IP rights are available and useful) through to litigation involving the IP rights protecting them (for example, in infringement or validity proceedings).

As one of the UK’s largest firms of European patent, trade mark and design attorneys, a significant amount of our work comes from the technology transfer departments of our university clients.

We work closely with our clients to file and prosecute patent, trademark and design applications in the UK and across Europe, and to manage portfolios of applications around the world.

We also handle contentious matters, including oppositions at the UK-IPO, the European Patent Office and OHIM, the office that administers EU trademarks.

Our in-house legal services team has many years of experience advising our clients in matters including licensing, collaboration agreements, technology transfer arrangements, protection of confidential information and ownership of IP rights.

The Global Gateway to Innovation The network which takes you further

TII is the European Association of professionals working in technology transfer and innovation support.

Founded in 1984 with support from the European Communities (EC), TII is today fully independent and groups some 200 members from all regions of Europe and beyond, and from all areas of innovation support.

Membership of TII offers many and varied benefits, and includes: Networking with leading European Technology transfer organisations to help you and your organisation build valuable professional contacts and to open up new markets for your services and your clients' technologies.

Opportunities to contribute actively to the further development of professional technology transfer services in Europe and to assist the effective commercial exploitation of science and RTD for the benefit of industry.

Conference, seminars, meetings and publications through which to promote your organisation and its services across Europe and beyond.

International exchange of working methods, professional experience and good practice, which can be a major source of information and advice for developing your organisation and your own career.

Trans-national business development opportunities through collaborative projects and consultancy assignments.

High added-value web-based tools for market and technology information searches

TII

The Association for the Transfer of Technology Innovation and Industrial Information MISSION

TII aims to create a global community of regional innovation support and technology transfer professionals, to promote high standards in the provision of innovation support and technology transfer services to firms and to share professional experience and good practice, with a view to developing the knowledge economy, improving quality of life and boosting the wealth creation process.

TII asbl – 3 rue Aldringen – L-1118 LUXEMBOURG – tii@tii.org – http://www.tii.org

COrPOrate MigratiOnS guide

immigration Law Thousands of professionals move abroad every year in the hope of finding higher-paid jobs and a better way of life, away from the gloom of the dark cloud hanging over the recession-hit UK. The country has witnessed a sharp increase in the number of people turning the dream into reality since the General Election, as individuals demonstrate their scepticism about the coalition government by ‘jumping ship’.

Britain’s tax competitiveness has been in steady decline since the start of the current economic crisis. However, it has become a more pressing issue for many individuals and businesses following the proposed increase in Capital Gains Tax. The consideration of moving offshore for tax purposes has become a frequent item on many corporate agendas.

Consequently, the disadvantages of being resident in the UK have become more apparent as more companies relocate offshore. A better quality of life is cited as one of the most important factors for investors and professionals moving abroad today, closely followed by the personal tax benefits and better career opportunities that are available abroad.

18 • GBM • January 2012

But, before you make the leap, there is much to consider. One unavoidable aspect of moving abroad is immigration law. It is recommended that you employ the services of an experienced and professional law firm that specialises in immigration. An expert in immigration law can help with all the legal aspects of your relocation, including preparing and submitting applications. This often helps to avoid potentially expensive and time-consuming immigration appeals and helps to ensure the process runs smoothly – and legally – from the outset.

Being prepared and knowing the legal requirements of the country you are moving to can make all the difference between sinking and swimming.

CANADA Henry J Chang c/o Blaney McMurtry LLP, 2 Queen Street East, Suite 1500, Toronto, Ontario, M5C 3G5 Telephone: 416-597-4883 Facsimile: 416-593-5437 hchang@blaney.com

Update on temporary work permits in Canada Introduction All foreign nationals in Canada, other than immigrants (ie, permanent residents), are considered “temporary residents.” This general category includes visitors, students and workers. A temporary resident may not engage in employment in Canada unless he or she also obtains a work permit.

The general procedure for seeking a Canadian work permit is as follows: secure a job offer in Canada; obtain a positive labour market opinion (LMO) from Human Resources and Skills Development Canada (HRSDC), which assesses the effect of the foreign worker on the labour market; and, upon obtaining a positive LMO from HRSDC, apply for a work permit through either Citizenship and Immigration Canada (CIC) or the Canadian Border Services Agency (CBSA), depending on whether a temporary resident visa is also required.

According to subsection 203(3) of the Immigration and Refugee Protection Regulations (IRPR), an LMO must be based on the following factors: whether the employment of the foreign national is likely to result in direct job creation or job retention for Canadian citizens or permanent residents; whether the employment of the foreign national is likely to result in the creation or transfer of skills and knowledge for the benefit of Canadian citizens or permanent residents; whether the employment of the foreign national is likely to fill a labour shortage; whether the wages offered to the foreign national are consistent with the prevailing wage rate for the occupation and whether the working conditions meet generally accepted Canadian standards; whether the employer has made, or has agreed to make, reasonable efforts to hire or train Canadian citizens or permanent residents; and, whether the employment of the foreign national is likely to adversely affect the settlement of any labour dispute in

progress or the employment of any person involved in the dispute.

In practice, the above procedure is the least desirable method for obtaining a work permit because the LMO process is time-consuming and the outcome is often uncertain. Wherever possible, temporary foreign workers should try to apply under one of the available exemptions from the LMO requirement; these exemptions appear in IRPR 204 and IRPR 205.

Recent changes On 4 August 2010, the governor-general-incouncil published amendments to the IRPR; these amendments became effective on 1 April 2011. A brief discussion of the most significant changes appears below.

Genuineness HRSDC, CIC and CBSA are now required to assess the genuineness of the job offer for both initial work permit applications and renewals. The four factors of employer genuineness that must be assessed are: the job offer must have been made by an employer who is “actively engaged” in the stated business; the job offer must consistent with the reasonable employment needs of the employer; the employer must be reasonably able to fulfil the terms of the job offer; and, the employer or their authorised recruiter must have shown past compliance with federal/provincial/territorial laws that regulate employment or recruitment in the province where the foreign national will be working. If the employment offer is found to be non-genuine under any one of the four genuineness factors, the work permit will be refused.

Prior compliance If the employer has hired temporary foreign workers in the past, HRSDC, CIC and CBSA must also perform an assessment to determine whether it has, during the past two years, provided substantially the same wages, working conditions and employment in an occupation as those items set out in the offer of employment to the temporary foreign

worker. In general, a negative decision is intended to make an employer ineligible in situations where it has been determined that there has been a difference in wages, working conditions or the occupation from an original job offer made by that employer to foreign nationals and for which there is no reasonable justification.

An employer will be ineligible to participate in the temporary foreign worker programme for a period of two years if it is determined that they have failed, without reasonable justification, to provide substantially the same wages, working conditions or employment in an occupation to any foreign national who has worked for them during the prescribed period. The period begins two years from the date that the request for an opinion or the application for the work permit was received.

Cumulative duration limit for most work permits There is now a four-year cumulative duration limit on most work permits. However, the accumulation of time worked toward this four-year limit began on 1 April 2011; periods of work prior to this date are not counted towards the four-year limit.

There are several exceptions to the fouryear cumulative duration limit. These exemptions include (among others): foreign nationals seeking to work in managerial and professional occupations; foreign nationals seeking to work in Canada who fall under IRPR 204 and IRPR 205; and, spouses and dependents of temporary foreign workers who are in managerial and professional occupations Temporary foreign workers who are not exempt from the cumulative duration limit will not be granted another work permit in Canada for another four years once this limit has been reached. As a result, any temporary foreign worker subject to the cumulative duration limit who intends to work in Canada for more than four years should acquire Canadian permanent residence before this limit has been reached.

January 2012 • GBM • 19

COrPOrate MigratiOnS guide

INDIA LawQuest Ms. Poorvi Chothani, Esq. Managing Partner Tel: +91 22 6615 6555 Fax: +91 22 22163215 poorvi@lawquestinternational.com

An overview of Indian visas In India, the demand for most visas except tourist visas has been historically low. Over the past few years, India has been witnessing an increased flow of foreign nationals to work or do business in India and benefit from the growing economy. This article will briefly describe the visa categories that are relevant to corporations and focus on the requirements and processes for business and employment visas.

Almost all foreign nationals, including minor children, need appropriate visas to visit India. Entry is permitted through authorised check posts or international airports, which are subject to immigration checks. Those who hold person of Indian origin (PIO) cards or are registered overseas citizen of India (OCI) do not need Indian visas.

Business visas (BVs) may be granted to individuals wishing to establish, or explore the possibility of establishing, an industrial or business venture or wish to purchase or sell industrial products in India. It cannot be granted to an individual comes in connection with money lending or petty trading or to undertake full-time employment.

The applicant’s financial background and expertise in the field of intended business are checked prior to granting a BV. The Consular Post will also check the documentary proof regarding the sponsoring, Indian company’s registration.

A foreign national may be granted a BV: to set up or explore the possibility of setting up a business or industrial venture in India; for technical meetings, or attending board meetings or other general meetings for business services support; for a short visit in connection with an ongoing project with the objective of monitoring progress, conducting meetings or providing highlevel technical guidance; to attend in-house training conducted at the regional hub of the company located in India; to purchase/sell industrial products or commercial products or consumer durables; to recruit manpower; if he or she is a partner in a business or are on

20 • GBM • January 2012

the board of directors of an Indian company; to participate in, or render consulting services with regard to, events such as exhibitions, trade fairs or business fairs; to transact business with suppliers or potential suppliers, or to evaluate or monitor quality, provide specifications, place orders, or negotiate further supplies in connection with goods or services procured from India; or, for pre-sales or post-sales activity not amounting to actual execution of any contract or project Multiple entry BVs may be issued to nationals of most countries for a maximum validity period of up to five years. US nationals may be issued BVs with a validity of ten years. BVs may be extended in exceptional circumstances.

The spouse and dependent family members accompanying the applicant must apply for a dependent visa (DV), co-terminus with the period of the principal applicant’s visa.

Employment visas (EVs) are generally issued to highly skilled and qualified specialists, managers and executives only. EVs are not granted for jobs in positions where large numbers of qualified Indians are readily available.

Employers are required to pay foreign nationals an annual salary of US$25,000 or more. All EV applications must be sponsored by a duly registered Indian entity.

Sponsoring employers are also required to certify and ensure that the visa holder will comply with all applicable income tax requirements.

The foreign national can only apply for an EV at the Indian diplomatic post in their country of citizenship or country of residence provided the applicant has resided there as a permanent resident for at least two years.

EVs are employer and location specific, which prevents foreigners from seeking new jobs on the same visa, and dependent on the employment contract. If the contract is terminated the visa is no longer valid, and the foreign national is required to leave the country.

EVs are processed on a case-by-case basis and historically have been granted for one year even if the duration of employment is longer than a year. The guidelines provide that visas can be issued for two years. EVs may be granted with a validity of up to three years to take up employment in the information technology (IT), software or IT enabled sectors. It is possible to get an extension of the visa in India for additional 12-month periods enabling the individual to remain in India on the employment visa for up to a total of five years from the date of initial issue of the visa.

The spouse and dependent family members accompanying the principal applicant on an EV must apply for a DV after the principal applicant has obtained their visa, which will be issued for the validity period of the principal applicant’s visa.

A foreign national may not convert from any other visa category to an EV within the country.

Almost all EV holders and some BV holders are required to register with their local Foreigners Regional Registration Office or Foreigners Registration Office within 14 days of the foreign national’s arrival in India.

Conferences visas are issued to applicants who want to attend international conferences organised in India by a ministry or department of the government, state governments, UN or its specialised agencies and reputed NGOs, among others.

The government issues project visas to foreign nationals seeking to work in the power or steel sectors.

A foreign national should apply for the visa that is most suited to the purpose of the visit.

The purpose of travel cannot be changed once the foreign national arrives in India, hence it is recommended that the applicant verify the appropriate visa category and consequently apply for multiple or single entry visas.

By Poorvi Chothani, Esq

UK Macfarlanes LLP Edward Reed Partner Tel: 020 7849 2568 edward.reed@macfarlanes.com www.macfarlanes.com

UK immigration rules: The ever-moving feast - but there are still options Immigration policy in the UK has always been a hot political topic, and never more so than today. As the fur flew between Ken Clarke and Theresa May over ‘that’ cat story, and the government’s hyperbole in relation to ‘annual limits’ on non-EU skilled workers reached blood-boiling levels, many were perhaps distracted from the relaxation of the investor visa rules and the skilled workers route for those paid in excess of £150,000 per year.

The UK operates a points-based system (PBS) for migrants wishing to come to the UK to work or invest. There are four tiers in the PBS currently accepting applications. Tier 1 includes investor, entrepreneur, post-study work and exceptional talent visas. Tier 2 is for those who wish to work in the UK and have a job offer prior to arrival. Tier 4 is for students and Tier 5 for young people from Australia, New Zealand, Canada, Japan and Monaco wishing to participate in the youth mobility scheme. There are no restrictions on Swiss or European Economic Area nationals or their spouses wishing to work in the UK.

investments’ within three months of entry into the UK. Qualifying investments are restricted to UK government bonds, or share capital or loan capital in active and trading UK registered companies, other than those principally engaged in property investment.

The remaining balance may be invested in certain types of UK assets (such as property), or placed on deposit in a UK regulated financial institution. The investment must be maintained (and therefore monitored) throughout the visa period.

Crucially, the government has relaxed from 90 days to 180 days the number of days an investor can be absent from the UK. If the investment made is increased to £5m or £10m, the investor will have to spend less time in the UK to become eligible for indefinite leave to remain, a key step to qualifying for a passport.

There is also an Entrepreneur Visa, designed for those investing in the UK by setting up or taking over (and running) a business in the UK. You do not need to have such a high level of funding as with the investor visa, but must create two new full time jobs in the UK, and register either as self-employed or as a company director within three years.

The Tier 1 (Investor) visa is designed to encourage high-net-worth individuals to make substantial financial investments in the UK. There are two ways to qualify: you must either have at least £1m that is disposable in the UK, or personal assets with a net value exceeding £2m and £1m under your control that is disposable in the UK and has been lent to you by a UK-regulated financial institution.

Employers wishing to bring staff to the UK from outside the European Economic Area need to apply to the UK Border Agency (UKBA) for a sponsor licence. Most employers will want to employ either Tier 2 (General) workers, who fill a gap in their workforce which cannot be filled by an individual already settled in the UK, or Tier 2 (Intra-Company Transfer) workers, existing employees from overseas who wish to work for the company in the UK.

Of the £1m disposable in the UK, at least £750,000 must be invested in ‘qualifying

Employers who obtain a sponsor licence (an administratively onerous task) can then apply

for the number of certificates of sponsorship they estimate they will need throughout the year. The number of certificates available has recently been restricted: for the year 6 April 2011 to 5 April 2012, a maximum of 20,700 skilled workers can come to the UK under Tier 2 (General), unless they are coming to the UK to do a job with an annual salary of £150,000 or above. The annual limit does not apply to intra-company transfers.

It is worth noting that Tier 2 (General) requires the employer will have to complete the Resident Labour Market Test, unless the job is on the list of shortage occupations. This is designed to ensure that there are no settled workers who would be suitable for the job, and it involves the employer having to, among other things, advertise the vacancy to settled workers for a minimum of 28 days.

Once a worker has had a certificate of sponsorship assigned to him by his employer, he can then apply for his visa. His certificate of sponsorship, salary, English language ability and maintenance funds will gain him points.

It is clear that the coalition is keen to encourage those who have the money to invest in the UK to help kick-start the economy. It is however, a fine balancing act and the government has had to placate the tabloid press by implementing a cap on the number of non-EU migrants, even if skilled.

The key practical issue for applicants is the time it takes to apply: anyone expecting to jump through all the hoops in under three months will face an uphill struggle. That said, despite all the ‘Yes Minister’-style red tape that now exists, the UK is open for business and investment.

January 2012 • GBM • 21

COrPOrate MigratiOnS guide

NEW ZEALAND Fragomen Karen Justice Principal and licensed immigration adviser Tel: +64 4 499 2043 kjustice@fragomen.co.nz www.fragomen.com

Setting up business in New Zealand

allow applicants to remain in New Zealand indefinitely provided a benefit to New Zealand is demonstrated by the business.

Moving your business or setting up a new business in a foreign country can be rather daunting, and fraught with all sorts of hidden traps relating to tax, immigration, employment laws and foreign ownership restrictions to name a few. Fortunately, if you are considering New Zealand as one of your options to move to, it can be a relatively hassle-free decision. In 2010, New Zealand was ranked the easiest country in the world to start up a business, second only to Singapore in terms of ease of doing business by the World Bank. Our public service has just been awarded top spot for the least corrupt country in the world (out of a total of 178 countries surveyed) by the annual Corruption Perceptions Index 2011.

For those wishing to set up or move an existing business in New Zealand, there is no maximum (or minimum) age requirement, relatively low English language requirements (IELTS overall band score of 4.0) and a requirement that applicants have experience that is relevant to what the proposed business activities in New Zealand will be. All applicants for all visa types will need to meet standard health and character requirements and, of course, ownership of sufficient funds to set up the business and support applicants and their families initially is also necessary.

Fragomen is able to assist with the immigration side to any business or corporate move, with a team of highly specialised and experienced immigration professionals. New Zealand welcomes new businesses and business people, and has a suite of visa categories aimed at those wishing to set up a new or purchase an existing business entity or simply to invest in New Zealand. Flexibility is provided for those who can afford to invest a minimum amount of money in New Zealand, or for those wishing to move and be involved as business owners. There are clear pathways to

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Applications for those wishing to be business owners, rather than investors, can be complicated and it is strongly recommended that these applicants in particular seek professional advice when looking to submit such applications. All applications under the business migration categories are processed by a dedicated processing team within Immigration New Zealand located in Wellington and processing times can vary from two to six months depending on the complexity of the application.

Professional advice is highly recommended as early in the decision-making process as possible, as it is critical to be aware of not only the requirements but also any on-going obligations attached to a given visa category.

USA Fakhoury Law Group, PC Rami D. Fakhoury Tel (248) 643-4900 Fax: (248) 643-4907 rami@employmentimmigration.com www.employmentimmigration.com

US House passes Fairness for High Skilled Immigrants Act - but it may not eliminate wait for EB-2 and EB-3 visas Indian nationals who seek employmentbased US immigrant visas in the 2nd preference (advanced degree or BA plus five years experience) now wait five-plus years for the EB-2 category, and more than 12 years for the EB-3 category for bachelor’s degree holders.

A young IT professional from India who has a four-year degree and two years of work experience will wait a minimum of 15 years under the current certification process. Many well-qualified professionals will not want to wait for this length of time as it creates great hardship. It truly interferes with planting roots in this country, (ie, mortgage, children school and to certain extent career growth) and there is a great deal of uncertainty created by policy and programme changes in US immigration law.

The Fairness for High-Skilled Immigration Act may make things better, but, how much?

[BOLD Subheading] The Bill was overwhelmingly passed in the House as HR 3012: “Fairness for High-Skilled Immigrants Act of 201” by 389-15. The Senate will likely pass it, and the President should sign it. This amendment will eliminate the percentage quota for large countries like India, and place Indian Nationals in the same worldwide wait period as applicants from other countries; a disadvantage for other countries (lengthening their wait time), but very good for China and India, shortening their backlogs.

The current system limits any country’s percentage of employment-based visas to a small percentage of the worldwide total allotment. Immigrant visas are subject to a per-country limit, set at 7% of the total annual number of family- and employment-based visas, or 25,620 per country. Employment-based visas are, in turn, divided proportionally among the preference categories at 28.6% each in the top three employment-creation categories, with additional numbers available for other workers, special immigrants, and EB-5 investor immigrants.

The present system already benefits Indians and Chinese more than the above facts might suggest. A total of 148,000 US employmentbased visas were issued in FY2010 worldwide; 7% of that is a mere 10,360.

However, unused visas in the EB-1 category from the same country get handed down, and unused visas from other countries are redistributed. That redistribution of unused visas, particularly from the world-wide EB-1, a category that is massively undersubscribed, made it possible for approximately 31,000 Indians to obtain EB visas last year.

The total number of employment-based immigrant visas issued in FY10 were 148K, of which 41K (1st pref), 54K (2nd pref) and 40K (3rd pref), with the remainder other workers.

Of these, 31K employment-based visas were issued to people from India, and 18K to persons from China.

The elimination of the 7% per country limit will make some difference in terms of additional visas and reduced waiting time for Indians, but not as much as some may expect.

January 2012 • GBM • 23

tHe inVeStMent WOrLd

the investment World Make an educated leap.

Investing must be understood as having risks, as unless you are investing in government bonds, there can no absolute guarantee of any return or capital growth, and even that statement must be tempered by the concerns over the bonds of some European Union countries.

When an investment is made the investor will be seeking one of three objectives: • An income from the investment.

• Growth on the capital investment.

• A combination of both income and capital growth.

Whichever of the preceding is the objective, the risk will need to be minimised whilst striving to achieve the required growth.

What to look for when investing.

When investing there are a number of issues, which need to be considered amongst those, being: • What return on my investment do I wish to see? Is it the minimum that I can realize? What is the historical record of the investment?

• How important is capital growth? What is the record of capital growth of the investment, or is the growth speculative as in the AIM market?

• As investing outside of banks and governments is a greater risk, can I afford to lose part or all of my investment? How should I look at my investment portfolio to spread the risks but maximise the returns on both income and capital growth?

• Do I wish to ensure that I am investing in ethical or environmentally sound companies and, if so, will I possibly forgo a percentage of my planned income or growth to maintain my standards?

• What is the industry or service that I am investing in and what is the track record of that industry and the perceived future?

Banks are an example of shares, which following the financial crisis fell sharply, but as profits are recovering are now rebuilding their share price.

• When investing it is necessary to consider the length of the desired investment. Some shares will be predicted to have a good growth plan over a 5-year period. Can you afford to invest for that period? One should look carefully at the Annual Report and the Investment Analysts’ reports to be able to assess the strength of shares, bonds and debentures.

• When looking at investments always consider that you may need to realize the investment earlier than you intend, so what will the costs be on early surrender?

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These are prime areas of concern that should be considered when building an investment portfolio, but are not all the areas of concern as each area has its own individualities that should be factored into your decisionmaking.

What to avoid when investing.

• As previously indicated an imbalanced portfolio will create issues. A good portfolio will allow for capital growth, income, various periods of investments and also elements of defined risk. Placing all investments in say shares is unwise, as if the market collapses then a vast percentage of the capital value will be lost, thus this should be balanced by investments in deposit accounts and government backed bonds.

• If you cannot afford to risk your investment then do not invest in shares.

• Do not invest in high capital growth shares if you wish to receive high income.

• Be aware of investments that have high release costs.

• If the shares are in unfamiliar companies such as those quoted on the AIM market then seek professional advice, as these shares will have no income but be based on future potential. This may be too high a risk if you cannot include that into a balanced portfolio.

Tips and Hints Investing is not as some people would describe it a “minefield”, but it does require a studious approach, and a solid understanding of the type of investments you may make. In this brief paper there is not room to discuss specifically the more “exotic” investments, so the tips and hints are focused on the more standard investment, but with all investments the most important tip is that “the greater the claim made in respect of the investment” the higher the perceived risk and the more careful you should be. Professional advisors are the experts in investments and will be regulated by their independent bodies as well as the FSA and Stock Exchange. If you receive advice from an unregulated person there will be no comeback.

As has been already indicated it is essential to have a balanced portfolio and the way to achieve this is by having cash deposits, bonds and shares. Cash deposits can be with banks or building societies or other regulated deposit taking institutions, and whilst at present, they generate limited income even for longer term deposits they do allow for ready access to funds, albeit that a small interest penalty maybe payable. This cash will allow you to have access to funds should you see an opportunity to acquire shares at a good price.

Government bonds will offer fixed interest over a fixed term and will always return capital. The one factor to be considered here is that although the interest may be attractive at the point of time of investing, the capital value will almost certainly depreciate over time. Unlike bank deposits the realization of the funds invested may be costly.

Shares are always seen as a standard investment medium and, by and large, are part of an investment portfolio. It is however important to ensure that you balance the shares. Investing in companies in the FTSE 100 will give you a solid base for income and capital growth and give a steady base.

However it is wise to carefully watch the company and its market intentions, as takeovers and mergers can affect shares and generally on an upward basis. There will be an opportunity to sell or acquire but outside of the closed period when share trading is prohibited. Apart from shares in the FTSE there are other PLC’s that have a good history and sound prospects and these can be traced through the shares prices quoted online or in the FT or other papers. Careful observation will allow you to see the share movements and allow for an informed decision.

It is also salient to look at market sector movements. Examples of this are the oil and gas and the mining industry. These industries have experienced good growth over the last few years, although not without some falls, and this is an indication that if you follow investment by sector you will understand the flow of the investment and will be able to bull and bear (buy and sell) at optimum times.

The AIM (Alternative Investment Market) is a market under the control of the Stock Exchange and is for what generally are viewed as up and coming companies. These will for instance be companies who have a new innovation to develop, or be mining companies who have seen an opportunity to test a new area for a mineral, and are now moving forward into the future development but need to raise capital. The investment return will be almost certainly be capital only and will be over a period of 3 years or more, but will give a high rate of capital return when the project is realized.

Using a professional.

Using a professional will cost you commission or a fixed monthly fee, but the benefits of the advice may well see your portfolio grow exponentially thus justifying the cost. The broker will understand the type of portfolio you seek to achieve and will be monitoring the markets and be able to advise you of any moves he feels are in your interest. Your use of a professional will be based on whether you are comfortable handling your own investments and whether you feel you can justify the costs whilst potentially better managing the risks.

Best time to invest.

It is difficult to determine the best times to invest as the risk factor that you are willing to bear will be a considerable factor. As for bank deposits and bonds there is no true “best time” as they are low risk. However where shares are concerned there needs to be an understanding of the “bull and bear” market.

A Bull Market is one where the shares are selling on the increase and a Bear Market where the shares are selling on the fall. The best time to invest in either market will be a critical decision. If you buy on a Bull Market you may buy at the point that the market is still increasing and thus you can sell at the optimum price and then make a gain, but also you may buy at the peak and thus need to hold the shares until the price rises. The reverse logic applies to a Bear Market. When a market is moving significantly the risk increases. It is wise to keep reviewing the indices that are regularly issued to make your decisions.

All the preceding advice is supplied on a nonrecourse basis and is intended for guidance only.

If you are in doubt about any investment you should seek advice from a regulated professional.

There is also the opportunity to invest in gold, silver or other precious metals online. There are regulated brokers who will invest your money in the metal of your choice without you physically holding the metal.

You are able to control your investment on a daily basis and you can buy and sell as little as a gram at a time. With the movement in gold on an almost daily basis this can form part of a balanced portfolio with very little risk as if the market falls rapidly you can sell immediately.

January 2012 • GBM • 25

internatiOnaL FiduCiary SerViCeS rePOrt 2012

International Fiduciary Services Report 2012 ACSP – 10 years of representing the Isle of Man Fiduciary Industry The Isle of Man Association of

Corporate Service Providers (ACSP) was formed on 25 June 1999. Its primary objective is serving as the representative body for fiduciary, corporate management and administration services providers, now known as CSPs, in the Isle of Man. This was in response to a new proposal to regulate the industry.

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This ACSP’s role embraces training, representing the industry to government bodies and promotion of the Isle of Man’s fiduciary sector. In this case, an open and positive relationship exists between the Association and government departments and there is constant dialogue on matters of contention.

Isle of Man There are a number of factors that make the Isle of Man an attractive business centre, particularly for offshore fiduciary business.

One such factor is the use of English as the primary language. Another is the fact that the legal system is based on UK law. This is particularly useful for UK solicitors who often have to consider elements of Isle of Man trust and company law.

A further factor is the time zone - companies on the Isle of Man are generally able to talk to the Far East and America in the same day, which is not possible in some jurisdictions.

A more serious issue is the Isle of Man’s political stability. Clients in the private client arena may put assets into trusts, companies or foundations for a number of different reasons. However, in all cases they will want to know that their assets are held in a safe and stable jurisdiction. In some cases, it is a client’s own domestic environment that is unstable and that provides the motivation for transferring assets to a more stable place.

Politically, the Isle of Man is as stable as you can get.

Communications are an important concern and it is possible to travel from the Isle of Man to Dublin and London in just over an hour. Telecommunications are also important these days as much communication is electronic: any jurisdiction wishing to be competitive has to have fast and reliable electronic communication.

I would also highlight the quality of the professionals in the Isle of Man: the lawyers, accountants and tax advisers are mostly UK trained.

The Isle of Man as a fiduciary location The Isle of Man has been accepted as an ‘approved jurisdiction’ by the stock exchange of Hong Kong for the purposes of listing of its companies on that exchange. In doing so, the Isle of Man joins a select group of countries that have been accepted by the Phillip Dearden Chairman - The Isle of Man Association of Corporate Service Providers Managing director - PKF (Isle of Man) LLC +44 1624 652000 phillip.dearden@pkfiom.com www.acsp.co.im

Hong Kong Listing Committee and in the Isle of Man’s case, companies incorporated under the two main bodies of company legislation in the Isle of Man (the Companies Acts 1931-2004 and the Companies Act 2006) have been accepted. This means that a company incorporated in the Isle of Man can, using the model that has been accepted, now seek a listing on the Hong Kong stock exchange.

These days there are an awful lot of international transactions, for example investors from around the world might put money into a company that then undertakes a mining venture in Kazakhstan or drilling oil in Nigeria. If you have lots of international investors who aren’t located in any one particular jurisdiction you’ll often put the vehicle in an offshore jurisdiction to achieve tax neutrality. Everybody will be taxed when they receive their dividends, but until then the profits do not get taxed.

The shareholders may then later try to float those companies on a stock exchange, and having the Hong Kong Stock Exchange say that, in principle, Manx vehicles are good enough for them is great. We’ve got two bodies of company law, which personally I’d always been happy with; but having the Hong Kong Stock Exchange saying they’re happy with them too is very good news.

At this year’s Confederation of Indian Industry conference in London, the Isle of Man Chamber of Commerce, supported

by Department of Economic Development member Clare Christian MLC, signed an historic memorandum of understanding with India, ensuring a partnership to deliver greater mutually beneficial trade and investment.

The acceptance of the Hong Kong Stock Exchange and the development of the relationship between India and the Isle of Man demonstrate the Isle of Man’s increasing importance internationally as a business centre.

Many countries have had to accept that the Isle of Man is prepared to be open and transparent and is only available for blue-chip business. The Isle of Man has tax information exchange agreements (TIEAs) with many countries, so they should be comfortable that either there aren’t any unwholesome things going on, or if there are, those authorities can get the information they need.

ASSOCIATION

Chairman:

Trust and foundations The formation and administration of trusts and companies is a very significant part of the Isle of Man economy.

Trusts are a very anglophile creation: they’re well understood by UK lawyers but not so well understood by lawyers in civil law jurisdictions who will often understand foundations better.

For this reason, the Isle of Man has introduced foundations legislation, which will allow for the creation of Isle of Man foundations. These have some characteristics of both trusts and companies and will be more easily understood by lawyers in the civil law countries such as France, Spain and Brazil. In the long run this should be a very useful addition to the Isle of Man’s armoury.

Pensions are big business in most mature jurisdictions. In the UK, people can transfer monies between different pension schemes, between self-invested personal pensions (SIPPs) and small self-administered schemes (SSASs), company schemes and private schemes. If people leave, the UK has a mechanism whereby pensions can be transferred to other jurisdictions. To facilitate this process, the UK has a regime called qualifying recognised overseas pension schemes (QROPS).

That means the UK effectively gives approval to jurisdictions where they accept that those jurisdictions have first class pensions legislation and that the pension providers are well enough regulated so that the UK will allow a pension-fund transfer. The Isle of Man has QROPS status, and of late this has become a very significant business with lots of people moving in and out of the UK and lots of associated pension transfers.

In summary The Isle of Man has now matured into a well diversified offshore financial centre. The main businesses for a long time have been banking, life and captive insurance, investment management and fiduciary services. This has more recently been supplemented by yacht and aircraft management services, e-business and pension provision, and there are now growing areas of business in the space and clean-tech sectors.

OF

CORPORATE SERVICE P

M Shimmin

Executive Officer: M Lambden Company Secretary: M Lambden

ACSP

Our Ref: January 2012 • GBM • 27

Admini PO Box 12-14 F Dougla Isle of M IM99 1

Telepho Facsimi Interna E-mail: Web: w

internatiOnaL FiduCiary SerViCeS rePOrt 2012

CYPRUS Fiduciary services report: Cyprus With its strategic location, great accessibility, excellent infrastructure and the numerous government incentives, Cyprus is an ideal financial and business hub. Investments of European origin have to comply only with certain restrictions such as among others, respect for the environment and safety standards. With Cyprus’ EU accession, dividends paid to Cyprus from other EU countries have no tax withheld in those countries.

Cyprus provides for numerous tax benefits and it is classed as a low tax jurisdiction. Its tax and legal systems are in full compliance with EU and OECD requirements and thus including Cyprus in the white list of international cooperative jurisdictions.

Cyprus actually provides for the lowest corporation tax in the EU with a tax rate of 10%. Under the Cypriot corporation income tax, inbound dividends are not taxable and there are provisions in place that may even exempt such inbound dividends from being subject to the special contribution defence fund (SCDF).

Besides the low corporate tax rates, the numerous double tax treaties that Cyprus has concluded with other countries, including all eastern European countries, offer tremendous possibilities for international tax planning through Cyprus in view of the fact that any tax paid in a country with which Cyprus has a treaty is deducted from the Cyprus tax payable on the same income and Cyprus does not impose any withholding tax and dividends, interest and royalties paid by business companies.

Outbound dividends are not subject to any withholding taxes. They are however subject to SCDF if paid to Cyprus tax resident individuals. Cyprus does not impose capital gains tax on the disposal of shares unless it relates to immovable property situated in Cyprus. If the immovable property is located outside of Cyprus, such gains are exempt. Nonetheless, Cyprus has expanded the applicability of the tax benefits obtained by the EU directives to all third countries by incorporating the provisions of the EU directives in its national legislation.

The Tax Legislation of Cyprus has also created a unique environment for holding Christodoulos G. Vassiliades & Co LLC Ledra House 15, Agiou Pavlou Street, Agios Andreas 1105 Nicosia, Cyprus Christodoulos G Vassiliades Managing director Tel: + 357 22 55 66 77 cgv@vasslaw.net www.vasslaw.net

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and trading companies. It has introduced numerous advantages making Cyprus a prime location in the international field of holding and trading regimes. Cyprus has committed itself to the preservation of its low tax regime as an ideal location for holding companies on an international scale. Cyprus, by virtue of its exceptionally advantageous tax system, has emerged into one of the most attractive holding regimes worldwide.

Cyprus. Also, individuals moving to a high tax country may obtain fiscal advantages in their new country by placing funds in an international trust created in Cyprus.

Moreover, for the purpose of attracting foreign investors to create in international trusts in Cyprus, the International Trusts Law of 1992 has been passed and deals with the regularisation of international trusts.

This Law offers freedom of movement of funds and it removes certain doubts as to whether the existing legislation could cover arrangements such as those, which are common in other jurisdictions.

Lastly there are no registrations or reporting requirements for trusts established in Cyprus nor are the names of trust or of the persons referred to in the trust deed disclosed. The only authority to be informed of the creation of an international trust is the Central Bank of Cyprus and only in cases where bank accounts are opened in Cyprus. Again no names are disclosed.

Cyprus international trusts enjoy important tax advantages, providing significant tax planning possibilities. The following advantages are indicative of the possible options for tax minimisation: all income, whether trading or otherwise, of an international trust (ie, a trust whose property is located and income is derived from outside Cyprus) is not taxable in Cyprus. Dividends, interest or other income received by a trust from a Cyprus international business company are neither taxable nor subject to withholding tax. Gains on the disposal of the assets of an international trust are not subject to capital gains tax in Cyprus. The assets of an international trust are not subject to estate duty in Cyprus.

Trusts are usually used by wealthy individuals for the purpose of protecting their inheritance or capital gains taxes in their home country. They can also be used by expatriates settling into a trust before repatriating, assets acquired while working abroad, to protect such assets from the tax net of their home country.

Trusts created in Cyprus can prove advantageous for a number of reasons. For instance, an individual who wishes to divest himself of personal assets for fiscal or other reasons can achieve this by transferring them to an international trust created in

In addition to that, trusts are advantageous when an individual who wishes to invest in business overseas, wants to ensure that the profits and dividends received are not remitted to the country of his residence.

Being one of the most reputable law firms in Cyprus, Christodoulos G. Vassiliades & Co. LLC has developed its expertise to provide a full range of legal, administrative and international tax planning services, particularly to foreign clients and trusts.

Professional and management services are provided through the firm’s affiliated companies. The firm’s competitive advantage stems from its commitment to clients, personalised approach, innovative quality service and deep industry knowledge.

UK Wealth planning for HNWIs With income over £150,000 per annum now taxable at 50% and individuals with income of £100,000 per annum losing their personal allowances, action is needed to ensure personal taxes are organised efficiently. There are a number of effective and non-aggressive tax planning actions that will protect and maximise wealth.

Married couples or those in civil partnerships could consider redistributing their income to make the most of individual tax allowances and rate bands. Transfers of assets between spouses or those in civil partnerships are free of capital gains tax (CGT) so the lower earning spouse could have most, if not all, of the investment income in his/ her own name.

Income could be tax-free or only taxed at 20% or 40% rather than at 50% if the higher earning

spouse has income in excess of £150,000.

Some key reliefs will also give a reduction against income.

Contributions to a pension scheme currently give tax relief at 50%. While the maximum annual contribution on which relief is given is now restricted to £50,000, there is an opportunity prior to 5 April to contribute up to £250,000 and gain relief at 50%. Each year up to £200,000 could be invested into a venture capital trust (VCT) gaining tax relief at 30%. Dividends from VCTs are tax-free and there is no CGT on disposal provided the investment is held for five years. Enterprise investment scheme (EIS) investments of up to £500,000, increasing to £1m next year, give relief at 30% and capital gains tax deferral relief may also be available. Again, there is no CGT on disposal provided the shares are held for three years, although any deferred gains will come back into charge to tax. Advice does need to be taken on deferring gains as there are options on which rate of tax you pay-in in the future. An enhanced seed EIS will be available from April 2012, which will give 50% tax relief (irrespective of the rate of tax paid) for investments up to £150,000 in start up companies.

Both EIS and VCT reliefs are given as an incentive for investing in smaller, therefore high risk, companies.

The corporate rate of tax is now significantly lower than personal; the lower rate is 20% and the higher rate is being reduced to 23%.

As a result, personal investment companies are becoming attractive for holding investments that would otherwise generate income and gains taxable at

higher rates. Dividends in a company can be received with no tax, interest is taxed at the lower corporate rates, gains are taxed at the lower corporate rate and benefit from indexation allowance. Anyone investing a significant amount in equities should consider the use of a company rather than direct personal ownership.

Baker Tilly Gary Heynes Head of Private Client Services 01483 307000 gary.heynes@bakertilly.co.uk www.bakertilly.co.uk

Make use of CGT annual exemptions of both husband and wife. Each individual (including children) can realise capital gains of up to £10,100 per annum each (at current rates) before any CGT is payable. Advantage should be taken every year of the CGT annual exemption because if you do not use it in one year, you lose it; you cannot carry forward unused allowances to later years.

If substantial capital gains have been made in the year, review other chargeable assets that may be standing at a loss to see if these can be disposed of in the same tax year in order to minimise the overall CGT payable. However, use losses carefully to make maximum use of them. There is little point in realising losses in the same year as you realise a gain that qualifies for entrepreneur’s relief and that may only be taxable at 10 - better to ‘save’ the loss to offset against a gain that would be taxable at 28%.

Some capital losses can be set against income tax (IT) and relief obtained at up to 50 including losses on shares in unlisted trading companies where the shares have been subscribed for and shares subscribed for under the EIS scheme.

It may be worthwhile taking advantage of the gap between the 50% IT rate and CGT of 28%, by investing in assets that will be subject to CGT rather than IT. These might include assets where the capital appreciation is likely to be more significant than income produced, but could also include funds or open ended investment companies (OEICs), which receives income accessed capital disposals.

action to minimise the effects of inheritance tax (IHT) on their estate on death, while others, unfortunately, take action they believe may mitigate IHT but inadvertently gives rise to IT or CGT charges.

Everyone should ensure they make a will and review it on a regular basis to ensure it remains tax efficient and continues to benefit those whom you wish to inherit your assets. The introduction of transferable nil-rate-bands does not mean that wills can be ignored for IHT planning purposes. A will containing a trust of the available nil-rate-band can enable maximum use to be made of the nil-rate-band, as well as reliefs such as business property relief and agricultural property relief.

You can make gifts of up to £3,000 per year free from IHT, as well as gifts up to £250 per year to as many different individuals as you like. Gifts of excess income are entirely exempt.

One of the most valuable reliefs is for business property, which gives 100% exemption for certain business investments and also includes shares listed on the Alternative Investment Market.

By Gary Heynes

Many individuals do not take

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internatiOnaL FiduCiary SerViCeS rePOrt 2012

GIBRALTAR So… what’s with Gibraltar?

Standing strong as one of the Pillars of Hercules, Gibraltar is a small British Overseas Territory located at the southern tip of Spain.

Gibraltar is a touristic hub for day-trippers and cruise liner passengers and, yes, its famous apes continue to make the Rock their home: but Gibraltar is also fast becoming a powerful force in international business.

Despite being very much under the radar when compared to the more established Channel Island, Caribbean and onshore European centres, Gibraltar has transformed itself over the past few years to become an exciting, growing, well-regulated and fully EU compliant international finance centre.

The heart of this transformation culminated with the introduction in 2011 of the Income Tax Act, which provides for a flat rate of taxation on corporate profits of 10%, replacing the previous ‘tax exempt’ regime.

Only those profits accruing or deriving in Gibraltar are taxable and so, properly structured, a Gibraltar company conducting its profit-making activity outside Gibraltar will not suffer taxation on any of its profits.

This is not the only attraction Gibraltar offers in the tax field - Gibraltar has no capital gains taxes, wealth taxes, inheritance taxes or stamp duty. Capital duty is a nominal £10 on the initial share capital, with no further amounts payable on any increases. Gibraltar companies can receive dividends free from tax and can pay these onward without suffering withholding. Interest is similarly paid free from withholding taxes and received tax-free. Royalties and savings are not heads of taxation under the Income Tax Act. Although part of the EU, Gibraltar does not charge VAT. Accordingly, Gibraltar companies play an interesting role in international tax structures, making good use of Gibraltar’s position as an EU onshore financial centre offering all the tax advantages enjoyed by its competing jurisdictions.

Gibraltar’s company legislation is based on the English 1929 Companies Act and a whole raft of common law precedents are, at least, highly persuasive in Gibraltar courts.

With a strong emphasis on effective, robust management and control, Gibraltar is an ideal jurisdiction for structuring holding companies, trading entities and, increasingly, IP-owning vehicles.

Line Management Services Limited (LMS) is the corporate services arm of Hassans, Gibraltar’s largest law firm. LMS offers its clients a full corporate services package including the formation of Gibraltar companies (as well as companies in over 30 other jurisdictions). LMS also caters for registered office, secretarial and registered

30 • GBM • January 2012

shareholder services. Corporate and personal directorships can also be provided. The basic package is complemented by the ability to provide full accounting and banking services.

Additionally, LMS can easily feed into Hassans’ vast array of legal resources, with expertise available in every field of law.

It is not just Gibraltar companies that are hugely popular in international tax planning structures. LMS also sets up limited partnerships (based on the English 1907 Act, with the added quirk of separate legal personality). PCC legislation, one of the world’s leading gaming regimes and a highly popular experienced investor fund product are also amongst Gibraltar’s highlights.

As a key Mediterranean port, it is no surprise that Gibraltar offers attractive ship and yacht registration facilities, which again can be structured tax-efficiently through corporate ownership. Boasting a new £75m air terminal, Gibraltar also hopes to become a key player in the worldwide aviation market.

Gibraltar’s private client tax regime is equally attractive. Its Category 2 status, aimed at high-net-worth retirees, essentially provides for individuals owning approved residential accommodation in Gibraltar to be subjected to tax of between £22,000 and £30,000 on their worldwide income. Category 3 status, which taxes only the first £120,000 of an individual’s remuneration (a maximum payable of £32,550) is also highly attractive for high level executives relocating to Gibraltar.

Hassans’ trust arm, Line Trust Corporation Limited (LTCL) sets up trusts for clients of all nationalities. It also provides professional trustee services and can structure clients’ investments through the use of special purpose vehicles (SPVs) enjoying the attractions detailed above. Accounting and banking services are also part of the package.

Both LMS and LTCL are licensed, regulated and supervised by the Financial Services Commission of Gibraltar.

Investment advisory and gatekeeper services to keep track of client investments can also be favourably procured.

Gibraltar is a common law jurisdiction, with the Privy Council in London being its highest court of appeal. Its parliament and legislation is modelled on that of the UK. It boasts a young, entrepreneurial, largely local workforce, which combines the unique blend of Latin flair with the tempered benefits of Anglo Saxon institutions and education. The vast majority of Gibraltar’s professionals are

trained in the UK and are fully invested in the success of the jurisdiction. Gibraltar has entered into 18 tax information exchange agreements and has been fully white listed by all major international organisations such as the OECD, IMF and FATF. So…what’s with Gibraltar? Nothing short of a highly competitive and attractive jurisdiction for all international tax planners to consider for their structures.

Authors Ian Felice is a partner of Hassans and CEO of LMS. He is a barrister, qualified to practise in Gibraltar and the British Virgin Islands.

Nadine Collado is the corporate services director of LMS. She is a fellow of the Institute of Chartered Secretaries and Administrators.

Hassans Line Management Ian Felice Partner ian.felice@hassans.gi Nadine Collado Corporate Services Director of LMS nadine.collado@linemanagement.gi Tel: +350 200 79000 Fax +350 200 71966 57/63 Line Wall Road PO Box 199 www.gibraltarlaw.com

More than just another service provider, the CKLB Financial Services Group provides unparallel professional services by delivering tailor made solutions to clients.

A people business with highly qualified professionals who understand well the requirements of private and corporate clients worldwide.

Multi jurisdictional Company Formation Corporate Management, Administration and Secretarial services Corporate and Back Office Accounting Establishment of Trusts and Trustees Services Private Equity Fund structuring, Formation and Administration services Private Wealth structuring & Family Offices International Cross border Corporate structuring International Capital Market and Brokerage services P.O Box 80, Felix House

24 Dr Joseph Rivière Street, Port Louis, Mauritius

405 8800

405 8818

January 2012 • GBM • 31

triP adViSOr

Europe’s Epicurean Escapes The beautiful vineyards, wide-ranging cuisines and world-famous restaurants and chefs of Europe make the continent a veritable playground for discerning food and wine connoisseurs.

“The destinations in this list provide the best food and wine experiences Europe has to offer,” commented Emma Shaw, TripAdvisor spokesperson. “With an enormous variety of high quality gastro offerings, even travellers with the most particular of palates can feast in Europe.

With so much on offer, the decision of where to visit can be a daunting one, so heed the advice of your fellow travellers and visit these triedand-tested gastro havens. The destinations below are Europe’s best for food and wine, as decided by TripAdvisor travellers.

“Considering the tough competition from destinations renowned for their culinary expertise, it’s great to see two UK destinations in the list.

With the likes of York and Edinburgh within our borders, it’s possible to have a wonderful foodie holiday without leaving the country.”

europe’s best food and destinations: 1. Florence, Italy

6. Siena, Italy

Boasting excellent Tuscan wines and specialising in dishes made with locally-grown ingredients, such as extra virgin olive oil, pecorino romano cheese and wild game, you’re unlikely to encounter so much as a morsel of disappointing food in Florence, named the best food and wine destination in Europe.

Many visitors to Siena are day-trippers, so you’ll find the restaurants are peaceful and uncrowded at night. Siena offers Tuscan cuisine, with specialities including pici (a spaghetti-like pasta), ribolitta (bread and bean soup), and panforte, a traditional Christmas sweet that’s now available yearround. There’s no need to break the bank on wine – the house wine in many restaurants is likely to be a lovely and affordable Chianti.

2. Paris, France The French are renowned for their rich, delicious food and culinary talents, so it’s no surprise to see the country’s capital and cultural centre named one of Europe’s best food and wine destinations. The pervasive talent of Parisian chefs means you need not visit an expensive restaurant in order to have good food – you can expect mouth-watering dishes all over the city, from a tiny bakery to a world-famous gourmet restaurant, while the wine lists will never fail to impress.

3. Rome, Italy Offering hearty Italian cuisine, be prepared to indulge on a trip to Rome.

Specialities include filetti de baccala (fried cod fillets), spaghetti carbonara and carciofi alla giudia (fried artichokes). Don’t miss the opportunity for an authentic Roman pizza, made with a thin, crispy base.

4. Sorrento, Italy Enjoy a meal made with fresh local ingredients, such as citrus fruits, olives and seafood, while taking in the picturesque views of the Amalfi Coast. Be sure to indulge in the Limoncello, an Italian lemon liqueur which is staple of the area.

5. York, UK Home of the famous Yorkshire pudding, York is the UK’s top gastronomic destination and each year holds a festival, attracting half a million visitors, celebrating the delicious local food. The area’s specialities include Yorkshirereared venison and Wensleydale cheeses.

7. Bologna, Italy With an impressive range of restaurants to suit all budges, Bologna is a wonderful destination for the food and wine traveller. Try tortellini al brodo (stuffed pasta in broth), mortadella (cured sausage) or tagliatelle al ragu (wide pasta noodles in meat sauce).

8. San Sebastian, Spain Tapas are the speciality here and should not be missed, with the local hams and fresh seafood likely to be delicious. This ancient town is also known for its cutting-edge molecular gastronomy – a cuisine which makes use of the physical and chemical transformations of ingredients that occur while cooking - so if you see anything unusual on the menu, it’s worth a try.

9. Barcelona, Spain The local Catalan cuisine is excellent, with zarzuela (seafood stew) and fideua (similar to paella) being highlights. Like San Sebastian, molecular gastronomy is also popular and easy to find here, so be prepared for adventurous dining.

10. Edinburgh, Scotland Once known for haggis and deep-friend Mars bars, Edinburgh has come into its culinary own. Scotland’s capital is now a foodie haven, offering cuisines from all over the world and good restaurants to suit any budget.

For more information on these destinations, visit www.TripAdvisor.co.uk.

This list is based on the millions of reviews and opinions from traveller around the world. Winners were determined based on the most highly-rated food and wine destinations by travellers in Tripadvisor reviews 32 • GBM • January 2012

January 2012 • GBM • 33

Luxury Brand Series – leading resturants

Luxury Brand Series

The World’s Finest Dining Experience With so many places to choose from, just where do you look to go when you want only the best cuisine? Our list shows you the restaurants that excel in their trade and offers you something beyond the norm. The restaurants featured offer food that was once only dreamt of and surpass capabilities of the average chef. The cordon bleu at each of these restaurants exceed the highest expectations of all food connoisseurs and are further enhanced by their locations, exemplary service and amazing experiences.

Be it for business or pleasure, over the next few pages let your eyes (and taste buds!) feast over what the culinary world has to offer you in luxury dining.

34 • GBM • January 2012

Restaurant Name

Location

Head Chef/Executive Chef

Skylon

London, UK

Helena Puolakka

Restaurant at The Pearl

San Diego, California

Jaison Burke

Gunther’s Modern French Cuisine

Singapore

Gunther Hubrechsen

Garibaldi Italian Restaurant and Bar

Singapore

Roberto Galetti

The Square Restaurant

London, UK

Robert Weston

ST. JOHN Restaurant and Bar

London, UK

Chris Gillard

noma

Copenhagen, Denmark

René Redzepi

The Lake Room Restaurant

Kerry, Ireland

Robin Suter

Guy Savoy

Singapore

Eric Bost

LA TOUR D’ARGENT

Paris, France

Laurent Delarbre

The Dining Room at Langdon Hall

Ontario, Canada

Jonathan Gushue

The Four Seasons Restaurant

New York, USA

Pecko Zantilaveevan

Le Manoir aux Quat'Saisons

Oxfordshire, United Kingdom

Raymond Blanc and Gary Jones

Aqua

Wolfsburg, Germany

Sven Elverfeld

Les Amis

Singapore

Armin Leitgeb

Nobu Berkeley ST

London, UK

Martin Brito

Marcus Wareing at The Berkeley

Knightsbridge, London

Marcus Wareing

The Red House Seafood Restaurant Singapore Established since 1976, Red House is one of the pioneer restaurants at the East Coast Seafood Centre. Well-known for our dedication to serving the best quality seafood in town, our timeless favourites include the Steamed Scottish Razor Clams and Sri Lankan King Crabs in Chef's Special Blend of Spicy Black Pepper.

Located at the East Coast Seafood Centre where the cool ocean breeze makes dining a wonderful experience, Red House Seafood Restaurant is nestled amidst lush greenery and just a stone’s throw away from the lovely seaside. It is the perfect place to wine, dine and simply enjoy the scenic beauty of Singapore’s east coast.

In December 2007, we also opened our doors at The Quayside, incorporating a fresh restaurant bar concept that offers customers the luxury of having drinks pre and post meal. The atmosphere is homely and convivial, yet elegant and makes a great venue for corporate functions and product launches.

Located in a quaint corner of the city centre, Red House at The Quayside is Robertson Quay’s prime dining spot. Tucked snugly along the riverfront, diners can enjoy a lovely view whilst feasting on delicious seafood. The cosmopolitan feel of Red House at The Quayside is the result of a unique restaurant bar concept where you can enjoy drinks “By The House” before and after a scrumptious meal.

Enjoy our Bar Bites which include the Trio Combination of Squid & Wasabi Mayo Prawns. Cooked favourites include Creamy Custard Prawns, Scottish Bamboo Clams steamed with Minced Garlic, Crispy Roast Chicken and Crayfish baked with Fresh Herbs & Fragrant Butter. We have a range of red, white and sparkling wines specially selected to pair perfectly with our menu offerings, and we also carry the irresistible Yamazaki Whisky.

Our private rooms hold up to 60 people and make great spaces for corporate functions & product launches. The bar area can also be booked for private events as it can be separated from the main restaurant area.

Dress casually and relax in the homely atmosphere at Red House. The mouth-watering smells of succulent seafood simmering in a myriad of delicious sauces constantly fill the air as you let our warm and friendly staff take care of all your dining needs. Do contact us today for menus and budgets customized to your requests.

Red House Seafood Restaurant Blk 1204, #01-05 East Coast Parkway Seafood Centre Singapore 449882 Tel: +65 6442 3112 Operating Hours: 5pm – 11.30pm (Mon – Fri), 11.30am – 11.30pm (Fri, Sat, Public Holidays) Red House at The Quayside #01-13/ 14 The Quayside, 60 Robertson Quay Singapore 238252 Tel: +65 6735 7666 Operating Hours: 11.30am – 11.30pm (Mon – Fri), 10am – 11.30pm (Fri, Sat, Public Holidays) dine@redhouseseafood.com Group Restaurant Manager: Sunny Goh sunny.goh@redhouseseafood.com Business Operations Manager: Jocelyn Ng jocelyn.ng@redhouseseafood.com Corporate Communications & Creative Developments: Yee Ling Chang yeeling.chang@redhouseseafood.com

January 2012 • GBM • 35

Luxury Brand SerieS – Leading reSturantS

Marcus Wareing at The Berkeley Knightsbridge, London Chef/Owner Marcus Wareing Marcus Wareing has his feet firmly in the kitchen at his eponymous two Michelin starred restaurant in Knightsbridge, London. This stunning venue has been his home for 11 years, previously as Pétrus until Marcus took ownership in September 2008 and re-launched as ‘Marcus Wareing at The Berkeley’. Marcus has established ‘Marcus Wareing at The Berkeley’ as London’s most acclaimed restaurant.

Marcus’ philosophy has and always will be great hospitality for every guest. The stunning dining room, designed by David Collins, is managed by Dimitri Bellos who has worked alongside Marcus for many years. The restaurant is well-known for its discreet service from their friendly and knowledgeable team, always happy to go that extra mile to suit the occasion.

Wareing continues to delight with his modern, light cuisine delivering the finest flavours from a palate of ingredients from all over the British Isles and further afield. For dinner the restaurant offer the ‘A la Carte’ menu priced at £80 for three courses. The ‘Taste Menu’ is an eight course option offering a superb selection of Marcus’ finest dishes which can be matched with wines for each course by their charming sommelier. Both menus are also available at lunch in addition to a three course set menu priced at £38, easily enjoyed within two hours making it perfectly suited to Business lunches.

Private Dining is available in the elegant Pomerol Room for up to 16 guests. Adjoining the main restaurant, the room is totally private offering a unique dining experience, ideal for a celebration or corporate event. A wide range of set menus are available for you to choose from varying in price based on the ingredients used in the dishes, and vegetarian options are also available.

At the heart of the restaurant lies The Chef’s Table offering 8 guests a birds-eye view of the kitchen from the comfort of your air-conditioned banquette. Marcus and his brigade will create a bespoke menu just for your table using the finest seasonal ingredients whilst you enjoy the theatrics that each day brings. For the ultimate client entertaining out your trust in their sommelier to select wines that perfectly complement the 8 course lunch or 9 course dinner menu. This exclusive experience really is a must for the culinary connoisseur.

Whether your choose the private Pomerol room, Chef’s Table or beautiful dining room, Marcus and his team will deliver inspired and exciting menus tailored to each individual. The passion for great food and service is evident in every detail so it is no surprise then that Marcus continues to receive numerous accolades from all over the globe.

36 • GBM • January 2012

Marcus Wareing at The Berkeley, Wilton Place, Knightsbridge, London SW1X 7RL Telephone 020 7235 1200 Fax 020 7235 1266 Email marcuswareing@the-berkeley.co.uk www.marcuswareing.com for online reservations

Marina Bay Sands - Singapore Guy Savoy Introduction The cuisine and philosophy of one of France’s most celebrated chefs Chef Savoy arrived in Singapore’s Marina Bay Sands in 2010, winning accolades for its refined cuisine and impeccable service.

For Chef Guy Savoy, fine dining is all about the senses. It is through his cuisine that this revered French chef expresses his sensitivity and passion for food. Selecting only the finest ingredients, prepared and served with an uncompromising awareness of what makes a dining experience truly exceptional, is what earned the prestigious Guy Savoy restaurant in Paris three Michelin stars.

Chef Savoy’s unerring attention to detail and profound respect for his carefully selected ingredients are replicated in the Singapore restaurant. Guests can dine in its modernist dining room or choose to have a pre-dinner aperitif at the champagne bar. A degustation bar menu is available in the afternoon, allowing guests to enjoy wines from every part of France and beyond, paired with a tasting portion of the famous Guy Savoy cuisine.

two Michelin Stars, the AAA Five Diamond Award, and named one of the top 40 restaurants in the US by Gayot for five years straight. Since opening in Singapore, Guy Savoy has been voted part of Singapore’s Best Restaurants by the Singapore Tatler, and has received rave reviews by both local and international press. The team of Guy Savoy continually strives to provide the same refined cuisine and personal experience found at Restaurant Guy Savoy in Paris.

The Team

Alain Herber (Executive Pastry Chef) Chef Alain Herber hails from Thiais, France and has been interested in the art of pastry making since a young age. He worked as a pastry chef for 15 years before landing the opportunity for an apprenticeship with one of France’s most decorated pâtissier, Pierre Hermé. Following that stint, Chef Herber worked alongside Philippe Conticini in creating artisanal pastry creations. In a quest to further hone his skills, Chef Herber joined St Regis, Bora Bora and was responsible for creating innovative pastries for the hotel. He came to Singapore in 2008, as Executive Pastry Chef of the then newly opened St Regis Singapore. In 2010, Chef Herber joined Guy Savoy as part of the opening team, and has since been responsible for creating the decadent and mouthwatering array of desserts that the restaurant offers.

Guy Savoy Award-winning Chef Guy Savoy is the youngest of the French legends credited with pioneering “Nouvelle Cuisine.” His Guy Savoy restaurant in Paris is considered one of the finest haute-cuisine establishments in the world. Selecting only the finest ingredients, Chef Savoy prepares and serves with an uncompromising awareness of what makes a dining experience truly exceptional. This is what earned the prestigious Guy Savoy restaurant in Paris three Michelin stars. As one of France’s most celebrated chefs, Chef Savoy has been awarded the Legion d’Honneur from the French Minister of Agriculture (2000) and the French President (2009) and was voted France’s Chef of the Year by his peers, among his numerous honors.

Chef Savoy has profound respect for his carefully selected ingredients. Flavors are gently coaxed so that every bite of food makes a statement. His technique is best exemplified in his signature dishes.

These exquisite dishes create an exquisite mix of aromas and flavors that will tantalize the sense of guests at Guy Savoy.

Restaurant Name Guy Savoy Location Marina Bay Sands, Casino Building, L2-01 Tel 6688 8501 guy.savoy@marinabaysands.com

Eric Bost (Executive Chef) Having been exposed to the restaurant industry at a young age, Chef Eric Bost developed early a keen interest in cooking. Realizing that his dream was to be a chef, he attended the prestigious New York based Culinary Institute of America. His passion to excel saw him travelling to Paris where he spent three years working in Michelin starred establishments, including Alain Ducasse aux Plaza Athénée and Les Ambassaduers at the Hôtel de Crillon. Chef Bost joined the opening team at Restaurant Guy Savoy, Las Vegas, in 2006 and during his tenure the restaurant was awarded numerous accolades, among them

January 2012 • GBM • 37

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internatiOnaL BuSineSS CriMe rePOrt 2012

internatiOnaL BuSineSS CriMe rePOrt THE FUTURE OF FRAUD: DATA THEFT AND THE DIGITAL FRONTIER Nothing stays the same. As technologies grow and become more complex, so do the risks they pose to organisations and everyone charged with protecting that entity’s assets.

Additionally, as organisations expand and shrink with a turbulent economy, new risks present themselves.

The expansion of social media also brings with it challenges for employers; your employees may be ‘tweeting’ things about your company that you might prefer to keep private.

Business leaders must be aware of some of the schemes that are becoming more prevalent across the globe.

Data theft Data theft is more of a concern because data storage is so cheap. It is easier to store data than to sort through it and only keep what you need. It is now much easier for employees to copy large amounts of data and walk out the door with it.

that, if accessed by a competitor, could lead to a decline of the company’s position in the marketplace. Non-ID data theft occurs when an employee makes copies of a company’s confidential information and uses it for personal use or transfers that information to a competitor. A company’s confidential information includes contracts, financial reports, and marketing plans.

storage devices, such as USB flash drives, iPads and notebook PCs. The act of illegally downloading data from a networked computer to a USB flash drive is called ‘thumbsucking’. The use of an iPod or other portable music player for the same purpose is called ‘podslurping’. Companies are now outlawing the use of these devices in their offices because of how easy it is to copy data.

How do thieves steal corporate data?

For example, in the US, the CBS television network recently featured an investigation on copier security. Copiers or multifunction printers (MFPs) are at risk of a data breach because each machine contains an internal hard drive used to store information and images, which CBS proved by extracting data such as birth certificates, Social Security numbers, income tax forms, police records, and medical records from secondhand MFPs. According to the report, 60% of Americans “don’t know” copiers store images on a hard drive. Many companies are not taking proper actions to prevent this breach.

Online theft: All information is connected virtually. Information is available on a company’s internal servers, but these servers are also connected to the Internet, which, if not protected, can be accessed by other Internet-based computers. A hacker can infiltrate the company’s IT infrastructure and access confidential data. A poorly designed system with weak security is at risk.

ID data theft: Stolen corporate data has a much higher impact than simple identity theft because it can affect hundreds of thousands of individuals.

As electronic borders between countries blur, hackers in one nation can easily commit crimes against individuals, corporations and government entities on the other side of the world. Hackers remain difficult to pinpoint as they can hide their tracks by commandeering computers from afar and routing their activities through machines worldwide.

ID data theft occurs when a customer’s records are illegally copied. Information stolen includes the customers’ names, addresses, phone numbers, passwords, account and credit card numbers, and government identification numbers. This information can be sold or used to commit all manners of identity fraud.

Physical theft: Most companies pay more attention to Internet-based security, but less attention to the individuals who have physical access to the same information.

For example, many cases of ID-based data theft involve the physical theft of the storage media used to store a company’s customer records.

Proprietary data theft: Companies are a host to various types of information; information

Non-ID data theft is an even bigger problem because of the growing use of portable

40 • GBM • January 2012

The investigation opens the question about the security of the data that is stored in MFPs. Some features available to prevent data from being stolen are: Xerox’s image overwrite feature electronically ‘shreds’ information stored on the hard disk; on MFPs with hard drives, there’s the option to remove the hard drive before the MFP is disposed, recycled or turned in after its lease; the secure print feature safely stores jobs in the machine until the owner enters a PIN to release them; and, the distributor offers security encryption products for purchase.

Analysing data Now that everything is digital, there is more

information available for fraud examiners and auditors to review. That is both good news and bad news.

It is much harder to analyse raw data due to the fact that there is so much. Just one terabyte could hold the equivalent of 1,000 copies of the Encyclopaedia Britannica.

Twelve terabytes could hold the equivalent of five billion single-paced, typewritten pages. The types of questions that confront security professionals and investigators who deal with this complex issue include: how can such large amounts of data be analysed to search for fraudulent activity?

Should one use logarithms, text searches or ratio analysis? How should one review the anomalies or irregularities that are found?

If this type of fraud is suspected at your organisation, an investigation is needed that includes members of different departments or disciplines to provide the knowledge and skill sets required. Legal counsel, internal and external auditors, accountants and HR and loss prevention personnel are the primary participants in an investigation, depending on the allegation. Companies may also consider including IT personnel and computer forensics specialists to help analyse and sort through data for pertinent and useful information for the investigation.

Reductions in resources The rate of fraud increases during times of economic turmoil. Since organisations are cutting budgets, this restriction affects fraud-related internal controls. The level of spending on preventive and detective controls has the potential of decreasing in the future. When there are cutbacks in a company, it is vital to maintain basic fraud prevention strategies - despite the economic climate.

Three factors are generally necessary for a fraud to occur: pressure, opportunity and rationalisation. The presence of each is more likely to take place in times of economic hardship. Both organisations and individuals experience the pressure of increased financial strain. Opportunities for fraud increase as companies lay off employees and reduce expenditures, leading to reduced internal controls and fraud prevention measures.

Feelings of helplessness, pessimism and fear allow individuals to rationalise fraudulent acts.

In this economy, employees have seen a surge of incentives and opportunities to defraud their employers. Some common schemes with heightened risk in periods of economic distress include embezzlement, skimming, larceny of cash and other assets, and inventory theft. Other schemes that are more common but require special access include check tampering, billing schemes and false refunds.

Social media issues

blogging and collaborative media, such as Facebook, LinkedIn, and Twitter, presents both challenges and opportunities. Social media offers businesses a new channel for advertising and customer communications, while employee usage creates various reputational, liability, and information security risks.

Potential security risks might come in the form of phishing scams, which convince employees to perform a task that launches a malware attack. Employees can send out sensitive corporate information via a social network just as easily as it can be downloaded onto a USB drive. Many employees also risk exposing an agency to major security breaches by divulging seemingly innocuous details about the workplace via Facebook or LinkedIn. An employee can even deride a company’s product or service through Twitter.

From monitoring and threat-detection tools to blocking and Web-filtering techniques, agencies now have a variety of weapons to fight this growing problem. Organisations need to adopt a comprehensive social media strategy with policies tailored to their requirements and culture. Carefully crafted usage policies can address employees’ behaviour online and offer strict guidelines on how to mitigate social media security risks. Many elements in such a corporate policy will explicitly state that violations (eg, no defamatory or harassing content, no posting of third-party copyrighted materials or trademarks, no posting of confidential or proprietary information) may result in disciplinary action. Every employee should be required to sign the social media policy, as well as annual confidentiality agreements.

Further, annual training sessions for employees and new hires can be offered to reinforce the agency’s social media rules and regulations.

Nevertheless, there is resistance by employees on the issue of allowing employers to interfere or monitor the use of these sites. The main concern when it comes

to employers monitoring Facebook accounts, Twitter feeds and personal blogs is for the employees’ privacy. Intrusion upon a party’s seclusion or private affairs is a tort, and a cause of action might arise in the instance of an employer monitoring online activities.

However, an employer can defend on the ground that the employee did not have a reasonable expectation of privacy.

In summary The smart business leader will take steps to manage these risks, rather than ignore them.

Protecting yourself may not be as difficult (or expensive) as you think. According to surveys conducted by the Association of Certified Fraud Examiners (ACFE), most instances of fraud in the workplace are detected through tips. Therefore, companies can often detect frauds early simply by having a reporting programme in place. Also, an experienced fraud examiner can conduct a fraud risk assessment specifically for your organisation to determine what proactive tools can be implemented to protect your assets and your reputation. With the right detection and prevention methods in place, as well as a leadership team that is committed to their successful implementation, your organisation can be well-prepared and protected against fraud.

About the author James D Ratley, CFE, is president and CEO of the Austin, Texas-based ACFE, the world’s largest anti-fraud association and premier provider of anti-fraud training and education. Ratley was selected as one of 2010 Security magazine’s most influential security executives. As an ACFE faculty member, he teaches regularly at workshops and conferences on a variety of fraud-related subjects, and was a visiting scholar at the University of Nebraska in Lincoln. He also serves as a member of the board of advisers for the Institute for Bank Director Education, and has been certified as a master peace officer by the Texas Commission on Law Enforcement Standards and Education.

Association of Certified Fraud Examiners Tim Harvey Director of UK Operations 0207 692 1888 Email:- tharvey@acfe.com www.acfe.com

James D Ratley

The growth of social networking, microJanuary 2012 • GBM • 41

internatiOnaL BuSineSS CriMe rePOrt 2012

SPAIN FINANCIAL FRAUD INVESTIGATIONS It is not possible to draw up a comprehensive list of every type of fraud, nor is there a fool-proof method for preventing it. Fraud is as varied as its perpetrators and its investigators: where human intelligence is involved, there are no limits.

Experience and research show that when people commit fraud, their most important consideration is risk of detection by third parties. Based on this risk perception, they commit fraud in areas of the company with less surveillance and fewer controls, and at deeper levels than normally addressed by the controls with which perpetrators are already familiar. The more senior their position within the company, the more controls they are aware of and the greater their chances for success and inflicting damage on the company.

The company information used in investigations is factual, consisting of a document structure (supporting documentation) and records (accounting) based on which our legal system and customs make it possible to build a representation of reality for subsequent analysis. There must be logical consistency between the facts, supporting documentation, accounting records, annual accounts, and general company information such as statutory activity, number of employees, company locations, etc.

A fraudster will try to modify this logical structure by manipulating the accounts or supporting documentation so that events that actually occurred are misrepresented in the accounting records. This may have various consequences, whether related to taxation, dividends or company valuation.

Corporate fraud investigation therefore consists of demonstrating the consistency - or lack thereof - of existing information, and finding the point at which the company’s documentary and accounting structure deviates from the facts.

In other types of investigation, the problem lies in uncovering information. In financial fraud investigations, the difficulty relates to choosing the right information for analysis, as it is not possible to dig through the entire mountain of data and documentation available with a reasonable timeframe.

Establishing priorities therefore becomes essential.

It is easy to see how in an investigation in which the search for irregularities is preventive - we do not know whether fraud exists and, if so, where it may lie - the focus must range from the general to the specific.

We begin by looking at the annual accounts, than move down through the accounting records and supporting documentation.

42 • GBM • January 2012

Any inconsistencies encountered during this process alert us to possible irregularities, errors or manipulation that must be further investigated. This process is known as a “generic investigation” where, with no prior knowledge of the company’s operations or any pre-existing suspicion of irregularity, we search for inconsistencies based on general company information and work down towards more specific items.

Rarely, if ever, do generic investigations allow a comprehensive review of every single information structure within a company, with the exception of criminal investigations in very small businesses. In practice, attempting such a review of larger companies is economically impractical and difficult to accomplish.

A less theoretical approach in a generic investigation such as that described above, in which there is no prior indication of fraud, is to use a risk detection approach. This consists of performing a study of the company and its business, operations, controls and internal processes. Based on the results of this study, a risk map is prepared to determine company areas in which internal controls are weaker and the risk of fraud or irregularity greater.

This is known as a “risk-based investigation”.

Once the risks have been determined and sorted by order of priority, based on their probability of occurrence, an investigation is launched on the hypothetical assumption that a specific level of fraud risk indicates its existence.

The last case - and the most frequent - is the investigation launched when indications of fraud arise in certain parts of the company, or are pointed out by employees or third parties. The possibility of fraud may also be discovered when compromising documents come to light, or when irregularities are detected by internal controls. When, as here, there is a possibility of fraud having been committed somewhere within the company, the investigation will be expected to reveal whether fraud has actually occurred and, if so, the value of the damages inflicted on the company and the methods used. This case calls for what is known as an “evidencebased investigation”, which is more direct and aimed at the specific area of information where the facts relating to the evidence presented and its consistency may be found.

In our experience, investigations must not be too broad in scope, as it is impossible to make an in-depth assessment regarding all aspects of the company. Instead, they must be specific, focused, and selective. They must go beyond what fraudsters imagine can be investigated, and beyond their ability to conceal and manipulate the information so that it does not reveal what actually occurred.

Presenting investigators with general or vague suspicions, or those that refer to the entire organisation is of little use if not preceded by a risk analysis that specifies the objective sought and an explanation to the company as to the nature of the investigation.

Fernando Lacasa, director in Forensic at KPMG in Spain

KPMG Fernando Lacasa director in Forensic, KPMG in Spain Tel: 00 34 91 456 3539 flacasa@kpmg.es www.kpmg.es

ITALY MARKET ABUSE: WHAT’S NEW? On 20 October 2011 the European Commission published legislative proposals Market Abuse Regulation (MAR) and Market Abuse Directive (MAD2) - to update and strengthen the existing framework for the protection of market integrity introduced by the 200a3 Market Abuse Directive (MAD).

based on accepted market practice; extends the prohibition to any attempt to engage in market manipulation; and, extends the list of practices that constitute presumed market manipulation.

The analysis, relating to the evolution of the markets and financial instruments and to the effective implementation of MAD within domestic regulation, highlighted the need for a common regulatory intervention: preventive, through an update of the MAD alongside a revision of the Markets in Financial Instruments Directive (MiFID), and repressive, through the implementation of enhanced powers for investigative authorities and the harmonisation of administrative and criminal sanctions.

To ensure regulators have access to the information they need to detect and sanction market abuse, MAR: extends suspicious transaction reporting obligations to trading orders and to OTC transactions; grants regulators the powers to obtain telephone and data traffic records from telecom operators and to access private documents or premises (subject to a judicial warrant) where there is a reasonable suspicion of insider dealing or market manipulation; requires member states to provide for the protection of whistleblowers and sets common rules with respect to economic incentives for whistleblowing; and, introduces an obligation for the cooperation and exchange of information as between financial regulators and the regulators of spot commodity markets to ensure a consolidated overseeing of financial and spot markets and to detect and sanction cross-market and cross-border abuses.

Scope The increase in trading across different venues (MTFs (multilateral trading facility), OTC (over-the-counter), OTFs (organised trading facility)) has increased the difficulty in monitoring potential market abuse. The aim of MAR is to extend the scope of the market abuse statutory framework to apply to any financial instruments admitted to trading on an MTFs or OTFs as well as to any related financial instruments traded OTCs, which can have an effect on the relevant underlying market.

Given the lack, under the existing MAD, of a clear and binding definition of inside information in relation to commodity derivatives markets and emission allowances, MAR is aimed at: aligning the definition of inside information in relation to commodity derivatives to the general definition of inside information by extending it to price sensitive information relevant to spotting commodity contracts as well as to the derivative itself; and, introducing a specific definition of inside information for emission allowances.

Insider dealing and market manipulation Insider dealing - MAR: extends the definition of inside information to nonpublic information that a reasonable investor would regard as material in its investment decisions beyond the current definition of price sensitive information; prohibits the use of inside information to deal and attempt to deal in relevant financial instruments; and, extends the dealing restrictions to cover amending or cancelling an order even if this is done to avoid trading on the basis of insider information.

Authorities’ powers reinforced

Administrative and criminal sanctions MAR proposals include a requirement that fines should not be less than the profit made from the offence, and the maximum fine should not be less than twice any such profit. For natural persons, the maximum fine should not be less than €5m; for corporate entities, not be less than 10% of annual turnover, with member states free to exceed these limits. In imposing sanctions, competent authorities should take account of other aggravating or mitigating factors, such as the gravity of the offence, previous offences or a suspect’s cooperation with the investigation.

In parallel, MAD2 requires member states

to: introduce criminal sanctions (extending liability also to corporate entities) for the offences of insider dealing and market manipulation, where these are committed intentionally; introduce the crime of inciting, aiding and abetting insider dealing and market manipulation, as well as any attempt to commit any of these offences; and, ensure effective, proportionate and dissuasive criminal sanctions.

Timing and impact MAR and MAD2 now pass to the European Parliament and the Council for negotiation and adoption. Once adopted, they will take effect within the following two-year period, being the time granted to member states to address the provisions in their state laws.

In regard to the impact on Italian regulation, the proposals relating to a number of topics have already been covered by domestic statutory provisions following the adoption of MAD, including, for example, the introduction of the crimes of insider dealing and market manipulation, or a corporate entity’s liability for offences committed in the interest or for the benefit of the entity itself by one of its officers (D Lgs 231/01 or ‘Law 231’).

However, Italy would have to update its domestic statutory provisions (despite undeniable hermeneutic problems related to internal principles of criminal law) to adapt it to European regulation to cover, for example, the extension of market abuse regulation to new financial instruments.

In addition, in light of the potential for corporate liability, companies are expected to review their internal control protocols under Law 231 (eg, to introduce standardised policies across their business units, to focus on their tolerance levels, etc) and their organisation, management and control protocols to avoid liability under Law 231.

Antonio Golino (partner) and Jean-Paule Castagno (consultant)

Antonio Golino Partner, litigation - regulatory investigations and financial crimes Piazzetta M Bossi, 3, 20121 Milan, Italy T +39 02 806 34 1 F +39 02 806 34 200 E antonio.golino@cliffordchance.com

Market manipulation - MAR: extends the definition of manipulative practices to cover all behaviour that may give false or misleading signals to the market, secure prices at artificial levels or employ fictitious devices, deceptions or contrivances making it no longer possible to establish a defence January 2012 • GBM • 43

COuntry FOCuS - SWitZerLand

Country Focus

Switzerland

Swiss opportunities When it comes to doing business in Europe, Switzerland’s stable, efficient and multi-lingual market offers a plethora of commercial opportunities. Home to a sophisticated consumer base, like-minded business culture and cutting-edge companies seeking innovative products and solutions, Switzerland is a key destination for UK firms with the technology and expertise to complement Swiss knowledge and know-how.

Switzerland leads the World Economic Forum’s Global Competitiveness Report for 2010-2011 ahead of the US, Sweden and Singapore. Three of its firms - Nestle, Novartis and Roche - are among the world’s top 40 companies. It offers a highly developed commercial environment, transparent and fair legal and regulatory system, and political and economic stability, while research and innovation form the foundation for its high quality and reliability.

And foreign trade represents more than 90% of Switzerland’s GDP, with the EU its key trading partner.

British potential For small and medium-sized companies new to trading overseas or looking to diversify and mitigate risks, Switzerland provides an excellent market for innovative technology and high-end products. British products are currently very competitive in Switzerland, where the country’s relative economic stability has resulted in a strong currency.

44 • GBM • January 2012

Switzerland is the UK’s third largest non-EU market, with total exports in goods reaching £4.4bn between January and October 2011, up by 8% the same period the previous year - this is more than Britain exports to Canada, Japan or India.

There is a broad range of opportunities, but some are worth a special highlight.

Life sciences are a particularly exciting area. Switzerland is home to the highest density of medical technology companies in Europe, spending some £44bn on healthcare standards - second in the world after the US. This makes it a key export market for overseas firms with innovative products to sell, particularly in the areas of pharmaceuticals, the rehabilitation sector and medical devices, the latter of which is served by some 3,000 companies in the UK. Meanwhile, Switzerland and the UK conduct 80% of all clinical trials in Europe between them.

Switzerland is renowned for its advanced,

precision engineering, particularly in the aerospace sector. While many Swiss firms are involved in the development, production and assembly of structural components, systems integration and services for aircraft, they are also keen to broaden their supply chain and welcome new products from overseas counterparts, mainly in the areas of composites, components and raw materials.

With the UK home to some of the world’s most technologically sophisticated composite manufacturers - from the largest, complete new generation engines to the smallest precision components - its businesses are well placed to contribute to Switzerland’s supply chain.

In addition, advanced precision engineering, along with other UK sectors such as electronics and IT are in demand in CERN (the European Particle Physics Laboratory) where scientists are colliding particles in the large Hadron Collider in a huge underground tunnel with the aim of recreating conditions immediately after the Big Bang and finding the Higgs boson.

Tech savvy Some 13, 500 companies comprise Switzerland’s burgeoning information and communications technology (ICT) sector. It has the highest per capita IT spending in the world with expertise being sought in ICT hardware, software and services particularly in the areas of consumer electronics, online gaming and video-on-demand applications.

And the UK, which is at the forefront of cutting-edge developments from MP3 players, mobile internet to digital content, is well placed to tap into these openings.

Fashion, food and drink present exporting opportunities for UK companies. Swiss consumers are affluent, sophisticated and globally aware and many have an appetite for high-end British clothing. The Swiss market, as one of the largest per capita food importers offers excellent opportunities for producers and merchants of quality food with particular demand for high quality whiskies and traditional and regional specialities.

Switzerland offers major export opportunities for aid-funded business. The United Nations (UN) office in Geneva is its largest presence [duty stations] outside the New York headquarters, with some 46 organisations represented there - 22 of which are Geneva-based. Geneva is a major centre for UN procurement of products and services, particularly for health, emergency relief and rehabilitation after a crisis. This is a potentially huge market for British companies. The UK currently gains between anywhere 4% and 17% of multilateral aid-funded business (depending on the organisation), with the most sought after expertise to be found in the healthcare,

consultancy, environmental, engineering, automotive and education and training sectors.

Green solutions An exciting new area is expected to come from the energy turnaround following Switzerland’s decision to phase out of nuclear energy by 2031. In order to replace the 40% of power gained from nuclear power plants, Switzerland plans to spend billions in renewable energy sources, energy efficiency measures and a new smart grid.

These investments are unlocking significant opportunities for UK businesses with their world leading capacity in decommissioning nuclear plants.

When it comes to Swiss infrastructure, UK companies have already been successful in tendering for major projects. Switzerland’s construction industry is valued at approximately CHF50bn while its civil engineering sector is presently in the phase of realising large infrastructure projects. There are openings to be found in rail, tunnelling and network refurbishment, tramline upgrades and hospital renovation.

There are opportunities beyond Switzerland too. With its central European location, Switzerland offers a hub from which to reach the rest of the continent, the Middle East and North Africa. Swiss firms have extensive experience of working effectively in these markets, and UK firms can work in partnership with them to extend their range.

A helping hand So how do UK companies go about doing business in Switzerland? One way is through UK Trade & Investment (UKTI), the government department that helps UK firms do business overseas and supports overseas firms to set up or expand in the UK. Because every enterprise is unique, UKTI tailors its services to suit specific needs from export training and networking opportunities to providing overseas contacts and bespoke market reports.

UKTI’s team in Switzerland has an in-depth knowledge of the market and can provide a range of services to UK-based firms looking to grow their business in the Swiss market.

Its Overseas Market Introduction Service has already helped some 250 UK firms in the past three years from a range of sectors export to Switzerland.

Even if a company is not sure whether it is ready to trade overseas, UKTI’s Passport to Export programme, will assess its readiness for international business, develop its export potential and help it start trading internationally. The programme offers new and inexperienced exporters capability assessments, support in visiting potential markets, mentoring from a local export professional and ongoing support once up and running.

Once the initial homework has been done, UKTI can help with the business of starting afresh in a new country through its range of market visits and overseas missions and sector-specific networking events in-country.

Various trade shows and exhibitions take place in Switzerland throughout the year and can be an excellent way to meet potential customers face to face.

Important considerations The Swiss economy is very competitive and companies face tough European regulations and standards related to product quality and packaging. There are also unique Swiss requirements for medications, cosmetics, detergents and chemical products, which need to be met.

The UKTI team in Switzerland, working with the Swiss authorities, local business organisations, legal and business professionals, and supported by a powerful home network in the UK, can provide support and advice to ensure a positive outcome.

With Swiss imports from the UK continuing to rise, fuelled by strong Swiss buying power, now is the time for UK firms to tap into the ever growing opportunities in this diverse and dynamic market, share the interchange of technology and expertise and reap the rewards.

If you would like to find out more about doing business in Switzerland, please take a look at the UKTI pages on www. ukinswitzerland.fco.gov.uk or email UKTI@ britishembassy.ch

January 2012 • GBM • 45

COuntry FOCuS - SWitZerLand

Switzerland: Uncertainty confronts the surest of economies Home to mountainous landscapes, luxury watches and Roger Federer, Switzerland sits in a strategic position, slightly left of Europe’s centre. Although small in size compared to its enormous neighbours, the Western European nation has carved out an important economic and political place for itself, both regionally and internationally.

A global crossroad Situated at the intersection of three major linguistic regions, Switzerland has four national languages. German is the primary tongue of more than 60% of Swiss citizens and is followed by French, Italian and the lesser-known Romansh, spoken by just under 1% of inhabitants. Its capital city is Bern, where the official language is German.

Although its population comes in at only 7.8 million, making it less than that of London, Switzerland boasts two important global business centres - Zurich, its largest city, and Geneva. They house headquarters for numerous banks, financial institutions, and international organisations. Besides UBS, Credit Suisse and Caterpillar, the head offices for the Red Cross, the World Trade Organization and multiple agencies of the United Nations are found in the two cities as well. The country also hosts the World Economic Forum in Davos, where global leaders, intellectuals and personalities gather annually to address the most urgent matters of the day.

Additionally, the famous CERN facility, otherwise known as the European Organization for Nuclear Research, is located on the French-Swiss border outside of Geneva. It holds the most powerful and advanced particle accelerator in the world, the Large Hadron Collider. The particle smasher is reported to be on the cusp of finding the Higgs Boson or ‘God’ particle, a theoretical component that lies at the heart of modern physics.

While Switzerland is known for its successful banking sector, the country has established itself as much more than that. With its skilled workforce and competitive industries, it is a global financial hub and a centre of innovation. Furthermore, it has become the meeting point for international discussion and collaboration.

An international national economy Besides being one of the most high-income economies in the world, Switzerland also benefits from a reputation as a modern and investment-friendly nation. The service sector contributes to over 70% of GDP and employs just under three quarters of the active 46 • GBM • January 2012

workforce. Banking, insurance and freight and transport make up the OECD member’s most competitive sectors and have supported the development of foreign trade across the country. Switzerland now contains some of the largest trade transit companies with modern warehouse and facilities networks.

It is therefore unsurprising that international trade plays such a big part in Switzerland’s economy. The country’s exports, with pharmaceuticals, watches and orthopaedic appliances as its most popular goods, account for more than half of GDP. Trade with the EU composes more than two thirds of the country’s total international trade, followed by that with the US; of the EU nations, neighbours Germany, France and Italy are the country’s biggest import and export partners. Switzerland has consistently maintained a substantial trade surplus for both goods and services, with its exports eclipsing its importation of mostly drug components and motor vehicles.

Switzerland routinely tops worldwide rankings when it comes to its economic environment. In the 2011-2012 Global Competitiveness Report, the World Economic Forum again crowned Switzerland as having the most competitive and robust business environment in the world, followed by Singapore in second place and Sweden in third. The list, which looks at 12 economic pillars including technological readiness and business sophistication, cites the country’s supportive business atmosphere and readiness to adapt as reasons for its placement.

Switzerland also nears the top of the 2011 list for the Heritage Foundation’s Index of Economic Freedom. Number five globally and first among its fellow European countries, Switzerland is applauded for its openness to foreign trade and investment.

The country is seen as an appealing destination for foreign direct investment due to its economic and political stability, transparent legal system and advanced infrastructure.

Furthermore, Switzerland offers numerous tax incentives. Its canton system of government, which divides the country into 26 semi-sovereign states that together form the Swiss Confederation, allows the individual cantons to establish their own foreign investment policies. Instead of abiding by regulations instituted by the federal government, each canton creates their own. Certain cantons offer foreign investment tax exemptions, with some even waiving taxes for new firms for a period of up to ten years.

It is no wonder, then, that Switzerland attracts a notable foreign business presence.

Although FDI inflows suffered during the financial crisis, the country’s economic attractiveness continues to draw investment,

Lauren Stephenson Content & marketing manager lauren.stephenson@globaltrade.net +33 1 55 27 25 25 www.globaltrade.net Linda Witters Content & marketing assistant linda.witters@globaltrade.net www.globaltrade.net/international-tradeimport-exports/m/c/Switzerland.html

primarily in the manufacturing, insurance, and chemicals and plastics sectors.

While its general approach to business seems to be one of openness, Switzerland is very protective of its agricultural sector.

The country heavily subsidises the industry to promote domestic production, but prices remain high. Import tariffs levied against foreign food products make local alternatives cheaper only by comparison. It further implements a quota system directed at Switzerland-based importers for certain items, which changes annually depending on market requirements, the year’s harvest and other criteria.

European entanglements Although encircled by member nations of the EU, the country remains linked to the supranational organisation only via bilateral treaties. A referendum to join the European Economic Area, or EEA, was rejected by the Swiss people in a referendum in 1992, and two ensuing referenda on EU accession were met with the same response.

Switzerland has a long history of abstaining from treaties and agreements that could bind them to intervene in a future conflict.

The country famously remained neutral during World War II and only began to slowly venture away from its mantra of absolute neutrality at the end of the Cold War. In 1996, it joined NATO’s Partnership for Peace and sent unarmed peacekeepers to Kosovo following the 1999 war, a step in breaking with past policies. Switzerland did not even become a full member of the UN until 2002, when it joined by referendum, the first country to do so. The country further approved in 2005, again via referendum, to join the Schengen Zone.

Switzerland is a founding member of the European Free Trade Association, or EFTA, which also includes Liechtenstein, Iceland and Norway. A trade bloc for non-EU European nations, EFTA has also signed free trade pacts with non-EU countries in addition to its agreements with the EU. However, unlike the other EFTA countries, Switzerland is not part of the 30-member EEA, which was drawn up to allow EFTA nations to participate in the EU Internal Market without joining the EU. Nonetheless, Switzerland enjoys much of the economic benefits and diminished trade barriers that the other EEA member nations have. The country’s relations with the EU are outlined in a series of treaties that represents the ‘bilateral approach’ - establishing agreements with the union as two equal entities, all the while refraining from full membership. However, having agreed on most of the regulations regarding the free movement of people, services and goods, Switzerland is practically an EEA member, all but in name.

that Switzerland has not been immune to the worries plaguing the euro and the EU. The Swiss metals, electrical, and machinery (MEM) industries have seen exports to the bloc slide. Coupled with the strong Swiss Franc, MEM industry leaders have reported declining margins. In a recent survey of 280 MEM companies, 71% saw a dip in orders.

Although exports to Asia rose by 11.9% from a year earlier, it remains only a slight buffer to the trade troubles affecting its biggest destination market.

The likelihood of an enduring crisis is therefore a major point of concern for the export-driven economy. Switzerland’s export volume is likely to increase by only 1% in the next year due to EU economic instability.

This follows a tough 2011, which saw an appreciation of the Franc against the Euro, the currency of its main trading partners, effectively making Swiss exports more expensive and harming the national tourism industry as well. This led the country to peg its currency to the Euro, a controversial decision that sparked talk of a currency war. The Swiss National Bank also recently established a cap of 1.20 Francs to the Euro in an attempt to stabilise the monetary situation.

While unemployment is estimated to sit at 3.4% in 2011, low when compared to the EU average, the figure is likely to escalate slightly next year due to the global economic slowdown. Switzerland’s GDP, which contracted by 1.9% in 2009 due to the financial crisis, grew by only 0.2% in the second quarter this year. This marks the slowest gain since its relatively swift recovery in the aftermath of the crisis.

A web of uncertainty While Switzerland is faring better than some of its European brethren, its economic dependency on the continent means that it will not emerge from the crisis unscathed.

Projections for the country remain mixed, ranging from dull growth at best to a slight recession at worst. Switzerland’s foundation is solid enough to weather the storm, but the measure of the damages inflicted remains to be seen.

GlobalTrade.net For more on Switzerland, head over to GlobalTrade.net, the premier network of international trade professionals. We offer a Directory of International Trade Service Providers, with over 21,000 trading companies, agents and service providers listed. Our knowledge resource also contains more than 18,000 market analyses and business tips on all countries and industries.

With over 200 articles and qualified service providers listed on the Switzerland page alone, explore GlobalTrade.net for your international business operations today.

Considering the geographical and economic proximity to the EU, it comes as no surprise January 2012 • GBM • 47

COuntry FOCuS - SWitZerLand

The proposed ‘Too Big to Fail’ legislation in Switzerland As an important financial centre, Switzerland has also been affected by the global financial crises in 2007 and 2008. As a result and in line with global standards, Switzerland has introduced its own ‘Too Big to Fail’ legislation. This legislation has certain defects, as Lukas Glanzmann and Theodor Härtsch of Baker & McKenzie Zurich highlight below.

The financial crisis of 2007 and 2008 has clearly shown that the failure of one (or even worse, two) of the large Swiss banks would seriously threaten the Swiss economy.

Generally, the large Swiss banks are per-ceived as too big to fail and, at the same time, too big to be rescued. Therefore, the Swiss parliament ap-proved a revision to the Swiss Federal Act on Banks and Savings Institutions on 30 September 2011 with the aim of strengthening the stability of the financial sector.

On 5 December 2011, the Swiss Federal Council published its proposed amendments to the Ordinance on Banks (SBO) and the Capital Requirements Ordinance (CRO), thereby further implementing the ‘Too Big to Fail’ legislation. Systemically relevant financial intermediaries are subject to specific capital maintenance requirements as set out in arts 123a et seqq of the CRO. Accordingly, they need to have a base capital of 4.5% of their risk-weighted assets (RWA), which shall consist of common equity tier 1, ie, either share capital or retained earnings (CET1). Furthermore, systemically relevant financial intermediaries need to maintain a buffer component of 8.5% of their RWA. At least 5.5% of this buffer component shall again consist of CET1 (art 123f CRO). Up to 3% of the RWA can also be maintained in the form of contingent convertibles (CoCos) subject to the condition that they are converted into CET1 if such CET1 falls below the 7% threshold.

This mechanism shall ensure that the CET1 is at all times at least equal to 10% of the RWA, even though CET1 may temporarily fall below such threshold (art 123f para 2 CRO).

Furthermore, they are required to build a progressive capital component in the form of CoCos, which are converted into CET1 if and when the CET1 falls below 5% of the RWA (art 123g CRO). Art 123c et seqq CRO set out the condi-tions to be fulfilled by CoCos and similar instruments in order to count as capital for capital maintenance requirements. In addition, the proposal of the Swiss Federal Council includes a leverage ratio (currently approximately 5% of the unweighted assets) (art 123j et seqq CRO). Finally, art 123m CRO provides for more stringent risk concentration provisions for systemically relevant banks.

In addition to these proposed changes, the draft contains detailed regulations regarding the organisation of systematically relevant financial intermediaries. In particular, they must prepare a contingency plan for the maintenance, without interruption, of systemically relevant functions for the Swiss market in case of an impending insolvency (art 21 SBO). The contingency plan relates only to systemically relevant functions in Switzerland. Each financial intermediary concerned has a certain amount of discretion as to the specific design of its contingency plan. The SBO does not contain any favoured solutions, such as a spin-off of such functions. There are three alternatives, namely: the transfer of such functions into a separate legal entity; the formation of a fully licensed entity, into which such functions shall be transferred if the contingency plan is activated; or, entering into qualified agreements with third parties regarding a takeover of such functions.

The plan must be approved by the Swiss Financial Market Supervisory Authority (FINMA), and FINMA has the right to reject contingency plans it considers ineffective (art 21a SBO). One of the key problems is, however, that FINMA will not be in a position to take into account all obstacles when approving a contin-gency plan. It will be sufficient if FINMA comes to the conclusion that a contingency plan most likely allows a spin-off of systemically relevant functions without any interruption, thereby creating a certain degree of legal uncertainty among customers and market participants. FINMA will be responsible for implementing the contingency plan in case of a restructuring of a financial intermediary, provided that the intermediary has not implemented adequate measures to maintain systemically relevant functions. The contingency plan must be activated at the latest if the progressive component in the form of CoCos is converted into CET1, ie, if CET1 falls below 5% of the RWA. Furthermore, and in line with the guidelines of the FSB, banks are required to present stabilisation plans to FINMA, which serve as a basis for a winding-up plan.

Despite the relatively detailed regime, the proposed amendments will not be sufficient to prevent a future financial crisis. This is largely due to the fact that a bank’s governing bodies, as well as FINMA, will not be in a position to anticipate all potential difficulties and to react quickly enough to developments in the finan-cial markets including the deterioration of a financial intermediary's assets. Furthermore, experience shows that a ring fencing of systemically relevant assets and functions immediately prior to insolvency proceedings is not possible within a few days. Additionally, third parties, such as the holders of CoCos, may try to pre-vent the conversion of debt into equity. Finally, with the introduction of new forms of capital (contingent capital) the parliament has created additional legal uncertainty. It would have been more beneficial to just resort to existing corporate law provisions, in particular the so-called conditional capital.

48 • GBM • January 2012

Theodor Härtsch Attnorney at law theodor.haertsch@bakermckenzie.com Direct Line: +41 (0)44 384 12 11 Lukas Glanzmann PD Dr iur, LLM, Attnorney at law Direct Line: +41 (0)44 384 13 55 lukas.glanzmann@bakermckenzie.com Baker & McKenzie Zurich Rechtsanwälte Holbeinstrasse 30 Postfach CH-8034 Zurich Switzerland

Switzerland: A launch pad for start-ups Adoptics AG is an emerging company focusing on the development of an implantable device that will restore perfect vision to aging eyes and to patients in need of customised vision. The company’s patented technology addresses the enormous market of vision correction and cataract surgery and could become the standard of care in ophthalmology. The technology could also have ground breaking applications in miniaturised optics for mobile phones, cameras and endoscopic devices. The company’s current strategy is to focus on introducing a single product to address a specific need where no viable product exists. Adoptics has been able to capitalise on a new approach to start and grow ventures by leveraging core competencies in engineering, high-tech operations, and fund raising in Switzerland and the US. The current global economic environment and the latest crisis of confidence in the US are creating a unique opportunity for Switzerland to become a global centre of value creation for investors in the healthcare and renewable energy fields. Switzerland is known for great innovation and exceptional workforce coupled with a solid education system that fosters creativity. The Swiss legal system offers great protection for intellectual property and international enterprises.

In addition, considerable efforts have been expended on the federal and cantonal level to promote innovation and entrepreneurship. The current venture capital model in the US has shown serious flaws in an economy dominated by fear and concerns of ‘investing too much too fast’, and investors are looking for the next evolved model responding to the new realities of an ever demanding global economy.

Switzerland may offer the perfect launch pad for a new breed of start-ups if strategies for growth and innovation can be executed to deliver greater values for investors. This can only be achieved through intimate knowledge of building and operating efficient structures in Switzerland as well as a deep understanding of fundraising globally, especially in the US. The next model will follow the evolution rule in being more efficient in creating value for investors and entrepreneurs. We believe that it is more likely to adopt a leaner risk-based approach with special focus on execution and well defined and tailored exit strategies. For instance, in the healthcare field, start-ups with innovative technologies will have to demonstrate clinical viability and market acceptance with limited capital and flawless execution before they should seek larger infusion of capital.

The key to delivering greater value out of innovation is to focus significantly on comprehensive vetting of opportunities including a thorough evaluation of exit strategies. Perhaps more importantly, portfolio managers should have a solid understanding of a risk-based approach that allows flawless execution, preferably through a handson approach.

Dr Khalid Mentak President & CEO Adoptics AG +41 32 366 86 20 khalid.mentak@adoptics.ch www.adoptics.ch

January 2012 • GBM • 49

uCaS

uCaS - at the heart of connecting people to higher education UCAS is the organisation responsible for managing applications to higher education courses in the UK. We provide application services across a range of subject areas and modes of study for universities and colleges-more than half a million people wanting to join higher education use UCAS each year.

Our specialist services, the Graduate Teacher Training Registry (GTTR), the UK Postgraduate Application and Statistical Service (UKPASS) and the Conservatoires UK Admissions Service (CUKAS) are used by more than 50,000 people annually.

UCAS aims to be at the heart of connecting people to higher education. In practice, that means helping students make informed choices about universities and colleges, guiding them, their parents and advisers through each step of the application process. Not only do we process applications, we also help students to find the right course, offer advice on how to write a personal statement and provide general support throughout the entire journey.

UCAS also generates a wealth of data and statistics, ranging from the number of applicants to the most popular courses. A range of data tables can be accessed instantly via the UCAS website. These tables provide data on applications, applicants and accepted applicants over a number of years, and cover several sub-categories, for example, gender or age group.

We also carry out research, consultancy and advisory work for schools, colleges, careers services, professional bodies and employers.

UCAS experts offer continuing professional development tailored to meet the needs of individual institutions or subject areas.

In October 2011, UCAS launched the Admissions Process Review consultation - the first detailed overview of the process for half a century. We are consulting with the education sector on a range of proposals and aim to publish the first findings in March 2012.

The specialist services we offer are as follows.

UCAS Research: This is a research community for the area of post-16 and higher education. The UCAS Research website has been created to allow the UCAS Research team a forum within which to present findings, and to promote discourse on current and ongoing issues of importance within the UK admissions arena.

CUKAS: This is the Conservatoires UK Admissions Service. The service provides facilities to research and apply for undergraduate and postgraduate practice-based music courses at seven of the UK conservatoires.

The Graduate Teacher Training Registry (GTTR): This is an admissions service that processes over 50,000 applications each year for full-time and part-time postgraduate teacher training courses at universities, colleges and school centred initial teacher training (SCITT) consortia.

50 • GBM • January 2012

UKPASS (UK Postgraduate Application and Statistical Service): This was established in 2007 to provide an admissions service to help institutions recruit postgraduate students and give applicants a simple and efficient online application.

UCAS Media: This offers a multi-channel approach to marketing to students and their influencers and provides research to help with student recruitment. Our portfolio of products and services includes online advertising and digital platforms, email marketing, promotion through social networking, print advertising, direct mail, student events, data insight products and much more.

UCAS 14-19: This is a major supplier of management tools, aimed at local authorities to support their 14-19 education provision. The team has developed the UCAS Prospectus and CAP, a set of intuitive tools that allow young learners to view and apply for learning opportunities in their local area in a secure, online environment.

If you are thinking about applying for a university or college course, starting in 2012, visit UCAS Connect or the UCAS main website.

We provide application services across a range of subject areas and modes of study for universities and colleges-more than half a million people wanting to join higher education use UCAS each year.

January 2012 • GBM • 51

teCHnOLOgy reVieW - taBLetS

TECHNOLOGY REVIEW

TABLETS

This month we will be reviewing five market leaders in the competitive and still growing Wi-Fi Tablet market.

Popularity of these devices has rocketed over the past two years, and are fast becoming a “must have” for both personal and business users. Here we take a brief look at each device, and how you can use them to maximum effect in your business into 2012 and beyond.

Apple iPad 2 The Apple iPad 2 is the most popular product currently on the market. Achieving a mammoth 68% market share in the second half of 2011, despite concerns rose around production following the March 2011 Japanese earthquake, the iPad 2 delivers in every aspect. Following hot on the heels of the original, similarly acclaimed iPad, the second generation model has all of the tools you need to manage your business on the move.

display, carrying a resolution of 1024x768 pixels. Owning any Apple product gives you access to the huge array of services available worldwide. Download only the content you need, using iTunes, the App Store, and innovatory iCloud service.

The iPad 2 carries a much slicker, smarter design than the first iPad. The newly introduced built in A5 dual core processor allows for much quicker, efficient use and switching between applications. The battery capacity of the iPad 2 is also much higher, boasting up to an incredible 10 hours of battery life. This makes the iPad 2 a high powered, convenient tool for day to day business use. You’ll have no worries about rinsing the battery, with no need to carry the charging pack. Built in front and rear facing cameras enable one to one, or conference, FaceTime video calling. The newest models, produced in November 2011, carry the iOS5 operating system. The iPad 2 is available with three levels of storage capacity, 16GB, 32GB, or 64GB, with prices escalating accordingly. This ensures you can purchase the system tailored to your needs, unique for your business or personal use. Additional items can also be purchased to enhance the user experience of your system, such as an external keyboard.

Due to the runaway success of the iPad 2, rival products have launched under the radar somewhat. While this has had its benefits, such as being able to iron out any early problems away from the media glare, it is without question this has also impacted on the ability of these products to gain market share. Due to it being first to market, the iPad is the benchmark against which its rivals are ultimately judged.

The Apple iPad 2 has a 9.7 inch screen

52 • GBM • January 2012

The iPad 2 starts at £399 to purchase the tablet outright. However, this product is available at a number of retail outlets, on a wide range of tariffs and payment plans.

Asus Transformer Launched in March 2011, the Asus Eee Pad Transformer operates a version of the highly vaunted Android operating system, known as Honeycomb, which is viewed across the world as being as good as, if not better, than iOS. The Transformer was much anticipated, given the reputation of Asus as a manufacturer of quality technological products took a dive in 2008-09, owing to widespread problems and negative press for their Eee PC notebooks.

Initial sales of the Eee Transformer were so good that Asus, and their component

suppliers, were unable to keep supply in line with demand to such an extent that they lost market share, such was the size of the unexpected dent the product had made in the market.

The Eee Transformer, while missing the “all singing, all dancing” appeal of the iPad 2, is still a very versatile device and an effective business tool. Weighing in at an ultra light 680g, the Transformer boasts a larger screen, at 10.1 inches, than its Apple produced rival,

with a screen resolution of 1280x800 pixels.

The Eee Transformer keeps you moving with its ultra quick dual core processor, and it even boasts 1GB of memory, easily beating the iPad at 512MB. Asus have released software updates for the Eee Transformer throughout 2011, and in the latter part of the year have announced plans for the release of the Eee Transformer Prime.

Scheduled upgrades for the newer model include a battery life of 14.5 hours and a mini HDMI port.

An Asus docking keyboard is an optional extra when purchasing the Eee Transformer, which made the price at launch £429, or £379 if purchased without the docking keyboard.

While not as big a name as its rival, Asus have introduced a worthy product to the fast growing Tablet market, and working alongside Google with Android, one would imagine future incarnations of this product could continue to innovate beyond imagination.

BlackBerry PlayBook is not a viable option for use by businesses. A PlayBook can, however, owing to the underwhelming performance of the device since launch, be picked up relatively cheaply in comparison to its rivals and is definitely a viable alternative to a gaming device as a child’s gift. Research In Motion have written off around $485 million accounting for the volume of discounts it has offered.

The Android 2.3 (Gingerbread) operating system is now available for the HP TouchPad, which delivers a significantly better user experience through Android Market apps.

That said, the TouchPad is best if you acquired one at the reduced price, and for personal use only. This device unfortunately landed far behind its rivals.

Samsung Galaxy

Although not mentioned previously, it is worth noting that Research In Motion’s aftercare standards are nowhere near those of its rivals. Apple, famous for their customer service levels and swift problem resolution, are world renowned as being leaders in this field. Research In Motion could learn a lot in this respect, with numerous reports of customers enduring frustrating waits for call backs which never came, or being sent down “blind alleys” with regards troubleshooting.

HP TouchPad The Samsung Galaxy Tab is the best alternative to the iPad 2. Operating an Android Honeycomb operating system, this product has helped Google, and Android, emerge as a serious rival to Apple.

Blackberry Playbook

Launch of this product was delayed, following the launch of the iPad 2, to enable Samsung to evaluate the two rival products, and then tailor their product accordingly to ensure it was able to offer a similar high end customer experience.

Research In Motion launched the BlackBerry PlayBook in the early part of 2011. This product was generally received negatively at the time. A number of features, such as email and calendar, were missing from the device when first launched. The product appeared to have been rushed to market, in order to capitalise on the clamour across the globe for Tablet products as well as an urgent desperation not to disappear in its rivals’ wake. The BlackBerry PlayBook is based on the BlackBerry Tablet OS, running applications developed using Adobe AIR. Research In Motion have since announced support for Android applications, which can be purchased and installed alongside its products through the BlackBerry App World store.

The BlackBerry PlayBook has a 7 inch screen, and like its rivals comes available with a choice of storage capacity options of 16, 32, and 64GB flash storage drives. Battery life of the PlayBook is not to the level of it’s rivals, with consistent usage rinsing the battery within 2-3 hours. Although email and calendar functionality has since been added to the PlayBook, in order to use these fully the user must have a BlackBerry mobile phone. The device does however support third party email and calendar applications should the user wish to utilise these.

Due to its set up and smaller screen, the

The HP TouchPad was launched in July 2011, and was only available to purchase through retail outlets for a period of 6 weeks. The HP TouchPad was launched using WebOS. The TouchPad was discontinued as HP have since stopped producing hardware devices running WebOS, as they move into using other operating systems.

The HP TouchPad boasts a 9.7 inch screen with screen resolution of 1024x768 pixels.

The TouchPad has the capability to receive phone calls and text messages, via Palm Profile, and can make outgoing calls using the Skype application. The TouchPad’s email system is competent enough, however it’s one major positive is the battery life, lasting over 8 hours.

A key feature of the TouchPad is that open applications always run, allowing a user to multitask fully without having to open and close applications to optimise performance.

Initial sales of the HP TouchPad were poor, and the device does not offer any point of difference where it could make a substantial impact to either a personal or business user. In August 2011, once the stock was discontinued and massively reduced, stock in most retailers sold out the same day.

Approval ratings of the TouchPad rocketed due to the cheap price on offer.

Key to Samsung’s success has been the versatility in the products they are able to offer their customer base, with their tablets available with 7.9, 8.7, or 10.1 inch screen, as well as the usual selection of flash drive space. With 1GB of memory outstripping the iPad, and an excellent dual core processor delivering quality performance at all times, the Galaxy Tab is an outstanding device, whether for business or personal use.

One contentious issue has been the long running legal battle between Google and Apple regarding alleged breaches of copyright and patent protection, on both sides. Apple founder Steve Jobs famously stated before his death that he would “spend every cent” of Apple’s money, in order to “destroy” Android. At the time of writing, there are over 20 legal cases ongoing worldwide between Google and Apple.

The iPad 2 is undoubtedly, and deservedly so, the market leader when it comes to Tablets.

While the Samsung offers a similar experience and excellent operating system, Apple retains the edge with their first to market products and continuous innovations, which leave their rivals trailing. Asus have bounced back strongly from the tribulations associated with their Notebook products, and while running Android systems they should gain enough of a market share to create a “Big 3” Tablet manufacturers through 2012. Research In Motion and HP have a lot of work to do if they are not to become an afterthought in the battle for Tablet supremacy.

January 2012 • GBM • 53

Managing inVeStMent riSKS

Managing investment risks M&A business beyond borders: Opportunities, risks and how to win global markets Global merger and acquisition (M&A) deal volume reached US$1.5trn in the first half of this year, registering a 22% increase from last year’s levels. Global M&A deals were mainly targeted at the Americas, followed by Europe, the Middle East and Africa (EMEA) and the Asia Pacific region, including India and China (Asia Pulse Pty Ltd, 28 June 2011).

Despite the ongoing global economic uncertainty, one area of business activity has remained surprisingly robust: M&A. The continuous global recession, technological innovations and the diminishing global frontiers have fuelled M&A at home and abroad. Prices are down, technology and innovation are on the rise, and conducting business without borders increases the number of potential customers exponentially.

It is a strategic move as companies, faced with continued pressure to grow profits and the added benefit of cash on the balance sheet, see these deals as virtually mandatory.

The lifecycle and what to look out for Shamefully, 65% of cross-border M&A fail.

Some deals never emerge from the initial phase of negotiations and due diligence; others fall apart in the latter stage when the acquisition is being integrated into the mission, vision, and values of the acquiring organisation. For these latter failures, the cause is a lack of foresight. Too often, dealmakers are so consumed by making the numbers work that they fail to establish a front-end strategic integration plan that details how the business will operate post M&A. Instead, consider integration at the outset of any talks. It’s never too early to start thinking about integration and what issues it may trigger.

Pursuing global expansion and growth through M&A requires an entirely new perspective and understanding of due diligence and risk management - a significant obstacle for most businesses. How can 54 • GBM • January 2012

success rates be improved?

Start with making the commitment and defining the strategic intent: The board and the C-suite need to determine the reasons for taking this step, while possibly looking at other tactical moves. Understanding why practice M&A as a global growth strategy, when, where in the world and with whom are some of the basic questions that need to be answered. This is a major step that requires the commitment of resources: financial, talent, time and innovation.

Strategically thinking also requires an answer as to who will run the cross-border operation? Will you send someone from HQ that may lack language, connections and credibility, or a local that may need to be brought in, informed and educated on your strategy, values, and priorities? But this person may be disengaged and/or unfamiliar with HQ practices. There is no right or wrong way. You need to be able to weigh the options and interpret the scene in a strategic context that integrates your company’s strategy, since looking at it as a separate activity may prove to be fatal.

Identifying the target: Still thinking strategically, after making the commitment, part of the strategic plan would be to clarify and define the desired target in terms of the type of company, size, location, and its added value. This is when you need to be able to answer the why - why now?

It would be beneficial to focus on the local culture, legal system and the governing laws; consult the ‘Ease of Doing Business Index’ by the World Bank, and the Transparency Index.

It is important to gather information about the industry, potential protectionism and the competition of the prospective candidates, and start interpreting the information in the context of strategy, tactics, long-term view and reality: how feasible and/or costly would it be for your company to pursue this target?

How would you determine and project success? Would language be a potential barrier?

Due diligence: [Entire section - excerpts from Grow Globally: Opportunities for Your Middle-Market Company Around the

World. Copyright (c) 2011 by Mona Pearl.

Reprinted with permission of John Wiley & Sons, Inc] Unfortunately, the majority of due diligence, fact finding, risk assessment, and investigative resources are focused solely on fundamental “hard” challenges such as infrastructure, EBIDTA, and ROI. However, over 80 percent of the real risks associated with international M&A are derived from “soft” challenges. Soft challenges originate from cultural differences, corporate transparency, and systems of doing business in a new country such as legal, labor, accounting, and cultural integration issues.

Understanding the corporate culture along with the culture of the country or region plays a crucial role in securing the long-term success of any M&A deal. While profits, EBIDTA, and ROI are important matters, these considerations represent just the tip of the iceberg—the visible tip. Underneath the water, and hidden from view, lurk the real dangers someone must expose through extensive research and due diligence.

Too often, the real difficulties and challenges of M&A surface months after deals are signed. Then, the tough questions that should have been addressed in the front-end of the strategic planning and the due diligence process start flowing. Questions about how will this newly acquired enterprise be integrated into the existing company?

Will it operate independently or as a department?

The answers to these questions and many others come from gathering the right information from the right sources. It’s easy to get misdirected or overwhelmed by the staggering quantity of available information.

Stay focused on research that includes assessment of demand, consumer profiles, competition, pricing, packaging, foreign regulations, shipping, and distribution, to name a few.

In addition, companies need to look internally at their strengths and

weaknesses in relation to their action plan.

That means evaluating corporate resources, manpower, internal knowledge, and their own culture before determining whether expansion opportunities are viable and warrant penetration into new markets.

This may be the time to start thinking about the desired post-merger shared culture, one that combines the strengths of both organizations and creates the value for this transaction. Chart the road map, step by step, as to how this change management as part of integration will happen. It is vital that all parts of the business prepare for integration before the deal is concluded to enable a swift and effective transition to take place.

Negotiations: After months of preparation to enter the global market place, including extensive due diligence and market analysis, identification of a target market, and the development of an elaborate market entry strategy, it’s finally time to seal the deal!

Sealing that deal successfully will require tremendous finesse in terms of international negotiation skills. The fact is, cross-cultural negotiations can make or break even the most carefully executed global expansion efforts. Not to mention, many countries, as a matter of survival, developed expertise in negotiating with an international marketplace and are light-years ahead of other cultures.

Consider the human and financial resources already expended conducting an extensive market analysis, selecting the ideal target market, performing product modifications and preparing the market entry strategy to position that product for success. Now is not the time to swoop in unprepared. Slow down, step back, and thoroughly equip the corporate negotiating team to understand

the task in hand and do its job. Negotiation is about people, customs and relationships, and the end result is a legal agreement.

Integration: The vast majority of acquisitions fail to meet the pre-acquisition objectives two years afterward. Even three years following an acquisition, only a mere 12% of companies report that overall growth has surpassed the pre-acquisition period. In other words, 88% of acquisitions are still trying to figure out what went wrong three years after the deal is complete. This failure to succeed, at least immediately, is often the result of limited time addressing and planning important aspects of the cultural integration of the two unique businesses.

Typically what happens is that the acquiring company seeks to imprint its own culture on the acquired company and appears surprised by the issues that result - issues that should have been discovered and planned for during the due diligence phase.

It doesn’t have to be that way. Savvy businesspeople can improve the likelihood of success with a more relevant distribution of due-diligence and an emphasis on postdeal integration. If 80% of the risk comes from the ‘soft’ issues, that’s where the focus of efforts should be directed. By extending the principles of traditional due diligence, businesses can make more informed decisions. Even when the numbers look good, the deal can become a disastrous failure if the soft issues are not properly addressed.

Learn about the culture of doing business; learn about the legal system and how it may affect your new venture; and learn about the political environment and any implications on daily business.

While the art of cross-border post-merger integration is still evolving, there are two best practices that can be distilled from observing the most successful deal practitioners: Set clear expectations, invest in high-quality, two-way communication, acknowledge cultural differences but simultaneously create a common corporate culture with a single goal: achieving high performance.

go wrong, lack of clarity about goals and objectives, compounded by poor and deteriorating communications, is frequently the cause - forcing the acquirer’s culture doesn’t lead to increased loyalty, productivity or achieving the intended goals.

Assemble the ‘A’ team The success of realising your goals and experiencing a smooth operational transition is largely dependent on having the right professionals to assist you. The AM&AA is the leading association and credentialing body for 800 middle market M&A professionals in 20 countries, providing connections, best practices and education.

Our leadership and people have unrivalled multidisciplinary expertise in the financial services industry. AM&AA members represent sellers and buyers of businesses ranging from $5 to $500 million in transaction value. Members are business advisory professionals, including investment bankers, intermediaries, corporate development, CPAs, CFAs, attorneys, and many others.

Their services include due diligence, accounting, financing, business valuation, tax planning, legal, strategic, other advisory and transaction support services.

Start with the end in mind The recent surge in cross-border mergers is part of a broader set of trends that reflect how companies are adjusting their strategies to compete in a world in which customers and suppliers are increasingly global.

Managing risk through the management of cultural differences, integrating corporate cultures across borders, and setting up a clear organisational structure, supply chain and responsibility are the major barriers to the success of cross-border transactions.

The long-term success of M&A lays in a committed leadership, a forward-thinking and global mindset, using due diligence to create clarity, cultural awareness, and a shockproof post-merger integration process.

When cross-border deals

BeyondAStrategy, Inc. Mona Pearl, Founder & COO MonaPearl@BeyondAStrategy.com (312) 642 - 4647 www.BeyondAStrategy.com

January 2012 • GBM • 55

Managing inVeStMent riSKS

Managing investment risks In an uncertain climate, one would be well advised to carry both an umbrella and a sunshade, or just not go out at all.

In investment terms, the equivalent of not going out is holding cash. The equivalent to carrying an umbrella and a sunshade is leaving cash on deposit or investing in sovereign debt that should both provide a so-called risk-free rate of return. However, you do not have to be a Greek philosopher to see the problem with putting money on deposit at a bank or investing in sovereign debt. Given the banking crisis and recent experience in the European bond markets, few of us are bold enough to rule out further bank failures or a near-term sovereign debt crisis, even in the US or Japan. Therefore, the concept that underpins much conventional investment theory - that of a ‘risk-free return’ - is flawed. Arguably, the only risk-free rate of return is zero, which is exactly what investors get for not going out. However, if stashing the cash under the mattress is not appealing, and in a high inflation environment it probably is not, then investors should remember the mantra: diversity, intelligence and experience, or DIE. Diversity is obvious. A balanced and mixed portfolio of equities, bonds and other tradable assets should be an adequate security blanket even in volatile markets.

Index-weighted investment portfolios tend to outperform actively managed portfolios about 75% of the time. Diversity ensures that the investment does no worse than the

market most of the time. It is not risk-free, but it ensures that the return on investment is neither more or less than the appropriate compensation for the risk taken. However, even if the mix is perfectly optimised, it cannot guarantee that investors will not lose money. In fact, is likely that they will lose money if markets fall. However, diversity is the key to minimising risk, and it is more exciting than sitting on cash.

need stocks that go up when markets go down, or at least do not fall by the same amount, and stocks that go up by more than the index when the market goes up. In technical terms, we require low or negative beta investments in falling markets and high beta investments in rising markets. Beta is also known as financial elasticity. It measures non-diversifiable or market risk. Measuring beta is a means of separating an investment manager’s skill from their willingness to take risks.

In equity portfolios, one way to achieve diversity is through passive management or indexation. Simply hold all the available investments in proportion to their relative size, sit back and wait. In a perfect market, you cannot under-perform, but you cannot out-perform either. The investment return will be exactly correlated to that of the market. A more adrenalin-fuelled approach is to seek returns greater than those that commensurate with the risks taken and, if successful, to out-perform the market. This is otherwise known as ‘alpha capture’ and, to be successful, it requires market intelligence.

If the objective is to out-perform then, by definition, someone must under-perform.

Those who out-perform will generally have access to more information in support of their investment decisions than the rest. In equities, there is no substitute for research before making investment decisions.

An investment with a beta of 1 is perfectly correlated with the market. Zero beta assets, like cash, are not correlated at all with the market. However, zero beta does not always mean risk-free. Playing roulette is not a market correlated investment and therefore has zero beta, but it is not risk-free. Selling shares short in falling markets represents a beta of -1. If it were possible to invest in an asset with both positive returns and beta of -1, in a market portfolio that by definition has beta 1, it would be possible to achieve risk-free profits. With the use of leverage, this profit could be unlimited, but in practice it is impossible without introducing additional costs or risks.

The wisdom of crowds often prevails in the equity market and it is sometimes best to go with the flow. Indexation is equivalent to swimming with the tide. However, in volatile conditions it is often advisable to turn against the tide. Out-performing rising or falling markets requires investments whose performance is not perfectly correlated with the market. In short, we

Where should we look for these elusive high and low beta investments? This is where the final element comes to play. Experience is a vital component in managing investment risk. Any fool can make money in a bull market and many do, but when markets are volatile, it takes guile and experience to spot the pitfalls. Tipsters that do well on the upside are unlikely to be sophisticated enough in volatile condition. Specialist knowledge is required and this should be what investors pay their advisers for. No one has a monopoly on wisdom, but herd mentality often fails in difficult markets. It is therefore important to take advice from several different sources, even if only to find out which way the herd is heading.

Dr Kevin J Lapwood Managing director Research

56 • GBM • January 2012

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COuntry PrOFiLe - indOneSia

indOneSia

COuntry PrOFiLe

Indonesian Embassy 38 Grosvenor Square London W1K 2HW Tel. (020) 7499 7661 Fax. (020)7491 4993 kbri@btconnect.com

Indonesia today As the global economic gravity shifts toward the Asia Pacific region, Indonesia is determined to become a more prominent player in the region and in the world.

As the world’s largest archipelagic country with over 17,000 islands within its boundaries, Indonesia is strategically located in some of the world’s most important trade routes. Around 40% of global trade in goods passes through its territory annually.

With 238 million strong, Indonesia is also registered as the fourth most populous country in the planet. Nearly half of the population, or around 116 million, are within the productive labour force. And more than 50% of them are aged between 15-34 years old. All these facts spell a formidable work force that helps secure the country’s future development.

Indonesia is also well endowed with some of the most fertile land on the planet. Crops of all kinds are easily cultivated. On the map, the length of its territory spans from London to Moscow (5 million sq miles in total, comprising of 2.02 million sq miles of land and 3.1 million sq miles of water territories).

After more than a decade of reform era, Indonesia has shown a remarkable achievement as one of the most vibrant and resilient democracies with high economic growth. As the world’s thirdlargest democracy with the largest Muslim population, Indonesia projects the modern face of Islam and is a living proof that Islam, democracy and modernity can go hand-inhand.

58 • GBM • January 2012

At the world’s stage, Indonesia recoups its stature as a prominent member of regional and international organisations including the G-20 and the Association of Southeast Asian Nations (ASEAN). Key to this is the newly found stability and success of the Indonesian government over the last decade, particularly under the steadfast leadership of President Susilo Bambang Yudhoyono.

During his tenure, he puts high priority on fighting corruption that has plagued the country in the past, stimulating economic growth and maintaining the country’s overall macro-economic stability through sound policies and reforms. As a result, Indonesia has successfully regained the level of GDP growth equal, if not higher, than that of the pre-crises level in 1997-98.

Since 2004, by utilising prudent fiscal and monetary policies, Indonesia has vigorously pursued a ‘pro-growth, pro-poor, pro-job, pro-environment’ development strategy.

Now, the economy has begun to earn dividends. Indonesia is now an emerging economy with a very healthy debt-to-GDP ratio of 26% and has consistently kept a low budget deficit below 2%, while inflation in 2011 is predicted to be around 4%. Indonesia also enjoys solid foreign reserve hovering around US$118-120bn. With annual GDP of US$700bn of its GDP size, Indonesia is the 17th-largest economy in the world. It also boasts an ever-growing middle class population (26 million people) with the purchasing power parity approaching $1trn.

Indonesian macro-economy has shown its resilience. During the recent global financial crisis, Indonesia’s economy was able to grow by around 4-6%, the third highest among G-20 economies after China and India.

This year, Indonesian economic growth is expected to reach 6.5%. For 2012, Indonesia

realistically expects its growth at 6.3%, reflecting the global slowdown and the decline in demand from advanced economies for Indonesian exports.

In terms of competitiveness and business climate, Indonesia has successfully improved its ranking, from 54th to 44th, in the 2011 World Economic Forum’s Global Competitiveness Report. Moreover, the report acknowledges that Indonesia has become increasingly receptive to technology adoption and adaptation. It ranks Indonesia higher on technological readiness than other emerging markets. Indonesia was also ranked ninth by UNCTAD among the most attractive economies for foreign direct investment for 2010 to 2012. Furthermore, a recent survey for the BBC Extreme World series found that Indonesia has the most supportive entrepreneurial ecosystem and is the best place for entrepreneurs to start a business, even better than some advanced economies such as Australia, Canada and the US. The government is strongly committed to better business policy; a fact that investors have taken note. This is also reflected in sovereign credit upgrades Indonesia obtained from all three main ratings agencies (Fitch BBB-; Moody’s Ba1; Standard & Poor BB). Just recently Indonesia regained its investment grade for its sovereign debt at Fitch ratings from BB+ to BBB- which puts the nation on the same level as India. This has also become evident by the historic level of investment: Indonesia saw $23.5 billion in 2010, soaring up 54% from the previous year. Domestic investors too are responding to this improved business environment with domestic investment rising by 130% last year.

In the age of climate change, the Indonesian government has also reiterated its strong commitment in developing a green economy.

President Yudhoyono has underscored Indonesia’s intention to reduce its greenhouse gas emissions by 26% by the year 2020 through its own national means, or by 41% with international cooperation. In this regard, Indonesia has taken a leading role in the implementation of Reduction of Emissions through Deforestation and Forest Degradation (REDD+) scheme. Our present and future development programs must have a low carbon footprint, and our industries will have to practice energy efficiency.

Infrastructure During the past few years, the government has prioritised funding from the state budget and allocated generous amount on basic health and education, rural electrification and irrigation. Yet, that is not enough. Quoting President Yudhoyono, the infrastructure problem in Indonesia can be described simply: there is not enough of it; in fact, there is too little of it. With this in mind, the Master Plan for Economic Development Acceleration and Expansion was unveiled on 27 May 2011, setting out ambitious targets to make Indonesia one of the world’s biggest economies within the next 15 years.

The Master Plan outlines three main strategies, namely: developing six potential economic corridors throughout Indonesia (Sumatra, Java, Kalimantan, Sulawesi, Bali-Nusa Tenggara and Papua-Moluccas Corridor); increasing national connectivity to achieve locally integrated - globally connected environment; and, strengthening the capacity of human resources as well as enhancing the technology and scientific capability in order to support the development programme within the economic corridors. The government is fully aware that the infrastructure development is essential in order to ensure the successful

implementation of these strategies.

It is evident that the infrastructure development would not be possible without proper investments, domestic or foreign.

The Indonesian government encourages private sectors participation in the provision of infrastructure and related services.

Subsequently, under the public-privatepartnership (PPP) scheme, Indonesia offers 79 projects totalling US$53.40bn to potential investors this year to help accelerate the infrastructure development.

Tourism Tourism has always been one of the primary pillars of the Indonesian economy. Due to its location and geology, Indonesia is blessed with the most diverse landscape, from fertile rice lands on the islands of Java and Bali to the luxuriant rainforests across Sumatra, Kalimantan and Sulawesi, and from the Savannah grasslands of the Nusa Tenggara islands to the snow-capped peaks of West Papua.

Constant efforts are made to provide a destination that is a blend of natural beauty, cultural riches and modern facilities that are at par with any premier destinations in the world. Among the most well known islands are Sumatra, Java, Bali, Sulawesi and Papua. Bali is dubbed as ‘the world’s best island resort’ renowned the world over for its stunning beaches, picturesque paddy fields, dazzling culture, beautiful hotels and exquisite spas.

In 2010, Indonesia welcomed around 7 million foreign visitors. This year Indonesia expects to greet around 7.7 million tourists, an increase of nearly 10% from last year.

By July this year alone, the country already received up to 13% more visitors than the

same time last year, so that the government is optimistic that this target is well within reach.

Visiting Lombok and South Sulawesi in 2012 ‘The Visit Lombok Sumbawa Year 2012’ is the theme for Indonesia’s tourism campaigning next year. Lombok is one of the most popular tourist destinations in Nusa Tenggara, a group of Indonesian islands. The vast variety of activities the island offers makes it a desirable location for any traveller. The bustling shopping streets of the capital city of Mataram contrast with the relaxing tourist strip of Senggigi, while Lombok’s unique adventures include hiking the active volcano Gunung Rinjani, exploring the much soughtafter Gili Islands, or strolling along one of the many beaches of the island.

Indonesia has also officially announced 2012 as the ‘Visit South Sulawesi Year’. South Sulawesi is the southernmost province of the Indonesian island of Sulawesi. Its capital, Makassar, is the regional centre and the largest city in Eastern Indonesia. This province offers the snorkelling experience off Pulau Lihukan; exploring the ancient cave drawings of Gua Leang Leang, visiting the breathtaking waterfalls at the Air Terjun Bantimurung and enjoying the beaches and markets of Ujung Pandang.

Further information on Indonesia can be found on the following sites: www. bi.go.id (Indonesian central bank, Bank Indonesia); www.ekon.go.id (Indonesian Coordinating Ministry for Economic Affairs); www.kemdag.go.id (Ministry of Trade); www.bkpm.go.id (Indonesian Investment Promotion and Coordinating Board); www. indonesia.travel (Indonesia’s official tourism website); and, www.indonesianembassy.org. uk (Indonesian Embassy in London).

January 2012 • GBM • 59

Latin aMeriCa CarBOn CreditS FundS rePOrt

Latin aMeriCa CarBOn Credit FundS rePOrt The carbon markets, CDM and the future of climate change mitigation The international business community is well aware that the first commitment period of the Kyoto Protocol (KP) is just one year from its close at the beginning of 2012. Established as one of three flexible mechanisms under the KP, the Clean Development Mechanism (CDM) has become one of the most important developments in the climate change mitigation, sustainable development and technology transfer areas to date. The Latin American region secured a prominent firstmover advantage by successfully hosting the first registered project and the first activity to issue certified emission reductions (CERs) or ‘carbon offsets’.

The UN Framework Convention on Climate Change is an environmental treaty produced at the Rio Earth Summit in 1992 to stabilise greenhouse gas concentrations in the atmosphere to a stable level in an effort to prevent the potentially disastrous effects of human-induced climate change. Five years later, the Kyoto Protocol was first adopted and outlined three flexible mechanisms, including the CDM. Ratification and full entry into force of the KP occurred in 2005.

The CDM has only really properly existed as a legal force for about seven years, during which an enormous amount has been accomplished - some of the most important carbon market milestones are listed below.

According to the UN’s own figures (UNFCCC Report, ‘Benefits of the Clean Development Mechanism 2011’ page 6), as of July 2011 we observe the following statistics: number of CDM projects registered - 3,276; investment in the CDM totalled US$140bn through to mid-2011, making the average per project carbon-related investment equal approximately US$45m; and, in the Latin America region, the total investment for the 541 registered projects is US$11.5bn.

According to the abovementioned report, the CDM has played a significant role in delivering environmental, sustainable and technological benefits. With the CDM’s compelling track record in mind, while the first commitment period of the KP comes to a close in just one year, the CDM as an operational source of UN-approved, internationally-tradable emission offsets will continue to survive: The CDM does not have a sunset provision and recent improvements in efficiency mean that the system has never before functioned as well as it does today.

60 • GBM • January 2012

At the request of stakeholders to improve the speed, efficiency, and transparency of the CDM, significant steps forward have been made. The governing body, the CDM Executive Board (EB) and its support bodies have continued to make important advances in the existing, project-based system, as well as looking forward to how this might evolve into new mechanisms involving programmes, sectoral approaches, and nationally appropriate mitigation actions (NAMAs).

In combination with the largest source of demand for offsets, the EU Emissions Trading Scheme (EU ETS), the CDM has helped create a global, universal carbon price signal. While this can exhibit significant variance, there exist few owners of geothermal plants in Guatemala, hydro electricity projects in Brazil, or landfill gas sites in Mexico who do not appreciate the distinction between receiving $1, $10 or $50 per tonne of CO2 avoided and its role in helping finance the deployment of low carbon technology. A price signal has been generated and emitters now intuitively appreciate the economic value associated with their emissions. The very fact that it has become universally-understood what the avoided emission of one tonne of carbon dioxide equivalent is an impressive feat in itself.

Consider the likely scenario: There is no immediate legally binding successor to the KP, but the EU ETS continues (until at least 2020, with provision for accepting certain types of CERs), and the CDM proceeds as a fully-functional supply of off-sets.

This is not an entirely gloomy result. First, the systems, procedures, and knowledge are already in existence. The large emitters have made important relationships with consultants, investors, CER buyers, auditors and even some key host country negotiators.

As the political and regulatory landscape inevitably evolves, this diverse network of contacts and associates can quickly be called upon to respond in new ways or evolved ways, as each stakeholder deems appropriate for their particular circumstance.

In this period of great uncertainty, with the lack of a binding global framework to reduce emissions and a gloomy macroeconomic outlook, it is easy to become disheartened with the carbon markets and dismiss the CDM as a thing of the past.

It is EcoSecurities’ belief that this period of unrest is temporary and, with perseverance, carbon markets will continue in an evolved, expanded form. The CDM should be utilised to its full potential as it will afford much efficiency, speed and synchronicity.

There is much benefit to remaining openminded of the CDM, supporting it through this transition period and leveraging its fullymatured facility to produce robust, respected, and genuine emission offsets that can be utilised in a wide range of schemes.

New markets are already developing as sources of demand and the CDM may readily be adapted to evolve into new mechanisms and accounting methods to modify the supply characteristics accordingly. It is crucially important to remember that, after 20 years in the making, it will very likely be much easier, faster and efficient to build upon the CDM rather than replace it entirely and start anew. This reality should be clearly apparent to owners and investors in Latin America, especially considering the payback period for low carbon investments is often long and a stable platform is paramount to this successfully occurring.

EcoSecurities is one of the world’s leading organisations in the business of sourcing and developing carbon emission reductions from greenhouse gas emission reduction projects under the CDM. With a diverse portfolio of projects located in a number of regions, and covering a number of different low carbon technologies, EcoSecurities has built up unrivalled carbon market experience.

EcoSecurities is an active member of the Climate Markets and Investment Association.

Author: Bryan Lee, project manager, EcoSecurities

Ivan Liebig, project manager Latin America EcoSecurities ivan.liebig@ecosecurities.com

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diSPute reSOLutiOn

dispute resolution Alternative Dispute Resolution – an overview Whenever a dispute arises – either in a professional or personal environment – both parties are generally advised to seek professional help to resolve it. Whether it’s a dispute between companies or a couple seeking a divorce, going to court is usually the first option that comes to mind.

However while litigation has its advantages, it can also be expensive, inflexible, highly time-consuming and distracting for the management of an organisation. That’s why more and more disputes are now being resolved out of court using methods known as alternative dispute resolution (ADR).

The most commonly used forms of ADR are: • Arbitration. This is the referral of a dispute to a neutral third party for a decision. The decision is called an award which is legally binding and enforceable.

• International arbitration. This is a way of resolving disputes arising from international commercial agreements and other international relationships. It involves the same process as above, usually before a panel of three arbitrators. For example, if a British company builds a damn in an African country and a dispute arises, international arbitration can be used to resolve it.

• Adjudication. This is a statutory ADR process for the construction industry in the UK. The construction adjudicator is required to make an interim decision within 28 days of referral, providing a quick and effective way of resolving disputes arising out of construction contracts.

• Mediation. This is a confidential, informal and voluntary way of resolving a dispute with the help of a neutral third person (the mediator). The mediator works with both parties and helps them to reach a mutually agreeable solution.

In most cases ADR methods are faster, cheaper, less formal and more flexible than

litigation. It’s therefore no surprise that ADR is becoming increasingly important to individuals, companies and organisations – both in the UK and across the world. That’s where the Chartered Institute of Arbitrators (CIArb) comes in.

CIArb CIArb is the professional body for dispute resolvers. We promote the use of ADR as the preferred means of resolving disputes throughout the world. Our members include arbitrators, construction adjudicators and mediators, all concerned with the costeffective and early settlement of disputes.

We provide a wide range of services and support to our members - and others involved in dispute resolution - through training, conferences, events, research and publications. As an international centre for practitioners, policy makers, academics and those in business, CIArb develops and publishes a variety of standards and guidelines based on the latest thinking from leading figures in the industry.

CIArb: facts and figures We are a global network with over 12,000 members in more than 110 countries.

Altogether there are over 35 active branches in Africa, the Americas, Asia, Australasia, Europe (including the Republic of Ireland and the United Kingdom) and the Middle East/Indian sub-continent.

Our members work in over 250 commercial sectors including finance, construction, oil and gas and agriculture. Many are ADR professionals, while others become members for their own personal development or to enhance their careers in their primary professions including: quantity surveying, civil engineering, architecture, law, academia, HR and project management.

International arbitration International arbitration allows parties from different legal and cultural backgrounds to resolve their disputes without the formalities of their respective legal systems.

It has been growing in popularity with business over the past 50 years, and there are many reasons for this. These include the desire to avoid the uncertainties and local practices associated with litigation in national courts, and wanting to obtain a quicker, more efficient decision.

The New York Convention governs the enforcement of commercial international arbitration agreements and awards, and has been ratified by more than 140 countries.

So these countries recognise and enforce international arbitration agreements and foreign arbitral awards issued in other contracting states. This means parties can have confidence that their awards will be enforced almost anywhere in the world.

Therefore an international award originating in a country that is party to the New York Convention may be enforced in any other country that is also a signatory, as if that award were actually rendered by the domestic courts of that second country.

PricewaterhouseCoopers LLP Report “International Arbitration: Corporate Attitudes and Practices 2008” showed that corporations prefer to use institutions (rather than ad hoc arbitration) for resolving international commercial and business disputes.

The report cited the following institutions as the most commonly used by participating corporations: International Chamber of Commerce (ICC), American Arbitration Association-International Centre for Dispute Resolution (AAA-ICDR) and the London Court of International Arbitration (LCIA).

CIArb’s role in international arbitration As ADR increases in popularity all over the world, CIArb’s role in this area is becoming more important than ever. As part of our commitment to ensuring quality dispute resolution, we give our members the best training available, and offer the only globally recognised professional qualifications. This gives users confidence that the best people are helping to resolve their dispute.

Chartered Institute of Arbitrators 12 Bloomsbury Square London WC1A 2LP Telephone: + 44 (0) 20 7421 7444 Fax: + 44 (0) 20 7404 4023 www.ciarb.org/ info@ciarb.org

62 • GBM • January 2012

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That’s why Citi is committed to supporting microfinance institutions and funds around the world with a wide range of financial services, including agency and trust, fund administration, cash management and foreign exchange. A partnership with Citi means you can become better equipped to assist underserved communities in achieving their future success.

That’s why firms worldwide partner with Citi.

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Corporate and Business Conferences 2012 ACFE European Fraud Conference London | 25-27 March 2012

The Cumberland Hotel Great Cumberland Place, London, W1H 7DL Join the ACFE in London where some of the most respected anti-fraud professionals from across Europe will come together to share their knowledge and expertise at the 2012 ACFE European Fraud Conference.

The programme will feature speakers from government entities and the private industry with a wide variety of expertise in international fraud prevention, deterrence and detection. These experienced practitioners will lead you through interactive sessions while sharing real-world examples and strategies that can immediately take your fraud investigations to the next level.

Benefits of Attending • Learn from prominent global presenters in a variety of information-packed sessions that provide insight into the challenges that affect professionals today throughout Europe and around the world • Gain insight from experts in the field into the way fraud is evolving and hear about the latest developments in anti-fraud efforts to keep pace • Learn about cutting-edge fraud detection tools and techniques • Explore best practices from Europe’s top companies • Enjoy extended networking with colleagues who share your challenges and goals Register by 24 February to guarantee your spot and save up to GBP 100 on your registration. Or, invite colleagues to join you and save an additional GBP 15 per registration for teams of three or more.

23rd Annual ACFE Fraud Conference and Exhibition

Orlando, FL | 17th-22nd June 2012

Gaylord Palms Resort & Convention Center Expand your skills and advance your career at the 23rd Annual ACFE Fraud Conference and Exhibition. This is an unparalleled opportunity to attend educational sessions, earn CPE credits and network with other fraud examiners at the world’s largest antifraud event.

Explore current challenges in the fight against fraud and return home with valuable skills based upon proven techniques. Topics include fraud investigation, prevention and deterrence, ethics and compliance, legal elements, fraud auditing, risk management and more!

Contact: Ross Pry, Tel: +1 (512) 478-9000 Email: rpry@acfe.com

Investing In a Sustainable Future New York | 29 March 2012

Hudson Theatre Millennium Broadway Hotel, New York 145 West 44th Street (between 6th Ave. and Broadway) New York, NY 10036 Now in its 4th year, the Financial Times’ Investing in a Sustainable Future conference is a must-attend for investors interested in learning what the leaders of some of the world’s largest multinational corporations are doing to improve their organizations’ ability to continue to profit and grow.

Hotel Cut-Off Date: 23 February 2012

This one-day conference will feature speakers from large listed corporations describing specific ways their companies are moving towards greater sustainability. The panel discussions and keynotes will share the theme of quantification -- the specific and measurable financial result of sustainability initiatives is what is being examined here.

Register online or call 1-800-245-3321

Book by December 30 and save up to $400!

Room Rate: EUR 139 (inclusive of VAT, exclusive of breakfast) Group Code: ASSO230312

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Delegate Inquiries: Chrissy Sexton +1 212-641-6369 chrissy.sexton@ft.com

CEBMM 2012

2nd International Conference on Economics Business & Marketing Management Singapore |26-28 February 2012 The primary goal of the conference is to promote research and developmental activities in Economics, Business and Marketing Management. Another goal is to promote scientific information interchange between researchers, developers, engineers, students, and practitioners working all around the world. The conference will be held every year to make it an ideal platform for people to share views and experiences in Economics, Business and Marketing Management and related areas.

Contact: cebmm@iedrc.org.

Oman First Islamic Finance and Banking Conference 2012

Muscat, Oman | 23-24 January 2012 Al Bustan Palace, Muscat Oman First Islamic Finance & Banking Conference is to take place on the heels of the interest sparking u-turn in the Sultanate’s banking policies embodied in a decree authorizing the establishment of new Islamic banks, and offers first hand insight into the latest trends and dynamic changes in the Sultanate’s financial sector.

Oman was until recently the only Gulf state that did not constitute of banks offering Islamic products and services. However, the Central Bank of Oman, in May 2011 announced it would allow conventional lenders to run sharia- compliant operations in a bid to keep investment funds within the country.

Islamic banking, comprises of banking operations that exclude the use of the interest rate “interest free banking” amongst other aspects, and is one of the fastest growing segments of the international financial system, with an annual growth rate exceeding 20 per cent over the past decade.

Islamic assets stood at USD 1 trillion in 2010 and are expected to reach USD1.6 trillion in 2012.

In Saudi Arabia, Sharia-compliant financing accounts for 57 % of the total lending and all retail banking activities are Sharia compliant.

In the UAE and Qatar, Islamic banking share of assets has grown at a compounded annual growth rate (CARG) of 38 per cent and 50 per cent respectively, over the recent years.

These figures provide more than just a hint at how Islamic banking will fare in Oman, as Islamic banks and windows are set to capture a significant share of the country’s estimated $42bn held in assets over coming months.

Contact: 961 1 780200 – 961 1 754321 OIF@iktissad.com

IFC’s 14th Annual Global Private Equity Conference held in association with EMPEA

Washington D.C, USA| 14-16 May 2012 Ritz-Carlton, Washington D.C Returning in 2012 is the popular Institutional Investors-Only Summit, preceding the general conference forum on 14 May 2012.

Open exclusively to qualified LPs*, the Summit will be devoted to the needs of institutional investors for information about EM PE and will provide a forum for asking questions and discussing concerns with one another.

New in 2012: The EMPEA EM PE Fundraising Masterclass. This event will provide both first time fundraisers and those with funds in the market with real world fundraising perspectives, lessons learned and industry best practices on 17 May 2012.

Contact: events@empea.net.

Pensions Conference 2012

Brighton, UK | 30th May-1st June 2012 Hilton Metropole Brighton, UK The annual Pensions Conference is where professionals from across the pensions industry join to debate, to learn about and

to share their experiences of the issues of the day. The programme includes a range of technical matters, softer skills and professionalism topics; we also cover many wider issues affecting pensions. A new approach to an old problem, or a different view on the future course of pension provision – these are just some of the ways in which we hope the 2012 programme will support delegates to gain fresh perspectives on the challenges they encounter.

The conference is open to all who work in, or have an interest in, the pensions sector (not just pensions actuaries).

Contact: +44 (0)20 7632 1498

5th International CPDP (Computers, Privacy and Data Protection) Conference Brussels, Belgium | 25th-27th January 2012

The CPDP (Computers, Privacy and Data Protection) conference is neither a purely academic conference nor a business or activist conference. It is a privacy stakeholder conference set up by five academic institutes with the aim to bring together academics, practitioners, policy-makers and civil society so they can meet, exchange ideas and discuss emerging issues of information technology, privacy, data protection and law.

CPDP is organised by the following institutions: Vrije Universiteit Brussel, the Université de Namur, the Universiteit van Tilburg, the Institut National de Recherche en Informatique et en Automatique and the Fraunhofer Institut für System und Innovationsforschung.

CPDP has progressively been growing since its inception both in terms of speakers, participants and panels and the ambition for its upcoming fifth consecutive edition is higher than ever. Last year’s conference welcomed more than 400 participants, including 180 speakers from all over the world. Its artistic and public side events such as the privacy party, two public debates, film screening and Pecha Kucha evening attracted an additional 800 people. Determined to exceed the positive feedbacks received from speakers and participants from the last years, which range from “excellent” to “brilliant agenda keeping”, this year’s conference offers twelve panels, a pre-conference, several academic and cultural side events and a PhDevening.

The regular panels include both the presentation of stakeholders’ agenda and intense debates around key issues in the field of privacy, data protection, technology and society. In addition, specific sessions

will be dedicated to the issues of ICT and aging, surveillance and law-enforcement and eDiscovery.

Contact: info@cpdpconferences.org

Global Accounting, Finance & Economics Conference Melbourne, Australia | 20th-21st February 2012 Rydges Hotel, Melbourne, Australia Theoretical, applied and, empirical papers, as well as case studies in all areas of accounting, banking, finance, investment, economics are invited for the above international conference which is sponsored by the Australian Research Centre for Accounting, Finance and Economics (ARCAFE). The Conference is affiliated with following five peer-reviewed and indexed ( by ERA, Cable and Ulrich directories) international journals such as Global Economy and Finance Journal, Journal of Business and Policy Research, International Review of Business Research Papers, and Global Review of Accounting and Finance. Papers do not need to be global in nature. A proxy presentation may be possible for those unable to make the trip to the conference due to unavoidable circumstances.

Review Process, Paper Evaluation Report BEST PAPER AWARD and Publication Opportunity All papers will be anonymously blind reviewed by the Scientific Committee and all authors will be informed review outcome though an acceptance letter. All registered authors will receive evaluation report after the conference and papers selected as distinguished papers will be considered for publication in any of the above international Journals subject to the compliance to the Editorial Report from the Editor of the respective journal. Best Paper Winners will be selected in each discipline and Award winners will receive cash award and a certificate at the conference dinner, in addition to publication of their papers in any of the above journals selected by the reviewers DOCTORAL SYSMPOSIUM, Best PhD Proposal Award and Discount for Designated Discussant Doctoral symposium for PhD/DBA students will be conducted on 21 February by eminent supervisors and examiners and a feedback will be provided to the doctoral students.

There are 2 best PhD awards for PhD proposals/PhD thesis which is early, middle or final stage.

Contact: arcafepap@gmail.com

January 2012 • GBM • 65

London

LOndOn StOCK exCHange

17/11/2011

The London Stock Exchange welcomes Espirito Santo to celebrate the 10th Annual Execution Noble Charity Trading Day The London Stock Exchange today welcomes Mr. Nick Finegold, Vice-Chairman, Espirito Santo Investment Holdings Limited to open the Main Market to celebrate the 10th Annual Execution Noble Charity Trading Day.

Stock Exchange

This year we are thrilled to announce that the Espirito Santo Investment Bank will additionally, for the first time, host Charity Trading Days in Portugal, Spain, USA, Brazil and Poland where funds raised will go to local causes.

Damien Devine, Chairman of the Execution Charitable Trust commented: “… it is amazing to be able to launch the first Global Charity Trading Day on the 10th Anniversary of the Execution Noble Event….”

Espírito Santo Investment Bank (“Espírito Santo”) is the investment banking subsidiary of Banco Espírito Santo Group. Over the past 10 years, Espírito Santo has invested in international expansion and recently acquired a controlling stake in Execution Noble.

79852 210329 or Clare Simmons 44 (0)207 638 9751 Source: London Stock Exchange

12/12/2011

The London Stock Exchange welcomes Evraz plc to the Main Market Today EVRAZ Holding opened the London Markets in a market open ceremony at the London Stock Exchange.

The business is founded on two cornerstones: financial markets expertise, and a proven international distribution platform. With particular strength in its home markets of Iberia and the UK, Espirito Santo also has a long-established presence in some of the key emerging economies - Brazil, India, Poland and Africa.

We are pleased to announce that today the 1st Annual Espirito Santo Global Charity Trading Day will also take place.

Execution Noble has held an annual charity trading day since 2002 where the proceeds of the net commissions generated on the day are donated to the Execution Charitable Trust which uses the funds raised to make a difference to countless disadvantaged people in London, the UK and around the world.

Espírito Santo offers a full range of products including: Pan Euro Equities, UK Mid Cap Equities, Indian Mid Cap Equities, Brazilian

Equities; Project and Acquisition Finance; Corporate Finance, M&A; Equity Capital Markets; Debt Capital Markets; Corporate Broking; Corporate Access; Derivatives; Fixed Income; Sales and Trading; Securitisation; Private Equity plus a unique Reinsurance platform.

The business has a combined headcount of close to 1,000 professionals with offices in Lisbon, London, Madrid, Edinburgh, Dublin, Paris, New York, Mumbai, Hong Kong, Sao Paulo, Warsaw, Luanda and Mexico City.

Trust enquires contact Damien Devine: Chairman 44 (0) 207 456 9191

Visit the Execution Noble charity page: http:// www.execution-noble.com/x/charitableinterests.html

damien.devine@execution-noble.com

The total amount of funds raised since 2002 is now just over £10m.

Jacky.joy@execution-noble.com

66 • GBM • January 2012

Trading enquiries contact Jacky Joy: Trustee 44 (0) 207 456 9191 Press enquiries contact Caroline Merrill 44(0)

On 7 December EVRAZ became the only steel company to have been included in the FTSE100 Index. The inclusion in the index together with the admission to the Main Market of the London Stock Exchange are marks of recognition by the capital markets of the strength and diversity of its assets, the quality of our management and the prospects of the business.

EVRAZ is a vertically-integrated steel, mining and vanadium business with operations in the Russian Federation, Ukraine,

the USA, Canada, the Czech Republic, Italy and South Africa. It has had over 6 years of successful public market trading, having listed its GDRs on the LSE’s International Order Book in June 2005. The Company has since delivered in terms of its corporate development, operational performance enhanced transparency and improved reporting standards and on the 7th November they took a Premium listing on the London Stock Exchange. This was a big step in the development of EVRAZ into a truly premium, global steel producer.

EVRAZ is the only Premium listed steel company, thereby providing the investors with an alternative to pure mining stocks.

They are ranked the 15th largest steel producer in the world based on crude steel production of 16.3 million tonnes in 2010.

EVRAZ’s consolidated revenues for the year ended 31 December 2010 were US$13,394 million and consolidated adjusted EBITDA amounted to US$2,350 million. EVRAZ plc holds 99,7% of Evraz Group S.A. Morgan Stanley & Co. International plc and Credit Suisse Securities (Europe) Limited acted as Joint Sponsors to the Company.

Linklaters acted as a legal advisor to EVRAZ and Skadden as a legal advisor to the joint sponsors.

Source: London Stock Exchange

28/11/2011

The London Stock Exchange welcomes Inspired Energy plc to AIM

Inspired Energy was founded by Janet Thornton, Managing Director in 2000.

Inspired Energy provides energy purchasing, management and consultancy services to the ‘energy intensive’ UK mid corporate market. The Company currently manages and negotiates approximately 800 gas and electricity supply agreements on behalf of approximately 460 customers across the UK and is well placed to take part in the consolidation opportunities available in the sector.

Commenting on the Company’s Admission, Janet Thornton, Managing Director, said:

The London Stock Exchange today welcomes Inspired Energy on its first day of trading on the AIM Market of the London Stock Exchange.

Admission and trading of Inspired Energy’s ordinary shares commenced today on the AIM market of the London Stock Exchange (“Admission”). The Company has raised approximately £3.4 million before expenses by way of a placing of 111,651,668 new Ordinary Shares at 3 pence per ordinary share, giving it a market capitalisation of approximately £10.6 million on Admission.

“Joining AIM today provides Inspired Energy with an excellent springboard for the company’s next phase of growth as we continue to build its profile amongst our growing customer base in the UK market.

We offer a range of services and products which help corporate energy users tailor their energy requirements and ultimately enable them to manage their overall energy costs more efficiently.”

Source: London Stock Exchange

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n o d n o L

e g n a h c x E Stock

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28/11/2011

The London Stock Exchange celebrates 10 years of trading on the International Order Book

international reputation of the IOB. “The introduction five years ago of derivatives based upon highly liquid GDRs has also helped to boost liquidity on the order book, contributing to the Group’s position as the leading international gateway to Russia.”

09/11/2011

The London Stock Exchange welcomes Nandan Cleantec plc to AIM

Source: London Stock Exchange

08/12/2011

The London Stock Exchange welcomes MRSK Holding on its first day of trading

Today the London Stock Exchange celebrated ten years of trading on its International Order Book (IOB). To mark the occasion, Dmitry Pankin, Head of the Russian regulator, Federal Financial Markets Service (FFMS), was welcomed by the London Stock Exchange to open London trading in a market open ceremony this morning at 8am.

As part of the celebrations, the London Stock Exchange is today hosting a ‘Russia in Global Markets’ event. Senior representatives from both the Russian and European financial markets will meet to discuss a wide range of topics exploring Russia’s capital markets, international relationships and investment opportunities.

Launched in 2001, the IOB is now home to over 315 stocks, from 48 countries in Asia, Central and Eastern Europe and the Middle East. Over £40.6 billion has been raised in primary and secondary issues since the market was founded and the IOB is now the world’s most liquid market for trading in Global Depository Receipts (GDRs).

This year also marks the fifth anniversary of trading in Russian derivatives on the Group’s Derivatives platform. Now part of Turquoise Derivatives, the platform has established itself as the leading international marketplace for trading Russian equity and index derivatives, representing approximately 90 per cent of all globally exchange-traded options.

Commenting on the occasion Nicolas Bertrand, Head of Equities and Derivatives Markets at London Stock Exchange Group said: “The International Order Book has been a huge success story. It has demonstrated tremendous growth since its inception in 2001 and has firmly established itself as the world’s most liquid market for trading in Global Depositary Receipts. The continued interest from global companies looking to list their GDRs on London Stock Exchange Group markets illustrates the growing

68 • GBM • January 2012

The London Stock Exchange today welcomes Nandan Cleantec plc on its first day of trading on the AIM Market of the London Stock Exchange.

The London Stock Exchange today welcomes MRSK Holding on its first day of trading.

Trading of MRSK Holding’s shares in the form of Global Depositary Receipts commenced today following the successful admission of the Company to the Official list under the symbol MRSK.

MRSK Holding is the largest electricity distribution company in Russia and one of the largest electricity distribution companies in the world. Its principal activities are distributing electricity and providing technological connection to the Russian low and medium voltage electricity distribution grid network, as well as connecting customers to its electricity distribution grids.

The Company’s market capitalisation is approximately USD $4 billion.

Commenting on the listing, MRSK Holding’s CEO Nikolay Shvets, said: “We are delighted to see MRSK Holding’s GDRs listed on the London Stock Exchange as we look to further diversify and expand our shareholder base, as well as to increase liquidity of our equity securities. Listing in London is an important milestone in our history, allowing us to maintain our leadership in the Russian electricity distribution system. We look forward with confidence to our future as a London-listed company and to delivering value to all shareholders.”

The Bank of New York Mellon is the depositary bank for the GDRs, Allen & Overy LLP acted as legal advisors and FTI consulting handled international communications.

Source: London Stock Exchange

Nandan is a scaled vertically integrated biofuel producer. It has developed a number of revenue streams geared towards the ultimate provision of commercially refined biofuel derived from Jatropha plants or other suitable feedstocks.

The Group’s current activities are concentrated in India and include innovative plant breeding and genetic improvement of Jatropha, a 275,000 MT per annum biofuel processing plant which sells biodiesel to end customers and a Jatropha feedstock plantation base of approximately 51,000 ha.

In addition, the Group has initiated activities in India, Africa and Southeast Asia in order to further develop its land bank.

Nandan’s strategy is to maximise the potential of its position as a pioneer in Jatropha biofuel sciences. This will involve exploiting the Group’s position as a market leader in the Indian biofuel industry.

The Company has raised approximately £16.1 million through the issue of new ordinary shares at a price of 60 pence per ordinary share, implying a market capitalisation of Nandan on Admission of £166.1 million.

The proceeds of the issue of new ordinary shares will be used to enable the Company to develop a large sustainable feedstock supply of Jatropha for the production of biodiesel.

Prasad Moturi, Executive Chairman of Nandan, said: “We are delighted with the response we have received from UK institutional investors.

Admission to AIM is a logical next step for us in our Company’s development and today marks an important milestone that will help us to accelerate the delivery of our strategy. We have a strong, profitable and proven business model and are excited about the opportunities open to us as the world

looks to diversify its energy supply. We look forward to working in partnership with our new investors to develop our compelling biofuel solutions.”

transparent access, ORB offers private investors the chance to participate in the corporate bond market and today’s listing demonstrates the strong appetite for this type of issue. We are very much looking forward to continuing to develop this market.”�

Advisers to Nandan are: Arden Partners plc – Nominated adviser and broker

Benny Higgins, CEO at Tesco Bank, said: “We are delighted by the excellent response by investors to the second issue of Tesco Bank Retail Bonds. Although we are principally funded by retail deposits, the success of our second Retail Bond, which once again exceeded our target, shows the keen interest of a broad customer base in both Tesco Bank and in the range of savings and investments that we offer.”

Nabarro LLP – UK Legal advisers Tempus Law Associates – Indian Legal advisers Haribhakti & Co. Chartered Accountants – Reporting accountants and auditors Source: London Stock Exchange

16/12/2011

The transaction follows Tesco Bank’s hugely successful 5.2 per cent fixed bond issue in February which raised £125m. This issue was chosen by Tesco to offer retail investors direct inflation protection

The London Stock Exchange welcomes Tesco Bank to the Order book for Retail Bonds

Source: London Stock Exchange

The London Stock Exchange today welcomed the latest new bond listing to its Order book for Retail Bonds (ORB). Tesco Bank, the personal finance arm of the leading international retail group, has raised £60 million on the market, direct from private investors. Barclays Capital, Evolution

14/11/2011

The London Stock Exchange welcomes The Royal Bank of Scotland to the Order book for Retail Bonds

Securities and Lloyds TSB Bank Plc acted as book runners on the deal.

Celebrating the launch, Therese Procter, Personnel Director at Tesco Bank, today opened the market at the London Stock Exchange. The 8-year bond is available in £100 denominations with a minimum initial investment of £2,000.

This latest offering takes total fundraising on ORB since it was launched in 2010 to over £1.3billion, with 153 bonds now available for trading on the platform.

The London Stock Exchange today welcomes a new RBS inflation linked bond onto the Order Book for Retail Bonds (ORB). This is

the sixth bond to be issued by RBS on to the platform since launch.

The Inflation linked bond has maturity of seven years and a two per cent fixed coupon with the principal linked to RPI. The bond will be issued in £1,000 denominations.

Commenting on the new bond, David Stuff, UK Director of Listed Product Sales at RBS said: “In a low and uncertain savings rate environment, combined with high inflation, it can be a challenge to find an investment with real returns. The UK Inflation Income Bond offers returns designed to meet the needs of private and institutional investors. There are no restrictions on large investment amounts and there are no early redemption charges beyond the bid/offer spread.”

Pietro Poletto, Head of Fixed Income at London Stock Exchange Group said: “RBS is the most frequent issuer on ORB and we are delighted to welcome their sixth retail-sized bond onto the market. There is a growing demand from private investors for new bonds and inflation linked products have proved popular this year.

“ORB continues to draw new bond issues to the market and is steadily creating a wide choice of products for retail investors. We have a strong pipeline of new issuers and look forward to seeing an ever diverse range of issues going forward.”

The ORB was launched in February 2010 in response to strong private investor demand for greater access to fixed income investment.

There are now over 150 bonds available for trading on the platform and over £1.3 billion has been raised since launch. There are corporate, government and supranational bonds available, which are tradable in typical denominations of £1,000 or less. All are exempt from stamp duty and those maturing in five years or more are eligible for inclusion in ISAs and SIPPs. Full prospectus details and final terms for each security are available on the London Stock Exchange’s website.

Source: London Stock Exchange

Pietro Poletto, Head of Fixed Income Markets at London Stock Exchange Group, said: “We are delighted that Tesco Bank has issued its second corporate bond on ORB, a market that continues to go from strength to strength. This new inflationlinked corporate bond demonstrates the increasing prominence of ORB as an alternative source of funding for issuers looking to diversify their investor base. Providing simple,

January 2012 • GBM • 69

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