Global Business Magazine - February 2012 by Corporate ABM

gbm February 2012

global business magazine

THE BATTLE FOR EUROPE “WE HAVE TO CONFRONT IT, WE HAVE TO RESIST, WE HAVE TO FIGHT”

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INSIDE This Month:

GBM LeAdinG TAx Advisors

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Business Talk With the deepening of our economic woes, we begin by tackling the recent credit rating downgrade of eight countries made by Standard and Poor’s. With the end of the tax year looming for many, our international tax section covers business and taxation in the US Virgin Islands, planning for tax efficiencies in the Philippines, tax aspects of Venezuelan foreign currency control, the Indonesian tax holiday, Cyprus holding companies, Malta and Belize as attractive jurisdictions, and we answer the age-old tax question - how much? Our data protection focus features a Q&A with the ICO, the UK’s independent regulator covering UK date protection act and enforcing UK legislation. We also cover Canada’s new anti-spam legislation, preparing for the impact of the EU Cookie Law, binding corporate rules in Europe, and what you need to know about data privacy regulation in Asia. We look at the REACH regulation including, among others, the impending impact of EU chemical policy, avoiding excessive testing costs in fulfilling your 2013 registration testing obligations and lessons learnt from five years of Europe’s flagship chemical regulation. We profile Brazil, a developing country rich in opportunities for international trade looking at the growing sector, two legal regimes, arbitration and the common problem of commercial name trademark infringement.

cover sTorY

We examine Japan’s economy beyond 11 March 2012, recovery plan, growth model and ﬁnancing, Japan-UK co-operation, and thresholds to be considered during the planning stage for foreign investors.

deALinG WiTh dePression AT WorK

counTrY ProFiLe - BrAZiL

We also look at India, a key market and business destination, intellectual property laws and practice, getting off to the right start when doing business in India, and where it is headed in 2012.

sPoTLiGhT on BeLGiuM

WorK heALThY - TeAM BuiLdinG

As we go deeper into the winter months, we look at team building and tackling depression at work. For added motivation at work, who better to proﬁle in our success story than Donald Trump, business magnate.

LuxurY BrAnd series - roMAnTic GeTAWAYs 44

counTrY ProFiLe - JAPAn

Finally, just in time for Valentine’s Day, we review some of the most romantic getaways around the globe.

success sTorY - donALd TruMP

Are GrAduATes The WAY ForWArd?

deAL direcTorY

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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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February 2012 • GBM • 3

The BATTLe For euroPe

The Battle For Europe 4 • GBM • February 2012

“We have to confront it, we have to resist, we have to fight”

by Jamie Cooper The new year has brought little good news for the troubled continent with S&P announcing their downgrading of over half of the 17 Eurozone member nations, with Austria and France both losing their AAArated status. ‘We have to confront it, we have to resist, we have to fight’. You would be forgiven for thinking that this is a rallying battlefield cry or a scene from Braveheart as Mel Gibson and his compatriots line up to battle their oppressors. In reality, those are the powerful words of the controversial French President Nicholas Sarkozy as he addresses the ongoing crisis in the Eurozone which, despite billions of pounds and the support of some of the most economically powerful countries in the world, continues to worsen. The weapons may be fiscal and the soldiers may wear suits but make no mistake, Europe is in the midst of a ferocious battle with their very economic survival hanging in the balance. On Friday January 13th, Standard and Poor dropped their own economic bomb on the troubled continent when it announced that it had cut the credit ratings of nine European countries. France, Cyprus, Italy, Portugal, Spain, Austria, Malta, Slovakia and Slovenia all received their long-term ratings downgraded by one, or in some cases two levels.

Standard & Poor’s Standard and Poor’s (S&P) is one of the “big three” credit rating agencies alongside Fitch

Ratings and Moody’s Investor Service, that assess the financial stability of a country. Their downgrade of nine countries, all of whom are members of the European Union, was far from unexpected but nevertheless came as a huge blow to the worlds largest economy (the EU is considered in most analysis as one entity - the media-coined “United States of Europe”). It’s not just the countries that have fallen victim to S&P’s damning judgement, the European Financial Stability Fund was also downgraded from it’s AAA status making it harder for the fund that has kept Greece, Italy, Spain, Portugal and Ireland alive, to raise further money to continue this support. All five countries have relied heavily on the European Central Bank and their European Financial Stability Fund (more commonly referred to as the bailout fund) but with a lower rating the contributions of the more stable member states will likely increase yet again. The fund itself has already gained substantial injections as the EU recently completed it’s fundraising in preparation for a second bailout of Greece, so the timing of the report has meant the damage will not be as irreparable as it may have been. However, many respected individuals in Europe have voiced their concern that the amount raised falls significantly short of what is necessary to truly support member states through this period of sustained economic hardship. With recent developments not least of which was the S&P decision, raising these additional funds (a job which would already have been very difficult in the current climate and with no universally agreed solution) even harder. The EFSF’s capacity to lend money to struggling countries such as Greece is determined by the guarantees offered by the other Eurozone countries who have contributed to it. Prior to the downgrade only 6 of the 17 member countries had obtained the top triple A credit rating but, after the loss of top status by France and Austria,

February 2012 • GBM • 5

The BATTLe For euroPe

this number has now dropped to just 4. When rating the EFSF, S&P and it’s fellow rating agencies agreed to judge the fund based solely on it’s top-level rated guarantor governments rather than all guarantors, meaning the decrease in the number of AAA rated member states will undoubtedly effect it’s lending capacity. The only way the fund itself could have retained it’s AAA status would have been for it to gain further guarantees from the remaining four AAArated countries (the Netherlands, Germany, Finland and Luxembourg) - a commitment which an already heavily exposed Germany had previously ruled out.

The Eurozone So where does this leave the Eurozone and it’s indispensable Financial Stability Fund? Well if the Netherlands, Germany, Finland and Luxembourg are unwilling to increase their guarantees (which seems highly likely), the EFSF are left to absorb the impact of the fund’s downgrade to AA+. Whilst borrowing costs may rise, it does provide an opportunity to increase the amount available to lend as the existing guarantees would facilitate the issuance of a significantly higher amount of lower-rate debt. You would think that S&P would be satisfied with downgrading a third of the EU countries and their much needed bailout fund but for Europe, when it rains it pours. They followed the downgrades up with a statement saying that their outlook on France and Austria as well as twelve other countries in the 17 country block was negative, an announcement which was accompanied by confirmation that there was a 30% chance that they will downgrade the two former AAA-rated countries once again in 2012 or 2013. Whilst all the downgrades will have their impact on the countries concerned, none will have cut as deep as those on France and Austria as they were, prior to the downgrades, two of only six countries with the highest triple A ratings within the single currency block. The ratings agencies have been widely criticised for their role in major crisis’ such as the one Europe is currently battling, with their statements of credit-worthiness capable of extinguishing that constantlymoving light at the end of the tunnel. They have even received criticism for the part that some believe they played in bringing about the crisis, with some feeling that the failure to correctly assess the ability of certain private sector institutions to fulfill their fiscal obligations in conjunction with a laissezfaire attitude to leverage by the governments (namely that of the United States), causing an inevitable financial meltdown.

6 • GBM • February 2012

Regardless of their role in the , the influence over global economic and political movements is undeniable and unprecedented for a private company. But who and what determines whether a country is capable of fulfilling it’s financial responsibilities? Well according to S&P, the oldest and most prominent of the credit agencies, their decision takes into account a range of financial and business information that could have an impact on their ability to pay the money they owe - money that was initially borrowed through their issuing of bonds. In their own statement on how credit ratings are issued, this includes amongst others “economic, regulatory and geopolitical influences, management and corporate governance attributes and competitive position”. The criticism ratings agencies receive for being the deliverers of often bad news often seems analogous to shooting the messenger, but the influence they have and subsequently the consequences of their decisions are both far-reaching and severe. The direct implication of the downgrades is that the value of the relevant countries bonds will decrease whilst it’s interest rates increase. As this is the governments primary means of borrowing money, this means that borrowing the amount they require, paying back the full amount of these loans and then paying the interest on them becomes increasingly difficult. The logic is sound, a country that is more financially unstable should reward investors willing to take on this extra risk with a higher interest rate - otherwise why would they bother? Unfortunately this system throws them into a vicious circle in that, by lowering the credit rating of a country that is struggling financially, the ratings agencies are making it more expensive to borrow money and consequently harder for the countries to fulfill their commitments. Hardly the solid foundations you need to overcome a financial meltdown that has seen countries around the globe dragged to the starting line of a double-dip recession with major concerns over whether or not some of these countries, and indeed the European Union itself, will make it through to the end. Even Angela Merkel, the German Chancellor who has campaigned tirelessly to ensure the survival of the Eurozone and the single currency has - following the recent S&P announcements - for the first time cast doubt over the EU’s ability to save Greece. “Of course, there's Greece, a special case where, despite all the efforts that have been made, neither the Greeks themselves nor the international community have yet managed to stabilise the situation" she said addressing journalists before the latest meeting of EU leaders.

These concerns for both Greece and the continent as a whole have been the subject of much debate for the last 18 months, with few believing the end of the recession was really going to be the true climax of an economic downturn that has seen hundreds of thousands lose jobs, homes and businesses. Unfortunately with confirmation that the UK economy shrank by 0.2% in the final months off 2011 and a statement from Standard & Poors announcing a 40% likelihood that Europe will return to recession this year, the enormous task that this continent faces is showing no sign of shrinking.

Financial Markets In terms of the financial markets the downgrades, whilst having a predictable short-term negative response to the news, did not meet the announcements with the sharp falls one might expect considering the importance of the decision. The reason for this was simply that many were of the opinion that it was just a matter of time until this happened, down in part to the fact that S&P had already warned of possible downgrades weeks ago. The general perception of the developments in the eurozone was merely reinforced rather than brought to light by the downgrades and the further comments regarding S&P’s outlook on the majority of the single currency member states. With the Euro already hit 18-month lows in early January, the valuation reflected this belief that downgrades were just a matter of time. Had Germany, the largest and most powerful of the Eurozone economies, been downgraded the market reaction would likely have been very different. On the surface the downgrades were a predictable confirmation of the increasing economic pressures facing the countries concerned, but the reality was this was as much a shot at the Eurozone as it was at the individual nations. The Eurozone ministers’ attempts to resolve the engulfing crisis and prevent an imminent return to recession have been well publicised but generally ineffective and the S&P’s downgrades were verification of their ongoing opinion that the so called “proactive and substantial” response to the crisis, was simply not enough. S&P said shortly after the downgrades that they believed “the effectiveness, stability and predictability of European policymaking and political institutions have not been as strong as we believe are called for by the severity of a broadening and deepening financial crisis”. Whilst the downgrades were met with dissent around the continent, Angela Merkel and President Sarkozy responded simply by reaffirming their commitment to the current measures and encouraged their European

counterparts to focus on the latest in a series of action-plans. However, what has often been lost in the mountains of reports on the outcomes of the regular meetings of leaders is that regardless of how much Merkel and Co. champion the plans as the potential saviour of Europe, when considering the downgrades the S&P took these intentions into account and still felt a downgrade and a negative future outlook was appropriate. This suggests that S&P feel that even if the planned measures are successfully implemented, they will not have sufficient power to put an end to the worsening economic situation in the region, with their report stating “we believe that the current crisis-management tools may be inadequate to restore lasting confidence in the creditworthiness of large eurozone members such as Italy and Spain”. The report even went as

far as to suggest that even if the current plan was in place before the Euro was created, it would still have been unable to prevent this crisis. The S&P comments seemed to suggest a feeling that is becoming increasingly supported throughout the world, that the policy intentions of many of the most powerful nations are so focused on extreme austerity measures and immediately slashing spending budgets, that they are strangling economic growth and fueling the potential for another recession. “It is not good news...but it is not a catastrophe,” said François Baroin, France’s finance minister after the announcement of the downgrades, “it is not the rating agencies that dictate the policies of France.” He may be right in his refusal to bow to the power of the ratings agency and his compatriots will almost certainly be able to absorb the

financial implications of the downgrades, but the future for France and it’s continental neighbours remains uncertain, unpredictable and for most of the globe, unnerving. There is no doubt that the S&P downgrades will have consequences that will impact the Eurozone’s ability to try and find a solution to it’s many problems or at-least the timeframe in which they may be able to achieve it, but the true impact of the S&P decision is what it suggests for the future of the region. The negative outlook placed on the vast majority of the eurozone nations and the prediction of future downgrades for many, points to the fact that despite months of negotiations between the worlds most powerful individuals, the situation in Europe is a worsening crisis that threatens to engulf the world as it stands on the brink of recession.

February 2012 • GBM • 7

Gbm leading tax advisors

GBM Leading Tax Advisors What is international tax planning? Tax planning is the art of seeing what tax liabilities lie ahead and adjusting one’s path to ensure that the tax costs are, at any rate, no higher than they need be. In domestic tax planning, the taxes of only one jurisdiction are an issue. That is difficult enough: the practitioner needs to know a great deal about the tax system to guide his client down the optimum path. In the international version, the amount of information the practitioner has to have at his command is quite frightening. And the information, in both cases, is forever changing, with new statutes, regulations, decisions and treaties. I see that information requirement very clearly from my position as president of the International Tax Planning Association (ITPA). The function of this organisation is to disseminate information of this kind among its members through its meetings, publications and website (www.itpa.org). If we take a look at, say, the programme for its next meeting in Montreux in March 2011, we see the kind of information involved. The meeting opens with ‘A fresh look at Monte Carlo’. Like everybody else, I know that if I go and live in Monaco, I will pay no income tax (unless I am an American), but when I go to see my international tax adviser, I expect him to paint a bigger picture - to tell me about the snags involved in living in Monte Carlo, and about the best way to hold my investments in UK property and my shares in a Spanish manufacturing company. And what should I do about my US royalties? The next

speaker deals with quite different questions: his topic is ‘Detecting money laundering’. In cross-border transactions, money laundering can be very difficult to spot. Advice from someone who has spent a lifetime doing just that is 40 minutes well invested. In the second half of the morning, the programme moves on to investing in real estate, first in France, then in the UK. Non-French investors in French property will want to know about the société civile immobilière; non-UK investors in UK property will be delighted to learn that they have no liability to UK capital gains tax, but will need to appreciate the point where a tax-free quick turn can become a taxable ‘deal’. ‘Company migration: Planning opportunities’ is the title of a talk by Roy Saunders. This is an area in which he has been doing some original and creative thinking: what his audience will essentially learn is to recognise situations where it could be advantageous for a corporate body to become resident in another jurisdiction. Where a share in a business enterprise is not held by an individual but by some intermediary vehicle, the vehicle is often referred to as a ‘wrapper’. A wrapper can be, and often is, a holding company or a trust. Either of them can be administered in Luxembourg, as they can elsewhere, but Luxembourg also offers some other types of wrapper; these will be discussed by Herman Troskie at the beginning of the second day of the meeting. This talk is followed by Stephen Gray’s talk on dealing with intellectual property. He looks at this topic primarily from a US perspective, which is both difficult and important: it is difficult in that the US tax system has a good claim to being the most complex and difficult in the world, and it is important because the US still has the largest economy in the world, much of it related to intellectual property. Over the past few years, the offshore world has been hit by ‘storms’ of many kinds - information-gathering exercises sponsored by the OECD (Organisation for Economic Co-operation and Development) and FATF (Financial Action Task Force), political pressures from the high-tax country and thefts

8 • GBM • February 2012

of information by local employees. How has this affected the offshore centres and how will it affect their future? This is Richard Hay’s topic. The final talk of the day deals with things that have not yet happened, but will have happened by the 15 March 2011. This round up of regulations, treaties, decisions and enactments will be presented by Philip Baker QC. There are many other areas where the wellinformed international tax planner needs to have, at any rate, some basic knowledge. If we look through the programmes of later ITPA meetings, we can see several examples. In Monte Carlo, there will be a day devoted to investing in and out of the BRIC countries. On the next day, we find an update on Switzerland and the EU, and then come talks on choosing appropriate jurisdictions for asset protection, or one for an international charity. In the pipeline, for later meetings, are such topics as Islamic banking, private placement insurance, a fresh look at Austria, emerging markets for offshore services, crossborder estate planning and what the client expects from his tax adviser. International tax planning is not, as I said, a stationary subject; but many of the topics remain the same. It is interesting to go back to the programmes of the first ITPA meetings, in Amsterdam in 1975 and in Nice in 1976. I see that I was talking in Amsterdam about the ‘Stepping stone’ - the company interposed between a borrower and a lender or between the copyright owner and the ultimate licensee, for the purposes of obtaining treaty benefit on interest or royalties. This was a topic to which Michael Jones returned at the meetings in Amsterdam earlier this year. But he had some very different things to say, because in the meantime a number of events had occurred - not least of which was the decision of the Court of Appeal in Indofood (a case which may well have been wrongly decided, but which has afforded splendid ammunition to taxation authorities all over the world). The jurisdictions appearing in the 1975 programme might feature at a conference on international tax planning conference held tomorrow - Luxembourg, Netherlands, Gibraltar, Switzerland and Monaco. But, again, the content of any talk given about any one of those would now be very different. There are some countries that used to be on the international tax planning scene, which

Can one not read all this in books? Some of it, no doubt. Every ITPA member receives the Journal three times a year. These contain edited transcripts of the talks given at ITPA meetings, so that all members can have access to all the information, whether they attend the meetings or not. But while the people who need this information will go to some lengths to acquire it, they are, from a publisher’s point of view, rather a small market. There are, however, some very informative works in print. Marshall Langer’s classic Practical International Tax Planning (Practising Law Institute) is indispensible for those whose clients include US taxpayers or US income. There is a mine of information in Roy Saunders’ International Tax Systems and Planning Techniques (Sweet & Maxwell), a new and enlarged version of which has just been published. And I suppose modesty should not prevent me for mentioning my Essays in International Tax Planning (Key Haven) and Six Fiscal Fables (ITPA).

are no longer: Canada featured in Nice, and Denmark in Amsterdam. They no longer offer the tax planning advantages they did. On the other hand, there are quite a number of advantages that have been highlighted at past meetings, which never had quite the impact one might have expected. In 1976, Marshall Langer’s talk had the unexpected title, ‘The United States as a tax haven’ - a good deal of what he said remains true today. The same programme included a talk ‘The Australian trust’: it was a little-known, highly cosmetic niche vehicle then, and so it is today. There have been, however, a number of topics that seemed very important at the time but have, in the meanwhile, rather faded from view: for example, exchange control, bank secrecy, the Dublin IFC and (unexpectedly perhaps) asset protection. Other topics, by contrast, covered what was then new and uncharted territory, but which subsequently became better known: guarantee and hybrid companies (1984), investing in China (1984), company redomiciliation (1986), Labuan (1993), New Zealand Trusts (1993) and, more recently, Israeli ‘offshore’ trusts (2007). The ITPA focus is still very much on the new - some topics at recent meetings would have been meaningless to the members who attended the earlier meetings: STAR trusts and hedge funds (Cayman, 2009), financial centres in the Gulf, the new Savings Directive (Geneva, 2010), and Blacklists, Greylists and Whitelists (Venice, 2010).

Speaking for myself, I have undoubtedly learnt a great deal over the years by attending meetings and reading the Journal. But I think I have really learnt most by having to find things out in order to give the client advice. To reiterate what I said earlier: keeping in my head the details of the UK tax system is hard enough; I couldn’t possibly pretend to know more than the bare bones of the tax system of other countries. This is where I need to be able to communicate with a practitioner in that country, and one whose opinion I respect. How do I choose such a person? The clue, I have discovered, is to take every opportunity to meet and talk to practitioners from other countries and, while I may appear to be doing nothing more serious than enjoying a gin and tonic, I am in fact asking myself the silent question: “If sometime in the future I were to have a client with a liability (or the possibility of a liability) to tax in your country, are you the person to whom I would be sending an e-mail? If you are,” I am thinking, “then I need to have you on my list. When the day comes that I have a client who needs some advice about the taxes in your jurisdiction, I shall recommend that he (or I on his behalf) consult you. Of course, I cannot myself take responsibility for the wisdom of your advice, but I do have to take responsibility for recommending you: I shall be pleased if the client praises me for my wise choice, but I can be sure that I shall be blamed if my choice proves not to have been a good one.” A list of practitioners whose advice I am happy to seek is a very valuable asset indeed. Apart from ITPA meetings, conferences organised by IFA (Institute of Financial Accountants), STEP (Society of Trust and Estate Practitioners) and a number of commercial companies offer opportunities

to compile a list of this kind. It requires a certain amount of stamina to take advantage of every opportunity: it is very tempting simply to say ‘hello’ to the people you know and drift off to a nice dinner with people you like. It is a temptation to be resisted! Thomas Edison said genius was ten per cent inspiration and 90 per cent perspiration. You could say very much the same about international tax planning. The breakthrough comes when the practitioner says to himself: “Suppose we do it a different way?” But before he can propose a different way, he has to know enough about the taxes of the jurisdictions involved to see that the different way is a better way, and that calls both for a lot of learning and also good relations with a number of wise counsellors. The International Tax feature has been produced and published by GBM. The ITPA have only provided the introductory article to the feature.

ITPA Fact File Constitution- Company limited by guarantee, incorporated in the Cayman Islands President Milton Grundy, barrister, head of Gray’s Inn Tax Chambers, London Committee - Solicitors N Goodeve-Docker and R Pease, accountants F Hoogewerf and R Saunders, US attorneys S Gray and M Langer, and H Troskie. Meetings 2011 - Madrid 18-20 March, Cannes 10-12 June, Lisbon 14-16 October www.itpa.org Convention Director - Elizabeth Husband, fax: +44 1732 746689, elizabeth@itpa.org Registrar - Paula Banks, fax: +44 1534 855488, paula@itpa.org

February 2012 • GBM • 9

Gbm leading tax advisors

Belize

Belize – Not a Taxing Thought

Belize, a former British colony with around 312,000 people, is found at the southernmost tip of Mexico in the Yucatan Peninsula. A sovereign nation since 21 September 1981, Belize has the privilege of being a truly multicultural society, boasting at least nine ethnic sub-groupings with various sub-cultures and languages. English, its colloquial derivative ‘Kriol’, and Spanish are the most widely spoken languages, with English being the only official idiom.

professionalism exhibited in its daily operations (belizecompanies. com). Belize Corporate Services Limited has the wherewithal to adequately attend to queries for incorporations, which clients have from time to time. Not only are such queries capable of being handled, but in the case of professionals desirous of having their own Belizean presence, representation on their behalf is also part of the service offered.

The appreciation for such diversity has caused Belize to be able to offer a wide variety of services, and in 1990 it launched its foray into the offshore financial services market. Initially offering just international business companies (IBCs), the product range has over the years mimicked the ethnic diversity of Belize, now offering, among others, IBCs, asset protection trusts, various licences (international asset protection and management, foreign exchange trading, etc), money transmission services, payment processing services, money exchange services, safe custody services, accounting and as of December 2011, limited liability companies (LLCs).

Trusts have allowed for the proper establishment of such asset preservation strategies, as they follow the common law formula for trusteeship, while combining it with the inherent privacy resident within the asset protection provisions of the trust legislation. Persons who have any claims against the trust assets based on marriage, the termination of marriage, succession related interests or insolvency and creditors’ interests will be frustrated. The only grounds on which any claim against the trust can be officially entertained by the Supreme Court of Belize is where it can be proved that such trust was in fact established by duress, fraud or mistake. The trust becomes an entity falling not within the estate or property of the settlor, but the legal ownership, as with any trust, changes hands completely. There are, of course, inherent benefits to such a transfer of ownership that, for tax purposes, are somewhat self-explanatory; if it doesn’t form part of one’s estate, then arguably it is not taxable. Qualified and competent licensed professional trustees, such as Belize Trust Company Limited, the trust arm of the Belize Bank Limited, can provide all necessary trustee and trust agent services as may be required.

Of these, arguably the IBCs and the trusts are the most popular vehicles, having been the first two product offerings. There are many service providers in these areas making the products more commoditised and perhaps cheaper than in the past. The IBC offering is substantially the same as in other jurisdictions such as the BVI and Anguilla, but with one particular advantage; it has one of the lowest government fees that one can find in the world. As such, it makes for an attractive complement to one’s estate planning or tax planning structure, as it allows for the low-cost establishment of such structures. Financial planners, estate planners, asset protection managers, attorneys and accountants have traditionally favoured such a vessel, as it allows for the protection that is required as part of a structure geared towards the ultimate preservation of the client’s assets, be it in asset protection or tax planning. The Belize Bank Limited through its corporate arm, Belize Corporate Services Limited, is able to make incorporations of these IBCs with ease, given its long track record in the business and also the level of

Traditionally, banking has not played an integral role in the development of the offshore financial services sector, but, with the emergence of other areas of service, such as international money lending and other related services, international banking in Belize has become a necessity rather than an interesting conversation piece. Institutions such as British Caribbean Bank International (bcbankinternational.com) offer the necessary platform on which even Internet sales can be conducted, as well as the aforementioned services that now comprise the various licenses offered by the IFSC. The level of professionalism that such institutions espouse allows for a smooth transactional process, without the traditional pain that is often associated with establishing banking relationships. Banking in Belize has not been the selling point of the offshore financial sector, and that has worked to the detriment, but also to the benefit, of the financial institutions. Such institutions are not allowed the benefit of running wild without supervision, and this supervision by the Central Bank of Belize has indeed led to continued stability within the banking sector, illustrated by the fact that in the fairly recent global banking meltdown, there were no banking institutions in Belize that faltered or failed. The benefit of all this has been the cultivation of a culture of attention to detail, while at the same time allowing for the client to achieve the objective they seek to accomplish. Belize provides wonderful opportunities for many persons: the asset protection planner, the tax planner or the man wishing to preserve his assets from the rapacious creditor or the taxman. The time has come to take advantage of the positives offered under the jurisdictions. We look forward to you visiting and sampling our humble offerings. Christopher Coye, Managing Director 21 Regent Street, 4th Floor, Belize City, Belize Tel.: (501) 227 0697 Fax: (501) 227 0983 ccoye@bcbankinternational.com www.bcbankinternational.com

10 • GBM • February 2012

China, Hong Kong and Macau

Answering the age-old tax question: How much?

All taxpayers ask the same bottom-line question about their taxes: “How much are we going to pay this year?” For global companies, that question is harder to answer than it has been for many years. And it’s not just how much they owe, but also: “How much of a disagreement are we going to have with the tax authority in order to agree on that final figure?” According to a new survey-based report from Ernst & Young, ‘tax risk’ and ‘tax controversy’ are both rising rapidly. Tax risk is what companies face when they are unsure of filing correct tax returns; tax controversy is a polite term for the disputes that arise, alas, with greater frequency, between tax administrators and corporate tax directors over calculations of tax liability. Ernst & Young asked more than 500 senior tax and finance executives and audit committee members in 18 countries a wide range of questions about their recent experiences and predictions for the future. To gain a fuller picture, audit committee members, plus several dozen tax administrators and policymakers, were also interviewed. The consensus is that the enforcement landscape is now more challenging than it has ever been. All of the parties also agreed that governments will continue to lean heavily on companies in the coming years as tax authorities everywhere strive to collect every bit of cash due to them. Companies around the world told Ernst & Young that changing practices of tax enforcement are causing them considerable stress and uncertainty: The traditional tax audit: It is now more frequent and aggressive, and the resulting assessments and penalties made against the largest companies have entered the realm of billions of dollars. In a relatively new development, companies find themselves being audited by more than one nation at a time. These enforcement trends are apparently here to stay - 97% of tax administrators say they will increase their

Agnes Chan Regional managing partner Hong Kong and Macau Ernst & Young China 22/F CITIC Tower, 1 Tim Mei Avenue, Central,

focus on international structures and crossborder transactions over the next three years. Large increases in the volume of taxpayer information being shared: Governments rarely shared taxpayer data until recently, but the number of formal agreements to share that data has exploded, reaching 200 per year over the past few years. That makes it much more likely that a dispute in one country will become a regional or global dispute. New disclosure and transparency requirements: Tax administrators are focusing on cross-border transactions and insisting that companies disclose when and where they have used planning techniques that may be defined as ‘aggressive’. Additional attention to indirect taxes: The complexity of transfer pricing has long been a bone of contention between taxpayer and tax authority, but the tax community now reports rising levels of risk and controversy over indirect taxes, especially value-added taxes, reflecting the increasing use of this type of tax by governments. Hot spots for stricter tax enforcement: The increasingly global nature of business has directed the attention of tax authorities to other issues, including the movement of intellectual property, the disposal of assets via a holding company in a low tax jurisdiction and the movement of global workers between countries. These trends in tax administration are challenging for taxpayers, but tax authorities are not the only source of greater risk and uncertainty. Tax policymakers have been issuing new tax laws and regulations at a staggering pace, adding greatly to the uncertainty of tax executives. Why is there so much more tension now? Ernst & Young says the dramatic shift in the global economy has changed tax policy and enforcement, forcing companies and governments into more disputes. Despite all these escalating tensions, governments and companies are taking

Hong Kong, Hong Kong Office: +852 2846 9888 Direct: +852 2846 9921 Fax: +852 2118 4339 agnes.chan@hk.ey.com www.ey.com/hk

steps to improve their relationship. Ernst & Young believes the role of the corporate tax director has changed fundamentally over the past few years. They now have to serve as ‘tax diplomats’ who build relationships with a host of internal and external institutions. Internally, they have to shuttle between the C-suite, the audit committee and the company’s numerous divisions around the world. Externally, there are hundreds of local, national and regional tax authorities to deal with, as well as business analysts and the media. A key objective of this new tax diplomacy is certainty and consistency, goals shared by governments and taxpayers alike. In pursuit of certainty, many businesses are becoming more open about their tax calculations, and they are preparing for challenges before the traditional audit process even begins. In return for that demonstration of transparency and cooperation, governments are giving taxpayers far higher levels of certainty at the time of filing, enabling them to answer that question: “How much are we going to pay this year?” At Ernst & Young, we are aligned to the globalisation of your business and industry. Our borderless approach in the Asia-Pacific Area assist businesses in every industry sector achieve their potential by helping them manage global tax risks, uncover tax savings opportunities and meet cross-border reporting obligations. Our dedicated tax professionals in Hong Kong can help our clients with their crossborder tax structuring, planning, reporting and risk management. We work with our clients to build proactive and truly integrated tax strategies that address the tax risks of today’s businesses and achieve sustainable growth. It is how Ernst & Young makes a difference. To read the new report ‘2011-12 Tax risk and controversy survey: A new era of global risk and uncertainty’, go to www.ey.com/ taxrisksurvey.

Tracy Ho Country tax leader Hong Kong and Macau Services Ernst & Young Tax Services Limited 22/F CITIC Tower, 1 Tim

Mei Avenue, Central, Hong Kong, Hong Kong Direct: +852 2846 9065 Office: +852 2846 9888 Fax: +852 2118 4354 tracy.ho@hk.ey.com www.ey.com February 2012 • GBM • 11

Gbm leading tax advisors

Venezuela

Tax aspects of Venezuelan foreign currency control Romero-Muci & Asociados Despacho de Abogados, a firm member of Deloitte, has the distinction of being one of the few professional services organisations in Venezuela with the ability to provide our clients with tax and legal advice in a multidisciplinary manner. We help harmonise processes, procedures and legal documents all over the world. We also guarantee in-depth knowledge of the laws of other countries, which is essential for the overall effectiveness of the required solutions in multinational operations. We respond to the needs of our customers through teamwork appropriate to the nature and complexity of each project, assuring the most effective solutions for your business. We have a department dedicated to local and international mergers and acquisitions, business reorganisations, foreign investment, consulting and tax planning. We also specialise in: counselling free competition law, business and corporate law, individual and collective counselling, administrative, tax, constitutional, labour, commercial and arbitration litigation, structuring, negotiating contracts, associated structures, intellectual property, legal audits and transfer pricing, among others. Currently, Venezuela has 30 agreements for the avoidance of double taxation and is the country with most double taxation treaties in Latin America. Venezuela has opened the public sector to foreign investments from new economies such as China, Russia and Brazil. Government agencies have been contracting with foreign investors to conduct mainly oil and gas exploration activities, the construction of subway and train railways and housing. It also benefits the private sector because foreign investors subcontract resident private equity enterprises to conduct activities on their behalf in Venezuela. As stated above, our department of international taxation will provide all the necessary services and advice to Venezuelan or foreign companies that decide to invest in Venezuela or are in need of restructuring their business operations. Tax treaties also include transfer pricing rules. Venezuela’s transfer pricing rules generally follow OECD guidelines, requiring income and expenses related to transactions between related parties to be on arm’s length terms. The transfer pricing rules also define related parties and set forth permitted methodologies. Taxpayers are required to verify the existence of arm’s length pricing by conducting a transfer pricing study; prices that do not reflect an arm’s length amount may be adjusted by the tax authorities. Also, it should be noted that Venezuela has introduced thin capitalisation rules, which 12 • GBM • February 2012

provide for a debt-to-equity ratio of 1:1. Interest paid directly or indirectly to related parties may be deducted for income tax purposes if debts with related parties and unrelated parties do not exceed the net equity of the taxpayer. It is also very important to note that since 2003, Venezuela has a foreign currency exchange control regime. In light of this, the Ministry of Economy and Finance and the Central Bank of Venezuela have established an official exchange rate of VEF4.3 per US$. Individuals and companies are entitled to obtain foreign currency through the Currency Administration Commission (CADIVI) for listed goods and services. In this case, companies and individuals would have to submit the documents and information contained on CADIVI regulations and CADIVI may demand, at its own discretion, additional information to process the request for US$. CADIVI may deliver the amount of US$ requested by the Venezuelan enterprise/ individuals or it may deliver a smaller amount. Delivery will happen when CADIVI has disposition of US$. Where a Venezuelan company is not entitled to obtain foreign currency at the official exchange rates or, if able, CADIVI has not delivered them in 90 days, companies or individuals may purchase in Bolivars, securities nominated in US$ at the Central Bank of Venezuela through a system called ‘sistema de transacciones con títulos en moneda extranjera’ (system for the transaction with securities in foreign currency - SITME). Likewise, individuals that have obtained foreign currency through CADIVI, are able to obtain US$ through SITME. Basically, the Venezuelan company/ individual should address a Venezuelan financial institution and purchase in VEF securities nominated in US$. To access SITME, the Venezuelan company is required to certify that it is an importer of products or services and a resident enterprise. Companies are entitled to purchase up to US$50,000 per day and up to US$350,000 per year and individuals are entitled to purchase up to US$5,000 per year. The Central Bank of Venezuela will publish on a daily basis the exchange rate obtained through SITME. Please note that the foreign currency exchange rate at SITME will be higher than the official exchange rate of VEF4.3 per US$. Individuals and legal entities must be registered with the Superintendency of Foreign Investment (SIEX) in order to buy foreign currency or obtain remitted income from overseas investments (eg, dividend payments).

Romero Muci & Asociados Despacho de Abogados, a member firm of Deloitte Touche Tohmatsu Humberto Romero-Muci Tax & legal partner Tel: +58 (212) 2068730 hromero-muci@deloitte.com www.deloitte.com.ve

PHILIPPINES

Planning for tax efficiencies One remedy granted to taxpayers under Philippine tax law is the filing of a claim for tax credit or refund. This remedy is available in cases where a taxpayer has made tax payments considered erroneous or illegally collected, and also where a VAT-registered taxpayer incurs excess input VAT on his purchases and such input VAT is attributable to zero-rated sales. It is also available where the creditable withholding taxes withheld by his customers on income payments to him exceed the income tax due from him and, thus, cannot be credited against the income tax. When the claim for tax credit or refund is granted, the taxpayer is given a tax credit certificate (TCC) for the amount refunded. The TCC may be used to pay the taxpayer’s direct internal revenue tax liabilities. Because of the bureaucratic delays and attendant costs in recovering tax credits, taxpayers have found it practical to sell their TCCs to generate cash. However, this option has

recently been revoked by the Philippine tax authority. This poses a problem for taxpayers with potential excess tax credits and who now cannot decide whether to file the claim for TCC or refund. To avoid this situation, taxpayers should have an effective tax planning system. As a start, taxpayers should review their tax compliance methods. For example, taxpayers may require their customers to provide in a timely manner the proper documentary support for creditable withholding tax credits. Taxpayers may also review whether their customers use the proper withholding tax rate and tax base. Taxpayers may also make projections of their income tax payments to check if they have excess creditable withholding tax credits that may be offset against these tax payments. In doing this, taxpayers should consider its other tax assets, such as minimum corporate income tax credits and the net operating loss

carry over credits. They should also consider possible future transactions that may have income tax implications. Taxpayers having zero-rated sales may re-organise their operations to look for ways to reduce their excess input VAT. For instance, they could spin-off into a separate entity a division engaged in export sales only. The new entity will locate in an economic zone to enjoy the zero-rating on its purchases. They could make a projection of sales and purchases to avoid accumulations of excess input taxes. In cases where taxpayers already have TCCs, they may make projections of their operations and tax payments for the purpose of utilising fully the TCC.

Emmanuel P Bonoan Chief Operating Officer Vice Chairman, Tax Tel: +63 (02) 885 7000 ext 200 Direct: +63 (02) 885 0602 ebonoan@kpmg.com ebonoan@kpmg.com.ph

With the proper tax planning and execution, taxpayers can avoid the pitfalls and inconveniences of having to seek a tax credit or refund.

ISRAEL

Tax Benefits and Trusts in Israel. Michael Hunter & Partners is a specialist law firm dedicated to formulating and overseeing creative and comprehensive multi-national trusts, foundations and corporate structures as solutions that achieve the wealth preservation and family planning goals of its international client base. The firm’s four partners, Michael Hunter, Uzi Pinchasi, Eric Wachstock and Eli Hunter Zrihan, are members of STEP, and members of the firm have been specialising in trust and estate planning for over 40 years in both the UK and Israel. The firm regularly negotiates settlements with the Israeli tax authorities on behalf of its clients and maintains an in-house Israeli trust company for the benefit of clients who have been affected by

the recent Israeli trust legislation. The firm is also extensively involved in handling a wide range of its clients’ investments, with a special emphasis and expertise in private placement investments in or acquisitions of both Israeli and foreign companies and real estate investments, ranging from the purchase of real estate in Israel and overseas to the formation and participation in real estate syndicates in Israel and overseas. In an effort to encourage immigration to Israel and bring Israelis living abroad back to Israel, Israel recently legislated special tax benefits for new immigrants and returning residents who have lived outside of Israel for a sufficient number of years. Michael Hunter explained that the “benefits are a Michael Hunter & Partners 46 Rothschild Blvd. Tel Aviv 66883 Israel

ten-year tax holiday with respect to all income of any nature earned outside of Israel and, equally important, an exemption from all reporting requirements for foreign earnings during this ten-year period”. Uzi Pinchasi further explained that “most recently, in an effort to make it an even easier decision to immigrate or return to Israel, legislation has been enacted pursuant to which potential new immigrants or returning residents can move to Israel without being considered resident during a one-year trial period”. Another matter of interest to the firm’s international client base highlighted by Eric Wachstock is the Israeli trust legislation enacted a few years ago: “Broadly speaking, under this +972-3-566-5665 www.lawmhn.com mhunter@lawmhn.com upinchasi@lawmhn.com

legislation the foreign earnings of a trust whose beneficiaries are Israeli residents are not taxed in Israel if the trust was settled by a foreigner.” Eli Hunter Zrihan added: “The settler of a trust is defined to be both the legal settler and anyone who contributes economically to the trust. Furthermore, if a trust owns a company that company can be treated as see through for Israeli tax purposes such that if the trust is exempt from paying taxes on its foreign earnings, so too is its underlying company, and if the trustees of the trust approve a distribution to a beneficiary of the trust the transfer of the funds from the company to the beneficiary would be treated as a distribution from a trust and therefore not be subject to dividend tax.” ericw@lawmhn.com ezrihan@lawmhn.com

February 2012 • GBM • 13

Gbm leading tax advisors

Malta

Malta’s tax system – Avanzia Taxand may help you identify the benefits

Avanzia Taxand Walter Cutajar Managing director Tel: +356 2730 0045 walter.cutajar@avanzia.com.mt www.avanzia.com.mt

Malta is one of the few countries with a full imputation systembased income tax regime. This ensures that dividends are taxed only once since any income tax paid by the company on the profits so distributed are credited in full to the shareholder. If the shareholder’s income tax rate is less that the tax paid by the company, then the shareholder is entitled to a tax refund of the excess tax paid. Apart from this tax refund, shareholders may also claim certain tax refunds that vary according to the source of income from which the dividends are distributed. These tax refunds may be equivalent to 2/3rds, 5/7ths, 6/7ths or even 100% of the tax paid by the company on the profits so distributed. This mechanism ensures that the overall effective tax rate (ETR) is reduced to a maximum of 10% applicable to passive interest and royalties, 6.25% applicable to foreign source income and capital gains, 5% applicable to trading profits or even 0% in the case of dividend income and capital gains

originating from a participating holding investment (PHI). The conditions to be satisfied for an investment to qualify as a PHI are not very onerous. Income and capital gains from a PHI may also qualify for full participation exemption. These provisions make Malta extremely attractive for holding companies as well as intellectual property, treasury and finance. Malta has also attracted a number of professional investor funds and other funds, trusts, captive insurance companies, online gaming companies, etc. Malta also has a highly professional and skilled workforce, multi-lingual and an aptitude to work, comparatively low cost base, an approachable single regulator that is a onestop-shop to reduce bureaucracy, a sound legislative framework, financial system and a favourable economic outlook. Malta is politically stable and it is renowned for having created an environment that is highly attractive to investors wishing to invest or set up in Malta, as

Domenico Salerno Rosta House, 144 Castle Street, Edgeley Cheshire SK3 9JH Tel: +44 161 429 5304 Fax: +44 161 429 5309 hipretlimited@hotmail.com

14 • GBM • February 2012

Hipret began as Hipret SAM, Société Anonyme Monégasque, based in the Principality of Monaco in 1992. In the year 2000, it was established as Hipret Limited and based in Manchester, UK.

the characters of the trust in countries such as Luxemburg, where indirect taxation is very favourable and provides a system facilitated by the assets remaining in trust for no more than 30 years.

The director of the company is Domenico Salerno who has a degree in law, corporate law and international consulting, deals with the issues of control, budget and accounting and also finance and economic studies.

With regards direct taxation, the legislature has decided not to intervene by virtue of the fact that the general law already contains provisions on this and subsequent rules introduced in the mid1940s and derived from German law under which the tax treatment of specific assets and income are attributed to the person who mistrust.

Mr Salerno has collaborated in the preparation of the financial laws in Italy, as part of the ministers’ economic team. Currently undergoing publication by the publisher University Orientale in Naples is a monograph on the specificity of trust and related tax issues and an overview of a large number of countries. Chapter 7 deals in particular with the ‘taxation in the trust’, which deals with

well as highly skilled expatriates, because of the favourable tax regime, good standard of living, good level of education, excellent health facilities and a safe environment. Maltese people are also renowned for their friendliness. Avanzia Taxand is the Maltese member firm of Taxand and is ranked as a Tier Two Firm in Euromoney’s Corporate Tax Handbook. In 2009 Avanzia Taxand was named ‘Malta Tax Firm of the Year’ by the International Tax Review; in 2011, the firm was chosen as the winner of the Corporate Intl Magazine 2011 Global Award for ‘Tax Firm of the Year in Malta’. Avanzia Taxand offers a comprehensive, integrated range of tax services, and legal and financial advisory services including tax advisory and compliance, company formations, management and administration, indirect taxation, transaction tax, advance revenue rulings, tax litigation, liquidations and redomiciliation of companies.

Cyprus

Tax planning using Cyprus holding companies In recent years, Cyprus has established itself as an ideal jurisdiction for international tax planning as a result of the significant advantages afforded to Cyprus holding and investment companies (companies incorporated for the purpose of holding shares and/or other securities). The island’s strong infrastructure and legal framework have facilitated the flourishing of its service industry, which has now become the largest contributor to the Cyprus economy. Cyprus offers a simple taxation system based on a uniform corporation tax rate of just 10% and, as a member of the EU, does so with greater credibility than that usually associated with companies incorporated in other low tax jurisdictions around the world. The principal fiscal advantages offered to Cyprus companies holding shares are as follows: First, dividend income received by a Cyprus company from foreign subsidiaries is exempt from Cyprus taxation provided that the income from which the dividend was paid has not been generated by more than 50% from investment activities. Second, tax is not withheld in Cyprus from the payment of dividends and interest to non-resident individuals or corporate shareholders. Third, no tax is payable in Cyprus on profits from the disposal of shares or other securities held by the Cyprus company. Finally, tax is not levied in Cyprus on distribution upon liquidation of the holding in a subsidiary. In addition to the possible tax savings set out above, Cyprus companies also have at their disposal a wide network of tax treaties, as well as the provisions of the EU parent-subsidiary directive to assist with international tax planning. The workforce in Cyprus is recognised as being highly qualified. Nevertheless, the cost of registration and maintenance of a Cyprus company compares favourably to other European jurisdictions helping to keep overheads low. Our firm has been involved in international tax planning for more than 30 years, having established an array of different group structures using Cyprus holding and investment companies, as well as companies involved in, among others, trading, royalties from intellectual property licensing and service activities. Furthermore, through our membership of Accountants Global Network (AGN) International, we have access to resources and knowledge from the 197 member firms of the network, which is represented, in 89 countries. We believe in using the knowledge and skills of our staff to understand our clients’ requirements and devising a tailor-made solution and service that fully addresses those requirements. Please do not hesitate to contact us if you would like to discuss tax planning through Cyprus companies in more detail.

Joannides + Co Limited Accountants and Business Advisors Alexis Joannides Bsc (Hons) ACA | Principal 13 Agiou Prokopiou, Egkomi, 1100 Nicosia, Cyprus Tel: +357 22 556556 | Fax: +357 22 556300 cy@joannides.com.cy www.joannides.com.cy

israel

Michael Shine & Partners - Israel’s Premier Niche Practice, specializing in Multinational Family Estate Structuring and Asset Protection Michael Shine & Partners, is a leader in Israel in international and local tax planning, multinational family asset protection and structuring and estate planning. The firm advises an international private client base of high-net-worth individuals and families and caters for their overall legal services. Since the firm has extensive expertise in forming and managing foreign trusts, it maintains several in-house licensed foreign trust companies, which solely service clients of the firm and as such maintain the highest due diligence and compliance standards. In addition, the firm offers a fully comprehensive group of service companies providing corporate directorships and corporate nominee and fiduciary services. The firm also maintains an extensive practice in the following areas: commercial law, real-estate transactions, commercial litigation, succession, investments and general foreign transactions and M&A. The firm provides both private and corporate clients with international tax planning and private asset protection as well as estate planning. Three leading tax experts serve the firm as full time in-house consultants, specialising in local tax litigation and tax planning as well as obtaining ‘pre-rulings’. The firm also has a strong focus on advising both local and foreign families as well as foreign trust companies on all aspects of the taxation and reporting obligations of trust in Israel. Additionally, the firm actively advises new immigrants and returning residents to Israel. It should be noted that Israel has very attractive legislation for new immigrants and returning residents entering Israel post 1 January 2007, where a ten-year tax holiday (including no reporting obligations) is granted on all foreign income. It is important to seek proper advice and possible structuring advantages prior to contemplating immigration. Israeli tax legislation also gives room to family structuring and asset protection, using a trust or foundation instrument, which could lead to advantageous tax planning and savings for international families. The firm specialises in drafting and advising clients on their international wills, coordinating with foreign counsel with respect to specific jurisdictions, drafting local and internationals wills and probating foreign will in Israel and the administration of estates of deceased foreigners, both testate and intestate. Biography: Shira Shine - Born in Israel, Shira has been a partner at Michael Shine & Partners since 2005, specialising in local and international asset protection for private clients and multi-national families, and advises high-net-worth families globally in matters of international tax and estate planning and wealth protection aspects. She has an LLB (Cum Laude) Manchester University, UK, was called to the Israel Bar in 1999, is a member of STEP, chair of the trusts committee, Israel Bar Association and author of numerous articles and chapters in several leading journals and publications including ‘Trusts and Trustees and Inside the Minds’ and ‘Tax Law Client Strategies in the Middle East’.

Adv. Shira Shine – Senior Partner Michael Shine & Partners Advocates & Notaries Life Plaza Building, 6 Hachoshlim Street, Herzlia Pituach, 46120, Israel Tel: +972(0) 9 9531953 | Fax: +972 (0) 9 9531954 www.shinelaw.com | office@shinelaw.com February 2012 • GBM • 15

Gbm leading tax advisors

Indonesia

Tax holiday in Indonesia The Ministry of Finance issued regulations on the tax holiday (TH) through the Minister of Finance Regulation No 130/ PMK.011/2011 (the Regulation) effective 15 August 2011 and issued for the sake of the industrial growth inside of Indonesia. A taxpayer can be granted a TH facility for a period of five-ten years, starting from the commencement of its commercial

KKP.Panorama48 Grace Waworuntu Tax consultant Tel: 6221-3140643 grace@kkppanorama48.com www.kkppanorama48.com

production. After the expiration of the TH, the taxpayer will be entitled to an income tax reduction of 50% for a further two years. The minister of finance (MoF) can extend the duration of the TH and the tax reduction. The taxpayer eligibility criteria is as follows: pioneer industries that invest at least IDR 1trn (approximately US$117m), receive approval from the authorised state institution, place at least 10% of the project investment funds in national banks, and are an Indonesian legal entity established up to 12 months before the enactment of the Regulation. In addition, the pioneer industry must have already realised its entire investment and entered into commercial production. The provision of the TH involves a number of governmental parties. The Regulation states that the proposal to obtain the facility has to be submitted to the minister

of industry or the head of the Investment Coordinating Board, who, after coordinating with other relevant ministers, will deliver the proposal to the MoF along with the article 4 required documents. The MoF will assign a verification Committee on the provision of THs or the reduction of income tax to conduct research and verification by considering the strategic impact of the taxpayer on the national economy. In carrying out its tasks, the Committee will consult with the coordinating minister for the economy. The MoF also has to consult with the president of the Republic of Indonesia. The Regulation requires periodic reports to be delivered to the directorate general of tax (DGoT) and to the Committee, with the exact procedure to be further governed by a regulation of the DGoT. Facilities can be revoked from taxpayers who fail

to fulfil the eligibility criteria/ requirements or fail to submit periodic reports. Tax will continue to be imposed on the taxpayer’s income originating from business activities that are not granted a TH or reduction by the MoF, and the obligation to deduct and withhold tax imposed on third parties will continue to apply. Taxpayers who have already acquired income tax facilities under article 31A of Law No. 36 of 2008 on Income Tax are not eligible for the TH and reduction under Regulation, and vice versa. With this regulation, Indonesia’s government is hoping for new investor to come. With the third largest population in the world, Indonesia holds quite a big number for potential market - are you ready to bring new investment to Indonesia?

hong kong

Are Foundations Really Trusts ? Arguably, a Foundation is the civil code alternative to the common law trust. The three certainties which enable the formation of a trust, are also present in a civil law foundation. But trusts are not entities. A trust is a relationship between a settlor (or ‘founder’) and the trustees (the ‘Foundation Council’ or ‘Board’). The settlor gives to the trustees assets irrevocably to be held on terms within the Deed of Trust, to be held for the benefit of beneficiaries, either named, or to be considered by the trustees in their discretion. Trusts did not develop through legislation, because the law of ‘equity’ developed to govern them. In due course, however, more and more legislation was introduced to increase the certainty of how they operated (and how they could not operate). Today, many low tax jurisdictions have introduced trust legislation to attract clients to use their special ‘trust arrangements’ and these jurisdictions compete with each other for the most ‘user friendly’ trust laws. Foundations exist exclusively on 16 • GBM • February 2012

the basis of special legislation. The legislation, which is overwhelmingly derived from civil code jurisprudence, seeks to disconnect and sever the ownership of a founder from that of the Board or Council. Like trusts, the property is to be held and dealt with for the benefit of third parties or ‘beneficiaries’. However, unlike trusts where the beneficiaries have certain rights, there are no equivalent ‘beneficiary’ rights under a Foundation. So, here, there is a difference, and there is a very large body of jurisprudence on the rights of beneficiaries in the law of trusts. Whereas trusts developed as a growing body of precedent within the Common Law, Foundations were established solely by legislation, and through the statutory definition of individual property rights. Because of their wholly different legal progeny, how are trusts and Foundations to be compared? Recently, the High Court of Canada found that a Foundation was effectively a ‘trust’ and found that a relationship of trustee and settlor existed.

The case is Sommerer –v- R 13 ITLR 2011 p.869. Mr. Sommerer’s father established an Austrian Foundation (‘SPF’) in 1996 and placed shares into it. Subsequently, Mr. Sommerer junior migrated to Canada and became a Canadian citizen. The Foundation sold some of the shares at a profit and the Canadian tax authorities sought to tax Mr. Sommerer junior on the disposal, as the Foundation was a ‘trust’, and under domestic law, the income was attributed to him. Miller J., in the Tax Court said: ‘What needs to be analyzed, however, is not what SPF is, but what relationship exists amongst the SPF (a separate legal person) Mr. Herbert Sommerer and Mr. Peter Sommerer, and the Sommerer family. Is there a trust

relationship. Can Mr. Herbert Sommerer be seen as a settlor? Can the SPF be seen as a trustee, perhaps a corporate trustee ? Can Mr. Sommerer be seen as a beneficiary ? Do the three certainties…….exist? Are there any other characteristics of the Canadian trust that are missing in the Sommerer arrangement?’ The judge found the rights of the ‘beneficiaries’ were not as extensive as a trust, but that their rights sufficently resembled those under a trust. His conclusion was that the Foundation was, under Canadian law, a trust. The question must be – ‘What is the advantage of Foundations if they are going to be characterized as trusts?’

Chancery Partners Jonathan Shaw jonathan.shaw@chancery-partners.com Tel: +852 25301776 / 79 www.chancery-partners.com

US Virgin Islands

Business and taxation in the US Virgin Islands

The US Virgin Islands (USVI), an unincorporated US territory, although part of the US, has been granted the authority by the US Congress to enact special tax laws to encourage investment in business operations and to develop a financial services industry. The USVI offers many opportunities for investors seeking a politically stable, low-tax jurisdiction and legitimate protection of their assets from taxes. The USVI has enacted targeted tax incentives to certain types of businesses that are determined to enhance the economic well being of the territory and its people. These benefits, administered by the Economic Development Commission (EDC), are available for financial services companies, including investment managers and advisors, business and management consultants, international trading and distribution and any other businesses serving clients outside the USVI. Benefits are also available for hotels/guesthouses, recreation facilities, and retirement residence developments as well as businesses engaged in manufacturing, servicing clients outside the USVI, the marine industry and agriculture. Businesses can also qualify for tax benefits under the University of the Virgin Islands Research and Technology Park (RTPark), which is structured as a public corporation and autonomous instrumentality of the USVI government, created to foster the development of a technology sector in the USVI. Benefits under the EDC and RTPark include, among others (subject to requirements), a credit equal to 90% of the otherwise applicable income tax, which applies both to the income from the benefited business, and to the bona fide USVI resident owners on their allocations or dividends. The Internal Revenue Code of 1986, as amended (Code), applies in the USVI under a ‘mirror’ system whereby ‘USVI’ is substituted for ‘United States’ wherever the latter

appears. Also, the Code contains several sections that deal specifically with the USVI and govern the extent to which the USVI can grant tax incentives and how USVI residents file their tax returns. The USVI can grant tax benefits on any income that is USVI source and on certain income that is effectively connected with a USVI trade or business. Income is USVI source if it is fee or compensation income for services performed in the USVI. Capital gains derived by a USVI business may also be eligible if certain requirements are met. Certain dividend and interest income from a USVI payor is USVI source income. Income may be effectively connected with a USVI trade or business if it consists of non-US source dividends or interest derived in the active conduct of a banking, financing or similar business. The USVI can never reduce or rebate tax on income from US sources, except for sales of inventory manufactured in the USVI where title passes in the US. Marjorie Rawls Roberts, P.C. is a tax, corporate and investment law firm specialising in the application of the Code to the USVI, estate planning for USVI residents, and qualifying for and ongoing compliance under the EDC and RTPark. The firm’s clients include investment bankers, hedge fund managers, hotels, jewellery and watch manufacturers, recreational businesses, and retail operations.

Marjorie Rawls Roberts, P.C. Marjorie Rawls Roberts Owner Tel: 1 340 776 7235 jorie@marjorierobertspc.com www.marjorierobertspc.com February 2012 • GBM • 17

deALinG WiTh dePression in The WorKPLAce

ouT oF The BLue

Meeting the challenge of depression in the Workplace According to the World Health Organisation (WHO), depression is soon set to become the second most common cause of disability globally, after heart disease. The Centre for Mental Health estimates that the cost to UK business alone of poor mental health management is in the region of £25 billion per year. Estimates of the prevalence of depression vary, but a study by the British Office of National Statistics (ONS) suggests that one in four adults will suffer from a mental health problem in a given year and the majority of these people will suffer depression. There’s no doubt that depression is an occupational disease. It is increasingly common in industrialised economies and numerous studies have demonstrated the link between poor management practices, poor working conditions and depression. The challenge of depression is now so widespread that European Health Ministers have called for employers to “create healthy workplaces by introducing measures such as exercise, changes to work patterns, sensible hours, and healthy management styles [and] to include mental health in programs dealing with occupational health and safety.” All types of people suffer from depression and, as debilitating as it is, it’s not an unconquerable barrier to success. Abraham Lincoln is thought to have been a sufferer, as is Isaac Newton. Buzz Aldrin and J.K. Rowling have both spoken of their own struggles with the illness. “Avoiding recruiting or supporting employees with mental health conditions isn’t an option,” according to Sally Burton, chief executive of UK charity the Shaw Trust. “Supporting your workforce is, and will pay dividends in terms of increasing productivity, improving performance and retention, garnering talent and shaping future leaders, helping you to retain a competitive edge.” The Shaw Trust carried out a survey in 2010 that investigated attitudes to mental health problems in the workplace. They found that 42% of employers still underestimate the prevalence of mental health problems in their organisation. However, 90% of managers now say that they would be happy discussing mental health issues with an employee. This is good news, as changes in the workplace could be the key to reversing the epidemic of depressive illness. A number of studies have identified common risk factors in the workplace that can trigger depression. While some stress can be healthy, specific types of stress are highly likely to trigger depression. The American Psychiatric Association (APA) recognises burnout as a distinct pattern of workplace stress in which exhaustion, combined with doubts about the value of one’s work or the ability to do it, lead to depressed mood and diminished 18 • GBM • February 2012

performance. According to a study at the Finnish Institute of Occupational Health, burnout could account for as many as 69% of new cases of depression among workers. Preventing burnout in the workplace is a crucial step in the global fight against depression. Other studies have looked at the interaction between the effects of job strain and an employee’s feelings of control. These studies repeatedly show that depression is triggered when the demands of someone’s role exceed the amount of control they have in an organisation. For example, employees who encounter customer complaints but who aren’t empowered to do anything about them tend to suffer extremely high levels of stress and depression. Some of this stress can be offset by having a supportive culture in the workplace, where people are encouraged to talk openly and constructively about their concerns, but by far the most effective intervention is for managers to train and empower staff to respond to the challenges that they face. In the UK it is a legal obligation for organisations to assess the risk of stressrelated ill-health, and to take measures to minimise that risk. However, the Shaw Trust’s 2010 survey revealed that only 41% of larger businesses (50 employees and over) and 19% of smaller businesses have a formal mental health policy. Many experts suggest that workplaces should adopt a “mental hygiene” model by identifying risk factors in the workplace and helping employees to manage those risks. A recent Chartered Management Institute survey revealed that 39% of employees in the UK believe that their workplace is contributing to feelings of excessive stress. Kevin Friery, clinical director at Right Corecare told the British Psychological Society that managers should consider setting up programmes to teach people the necessary skills to deal with the modern workplace. "You need a rounded employee - you need somebody who can actually do the job but who can also psychologically cope with the pressure of being an employee," he said. There are many mental health management

resources available for organisations large and small. In the UK for example, Acas (the Advice, Conciliation, and Arbitration Scheme – www.acas.org.uk) offers guidance and training, much of which is available online, and the NHS Health for Work (www.health4work.nhs.uk/) service offers a free advice line. Internationally, a number of private companies provide Employee Assistance Programmes for businesses. These programmes increase employee retention, productivity, and well-being. In 2008, over 5,000 organisations provided over 8 million employees with access to an EAP at a cost of around £8 per employee. The way in which jobs are structured has the most significant impact on the levels of stress and depression in the workforce. Based on the latest findings about workplace depression, Acas suggests a number of measures that all businesses should consider. In order to minimise stress, employees should: • Be able to see how their output makes a valuable contribution to the organisation. • Be allowed as much variety as possible in the tasks they carry out, the speed at which they work, the way in which they work and even the place in which they work if possible. • Receive regular performance feedback – repeated studies have shown that uncertainty about performance is a major stress factor. • Be given ownership of their responsibilities. • Be provided with suitable opportunities for learning and problem-solving Workplaces that have better communication and that allow their employees greater flexibility and control have fewer instances of depression. Of course, not all depression is work related. “If it's work related then you have the responsibility and control to help remedy it,” says an Acas spokesperson. But, “if it's a domestic issue, then talk to the individual about the changes you can implement to make things easier. If they have not

already found support, point them in the right direction towards help from their GP or a counsellor.” Acas also suggests that organisations should offer flexible working patterns if possible: this allows the employee to take control and manage the demands of their job and their illness. Simple,

straightforward steps like this will lead to an easier recovery and a more productive return to work for the employee. It also helps to encourage employees to be proactive about their own mental health. Experts suggest that employees should encourage their employees to seek out opportunities for job enrichment; make it clear that employees have the right to clarify what is expected of them, and the right to ask for reasonable support in meeting those expectations; and ensure that employees know about any help that is available through human resources, employee assistance programmes, or external organisations. It’s important to remember

that depression is medical condition that differs from feelings of sadness and upset in that it lasts much longer and often causes a number of debilitating symptoms such as insomnia, lethargy and feelings of extreme hopelessness. Depression can have a devastating impact on individuals and organisations. According to the UK Health and Safety Executive, a diagnosis of stress leads to an average of 31 days of illness and, according to the APA, almost 15 percent of those suffering from severe depression will go on to commit suicide. Because of fear, stigma and widespread misunderstanding, as many as 70% of depression sufferers will leave their condition untreated. But there is hope. Recent studies show that antidepressant medications are effective for the majority of sufferers of depression, completely eliminating symptoms for many people and leading to a significant reduction in the severity of the condition for others. Structured therapies, in particular Mindfulness and Cognitive Behavioural Therapy, have also been found to be effective in multiple scientific trials. In mild depression, simple lifestyle changes such as taking more exercise and getting better sleep have been proven to lead to a powerful improvement. With the right sort of support there is no reason why someone who has suffered from depression, even for prolonged periods, shouldn’t go on to live a happy and fulfilled life. The workplace has much to offer. Most people, depressed or otherwise, find that they get a great sense of well-being from a good workplace. At its best, the workplace is a place where individuals can contribute towards something meaningful, meet stimulating people, and enjoy overcoming challenges. But all too often, the workplace strips people of control and distances them from their accomplishments. This has been proven to lead to a downward spiral of burnout, hopelessness, and depression. Organisations, Managers and HR professionals are on the frontline of one of the biggest public health battles in modern times. The first step in that battle is to leave behind the stigma of depression and focus on what can be done to prevent it. If you are currently suffering from, or suspect you may suffer from, depression, talk to your doctor about it. It is a readily treatable condition and many different types of support are available. If you are in immediate danger or distress, please go to http://www. suicide.org/, or to http://www.befrienders. org/, who will direct you to the appropriate suicide prevention and depression support services in your country.

Disclaimer: This article is for general information only, and should not be treated as a substitute for medical advice. Global Business Magazine is not responsible or liable for any diagnosis based on the content of this article. Always consult your doctor before commencing any kind of treatment. February 2012 • GBM • 19

LeAdinG LAWYers - BrAZiL

Country Proﬁle - Brazil Embassy of Brazil

Brazil today, The economy

Tel. 020 7399 9000 secom@brazil.org.uk www.brazil.org.uk

Over the past fifteen years, Brazil has built a new development model underpinned by monetary stability, reversal in external weaknesses, fiscal responsibility and social inclusion. This effort has led the country into a cycle of economic growth and a new level in the international context, with growing interest in investments. Maintaining the economic capacity to provide increased business opportunities has been a priority for the country. In this regard, there is a permanent commitment not only to the consistency of the economic foundations and social justice, but also to the overall soundness of the institutions. Brazil has endeavored to ensure universal, stable and clear rules for the productive sector that ensure predictability and transparency for those who seek to invest in the country. Dilma Rousseff, the first female president in the history of the country was elected at the end of 2010 on a platform of continuity of the economic and social achievements of her predecessor Luiz Inácio Lula da Silva. According to the International Monetary Fund (IMF), in 2010, Brazil was the world’s seventh largest economy in nominal terms and the eight in purchasing power parity (PPP). By 2012, it will become the world’s sixth largest economy and the fourth by 2030. By far the largest economy in South America, in 2010, the Brazilian GDP experienced a 7.5% growth, the best performance since 1986. This is due to an accumulation of good

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practices over the past years, with effective public policies directed at strengthening the macroeconomic foundations of the economy. These are comprised of inflation targeting, a primary fiscal surplus, a floating exchange rate regime, expanding domestic demand, encouragement of investment and exports, increasing international reserves and attracting foreign direct investment (FDI). Data for December 2011 from the Central Bank shows that Brazil’s net public debt currently stands at 38.5% of GDP - well below the average for most of the developed countries affected by the international crisis these figures have contributed to significantly reducing the risk profile of Brazilian government bonds. With a population of 191 million, Brazil has a large and fast growing consumer market. Since 2002, mostly as a result of social programmes implemented by the Brazilian Government, over 40 million Brazilians moved up to the middle level of the social pyramid with access to health, education, credit and formal employment. The average income of the Brazilian population has been increasing and since 2003 real average wage went up by 35%, while inequality in income distribution has been decreasing, reaching the mark of six percentage points since 2001. The stronger demand in the domestic consumer market has had a marked impact on the Brazilian economy. First, it was the

vital force helping the country to avoid the worst effects of the 2008 economic crisis. Second, it has instigated investment in productivity: of the total imports in 2010, 46.2% were of raw material and intermediate goods, whereas only 22.6% were of consumer goods. This economic expansion trend is likely to continue, 2010 figures show that Brazilian industrial production reached its highest level since 1986. In 2010 the rise in industrial production was of 10.5%, in relation to 2009, when a retraction of 7.4% was noted caused mainly by the world economic crises. Brazil has been able to keep inflation under control, allowing it to rescale sovereign debt that had previously been contracted under difficult conditions and with extremely volatile interest rates. At the same time, since 2001, the trade balance surplus has allowed Brazil to build its international reserves reaching a level of US$351.5 billion in December 2011. The external market has also played an important role in Brazil’s development and its strong macroeconomic stability. In 2010, total trade reached US$383.6 billion, a 36.6% increase in relation to 2009, when it registered US$280.7 billion. Exports reached US$201.9 billion and imports peaked at US$181.6 billion. For the first eleven months of 2011 (Jan/Nov) exports have reached US$233.9 billion and imports peaked at US$207.9

billion, compared to the same period in 2010, these numbers mean that exports have risen by 29.2%, and imports by 25.1%. Total trade reached US$441.9 billion an increase of 27.3% to the same period in 2010. Over the past years, Brazil has become an important supplier of agricultural products and commodities, as shown in the rankings below. In 2011 (Jan/Nov), manufactured (35.8%) and semi manufactured (14.2%) products accounted for 50% with basic products accounting for 47.9% of total exports. Brazil in the world - production and exports of selected products Products

World production

World exports

Sugar

Coffee

Orange juice

Ethanol

Bovine meat

Tobacco

Iron ore

Soybeans

Leather and fur

Poultry meat

Footwear

Soybean residue

Maize

Soybean oil

Airplanes

Pork meat

Cotton

Cars

Aluminium

Steel

Brazil attaches great importance to a successful conclusion of the Doha Development Round of the World Trade Organization (WTO). The country has made a huge effort during the negotiations to ensure a positive outcome for all WTO members. At the regional level Brazil is working closely with its neighbours to create a peaceful and prosperous space in South America. Regional integration is a top priority of Brazil’s foreign policy reflecting the confidence shown by international markets in the region. With the economic outlook improving, Brazil’s immense market remains the largest recipient of FDI in Latin America and one of the top ten FDI destinations in the world. According to the recent FDI Global Outlook

Report published by the FDiIntelligence, Brazil moved rapidly up the rankings of the leading FDI locations in the world in 2010. With 28% growth in greenfield FDI projects, Brazil was the seventh leading location for projects in 2010, up from 11th place in 2009. Capital investment into Brazil increased by 19.7% and job creation by 64.5%, making it the fourth biggest country in the world for greenfield investment and jobs. The country experienced very strong growth in inward investment in the renewable energy, electronics, chemicals and food and beverages sectors in particular and in 2010 the flow of FDI into the country reached US$48.4 billion. For the first eleven months of 2011 (Jan/Nov), the FDI inflow has reached US$60 billion, an increase of 82% in comparison to the same period in 2010. With the incentives for long term financing, the private sector is expected to play a key role in long term investment initiatives. Brazil does not impose any restrictions on foreign capital repatriation and continues to be an attractive investment destination for both FDI and portfolio investment. In recent years Brazil has earned investment grade status, according to the evaluation of rating agencies such as Standard & Poor’s, Moody’s and Fitch. Many challenges remain for Brazil. One of the most important is to expand infrastructure in order to maintain its economic development. Introduced in January 2007, the Growth Acceleration Program (PAC) is a set of long-term public investments in economic and social infrastructure in the sectors of transportation, energy, water, sanitation, and housing. The programme also includes several measures to encourage economic development, such as stimulus to credit and financing, improvement in the investment environment, tax relief, and long-term fiscal measures. The second phase of the programme (PAC 2) launched in March 2010, plans to invest up to US$ 571 billion in the period 2011-2014 and US$ 376 billion after 2014. The plan is focused on the areas of logistics, energy and urban infrastructure, but extends priorities to social areas such as housing, health and public safety. The largest share was allotted to developing transportation and logistics, with a view to expanding and connecting Brazil’s highways, railways, waterways and airports, and also to secure and increase energy supply. The Brazilian Development Bank (BNDES) predicts that between 2010 and 2013, US$51 billion will be invested in electric power, US$37 billion in telecommunications, US$22 billion in sanitation, US$16 billion in railways, US$33 billion in roads and US$14 billion in ports. The capacity to innovate in science and technology has also enabled Brazil to lead the way in deep-sea oil exploration. In addition to exploring deposits in other parts of the

world, the state-owned energy company Petrobras is now embarking on a new challenge closer to home: that of exploring potentially enormous underwater deposits in the ‘pre-salt’ layer beneath the seabed off the coast of southeast Brazil. This could double Brazil’s reserves and place it among the top five oil-producing nations in the world. The oil and gas sector alone is set to receive investment of around US$224 billion between 2010 and 2014. Tourism and sports events This brief overview of the state of the Brazilian economy would not be complete without mentioning tourism, one of its fastest growing industries. Many different types of tourist are attracted by a unique confluence of factors in Brazil: amazing natural beauty and superb climate, cultural diversity, biodiversity, world heritage sites, fabulous food and eponymous events combined with the added value of the much admired warmth and hospitality of Brazilian people. International airlines are increasing their scheduled flights and there is much development forecasted in the hotel, catering and other tourist service sectors including renovation of the major airports. Tour operators have been expanding their business in Brazil as well as broadening their portfolios of destinations and holiday types in Brazil to cater for the swiftly growing tourist market. This trend is likely to expand further with the forthcoming 2014 World Cup and the 2016 Olympic and Paralympic Games. A wide range of business opportunities arise from the fact that Brazil will be hosting the world’s two biggest and most prestigious sporting event in the next five years. Both public and private investment in sports facilities, infrastructure and services have been growing significantly, which is expected to accelerate in the next few years leading to the World Cup and the Olympic Games. Brazilian and international industries and companies specialising in stadia development, communications and security systems, transportation and accommodation, marketing, insurance, relevant sports and hospitality services are set for huge expansion in demand for these major sporting events and, therefore, major gains. Further information on Brazil can be found on the following sites: www.brasilglobalnet.gov. br (Ministry of External Relations); www.mdic. gov.br (Ministry of Development Industry & Commerce); www.bcb.gov.br (Central Bank of Brazil); www.apexbrasil.com.br (Investment and Export Promotion Agency); www.ibge.gov.br (Brazilian Institute of Geography & Statistics); www.brazil4export.com (Brazilian National Confederation of Industry); www.fazenda.gov. br (Ministry of Finance); www.embratur.gov.br (Tourism); www.brazil.org.uk (Embassy of Brazil in London).

February 2012 • GBM • 21

LeAdinG LAWYers - BrAZiL

Lauren Stephenson Content & marketing manager lauren.stephenson@globaltrade.net +33 1 55 27 25 25 www.globaltrade.net Sanne Rouhl Content & marketing assistant sanne.rouhl@globaltrade.net www.globaltrade.net/international-trade-import-exports/m/c/Brazil.html

Brazil: A developing country rich in opportunities for international trade Brazil, with almost 195 million inhabitants, is the largest and most influential country in South America, and the fourth largest in the world. Brazil borders every South American country except for Chile and Ecuador. Its Atlantic Ocean coastline measures almost 7,500kms.

Sao Paulo, the biggest city in South America, is Brazil’s economic and cultural hub. Most financial centres are based on the Avenida Paulista. The current economy of Sao Paulo is going through a deep transformation, and focuses mainly on the tertiary sector. Headquarters from big multinationals are not only based in Sao Paulo, but also in Rio de Janeiro, the second largest city in South America. The downside of these cities is that a third of the entire population still live in favelas (slums). The country is known as an economic giant with one of the biggest democracies in the world, and is part of the Big Four, also known as BRIC. The economies of Brazil, Russia, India and China are all at a similar level with regard to new economic developments. When South Africa joined BRIC in 2010, it resulted into the name change to BRICS. In 2011, BRICS was founded; an independent international organisation encouraging cooperation in many different fields. The primary purpose is an improvement of the global economic situation, and these five developing countries could eventually become more involved in global affairs. Because these countries are very prominent with regard to different rankings (political, social, and economic), it is predicted that by 2027, they will take over the current G7 countries. Brazil is the fastest growing country in Latin America, with an annual growth rate of 7.5% GDP, and at the moment the sixth biggest country in terms of GDP. It also has one of the biggest social inequalities in the world. When looking at the Lorenz Curve of Brazil, major distortions can be found. This Lorenz curve represents the distribution between different countries income. The country is facing destitution and moderate levels of unemployment, currently at 6.7%, and is expected to increase to 7% by the end of 2013. In addition, crime and violence is a consistent problem. The public debt represents more than 60% of Brazil’s GDP, and to reduce this the government created a plan for accelerating growth.

22 • GBM • February 2012

The fact that Brazil is hosting the FIFA WORLD cup in 2014 helps reduce the level of unemployment by creating jobs in the challenged sector of infrastructure. Furthermore, Brazil will host the Olympic Games in 2016, which should further stimulate the economic growth and reduce the unemployment rate. Brazil possesses copious amounts of natural resources, and has the capabilities to become self sufficient in terms of oil in the near future. The economy is greatly diversified and the country has a wide range of export products. Brazil is the world’s number one producer of sugarcane, oranges and coffee, one of the main producers of soy and the fourth largest exporter of timber, attracting multinationals within the food industry and bio fuels. Agriculture contributes 6.6% to the GDP, but represents 40% of the total export. The tertiary sector consists of 66.6% of the GDP. The country also has a great industrial sector contributing more than 25% to the GDP. The rapidly expanding sectors in Brazil are automobiles, computer software, computer equipment and tourism. Mainly due to the financial crisis, the figures regarding foreign trade show that both import and export levels dropped 21% in 2009 compared to the preceding year. However, 2009-2010 saw figures increasing again. As the Brazilian economy will expand within five years, the currency, the real, will also appreciate, which could lead to a decrease in exports. Forecasts have been made that imports will increase because of a strong real. Eventually, this will result in the widening of Brazil’s current trade deficit, presenting good opportunities for companies wishing to export to Brazil. Foreign trade in Brazil represents 25% of the total GDP, a surprisingly low percentage; nevertheless, the country is placed in the top 20 of world exporters. The main trade partner countries are China, the US and Argentina with 15.2%, 9.6% and 9.2% respectively. Brazil has an outstanding performance in the field of foreign trade; in 2011 they recorded

a trade surplus of US$30bn, an increase of almost 50% over 2010 - the largest trade surplus recorded since 2007. Brazilian consumers in general have a high brand loyalty. The wealthier consumer values things like quality, customer relationship management and social commitment of a company. They possess similar consumer behaviour traits to that of Europeans and North Americans. Even though national is important and is often is reflected in their consumer behaviour, Brazilians are more likely to buy foreign products to show off their wealth. These products often consist of technological equipment. The consumer also has become more selective and demanding. Despite the fact that they have one of the highest interest rates in the world, almost everything in Brazil is bought on credit. Some stores therefore offer to spread the payments and sometimes without any interest charged. In Brazil, taxes are more than 33% of the GDP, one of the highest taxation rates in the world. The majority of the population consists of poorer social classes and socialism plays an important role for politicians when elections are being held. A large portion of all the tax money collected will be used to improve the life standard of the poorer inhabitants. The majority of the underground economy evades taxes and this causes a distortion within the business environment. As a result, profits will drop for businesses that play by the rules because they have to compete with competitors that evade tax. Due to the financial problems in 2009, Brazil put restrictions on 60% of all imports to protect the domestic market. This is contradictory, as Brazil advocates free trade when exporting raw materials and does not embrace the imported products. The main reason for taxes being so high is that the value per capita that Brazilians produce is not sufficient for the government to solve all the challenges the country faces, both social and economical. As there is no institutional solid base in the country, taxes will remain high. The worth of foreign direct investment (FDI) became four times as high between 20052010. Brazil is the leading destination for FDI in Latin America and the fourth largest investor in emerging markets. Several factors that enhance the attractiveness of the country for international investors are the total worth of the market (nearly 200 million), the convenient accessibility to raw materials, and a booming and diversified economy that leaves Brazil less vulnerable to an international financial crisis. The finance, oil, gas, beverages and telecommunications sectors attract the most

FDI. The main investors are the US, Spain and Belgium with 15.8%, 12.9% and 7.6% respectively. Low labour costs and an abundance of raw materials are also reasons why businesses would like to invest in Brazil. Furthermore, Brazilian universities have good educational levels and are well renowned internationally. There are also several administrative barriers that hinder international trade. In some sectors, the real loses competitiveness against Asian competitors when valued against the US$. A sector that has the fewest investment opportunities is textile, mainly because of the low labour costs of its Asian competitors. The Brazilian government actively promotes FDI and has removed most of the barriers related to foreign investor activity. Numerous sectors have been deregulated over the past 15 years, and a large number of companies have been privatised. They also encourage FDI in the form of tax exemptions, tax incentives and aid. The government implemented a protectionist trade policy that guaranteed the profitability of foreign direct investments. These measures resulted in an increase of inward flow of 22,489 in one year (from 25,949 to 48,438 in 2009 and 2010 respectively). As the investment regime in Brazil is a liberal one, a foreigner is allowed to have a majority interest in a company. FDI could therefore be an interesting opportunity for entrepreneurs to expand their businesses abroad. The country is based on a parliamentary democracy. For citizens aged between 18-70, it is a duty to vote. Brazil’s current president is Dilma Rousseff, the first woman to be elected as a president and the successor of Luiz Inacio da Silva. She is the head of state and head of government. In 2003, she joined the government as the minister for energy. Roussseff stated that she represented continuity within the Lula government, under which many Brazilians saw their wealth increase due to the improved economic conditions. She favours a strong state role in areas like banking, energy and oil. The national congress (or parliament) consists of two houses. The first house is the Senate (81 members) and the second house is the Chamber of Deputies. In total there are 15 political parties represented in the parliament. The proportion of seats of

a given party changes regularly because of its politicians (who change parties or new politicians who join a party). Brazil also has various political cultures throughout its different regions. Politics in the north and northeast are more dependent on political generosity than states in the south of Brazil. This is related to the history of the southernmost state, Rio Grande de Sul. There have been three civil wars in this state, and the state has been involved in numerous political conflicts in the Rio de Planta areas. As a result, political parties don’t have much penetration in the State of Rio Grande de Sul. The business culture in Brazil seems to be more open than in Europe. Personal contact is highly valued in Brazil, and the first contact is often initiated by an e-mail followed by a telephone call. Relations become friendly very quickly, and physical contact is common - even embracing each other is common when you know each other well and deep and long lasting relationships are more appreciated. Brazil is a goldmine of opportunities for investors, importers and exporters alike. For more on Brazil, head over to the Brazil portal on GlobalTrade.net. With over 400 articles and qualified service providers listed on the Brazil page alone you’ll find all you need for your business operations in Brazil. We offer a Directory of International Trade Service Providers, with over 22,000 trading companies, agents and service providers listed in over 185 countries. Our knowledge resource also contains more than 18,000 market analyses and business tips on all countries and industries.

February 2012 • GBM • 23

LeAdinG LAWYers - BrAZiL Glenn Faass, managing partner Macleod Dixon Consultores em Direito Estrangeiro Av. Presidente Wilson 231 / 21st floor Centro, Rio de Janeiro, RJ, Brazil T: +571 746 4608 | F: +571 746 4620 glenn.faass@nortonrose.com

Roberto dos Santos Carneiro Attorney in Rio de Janeiro Rua Pereira da Silva 244, 1001 22221-140 - Rio de Janeiro RJ - Brasil Tel.: + 55 (21) 8131 2913 rcarneiro@yahoo.com

The Brazilian upstream: A growing sector - two legal regimes Historically, the Brazilian E&P oil & gas sector was a rigidly controlled state monopoly. Until 1995, only Petróleo Brasileiro S.A. (Petrobras) was entitled to explore for and exploit hydrocarbons, refine them, import or export them or resulting products and transport them by sea or pipeline. This operational monopoly covered upstream, midstream and part of the downstream; only retail commercialisation of oil by-products was open to private players. On 9 November 1995, the Brazilian Constitution was amended to permit a comprehensive opening of the oil and gas sector. In 1997, the Petroleum Law (Law 9.478/97) (PL) created the National Petroleum Agency (ANP), a governmental agency under the Ministry of Mines and Energy, to regulate the oil & gas and biofuel sectors. The PL also laid the foundation for oil and natural gas exploration, development and production activities to be carried out under concession contracts, awarded in transparent competitive bidding rounds open to Petrobras and private entities. The concession regime proved reliable, providing the comfort required by oil companies to enter the Brazilian upstream sector. The concession terms evolved over 10 rounds starting in June 1999. Massive bid bonuses and exploration commitments have shown that the right geology, plus a solid fiscal and regulatory regime, is the road to success.

then migrates to its present location. When Lula showed where the mother lode was, it opened an entirely new petroleum province, expected to contain 50-100 billion barrels. This resource has the potential to give Brazil the same or greater reserves than Venezuela's conventional resource, and put it into the upper elite of international petroleum producers. It is also seen by many as the rocket fuel for Brazilian social and economic development, including moderating one of the world’s most unequal distributions of income. Pre-salt discoveries to date have been made under the concession contract regime of the PL, but it was felt that more advantage for the state could be extracted from a resource of this importance. Accordingly, the Brazilian government undertook a major review of Brazil’s petroleum regime and, on 31 August 2009, announced proposals for major changes to the country’s petroleum framework. The four ‘pre-salt’ bills became law in 2010. They did not amend or revoke the PL, and could not impose a new structure on presalt discoveries made under the concession regime - the new regime will only apply to ungranted acreage in the presalt region and other areas that may be classified as strategic by the state in the future.

From a single industry participant in 1995, by January 2011, there were 74 economic groups with activities in the Brazilian upstream.

Law 12,351/10 created a production sharing regime for the presalt acreage, and Law 12,304/10, set-up Pré-Sal Petróleo S.A. (PPSA), a new wholly state-owned company responsible for managing the country’s interests in the production sharing contracts (PSCs) and commercialisation of oil or gas produced from the pre-salt and other strategic areas.

There were good and bad years in terms of discoveries, but the flexible concession regime under the PL accommodated, until Petrobras’s announcement of the Tupi discovery (now called Lula) on 8 November 2007, which confirmed years of speculation as to the origin of the oil in the Campos basin, and the adjacent Santos and Espírito Santo basins. It is now understood that the oil in these basins is actually formed beneath a thick layer of salt offshore Brazil and

The main aspects of PSCs include: PSCs will be granted under a bidding system, similar to the concession regime; PSCs contemplate a typical cost oil and profit oil structure where production to be shared between the state and the contractor under the PSC is defined as ‘excess oil’, and the contractor is reimbursed its costs and expenses of exploration and production through ‘cost oil’, after a commercial discovery is made; winning bids will be those providing the

Since the PL, the most important Brazilian oil & gas industry measurements have doubled. Oil reserves increased from 7.1 billion barrels to 14.2 billion barrels at the end of 2010, and natural gas moved from 227.7 billion m³ to 423 billion m³ over that period.

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highest allocation of excess oil to the state; Petrobras will be the designated operator of all blocks covered by Law 12,351/10 and will hold a minimum participation of 30% in the venture; customs and tax incentives applicable to the Brazilian oil industry will apply to activities under the PSCs; and PPSA will be a party to the PSCs, but will not have any risk or responsibility for costs of oil and gas exploration activities. This production sharing regime is fully developed, but has not yet been implemented, due to ongoing political battles over distribution of the Federal State’s royalties among the Brazilian states. Despite optimistic commentary from Brazilian politicians, we do not believe that this will be resolved in the near-term, nor that the first pre-salt acreage bid round will occur in 2012. Conventional acreage (non pre-salt) will be available under the concession regime in an 11th bid round to be held sometime in 2012. While this is not what the industry is looking for, it keeps Brazil on the upstream map internationally, especially since no bidding round has been held since December 2008.

Cancellation of infringing commercial names in Brazil The problem of infringement of commercial name trademarks is one that is common the world over. It is, however, a particular problem in Brazil where there are around five million companies registered throughout its 27 states (including the Federal District), with another 400,000 currently being added to that number each year. It is possible for trademark owners to file an appeal at the Commercial Registry, but this must be done within ten days of the notice of the commercial name being published in the Official Gazette. Failing this, the IP owner must bring a court action against the infringing company in order to force it to amend the commercial name. The statutory term to bring the court action is ten years, but only five years if damages are sought. Court actions are expensive and first instance decisions normally take around 18-24 months. In light of this, IP owners should first serve the infringer with a cease and desist letter, which will have a good chances of success, particularly if several reminders and follow up calls are made. A complication here is that the vast majority of companies in Brazil are set up by only two partners with very limited investment and do not survive more than a couple of years. Worse still, most partners do not have the financial capacity to wind up the company as this often includes the payment of back taxes and often damages from labour disputes. This has led to a situation where the vast majority of companies registered in Brazil are not actually trading while the partners cannot afford to have them dissolved. However, the companies remain active on the various commercial registries, which gives their owners the rights to use their commercial names and dilutes the infringed trademark. Court actions against such companies can be very frustrating particularly when the partners cannot be found, and court appointed guardians take over the defence of the absentee defendant. Experience has shown that commercial registries will only amend commercial names where the partners cannot be found if the president of the Registry is threatened with jail for contempt of court. An attractive alternative in cases where the company is no-longer trading is to cancel the name after ten years of inactivity. Although commercial registries should do this as a matter of course, they often do not, and so it falls to IP owners to files petitions requesting the commercial registry to cancel the registration of an infringing commercial name where the company has not filed papers for over ten years. This remedy is finally allowing IP owners to stop companies using their trademark as a commercial name and prevent its dilution at commercial registries.

Arbitration In Brazil Foreign investors can protect their investment in Brazil by choosing arbitration for the settlement of disputes Adriana Noemi Pucci works as counsel and arbitrator in civil and commercial cases in domestic and international arbitrations. Ms Pucci holds a PhD in Economics and Financial Law from São Paulo University (USP) and serves on the panel of arbitrators of the International Centre of Dispute Resolution (ICDR, a division of the American Arbitration Association), the CIETAC (China International Economic Trade and Arbitration Centre), the CAM (BOVESPA Câmara de Arbitragem do Mercado), the CCBC (Arbitration and Mediation Centre of the Chamber of Commerce Brazil-Canadá), and the FIESP/ CIESP Arbitration Centre. She is the editor in chief of the Brazilian Arbitration Review. Since 1996, arbitration and ADR have attained a high level of acceptance in Brazil, with a modern Arbitration Act (Law N 9.307/96) and having ratified the New York Convention in 2002. Mediation is being used more often - a bill is pending in the National Congress requiring parties to submit a dispute to mediation before initiating a lawsuit. The CNJ (Conselho Nacional de Justiça) also promotes the use of conciliation between parties already in a lawsuit. Many in the international community believe that allowing foreign investors to arbitrate disputes is essential to attract foreign investment. Arbitration has increased over the past 15 years and nowadays Brazil has an enforceable arbitration system. Any commercial disputes can be resolved by arbitration. The stock exchange of São Paulo has a centre for arbitration, CAM, which has new arbitration rules in force since 1 January 2012. Companies desiring to follow Brazilian corporate governance practices must include in their bylaws an arbitration clause to refer disputes between or among shareholders to arbitration under CAM’s rules. Arbitration and ADR involving state or state-owned or controlled company are enforceable and had been promoted by the enactment of specific legislation requiring state-owned or controlled companies to use these proceedings to resolve disputes; for example, the 1995 Public Services Permission and Concession Act. The arbitration system in Brazil has the strong support of the judiciary. Brazilian courts are upholding the enforcement of arbitration clauses and arbitral awards. Only procedural aspects of the award may be challenged when seeking nullification, as the court has no power to review the merits of an arbitral award. Foreign arbitral awards are enforced by the Supreme Court (Superior Tribunal de Justiça - STJ), under the New York Convention mechanism, to enforce foreign arbitral awards. Brazil became the fourth or fifth country in the world to use arbitration and São Paulo is the city with the most arbitrations cases in Latin America. There are many domestic arbitration centres like the CCBC, FIESP/CIESP, CAM and others that run arbitrations over billions of Reais.

Andrew John Bellingall LLB (Hons) Partner at Daniel Advogados – Rio de Janeiro, Brazil Admitted to the Bar of Rio de Janeiro and São Paulo andrew.bellingall@daniel.adv.br

Arbitration has been used for foreign and domestic investors in Brazil, and the investments agreements required for the next sports events (the World Cup 2014 and the Olympic Games 2016) will certainly promote the use of arbitration for the settlement of disputes.

Daniel Advogados - www.daniel.adv.br Direct Tel: 55 21 2102 4270 Mobile. 55 21 9600 6251 Tel: 55 21 2102 4212 Fax: 55 21 2524 334

Rua Bueno Brandão, 158, apto 81 Vila Nova Conceição, São Paulo, SP, Brazil, CEP 04509-020 Tel: (55 11) 3586 5074 Cel: (55 11) 9972 4686 adriana.pucci@pucci.adv.br | adriana.pucci5@gmail.com

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LeAdinG LAWYers - BrAZiL

Philippe Bhering Av. Eng. Luís Carlos Berrini 1681, 14. Stock 04571-011 São Paulo - SP Brasilien tel.: +55 (11) 5505 1191 fax: +55 (11) 5505 1295 www.bheringadvogados.com.br

Bhering Advogados was founded in 1978 in Rio de Janeiro operating in the field of legal protection and registration of Intellectual assets. Our team is formed by lawyers, engineers, trademark and patent agents, a translation department and administrative support staff. Intellectual Property assets are gaining increasing importance in the whole business scenario. In addition to enhancing the sale of products and services, said assets are a source of financial gain by means of licensing and assignment of rights.

With decades of expertise with national and foreign partners, Bhering Advogados is capable of providing specialized legal advice in all areas of Intellectual Property. We have a united team that ensures accurate and prompt assistance.

Besides the Headquarter office located in Rio de Janeiro, we have branch offices in São Paulo and Curitiba, offering our clients a prompt and personalized assistance.

Considering the identification and management of intellectual assets as ways to achieve strategic goals, a consistent connection between legal knowledge and the understanding of the sciences and technological advances becomes necessary. Our professionals are experienced in various areas of knowledge, thus being capable of understanding the client’s business and providing assistance in managing their intellectual property assets.

Born in Rio de Janeiro, RJ; admitted to the Brazilian Bar Association (State of Rio de Janeiro) in 2006.

In order to work on complex cases in modern times, our team goes beyond the traditional concept of Intellectual Property to render services in crucial law areas such as information technology, advertising, entertainment, and rights of publicity (image rights).

Worked as a Guest Researcher at the MaxPlanck-Institut für Geistiges Eigentum, Wettbewerbs- und Steuerrecht (October 2009 - March 2010).

Our main practice areas are shown below, including services offered by our firm and business categories commonly assisted by us. We are recommended by representatives in Brazil of banks and consulates of Europe and the U.S., also by the American, Swiss, French and German Chambers of Commerce.

Philippe Bhering

Background: Candido Mendes University (LL.B., 2006); Ludwig-MaximiliansUniversität, Munich, Germany (LL.M., 2010), with thesis "Ambush Marketing - eine rechtsvergleichende Untersuchung zum deutschen und brasilianischen Recht"; Ludwig-Maximilians-Universität, Munich, Germany (PhD Candidate).

Worked as a Research Assistant at the International Max Planck Research School for Competition and Innovation, under supervision of Prof. Dr. Reto Hilty (January 2010 - June 2010). Appointed to the Enforcement Committee of the International Trademark Association INTA (2010-2011 term). Member of the Trademark Law and Practice Team of MARQUES (Association of European Trademark Owners). Associations: Brazilian Bar Association (Rio de Janeiro); ABPI - Brazilian Intellectual Property Association; INTA - International Trademark Association; GRUR - Deutsche Vereinigung für gewerblichen Rechtsschutz und Urheberrecht e.V.; AIJA - Association Internationale des Jeunes Avocats. Languages: Portuguese, English and German. Practice Areas: Trademarks, Licensing, Enforcement against Unfair Competition and Counterfeiting, Criminal and Civil Litigation

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Ana Tereza Basilio Telephone: 55 (21) 2277 4200 Fax: 55 (21) 2210 6316 abasilio@basilioadvogados.com.br www.basilioadvogados.com.br

Ana Tereza Basilio has a bachelor of law from Universidade Cândido Mendes and has worked in the large law offices of Brazil, among them, Sergio Bermudes’ firm, where she worked for 11 years. She was also a partner of Trench, Rossi e Watanabe Firm (Baker & McKenzie), being responsible for the civil and commercial litigation area in Brazil from July 2002 to December 2005. She is a postgraduate in North American law from Wisconsin University and is a specialist in civil and commercial litigation as well as in arbitration. She taught civil law in the post graduation course of the Escola Superior de Advocacia (Lawyer’s Superior School) from 1993 to 2001 and she’s the author of several books about corporate law. Anu_primos_velhas(3).pdf

16/12/2011

From 2004 to 2006 she was president of the Mediation and Arbitration Chamber of the Brazilian Bar Association. She acted as president of the Lawyer’s Association Committee from October 2003 to December 2006, and as vice-president of the Arbitration Committee during the same period. She was also elected as chief counsellor of the Brazilian Bar Association during the threeyear periods from 2000 to 2003 and 2003 to 2006. Additionally, she was appointed as member of the committee to fight piracy and unfair competition of the Federal Committee of the Brazilian Bar Association during July 2005 to December 2006, and of the special committee to fight piracy and unfair competition of the Federal Committee of the

Brazilian Lawyers Association, of which she is still a member. She is a member of the editorial committee of the Arbitration and Mediation Magazine, and member of the corporate law committee from the Escola da Magistratura (Judge’s School) of the High Court of the State of Rio de Janeiro. She is a professor in Fundação Getúlio Vargas, in the arbitration post graduation course. In December 2010, she was elected a member of the TRE, the Tribunal Regional Electoral (Electoral Court).

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February 2012 • GBM • 27

sPoTLiGhT on BeLGiuM

spotlight on Belgium EUROPE - BELGIUM - BRUSSELS Located at the heart of Western Europe, Belgium is one of the six founding States of the European Union. This position as the ‘crossroads of Europe’ undoubtedly comprises one of the essential keys for characterising its economy.

Brussels, its capital, has a large number of European and international institutions. With a surface area of 31,000 km2 and almost 11 million inhabitants, the density of its population is the highest in the European continent, along with that of the Netherlands. Belgium is divided into three Regions: the Region of Brussels Capital, Flanders and Wallonia. Moreover, the population is divided into three language groups (Dutch-speaking, Frenchspeaking and German-speaking): the Flemish, French and German-speaking Communities. Like the country, the communication infrastructure is highly developed: it offers major road, rail and river routes, 5 international airports (Brussels, Liege, Charleroi, Ostend and Antwerp) and 4 sea ports (Antwerp, Zeebrugge, Ghent and Ostend). Belgium has one of the most developed ‘broadband’ networks in Europe. The country is considered as the most suitable place for investments in logistics and distribution in Europe (Cushman and Wakefield, “European Distribution Report”). The country is an excellent example of a ‘small open economy’, with strong macro-economic fundamentals. Gross domestic product (GDP) in current prices amounted to 354 billion euros in 2010, thus representing 3% of the total GDP of the 27 countries of the European Union. The openness of the Belgian economy, as measured by the average of its exports and imports of goods and services related to GDP, reached 81.4% in 2010. The openness of the Belgian economy is also demonstrated by its integration in the European Union, while exports towards markets outside the Union have also grown. Many foreign companies are present in the Belgian market, or have chosen the country as a centre of distribution to supply the wider European market. Like every other modern economy, the Belgian economy is characterised by the growing dominance of services: the share of commercial services (including healthcare) in the total gross added value rose to 63% in 2010. The share of manufacturing industry was 14%, with the balance divided between construction (5%), agriculture (1%) and non-commercial services (15%). Despite its more limited scale than in the past, manufacturing industry remains essential for the Belgian economy because it still generates a major share of commercial services and Belgium has remained an important exporter of manufactured goods.

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The strengths of Belgian industry are the chemicals and plastics industry which includes plastics and rubber processing, pharmaceuticals and biotechnology, cosmetics, soaps and detergents as well as paints and varnishes (24% of the total added value from the manufacturing industry), metallurgy and metal-working (15%), agricultural and food industries (14%), manufacturing of transport equipment (6%), machinery and equipment (7%), electrical and electronic equipment (7%) and the paper and cardboard industry, publishing and printing (8%). Its major openness to the outside world, a source of dependency for the Belgian economy, is also at the source of its wealth, which is based on high productivity, like the United States, which is the reference in this area. According to European structural indicators, the GDP per inhabitant of Belgium expressed in parity of purchasing power and relative to the European average (EU-27) set at 100, was 119 in 2010. Belgium is classified among the wealthiest countries, on an equal footing with Germany. Regarding labour productivity within the European Union, Belgium appears at the head of the pack along with Luxembourg and Ireland. Furthermore, Belgium is classified among the 15 most competitive nations according to the World Economic Forum’s ranking, because of a high level of health and primary education, higher education and training, an efficient organised goods market, high level of productivity, the quality of infrastructure and the readiness of information and communication technologies (ICT). Based on the annual Ernst & Young European Investment Monitor 2011, Belgium occupied the 6th place on the list of most attractive investment countries in Europe (same as in 2009). In comparison with 2009, the number of foreign investments in Belgium rose from 149 to 159. •

2008 : 142 projects

•

2009 : 149 projects

•

2010 : 159 projects

The countries that account for most investment in Belgium are the United States, the United Kingdom, France, Germany and the Netherlands. As regards the type of sector in which investments are made, investments in sales & marketing projects are at the top. The industrial sector and logistics sector are in place two and three respectively.

To this effect, the Service • assists investors with relevant information on the legal, human resources, incentive and business aspects of their investment plans; • prepares programs of contacts in Belgium;

Service Foreign Direct Investments

• provides general and tailor-made information on aspects about the Belgian investment climate, upon request.

The Service Foreign Direct Investments is the federal point of contact and 'help desk' for companies considering setting up operations in Belgium as part of their European expansion plans.

The office works in close cooperation with the Regional Investment Offices of Brussels, Flanders and Wallonia and the Belgian Embassies.

Federal Public Service Economy Service for Foreign Investments Vooruitgangsstraat 50 1210 Brussels Tel +32 277 69 13 invest.belgium@economie.fgov.be

February 2012 • GBM • 29

reAch reGuLATions

reAch regulations REACH and CLP: Towards the safe use of chemicals REACH stands for the regulation for Registration, Evaluation, Authorisation and Restriction of Chemicals. The REACH Regulation entered into force on 1 June 2007 to streamline and improve the former legislative framework for chemicals in the EU. REACH lead to the creation of the European Chemicals Agency (ECHA), which has a central coordination and implementation role in the overall process. The ECHA is located in Helsinki, Finland, and manages the registration, evaluation, authorisation and restriction processes for chemical substances to ensure consistency across the countries in which REACH applies. At the beginning of 2009, REACH was complemented by an updated European regulation on Classification, Labelling and Packaging (CLP) of chemical substances and mixtures. The CLP Regulation introduces a new system for classifying and labelling chemicals throughout the EU, based on the United Nations’ Globally Harmonised System (UN GHS). The CLP Regulation lays down the way in which hazards of chemical substances and mixtures should be classified and communicated. It is the task of industry to establish what the hazards of substances and mixtures are, before these are placed on the market, and to classify them in line with the identified hazards. If a substance or a mixture is hazardous, it has to be labelled so that workers and consumers know about its effects before they handle it. Both regulations have a series of deadlines. The first of these came in December 2008 with the deadline for pre-registrations, then in November 2010 the first REACH registration deadline and in January 2011 deadline for CLP notifications. Depending on the intrinsic properties and production volume, a preregistered substance under REACH needs to be registered by 1 December 2010, 1 June 2013 or 1 June 2018. REACH The 30 November 2010 was the first REACH

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registration deadline for high volume and the most hazardous chemical substances manufactured in or imported into the EU. The next REACH deadline, which is on 31 May 2013, concerns phase-in substances from 100 to 1000 tonnes per year and per manufacturer or importer. Non-EU manufacturers should make sure that their importer or only representative also gets ready for this deadline. CLP Substances placed on the EU market must be classified, labelled and packaged according to the new CLP criteria by 1 December 2010. From that date, a CLP notification to the Classification & Labelling (C&L) Inventory should be made within one month of placing a substance on the EU market. More than 3.1 million CLP notifications (which covered more than 100,000 substances) on the classification of chemical substances in line with new EU rules were submitted to the ECHA by the first deadline of 3 January 2011. The data received will enable the ECHA to establish the first European inventory of the classification and labelling of hazardous and registered substances and harmonised classifications. One of the main objectives is to ensure that users of chemicals, workers as well as consumers, are properly informed about the hazards of the chemicals they handle. Authorisation The aim of the authorisation process under REACH is to ensure the good functioning of the internal market while assuring that the risks from substances of very high concern (SVHC) are properly controlled and that these substances are progressively replaced by suitable alternatives where these are economically and technically viable. Substances that are included in the Candidate List have been identified as SVHCs and are candidates for eventual inclusion in Annex XIV. These substances may have very serious and often irreversible effects on humans and the environment. The Candidate List now contains 53 substances in total. Beyond possible other obligations, EU and EEA producers and importers of articles shall notify the ECHA within six months after a substance has been included in the Candidate List, if the substance is present in those articles in quantities totalling more than one tonne per producer or importer per year and if the substance is present in those articles above a concentration of 0.1 % weight by weight. Information on obligations resulting from the inclusion of substances in the Candidate List is available on the ECHA’s website. When a Candidate List substance has been included in Annex XIV of REACH, it cannot be placed

on the market or used after a date to be set (the so-called ‘sunset date’) unless the company is granted an authorisation. Restriction REACH foresees a restriction process to regulate the manufacture, placing on the market or use of certain substances if they pose an unacceptable risk to human health or the environment. The restriction is designed as a ‘safety net’ to manage risks that are not addressed by the other REACH processes. Any substance on its own, in a preparation or in an article may be subject to a restriction if it is demonstrated that risks need to be addressed on a community-wide basis. A restriction dossier needs to justify that the proposed restriction is the most appropriate risk management measure to address these risks. A number of substances have already been restricted under the REACH Regulation, but more are under consideration and published on the ECHA’s website. Priorities for 2012 The first challenge of 2012 for the ECHA is to ensure the readiness of the Agency for the second REACH registration deadline of 31 May 2013. This will include the support to registrants provided by the ECHA helpdesk and the focusing of guidance updates on registration-related needs. The ECHA will provide support to lead registrants to assist them in preparing high quality technical dossiers and chemical safety reports. Enhancements to the dossier submission processes and to existing tools will be necessary, as well as targeting communication and outreach activities. Feedback from the first registration deadline demonstrated that the ECHA should have its IT registration systems and other tools ready in 2012, well in advance of the 2013 deadline. A second challenge will be for the ECHA to live up to the expectations on evaluation. Evaluation, together with each industry’s own responsibility, should instil confidence in the EU citizens that industries’ registration dossiers are of a good quality and meet the requirements. There will be a heavy workload in the domain of evaluating all testing proposals incorporated in 2010 phasein registrations will need to be examined by 1

application dates for the first substances on the authorisation list are likely to generate a much higher number of applications in 2012. The Commission has also set as a policy target a Candidate List containing 136 SVHCs, by the end of the year. Achieving this target will require intensive co-operation between the member states and the Commission in identifying the substances for which the ECHA has been requested to provide support. Many of these substances will, in the longer term, pass to the Authorisation List. A fourth challenge for the ECHA will be ensuring its readiness for the expected entry into operation of the new Biocides Regulation in the course of 2013. The ECHA will have to prepare the IT systems for the submission of different types of biocides dossiers in advance; to create and get operational the biocidal products committee; as well as to recruit and train scientific and other experts to process and assess the many dossier types. Moreover, the ECHA will have to: prepare its helpdesk and those of member states to be able to handle questions from industry; develop guidance, manuals and other tools to assist industry; and, set up a communication campaign to alert industry, member states competent authorities and other stakeholders on the obligations resulting from the new legislation. A fifth challenge, in the same vein as biocides but smaller in extent, is expected to result from the recast of the Prior Informed Consent (PIC) Regulation through which the EU implements the Rotterdam Convention. Through the recast, the technical implementation tasks of this Regulation are expected to be transferred from the Commission to the ECHA. Although the workload impact on the ECHA of this new regulation is much smaller than that of biocides, it nevertheless raises similar challenges since, based on the expected early adoption of this legislative proposal, the preparatory phase will also be short and partly overlap with that for biocides. More information on the ECHA’s key priorities and challenges for 2012 is detailed in the ECHA’s Work Programme 2012. Further information: www.echa.europa.eu

December 2012. Given the ECHA’s observation that the quality of the dossiers need improvement, good progress needs to be made with regard to checks on the compliance of registration dossiers for high-volume chemicals. Furthermore, substance evaluation will need to begin via the adoption of the first community rolling action plan. A third challenge will be in the area of authorisation, where the approaching

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Reach regulations

EU (Netherlands and UK) REACH: Building on experience - lessons learnt from five years of Europe’s flagship chemical regulation 1 June 2012 will mark the fifth anniversary of REACH, Europe’s flagship chemical regulation. REACH has introduced an entirely new system of chemical regulation, shifting the burden of proving the safety of chemicals from the regulators onto industry, and ushering in a new system for restricting and phasing out certain harmful chemicals. Under REACH, European manufacturers and importers of chemicals are required to register (certain information about) their substances with the European Chemicals Agency (ECHA). Registration occurs in multiple phases: the first, for higher tonnage substances, ended on 1 December 2010. ECHA declared the process a success, with over 24,000 registrations received for 3,400 different substances. While the second phase is currently ongoing, the first phase was not without difficulties. REACH leaves some of its key concepts open to interpretation. For example, the definition of ‘importer’ does not appreciate the often complex supply chains involved. Because this definition is not tied to customs import, but refers to the physical introduction of substances into the EU, many companies struggled to decide on whom, in their supply chain, is responsible for registration. While various companies have managed to bring clarity by contractually assigning the role of a ‘REACH importer’, in implementing such a strategy it is important to acknowledge the differing views of enforcement authorities across the EU as to whether this is permissible. REACH also prescribes that certain core data must be jointly submitted by all those manufacturing and importing the same substance. Manufacturers and importers of the same substance are required to share data in substance information exchange forums (SIEFs) and to appoint a ‘lead registrant’, requiring new forms of legal agreements to be put in place. It is important to ensure that such agreements cover, among others, cooperation and data and cost sharing between participants in SIEFs. Companies taking on the lead registrant role should ensure that their liability is restricted and well defined, the costs they incur in performing their role can be recovered, and there is a clear process in place to allow their resignation from the role should circumstances change. With the first registration phase completed, attention has also shifted to the second and third limbs of REACH: evaluation and authorisation. The latter is currently causing the greatest concern among industry, as

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companies face the prospect of no longer being able to use chemicals they have relied upon for decades, while reliable alternatives may not yet be available. The authorisation process begins once a substance has been identified as a substance of very high concern and placed on the socalled ‘candidate list’. This triggers certain supply chain information requirements in respect of products containing the SVHC above a concentration of 0.1% w/w. There is a continuing disagreement between member states as to whether the 0.1% should be applied to the finished product or each of its constituent components individually. Also, companies feel that certain substances are being added to the candidate list without proper technical justification. To date, the European courts have not been receptive to attempts to challenge these decisions. Many manufacturers and suppliers are also finding that their customers are stipulating that the products supplied to them must contain no SVHCs at all. The next step is for ECHA, and ultimately the European Commission, to choose which substances require an authorisation for continued use and to fix the terms and duration of such an authorisation. Authorisations are subject to sunset dates, ie a date after which no further authorisation will be granted and the substance must no longer be used. Socio-economic arguments about the availability of alternatives are not taken into account until the point at which a substance is already subject to authorisation and an application for the actual authorisation has to be made. Companies therefore argue that this means that sunset dates are being set that do not adequately take account of the production cycles of their products or the time required for developing alternative substances. When REACH was introduced in 2007, there were gloomy predictions about what it would mean for the future of the European chemical industry. According to figures recently released by CEFIC, the EU remains the top exporter and importer of chemicals, but its share of world sales has fallen over the ten years to 2010. It is too early to say whether REACH has played a part in this decline, but the European Commission’s upcoming REACH review should help to provide a clearer picture of the correlation - its scope including reporting on the first lessons learnt from the implementation of REACH with special attention to the costs and administrative burden and other impacts on innovation. Allen & Overy REACH is one of the most ambitious pieces of legislation to come out of Europe to date and has already had far-reaching and costly

Henry van Geen Partner The Netherlands Tel +31 (0)20 674 1117 henry.vangeen@allenovery.com Rebecca Lawson Senior associate UK Tel +44 (0)20 3088 4618 rebecca.lawson@allenovery.com Jochem Spaans Counsel The Netherlands Tel +31 (0)20 674 1500 jochem.spaans@allenovery.com Matthew Townsend Partner, co-head REACH practice UK Tel +44 (0)20 3088 3174 matthew.townsend@allenovery.com implications for all players in the chemical supply chain. Through tracking the development of REACH from its inception, we have built up extensive knowledge on the key and evolving issues. This pool of knowledge is continuously being refined, tested and expanded as a result of our daily assistance to clients. Allen & Overy’s global environmental law group, consisting of over 60 attorneys in 15 jurisdictions, has assisted a wide range of clients from many different sectors on their REACH, and related product stewardship, compliance issues. We have therefore gained an in-depth understanding of the impact of REACH on the different actors in the marketplace. By Henry van Geen, Rebecca Lawson and Jochem Spaans

BELGIUM For Europe contact: Alain Vassart, tel. +32-492972330, e-mail: a.vassart@arcadisbelgium.be

For USA contact: Michelle Langefeld, tel. +1 513-985-8020, M +1 513-304-4214, e-mail: Michelle.Langefeld@arcadis-us.com www.arcadis.com

What is Product Stewardship at ARCADIS? The mission of ARCADIS’ global product stewardship practice is to enable our clients to freely formulate, efficiently manufacture and broadly market their products in a safe, responsible and globally compliant manner. We address environmental, human health and sustainability issues for chemicals and chemical products throughout the supply chain. Compliance within the complex web of changing international regulatory requirements guides much of our work, but we also consider and plan for less formal, but equally important, stakeholder concerns (including those of our clients’ customers), as well as issues of public perception. ARCADIS’ staff members provide a supplychain level of support and have worked with global chemical and consumer product companies in dealing with a variety of products, ranging from specialty chemicals and durable goods, nonferrous metals, textile auxiliaries and fluorochemicals to veterinary pharmaceuticals, agrochemicals and animal feed additives. Our team comprises a large number of corporate-bred scientists and regulatory affairs managers from major, multi-national corporations who understand the corporate challenge of developing and delivering valuable products in competitive business climates while striving to responsibly address product safety concerns, global regulatory requirements, emerging technical issues and public stakeholder expectations. Global Product Stewardship encompasses human and environmental safety, regulatory compliance and sustainability concerns across the product development life-cycle and throughout the supply chain of a chemical or product. Where does ARCADIS fit within the product development lifecycle? This question can be answered differently for every client. The roles and extent of our services are as varied and scalable as our clients. ARCADIS’ global product stewardship team has the experience and resources necessary to support the entire product development process. Our services include: regulatory compliance guidance and evaluation; authoring of chemical safety report (CSR) and dossier

preparation; REACH (registration, evaluation, and authorisation of chemicals ) and CLP (classification, labelling and packaging regulation); consortium and SIEF management, both administrative and financial; GHS (globally harmonised system for chemical classification and labelling) implementation, CLP compliant Safety Data Sheets and e-SDS; and, on-site custom regulatory support, socio-economic analysis. Human and environmental safety — it’s all about the data The trend for the international commerce of chemical products is focused on the need for more and better human and environmental safety data. Initiatives behind this trend depend on managing public stakeholder expectations with regard to, consumer safety, worker safety, community right-toknow and environmental impact. ARCADIS helps clients meet these data needs in an intelligent and cost-effective manner. We help develop testing plans and manage the conduct of studies to promote the generation of quality, credible data. Sound human and environmental safety data are critical to supporting sustained marketing of consumer products. Key in our assistance to clients is an understanding of the interactions and implications across the various global requirements and guidelines - clients want to maximize the use of the data developed and they need to understand its ramifications across multiple regulatory programmes. However, the answer is not in developing data for the sake of having data. ARCADIS is very well versed in risk-based analysis and advocacy and cognisant of the potential pitfalls of regulatory regimes with a focus on hazard identification.

becoming an extension of these resources. ARCADIS helps our clients maintain their foundational Chemical Substance Inventory (CSI) and then initiates, researches, develops and maintains the chemical dossiers for our clients’ individual chemicals and families of chemicals. Our focus is on full regulatory compliance through the identification and development of wise, necessary and appropriate safety data. ARCADIS is an international company that provides consultancy, design, engineering and management services in the fields of infrastructure, water, environment and buildings. Over the years, we have worked diligently to retain our core values, and we’ve made it our priority to ask ourselves the tougher questions about who we want to be — as a trusted consultant, as an employer and as a corporate citizen. With more than 19,000 people worldwide and €2.3bn in revenue, the company has an extensive international network that is supported by strong local market positions. We rank among the top ten management and engineering consultancies in the world. In Europe, Brazil and Chile, we have a top five position; in the global environmental market, we are positioned in the top three.

These heightened data requirements are placing substantial resource burdens on companies whose staffs are already lean. ARCADIS helps clients develop globally coordinated registration and compliance programmes by

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reAch reGuLATions

UK Exponent International Limited Mr Julian Reddy Head of REACH and chemical notification services Tel: +44 (0)1332 868002 jreddy@uk.exponent.com www.exponent.com

REACH 2013 – The impending impact of EU chemical policy The issues Since its entry into force in 2007, the REACH Regulation has been described as the single most complex piece of legislation currently in operation within the EU. The first deadline in 2010 saw approximately 25,000 registrations covering over 3,400 substances being electronically submitted to the European Chemicals Agency (ECHA), the regulatory authority responsible for overseeing the management of the Regulation. ECHA predicts that an equal or even greater number of chemicals are scheduled for review in the next phase of the process, with a deadline at the end of May 2013. In parallel with the demands of ensuring compliance with the 2013 deadline, companies are now beginning to receive feedback from ECHA on their 2010 submissions as part of their evaluation procedure. There is also the potential for new studies to be requested by ECHA to support the registrations. Furthermore, some companies are rising to meet the potential challenges that will face substances that have been added to the ‘candidate list’ or that have already been deemed to require Authorisation. The technical approach Gearing up for the 2013 deadline has once again seen the chemical industry mobilising to operate within the framework of REACH’s Substance Information Exchange Forums (SIEFs). These SIEFs ensure companies supplying the same substance to the EU work together to ensure that available data is shared and that companies are appropriately reimbursed for sharing what may once have been proprietary information, developed at a substantial cost. Many of the substances registered in line with the first tier deadline had been the subjects of previous regulatory reviews and as such a great deal of data on them already exists. In comparison, the 2013 substances are being seen to be ‘data poor’, meaning either new data is having to be generated or alternative strategies employed by a company to fulfil REACH’s mandatory data requirements. The use of integrated testing strategies (ITS) will see the formation of chemical categories and the use of read across of data between similar substances. These methods, which must be based on sound scientific judgement, coupled with the use of data waivers and QSAR modelling, are intended to prevent unnecessary testing being carried out wherever possible. Additionally, companies will again be challenged with obtaining highly detailed information on the exact use pattern of the substances they place on the EU market to ensure that a substance can be shown to be used without posing an unnecessary risk to man or the environment. Those companies that must revisit previous submissions may face the task of utilising far more detailed models to demonstrate safe use or offer a more complete and insightful interpretation of existing data to adequately demonstrate to ECHA the intrinsic properties of a substance. In other cases, following ECHA’s review of a higher level testing proposal as a result of a dossier evaluation, a company may be required to generate completely new laboratory test data to support a registration. This is something that may present its own challenges to a company as capacity in suitable laboratories is already becoming

34 • GBM • February 2012

short in supply as companies attempt to address the requirements of the upcoming 2013 deadline along with ECHA’s formal request for information on substances that have already been registered. These challenges are compounded by the significant task of ensuring that all the relevant data is reported in a robust and defensible set of regulatory documents. Most notably this includes a registration dossier summarising all the relevant technical and commercial data along with appropriate studies and relevant literature in IUCLID5 format. For substances supplied at above ten tonnes per year, a Chemical Safety Report (CSR) that documents any intrinsic hazards of the substance and where appropriate provides a fully comprehensive risk assessment that covers all the relevant sectors of use must also be provided. It is fair to say that with all these regulatory obligations many companies will find their REACH resources stretched to a maximum in the run up to the 2013 deadline. Exponent’s expertise Exponent is one of the largest scientific and regulatory consulting firms in the world and offers a wide range of technical and regulatory expertise to help companies meet their REACH obligations. Our team comprises regulatory professionals, project managers, risk assessors, socioeconomic analysts and technical specialists in all relevant scientific disciplines directly relevant to REACH. The varied and strong scientific and regulatory experience of our staff gives Exponent the ability to offer full and complete services to help companies comply with their responsibilities under REACH. The assistance we can provide includes but is not limited to, regulatory strategy and advice, project management, SIEF and consortia management, data evaluation and gap analysis, development of ITSs, study monitoring, dossier preparation and submission, preparation of Chemical Safety Assessments/Reports, evaluation and authorisation services and Only Representative and Third Party Representative services Please contact us to find out how Exponent can help you meet your company meet their REACH regulatory obligations.

belgium ARCHE Frederik Verdonck Science Project Manager Tel - 32 9 265 87 60 frederik.verdonck@archeconsulting.be www.arche-consulting.be

Avoiding excessive testing costs in fulfilling your 2013 registration testing obligations under REACH Fulfilling testing requirements for 2013-2018 substances

be involved to whom saving resources would be an additional asset.

When REACH entered into force, it was known and accepted that fulfilling the data requirements stipulated in the REACH directive would result in an increased use of laboratory animals for the next ten years. Specifically with regard to the lower volume substances to be registered by 2013 and 2018 REACH deadline, it is expected that less data on hazardous properties will be available compared to the high production volume substances registered in 2010. Consequently, many chemical manufacturers and importers will be facing the challenges of filling the data gaps on hazardous properties of their product portfolio in the next years. This can potentially lead to significant additional costs for testing, especially when considering that the number of registrants per substance may on average decrease such that cost-sharing options will decrease as well. Moreover, because of the lower volumes, more small and medium sized enterprises (SMEs) will

Saving resources by using alternative approaches In order to minimise the number of animal tests, the REACH Regulation already provides a number of possibilities to adapt the testing requirements and use existing data and alternative assessment approaches such as read-across, in vitro methods and (Q)SARs (quantitative structure activity relationships). A SAR is a qualitative relationship that relates a (sub)structure to the presence or absence of a property or activity of interest. In contrast, a QSAR is a mathematical model (often a statistical correlation) relating one or more quantitative parameters derived from chemical structure to a quantitative measure of a property or activity (eg, a (eco)toxicological endpoint). The recent report published in fulfilment of its obligations under article 117(3) of REACH by ECHA (2011) described the extent to which registrants to date have used non-animal test methods within their registration dossiers to fulfil the information requirements stated in annex VII to VIII of the legislation and to what extent they have proposed to use such approaches for the higher-tier studies of annexes IX and X. It may be concluded from the submitted 2010 registration dossiers that read-across is used significantly more often than (Q) SARs; (Q)SARs have only been applied in a limited number of dossiers and more for environmental endpoints despite all efforts made previously to promote the adoption of alternative testing methods. A number of scientific but also regulatory conditions need to be met in order for QSAR results to provide an acceptable alternative to experimental data. Models need to be scientifically valid or validated if they are to be used in the regulatory assessment of chemicals. For the purposes of REACH, an assessment of QSAR model validity should be performed by reference to the internationally agreed OECD principles for the validation of a QSAR. The five OECD principles can be summarised as follows (OECD, 2007): every QSAR should have a defined endpoint, an unambiguous

algorithm, a defined domain of applicability, appropriate measures of goodness-offit, robustness and predictivity, and a mechanistic interpretation, if possible. These principles are well incorporated in most recent developments on QSARs. In particular, the OECD QSAR Toolbox is developed to make the (Q)SAR technology readily accessible, transparent and less demanding in terms of infrastructural costs. It is made with the five OECD criteria in mind and combines several QSARs. The peer-reviewed literature holds a large amount of new developments on alternative approaches that have evaluated several QSARs and/or in vitro methods for one or more endpoints. Especially several relevant EU research projects (A-Cute-Tox, ANTARES, CAESAR, DEMETRA, OSIRIS, ReProTect, and others) focused on improving existing approaches. Towards a more cost-effective testing strategy After an initial data gap analysis on the relevant testing requirements in the dossier preparation, the registrants should develop a cost-effective strategy to fill the data gaps. Data gaps should not automatically result in testing proposals (in case of vertebrate testing) or actual testing. The use of alternative testing approaches should be effectively included as an assessment step prior to deciding on testing. This step will effectively enable registrants to save resources and animals where applicable at the same time. Additionally, in case of substances with varying impurities depending on the consortium/SIEF member, hazard identification of impurities based on QSAR models may facilitate discussions on the substance sameness discussions in the early substance identification steps. In conclusion, (Q)SARs may be used to contribute to a reduction in the number of tests with vertebrates that may be required. The concept and use of the various alternative testing strategies, including (Q) SARs, are therefore strongly embedded in the REACH Regulation and guidance documents. By Frederik Verdonck & Marnix Vangheluwe (ARCHE)

February 2012 â&#x20AC;˘ GBM â&#x20AC;˘ 35

reAch reGuLATions

UK Dr Samantha Wright or Dr Richard Elsmore REACH consultants Tel: +44 (0) 1423 520245 sam.wright@jsci.co.uk richard.elsmore@jsci.co.uk www.jsci.co.uk

JSC International Limited Simpson House, Windsor Court Clarence Drive, Harrogate HG1 2PE, UK

REACH: No data, no market The clock is counting down ready for the June 2013 deadline for REACH registration. If you manufacture or import chemical substances within the EU, you should have already pre-registered. If you import or manufacture any substances in volumes of between 100 to 1000 tonnes per year, you should have started the process of preparing your registration dossier ready to be submitted to the European Chemicals Agency (ECHA). The process of preparing the dossier involves the evaluation and assessment of the health and environmental hazards and risks that a substance may pose and how those risks can be controlled. The development and assessment of substance hazard data can take many months, so it is important for businesses to have started the process to be completed in time. If you miss the deadline you will no longer be able to manufacture or supply your chemicals legally - no data, no market! If you wish to place a new substance on the EU market or a substance that has not been

pre-registered but which is manufactured or imported at over one tonne per year, registration is required, and this must be completed before the one tonne threshold is reached to stay in compliance with the regulation. If you are a non-EU manufacturer, you are not permitted to register a substance with ECHA, you must either provide information related to composition and volumes to your EU importer, which may be your customer, or, assign an only representative (OR). The requirement is for the OR to have a sufficient background in the practical handling of substances and the information relating to them and they must be a natural or legal person within the EU. The OR will become legally responsible for ensuring REACH registration and compliance with REACH requirements on behalf of the non-EU importer, which will prevent the disclosure of confidential product information to potentially the non-EU companies’ customers.

ITALY Dr Jose V Cantavella Cabedo Address ChemSafe Via Ribes 5 10010 Colleretto Giacosa (TO), ITALIA Tel +039 125 53 8888 Fax +039 0125 53 8475 ChemSafe was founded in 2001 by Dr Antonio Conto and is nowadays one of the best independent consultancy companies in Europe for registration of agrochemicals, biocides, chemicals (as for REACH regulation), petrochemicals and pharmaceutical products. Based on an excellent expertise and scientific background, ChemSafe manages all projects on quality, reliability and competitive price approach under an expert project leader. Our multidisciplinary team includes the highest level of knowledge about legal, chemistry, biology, toxicology, environmental fate, eco-toxicology, regulatory and scientific networks. Besides all the regulatory needs, ChemSafe offers you, consortium management, only representatives (OR),

36 • GBM • February 2012

Mobile +039 340 388 4184 j.cantavella@chemsafe-consulting.com

third parties representatives (TPR) and full REACH dossiers for chemical and petrochemicals products. Also, ChemSafe is widely known across Europe for the superb quality of its SDS (safety data sheets) and E-SDS (extended safety data sheets) and for its safety data sheets web hosting system. We are now getting more specialised in the safety of nano chemicals, particularly in the view of the their peculiar safety profile. A special registration technical dossier is requested to submit the hazard assessment of nano chemicals to the authorities. All members of staff are full time members of the company.

JSC consultants have significant experience in all aspects of REACH. We have prepared a large number of registration dossiers and chemical safety reports (CSRs) and have provided expert advice on specific areas of REACH such as data evaluation and study monitoring. JSC have SIEF/consortium management experience and ensure that the deadlines of your project are met. We are able to help with the preparation of consortium agreements, communication within the consortium and ensure an effectively running consortium. JSC are able to help downstream users identify their obligations and provide training to ensure continued compliance. JSC International Limited is a privately owned independent European consultancy company providing regulatory support to the chemical, agrochemical and biocides industries. At JSC, we have a dedicated team of highly motivated people with backgrounds from government, industry and contract research.

Agrochemicals Biocides Industrial Chemicals REACh Pharmaceuticals Cosmetics

www.knoellgroup.com

Trainings

STRATEGIC CONSULTING KNOELL GROUP consists of DR. KNOELL CONSULT GmbH and 6 majority-owned subsidiaries in Germany, Switzerland, Great Britain and China. KNOELL GROUP is providing full-services in the areas of regulatory affairs, product safety and consulting. Whether you need complete registration dossiers, risk assessments or safety data sheets “ we are perfectly prepared to support you and your business. Contact us!

Contact: DR. KNOELL CONSULT GmbH Dynamostraße 19 68165 Mannheim Germany T.: +49 621 71 88 58-0 info@knoellconsult.com

LeAdinG LAWYers: indiA

india’s Leading Lawyers by GBM India is fast becoming the place to do business and make investments. But before stepping into the world of the unknown it is important to get specialist advice, we have listed the lawyers and advisors that we feel are the best in their respective area.

38 • GBM • February 2012

Firm

Name

Expertise

A.R.A. LAW

Rajesh Begur

Banking and Finance

Advani & Co

Hiroo Advani

Dispute Resolution

ALMT Legal

Aliff Fazelbhoy

Banking and Finance

Amarchand & Mangaldas & Suresh A. Shroff & Co

Cyril Shroff

Banking and Finance

Anand and Anand

Pravin Anand

Dispute Resolution

AZB & Partners

Zia Mody

Banking and Finance

Bharucha & Partners

M P Bharucha

Dispute Resolution

Bhasin & Co

Lalit Bhasin

Aviation

Brus Chambers, Advocates& Solicitors

Shrikant Hathi

Shipping

Clasis Law

Sakete Khaitan

Investment Funds

Crawford Bayley & Co

Sanjay Asher

Corporate M&A

Dave & Girish & Co

Mona Bhide

Banking and Finance

Desai & Chinoy

Phiroze Mehta

Insurance

Desai & Diwanji

Apurva Diwanji

Corporate M&A

Dhir & Dhir Associates

Alok Dhir

Insolvency

DM Harish & Co

Anil Harish

Tax

DSK Legal

Anand Desai

Corporate M&A

Dua Associates

Ranji Dua

Corporate M&A

Economic Laws

Suhail Nathani

International Trade

Federal & Rashmikant

C Rashmikant

Dispute Resolution

FoxMandal Little

Shourya Mandal

Corporate M&A

Gagrats

Rustam Gagrat

Aviation

Hemant Sahai Associates

Aparajit Bhattacharya

Corporate M & A

Holla & Holla

Nettar Bhat

Dispute Resolution

J Sagar Associates

Jyoti Sagar

Corporate M&A

Kachwaha & Partners

Sumeet Kachwaha

Dispute Resolution

Kanga & Co

Mansingh Bhakta

Corporate M&A

Karanjawala and Company

Raian Karanjawala

Dispute Resolution

Khaitan & Co.

Haigreve Khaitan

Banking and Finance

Krishna & Saurastri

Manish Saurastri

Lakshmi Kumaran & Sridharan

V Lakshmi Kumaran

Tax

Lall & Sethi Advocates

Chander Lall

Luthra & Luthra

Rajiv Luthra

Aviation

Majmudar & Co

Akil Hirani

Corporate M&A

Nishith Desai Associates

Nishith Desai

Corporate M&A

P & A Law Ofﬁces

Anand Pathak

Corporate M&A

Rajinder Narain & Co

Ravinder Nath

Aviation

S&R Associates

Rajat Sethi

Corporate M&A

Seth Dua & Associates

Sunil Seth

Corporate M&A

Singhania & Partners

Ravi Singhania

Corporate M&A

Solomon & Co.

Jonathan Solomon

Insurance

Swarup & Company

Shailendra Swarup

Corporate M&A

Talwar Thakore & Associates

Suresh Talwar

Corporate M&A

Titus & Co

Diljeet Titus

Corporate M&A

Tuli & Co

Neeraj Tuli

Insurance

Tyabji Dayabhai

Nimish Vakil

Aviation

Udwadia & Udeshi

Darius Udwadia

Banking and Finance

Vaish Associates

Ajay Vohra

Tax

Singh and Associates

Manoj Singh

Kockhar and Co

Rohit Kochkar

Inbound Investments

Anand and Anand | Pravin Anand | Managing partner Tel: +91-120-4059300 | email@anandandanand.com www.anandandanand.com

A watershed in intellectual property laws and practice in India Intellectual property (IP) law and practice in India are keeping pace with global developments and the gas pedal has been pushed by courts recognising speedy justice as zeitgeist. Anand and Anand is a full service IP law firm with a presence in four metropolitan cities of India: Delhi, Noida, Mumbai and Chennai. Pravin Anand, the managing partner of the firm, has spearheaded the successful movement of changing India’s perception of IP. The firm advocated the cause of fast track trials in IP cases to address the concerns of right holders, both Indian and foreign corporations. The results are far reaching - the life span of IP law suits has shrunk

from five to seven years to two to three years. Another change that allows greater flexibility to pursue trials before courts in India, especially for foreign corporations, is the paradigm shift of recording evidence before specially appointed officers of court as opposed to the rigid and time consuming process of recording evidence before court. Witnesses can now depose before the court commissioner by making just one or two visits to India at their convenience. The option of recording evidence through video conferencing is also garnering acceptance as a viable alternate to the requirement of the physical presence of a foreign witness during his deposition before court or a court commissioner. In a world that is seeing increasing resistance of courts to grant of interim injunctions in patent infringement actions, Anand and Anand has succeeded in persuading the court

to grant ad interim injunctions in several patent infringement cases in recent months. An encouraging development in the space of trademarks is the recognition by Indian courts of unconventional trademarks, such as shape marks and sound marks. Anand and Anand has represented right owners and successfully restrained infringement of the shape marks of its clients. Anand and Anand has been a lead adviser in trademark acquisitions and formation of joint ventures by its clients. At present, Anand and Anand is involved in high stake patent litigation before the high courts of Delhi, Bombay, Madras and the Supreme Court of India and over 30 ongoing trial proceedings before court commissioners over the last year, over 50% of these representing a number of well known foreign corporations.

Clasis Law | Shalini Agarwal / Sakate Khaitan | Partner / Partner Tel: + 44 207876 4848 / +91 (0) 22 49100000 shalini.agarwal@clasislaw.com / sakate.khaitan@clasislaw.com www.clasislaw.com

A passage to India: Getting oﬀ to the right start when doing business in India India is a key market and viable business destination for potential foreign investors. However, the complexities and idiosyncrasies of doing business in India can be overwhelming and do need to be considered carefully by those venturing into the Indian market. Understanding the prevailing culture, market, bureaucracy and regulatory environment are critical to business success. Access to firsthand knowledge and experience of the Indian market is equally necessary to avoid the pitfalls of doing business in a foreign environment. Implementing a business strategy requires careful planning and consideration of local rules, regulations and customary best practice. As international cross-border transactions increase in number and complexity, Clasis Law, with its Indian offices and international presence, is well placed to assist clients in finding innovative and commercially sound solutions for their business requirements. Clasis Law is a full service Indian law firm that is truly international in vision, scope,

experience and capability. Its hallmarks include a high degree of legal expertise, commitment to excellence, efficiency, integrity, focus and client care, all of which guide the partners, associates and staff in their daily business dealings. Clasis Law partners have decades of experience of operating in India and advising on various aspects of Indian law and jurisdiction. The partners have worked on an array of legal issues across numerous sectors including, among others, international corporate cross-border transactions and infrastructure. Several partners of Clasis Law are recognised leading experts in their field and have been acknowledged by industry peers for their in-depth expertise and know-how, which, together with the dedication, diligence and reliability of the associates, enables the firm to provide clients with exceptional service. Clasis Law has offices in New Delhi, Mumbai and the unique advantage of having a London office fully staffed by Indian lawyers that provide advice on matters relating to Indian law and jurisdiction. Operating across different time zones is exceptionally beneficial for clients, as

Clasis Law is able to meet tight deadlines and provide clients with access to legal advisers worldwide. Clients looking at doing business in India need assistance with advice on various fronts, including a review of the regulatory environment to assess what restrictions exist for a company planning to set up a business in India. Following this, is a review of the optimum corporate structure to adopt, namely whether to operate through a private or public limited company, how to structure the shareholding, how to fund the business and plan for exit routes. Companies also need to ensure compliance with local employment laws and ensure mandatory registrations are undertaken. Clasis Law have a well-earned reputation for their legal expertise and have considerable experience in advising clients on the aforementioned issues. It has been recognised as top tier Indian law firm and recommended for its work in the fields of infrastructure, banking, corporate, insurance, employment and immigration. We would be delighted to have the opportunity of assisting you in India.

February 2012 • GBM • 39

LeAdinG LAWYers: indiA Express Towers • 23rd floor • Nariman Point • Mumbai 400021 • India TEL +91 22 6639 6880 | FAX +91 22 6639 6888 | mumbai@azbpartners.com AZB House • Plot No. A8 • Sector 4 • Noida 201301 • India TEL +91 120 4179999 | FAX +91 120 4179900 | delhi@azbpartners.com AZB House • 67/4 - 4th Cross • Lavelle Road • Bangalore 560001 • India TEL +91 80 4240 0500 | FAX +91 80 2221 3947 | bangalore@azbpartners.com Onyx Towers • 1101/B • 11th Floor • North Main Road • Koregaon Park • Pune 411001 • India TEL +91 20 6725 6666 | FAX +91 20 6725 6600 | pune@azbpartners.com AZB & Partners is one of the prominent law firms in India. Our aim is to provide clear, concise and practical advice based on an indepth knowledge of the legal, regulatory and commercial environment within which our clients operate and a full understanding of their business objectives. Our core values embrace operating to the highest professional standards and building supportive and strong relationships with clients. These are communicated throughout the firm and instil a full appreciation of the professional and ethical responsibilities the firm places upon our lawyers. Our clients are central to everything we do. Their needs determine how we organise ourselves and the range of specialised services we provide. We aim to work in partnerships with clients to anticipate and deal successfully with the legal and regulatory aspects of their business aims and objectives. Our lawyers are members of broad practice areas that work together closely. These practice areas are structured to facilitate

the sharing of technical know-how and the development of a consistently high standard of legal advice across the firm. The legal services provided cover corporate, commercial, regulatory, financial and tax planning. We advise in M&A, joint ventures and general corporate, regulatory practice and securities laws, private equity, capital markets, funds practice, banking and finance, microfinance, derivatives, infrastructure and project finance, real estate, media and entertainment, information technology and business process outsourcing, employment, insurance, intellectual property, pharmaceuticals and biotechnology, taxation, aviation, competition law, and litigation and arbitration. We know that our clients needs do not stop at national borders and therefore continue to build our practice to service the developing needs of our clients. We have received numerous awards and acclaim for the quality of our overall practice as well as in specific practice areas. We have been included in the ‘Winners Circle 2011

at the M&A Atlas Award – Global Major Markets for the Deal of the Year’ (above US$10bn). AZB & Partners has been awarded the ‘Most Active Legal Advisor – PE and M&A for 2010’ award by the APEX Awards. The IFLR Asian Awards awarded AZB & Partners the ‘Private Equity and Venture Capital India Team of the Year 2011’, the ‘Mergers & Acquisitions India Team of the Year 2011’ and the ‘Firm of the Year – Mumbai 2011’. Among others, the firm has been awarded ACQ Country Awards for Achievement 2011 in the following categories: ‘Most Trusted Law Firm of the Year – India’; ‘Full Service Law Firm of the Year – India’; and ‘Law Firm of the Year – India’’. The firm has won awards in 11 categories at the India Business Law Journal’s 2010 India Law Firm Awards – including ‘Best Overall Law Firm’, and received the ‘Most Trusted Law Firm of the Year – Asia’ award by the InterContinental Finance Magazine’s Continent Excellence Awards 2011.

Ravi Nath is a Managing Partner at one of India’s oldest legal firms. He was recognised several times by Euromoney and others as a leading lawyer in mergers & acquisitions, aviation, asset finance, and cross border issues. He appears in Who’s Who Legal and the Legal 500. He has served as President of the Inter-Pacific Bar Association, and as Chair of the Aviation Committee of International Bar Association. He serves on the Advisory Board of the International Registry established in Ireland under the Cape Town Convention. He is the editor/author of various books and papers on aviation laws, and regularly advises all major players including Boeing, Airbus, Embraer, Bombardier, Citibank, ABN Amro, Standard Chartered, Deutsche Bank, BNP Paribas, GECAS, ILFC, Aircastle, Airlease, Aercap and several others. He also advises on Indian regulations and 40 • GBM • February 2012

enforcements. Over the past ten years, he has advised on transaction in excess of US$14bn. The Legal 500 stated: “Ravi Nath’s esteemed reputation as an aviation expert puts clear blue water between Rajinder Narain &Co. and its rivals…” Rajinder Narain & Co. has been recognised as the ‘Aviation law firm of the year in India’ by Corporate International Global Awards 2011. He is frequently invited to speak at various conferences. Some of the other better-known clients he advises are Bechtel, BMW, United Technologies and UBS. He has advised on a number of successful ventures in India for some of these clients. The Bar Association of India conferred its highest honour on him given by the Chief Justice of India and the law minister. At the

invitation of the US State Department, Mr Nath, along with the President of the Bar Association of India, conducted a twoday seminar on India’s commercial and corporate laws that was attended by many leading overseas lawyers. He was invited to contribute a paper on certain aspects of India’s corporate laws (along with India’s finance minister). Both are available as books. Two of the firm’s partners were chief justices of the Delhi High Court and one a president of the High Court Bar Association. Mr Nath’s education includes: B.Com. (Hons), LLB, Intl & Comp Laws, (King’s College London) and PIL (Harvard). He served an apprenticeship at erstwhile Sinclair Roche, London, and he lives in New Delhi with his wife and two children.

The India story: Where are we headed in 2012? 2011 has seen many ups and downs faced by economies worldwide. However, there are high hopes for India with its stellar growth rates and burgeoning workforce. India’s government has robust plans to implement much-needed reforms in 2012 intending to attract and promote foreign direct investment to supplement domestic capital, technology and skills, for accelerated economic growth. Foreign direct investment (FDI) has the connotation of establishing a lasting interest in an enterprise that is resident in an economy other than that of the investor. The government has put in place a policy framework on FDI that is transparent, predictable and easily comprehensible. The Indian economy is better placed than many other nations to withstand a fresh round of global economic turmoil. India’s resilience results from the bulk of India’s GDP being domestic-demand driven. India’s external commercial borrowings policy, which places end-use, all-in cost and maturity restrictions, has been successful in maintaining external debt at sustainable levels. The banking sector has been robust. Problems of poverty and inequality pose continuing challenges. India’s growth story is now an accepted fact, but many in India are yet to receive the full benefits of our rapid economic expansion. This is the beginning of the ‘India’ story. HSA Advocates (formerly Hemant Sahai Associates), set up in 2003, is a leading full service law firm in India with a recognised market leading practice. With over 55 lawyers led by 10 partners, with principal offices in New Delhi and Mumbai and a presence in Bangalore, HSA advises leading companies (both domestic and international), banking and financial institutions, private equity and VC funds, the government, etc, on a wide variety of matters including, among others, projects/ infrastructure, energy sector, corporate commercial M&A transactions, foreign investment and joint ventures, disputes and litigation. HSA’s philosophical approach is to partner with clients’ and HSA consciously invests in building client relationships, demonstrated by the high levels of commitment that it brings to the table. HSA’s pragmatic and business-like approach to problem solving translates into comprehensive yet cost-effective legal services. Aparajit Bhattacharya, a partner, heads the firm’s corporate commercial and M&A practice group, and also the environmental and CDM practice group. One of HSA’s founding members, he is actively involved in diverse assignments including, among

others, corporate M&A and transaction advisory, infrastructure & energy, project financing, cross border transactions, and corporate restructuring. Aparajit has led diverse assignments/ transactions including strategic and private equity investments and VC transactions, management buy-outs and corporate restructuring transactions, foreign investment into India, entry strategies, and joint ventures. Named among the leading M&A corporate lawyers in India by Chambers Asia 2010, 2011, as well as by Chambers Global, recommended by Asia Pacific Legal 500 for Corporate Commercial M&A transactions and projects-related matters, Aparajit is also listed as the leading and recommended lawyer by Global Law Experts for climate change legal advisory services - India.

HSA Advocates (formerly Hemant Sahai Associates) New Delhi | Mumbai | Bangalore Mr Aparajit Bhattacharya Partner Tel: +91 11 2651 1000 aparajit.bhattacharya@hsalegal.com Mr Jayamon VP Manager Tel: +91 22 4340 0400 jayamon.vp@hsalegal.com www.hsalegal.com

February 2012 • GBM • 41

TeAM BuiLdinG in The WorKPLAce

Team Building in the Workplace elizabeth inniss

Its detractors call it 'forced fun', and many cringe at the prospect of having to play games when reeling in the aftermath of mass redundancy. However, team building can be still be a positive and useful exercise in the right hands. It is clear that happy teams enable companies to thrive. When morale plummets, the negativity can spread like a nefarious cloud diminishing productivity. Companies nationwide are struggling, and if pay rises and more resources simply aren't an option, team building can play a valuable part in improving the dynamic of a group.

Why team building? Rather than executing a programme of dry training sessions in the same office, team building companies tend to offer workshops, challenges and even overnight-stays in diverse settings. By taking employees out of the familiar office zone, they provide an opportunity for new dynamics and behaviour to emerge. Team events can also be successful in breaking patterns of ineffective communication. For example, Sue and Phil have worked together for years and got by with minimal interaction. Now however, the team is taking on a project where they must work more closely over an extended period of time. It can be awkward for longestablished team members to start anew so having them partner up to tackle a labyrinth, or treasure hunt, could be an effective way to begin. Furthermore, technology often takes the place of physical interactions, especially when there are stairs involved. Separate teams can interact for weeks via phone, messenger and email without any real human contact, resulting in dwindling face-to-face communication skills and creating distance between departments. Team building sessions can target specific skills such as compromise, decisionmaking, communication, time management and leadership. Instead of the in-house PowerPoint presentation and beige buffet, these themes can be addressed in a fresh way, perhaps via a challenge or a game that facilitates joint-working or competition. What are the beneﬁts of team building? The benefits of team working are widely acknowledged: creating supportive, empowering relationships; enabling innovation; promoting equality and awareness of others; encouraging joined-up 42 • GBM • February 2012

working and rapport-building. Despite this, many consider the idea of team building to be contrived, expecting teams to form organically and thrive. However, there are any number of outcomes when teams are formed and not all of them are good for business or morale. Team building sessions can be a useful way of moulding a newly formed team into good practises early on, setting the tone and breaking the ice. More established teams can be 'shaken up' out of old habits and introduced to new ways of working in a novel environment. Naturally, companies want to see a return on their investment, and employees want to understand why they took time out of their busy schedule to do an assault course in a muddy field.

Therefore, the beneﬁts of team building include: Bonding - which fosters trust and kindness. This is as useful to long established teams as it is to the newly formed. With bonding comes the gelling of the team, working more closely and pulling together during tough times, sharing workload and creating the ability to influence one another positively. Improved communication - which improves efficiency and speed. When a team communicates well tasks are executed faster and problems are solved earlier - and amongst the team rather than escalated to a manager. Naturally, they become more interactive and share ideas, improve interpersonal skills and become more relaxed, which in turn means fewer mistakes born from stress and less absenteeism. Fresh perspective - for those who've been in the same job for a while, habits can be hard to break. For some there may even be an element of institutionalisation. Breaking out of the work environment, even seeing colleagues in their own clothes and in different surroundings, or having the boss around as 'one of us' for the day, can be stimulating and facilitate the acceptance of new concepts. Energy - when a team building day is successful, employees return to work energised and full of stories to share with other colleagues. Energising highlights may include the confidence boost of winning a task or receiving praise, or seeing a team member in a new light. The laughter generated during a comical exercise, such as dressing in sumo wrestling costumes or riding 'fun buggies' can be a source of lasting

lightness and energy. Finding out the boss has a sense of humour is also uplifting.

What type of activities are there? It depends on what you want to achieve and your budget. Essentially team building activities are stimulating, interactive and often problem-solving tasks designed to help group members work effectively together. Many sites exist that provide a range of bespoke workshops and activities from the standard to the bizarre. Greentop for instance provide 'Circus for Business' - a unique opportunity to work with professional circus artists, with trust building exercises involving tightrope walking and balancing priorities on stilts. Kaleidoscope Events host filmmaking sessions, which can bring out the frustrated actors in the group, and chocolate making workshops within a time limit and virtual budget, as well as fantasy Formula One. Indeed, cars feature prominently for several team building organisers, Off Limits Corporate Events offer no less than ten driving activities including 'rage' and 'chuckle' buggies, blindfold and even hovercraft driving. If the budget doesn't stretch to such events, simply taking the team out for dinner and an interactive activity such as bowling, Laser Quest or a murder mystery can be effective at boosting morale and getting people talking, and laughing, no matter the mood in the office. The Team Building Directory also offers free games and ideas based on themes such as motivation and change. In-house team building is also an option, but efforts must be made to ensure the team is properly stimulated in this familiar environment, and returning to the desk during breaks should be discouraged. It is important to recognise that much depends on the facilitator. Whether hired, or in-house, team building in the hands of an excellent leader can turn even the most simple game to an important learning experience. Deciding what should be achieved from the team building exercise, and providing a structure to accomplish it, is crucial, lest the day descends into it chaos and becomes counter-productive.

Team scenarios: What if the team members don't get on with each other? Where there is difference (earnings, opinions, attitudes), old grudges or ineffective communication there is conflict. When left to escalate 'a combative climate of distrust and suspicion develops' (Bowditch & Buono, 1997). Team members may benefit from activities that level out some of those differences and provide opportunities for communication and laughter. It is important to recognise the strong feelings team members may have toward one another, while encouraging quick resolution within

depersonalised, communicative activities. It is important to source a facilitator who can give this delicate theme the structure and respect it deserves. The benefits of solving this issue will enable team members to coordinate their work more easily, meet deadlines, take responsibility, share workload and reduce absenteeism.

What if the team members get on too well? Some teams are simply entrenched in doing things as they have always done them. They refuse, or feel unable, to change. Their confidence comes from knowing the job well, doing it in a certain way and retaining the same familiar dynamic. In this way, the team itself can take on its own personality - in this case, it is close but stubborn. In this instance it is important to bring the team together in a relaxed environment which plays to their strengths, whilst ensuring an activity which requires everyone's input. Learning activities, in an environment that allows for mistakes, and offers plenty of praise can help soften resolve. Sessions that embrace change as a force for good would be advisable.

What if the team is new? Establishing the professional tone and values of an organisation, and forging a team in a more controlled way, is best achieved when the team is new. Communication exercises are vital at this stage. A series of ice-breakers and team working games would be beneficial. Team building for such groups also provides the opportunity to discover the personalities of the new recruits, including who naturally leads, builds rapport or shies away from attention. This in turn can be useful for managers wanting to work with the dynamic of the team and create a synergistic group.

What if the team is angry? Following redundancy, appraisal or pay cuts, team members can become angry, resentful, rebellious or lose faith. The suggestion of a team building day may seem to throw more fuel on the fire, but this is an ideal time to take the team out of the office and address these issues. Debates, interspersed with physical activity to run off adrenaline, and humour to lighten the mood, could oďŹ&#x201E;oad some of the team's collective feelings and provide neutral territory to discuss wider issues. Failing that the 'rage buggies' mentioned earlier could let off some steam. Properly managed, a healthy team plays to its strengths, bringing out the best in each team member. Subsequently the unit as a whole takes on its own dynamic which complements and strengthens the team further. The Team Building Directory states 'a strong team who know they can rely on each other will outperform others in all areas.' It is clear that effective, well facilitated team building sessions can help to achieve this. February 2012 â&#x20AC;˘ GBM â&#x20AC;˘ 43

TriP Advisor

TripAdvisor’s Holiday Hotspots for 2012 With picturesque architecture, gastronomic delights, sandy beaches, lively nightlife and more, the destinations on this list offer something to suit every traveller’s preference – making it no surprise that these places are steadily increasing in popularity, and are set to be hotspots in the year head. “These destinations have really piqued traveller interest and we expect to see this momentum continue,” commented Emma Shaw, TripAdvisor spokesperson. “They take in a wide range of holiday experiences, everything from beautiful beaches to UNESCO World Heritage sites, so there’s somewhere in here for every traveller.” These destinations are seeing continually increasing interest from travellers on TripAdvisor and are sure make great holiday choices this year:

TripAdvisor’s holiday hotspots for 2012 1. Tallinn, Estonia

6. Seminyak, Bali (Indonesia)

A 2011 European Capital of Culture, Tallinn is a beautiful city to explore, boasting stunning architecture such as the Kumu Art Museum and intriguing attractions such as the Old Town which is a UNESCO World Heritage site.

Away from the hustle and bustle of Bali’s main drag, Kuta beach, this picturesque town is one of the island’s more upscale areas. Enjoy fresh seafood while watching gorgeous sunsets and be sure to indulge in the famous Balinese spa treatments.

As one TripAdvisor traveller said, “My husband booked a surprise weekend break for us to Tallinn and I really had an excellent time. Overall, I would recommend Tallinn as a destination.”

As one TripAdvisor traveller said, “Seminyak is a place for anyone looking for a peaceful relaxing retreat within easy reach of the great restaurants, bars and the beach.”

2. Riga, Latvia

7. Vilnius, Lithuania

Riga is Latvia’s capital city and the largest city of the Baltic States, and is home to an extensive collection of picturesque Jugendstil (German Art Nouveau) architecture. The Old Town is particularly lovely with its cobbled streets and the city is well-known for its lively nightlife scene.

Vilnius, a European Capital of Culture in 2009, is the Lithuania’s largest city. It boasts an impressive array of Baroque and Gothic architecture, while the large Old Town is a UNESCO World Heritage site.

As one TripAdvisor traveller said, “The Old Town is pretty lively with outside music concerts and open-markets in the summertime. I highly recommend visiting Riga.”

3. Moscow, Russia Featuring historical sites, including the Red Square, St. Basil’s Cathedral and the Kremlin to name a few, a world-famous theatre and an endless supply of must visit museums. Moscow is well worth visiting. As one TripAdvisor traveller said, “Moscow is a beautiful city with so much history. It was an absolutely amazing experience and I deﬁnitely want to go back again.”

4. Zurich, Switzerland Located in north Switzerland on Lake Zurich and against a mountainous backdrop, Zurich is arguably one of Europe’s most enviably located cities. It is known for its excellent restaurants and for a truly local experience, try the city’s quintessential dish, Zürigschnätzlets - veal in a cream and wine sauce. As one TripAdvisor traveller said, “Zurich is a beautiful city to walk around with lots of beautiful buildings, parks and side-walk cafes.”

5. Fethiye, Turkey (Aegean Coast) Fethiye offers history alongside natural beauty. This as an ideal choice for a holiday that combines beach and culture – travellers can visit the ruins of the ancient city of Telmessos, while also enjoying the beautiful sandy coastline. As one TripAdvisor traveller said, “We had a fantastic time in Fethiye. The town is in a beautiful setting with a harbour and you get a real ﬂavour for Turkish life.” 44 • GBM • February 2012

As one TripAdvisor traveller said, “The people of Vilnius are very friendly, the city is very clean, not too crowded and the restaurants are good.”

8. Austin, Texas (USA) The capital of America’s second-largest state, Austin is well-known for its music scene, as well as its great restaurants. With its rolling hills, clear lakes and granite ravines, it also offers a variety of adventure and outdoor activities. As one TripAdvisor traveller said, “I just visited Austin Texas... wow what a city. The people are all so friendly, the scenery was beautiful and the weather was great too.”

9. Chania Town, Crete (Greece) Located on the western side of Crete, the highlight of Chania Town is the Old Town which features centuries-old Venetian architecture. The sandy, turquoise-water beaches are beautiful, while the beachside bars and restaurants won’t fail to impress. As one TripAdvisor traveller said, “The tight alleys of the Old Town are ﬁlled with fantastic restaurants and shops, all just steps away from a beautiful harbour.”

10. Chaweng, Koh Samui (Thailand) Chaweng is the beach on the east coast of Koh Samui. The pristine white-sand and turquoise water beach is several kilometres long, with accommodations, restaurants and attractions to appeal to travellers of all budgets and interest. As one TripAdvisor traveller said, “Chaweng is a beautiful place to stay. There are lots of things to do like quad biking, snorkelling and scuba diving.”

11. Bordeaux, France

14. Essaouira, Morocco

Bordeaux is renowned not only for producing some of the best wines in the world, but also for its unique architecture which has earned a UNESCO World Heritage site listing. When you’re not visiting vineyards, be sure to check out the area’s picturesque beaches.

Essaouira provides a relaxed alternative to the high energy of Marrakech. Visitors to this lovely coastal destination are attracted to its beaches, fresh seafood and medina.

As one TripAdvisor traveller said, “This is one of the most beautiful cities I have ever seen. The architecture is gorgeous, the food and wine is excellent and the shops are top notch.”

As one TripAdvisor traveller said, “The peaceful town of Essaouira is a great town for shopping, dining and walks on the beach, as well as being a nice break from the congestion and sensory overload of Marrakech.”

12 San Sebastian, Spain

15. Mendoza, Argentina

The ways to keep entertained in San Sebastian are seemingly endless, with its stunning scenery, great restaurants, beautiful beaches, lively nightlife and major film and music festivals, as well as ski resorts within driving distance.

Mendoza enjoys a picturesque location on the eastern side of the Andes and holds the majority of Argentina’s vineyards. With an abundance of parks, lakes and rivers, as well as its great skiing, Mendoza is an ideal destination in which to enjoy the outdoors.

As one TripAdvisor traveller said, “San Sebastian is such a beautiful place. It is such a historically rich area ﬁlled with friendly people.”

As one TripAdvisor traveller said, “The charming city of Mendoza is ﬁlled with beautiful parks, plazas, historic architecture and artisan markets.”

13. Lyon, France Located in the Rhône-Alpes region, Lyon is France’s third-largest city. Like many of its neighbours, Lyon is well-known for its gastronomy and impressive selection of Michelin-starred restaurants, while the Saint-Jean and the Croix-Rousse areas – UNESCO World Heritage sites – are well worth visiting.

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

As one TripAdvisor traveller said, “Lyon is a beautiful city with great history and gastronomy.”

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LuxurY BrAnd series – roMAnTic GeTAWAYs

Luxury Brand Series

Luxury Romantic Getaways The month of February is famous for Valentine’s Day and many regard it as the most romantic month of the year. Our fine selection of hotels and resorts from all over the world will ensure that you have memorable stay at this special time of year. From luxury private beaches to cosy winter escapes we have it all.

February 2012 • GBM • 47

LuxurY BrAnd series – roMAnTic GeTAWAYs

Relais & Chateaux Hotel Santa Teresa | Brasil Hotel After three years of careful restoration, the Hotel Santa Teresa reopens its doors, redefining the boutique, luxury experience in Rio de Janeiro. Once a colonial mansion, today the Hotel offers a chic, elegant refuge for the most demanding guests. With magnificent views of Rio de Janeiro, the Hotel Santa Teresa is located in the heart of historical Santa Teresa, closer than any 5-star luxury, boutique hotel to the main touristic attractions of the city, including Guanabara Bay, Corcovado, Sugarloaf, Tijuca Forest, the historical centre and with fast and easy access to the best beaches in and close to the city. Charming and picturesque, surrounded by colonial mansions, museums, artist ateliers and the only remaining tramway in Rio, the Hotel Santa Teresa is the authentic Rio, a place where high-rise buildings and traffic are replaced by red-tiled rooftops, cobblestone streets and exuberant nature. While preserving its colonial façade, all of the Boutique Hotel’s 44 rooms and suites, the restaurant, lounge, SPA and pool areas have been recreated using materials such as burnt cement floors, tropical woods, black and golden limestone slate and Portuguese tiles. Deluxe furniture and original art pieces created by renowned contemporary Brazilian designers, evoke innovative Tropical Design. Throughout the Hotel, craftsmanship and art from the Amazon, Pará, Minas Gerais and the Northeast showcase the diversity and multi-cultural influences of Brazil. Set on 4,000 square meters of landscaped, tropical gardens, the Hotel Santa Teresa provides a sense of tranquillity and harmony with nature, with the comfort and elegance of unique design. All areas of the Hotel Santa Teresa evoke the senses, from the maze of corridors and wooden stairs leading to the rooms, filled with aromas from coffee beans, to the lounge, where one can enjoy a cocktail on the open 48 • GBM • February 2012

air terrace overlooking treetops. The pool area, boasting a semi-Olympic pool and stunning, panoramic views of the city and the luxury SPA, are places where the guest can relax and tune body, mind and soul. At sophisticated, yet casual Térèze Restaurant, world cuisine by Executive Chef Damien Montecer and over 200 labels of wine delight the most demanding palates. Hotel Santa Teresa provides guests with a luxury experience without pretention, authentic and charming, simply unique. Rooms The Hotel Santa Teresa’s 44 Tropical Design rooms and suites blend the finest natural elements with the latest technology for comfort and convenience, with unique style and elegance. Ample use of noble tropical woods, bathrooms outfitted with black limestone and furniture creations by famous Brazilian designers such as Sergio Rodrigues, Studio Vitty and Rock Lane provide unique design, chic and sophisticated, charming and unpretentious. Each room and suite offers a unique view; from the red-tiled roofs of colonial houses and the tropical gardens surrounding the hotel, to the magnificent mountain range and bustling Rio de Janeiro below, to Christ the Redeemer statue perched high above. Rooms and suites are appointed with heavenly beds outfitted with high quality cotton and linen, luxury bathroom amenities, LCD TVs with over 60 cable channels and complimentary broadband internet connection. Many rooms and suites have balconies overlooking the city or tropical gardens while the premier suite, the Panoramic Loft Suite, provides a spectacular 200° panoramic view of Rio de Janeiro. Every detail of the Hotel Santa Teresa’s rooms and suites has been considered to provide the ultimate boutique hotel experience; chic design, luxury amenities, unparalleled comfort and convenience and truly unique views.

Decoration The concept of Tropical Design found at the Hotel Santa Teresa brings together Brazil’s rich past and dynamic present using only the finest natural elements. Luxury linen, wild cotton, coconut and banana tree fibres, tropical woods, Portuguese tile, black , green and golden slate and burnt cement permeate throughout the Hotel’s charming social areas and luxurious accommodations. Design furniture and art pieces created by renowned contemporary Brazilian designers and artists such as Sergio Rodriguez, Zemog, Studio Vitty, Rock Lane, Carassa and Oficina de Agosto, elegantly blend with the restored colonial architecture. The Térèze Restaurant, casual, yet sophisticated, makes use of recycled materials, including demolition wood furniture and restored, treated canvas, lending way to an Eco-Chic ambiance. Just across from the Restaurant, the Bar dos Descasados Lounge has a Bohemian-Boutique aura brought out by the red and white-tiled floor, brick arches and comfortable, over-sized arm chairs, sofas and dorsel lounge beds. Every element, all materials, the design furniture and works of art have been selected and integrated into the Boutique Hotel Santa Teresa’s facilities to provide atmosphere and comfort while holding true to Brazil’s ethnic heritage. Lounge The lounge, Bar dos Descasados, was centuries past the slave quarters of the Guimarães Mansion, yet today, offers a Bohemian-Boutique setting to enjoy drinks and light appetizers. Design art pieces by Zemog decorate the open-air lounge, with comfortable over-sized arm chairs, sofas and dorsal lounge beds set in a charming fusion of brick arches with Portuguese tile. The lounge terrace overlooks red-tiled roofs and tree tops where one can frequently observe marmosets, parrots and toucans, adding a magical touch to the chic ambiance of the bar.

At night, with trendy lounge music, candles and starlit skies, the Bar dos Descasados takes on a romantic tone, a perfect place to start or end an evening. Térèze Térèze Restaurant is a sophisticated, yet casual venue, where one can savour world cuisine in an Eco-Chic setting. Burnt cement floors, Rock Lane recycled wood furniture, white-washed walls and floor-to-ceiling windows overlooking treetops and colonial houses provide a tranquil and picturesque setting to enjoy innovative cuisine created by Executive Chef Damien Montecer, whose vast experience includes work with worldclass chefs in New York, London and Cannes. Over 200 wine labels from the old and new world complement dishes which fuse Asian and Mediterranean ingredients with regional produce for an experience in flavours, texture and aromas sure to surprise the most demanding of palates. SPA The SPA at the Hotel Santa Teresa combines luxury and sophistication with natural elements to provide an ambiance of tranquillity and harmony. Walls and ceiling of eucalyptus wood intertwined with vine, furniture and design pieces by Studio Vitty at the relaxation area contrast with modern ceramic and white-tiled treatment rooms each with individual music and temperature controls and utmost comfort for world-class therapeutic and beauty treatments. Highly trained, professional staff provide a wide array of treatments while an exclusive partnership with Eco-Amazonian Natura products, ensures complete satisfaction. Location The Hotel Santa Teresa is located in the heart of the historical and cultural district of Santa Teresa in Rio de Janeiro. Whether travelling on business or leisure, the Hotel’s location

is simply unbeatable, closer to the business district and major touristic sites than any other 5-star deluxe property in Rio de Janeiro. Only 3 km from the Financial and Commercial Center, 4 km from Santos Dumont Airport and 20 km from Galeão International Airport, the Hotel Santa Teresa provides a location closer to these hubs than any other luxury, boutique hotel in Rio. Additionally, the Hotel Santa Teresa is the closest deluxe hotel to all the major touristic sites, including; Corcovado, Sugarloaf mountain, the Historical Centre, Tijuca Forest and only a jump from Lapa, where authentic and sophisticated Carioca nightlife happens. With easy access to all locations within the city, including Ipanema and Copacabana, as well as the best beaches in and around Rio, the Hotel Santa Teresa is in a perfect location for both the business and leisure traveller seeking a luxury, boutique hotel experience. Perched high on Santa Teresa hill, the Hotel Santa Teresa offers spectacular panoramic views of the city, while guests can enjoy a haven of tropical gardens unique to boutique hotels in Rio de Janeiro. The area surrounding the hotel is charming and authentic, with cobblestone streets, colonial houses, churches and museums, with the historic tramway passing in front of the hotel’s main entrance. Guests at the Hotel Santa Teresa will enjoy unique and exclusive location, both in terms of accessibility to areas within the city, as with the general ambiance of tranquillity of the hotel. Awards: BRAZIL´S BEST HOTELS STAY LIST 2011 NATIONAL GEOGRAPHIC BEST HOTEL IN SOUTH AMERICA CONDE NAST TRAVELLER HOT LIST 2009 THE PANORAMIC LOFT SUITE WORLD´S BEST HOTEL SUITE WALLPAPER MAGAZINE

RELAIS & CHATEAUX HOTEL SANTA TERESA www.santateresahotel.com reservas@santateresahotel.com Tel 55 21 3380 0200 February 2012 • GBM • 49

LuxurY BrAnd series – roMAnTic GeTAWAYs

Grand Hotel Principe di Piemonte Viareggio SERVING YOUR EMOTIONS «I sell emotions…» this is how Alessandro Augier, General Manager of Grand Hotel Principe di Piemonte in Viareggio, introduces himself. «Our philosophy is to give our guests the pleasure to rediscover the old time beauty with all its details in a totally up to date facility. Our goal is to anticipate our clients’ needs and to exalt with excellence their emotional instincts» Born in the early twenties as Select Palace Hotel, in 1925 the building has raised of two storeys, embellished by the magnificent pediment that harmonizes all the central part. In the years it becomes a famous international hotel and the favourite residence for many aristocrats, intellectuals and artists. In 1938 has been renamed Grand Hotel Principe di Piemonte and its charm have seduced several directors, becoming the scenario of many movie productions. The liberty building that faces the sea of Viareggio, has today 106 rooms, 87 double and 19 suites, divided in five floors, each one of these decorated in a different style, to make an ideal journey through hospitality of every epoch. The first floor, in International style, reminds the french fashion of 18th century, very popular in most of the luxury hotels of that time. The second floor, in Decò style, is inspired by the early 20th essence of Belle Epoque with dark wood, parchments, silk 50 • GBM • February 2012

woven and decorated mirrors. The third floor, in Colonial style, represents the exotic that becomes furnishing. India and the East are recalled by the bamboo decorations and the printed woven. The fourth floor, in Empire style, celebrates Napoleon’s dream of greatness with the elegant light varnishing enlightened by the beige and blue striped woven. And at the end, the fifth floor in Modern style where in the eight rooms, four of which have a marvellous terrace facing the sea, are decorated with materials, shapes and complements of these days. The beautiful ballrooms of the old days, unaltered in their splendour, are transformed today into multi-functional rooms equipped for prestigious events. It is in honour of Giacomo Puccini and its Operas that the main hall, with a capacity of 160 people, was called "Butterfly”. The spacious common areas, decorated with furnishings and fabrics designed exclusively for the Grand Hotel Principe di Piemonte, are understood as a large lounge where to find quiet corners for concluding business negotiations or just having a chat in front of a drink. The gourmet restaurant “Il Piccolo Principe”, Michelin Star and mentioned with excellent scores in all the most important guides, offers a particularly researched cuisine that can be enjoyed in the location on the fifth floor where you can reserve a table in the bright dining room or, during the summer season, on the poolside at the roof garden, always with a breathtaking view that goes from the mountains to the sea. Dishes are enriched by the 850 labels in our wine list of our Cellar, where is also possible to organize, for small parties, private dinners and tastings with our Sommelier. “Il Piccolo Principe” is also open

I HAVE EVERYTHING. I HAVE THE “PRINCIPE”. for the non-residents in the hotel. At the ground floor is open the Tuscan Restaurant “Regina” where you can enjoy a more traditional cuisine, full of the tastes and flavours of our region, in the wide dining room or in the veranda that faces the sea. On the fifth floor, the amazing rooftop pool with spectacular views over the coast and the Apuane Alps, has waterfalls Jacuzzi areas. Heated in winter at 35 °C and enriched with ozone, is created to give relaxing moments throughout the year.

On the fifth floor there is also the Fitness Center with modern machinery where guests can workout enjoying the view. Member of Small Luxury Hotels of the World and Great Hotels of the World, prestigious brands that collect many luxury hotels around the world, the Grand Hotel Principe di Piemonte is located directly on the seafront of Viareggio, close to the most important art cities of Tuscany and the beautiful Cinque Terre.

At the pool during the summer you can also enjoy delicious snacks or aperitifs. The beautiful spa offers, in 350 sq. mt., a wide range of facial and body treatments, sauna, turkish bath, Kneipp course, chromo and aromatherapy showers, relaxation area and many beauty and holistic services. Multisensory experience of scents, colors and music to regenerate the senses and relax the mind. Among our most exclusive treatments: massages with honey, chocolate and hot stone, ayurveda, shiatsu and reflexology.

PRINCIPE DI PIEMONTE SpA Piazza Puccini, 1 - 55049 Viareggio (LU) Italy - tel: +39 0584 4011 Fax +39 0584 401803 - info@ principedipiemonte.com www.principedipiemonte.com February 2012 • GBM • 51

LuxurY BrAnd series – roMAnTic GeTAWAYs

Shangri-La’s Tanjung Aru Resort and Spa Kota Kinabalu, Malaysia A Renewed Journey of Discovery Sun and Sea in Five Star Luxury An exotic paradise waiting to be discovered, Shangri-La’s Tanjung Aru Resort and Spa, Kota Kinabalu is located at the northern tip of exotic Borneo and is surrounded by a bay of five islands known as the Tunku Abdul Rahman Marine Park. A leading beachfront deluxe property in Kota Kinabalu, the resort offers 492 beautifully appointed mountain and sea view rooms set within 25 acres of well-tended surroundings. The resort is within walking distance of the Tanjung Aru beach. Sun seekers can satiate their appetite by lounging around the resort’s brand new 2,000-square-metre swimming pool complete with tapered shoreline, disappearing infinity edge for adults and custom-built jacuzzi beds. Families will be spoilt for choice with the resort’s brand new water play area with everything from theme-park quality water

52 • GBM • February 2012

slides, water fountains, a super splash bucket and water balloon battle stations. Spectacular views set the scene for sundrenched days of a family inspired ninehole pitch and putt, tennis or water sport activities. The complimentary Cool Zone kids club is a highlight for children from four to 12 years with a daily programme to keep the little ones entertained. Appealing to the gym buff at heart, the property’s renewed Health Club is designed with the best in exercising luxury. Built with dedicated areas for cardio, weights, Pilates and personal training, the facility also features an energy boosting juice bar, relaxing sauna and locker rooms with male and female orientated zones. Food alone is reason enough to enjoy a fabulous dining experience at the resort’s seven unique restaurants and bars. From freshly barbecued ocean favourites at CocoJoe’s Bar & Grill to an evening rendezvous at Kota Kinabalu’s iconic Sunset Bar, from sumptuous buffets at Café TATU to wok-fired

Chinese specialities and dim sum at Shang Palace, from wholesome Italian at Peppino to sweet treats at Cool Box ice cream bar followed by a night-cap at Borneo Lounge & Bar. Shangri-La’s Tanjung Aru Resort and Spa, Kota Kinabalu is a distinctive platform of gastronomic delights for the hungry traveller. Guests also get to discover the life-enriching, soul-soothing and enduring effects of the spa lifestyle at the resort’s CHI, The Spa, the signature spa brand of Shangri-La Hotels and Resorts that is inspired by the mystical legend of ‘Shangri-La’ captured in James Hilton book, Lost Horizon. A haven of rest and relaxation, the spa village is built on a private island and features everything, including beautiful treatment rooms (eight villas in all) equipped with a steam room and outdoor shower and bath. Guests can choose to enrol in the mind and soul enriching activities such as yoga and tai chi, conducted daily at the yoga pavilion. Shangri-La’s Tanjung Aru Resort and Spa is

part of the largest Asian based deluxe hotel group in the region and is run by one of the world’s finest hotel management companies, the Hong Kong based Shangri-La Hotels and Resort. Today the 492-room Shangri-La’s Tanjung Aru Resort and Spa is one of the prides of the Shangri-La Hotels and Resorts for its continuous receipt of international class award from renowned establishment around the world and is ranked amongst the 100 finest in the world. Shangri-La’s Tanjung Aru Resort and Spa is located in Kota Kinabalu, capital of the Malaysian state of Sabah at the northern tip of Borneo. Set amidst 25 acres of beautifully landscaped gardens on a peninsula surrounded by the waters of the South China Sea, the deluxe property is one of Asia’s most exotic retreats, yet only 10 minutes from the sprawling capital of Kota Kinabalu and the Kota Kinabalu International Airport. Facing the resort and minutes away by speedboat are five tropical islands and in the distance

looms Southeast Asia’s highest peak, the 4,101 metre Mount Kinabalu, one of the world’s heritage site. SEE & DO Tunku Abdul Rahman Marine Park Distance: 10 to 15 minutes by speedboat from the resort marina Enjoy a lazy afternoon of warm sun, crystal clear waters and white sandy beaches on any of the five beautiful islands that surround Kota Kinabalu; Pulau Gaya, Sulug, Mamutik, Manukan and Sapi. Lok Kawi Wildlife Park Distance: 30 minutes by taxi No trip to Borneo is complete without a glimpse of Borneo’s famed Proboscis monkey and man of the forest (Orang Utan). Mari-Mari Cultural Village or Monsopiad Cultural Village Distance: 30 to 45 minutes by taxi Learn of Borneo’s rich cultural heritage, ethnic groups and traditions in this highly recommended, highly educational experience.

Mount Kinabalu Distance: 1 hour 30 minutes by taxi This UNESCO World Heritage site is one of the most important biological sites in the world. Make it a point in your trip to ascend the mountain and consider the via feretta route to the top for an even greater adrenaline rush!

Shangri-La's Tanjung Aru Resort and Spa No. 20, Jalan Aru, Tanjung Aru, 88100 Kota Kinabalu, Sabah, Malaysia Tel: 60-88-327888 Fax: 60-88-327878 Email: tah@shangri-la.com

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LuxurY BrAnd series – roMAnTic GeTAWAYs

Six Senses Ninh Van Bay, Nha Trang, Vietnam Six Senses Ninh Van Bay sits on a dramatic bay, taking full advantage of the superb setting. Impressive rock formations, white sand beach, a playful stream and the towering mountains behind, all add to the senses of being luxuriously at one with nature. Ninh Van Bay provides the ultimate seclusion as it is accessible only by water. Upon arriving at Cam Ranh Airport, it takes 60-minutes by car to the Six Senses Lounge in Nha Trang City. It is then a short 20-minute boat ride to Six Senses Ninh Van Bay. Six Senses Ninh Van Bay comprises 58 pool villas situated on the beach front, on the hillside, and over water amongst rock formations into which private swimming pools have been crafted. Several hilltop villas located near the Six Senses Spa have personal Spa Suites with massage champas and steam showers. The resort’s restaurants serve international and local favorites, plus East-meets-West specialties. Adjacent to The Restaurant is The Bar—a duplex structure that provides ample space for lounging on daybeds with drinks-in-hand, or more conventional seating; plus a wine-cellar cave featuring wines from the old and new worlds. The Six Senses Spa is blended into the rocks beside a gentle waterfall. It provides signature treatments together with individual rejuvenation specialties of the region. Activities include tennis, watersports and dive facilities, a gym, and nature trails that take advantage of the resort’s unique location. Ninh Van Bay, Ninh Hoa, Khanh Hoa, Vietnam Tel: (+84) 58 372 8222, Fax: (+84) 58 372 8223 Reservations Department : Tel: (+84) 58 352 4268, Fax: (+84) 58 352 4704 E-mail : reservations-ninhvan@sixsenses.com

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Evason Ana Mandara Nha Trang, Vietnam Evason Ana Mandara means beautiful home for guests—a sentiment that is reflected at the resort with its warm, Vietnamese hospitality combined with peaceful surroundings. It is Nha Trang’s only beachfront resort; occupying 2.6 hectares or 6.42 acres of private tropical gardens and 600m of private beach, offering simplicity, serenity and refinement, together with spectacular views of Nha Trang Bay. Cam Ranh, the airport serving Nha Trang, is a thirty-minute drive from the resort. Comprising of 74 semi-detached garden villas, Evason Ana Mandara guest accommodations combine traditional Vietnamese touches with locally-inspired architecture and modern conveniences. Rooms are either situated in the lush, tropical gardens or with breathtaking, sea views across the bay. Private terraces off every room are an ideal spot to relax at day’s end. The Pavilion Restaurant offers gourmet cuisine, with many Vietnamese and international favourites using the fresh ingredients. The adjacent Bamboo Courtyard and Lobby Bar are great gathering places for refreshments. The Beach Restaurant offers allday dining, and features fresh seafood that is cooked to your order in the open kitchen. The Six Senses Spa at Evason Ana Mandara presents a Vietnamese experience of specialty treatments and programmes, in addition to the traditional menu of holistic rejuvenation and pampering. The resort also offers tennis, beach volleyball, and a water-activity centre, plus a PADI Scuba Diving Centre. A full-service tour and adventure desk will arrange a host of activities from guided treks through the countryside to picnics, cultural, river and morning market excursions. Evason Ana Mandara - Nha Trang Beachside Tran Phu Boulevard, Nha Trang, Khanh Hoa, Vietnam Tel: (+84) 58 352 2222, Fax: (+84) 58 352 5828 Reservations Department : Tel: (+84) 58 352 4705, Fax: (+84) 58 352 4704 E-mail : reservations-nhatrang@ evasonresorts.com

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LuxurY BrAnd series – roMAnTic GeTAWAYs

Hyatt Regency Maui Resort and Spa Maui, Hawaii You’ve made a commitment. So have we. Let Hyatt Regency Maui Resort and Spa make your honeymoon unforgettable. The perfect honeymoon begins with the ultimate setting of romance. You’ll find none better than Maui’s premier fantasy resort, the Hyatt Regency Maui Resort & Spa. Ideally situated on 40 tropically landscaped oceanfront acres along a three-mile stretch of the famed Ka’anapali Beach, Maui’s longest crescent beach, Hyatt Regency Maui Resort and Spa offers an authentic Hawaiian experience in a setting of tropical luxury. Newly renovated guestrooms feature a sleek, contemporary Hawaiian design that is both comfortable and sophisticated. The fresh, tailored and uncluttered style, vibrant color scheme, custom artwork, and stylish new furnishings result in an elegant and welcoming guestroom that feels uniquely local. Each room features a separate seating area and private lanai from which to enjoy panoramic views of mountains or sparkling sand and sea. An exclusive Regency Club on the uppermost floors of the Atrium Tower offers personalized concierge service, breakfast, sunset cocktails and hors d’oeuvres. Boasting endless amenities including Spa Moana, elaborate water playground with tropical streams and waterfalls, championship golf, four tennis courts, beach activities, scuba and catamaran sails, four restaurants and lounges, shopping, and over 100,000 square feet of function space, as well as expert-led stargazing, luau, and wildlife, art and tropical garden tours, Hyatt Regency Maui Resort and Spa offers everything necessary to create the quintessential Maui getaway. Spa Moana and Moana Athletic Club, Maui’s only oceanfront, 15,000 square-foot luxury spa and fitness center, offer breathtaking views of the Pacific ocean and the island of Lanai through large windows. Spa Moana boasts 15 treatment rooms including massage and facial rooms, couples massage suites, and a full-service beauty salon. The state-of-the-art, Moana Athletic Club provides the highest quality equipment and challenging aerobics and fitness classes. Athletic Club open 24 hours. The first destination resort in the world, Hyatt Regency Maui Resort and Spa has been a trendsetter in luxury since opening in 1980. With lavishly renovated guestrooms and Maui’s chicest new dining destination, Japengo, paired with an idyllic oceanfront setting and genuine service, Hyatt Regency Maui Resort and Spa is making it even more captivating for vacationers to book in 2012 and beyond. 56 • GBM • February 2012

For more information regarding Hyatt Regency Maui Resort and Spa, please contact the resort by phone at (808) 661-1234 or (800) 233-1234, or visit the resort website: www.maui.hyatt.com.

Baros Maldives North Male’ Atoll, Maldives Baros Maldives- The Essence of Maldives When you’re in love, there’s no better place to be than Baros, Maldives. Baros Maldives is a small coral island in the Indian Ocean, just 20 minutes by speed boat from the Maldives International Airport. Set in a translucent lagoon surrounded by a sun-drenched, golden sand beach, ringed with a colourful living coral reef, Baros Maldives is the perfect retreat for a romantic holiday to remember forever. Its 75 private villas seem designed for romance, whether poised over the tranquil waters of the lagoon or set in verdant, tropical gardens where exotic flowers bloom beside sandy trails shaded by swaying palms.

The resort’s Deluxe Villas, Baros Villas, Water Villas, Baros Pool Villas and Baros Premium Pool Villas are all equally desirable for a vacation of love and luxury. They each have a kingsize bed, a daybed to relax, veranda, satellite television, air-conditioning, mini-safe and mini-bar, Lavazza expresso machines and a personal wine chiller with sommelier selected bottles. Each villa is stylishly created with sandstone and timber, with fine furnishings and large windows to let in natural light and contemporary linen blinds for privacy. Water villas have individual sun decks and stunning views of the sea with steps down to the lagoon for leisurely swimming. All have bathrooms en-suite, some open to the sky, while others feature indoor and outdoor rainfall showers in a walled garden. A member of the Small Luxury Hotels of the World, the awardwinning Baros Maldives excels in caring personal attention to meet every guest’s desires. For couples who crave complete seclusion with in-villa dining and picnics on an isolated sandbank, or pleasure and indulgence in one of three gourmet-class restaurants and bars, Baros Maldives is the answer. Baros Maldives is dedicated to lovers, whether on a secret interlude together, a honeymoon in the sun, a special anniversary, or for those who just want to enjoy each other’s company away from stress and hassle. No children or groups are there to disturb the serenity of this tropical idyll, and staff members are discreet and understanding. The Spa features treatments designed especially for couples together and there are exclusive yoga sessions. Guests can enjoy a sunset cruise for two on the resort’s traditional sailboat, complete with airconditioned bedroom. A luxury yacht with a double bedroom can be chartered to visit neighbouring islands, or couples can take a boat to view leaping dolphins. For relaxation, there are comfortable loungers and hammocks in the Palm Grove, a library of films and books, and culture aplenty in the Maldivian Lounge with its antique maps and artefacts. Guests return again and again to Baros Maldives charmed by the warm hospitality and memorable moments that are the essence of this truly romantic resort. Be special. Be destined for Baros. Baros Maldives, PO Box 2015, Male’ 20-02, Republic of Maldives Tel: +960 664 26 72, Fax: +960 664 34 97 info@baros.com, www.baros.com

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La Veta Inn, Colorado, USA Inspiring and healthy retreat The La Veta Inn is situated at the base of the majestic Cuchara Valley in Colorado, nestled between the Sangre de Cristo mountain range and the Spanish Peaks. The Inn is laid-back and inviting with a well-trained staff located in a funky and artistic town that offers unsurpassed beauty and great outdoor adventure. Guests have the opportunity to be active or to relax, conduct business retreats or business coaching, or celebrate as a family, either as a great get-together or to start a life together with an intimate wedding. Located near tourist favourites including the Wahatoya mountains (the breasts of the world according to Native Americans), the Great Sand Dunes National Park and the Cuchara Valley through which the Highway of Legends winds and is listed first among Colorado’s Seven Natural Wonders. The Native Americans considered this valley a “Healing Valley” and the La Veta Inn offers its guests a healing experience. Activities include hiking, biking, rock climbing and golfing at the famous Grandote Peaks Golf Course. Winter activities include snowshoeing, cross-country skiing, and even ice skating on mountain lakes. Art galleries in town express the natural beauty of the Valley through sculptures, painting, photography, even jewellery. Summer events include Art In the Park (July), Stonewall Century Bike Ride (August), Celtic Music Festival (September) and Octoberfest (October). This boutique hotel has 18 uniquely decorated rooms, 23 beds (21 Queen and two King). Each room has been decorated by a different local artist and includes the art’s work which is for sale. Guests enjoy comfortable rooms with feather mattresses, Canadian down comforters, Israeli cotton sheets and Turkish towels, and private bathrooms filled with organic (non-toxic) soaps and shampoos. 58 • GBM • February 2012

The Inn offers delicious cuisine in its worldclass restaurant created with care and zest each day by renowned New York chef, Alys Romer. Alys uses locally sourced ingredients whenever possible including local grass-fed beef, lamb and local vegetables, to deliver world-class homemade food with a style that has made her a Southern Colorado legend. This exceptional restaurant offers indoor seating for 50 people and a patio restaurant seating an additional 50 people during warmer months. Diners are frequently entertained by local musicians playing acoustic music or a concert on our stage with an area band. For business retreats, the Inn offers a conference room equipped with stage and projection TV, and seats up to 40 people. An executive conference room is also available for up to 12 people. The Inn has two massage rooms and a fitness studio for yoga and other exercise classes,

and the Inn’s coffee shop is open all day and offers guests a quiet place to read, work or relax. Staying active, healthy and inspired couldn’t be easier at the La Veta Inn � come and try it for yourself.

103 West Ryus Ave La Veta, CO 81055 719-742-3700 info@lavetainn.com

Sofitel Fiji Resort & Spa Fiji UPGRADE TO LUXURY AT THE SOFITEL FIJI RESORT & SPA Luxurious French sensibilities and Sofitel style is what truly sets this resort apart in a destination spoilt for choice. Down to earth Fijian friendliness is what keeps guests returning time and time again. Famous for its long, lazy beachfront location, swaying palm trees and romantic sunsets, the Sofitel Fiji Resort & Spa is Denarau Island’s most alluring resort enjoying a beach frontage, the island’s largest lagoon pool, and 26-acres of lush gardens with views extending across Nadi bay. With a prime address on Denarau Island just 20 minutes drive from the Nadi International airport, the resort is a modern, integrated destination unfolding across 26-acres of lush garden paradise with views extending across Nadi bay. Sofitel’s signature style emanates throughout, with classic furnishings and Fijian customs infused in every aspect of resort life, including its award winning restaurants and spa. Best of all this month, the resort celebrates romance to introduce an elegant new Luxury Room category, including ten inspiring suites. The resorts features a full service Mandara day spa with a menu of unique wellbeing experiences including the Fijian ‘bobo’ massage, and body treatments infused with local ingredients. Boasting nine exclusive beachside bures, including specially created couples rooms, beautiful bures with outdoor garden showers, plus a private sauna, whirlpool and juice bar retreat, Mandara is a spa sanctuary for Sofitel guests. Sofitel also features the world’s first ever Pure Fiji concept store onsite, in addition to French inspired sidewalk cafe, La Parisienne for casual dining. Of course, the most talked about and loved part of the resort is no doubt its stunning lagoon style pool complete with a separate ‘adults only’ deep end and secluded spa.

onsite operator, Adrenalin Fiji and a Rosie Holidays touring desk to book day trips such as cruises and village visits conveniently at the hotel. When it comes to cuisine Sofitel’s V Restaurant is unrivalled. Proudly Fijian with local artwork and motifs adorning white walls and influencing its decor and design, V restaurant is also unapologetically chic. The restaurant is completely air conditioned for the comfort of its guests, ensuring a contemporary and comfortably cool dining encounter. V’s stunning presentation is complemented by the culinary craftsmanship of renowned executive chef, Brendon Coffey making it the perfect venue for those with an appreciation for fine food, wine and service. Couples visiting Fiji for a romantic interlude can enjoy a peaceful and leisurely breakfast – sans children – at Sofitel Fiji Resort & Spa’s beachside restaurant, Salt. Situated between the ocean and the resort’s long lagoon pool, Sofitel’s ‘adults only’ breakfast is available each day from 08.00am to 10.00am. Sofitel’s à la carte couple’s breakfast at Salt complements the resort’s buffet breakfast with sparkling wine option which is available each day at Lagoon restaurant. Visit www.sofitel.com

For those who like adventure, Sofitel Fiji offers Fiji’s most extensive range of tailored watersport and recreation options in association with

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dATA ProTecTion & PrivAcY

data Protection & Privacy report

WE TALK TO THE ICO ABOUT DATA PROTECTION

What is the ICO, the process behind it and the role it plays nationally or internationally?

on our work and provide a helpline which anyone can ring to ask questions and get advice about compliance with the Act.

The ICO is the UK’s independent regulator of the Data Protection Act 1998 and the Freedom of Information Act 2000. The ICO’s role is defined within the European data protection directive which requires an independent supervisory authority in each member state. The UK government introduced the Data Protection Act, which implements this directive, and our remit is to enforce the Act in the UK.

How long should an organisation keep data, in terms of the data they have in the business?

The Information Commissioner has an office of over 300 staff to help discharge his functions. The office provides a helpline to assist organisations and members of the public who have queries relating to the Act, complaints and policy departments, an audit department and an enforcement department who take action when it is clear that an organisation has failed to comply with the Act.

So the ICO impartially updates on data protection and privacy regulations? We put lots of information, advice and guidelines on our website, publish e-newsletters and blogs updating people

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Data protection isn’t black and white; it’s about degrees and assessments looking at what personal data you have, why you have it, what it’s used for. You will also need to consider the risks of disclosure, and protect the data in a way that’s appropriate and proportionate. Also, in some areas you might have other statutory obligations, now or in the future, which you will need to consider when assessing which data to keep and for how long.

What are the legal responsibilities for businesses and organisations under the Data Protection Act? The Act has eight principles which anyone who processes personal data has a legal duty to comply with. You must process data fairly and lawfully, for a specific purpose, it has to be accurate, relevant and up-to-date, and you can’t keep it longer than necessary, which is different for each business and circumstance. You have to process the data in line with individual rights because

individuals have rights in the law: the right to access the information to see what you hold about them, to request changes to the data if it is inaccurate, and to request that you no longer process their data. You must have an appropriate level of security and, if you decide to outsource data processing to a contractor, this must be covered by a written contract. If you transfer personal data outside the EEA, you must also ensure an adequate level of data protection and there are several ways to achieve this. So this is your starting point, the backbone of the Act. Obviously there is much behind those principles in terms of what they mean and how you approach them, and further guidance can be found on the ICO website (www.ico.gov.uk).

If a client or customer complained about the personal data that a company holds, what would be the correct protocol to deal with this? First, go to the company and see whether the personal data they are holding about you is accurate. You can do this by making a subject access request, which is a legal right under the UK Data Protection Act, and allows you to request all of the information an organisation holds about you. After being provided with this information you

can then check whether the information they have about you is accurate and let them know if any of the details need changing.. Organisations should have internal complaints procedures to deal with any subsequent complaints. If an organisation fails to comply with a subject access request or refuses to update your records without good reason then you can make a complaint to us.

going to use their data. Fairness is also about expectations - if you going on holiday it would be in your reasonable expectations that data would be passed from the travel agent to the hotel and the airline. You should consider why the information is being processed, why it is needed, and the effect that it will have on the individual and whether what the organisation is doing is justified.

The ICO website has information for individuals who are unhappy with how a company has handled their information; this includes details of how to make a complaint and the actions we will take following a complaint being made.

It is an important part of the law because if you have someone else’s personal information then you shouldn’t be processing it in a way that is unfair to them.

For example, with a request under section 42 of the Act, we undertake an assessment as to whether it is likely or unlikely that the organisation has complied with the law. Depending on the nature of the case, we will then write to the organisation to tell them the conclusions of the assessment and the expectations that we have of them, ie, whether we believe that the organisation’s response was adequate and what further steps, if any, are still required. At this stage most of the complaints we receive will get resolved without the need for further action. However if the problem doesn’t get resolved or becomes a serious issue, we will then check to see whether there is the organisation has a history of non compliance in this area, or whether the issue in question fits with our regulatory action policy and may consider taking formal enforcement action.

If data held is incorrect or incomplete, are there penalties and when does it breach the Data Protection Act? If you have inaccurate or out of date information then you are breaching the data protection principles and you must take steps to comply with the law. Whilst breaching the principles of the Act is not a criminal offence it can become a criminal matter if the individual or organisation responsible for breaching the Act, knew or ought to have known that they were not complying with the law. For example if an employee knowingly discloses personal data without the consent of their employer then it is an offence under section 55 of the Act. If we send you an enforcement notice, and you fail to bring about the necessary improvements as detailed in the enforcement notice, then that’s also a criminal act.

What is fair processing and are there guidelines? Processing has to be fair and lawful, that’s the first principle, and this includes transparency, ie, what an individual has been told about how the organisation is

The ICO website includes guidance for organisations explaining the steps they must take to comply with the Act The guidance also explains what we expect organisations to take into account in order to demonstrate that they are processing personal data fairly.

What are privacy notices? Privacy notices, sometimes called ‘fair processing notices’, are a way of telling people about what you plan to do with their information. Whether you refer to these documents as a privacy notice or privacy policy - they may have different names but all of them carry the same meaning. Good privacy policies or notices should clearly explain what information an organisation will be collecting, why they are collecting it, what they are using it for, your rights and how to contact them if you have any problems or complaints. Privacy notices have to be clear and understandable. A good privacy notice is essential, as a person reading it should feel confident that they understand how their data will be handled and for what purpose. What you also find is that people take what’s called a ‘layered notice approach’. So on a website you initially you get some very basic information, then you go to a particular part of the website to find further information and then the final layer provides very detailed information explaining the legal implications of the Act. Companies should see privacy notices as an important means of maintaining the confidence of their customers.

What new legislation should readers be aware of? The EU-level data protection directive is currently being revised, and we are expecting the draft proposal soon from the European Commission.

least a two-year period of negotiations before the proposals are agreed and made formal European law. There will then be a period of time for governments to implement the European law. There may continue to be some national variations depending on the legal setup of each country. A Regulation has direct effect, which means the UK government will have to implement it directly, whereas a Directive sets out what is to be achieved and leaves the ‘how’ to national governments.

So businesses don’t need to worry about this for at least another couple of years? They don’t need to worry in the sense of complying with it. Businesses may perhaps want to have an influence in the way the law is written. They have the next two-year negotiation period to lobby to try and influence. Most businesses might have an interest in understanding the direction the new Regulation might take. There may be more explicit obligations and responsibilities for businesses so it is beneficial for them to be aware of the upcoming changes, once announced, in terms of understanding what the future requirements might be. There may also be an industry association that they can go to so as to lobby directly. Businesses have to prepare in advance because you can’t implement changes overnight. So they would be advised to at least keep an eye on the process, to be aware of what’s coming so they can be prepared for it. It’s in a business’ interests to know what’s going on and what’s coming.

Any ﬁnal words? It is in the interests of business as well as individuals to comply with the data protection principles.If you want to be ahead of the competition, then it is in your interests to look after people’s personal data properly and show you are taking it seriously. If you do, individuals are more likely to trust and therefore do business you. Information Commissioner’s Office 01625 545 832 www.ico.gov.uk

We expect the legislative proposals to consist of two legal instruments: a general data protection Regulation and a Directive for the police and law enforcement sector. One published, we expect there to be at

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dATA ProTecTion & PrivAcY

CANADA BEST PRACTICES FOR EMAIL MARKETING

Electronic marketing is a foundation of any modern business. It is inexpensive, direct and can be easily tailored for a target audience. Its results are easily tracked. However, in December 2010, Canada’s government introduced new anti-spam legislation that will regulate how businesses communicate with their customers electronically.

message under CASL is specifically prescribed. Consent may be either express or implied.

The legislation will have global effects because the law will apply to any commercial electronic message sent or received in Canada; therefore the scope of the legislation will affect any business communicating with Canadian customers, whether or not that business is based in Canada.

Consent can be implied where there is an existing business relationship between the sender and the recipient (an on-going commercial activity or existing contract), an existing non-business relationship between the sender and the recipient (recipient has made a donation or gift, for example, or is a member of a society) or if the recipient has published their electronic address without publishing a disclaimer.

While the act (known commonly as Canada’s Anti-Spam Legislation, or CASL) and its regulations will not be in force until an order is passed by the governor in council, prudent businesses should ensure that their current electronic marketing practices are in line with CASL to prevent violations once the laws are in force. The prohibition CASL prohibits sending a “commercial electronic message” to an address unless a recipient has consented to receive such a message, and must meet certain proscribed requirements. What’s a “commercial electronic message”? CASL defines a “commercial electronic message” as an electronic message sent by any means (text, voice image or sound image), where it’s reasonable to conclude that one of the purposes of the message is to encourage engagement in a commercial activity. It includes messages that promote a person engaged in a commercial activity. The message does not have to overtly offer a service, but will still be considered within the scope of CASL if it promotes a person or group of people who offer services. What qualiﬁes as “consent”? Consent to receive a commercial electronic

“Express” consent requires a sender to identify the purpose for which they are sending the commercial electronic communication when seeking express consent from a recipient.

There may be some uncertainty about what constitutes an “existing business relationship”, as many business relationships may be on-going over a number of years, with periods of activity and inactivity. CASL implies consent where the sender and the recipient have been engaged in a commercial activity or a commercial contract has been entered into between the parties in the previous two years. An existing business relationship may also be implied where a recipient has made an inquiry about the sender’s business, product or service within the past six months. Exceptions There are some circumstances where consent, either express or implied, is not required from the recipient of a commercial electronic message. This includes where the sender is responding to a request for a quotation, where the message completes or confirms a transaction or where the message provides warranty, recall or safety information about a purchased product or service. Jurisdiction, enforcement and onus CASL will apply to any commercial electronic message sent or received in

Danielle Lemon Danielle Lemon Law Group Vancouver, BC, Canada Tel: 001.604.375.8814 Fax: 001.604.909.2757 dani@dllg.ca www.dllg.ca 62 • GBM • February 2012

Canada, and therefore can apply to foreign businesses that sent messages to Canadian recipients. CASL will be enforced by the Canadian Radio-television and Telecommunications Commission, Canada’s media and communications regulator and enforcement tools will include letters of warning, legal undertakings and administrative penalties for breaches of CASL of up to $1m for an individual, or $10m for a corporation. Directors and officers may also be found vicariously liable for violations of CASL by their companies. The legal onus to prove consent exists lies with the sender rather than the recipient of the message, which means businesses need to ensure their electronic marketing practices comply with CASL and that a clear record of consent can be provided in the event that any breach of CASL is alleged. Establishing compliant practices now will prevent any costly defence in the future. Danielle Lemon is a corporate/commercial lawyer based in Vancouver, Canada, specialising in e-commerce, technology, licensing and intellectual property law. Danielle is a graduate of the London School of Economics and practiced in international firms in both Canada and the UK before founding Danielle Lemon Law Group (www.dllg.ca) in 2011.

ASIA DATA PRIVACY REGULATION IN ASIA: WHAT YOU NEED TO KNOW

Data privacy regulation in Asia has not traditionally been a headline issue for businesses that operate in the region. Apart from a few notable exceptions, Asia’s lawmakers have historically defied trends towards detailed, comprehensive regulation adopted elsewhere, the leading example being the European Community’s directive 95/46/EC. The regulatory approach in Asia has been more closely aligned to that of the US with a ‘patchwork’ of sector-specific regulation in industries such as banking and telecommunications, certain criminal offences targeting particularly serious cases of theft and hacking and, to varying degrees, regulation in ‘data intensive’ areas of activity such as e-commerce and credit reference checking. This is all set to change. The past 18 months have seen an explosion of new regulation in Asia directed at stepping up data privacy standards and giving law enforcement agents stiffer penalties to impose upon transgressors. The pace of change is rapid and the impact widespread, with significant reforms in jurisdictions such as Hong Kong, China, India, Singapore, South Korea, Taiwan and Malaysia. It remains to be seen how aggressively the new requirements will be enforced, but it is clear that doing business in Asia will require closer attention to the impact of laws, rules and regulations, in particular, on the use of personal data for marketing purposes and cross-border data transfers to regional data centres and shared services hubs. In this article, we look at the reforms in Asia’s leading economies and explain the practical implications for business. Hong Kong was early to enact comprehensive data privacy regulation, passing a European-styled law in 1995. Longstanding perceptions that the law was not being adequately respected came to a head in the summer of 2010, when headlines were dominated by a series of ‘cross-marketing’ scandals involving the sale of customer lists by one organisation to another. The data privacy bill now before the legislature will enact some of the toughest marketing controls in the world, making it more difficult for Hong Kong businesses to enter into marketing alliances and leverage customer databases. China’s rapid surge towards being a global economic power has not come without its growing pains, and its poor reputation for data security has caught lawmakers’ attention. In 2010, the government issued a

set of guidelines obliging data processing businesses to implement written security policies and other measures directed at raising compliance standards. In January 2011, the government published a draft national standard directed at data security on the Internet. Modelled on comprehensive, European-styled regulation, the draft standards have caught observers’ attention, signalling an unexpected move that will likely impact businesses in China. Perhaps no one was more surprised than India’s US$50bn offshore services industry when the government passed new data privacy rules in April 2011 that are, in some respects, more stringent than in Europe. The government issued a hasty clarification advising that the new rules are not intended to apply to personal data offshored from overseas, but are instead aimed at improving regulation domestically for Indians. But the reforms are very far reaching, and will have India standing amongst the leaders of data regulation in the region. Singapore, renowned for the quality of its telecommunications and IT infrastructure, has historically had among the leanest data privacy regulation in the region. Matching the reform movement, the government announced plans to table a European-styled comprehensive data privacy regime in 2012. The formal impetus for regulatory reform is the 2005 APEC Privacy Framework, which binds the APEC membership to adopt the principles-based approach to data privacy regulation set out in the 1980 OECD Guidelines Governing the Protection of Privacy and Trans-Border Flows of Personal Data that laid the groundwork for European Directive 95/46/EC. The formal legal basis for change is straightforward, but the specific drivers of change in each jurisdiction vary. Data privacy reforms in Asia are often eventdriven, reacting to particular incidents of abuse or non-compliance. The rapid pace of economic growth in the region has been accompanied by a corresponding increase in the volume of electronic personal data held by governments and businesses, raising concerns about potential misuse. A stepping up of data privacy regulation may also be deployed as a trade and employment policy tool, offering support to industries such as IT and business services which become more competitive as offshore service providers with stronger data privacy controls in place.

As reforms are implemented and clarified, businesses operating in Asia need to check any assumptions they have made about laxity in data privacy standards. Acquirers of businesses in Asia will want to conduct more careful due diligence into the terms and conditions under which data was collected from the target business’ customers to ensure that it remains useable without potentially costly remedial action. The data export controls found in many of the new laws will likely pose difficulties for cloud computing and data centre hubbing operations that are becoming increasingly popular to Asian businesses as they grow in size, scope and complexity. It remains to be seen whether regulators will grant exemptions for exports to neighbouring jurisdictions with comparable standards, or if a model form of contract or some other form of administrative fix will be made available so as to avoid the need for data subjects’ consents. Data privacy regulation now matters in Asia, and those doing business there will need to plan their operations in a way that reflects the increased rigor that governments are intent on applying. At Freshfields Bruckhaus Deringer LLP, we are uniquely placed to advise your business on these developments. Our international team of data privacy specialists has years of experience advising on the European best practice upon which the reforms in Asia are based. We combine local knowledge on the ground in the region with a strategic, commercial mindset. We get results for businesses, forging practical solutions that will enable you to achieve your business objectives.

Freshfields Bruckhaus Deringer Mark Parsons Counsel 11th Floor, Two Exchange Square Hong Kong Direct +852 2846 3341 mark.parsons@freshfields.com www.freshfields.com

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EUROPE BINDING CORPORATE RULES: THE GLOBAL COMPLIANCE SOLUTION

The information that organisations hold about customers, employees and other individuals is an extremely valuable asset; but its use on a global basis is strictly regulated by EU data protection law. This does not allow the transfer of personal information to countries outside the EU that do not have an adequate level of data protection unless the organisation has put in place adequate safeguards to protect the privacy rights of individuals. Although certain territories have been approved by the European Commission as having “adequate” data protection regimes in place, the list of approved countries is very small and countries without a comprehensive legislative approach to privacy, such as the US, are not regarded by the EU as providing the requisite level of protection for individuals’ privacy rights. Therefore, in order to process personal information lawfully on a global basis, organisations must put in place adequate safeguards to legitimise any transfers of this information. One way in which to achieve this is to use standard contractual clauses approved by the European Commission. The drawback is that these ad hoc contractual arrangements are not a suitable way to deal with international transfers for organisations operating on a worldwide basis. A flexible, tailor-made solution that does away with the inconvenience of having to enter into innumerable contracts among subsidiaries, without having to pay attention to national borders and jurisdictional differences, is likely to be the only practical option. Binding corporate rules Since 2003 the EU data protection regulators have acknowledged the role of binding corporate rules (or BCRs) as a mechanism to legitimise data exports within a corporate group. A BCR is a global code of practice based on European privacy standards that multinational organisations draw up and follow voluntarily, and national regulators approve in accordance with local law. Field Fisher Waterhouse LLP Sian Rudgard Legal director Tel: 020 7861 4000 sian.rudgard@ffw.com www.ffw.com

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Approval is coordinated by one ‘lead’ national regulator chosen in accordance with certain defined criteria, such as the location of the European headquarters of the organisation. The development of a ‘mutual recognition’ procedure in which the majority of the national regulators participate has served to simplify the approval process. The Article 29 Working Party (the EU advisory body of which the national regulators form part) is responsible for providing guidance to organisations as to how a BCR application should be structured. BCR approval process For any business contemplating BCRs, close attention should be paid to the guidance published by the Article 29 Working Party and, in particular, WP153, which is available at ec.europa.eu/policies/privacy/ docs/wpdocs/2008/wp153_en.pdf. The BCR will usually comprise a policy or code that must describe the type of personal data to which the BCR relates, explain the nature of the rights granted to individuals and who will be responsible for overseeing compliance. This document must also contain the core privacy principles that meet the adequacy standards as defined by the Article 29 Working Party. This policy will also contain, or refer to, the practical aspects of compliance, such as how the organisation will cooperate with the national regulators, deal with subject access requests, audit compliance and deal with complaints. The BCR must be enforceable by data subjects whose personal data is collected in Europe and it must also be binding on all parts of the organisation. This means that there must be a mechanism in place to address this, such as a contract or a unilateral declaration, which will form part of the application. The approval process involves an initial consideration of the application by the lead

national regulator; the application is then checked by two reviewers before being circulated under the mutual recognition procedure. Those regulators that are not part of the mutual recognition process have an opportunity to comment before the lead regulator issues an authorisation. The process takes approximately 12 months. The future of BCRs The current data protection regime (which is based on Directive 95/46/EC) is due to be replaced by a new privacy framework in the form of a regulation, a draft of which is due to be published early in 2012. Specific reference to BCRs is likely to be made in the new regulation which will also contain information as to the minimum requirements for a BCR, details of a simplified authorisation process, the removal of some of the national requirements associated with BCRs and BCRs for processors. The new regulation is also likely to contain a requirement that organisations must be able to demonstrate compliance with the law, the so called ‘accountability principle’ and the EU Commission has indicated that an organisation with BCRs is likely to satisfy this requirement. The EU Commission has emphasised the importance of BCRs as being a mechanism that promotes innovation and accelerates economic growth and also as a solution that provides legal certainty, flexibility and real data protection internationally. Global organisations seeking to adopt a consistent and flexible approach to data privacy should be looking at the BCRs model as a basis for both legal compliance and practical information management.

UK HALEBURY URGES UK BUSINESSES TO PREPARE FOR IMPACT OF EU COOKIE LAW

Halebury, a leading London law firm, is urging UK businesses to act quickly to meet the deadline set by the Information Commissioner’s Office (ICO) and EU for online businesses to comply with the new EU cookie directive. Companies are urged to show they are working to meet the terms of the cookie regulations, following the ICO’s warning that it will start to exercise its powers against businesses failing to comply with the new law by May 2012. Solicitor Sarah Monk, a specialist in data protection and privacy at Halebury, said: “The EU Cookie law came into effect in

May last year, requiring website owners to provide information on which cookies feature on their site and to obtain consent from visitors before they can store or retrieve information on a computer, or any other device with a web connection. The ICO provided websites with a 12-month lead-in time in order to devise solutions to comply with the new law but the deadline expires on May 25, 2012. “The new law is designed to raise awareness of ‘tracking cookies’ among Internet users, giving them more control over their online privacy. Many companies have been reluctant to implement the

measures asking for users’ consent to cookies because they fear losing effective tracking information about their website. However, others are confused about how to implement the law in the first place. “Failing to comply with the new regulations could see businesses being fined up to £500,000 from May, for serious breaches of the new regulations, so it’s crucial that companies get up to speed before the deadline.” Halebury points out that if a website has a shopping basket function, remembers when a user has logged in, carries third party advertising or uses an analytics package, it is likely that it uses cookies to do so. The ICO, which enforces data privacy legislation in the UK, has produced an online guide on how to adhere to the new laws. It states that websites using cookies now need to tell people that the cookies are there, explain what the cookies are doing, and obtain their consent to store a cookie on their device. Ms Monk added: “Ensuring that you have clear communication devices in place which give people the choice to accept or decline the use of cookies is crucial. Not everyone is going to want to know, but it’s important to give them the option. Getting consent through some form of communication which the individual ‘knowingly indicates their acceptance’ is preferable; however in some cases, a note in your website’s terms and conditions may suffice, but it’s important to check, before it’s too late.” Halebury is a leading London-based practice specialising in areas of law such as technology, media, telecoms, sport, employment and corporate. Halebury operates on a non-traditional business model. Set up as a company rather than a partnership, Halebury retains a team of lawyers with Magic Circle and inhouse experience, acting as self-employed consultants in conjunction with in-house teams.

Halebury 3 Wigmore Place, London, W1U 2LN Sarah Monk Solicitor

Tel: 0207 127 2500 Fax: 0207 990 9200 info@halebury.com www.halebury.com

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Japan

Focus on

Japan’s economy beyond the Great East Japan Earthquake The Embassy of Japan is delighted to have the opportunity to present this introductory article for the Japan Country Profile Report. We would first like to express our sincere appreciation for the kind words of support and generous contributions of assistance to our country from all over the globe following the Great East Japan Earthquake. The people of Japan share a determination for a swift recovery, and the public and private sectors are unified in working towards this goal. We would also like to take this opportunity to emphasise that Japan is open for business and travel. We hope that, upon viewing this profile report, readers of Global Business Magazine in the UK and worldwide will visit, invest into, and trade with Japan even more actively than before. Recovery plan and ﬁnancing When the then Prime Minister, Shigeru Yoshida, observed the devastated state of Tokyo after WWII, he would say: “Japan will recover, indeed will Japan recover soon.” We believe the Japanese people truly share the determination of this great statesman as they contemplate the effects of the earthquake and tsunami. What is the current Noda Administration doing to address the aftermath of the disaster? The first priority is the earliest possible recovery of the affected areas. Over the next ten years, public funds of up to £190bn will be spent on reconstruction. Following four supplementary budgets in FY2011 that were implemented for this purpose, for FY2012, the Japanese Government has set up what is called a “Special Account for Reconstruction from the Great East Japan Earthquake” in the amount of \3,775.4 billion (£31.5 billion). The Japanese government estimates that economic growth in the next fiscal year will be 2.2% due to the reconstruction demand following the Great East Japan Earthquake. To meet the cost of reconstruction, Prime Minister Noda intends to raise income tax while freezing corporate tax reductions so that the burden will not be passed on to future generations. The reconstruction of the devastated areas aims not simply to recreate things as they

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were before the disaster but to take a leading role in bringing about the rebirth of Japan, focusing on a number of key areas, including: urban planning geared to the needs of an ageing society; industry-university collaboration; the vigorous introduction of state-of-the-art smart energy systems; and research and development (R&D) as well as production of world-leading drugs, pharmaceutical and medical devices. The recovery of Japan and the world economy As we have seen from the disruption to supply chains due to the earthquake and tsunami, this disaster brought home the close connection between world markets and the Japanese economy. Japan’s dependence on external demand has increased during this decade - the ratio of exports to GDP rose from 10.6% in 2001 to 17.5% in 2008, during which Japan enjoyed steady growth until the Lehman shock happened. The revival of Japan, the world’s No 3 economy, is indispensable for the recovery of the world economy. Japan’s GDP in 2010 reached $5.5trn, it has the largest amount of net foreign assets in the world (£2.1trn), and with just 2% of the world’s population, Japan accounts for 20% of global R&D spending. Japan-UK co-operation For Japan to recover, prosperity in Asia and the world including the European economy is crucial. The UK and Japan share the common principle of pursuing prosperity through open and free trade in a global environment of peace and stability. When Foreign Secretary Hague visited Japan in July 2010, he spoke of how the two countries agree almost instinctively on a broad range of policies. Japan and the UK have developed extremely close economic relations. In terms of the total accumulated volume of Japanese direct investment, the UK, with £24bn, is the number two destination in Europe after The Netherlands. The number of Japanese companies operating in the UK totals nearly 1,300.

There are more than 60,000 Japanese residents in the UK, which hosts the largest concentration of Japanese companies and residents in Europe. The number of Japanese direct investment projects in the UK was second only to that of the US in 2010. The Great East Japan Earthquake reminded us of the deep connection between the two economies. Japanese car factories in the UK account for half of British car production and exports. Renesas Electronics located in Tohoku, for example, produces microcomputer chips for engines and brakes and has a 40% share of the world market, but stopped production because

of the earthquake. As a result, in the month following the disaster, British vehicle production dropped by 13%, so the earthquake and tsunami were counted as one factor bringing downward pressure on UK GDP, particularly in the second quarter of this year. Assisted by the rare alliance of different Japanese carmakers, the company’s factory operations were able to resume in June. Car plants in the UK resumed normal production in the third quarter, much earlier than anticipated. This served as a demonstration of our deep-rooted economic interdependence. To boost both the Japanese and British economies, the

Japan has been actively addressing issues raised by the EU, including non-tariff measures. The Government Revitalisation Unit has also firmly tackled the problems of regulatory and institutional reforms in the autumn Diet session and aims to achieve results in this regard by spring 2012.

but it is also a reflection of the longevity that humanity has sought throughout history. Japan aims to create a model social system that enables elderly people to enjoy healthy lives and play a more active role in society, and an ageing market is a source of innovation, new industries and jobs.

At the G20 meeting with Prime Minister David Cameron in France, Prime Minister Noda expressed his appreciation for the UK’s consistent support for the EPA, and stressed his determination to lead the country toward the early launch of the negotiations.

In conclusion

There is great scope for enhanced relations with the UK in many other economic arenas. In early October 2011, in light of the accident at the Fukushima nuclear power plant, the British Embassy in Tokyo hosted a seminar on nuclear power. This is an area clearly earmarked for further co-operation, where the UK side has longstanding expertise. Japanese enterprises are actively participating in UK projects and co-operating with their UK counterparts in various fields, particularly in green development. Toyota’s first hybrid cars made in Europe have been in production in their factory in Derbyshire since June 2010, and the production of Nissan’s Leaf electric cars will start in Sunderland in 2013. Recently, Sanyo began work on the world’s largest solar bridge at Blackfriars railway station by providing the solar panels. Meanwhile, Mitsubishi is pursuing the development of wind and marine energy in Scotland. Japan growth model The Japanese economy has remained stagnant for a long time since the collapse of the ‘bubble’ in the early 1990s. The government has formulated a new growth strategy intended to lift Japan out of its economic stagnation, calling for Japan to address and solve global issues as a frontrunner, and to become a new model of growth for the world.

conclusion of a JapanEU economic partnership agreement (EPA) is of paramount importance. Japan and the EU agreed to start the process for negotiations in May 2011 and have started discussions to define the scope of the negotiations, which will encourage further Japanese inward investment into the UK and present an opportunity for British companies to deepen their penetration of the Japanese market and to expand their exports to Japan. In his first policy speech to the Diet, Prime Minister Noda stated that Japan’s commitment to pursuing the early launch of the Japan-EU EPA negotiations remains solid.

Energy and environmental problems continue to be major challenges for Japan— which depends on foreign sources for most of its energy needs—and will pose an obstacle to growth. Adding to this, the Fukushima nuclear accident has made it necessary for Japan to review its energy policy. Japan must resolve those problems and set forth a new model of growth, and it aims to continue leading the world in energy efficiency through technical innovation and regulatory reforms. Another structural problem faced around the world is a declining birth rate coupled with the ageing of society. Japan has the most rapidly ageing society, with the proportion of elderly people at 23%. As this is set to increase in the future, it is essential to design and build new pension and healthcare systems in order to maintain their vigour.

There is no doubt that the earthquake and tsunami constitute one of the greatest challenges that Japan has ever faced, but it is not the only one in our history. These formidable circumstances have prompted concentrated and concerted efforts for renewal within new parameters, resulting in innovative technologies for sustainable economic development. For instance, in the wake of the ‘oil shock’ in the 1970s, Japanese manufacturing industry responded by raising the energy efficiency of its production technology and has moved to the forefront of the world’s efforts to tackle climate change. Japan’s energy efficiency is now double that of the US and the European OECD members. Reconstruction was not easy then and will not be easy now. However, the Japanese people will unite towards a common goal and will no doubt enjoy the help of other countries, including the UK. The challenges for Japan are not limited to the earthquake but include the rebuilding of the public finances, dealing with the ageing society and formulating new energy policies. Since the recent economic troubles of the US and Europe, the term ‘Japanisation’ has been used in the media to describe a situation that is better avoided and yet in which many countries in the developed world nonetheless find themselves. We take issue with the idea that following in Japan’s footsteps is necessarily a bad thing. In facing these new trials that the world has not experienced before, history offers examples of the birth of new concepts and technological advances. Through its search for a way forward in such daunting circumstances, Japan is prepared to play the role of a front-runner and provide a model for the world. We are no doubt in a difficult situation, with a great many issues still ahead of us, including physical and economic reconstruction; but we would rather seek to change such adversity into an opportunity. Japan is embarking on tackling the present challenges in an optimistic spirit so that once again Japan will become a model for other countries.

Embassy of Japan in the UK 020 7465 6500 info@LD.mofa.go.jp www.uk.emb-japan.go.jp

The ageing of society has negative aspects,

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Baker & McKenzie GJBJ Shinichiro Abe Partner Practice Area: Insolvency, Corporate Tel: +81-3-5157-2951 shinichiro.abe@bakermckenzie.com www.bakermckenzie.com Japan's economy has been substantially impacted by the events of March 11, 2011. While the country has had to overcome significant adversity and challenges still exist in the market, many new trends are being observed. These pertain to a variety of areas, including: the overseas expansion of Japanese corporations; the power of Japan’s aging population; the structure and regulation of Japan's stock exchanges; renewed investor hope in Japan's largest power company; and a rise in compliance issues and other government policies affecting business and financial industries in Japan. Supply chain issues are a prevalent concern among Japanese corporations as a result of many factories suspending their operations due to the string of unfortunate events in the Tohoku area. Corporations have realized the danger of unstable supply chains, especially in a competitive crossborder business environment. Due to these circumstances, a larger proportion of legal work is now focused on outbound matters. The number of new Japanese business subsidiaries in Asia has also multiplied and more companies are considering overseas acquisition opportunities. The strength of the Japanese yen is another factor spurring investments abroad. Company groups are even considering moving their headquarters from Japan to somewhere in the greater AsiaPacific region. A move that was unusual until recently. Japan's aging population has been an ominous concern for decades. Now exacerbated by the Great East Japan Earthquake, projects related to elderly home care facilities, medical services and other environment issues are increasing, reflecting the high proportion of Japanese citizens aged 65 years and over. The spending power of the aging population is stronger than ever and cannot be disregarded. Given that the elderly are also more willing to spend on luxury items and make investments, the need for legal advice will increase in the area of financial products, financial planning and real estate, together with cross-border tax advice. The younger generation is also seeking opportunities to invest outside of Japan, indicating a diminishing reliance on Japan’s social security and pension system. Endeavours to make the Japanese market more attractive to potential listing companies is also emerging as a recent trend. A number of Japanese corporations are now considering listing on the Hong Kong Stock Exchange (HKSE) for various reasons including deregulation and supply chain issues. As a

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Seishi Ikeda Partner Practice Area: Finance, Real Estate Tel: +81-3-5157-2731 seishi.ikeda@bakermckenzie.com www.bakermckenzie.com

result, the HKSE is fast becoming a growing competitor in the market. Last year, the Tokyo Stock Exchange and Osaka Stock Exchange, which together account for almost 99% of all of the stock exchanges in Japan, announced their plans to merge in 2012, pending approval from the Japanese Fair Trade Commission under the Anti-Monopoly Act (filing made on January 4, 2012). Other potential measures to improve the market include disclosure requirements that meet the expectations of investment banks and further consideration of the impact of the growing number of elderly investors in the market. The stability of the Tokyo Electric Power Company (TEPCO) was also a concern for investors after the Fukushima Daiichi nuclear disaster. However, since the government's ¥900 billion bailout, TEPCO has established an ADR system which provides compensation to various victims who suffered from the radiation leak. This system aids and benefits those affected by the nuclear disaster and also limits the company's loss. Investors should continue to closely monitor TEPCO's actions in the coming months. The company plans to submit a business plan to the government this spring in 2012 outlining their goals and business models for the future. Recently, the issue of compliance surfaced in the context of the highly publicized Olympus scandal. Olympus reportedly hid losses of ¥90 billion from the public and the media for over a decade. Since October 2011, its stockholders have filed damages claims against Olympus for misstatements in its public financial reports. Olympus itself has filed damages claims of up to ¥3.6 billion against 19 existing and former executives and ¥1 billion against five former company auditors. As a result, listed companies have started to consider more thorough compliance programs, which in turn will create a more stable market. The number of insolvency filings in Japan remains low, despite the events of March 11, 2011. This can be attributed to a moratorium passed by the Japanese cabinet in December 2009, which allowed banks to roll over existing debts if borrowers applied to do so. The law enabled distressed small and midsize business debtors to extend their loans past the maturity date, which was previously very uncommon in the Japanese banking industry. In December 2011, the law was extended and a survey conducted by the government reported that 97% of the applications under the debt moratorium terms were accepted by financial institutions. As a result, many zombie companies continue to survive. The moratorium expires

in March 2013, at which time insolvency filings are projected to increase again. In the near future, further legal reforms are projected to change existing legislation in Japan. Among them, after a long hiatus, will be significant amendments to the Civil Code of Japan. This law is the basis for Japan's Commercial Code and a wide variety of other laws and regulations which may affect how companies operate. Going forward, it will be crucial to carefully review pending laws and how they will affect future business activities. The trend towards outbound activity, the proposed changes to Japan’s stock exchanges and current events generally will need to be monitored to maximize the success of corporations doing business in Japan.

Ryuji Sakai Partner ryuji_sakai@noandt.com Ko Wakabayashi Partner ko_wakabayashi@noandt.com

Post-Olympus Japan Investment? In 2011, we saw a decrease in the number of M&A transactions targeting Japanese publicly traded companies (JPCs) by foreign investors, which was attributable, to a large extent, to the natural disaster and increasingly high value of the Japanese Yen. Also, the Olympus Corporation scandal surfaced out of the blue. It is alleged that Olympus intentionally concealed investment losses of more than 100 billion Yen for over a decade and engaged in dubious M&A transactions in an effort to offset its concealed losses. This scandal shocked the market, and made the Daio Paper Corporation scandal, which occurred earlier in the year, appear trivial in comparison (in the Daio scandal, Daio’s

chairman misappropriated more than 10 billion Yen from Daio’s group companies’ accounts to cover for his gambling debts). As of early January 2012, public authorities are conducting investigations for possible civil and criminal sanctions against Olympus and its incumbent and past officers and directors, and the Tokyo Stock Exchange is still considering whether or not to delist Olympus’ shares. Olympus’ investors, who suffered losses due to Olympus’ post-scandal stock price crash, appear to be watching these developments before asserting any statutory damages claim against Olympus under Japanese securities law, which could have a significant impact on the continued viability of the company. The fate of Olympus remains uncertain, but regardless of the outcome the scandal may be seen as yet another deterrent factor for foreign investors to investment into JPCs, as it may have cast significant doubts on the integrity and credibility of JPCs’ public disclosure practice and corporate governance systems. However, during the last decade, regulations regarding public disclosures and corporate governance of JPCs have improved through a series of amendments to Japanese securities and corporate law and stock exchange rules, and ‘internal control,’ ‘compliance’ and senior management’s ‘fiduciary duty’ have become the concepts that are widely recognized and valued in practice. Accordingly, it would probably be fair to say that the Olympus scandal and the Daio scandal are peculiar cases, which would not be seen often in Japan. For the foreseeable future, Japan will probably remain as the world’s third-largest economy. It is said that share prices of many JPCs are undervalued and, in many cases, an undervalued price may more than offset the negative impact of the high value of the Japanese Yen. Therefore, if a foreign investor has a business reason to engage in an M&A transaction targeting a JPC, the Olympus scandal should not weigh too heavily against proceeding with the transaction. For a foreign investor interested in pursuing such investment opportunities, the following outlines some threshold issues to be considered during the planning stage. An acquisition that would result in a purchaser owning more than one-third of the issued voting shares of a JPC through an ‘off market’ transaction will, in principle, require the purchaser to make a tender offer to all the shareholders of the JPC in accordance with

the Japanese tender offer rules, including setting an offer period of at least 20 business days. It has become very difficult to avoid the tender offer requirement by combining an ‘off market’ purchase with a ‘market’ purchase and/or a subscription for newly issued shares of the target JPC. ‘Hostile takeovers’ are still not received well in Japan, and there have been very few attempted ‘hostile takeovers’ of JPCs. Japanese banks are very reluctant to finance ‘hostile takeovers,’ and employees tend to oppose any such acquisitions. Many JPCs have also adopted ‘hostile takeover defence plans’ (i.e., Japanese ‘poison pills’), which effectively provide an opportunity for management to negotiate with a potential purchaser (the threshold ownership percentage to trigger such a plan is typically 20% of the voting shares). An acquisition resulting in an ownership of more than 20% of the voting shares of a JPC is subject to a 30-day prior filing requirement under Japanese competition law, if the applicable thresholds are met. If a complex substantive review by the competition law authorities is necessary, such review may be undertaken only after a public announcement of the contemplated transaction. An acquisition resulting in an ownership of 10% or more of the shares (voting or nonvoting) of a JPC is subject to a 30-day prior filing requirement under Japanese foreign exchange law (although normally shortened to two weeks in practice), if, among other things, any business conducted by the JPC or its group companies falls within certain restricted areas. Japanese employment law heavily restricts the ability of a company to lay off its employees or change existing employment terms, and these matters should be carefully considered in managing post-acquisition business strategies. Except for financial information, public disclosures of JPCs are, in general, not very detailed compared to those in certain other jurisdictions and are often not sufficient for M&A valuation purposes. This should be considered when planning due diligence. We host courtesy private seminars on various topics, including M&A related issues that may be of interest to foreign investors. If you are interested in such a seminar, please kindly contact us at the following addresses.

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Anderson Mori & Tomotsune Hideki Thurgood Kano Equity Partner Tel: 81-3-6888-1061 Fax: 81-3-6888-3061 hidekithurgood.kano@amt-law.com www.amt-law.com

Hideki Thurgood Kano is a partner at Anderson Mori & Tomotsune, one of the largest and most diversified full service law firms in Japan. Thurgood has been practicing in the area of labour and employment since 1995. He acts on behalf of both Japanese and non-Japanese multinational companies, advising on all aspects of labour and employment, including, but not limited to: collective labour management (collective bargaining sessions with labour unions, handling of concerted activities of labour unions); individual labour-management (dismissal and voluntary resignation, disciplinary actions, whistle-blowing, employment of non-Japanese workers, among others); labour insurance, social insurance and pension plans (workers accident compensation insurance, unemployment insurance, health insurance, among others); and labour and employment related dispute resolution and litigation (labour/employment-related litigation, mediation on individual employment dispute, among others). Under Japanese labour/ employment law, it is extremely hard for companies to try to unilaterally terminate an employee. Thurgood tends to advise companies on ways to avert formal labour and employment disputes, especially concerning termination cases. This is partly because it is very difficult, in general, for companies to completely win a lawsuit under the Japanese labour/ employment law as it is pro-employees, and partly because being involved in a timeconsuming and costly lawsuit may not be good for the interest of companies in the long run. However, Thurgood is also an experienced labour and employment litigator, having successfully defended many cases. Thurgood has written and lectured extensively on labour and employment matters. The biggest labour/employment issue these days is that there are many employees who get mentally depressed due to bullying or too much work. Some of them even commit suicide, unfortunately. In such a situation, getting employees to consult a medical doctor and having an appropriate second opinion would be the best approach. Thurgood has

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maintained a good relationship with some excellent medical doctors who examine employees, from the viewpoint of companies. Thurgood would like to draw the attention of the readers to some recent developments. First, the Worker Dispatch Act. An accepting company is allowed to utilise a dispatched worker with no limited period of time for 26 types of job (26-types), but only for three years concerning de-regulated types of job. Thus, there have been many accepting companies trying to disguise de-regulated types of job as one of the 26-types. Recently, the Ministry of Health, Labour and Welfare issued two government ordinances concerning fictitious jobs under the 26-types (8 February 2010 and 28 May 2010), and is now trying to crack down on such fictitious treatment. Second, concerning the Handicapped People Employment Promotion Act. Companies with 56 employees or more are required to hire one or more handicapped persons (1.8% being the statutory hiring rate). Until 30 June 2010, those companies failing to satisfy the statutory hiring rate had to bear and make a handicapped people employment contribution payment if the number of their employees was 301 or more. Since 1 July 2010, this has been lowered to a threshold of 201 or more employees. Third, concerning the Old People Employment Security Act. Companies adopting a 60-year-old mandatory retirement system are permitted to select certain employees satisfying internal relevant selection standards from among all employees reaching 60 years of age and to continue to use such selected employees only. As a rule, the internal relevant selection standards are to be explicitly set out in a labour management agreement at the company. However, as an exception, a company with 300 employees or less is permitted to set out the internal relevant selection standards in its rules of employment when the company has made an effort to, but is unable to, enter into a labour management agreement. This exception will be abolished as of 31 March 2011. The effect of this abolishment could be that, even a company with 300 employees or less may, as of 1 April 2011, be prohibited from selecting certain employees from all employees reaching 60 years of age, unless the company enters into a labour management agreement. Finally, concerning the Next Generation Nurture and Support Policy Act. Companies with 301 or more employees are, for the time being, obliged to establish and report to the Regional Labour Bureau specific contents of action plans under which their employees will be urged to bear and raise children. As of 1 April 2011, this obligation will be imposed on companies with 101 or more employees.

success sTories - donALd TruMP

success stories

Donald Trump New York’s Finest

Born on June 14, 1946, in Queens, New York, Donald John Trump, Sr. is an American business tycoon. His father was a successful New York City real-estate developer and Donald worked at his firm while attending college. He joined the company officially in 1968. In 1971, Donald was given complete control of the company. And so ‘The Trump Organization’ was born. Donald Trump has turned his father’s company into a vast and hugely successful business empire. It took a lot of hard work, assertiveness and business smarts to become the man that Trump is today.

Mr. Trump had a comfortable and secure childhood. He learned discipline after being sent to the New York Military Academy at age 13 and there he completed his middle school education and earned academic honours. It was here that he also learned the veritable meaning of competition and how assertive and uncompromising one had to be to obtain what they wanted. Trump had a deep passion for real estate and wanted to do more than simply collect rent or engage in physically demanding jobs at apartment complexes. He chose to delve further into the business than his father had, and because of this desire, he studied finance at the esteemed University of Pennsylvania’s Wharton School. While working for his father during college, the two bought an apartment complex, which was in bankruptcy and foreclosure, for $6 million. They acquired financing that was more than the purchase price in order to complete badly needed repairs and to remodel the ram-shackled building. Less than two years after they had purchased the complex, the building was sold for $12 million dollars. This experience proved to be among the most profound business lessons Donald Trump would learn. Trump dreamed of making a name for himself in New York City. At 28, he was finally given his chance and was about to become one of the youngest and most successful real estate tycoons in New York. He rented an old, run down apartment in Manhattan and began to explore the city, observing the buildings he saw and their condition, at every chance he got. Trump was keenly aware of choosing the right properties for investments.

His determination and persistence culminated in the building of a convention centre on what was once known as Penn Central Rail. He persuaded the city as well as the mighty Hyatt Corporation to restore the Commodore Hotel. This would become the Grand Hyatt Hotel. Donald Trump had finally proven to New York he was serious, determined and a force to be reckoned with. Donald Trump has fashioned New York City into a city like no other. His endeavours have all been original, modern and grand. The Trump Tower on Fifth Avenue showcases Trump’s aggressive, determined and brilliant power and business acumen. Containing stores and million-dollar luxury apartments, Trump Tower is Donald’s trademark and is what garnered him the national exposure he set his mind to so many years ago. He believed and was keenly aware that the wealthy would have no concerns over what they were willing to pay and so when the competition attempted to force him out of the industry by reducing their prices, Trump merely raised his. He understood the mentality of the aﬄuent. He was right. Donald Trump, the person, is dignified and has a strong sense of self-respect. He is very sincere, loyal and incredibly generous and giving. Trump believes that we are all born with the ability of making deals and becoming successful. He feels these are traits found in our genes. His influence has reached American businesses as well as global and worldwide businesses. He’s a real estate mogul, reality television star, socialite, one time potential Presidential contender, and best-selling author. He is strong, brilliant and successful. He is known around the world

as one of the most accomplished people our generation has seen and is an inspiration to so many people who dream of success. Many look to up to him for encouragement, guidance and support. He respects and thinks highly of those who are strong like he is. He has made a name for himself that to this day remains unrivalled. Trump’s enormous success can be widely attributed to his entrepreneurial vision, aggressive business tactics and his sheer desire to be a successful entrepreneur. He is considered globally as a “human-brand.” His name alone has allowed him to monetise from his career and helps to sustain his longevity in both business and media. He puts a name and face to his properties and everything that he touches, much like a model selling a clothing line. This is not just in America, but also in international real estate sites where his brand is immediately viewed as powerful, influential and important. Donald Trump is truly an awe-inspiring figure. His leadership is evident in the manner in which he approaches his own employees. They are not judged by their education, or lack thereof, but rather for their ability to lead and their overall performance. Not every successful leader has earned a college degree. Often business experience and simple street smarts can run circles around a college educated individual. Trump is a man who has been humbled many times throughout his career, yet these experiences have developed him into the great leader that he is today. He will continue to rise above any obstacle in his path and be the successful mogul that he is simply because that is what he was born to be.

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Are GrAduATes The WAY ForWArd?

Are graduat es the way forward?

Why Graduates? Professional businesses and corporations are looking to recruit graduates on a greater scale than ever before. Opportunities are becoming more closed across entry level jobs so only potential candidates holding degrees are able to apply. Nor is it uncommon that businesses do not ask or require you to have gained a degree in a specific subject area, unless of course the job is for a specific role relevant to a qualification. Although there are many well known, successful individuals, such as Richard Branson, who have attained high levels of achievement without going to University, there must be powerful reasons as to why, in a challenging economic environment, more and more businesses are taking the “graduate only” approach to their recruitment when this approach comes at arguably a higher cost a higher risk. It is well publicised that attending University is a large commitment, both in terms of time and in a financial sense. Indeed attending University, certainly in the UK, is well on its way to becoming a more exclusive opportunity for those fortunate enough to be able to finance the time on further education.

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It goes without saying that to attain certain positions one must have the required level of education and pre-gained qualifications, which often then lead into further qualifications relative to your new role, which in the case of a lot of graduate employers will be financed on your behalf.

While the benefits available to businesses through hiring graduates are obvious in terms of the impact an increased level education can inspire, particularly on profit margins, there are reasons other than the educational benefits for why businesses benefit from hiring graduates.

Businesses and corporations are able to grow their business and revenues through a core of dedicated, committed to the cause individuals. To realise the impact such commitment can have on business’ attitudes towards recruitment it is not necessary to look at a multinational corporation, as retention rates at larger corporate businesses are usually better than employment averages. Due to the current global economic downturn, increasing levels of graduates are finding jobs in the retail sector and likewise, more and more retailers are becoming “graduate only” recruiters. Particularly in an industry such as retailing, where employee turnover is notoriously high, recruitment managers love to see past examples of commitment to a cause of some form or other. This gives business almost an insurance policy, in knowing that having committed a number of years to a degree and experiencing the highs and lows that experience brings, that potential candidates are more likely to stick around for the long haul. Recruitment managers are judged on how long the successful candidates they source stay with the business for, or even make it out of their first year, as well as the more traditional recruitment industry characteristics and key performance indicators. Whilst hiring exclusively graduates is a potentially risky approach, the outlay and investment in the individual in terms of salary is likely to be somewhat higher too. Due to the current global economic conditions however, graduates are not as expensive as they used to be, and their salary demands are coming more and more in line with what a non-graduate but with other relevant experience might expect to earn. Businesses can also take advantage from this perspective as graduates will often work for lower remuneration initially as they see this as a step on the ladder. It is crucial for businesses to recognise graduates performance and the value they add to the business; however, as it won’t take them long to become independent and able to seek alternative employment should their current business not reward them adequately. It is known however, that businesses with teams predominantly made up of graduates achieve better results and generate higher revenues for businesses than those with a higher concentration of non-graduates working in their teams. Hiring a graduate workforce may create a larger outlay in the short term, however in the longer term will provide a prolonged and consistent return on your initial investment as a business. Being fresh graduates from an educational institution, candidates with a degree tend to enter their first major employment with open eyes and an open mind, and are perhaps even somewhat unsure of their own expectations and ambitions at this

time. Having not been “scarred” through years of working in the same business as some of their more experienced colleagues may well be, graduates offer an enthusiastic, fresh approach and are almost always willing to learn. Graduates are more open to the opportunities offered with new employment, therefore are more adaptable, have not became “stuck in their ways” and can generally be taught to do things in the manner in which a business demands. While certainly being redeeming qualities within the individuals themselves, this enthusiasm and adaptability often rubs off across others in the workplace, helping to boost morale and create a more motivated workforce, giving longer term employees a fresh outlook and often a new lease of life in regards to their employment. Competition can also increase in the workplace due to these factors, pleasing business managers who will be overseeing a more productive, profitable workforce. Graduates will also offer a business perhaps much needed flexibility for similar reasons. It is likely that a new graduate would have experienced employment of some nature before beginning their first job since graduating; however there will be no fixed sense of a working pattern in their heads. Graduates will be open to new ideas and more open to change, as well as being more willing to take on new challenges, tackle problems and provide inventive solutions. Due to the evolution in the way Universities teach students, many business driven degrees are now delivered with “real life business” in mind. This delivers graduates who are generally more business minded than nongraduates therefore will add better value to a business through their increased business skills. Business degrees also cater for specific skills which deliver successful business people from Universities. Graduates will have developed a greater understanding of business etiquette through honing of both verbal and non-verbal communication skills. Data interpretation, theory building and presenting skills are also skills often rounded and consolidated through University education.

other information about the business in which they were placed. A graduate with a positive attitude towards such placements will learn a lot in the time they spend at the placement, are paid a salary as if the placement was regular employment, and are encouraged to treat these work placements as such. Increasing numbers of employers ultimately offer their stronger work placement candidates jobs upon completion of their placement or degree. High performing graduates will be able to provide references from both their University placement facilitator and in most cases the employer themselves as an indication of what qualities they are able to offer a business. As with any business decision, graduate hire is a risky strategy however ultimately one that will be rewarded and see long term benefits. There are sources available which present statistics looking at which Universities and which subject areas have the highest percentage of students going into immediate employment. These sources can prove unreliable however, as they are dependent on the level of students who wished to take part in the research and furthermore, which of those students who did take part gave clear answers. As a business, the most reliable approach to recruiting high quality, ambitious graduates to the team is to use an experienced in house recruitment team who are skilled and have a proven track record of sourcing suitable graduate candidates to the business. A second reliable option is to utilise the skills of a recruitment consultancy which specialises in graduate recruitment. Building relationships with Universities and other educational institutions which educate students to the specifications to which a business will ultimately recruit can also have long term benefits when it comes to graduate employment. Businesses often benefit from building a healthy rapport with Universities and Business Schools, as it can lead to a ready-made, high quality candidate pool for any employment opportunities.

Although graduates are often termed as “inexperienced” when they enter the workforce upon leaving University, the opposite is often true. A lot of University degrees, particularly in subject areas such as business management, now include a compulsory year of work experience. This is usually in year three with students then required to complete their dissertation work in their final year based on information about their placement, such as the roles available and

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deAL direcTorY

deal directory Adecco SA: Acquisition On 3 January 2012, Adecco Group, the global leader in human resource services, announced the acquisition of VSN Inc., a leading provider of professional staffing services in Japan, for an enterprise value of €90m. VSN Inc. doubles the exposure to professional staffing of Adecco in Japan and reinforces Adecco’s strong position in an attractive structural growth market. Adecco expects the transaction to be immediately EPS accretive and EVA enhancing in year one. Under the terms of the acquisition agreement, the enterprise value of VSN Inc. amounts to €90m, equivalent to an EV/EBITA multiple of approximately 6.5x based on the estimated EBITA for the current year (fiscal year-end March 2012). The acquisition is highly complementary, with an optimal strategic fit, offering a synergy potential of around €2m. The transaction will be financed with Adecco’s existing financing resources and is expected to be immediately EPS accretive and EVA enhancing in the first year post the close of the deal. The transaction remains subject to certain closing conditions. It is expected to close in the first quarter of 2012.

Afren PLC: OML26 acquisition completion, and ﬁnancing On 30 November 2011, First Hydrocarbon Nigeria Limited (FHN) announced that it had completed the acquisition of a 45% interest in OML 26 from the Shell Petroleum Development Company of Nigeria Ltd (SPDC), Total E&P Nigeria Ltd (Total) and Nigeria Agip Oil Company (Agip), together the SPDC Joint Venture. FHN also announced that it had reached completion on financing facilities totalling US$280m enabling it to fully fund the acquisition cost and its share of future capital requirements associated with the initial development of the block. Osman Shahenshah, chief executive of Afren, commented: “Afren’s support of First Hydrocarbon Nigeria’s acquisition of a 45% stake in OML 26 is another important milestone in our long-term commitment to the indigenous oil and gas sector in Nigeria. This builds on the established technical and

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operational track record, gained through the successful Okoro and Ebok greenfield developments, together with its indigenous partners AMNI and Oriental. This acquisition is a strong endorsement of Afren’s long term strategy, of working with indigenous companies to reactivate fallow assets held by the major international oil companies in Nigeria, and further builds on our unique position in sub Saharan Africa’s largest oil and gas province. Importantly the acquisition is highly accretive to Afren shareholders, with all funding associated with the transaction arranged by FHN.”

Athol Gold & Value: Acquisition On 30 December 2011, the directors of Athol announced that, at a general meeting held that day, shareholders in Worship Street Investments Limited (Worship Street) approved the sale of its investment portfolio and cash to Athol. Worship Street will now delist from PLUS and distribute to all of its 450 shareholders the 305,432,127 Athol shares it acquired pursuant to the transaction. Jennifer Allsop, executive chairman said: “Our funds under management have today increased by almost 50%. We have more than doubled our shareholder list. Other deals of a similar nature are in the pipeline and our aim of creating a vehicle with highly liquid shares, serious funds under management and which is able to deliver value by rationalising the plethora of sub critical investment companies on AIM and PLUS has moved one step closer. We look forward to 2012 with extreme confidence.”

Clarkson PLC: Acquisition of Boxton Holding & Bridge Maritime On 1 December 2011, Clarksons, the world’s leading integrated shipping services group, announced it had agreed to acquire Boxton Holding AS (Boxton) and Bridge Maritime AS (Bridge), both Oslo-based ship broking businesses. Boxton and Bridge have extensive experience in sale and purchase, newbuilding, leasing and project broking across all shipping markets, and have particularly strong client relationships within the container, tanker, gas and offshore markets.

Boxton, Bridge and Clarksons’ existing Norwegian businesses will be immediately integrated into a single office, employing circa 15 people, with Jakob Tolstrup-Møller becoming managing director of Clarksons Norway. The acquisition complements Clarksons strategy to build its presence in Scandinavia. Supported by Clarksons’ unrivalled global reach and breadth of broking and capital market services, the enlarged team at Clarksons Norway will be able to significantly expand the offering to our clients. Clarksons will acquire these businesses from Foxy AS, IB Holdings AS, Millennium Capital AS and Cambridge Shipping & Trading AS. Gross assets to be acquired amount to £1.1m. Jakob Tolstrup-Møller, CEO of Boxton, commented: “We are delighted to join forces with Clarksons. We believe our clients will benefit from this amalgamation, as Clarksons’ global capability and market leading position gives us a fantastic platform to strengthen the service offering we can deliver.”

CSF Group PLC: Acquisition On 3 January 2012, CSF, the leading provider of data centre facilities and services in South East Asia and one of the largest providers of data centre services in Malaysia, announced it had entered into an agreement to acquire the entire issued share capital of Third Wave Sdn Bhd (TWSB) for a cash consideration of RM5,000,000 (c.£1,016,000) payable over a three-year period. TWSB is a fast-growing company focused on providing solutions for network infrastructure, enterprise security and data centre requirements in the telecommunications, education, healthcare, financial and government sectors. Strategically, the acquisition of TWSB will strengthen the Group’s resources and improve its ability to work alongside telecommunications service providers positioning CSF’s Computer Exchanges as the data centres of choice in the region. CSF will now be able to offer high performance communications infrastructure services coupled with excellent connectivity in addition to the high quality and reliable mechanical and electrical infrastructure we have historically provided.

Fenner PLC: Acquisition On 1 December 2011, Fenner PLC announced that its wholly owned subsidiary Fenner Dunlop Americas, Inc., (Fenner Dunlop) had acquired substantially all of the operating assets of the business being conducted under the name ‘Allison Custom Fabrication’ from a group of related privately owned entities based in Allison, Pennsylvania. The unaudited value of the gross assets being acquired was $6.471m as at 31 December 2010. This latest acquisition will strengthen the Fenner Dunlop strategy of being the supplier of choice for Engineered Conveyor Solutions in the Americas. Combining Fenner Dunlop and Allison will enable mining customers to enjoy integrated solutions for improving the safety and total cost of ownership of materials handling, in both underground and above ground applications. Fenner is a world leader in the field of reinforced polymer and textile technology. The Group provides a comprehensive range of products and services for conveying systems in the mining and power generation markets, conveyor belting for the mining and power generation markets, precision motion control products for the office automation and mechanical equipment markets, sealing products for mining, hydraulics and energy industries, technical fabrics and polymer products for the medical device industry.

Metric Prop Inv PLC: Acquisition On 1 December 2011, Metric Property Investments plc (Metric), the UK specialist REIT, announced that the Metric Income Plus Limited Partnership (MIPP), had contracted a sale-and-leaseback transaction with Carpetright plc on their 48,300 sq ft retail unit in Sevenoaks Way, Orpington for £6.25m. The purchase reflects a net initial yield of 7.6%. MIPP is the recently launched £150m joint venture between Metric and Universities Superannuation Scheme Ltd, where Metric has a one-third interest and receives management fees of 0.4% per annum of gross asset value of the portfolio. Since formation of the joint venture in midNovember, MIPP has invested £26.2m in a total of three assets with rents averaging £14.10 psf. The properties are fully let with an unexpired lease term of 17.5 years.

Andrew Jones, chief executive of Metric, commented: “Secured off-market, this is a compelling acquisition for MIPP and comes only a couple of weeks after the Joint Venture was formed. The property is one of a number of pipeline deals that we have identified that support the MIPP strategy and has favourable underlying fundamentals located in a very strong retail pitch with high occupier appeal. The yield on the MIPP portfolio is now 7.1% with 60% of the income subject to RPI uplifts which will produce double digit cash-on-cash returns.”

Patagonia Gold PLC: Acquisition On 5 January 2012, Patagonia Gold (PGD) announced it had purchased the Estancia ‘El Tranquilo’, through its 100% owned subsidiary Minera Minamalu S.A., covering the remaining land surface rights over the Company’s flagship Cap-Oeste gold and silver project together with other highly prospective gold areas. In December 2008, PGD purchased the Estancia ‘La Bajada’, of area 36,544 hectares, which gave PGD the land rights as well as the mineral rights over the south eastern sector of the Cap-Oeste project; the COSE Deposit and the prospects Monte Leon, and Breccia Valentina. The purchase of the Estancia ‘El Tranquilo’ covers the remaining north-eastern sector of the Cap-Oeste project. It also covers the highly prospective Don Pancho, Vetas Norte and Felix areas. The purchase price for ‘El Tranquilo’ was US$2,100,000 and comprises 20,000 hectares of land, dwellings, sheds, outbuildings and infrastructure. With the above acquisition PGD now have the land surface rights as well as the mineral rights over the whole Cap-Oeste gold and silver deposit; the COSE bonanza grade gold and silver deposit and other very prospective gold and silver targets within the El Tranquilo block.

PowerHouse Energy Group plc: Proposed acquisition of Pyromex Holding Further to the announcement made on 3 August 2011, on 3 January 2012, PowerHouse, an alternative energy company specialising in the manufacture and sale of

zero emission waste-to-energy equipment systems, announced that on 30 December 2011 it served notice on the vendor, Peter Jeney, to exercise its option to acquire the remaining 70% interest in Pyromex Holding, AG (Pyromex). This was for an initial consideration of £2.5m in cash over the 18 months following completion and a maximum potential further consideration of £30.5m dependent on the achievement of certain market capitalisation or profit targets of the enlarged Group. The directors believe that PowerHouse will significantly expand its sales pipeline by acquiring its technology licensor. Pyromex has, during its technology development phase, generated a global following of potential customers now representing a valuable sales pipeline of future contracts to be delivered through the PowerHouse Group.

PZ Cussons PLC: Acquisition On 5 January 2012, PZ Cussons Plc, a leading consumer products group in Europe, Asia and Africa, announced the exchange of contracts for the acquisition through its beauty division of the Fudge hair care brand from Australian-based Sabre Group. The brand and associated inventory are being acquired for a consideration of £25.5m in cash with completion expected by the end of January following the satisfaction of certain regulatory obligations. Fudge will join the portfolio of brands within PZ Cussons Beauty, the group’s recently formed beauty division, which currently comprises St Tropez, Sanctuary and Charles Worthington. Revenue for the year ended 30 June 2011 was £15.7m. Approximately 50% of Fudge sales are currently in the UK and Europe and 50% in Australia and New Zealand. Alex Kanellis, chief executive of PZ Cussons Plc, said: “The acquisition of Fudge further strengthens our newly formed beauty division and broadens its category participation. The geographic and distribution footprint of Fudge is a perfect fit with the current brand portfolio and we see further opportunity to develop the brand’s international potential.”

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deAL direcTorY

Randall & Quilter: Acquisition of Synergy Insurance Services (UK) Ltd On 1 December 2011, Randall and Quilter Investment Holdings plc, the AIM listed specialist insurance investor, service provider and underwriting manager, agreed to purchase the entire share capital of Synergy Insurance Services (UK) Limited (Synergy), the high-net-worth managing general agent (MGA). As a result of the proposed purchase, which is subject to FSA approval, the Group is assuming a negligible level of net current liabilities. While some planned restructuring actions and the benefits of scale from R&Q’s existing MGA infrastructure will enable operating performance to improve significantly, Synergy is expected to produce a small loss for the Group in the 2011 financial year. However, Synergy has a good renewal book and underwriting track record and is anticipated to grow premium strongly from the current year estimate of c£6m. It is expected therefore that Synergy will make a positive contribution to the Group’s financial results in 2012 and beyond. Commenting on the proposed acquisition, Ken Randall, R&Q’s chairman, said: “We are delighted to announce the acquisition of Synergy and welcome Emma Bennett and her highly experienced team to R&Q. Synergy has established an excellent reputation within the specialist personal insurance market and will complement our existing MGA businesses.”

Rotork PLC: Acquisition On 1 December 2011, Rotork p.l.c (Rotork), the market leading actuator manufacturer

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and flow control company, announced that it had acquired all the share capital of Prokits Limited (Prokits). Prokits, based in Mansfield, Nottinghamshire, UK, is a designer and manufacturer of valve adaptor kits and accessories for the valve industry. Gross assets of Prokits are £0.6m. The sole owner of Prokits, Craig Mellins, has been appointed as general manager of Rotork Valvekits into which the Prokits business will be merged. Commenting on the acquisition, Rotork chief executive Peter France, said: “The acquisition of Prokits, for which Craig Mellins has established a good reputation in the market over the last decade, will increase the customer base and scale of our Rotork Valvekits valve adaption and accessory products business.”

ValiRx PLC: Acquisition On 5 January 2012, ValiRx Plc, a life science company with a focus on cancer diagnostics and therapeutics for personalised medicine, announced that ValiFinn Oy, its wholly owned subsidiary, acquired from Pharmatest Services Oy (Pharmatest) of Oulu, Finland, its biomarkers business unit together with five families of patents and patent applications and related intellectual property (IP). The consideration is a payment of €75,000 and the allotment of 15,000,000 shares in ValiRx Plc, credited as fully paid. There is also an obligation to pay a royalty to Pharmatest from future revenues relating to the IP and for the life of the patents. Strategically, the acquisition will enhance the Group’s R&D capability, as the specialist biomarker expertise within the unit is leveraged to advance in-house the

development of companion biomarker diagnostics to complement ValiRx’s therapeutics, its existing intellectual property and companion diagnostic activities.

Vodafone Acquires Blueﬁsh Communications On 1 December 2011, Vodafone Global Enterprise, the business within Vodafone that manages the communications needs of its largest multinational customers, announced that it is strengthening its professional services arm through the acquisition of European IT and communications consultancy, Bluefish Communications Ltd. Bluefish will form the nucleus of a new Unified Communications and Collaboration practice within Vodafone Global Enterprise, which will focus on advising multinational companies on how to get the most from their mobile, fixed line and IT services, as well as offering guidance on the adoption of cloud services. Nick Jeffery, CEO of Vodafone Global Enterprise said: “The acquisition of Bluefish further develops our expertise in unified communications and broadens the range of services we can offer to our multinational customers. Having the right information at the right time, in the right place, has never been more important to business success and this acquisition will enhance our ability to advise multinationals on how to maximise value from their communications.” The value of the gross assets being acquired is £3.14m.

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