Global Business Magazine - May 2012 by Corporate ABM

gbm May 2012

global business magazine

Fifteen Years of Google Changing the World One User at a Time

gLoBaL FUnd services

Franchise Law

coUntry proFiLe - meXico

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inside This Month:

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Business talk ever been tempted to google Google? In this month’s cover story, we provide an insight into the largest and most lucrative search engine in the world. Being at the top of your game is one thing – staying there is a different matter. We give you the top ten attributes of a great leader. While on the subject of leaders, our success story focuses on the world’s richest man – Mexican tycoon and philanthropist carlos Slim. Staying down Mexico way, we look at the ‘legal labyrinth’ that is unfair competition and the ﬁnancial instrument that is helping to generate private equity. We also examine the country’s role in future global growth. Focusing on the UK, Family Law looks at the role of the FLBA and the importance of establishing a court’s jurisdiction in a divorce. As high value contracts are awarded to manufacturers outside the UK, our public procurement focus examines the impact on the national economy. We also learn about the procurement Lawyers’ Association (pLA), and the distinction between selection and award criteria in Denmark. Advertising Law questions whether trademarks for alcoholic beverages are being exploited responsibly and intellectual property rights in sponsored online advertising. With their economy held back by lack of capital and high unemployment, Franchise Law looks at how some of the largest US franchise brands have turned to overseas for growth. We also ﬁnd out about franchise regulations in czech and Vietnam’s unprecedented level of interest from the international franchise community.

cover story

sUccess story: carLos sLim

Franchising Law

trip advisor - worLds Best Beach destinations

real estate Law tackles foreign investment in Australia. We also examine Shari’acompliant ﬁnancing structures within Japan and the impact of the latest French tax reforms.

LUXUry Brand series - goLF resorts

Finally, if you’re in search of challenge, reward and the opportunity to escape, look no further than the golf resorts proﬁled in our Luxury Brand Series, which ties in with our article on how to improve your game. Alternatively, if your idea of relaxation involves less activity, trip Advisor names the top ten beach destinations.

improving yoUr goLF game

FamiLy Law

great Leadership sKiLLs

reaL estate sector report

deaL directory

Global Fund Services looks at the changing face of Malta’s fund administration, Japanese investment advisory ﬁrms and demystiﬁes the generic label of private equity in Luxembourg.

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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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15 tears oF googLe - changing the worLd one User at a time

Fifteen years of Googlee Larry Page and Sergey Brin, the founders of one of the world’s most iconic companies, ﬁrst met at Stamford University in 1995. By 1996 they had developed their ﬁrst “web crawler” – a service called BackRub, which they ran from the university’s servers. By 1997 it was so popular that the Stamford decided that BackRub needed its own servers and Larry and Sergey decided it needed a better name. After some brainstorming, Google was born.

Changing the world one user at a time The two young entrepreneurs had their work cut out for them. In 1992, the internet was small enough that one man, Tim Berners Lee, could keep a manual list of all of the servers available. By 1994 the National Centre for Supercomputing Applications was adding around 30 new sites a day to its “What’s New” list. Services like Yahoo and Gopher Jewels were trying to impose some order by organising web sites into Yellow Pages-style directories but the volume of new pages was starting to outstrip anyone’s ability to organise them. In 1994 the first search engines started to appear and in 1996 Yahoo!, Magellan, Lycos,

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Infoseek, and Excite each paid $5 million to be promoted on the Netscape homepage and in the browser. By 1998, just as Page and Brin were moving into their friend Susan Woicicki’s garage, Yahoo! had taken 37.4 percent of the US internet search audience, Excite (now merged with Magellan) had 28.5 percent and Lycos had 14.5 percent of the audience. Search engines were breaking market valuation records in the dot-com bubble, with Yahoo’s shareprice topping out at $118.75 in January 2000, and Lycos selling out to Telefónica for $5.4 billion: nearly 3000 times the company's initial venture capital investment. Page and Brin thought they had missed the boat and, realising that the

company was taking too much time away from their PhD studies, they offered Excite the chance to buy the fledgling company for $750,000. Excite turned them down in early 1999. But Google still had something that these other search engines did not: working with other scientists at Stamford they had developed a better way of ranking web pages. While other search engines simply calculated the number of times that a word or phrase appeared on a page, Page and Brin’s system also looked at how popular each page was by counting the number of links from other websites, or “backlinks”. In 1998, PC Magazine said that Google had “an uncanny knack for returning extremely relevant results” and recommended it as the best search engine available. Even though Google had yet to significantly penetrate the search market, by the end of 1999 they had raised $25 million in venture capital, moved into bigger offices twice and hired 40 employees and a company cook who used to cater for the Grateful Dead. Since then they’ve gone from strength to strength. That decision to invest in a company chef with a rock band pedigree tells you a lot about

the Google ethos. This is a company that works hard by playing hard. The Google philosophy states that “work should be challenging, and the challenge should be fun… Our atmosphere may be casual, but as new ideas emerge in a café line, at a team meeting or at the gym, they are traded, tested and put into practice with dizzying speed.” This ethos doesn’t just come from the founders but also from their executive chairman, Eric E. Schmidt, previously at Novell, Sun and Xerox PARC. He introduced Google’s famous 70/20/10 work structure. As he explained to CNN in 2005, “We spend 70 percent of our time on core [business activities like] search and ads. We spend 20 percent on [activities] related to the core businesses in some interesting way. Examples of that would be Google News, Google Earth, and Google Local. And then 10 percent of our time should be on things that are truly new.” So much of Google’s innovation comes from this system that Google employs managers to keep track of the division of each engineer and manager’s time to make sure that they’re getting their 20 percent time. Some of these products have changed the way we use the web forever. Google Maps, Google Earth and Google

Streetview have all resulted in new locationbased services, and, with the introduction of Google’s mobile Android operating system, you’re as likely to use Google Maps as a handheld GPS navigation system as you are to use it to plan a route from your desktop. Google Docs has cornered the market in collaborative cloud-based office tools since 2006 and Google has been innovating image and video search services since 2001. Two recent innovations represent the extent of Google’s plans for diversification: the Android mobile operating system and the Google+ Social Network.

Google Goes Social Search and advertising make up the core of Google’s revenue stream. In the fourth quarter of 2011, Google made $10bn in revenue, split almost 50/50 between it’s US and international operations. Best-in-class search results deliver users (there were over 1.7tn Google searches in 2011) and these users receive targeted advertising based on their current and previous searches. Google’s AdWords system lets businesses “bid” for advertising space and this bid revenue

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15 tears oF googLe - changing the worLd one User at a time

is what nets over 97 percent of Google’s income. But that revenue stream is under threat from the social network, Facebook. Google targets its adverts in response to a user’s search terms and location. A Google spokesperson explains: “Let's say that you run a bakery near Boston. Set your ad to appear to customers in just that location, and when someone living or on holiday there searches Google for "blueberry muffins near Boston", they could see your ad and click it to connect to your business.” That “term and location” model has worked well since 2000, but it is being seriously challenged by Facebook’s demographic advertising model. Since its inception, Facebook has been collecting mountains of data about its users: their age, sex, location, interests and even their estimated income are all derivable from the information that users share on their profiles. While Google still outsells Facebook 10:1 in terms of advertising revenue (Google sold $36.5 billion in advertising in 2011, Facebook sold $3.2 billion) Google’s stock price isn’t keeping pace with the rest of the technology sector. The price it can command per advertising click is also dropping, as Facebook and other social networks offer better targeting based on more comprehensive user data. Steven Levy, author of Google “biography” In The Plex said, "Facebook awoke Google to its shortcomings in the social aspect of the Internet. It wasn't something that could be ignored.” Facebook’s user data powerhouse is its Opengraph Protocol. This is the system that allows web developers to place Facebook “like” buttons on their pages, to let users log in with their Facebook accounts, and to share everything they do on third party sites on their Facebook timeline. It may not sound like much, but with a few lines of code, Facebook can monitor everything you do on the web. But the Opengraph Protocol is anything but open: Facebook has a monopoly on this information and can sell premium advertising services based on what it knows about its users. Google+ is the company’s attempt to harvest social data in the same way. As both a social network and a way of integrating user information across multiple Google services, Google+ is, Larry Page hopes, the key to Google’s continued dominance of the online advertising market. Although Google+ has been widely derided in the technology press as being a “ghost town” it already has more users than Facebook did at this stage

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of its development. Larry Page wrote in his Q4 2011 letter to investors: “I am super excited about the growth of … Google+, which now has 90 million users globally – well over double what I announced just three months ago. By building a meaningful relationship with our users through Google+ we will create amazing experiences across our services. I’m very excited about what we can do in 2012 – there are tremendous opportunities to help users and grow our business.” Of course it’s advertisers and, by extension, Google shareholders who stand to benefit most from the introduction of Google+. Now our hypothetical baker can exclude those people who have joined a dieting community on Google+, or can even target specialist products to people who have identified themselves as gluten intolerant or vegan. Google is hoping that it can use Google+ to

maintain its advertising dominance as the web evolves.

Dominating the mobile web Google also invested heavily to acquire and develop Android, the first open source mobile operating system. Apple looked to be set to dominate the mobile browsing market with the iPhone in the mid 2000s and Google perceived that this might be a threat if it was “shut out” by Apple’s proprietary software at some point in the future. By Q3 2011, Android handsets were outselling iPhones and accounted for over 50 percent of the world smartphone market. Google is tightlipped about its revenue model for Android, but company figures show that each handset nets the company about $10 in income. While that doesn’t compete with the average $580 income Apple generates from each iPhone handset, it keeps Google at the forefront of mobile search and advertising.

The Google Culture evolves Fifteen years after it was founded, Google may be bigger but the ethos hasn’t changed much. It is still regularly voted as one of the best employers in the US by its employees and Fortune Magazine. The company offers onsite childcare, gyms and healthy food. “The goal is to strip away everything that gets in our employees’ way,” says Eric Schmidt. “We provide a standard package of fringe benefits, but on top of that are first-class dining facilities, gyms, laundry rooms, massage rooms, haircuts, carwashes, dry cleaning, commuting buses – just about anything a hardworking employee might want. Let’s face it: programmers want to program, they don’t want to do their laundry. So we make it easy for them to do both.”

Let’s face it: programmers want to program, they don’t want to do their laundry Google also has an excellent diversity program that includes funding for women’s engineering scholarships, the Black Googlers Network in New Orleans and the Gayglers: an LGBT organisation within the company. Most of all, employees consistently say that they feel that they can make a difference, no matter what level of the organisation they may be in. Google prides itself on its “everyone counts” ethos. Saying that it “listens to every idea, on the theory that any Googler can come up with the next breakthrough,” and “provides the resources to turn great ideas into reality… In the same way Google puts users first when it comes to online services, Google puts employees first when it comes to daily life in its offices.”

Google’s company motto has long been “Don’t be evil” Google’s company motto has long been “Don’t be evil” but the company has attracted some criticism recently both for the way it has filtered search results in countries like China, and for what some see as a rather high-handed approach to user privacy. But the company has remained responsive to user criticism – eventually moving their servers from the Chinese mainland and refusing to self-censor search results and engaging in an ongoing discussion about privacy on the net. Google also undertakes philanthropic and environmental work. “Google Green” permeates every part of the organisation, from organising shared commuting services and buying locally sourced food for staff kitchens, through to recycling all of their electronic equipment and reducing energy consumption through smart building design. Google has also invested almost a billion dollars in green energy projects. 30% of their own power comes from renewable resources, and they’ve taken equity stakes in a number of large-scale wind and solar projects in the US and Germany. The ethos even stretches to the Google Maps product which offers biking, walking and public transport navigation as well as displaying electric vehicle charging points. Google’s philanthropic arm, Google.org, is responsible for the company’s charitable giving. It awards over $100 million annually in direct grants that focus on support for science, technology, engineering and math (STEM) education; girls' education; empowerment through technology; and fighting human trafficking and modernday slavery. They also offer support to humanitarian agencies in the aftermath of natural disasters and other crises by offering their services to host data-rich maps with information about the event, creating missing person databases and disseminating public alerts. While Google is having to change as the web evolves it still hasn’t taken its eye off its goal of changing the world, one internet user at a time. It is placing the tools of democracy in the hands of users, by providing channels like the Tunisia Talks video channel for the country’s landmark post-uprising elections, or the Google+ discussion with President Barack Obama. Fifteen years after Google began, it’s changed the world in countless ways. And Sergey Brin is still on leave from his Ph.D. programme in Computer Science at Stanford University.

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gLoBaL FUnd services

global Fund services report Hedge Fund Group (HFG) Overview The Hedge Fund Group maintains a networking association of more than 75,000 hedge fund industry professionals who actively network, partner, and refer resources to each other. The Hedge Fund Group is the fastest-growing hedge fund organization with members from more than 60 countries and working in every major hedge fund city. Our members include over 80% of the top 100 hedge funds in the industry, and we gain at least 600 new members each week.

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$ $$ In 2006 Richard started the Hedge Fund Group (HFG) networking association. It quickly grew from an off-line organization of 200 members to a global networking association of 10,000+ members. After receiving literally thousands of emails from professionals looking for training on hedge funds and recommendations for the "best" certification for a hedge fund professional, Richard realized there was an unmet need for a hedge fund focused professional designation program. In 2007 and 2008 the Hedge Fund Group's influence and size grew to over 20,000 active members, and with his advisory

board's support the Certified Hedge Fund Professional (CHP) program was launched. At first the program had a small website, no logo, no video modules, and no networking events offered. Despite these weaknesses, it attracted 80 participants, and the Hedge Fund Group re-invested everything that came in from this new business back into building a stronger training platform for the CHP Designation. We now operate with our 8 full time employees and offices from Portland, Oregon and Sao Paulo, Brazil with associates and board members in New York, London, Chicago, Sao Paulo, San Francisco, Bejing, and Dubai. Many know of the Hedge Fund Group (HFG) because of our self-paced training program on hedge funds called the Certified Hedge Fund Professional (CHP) program. Since program can be completed from anywhere in the world we have seen over 1,400 participants from 30+ countries join the program. CHP program is the industry standard and trusted certification program built exclusively by and for hedge fund professionals as a continuing education and professional self-improvement program. You can learn more about the Hedge Fund Group at http://HedgeFundGroup.org and more about the CHP designation program at http:// HedgeFundCertification.com The Certified Hedge Fund Professional (CHP) program got its start in Boston, MA, from founder Richard Wilson and the Hedge Fund Group. Below, find a short history of the CHP designation, including why the program was created and how it has grown so quickly over the past several years. Richard's experience and background is in risk management, capital raising, and third party marketing. In 2005-2006, he was working as a capital raising professional in Boston. He wanted to increase his knowledge and credibility within the hedge fund industry, and was completing research on potential designation and certification programs that he could complete. Additionally, he had several years earlier completed a financial modeling certification program, which helped him to learn about the subject. It also validated his knowledge by being certified by a well-known organization. What he found in his research was that every certification program that hedge fund professionals were completing had been designed for finance, investment,

or risk professionals but not hedge fund professionals. Furthermore, he saw that these programs were built with analysts and risk managers in mind, but not for the other 20-25 job titles in the hedge fund industry. This ignored need is what prompted the creation of the Certified Hedge Fund Professional (CHP) program. Richard C. Wilson’s Bio: Richard C. Wilson provides institutional best-of-breed fund manager ideas to family office investors. Richard wrote the #1 most popular book on hedge funds, which has been read by over 100,000 people. He runs several associations including the 75,000+ member Hedge Fund Group and the Family Offices Group. He is a leading global speaker on family offices, hedge funds, and capital raising who has spoken at and chaired over 50 industry conferences and summits in Zurich, Monaco, Singapore, New York, Liechtenstein, Brussels, Sao Paulo, Tokyo and the Cayman Islands. Richard has worked with and interviewed many of the top family offices in the world. He continues to serve them through providing family offices with Family Office Monthly Newsletter, a monthly newsletter for the UHNW individuals and family offices; the Family Office Portal, which is the industry's first true training portal dedicated exclusively to training family office employees and executives; and Richard Wilson Capital Partners, which helps family offices increase their access to best-of-breed investment fund managers. Richard has been named one of America's Premier Experts, and recently has appeared on the Brian Tracy TV Show that is shown on ABC, NBC, and Fox affiliate channels around the United States. Richard has written several books in the past, including a bestselling book last year on hedge funds called The Hedge Fund Book: A Training Manual for Capital Raising Executives and Professionals. It has since sold several thousand copies in hardcover format and has been rated the #1 investing book on the Kindle platform. (ISBN# 978-047052063) Richard's educational background includes earning a Bachelors in Business from Oregon State University and an M.B.A. from the University of Portland. He has also completed masters level coursework on the Psychology of Influence studying under Dr. Wolman and the research of Dr. Cialdini.

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NORTH AMERICA, EUROPE, ASIA

How GlobeOp established itself as the specialist in Form PF reporting In 2011, in anticipation of the 2012 Securities and Exchange Commission (SEC) reporting deadlines, GlobeOp was the first administrator to launch a private fund (Form PF) reporting service for hedge funds.

Q&A In a series of interviews, GlobeOp Financial Services’ president and COO, Vernon Barback, and global head of client solutions, Tony Glickman, who leads the dedicated Form PF team, discuss the regulations and implications for fund managers.

Vernon Barback, president, COO What is Form PF and what should a manager do? Barback: Form PF, which stands for form private fund, is a requirement that was adopted in October 2011. It is a requirement for large alternative managers, whether hedge fund managers or private equity managers, to provide quite detailed filings on a regular basis to assist the Financial Stability Oversight Council (FSOC) in monitoring systemic risk. Glickman: Many market participants suffered a crisis of confidence when they saw the onerous requirements for Form PF, but Form PF could help renew their own confidence in what they do. It gives a very good overall aggregate snapshot of all the vehicles being managed and all exposures. It could become a staple of investor due diligence. Barback: The first thing a manager should do is seek legal advice and establish if and when they need to file. The key questions are: am I registered with the SEC, and what is the gross size of my balance sheet?

Tony Glickman, global head of client solutions

What is Regulatory AUM (RAUM) and how does it affect the Form PF deadline? Barback: These calculations created confusion for some fund management companies under the impression that filing was driven by the fund’s net asset value (NAV).

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Glickman: Initially used in the Commodity Futures Trading Commission (CFTC) filings, RAUM was adopted by the SEC for fund registration and Form PF reporting. It is a measure of the gross assets on a firm’s balance sheet, including derivatives. Firms with even modest leverage can therefore have significantly higher RAUM than their normal NAV or AUM measures. This can affect a fund’s specific category of filing deadlines, frequency and content.

How did GlobeOp establish itself as a leader in Form PF reporting?

us to do Form PF reporting for them, we’ll gather all the data into a single database and we’ll maintain that data so that there’s an audit trail. We’ll liaise with them about which methodologies they would like to use. We have been talking to the SEC; if there are questions that a client might like to ask about a particular methodology, we are certainly in a position to go and ask anonymously on behalf of the client, so as to pull together a report that is both electronic and can be read by the manager. It is the manager who is ultimately responsible for the filing, so they must be confident that the report is good and then make the electronic filing with the SEC.

Barback: As we read Dodd-Frank and found out about Form PF deep in that 2,000-page document, we realised: this is going to be a lot of work for our clients and they are going to need our help. Glickman: GlobeOp was the first to develop an end-to-end, stand-alone, full-service Form PF solution to help anyone make a filing. Barback: There is a large software element to it, but we are offering more than that. We are offering a comprehensive service. For our clients and for those clients who want

On average, expect to invest more than 2,000 hours to prepare a Form PF filing.

GlobeOp Form PF Data Classifications, Complexity and Time Pressure

What makes Form PF an issue of particular urgency? Barback: Initially there was considerable concern because the timeline to implement was quite short – but all credit to the regulators, they listened to that feedback. Initially the filing was going to be quarterly, 15 calendar days after the month end; and complex funds − many of them don’t even strike a NAV that quickly. So the regulators listened, they pushed back the first filing dates by a few months to give people time to be ready, and they also recognised that the cycle needed to be longer than 15 days, so they moved it to 60 days. That has given people a bit more time, but it is still a lot of work and there is absolutely no room for complacency. This is a regulatory filing. It is a complex filing. It has hundreds upon hundreds of data elements, with a requirement in some cases to file once a quarter but to include three individual ‘month-ends’ in that filing. People need to make sure they are ready before that filing date. It is not a lot of time. Glickman: Whenever one is reporting to regulators, one should be sure to give consistent, coherent, accurate data. There is a substantial number of data points − as high as 1,600 for some filings. Some of that data needs to be manipulated, and it all needs to be aggregated. It is a manager’s report; hence, every entity that is managed by a particular manager needs to be aggregated and mapped.

COMPLEXITY Factor

How many hours of preparation? Barback: On average, expect to invest more than 2,000 hours to prepare a Form PF filing. Sourcing and processing such a wide range of data is a challenge in itself. Organised, controlled and sustainable procedures are essential. Time, dedicated resources and access to expert advice are required.

Can Form PF be interpreted in different ways? Reporting deadline

TIME PRESSURE Factor

Data Classification AUM/RAUM

Fund Static

Pricing Hierarchy

Counterparty Exposures

Geographic Exposures

Product Type Exposures

Derivative Exposures

Investor Data

Risk - Proprietary

Duration by Product

Investor Liquidity

Risk - Scenarios

Financing Exposures

Manager Static

Risk - VAR

Financing Liquidity

Portfolio Concentrations

Trading/Clearing

Form PF Filing Data

Portfolio Data

Fund Performance

Portfolio Liquidity

Glickman: There is considerable room for interpretation in the way a fund management company completes Form PF. For many questions, there is no single answer. When developing their responses managers should consider that Form PF, or parts of it, could potentially become a future element of investor due diligence. Data reporting choices made now could significantly affect how funds may be viewed in future by investors.

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What are the XML filing format requirements? Glickman: These requirements released by FINRA in March have technology development implications for funds or service providers planning to prepare Form PF reports. The XML format is the most practical reporting option for large funds filing submissions on the IARD website.

There is a substantial number of data points − 1,600 for some filings. What is GlobeOp’s connection with the SEC and CFTC? Glickman: Regulators have realised that it makes sense to solicit information and opinions from market operatives before adopting procedures for a new regulation. The SEC and CFTC solicited opinions from market operatives, and we participated in that exercise. They also entered into dialogue with individual market operatives who had knowledge about implementation. We’ve had the opportunity to ask them questions and they’ve asked us questions. It has been a very good back-and-forth that has enhanced our ability to help our clients and service the industry. Barback: We found the right people at the SEC, and they told us that we were the first hedge fund administrator to call them. We asked them questions that they didn’t know the answers to, and they looked to us and said, ‘That’s a good question, how might your clients want to go about responding to that?’ So we were really able to help them think through some of the details in a pragmatic way that would be practical from our clients’ points of view.

Glickman: Test filing is extremely important. Since we already see investors lining up to review sections of Form PF as part of their due diligence, we believe that managers need to ensure that their filing accurately reflects the assets that they manage and the profile they would like to have with investors. Delineating assumptions before preparing the filing is important, but you need to see in a test filing how those assumptions play out. We’ve been doing test filings for months already and we’ve learned that we can produce a filing in a matter of days, once all the dependent data is available. And that’s only because we don’t do anything manually. If you’re going to do this manually, then you’re going to be investing 2,000 hours. Every question has to be mapped on a scalable basis to our regulatory database. We did it that way because we believe large-fund managers should have at least two-to-four weeks to review the filing before submission, so they understand everything that is in there, including exactly how it is going to look and what the optics of the form are going to be. We can show not only the architecture of the data aggregation that goes into Form PF and the topography of all the systems that we use in order to generate it, but we can actually show a sample filing of an XML file that will be uploaded to the IARD database − which is the procedure that the SEC and CFTC have established for submitting this data. It would be foolish in our opinion to prepare the file the first time you are going to submit it and not have seen it and what the data looks like. We’ve already been doing test filings since November. Barback: Our dedicated Form PF team, led by Tony, has produced test reports across a range of fund strategies and managed accounts. It has been an instructive process for us all, including putting our automated data systems and the SEC’s electronic format through their paces. We’ve also been able to work with the regulators to discuss client questions and to further refine the sustainable processes needed, as Form PF becomes an ongoing fact of life for hedge funds.

GlobeOp Financial Services For more information or a demo of Form PF or any other GlobeOp service, contact: Eamonn Greaves global head of business development e.greaves@globeop.com +1 914 670 3612 www.globeop.com

GlobeOp can minimise the operational burden by leveraging its existing, integrated fund data infrastructures, risk reporting and aggregation services − and by efficiently gathering and storing data in its Form PF regulatory data warehouse. GlobeOp analysts review the system output with clients, then prepare the electronic filing for approval and upload by the client to the Investment Adviser Registration Depository (IARD) website. By utilising GlobeOp’s end-to-end solution, clients are better able to meet regulatory obligations, save time and reduce investment in internal resources.

How important is a test filing before the deadline? Barback: The last thing I would want, if I were a manager, would be to do this for the first time in August when I am filing with data for April, May and June.

For informational purposes only and should not be construed as legal advice or legal opinions. Clients and prospective clients should consult with their counsel on the implications of these and other regulatory requirements. Please note: neither the SEC nor the CFTC have endorsed GlobeOp or any other service provider.

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$ $$ MALTA

The Changing Face of Alternative Investment, CTA and Hedge Fund Administration My view of the investment world is largely influenced by the administration of alternative investment, CTA and hedge funds, including managed accounts utilising similar strategies. This used to be a fairly straightforward niche business, but following the 2007/2009 financial debacle and the increased involvement of institutional investors in these markets, the requirements made of alternative investment product administrators (the ‘Administrators’) have grown substantially. In addition, there has been a growing trend of Administrators widening their service models, to meet the demands of managers who are outsourcing as much of their own back and middle office administration as they can. Furthermore, Administrators today have to help the funds and the directors of those funds, to comply with the flood of new and proposed regulations that have hit the global financial services industry since 2009 and continue to do so over the next few years. I think it is fair to say that the ‘flood’ would have tested Noah. A lot of what is required of Administrators today is relatively easy to supply, providing the Administrator is prepared to change from being an NAV accounting and shareholder services house, to an IT services organisation with an emphasis on automation (IT) and client service. In addition to the administration of the manager’s middle and/ or back office, managers today want a wide range of in-depth and (often) customised reports that they wouldn’t have wanted, nor expected, five years ago. For example; post the financial meltdown, as a result of carrying out the full NAV process, the demand for much stronger risk management tools has now mushroomed, with Administrators now providing and manipulating the immense amount of data (the ‘Data’) that they have, so that it can be fed into the manager’s selected risk management/analytical programmes. Furthermore, managers and investors want greater transparency in not only their portfolios and assorted reports – including attribution reports that may cover asset type and geographical spread – as well as maturity and liquidity breakdowns. As most of this information (if not all of it) is embedded in the Data and is merely a matter of writing the IT software that enables that information to be extracted, manipulated and then fed to the manager’s models and programmes, the expertise that the Administrator requires has become much more IT orientated. As a result, the profile of an Administrator’s staff has already begun to change from that of

an accounting practice to an IT and service providing business. IT will also be called upon to provide systems that allow the Administrator to produce the Data, in order that the manager, the fund and the directors comply with the huge number of new regulations. We have seen the Alternative Investment Fund Managers Directive (AIFMD) in Europe and Dodd Frank in the US. Furthermore, Europe has also had MIFID and a greater emphasis on not only corporate governance, but the fitness and probity of the directors of the funds. Again in Ireland and under EU regulations, the requirement for the directors to take greater responsibility for oversight, means that information has to be delivered to them to enable them to do this efficiently and quickly. Similarly, the Administrators have to produce the data for the managers, to be able to make the necessary reports to the regulators. The Dodd Frank Act is a huge programme which covers FACTA – the new global tax gathering tool of the US Government. It also covers the new PF form – an amazingly complex report requiring a huge amount of Data to be supplied by the Administrator. Furthermore, with new legislation introduced in Asia and Africa, and in the context of the reaction to the MF Global scandal and the proposed Financial Transaction Tax (FTT), we can expect more to come.

Dermot S.L. Butler Chairman Custom House Global Fund Services Limited The International Alternative Investment & Hedge Fund Administrator Tel: 0035318780807; Fax: 0035318780827 dermot.butler@customhousegroup.com www.customhousegroup.com

All of these will invariably put a strain on the Administrators – particularly FATCA which requires the Administrator to disclose whether any investors in funds are ultimately US taxpayers. By the time FATCA goes live in a year or so, a raft of systems development and reporting procedures will be required. Another major factor is the increasing costs that come with complying with all these new regulations. Following the recent reports that writing the Proxy Rules had taken 25,000 SEC staff hours, one cannot but wonder how many hours have been spent by the industry’s legal fraternity and senior staff in the funds and managers on the very same topic. With such enormous costs, ultimately it is the investor who will pay. So in conclusion I think that we are going to see the whole structure of Administrators change to become much more IT service providers. This means that the staffing of the Administrator will become weighted towards senior IT oriented staff rather than junior accounts staff and the client relationship departments will grow substantially.

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gLoBaL FUnd services

MALTA A Well Kept Secret in Custody Services.

Paul Mifsud Managing Director Sparkasse Bank Malta plc 101 Townsquare Ix-Xatt ta’ Qui-si-Sana Sliema SLM3112 MALTA paul.mifsud @sparkasse-bank-malta.com www.sparkasse-bank-malta.com (+356) 21335705 | F (+356) 21335710

When the well known economist E. F. Schumacher said, ‘small is beautiful’, he created a case for the intrinsic value found in smaller, efficient and more nimble organisations. This philosophy is very much alive in the Austrian Savings Bank ‘Sparkasse Bank Malta plc’ based in Malta. Discreet in nature, few know that Sparkasse Bank has become a niche player in the provision of fund custody services in Malta, a service that is one of three core services (other than banking and wealth management) offered to their customers there. In fact, the bank refers to its custody services as ‘Private Banking for Fund Managers’ which not only hints at a high level of attention and support but contactibility and approachability. Based in Malta, this Austrian Bank is punching above its weight, in an area traditionally renowned as being dominated by global banks. However, as part of a larger banking group (as are the Austrian Savings Banks and the Erste Group) the bank has found the necessary support and strength to enter the market in Malta. Having invested heavily in IT and human resources, as well as establishing a farreaching global custody network, the bank has the necessary recourses and capabilities to manage the new challenges facing the industry. It is a known fact that the fund industry is currently struggling to deal with the implementation of various global legislations including, amongst others: Alternative Investment Fund Managers Directive (AIFMD); Undertakings for Collective Investment in Transferable Securities V (UCITS V); and Foreign Account Tax Compliance Act (FATCA). . Contrary to what may be perceived by others, in the bank’s opinion, these highly detailed sections of regulation could possibly give rise and justification to smaller and more specialist institutions in the field, moving away from the ‘one stop shop’ attitude that has been adopted so far.

registered outside Malta. Founded in 1817, Sparkasse Bank Malta plc forms part of the Austrian Savings Banks and Erste Bank Group. The brand is known throughout Austria and Central Europe as a leading Banking and Financial Services Group, serving over 17 million customers from 3,200 branches in eight different countries, and employing over 50,000 people. The Group has an A1 (stable) rating from Moodys, and is recognised by the Global Custodian publication as an award winning international custodian. Sparkasse Bank Malta Plc is licensed and regulated in Malta by the Malta Financial Services Authority (MFSA), to provide banking, investment and custody services. The MFSA is the single regulator for financial services in Malta, regulating private pensions, trustee services, investment business, insurance business and banking. For further information on the bank’s custody solutions, please contact Paul Mifsud on: paul-mifsud@sparkasse-bank-malta.com.

$ $$

Malta is very well placed to become a new hub for funds in general – be it under the UCIT or AIMFD regime. Such steady momentum has encouraged the bank’s investment in strengthening its resources in safekeeping, risk management of portfolios, IT and legal support. The bank is confident and optimistic for Malta’s future and is already enjoying the fruits of its labour. Currently, the bank acts as custodian to UCIT IV funds, retail non-UCIT structures, fund of fund structures, as well as funds

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LUXEMBOURG CACEIS Investor Services Nicolas Palate Senior Relationship Manager - Private Equity & Real Estate Servicing Tel: +352 47 67 23 56 nicolas.palate@caceis.com www.caceis.com

Private Equity in Luxembourg Despite the current economic slowdown, Private Equity remains a key feature of the economic landscape. Playing a major role in the business economy, it represents a fundamental source of support to unlisted companies throughout their lifecycle. It also permits direct and indirect investment in and promotion of innovation and new technologies, which in-turn stimulates economic growth and employment. However, as an asset class Private Equity is probably one of the least understood segments of the current financial markets, which is due to the diverse range of investment strategies it encompasses. In fact, compared to traditional investment funds such as UCITS, Private Equity differs in strategy, operating model, structure and objectives. This article aims to demystify the generic label of Private Equity, demonstrating through practical examples the investment strategies we come across in Luxembourg. Defining Private Equity… Private Equity is usually considered as an asset class, consisting of an equity participation in operating companies not publicly traded on a recognised stock exchange. However, this definition encompasses a wide range of investment strategies that fundamentally differ in a number ways. Let’s start by looking at a strategy that has been well known since the 80s and the RJR Nabisco/KKR deal – a Leverage Buyout. This consists of the acquisition of a mature company generating important cash flows, which allows the interest payment on the debt to be used to finance the deal. By way of comparison, a Mezzanine Investment is the common designation used for subordinated debt (also denominated junior debt due to its position in the firm’s debt hierarchy) granted to less mature companies unable to access high yield capital market. Venture Capital refers to equity investments in recently launched companies, which allows them to expand, while Distressed Investment relates to an equity or debt investment in financially distressed companies often accompanied by corporate restructuring. Last but not least,

Growth Capital describes equity investments in relatively mature companies that are looking for capital to further expand their reach, to enter new markets or to finance a major acquisition. … In Luxembourg One of the most famous Private Equity success stories in Luxembourg is the emergence of Skype. Financed in 2003 by a Luxembourg Private Equity fund for €20 million, Skype is now owned by Microsoft which spent $8.5 billion on the acquisition in 2011. Since this showcase, the Luxembourg Private Equity market has grown, and new investment vehicles have been implemented which allow a large range of investment strategies. Real Estate Investment funds based in Luxembourg are an increasingly demanded vehicle for acquiring properties all over the world. Some of the main European Infrastructure funds have also set-up their domicile in Luxembourg, financing brownfield (already in operation and generating cash flow) or greenfield (under development) infrastructure projects. These include: general public services (water or heating production and distribution); public/ private partnerships in transportation (highways, railway networks, transportation companies); telecommunications (fiber-optic networks); and lastly, health services. Currently, Socially Responsible Investment (SRI) is a very popular topic in Luxembourg. The Eurosif 2010 study defines SRIs as ‘a generic term covering any type of investment process that combines investors’ financial objectives with their concerns about Environmental, Social and Governance issues’. For example; renewable energy assets acquisitions consists of investment in a wide variety of companies engaged in the production and sale of ‘green’ energy (hydroelectric, photovoltaic or wind energy, as well as gas recovery from rubbish dumps). These assets often benefit from the political generosity of governments willing to promote green energy. Out of the 300 existing specialised vehicles focusing on Micro-finance, several are located

in Luxembourg. They invest through equity or debt into financial intermediaries (local banks, institutions or NGOs), providing an opportunity for low-income population in emerging economies to contribute to their sustainable development. Carbon Finance is another SRI strategy. Stemming from carbon reduction objectives set for European industries by the Kyoto Protocol, carbon investment vehicles play an intermediary role between these industries looking to decrease their emissions and investments in projects generating carbon reductions in developing countries. Finally, the trading of exclusive and collectible commodities, such as valuable wines, precious watches, works of art, diamonds and classic cars, is becoming an ‘in vogue’ investment for institutional clients as well as High Net-Worth Individuals (HNWIs) willing to diversify their portfolio in tangible assets. This allows for decorrelation with the current volatility of traditional financial products and investment instruments. Setting Up Private Equity Funds in Luxembourg Having attracted fund initiators from all over the world, Luxembourg is Europe’s leading centre for the incorporation of investment funds. Since the introduction of the CSSF (“Commission de Surveillance du Secteur Financier”) regulated vehicles, namely the SICAR (Société d’Investissement à Capital à Risque) (2004) and SIF (“Specialised Investment Fund”) (2007), Luxembourg is the financial centre of choice for launching sophisticated investment funds, and meets the specific needs of private equity funds with diverse and specific investment strategies. Since it set up a dedicated and specialised private equity team in 2004, CACEIS has developed a considerable expertise in this domain. As service provider to more than 140 Private Equity vehicles – Luxembourg or non-Luxembourg-domiciled – regulated or unregulated – the investment strategies outlined in this article are features that CACEIS deals with on a daily basis.

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JAPAN Anderson Mori & Tomotsune Osamu Adachi Partner Tel: +81-3-6888-1078 osamu.adachi@amt-law.com www.amt-law.com/

The AIJ Investment Scandal and the Ensuing Changes in the Law Tokyo-based investment advisory firm AIJ Investment Advisors Co., Ltd. allegedly falsified the results of its management of fund assets, winning mandates to manage pension fund assets on the strength of these falsified results. Between 2002 and 2010, the Securities and Exchange Surveillance Commission's inspection found that AIM Global Fund – an offshore fund established in the Cayman Islands and managed by AIJ – accepted management of ¥145.8bn in pension fund assets and incurred ¥109.2bn in investment losses. According to the allegations this was a relatively simple Ponzi scheme, not unlike the Madoff scandal. In the wake of this scandal, a team from the Financial Services Agency (FSA) in charge of supervising financial institutions has begun to conduct a survey of all investment advisory firms. In addition to this, another FSA team in charge of planning financial regulations has also been conducting hearings with investment advisory firms, to determine the need for change. Some commentators argue that the regulations should be changed from the current registration system of investment advisory firms to an approval system. Other possible proposals look at strengthening the current system for investment advisory firms, by requiring outside audits, more detailed annual business reports, and changing the regulations to increase the monitoring of firms and their business. It has also been suggested that the monitoring role of trust banks should be strengthened. A typical pension fund arrangement is that a pension fund entrusts its assets to a trust bank, and an investment advisory firm as the pension fund's agent, under a discretionary investment contract with the pension fund, gives investment instructions to the trust bank. The new proposal is to give the trust bank more direct access to ultimate investments such as offshore hedge funds, which it has been instructed to invest in by the investment advisory firm. All these regulatory proposals and suggestions are still at the exploratory and discussion stage and, indeed, some of them seem rather excessive.

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Aside from the AIJ scandal, the recent amendments to the fund-related regulations are; (i) easing the registration requirements for investment advisory firms whose clients are certain qualified investors; and (ii) strengthening the regulations on the specifically permitted business for certain qualified institutional investors, by requiring that such business operators report the names of funds and qualified institutional investors to the relevant authority. Furthermore, the Financial System Council, an advisory organisation to the relevant ministers, has started

discussions on major amendments to the Investment Trust and Investment Corporation Act. This new legislation will come into force in a couple of years. Osamu Adachi is a partner at Anderson Mori & Tomotsune, who advises and assists clients on financial transactions and regulation (including fund regulation), mergers and acquisitions and other corporate matters.

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country Focus mexico Doing Business in Mexico “Mexico is a country full of opportunity and there has never been a better time to consider Mexico as a place to do business.” (UK Trade & Investment – ‘UKTI’) Over the last 30 years, Mexico has undertaken a series of changes that have placed it as one of the engines of future global growth. According to the Economist Intelligence Unit, structural reforms and fiscal discipline have not only brought macroeconomic stability and record low levels of inflation in Latin America, but internal and external debt levels considerably lower than those in developed economies. With an overall GDP of over US$1tr, a population of 112m people, and a country the size of Western Europe combined, Mexico presents one of the most attractive business environments of today’s emerging economies. competitive Advantages According to Goldman Sachs, Mexico is the 14th largest economy in the world in terms of GDP. This year, the country is expected to grow a solid 3.8%. In addition to its growing GDP, Mexico holds an investment grade status of BBB+ and is the lowest risk country in Latin America. It is also one of the most open economies of the world, holding a network of 12 Free Trade Agreements that provide it with preferential access to 44 countries (including the EU), which account for 60% of the world’s GDP. The country has signed agreements on the reciprocal promotion and protection of investments (which foster legal protection of capital flows) with 28 countries. They also have agreements to avoid double taxation with more than 30 countries. The country also holds important human capital with 52% of the population under 25. By 2020, the working age population

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will reach 88m, opening a huge consumer market. In 2011, Mexico held 55% of the total luxury market of Latin America. Moreover, Mexico has developed a highly skilled labour base, with over 100,000 students graduating from engineering programs in Mexico each year – more than the USA or the rest of Latin America combined. Mexico provides one of the friendliest environments for investment. Investors only need 13 days and eight procedures to open a business. These numbers are significantly lower than those in India, China or Brazil. In addition to this, it has low tax rate (30% income tax) compared to developed economies. According to the ‘Doing Business’ report from the World Bank, Mexico moved forward 20 positions between 2006 and 2012, thereby ranking 35th easiest place in the world to make business. This again is way ahead of the BRIC countries. Geography provides an important asset for Mexico, as it is both a geographic and logistical hub between North America and Latin America, the Pacific and the Atlantic, and Asia and Europe. It also has a vast wealth of natural resources. The World Trade Organisation states that Mexico is the 10th largest exporter in the world, with around 80% of all of these exports being manufactured goods. However, Mexico is not a commodity-based exporter but rather a high-quality manufacturing one. This stems not only from the aforementioned strategic location and human capital, but that compared to China, Brazil or India (Alix Partners 2010), it offers the most competitive operation and labour costs along with an exchange rate advantage. Strategic Sectors In focusing its economy on the secondary sector, Mexico aims to develop a higher-end technology and service based economy.

Thanks to its competitive operation costs, there are many strategic industries that have been developed, as seen in, amongst others, the aerospace, automotive and electronic/ electrical arenas. Automotive The automotive industry is perhaps the most strategic sector of the Mexican economy, contributing around 3% of the country’s GDP. As the 9th largest automotive producer in the world and the 5th largest exporter, in 2011 Mexico produced 2.3m vehicles – 80% of which were exported to the US/Canada, 11% to Latin America and 9% to the EU. That same year, Mexico exported over US$60bn in the sector – a 15% growth from 2010. The country has become the auto parts hub for North America, with seven of the world’s largest manufacturers choosing Mexico as their production and export platform including GM, Ford, VW, Nissan, Honda and Toyota. 2011 was also the year that Nissan announced a US$2bn investment in Mexico and US$ Honda 800m – a sign of the optimistic forecast for the country’s automotive industry. Aerospace Between 2010 and 2011, Mexico was the main destination of FDI for manufacturing in the aerospace sector around the world. Exports tripled in six years reaching US$4.3bn in 2011, with an annual growth rate of 16.5%: Most of these exports served the US market (81%), with France and Germany following with 2.8% each and Canada and the UK closely behind with a participation of 2.6% each. Currently Mexico is the 9th largest supplier to the US market and the 6th to the European market. With 240 aerospace companies in Mexico employing over 30,000 people, companies like EADS, GE, Bombardier, Honeywell and Lockheed Martin, amongst others, have set up operations in Mexico.

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Mexico is a country full of opportunity and there has never been a better time to consider Mexico as a place to do business. (UK Trade & Investment – ‘UKTI’)

Every year, the industry works to evolve from second stage manufacturing (producing harnesses, turbines etc) to become a design and engineering industry. This explains the recent 24bn investment of GE in an aerospace turbine design centre. Infrastructure Between 2007 and 2011, over US$19bn were invested to build or improve Mexico’s road infrastructure. Meanwhile, infrastructure investment has reached 4.8% of the GDP during the current administration, which is way above the average spent by OECD countries. This continually increasing effort provides unique business and investment opportunities for infrastructure firms around the world. Electronics Increased manufacturing capacity along with the technological sophistication of Mexican products and availability of human capital, have made Mexico an electronics/ logistics platform for the region. With more than 730 electric and electronics industry companies, including some of the world’s largest electronics manufacturers, the country is currently the largest producer of smart phones and the third largest exporter of mobile phones. It is also the leading exporter of flat screen TV’s, the second largest exporter of televisions, the third largest producer of

refrigerators and one of the top computer equipment producers in the world. IT

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Guadalajara Digital Creative City (CCD), which seeks to create the biggest digital technology hub in Latin America.

As the natural gateway to the biggest IT market in the world – the US –Mexico has positioned itself as a big player in IT services export, exporting over US$5bn in 2011. According to the firm KPMG, Mexican near-shore outsourcing possibilities allowed cost reductions of between 30% and 55% in back-office and call centre activities, software design, and web and multimedia services. Moreover, Mexico was ranked fourth in the largest global exporters of ICT services and is now widely considered the region’s number one competitor versus the US.

The two other sectors that are also particularly attractive in Mexico is firstly, mining – an industry that generates over US$25bn (3rd source of income of the country with 1.7% of the GDP) and accounts for 30% of all FDI going into the country. Mexico ranks as the world’s 9th largest mining producer and the 4th in Latin America, and is also the world’s largest producer of silver and bismuth. Secondly, the other significant sector is retail, with Mexico the most important luxury goods market in Latin America, holding 55% of the overall sales of luxury goods in the region.

creative Industries

ProMexico

As Mexico is the country with the largest movie market in Latin America, this is one of the newest strategic sectors in which the country intends to become a leader. Currently, over 1,500 companies operate in the country – from production companies – postproduction and special effects – to software and videogame developers. Mexico is also the largest consumer of videogames in Latin America, with 50% of the total sales volume of videogames in the region (occupying 13th place among the 15 largest markets in the world). This year, the government launched the initiative

ProMéxico is the Mexican Federal Government’s Trade and Investment promotion agency. Its vast network of foreign offices is the point of contact for foreign investors and importers who need detailed and personalised support for projects in Mexico.

If you have any questions regarding our work in the UK, please contact José Neif, Director of ProMexico UK, on: +44 (0) 2078115040, or email: jose.neif@promexico.gob.mx.

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Unfair Competition in Mexico: A Glimpse Into a Legal Labyrinth Over the years, unfair competition has become an important part of the state of law in several jurisdictions. One of the reasons for this is to create and ensure the existence of fair commercial conditions for producers, consumers and public interest – a triad of elements that converge in the market and are looked after by the Government. Furthermore, the regulation of unfair competition is a response to avoid unlawful behaviours occurring in the commercial environment, especially in relation to intellectual property and commercial transactions. In essence, the goal of any unfair competition regulation is to ensure all the market players to play by the rules set forth in the ‘book’, without taking unlawful economic advantage away from other players and their presence in the marketplace. However, what happens when this book is apparently not there, or when it is so disseminated and scattered that it ends up resembling more of a labyrinth? The Legal Framework The described scenario above is the situation that Mexico currently faces with regards to unfair competition. Unlike other jurisdictions that have specialised statutes, such as the United States of America and several countries of the European Union, Mexico lacks proper regulation on this subject, which hinders any possibility of catching up with the present-day state of commercial affairs. As it currently stands, instead of having a straightforward regulation in one specific statute with a precise procedure, whoever wants to raise an unfair competition claim faces a complex and disarrayed legal framework, which demands a tailored-made solution to address the specific need. The labyrinth starts at the point the definition of unfair competition – along with most of the infringement actions in this matter – is included in a scarce catalogue, which is part of the Industrial Property Law (‘IPL’) statute. Created by the Mexican Congress in 1991, congressmen at that time may have not been familiar with the growing importance of this area of law and may have instead considered it a by-product of intellectual property. This could be the reason why it was included in the IPL, rather than enacting a specific legal framework. In light of this, the issue has not been revisited by the lawmakers with a thorough assessment; in lieu, the latter have enacted an intricate patchwork in several statutes, as will be described later on. The Industrial Property Law Statute There is a key core element with regards to unfair competition in Mexico, namely whether the specific claim has to be based on the infringement of one of the intellectual property rights protected by the IPL; i.e. industrial designs, trade secrets, trademarks and slogan registrations. The first approach to this question is to take into consideration the fact that the catalogue of infringement actions based on unfair competition is regulated in several sections of Article 213 of the IPL, without clarifying support in other

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statutes. Consequently, the conclusion would be that any legal action based on unfair competition must be filed in accordance to the IPL, meaning that the claim must refer to the violation of an intellectual property right and that the trial’s first stage would subsequently have to be before the Mexican Patent and Trademark Office (‘MPTO’). While the MPTO is a specialised forum into intellectual property, it is not necessarily into unfair competition. Despite the foregoing, an amendment to the Commerce Code in 2005 created what could be considered as an independent course of action for an unfair competition claim, without raising the claim by means of an administrative infringement action with the MPTO. Instead the forum would be a civil judge, which entails a more expedite procedure with a different set of rules. Nevertheless, as no recent judicial decisions have been made in this regard, how this amendment is understood and applied in practice remains to be seen. The Diﬀerent Procedures and Rules Furthermore, when dealing with unfair competition in Mexico, the situation will take the interested party to address a dissonant patchwork in the legal framework. Depending on what the precise claim is, the offended party may have to analyse the situation under the scope of protection of one or more of the following laws: IPL; commerce code; consumer protection law; copyright law; federal criminal code; federal civil code; and the Paris Convention for the Protection of Industrial Property. This means that the type of procedure and rules that have to be followed will be different altogether, thereby involving a labyrinthian path among laws and forums. These may include administrative actions that have to be brought before the MPTO and Federal Attorney’s Office of Consumers; civil actions with the federal judges and courts; and criminal actions with the Baker & McKenzie, S.C. Federal District Attorneys. Sergio Legorreta-González As can be understood Carlos Dávila-Peniche from this discussion, the Mexican labyrinth on Principal / Associate unfair competition is very Tel: +52 (55) 5279-2900 complex and entangled. That’s why when dealing Sergio.Legorreta@bakermckenzie.com with the cat’s cradle, Baker & McKenzie is deeply Carlos.Davila@bakermckenzie.com committed to creating www.bakermckenzie.com innovative, out of the-box strategies. Pushing the existing boundaries and thinking in this legal area, we find solutions for specific cases, as well as aid the development and progress of what is currently a stagnating legal framework.

Customs Compliance: Highlights of a New Mexican Government Strategy Recently, the Mexican government has taken an aggressive approach on tax and customs audits. This approach is not only with respect to consequences not seen in the past for companies or individuals failing to comply with trade and customs obligations, but the number of audits performed by the authorities. In Mexico, the Tax Administration Service (known in Spanish as SAT) is part of the Ministry of Finance and Public Credit. It is responsible for reviewing, inter alia, compliance with tax and customs obligations, specifically those relating to payment of taxes and duties. This is one area within SAT that is committed to customs and trade related obligations and duty payment. The general efforts of SAT to review customs compliance, is focused at the time of customs clearance into Mexico. However, SAT’s authority to verify compliance with all customs and trade obligations has also been expanded to goods being transported, onsite audits and desk audits. The onsite audit is performed by SAT at the tax domicile of the taxpayers. All visits to the premises during those audits are conducted there, and the taxpayers must provide the information and documentation requested by SAT during those visits. Through these types of audits, SAT may review compliance with internal taxes, as well as customs and trade obligations. A very important aspect of the onsite audits is that SAT is entitled to physically review whether all the goods located at the premises of taxpayers were duly imported into Mexico. If the taxpayers cannot provide evidence that the goods located at such premises entered into Mexico comply with all the import formalities, then SAT will conclude that the taxpayer omitted import duties and taxes, and impose severe penalties. Contrary to onsite audits, desk audits are performed at the office of SAT. Where all the documentary and information requirements are served at the premises of the taxpayer, the information and documentation requested must be presented at the offices of SAT. Unlike onsite audits, SAT does not physically inspect the legal importation of goods in possession of the taxpayer when executing these types of reviews. Traditionally the above panorama ruled the way in which SAT handled compliance with tax, customs and trade obligations. However, while the tax and customs laws governing compliance with such obligations have not been dramatically amended, a new approach has been taken by SAT with respect to the consequences of not complying with those legal obligations. This approach is more frequently taken in enforcement actions by the authorities sitting in the federal states of Mexico. The new approach of SAT is also focused on the criminal side of non-compliance obligations. Historically, Mexican taxpayers knew that SAT had the

authority to file criminal charges for certain conducts identified as fraud (such as omission of import duties and smuggling of goods). However, until last year, the few criminal charges brought by SAT against taxpayers were more exemplary charges for notorious companies or individuals. These days the pattern has changed and criminal charges are increasing. In fact, between 2011 and 2012, Baker & McKenzie handled at least five customs cases in which SAT brought criminal charges, derived from situations including allegedly not returning goods abroad, when imported under the temporary regime for manufacturing purposes and further exportation (following the rules of the IMMEX programme). Even when the criminal charges brought by SAT are based on an alleged violation of customs and trade obligations and the possible fraud against the Mexican Treasury, those violations do not have to be final to be prosecuted by the General District Attorney. It may only take SAT to issue a resolution during an onsite audit or documentary review and a request to the District Attorney’s office, for charges to be brought against a taxpayer. The problem with such criminal charges is that even when the taxpayer contests the resolution of the onsite audit or desk review with an administrative procedure with the Federal Tax Court – thereby not considering those resolutions as final – the criminal charges and procedures are still prosecuted as if the alleged fraud issued in those resolutions were final. In other words, the administrative file and the criminal file may run independently in parallel to each other, resulting in absurd outcomes. On the technology front, the newest strategy of SAT to expedite but also strengthen compliance with customs and trade obligations is the implementation of procedures for customs and trade transactions, which will be mandatory from 1st June 2012. These procedures are known as the Single Window (or Desk) for Foreign Trade Transactions (‘VUCEM’ for its acronym in Spanish). Although VUCEM’s main objective is to facilitate and simplify information flows between business and government to provide significant benefits, there is no question that this program will play a key role in verifying compliance with trade obligations for importers, as SAT will have immediate access to information relating to compliance on trade transactions. While compliance is not unknown for Mexican importers, with the implementation of this new strategy of the government, the word is more than ever in the mind of all of the players in the trade community. Furthermore, the role of compliance must be re-evaluated and taken to the next level, to cope with the new government strategy in a more proactive way. With more than 20 years of experience, Baker & McKenzie have been assisting companies doing internal compliance reviews.

Baker & McKenzie Abogados, SC Edmundo-Elias Fernandez Principal partner Telephone: +52 33 38485300 Fax: +52 33 38485399 edmundo.elias@bakermckenzie.com www.bakermckenzie.com

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Discover Fantastic Variety in Mexico

The Real Estate in Mexico for Foreigners

Thanks to a booming tourism industry there are six million jobs in Mexico – two million of which are direct and four million indirect. Government investment in the industry has also been increasing substantially during the present administration. In fact, in 2011 it was around US$550m – an increase of 300% compared to 2006. Furthermore, tourism infrastructure is one area in which international participation is welcome and encouraged. During 2010, foreign investment in tourism projects in Mexico was US$3.5 billion – a significant proportion of this going into the real estate sector. At present, the countries that invest the most in this tourism sector are the United States, Spain and Canada.

In Mexico, the real estate business has similarities to other countries, namely the legal formalities, the taxes that need to be paid, the legal paperwork to ensure the title, and a neutral party handling the documentation and monies of the parties to ensure a smooth exchange. Increasingly, U.S. title companies are doing work for U.S. buyers in Mexico and Central America. While prices are often much cheaper than most areas of the U.S, in many locations houses and lots are just as expensive – one example being Mexico City. However, unlike other Latin American countries, U.S. banks have begun to give home loans for properties in Mexico.

At the southern tip of the Baja California peninsula, the exclusive beach resorts of San José del Cabo and Cabo San Lucas – known collectively as Los Cabos – will satisfy even the most discerning visitors. Located on a peninsula where the desert meets the Sea of Cortez and the Pacific Ocean, Los Cabos has a contrasting natural landscape and enjoys a sunny climate all year round. Visitors are guaranteed unforgettable holidays in a idyllic setting known for professional diving, sport fishing, golf and water sports. With real estate booming there are also a variety of high-end resorts. Founded in 1999, Lex Advisors is a ‘boutique’ law firm located in Los Cabos – one of the key points for tourist development in Mexico and host city to the 2012 G20 World Leaders Summit. Innovative and highly regarded, our law firm specialises in real estate and corporate law. In the last ten years we have closed more than US$1 billion in Cabo residential real estate alone. We are also one of the only firms in the area that can meet all your legal needs under one roof – from real estate development – cross-border transaction – corporate law – tax planning – closings – to foreign investment. Furthermore, we pride ourselves on delivering an unrivalled level of customer service. At Lex Advisors, our commitment is to deliver a tailor-made, high quality and precise legal service: Our mission is to protect our clients and understand their needs: Our vision is to have lifelong professional and personal relationships with our clients. We know Baja; we know Los Cabos; and most important of all, we know the law and understand business.

Mexico makes it easy for foreigners to have properties. In land, they can hold a direct title to their Mexican real estate. In the ‘restricted zone’, which is within 62 miles (100 kms) of the US/Mexican border, or within 31 miles (50 kms) of the coast, foreigners can have real estate through a bank trust. Determining the legal entity to meet the needs of the investor, depends on the kinds of real estate and where it is located. However, it is important to be informed on how foreigners are taxed on property owned in Mexico, and what the tax implications are if you are not resident and want to sell. With 18 years of experience, Investment & Legal Consultants headed by Claudia Ozuna Galeana, has been witness to many changes in real estate investment. The firm specialises in providing the necessary legal counselling, while keeping in mind the clients’ business-end operation within the Mexican legal schemes and provisions. The office is one of the few legal firms in Mexico classified as a general corporate practice or full-service law firm. In the real estate department, the firm has been actively engaged in purchases; trusts; developments (including projects in the so-called ‘restricted zone’); unilateral and multilateral mortgages; zoning and, among others, leases involving full domain and Ejido (farming) property. The firm has also advised on transactions relating to environmental permits and beach concession titles linked to properties. With migratory status directly affecting the options available to acquire or sell real estate, the firm’s immigration services is aimed at helping Asian, European, North American and other businesspeople and their families acquire the appropriate visa status to live, visit and work in Mexico. Our success is down to being able to draw upon our considerable experience, to provide an efficient and responsive service that meets the specific needs of our clients and focuses on cost efficient solutions.

136 Paseo Finisterra Suite 6, San Jose del Cabo Baja California Sur, Mexico 23406 Tel: 52 (624) 14 254 53 Fascimile: 14 26604 www.lexadvisors.com.mx

Investment & Legal Consultants Claudia Ozuna Galeana Attorney at Law

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Mexican Development Capital Certificate

A New Legal Frame for Public Contracting

In Mexico, the Development Capital Certificate (‘CKD’) is a new kind of financial instrument designed by Mexican financial and regulatory authorities, to allow the Administrators of Retirement Funds (‘AFORES’) invest in private equity funds and projects. This is achieved by transforming domestic savings into productive projects in the country, while providing an opportunity for AFORES to diversify their risks and increase profits.

One of the main goals of the current administration has been to promote and develop infrastructure projects. Until the beginning of this year, governmental procurement contracting was mainly governed by the Law on Acquisitions, Leasing and Services of the Public Sector and the Law on Public Works and Related Services and its regulations. However, on 16 January 2012, the Federal Government published in the Official Gazette of the Federation the Law on Public and Private Partnerships (‘LPPP’), setting a new legal framework for governmental procurement contracting.

In the development and impact of Private Equity in Mexico, we identified two actions that would help enter the circle of growth and competitiveness, generating private equity and entrepreneurship in the Mexican economy. Firstly, it would be to enable a domestic financial vehicle with efficient corporate structure, tax regime and viable costs: Secondly, it would be to amend the investment regime for AFORES, allowing them to participate as investors in private equity funds. Now these conditions have been met, we have seen a substantial increase in the amount of committed capital and the number of invested funds. The first condition was with the Private Equity Investment Trust, and the second with the creation of the CKDs. To date, there are 12 CKDs issued for an aggregate amount of 32,650.00 million pesos (approximately US$2.5bn). There are eight more registered on the stock exchange to be released in the coming months, for an aggregate amount of approximately 6 million pesos (approximately US $500m). The CKD has features that make it different from the way in which institutional investors invest in private equity in developed markets such as the U.S. and Europe, and also in other emerging markets. Currently, there are diverse CKDs that have been successfully created including, Nexxus, Wamex, Promecap, Prudential, Discovery and Macquarie. There are also others who are on their way such as Evercore / Protego, Darby, IGS and many others. Paradoxically, the financial crisis triggered by the housing debacle in the United States and some European countries, has now restricted access to the developed and successful funds of the capital markets that were attracted to the money of the AFORES, despite the high costs.

The scope of the LPPP includes long-term projects that are to be developed between public and private sector entities, for the rendering of services in which the infrastructure is totally or partially provided by the private sector (‘PPP’). The LPPP applies to projects, among others, that are being developed by entities of the Federal Public Administration and by local governments (state and municipal) as long as federal funding is involved in the project and if federal funding surpasses the amount of the local government’s contribution. PPPs may be developed through the initiative of a governmental entity. Subject to previously published governmental requirements, private contractors may submit proposals for the development of a PPP, provided that they supply all the supporting information required by the LPPP to justify its development. If the governmental entity then decides to put the PPP for bid and the contractor is not awarded with one or does not participate in the corresponding adjudication process, their expenses will be reimbursed accordingly. PPPs may be awarded through a public bidding process, and occasionally through restricted invitation or direct adjudication. The contractor that submits the best technical and economic proposal will be awarded the contract. While contractors may be nationals or foreigners, the project execution can only be through a Mexican special purpose company, with a specific focus on the development of the PPP. All related matters are then resolved according to the contract, the LPPP, as well as the civil and mercantile legislation. The duration of the contracts have to be at least 40 years and will also be subject to an extension. The LPPP also regulates the granting of the federal authorisations, concessions and permits needed to develop a PPP, and establishes that they have to be resolved by the relevant authorities within a short period of time. Providing that there is no response from such authorities within 60 days, the authorisation, concession or permit is then considered granted. However, projects similar to PPPs that were organised before the LPPP will remain governed in accordance with the laws in force and in effect before its enactment.

Rivera Belden, Ulloa Sada & García Sánchez Guillermo Rivera BeldenManaging Partner Tel: (52-55) 3687-0060 grivera@rbg.com.mx www.rbg.com.mx

QUINTANA AROUESTY, S.C. MIGUEL ANGEL QUINTANA Managing Partner Tel: +(52) (55) 5280-5555 / 6040 Fax: +(52) (55) 5280-8600 mquintana@qaa.com.mx www.qaa.com.mx Montes Urales 754 – Piso 3, Lomas de Chapultepec 11000 México, D.F., México

May 2012 • GBM • 23

sUccess stories - carLos sLim heLU

success stories carlos slim Helu – from rags to riches? Right at the top of the Forbes magazine list of billionaires is the name of Carlos Slim Helu. Although the name is not as well-known as others on the list such as Bill Gates or Mark Zuckerberg, the 72 year old Mexican outstrips their successes with an estimated personal fortune of $69 billion. So who exactly is Carlos Slim Helu and how did he become the world’s richest man?

24 • GBM • May 2012

Beginnings

Economic crash

Slim Helu is not a typically Hispanic surname, and this gives the first clue to the family’s origins. Both of Slim Helu’s parents emigrated to Mexico from Lebanon, arriving in the Americas when they were teenagers. Carlos’s parents, Julian and Linda got to know each other through the close knit Lebanese community, and married in 1926. Carlos is the fifth of their six children, and was born in 1940. It seems probable that the young Carlos inherited his entrepreneurial and business sense from his father, as by the time Carlos was born, his father was running a successful grocery and real estate business in Mexico City. Smart investments in up and coming areas formed the basis of Julian Slim Helu’s wealth. Despite the Slim Helu family’s growing fortune, Julian wanted to foster business skills in his children and encouraged them to take an interest in all aspects of the business. At an early age, Carlos and his siblings were taught the basics of commerce, and Carlos made his first investment in bank shares at the tender age of 12.

By the early 1980s, Carlos Slim Helu was a successful and wealthy man, but had not reached the huge levels of success that he enjoys today. The Mexican economic crash of 1982 was what delivered the opportunity to consolidate his wealth. The economy of Mexico had been built on oil revenue, but in the early 80s the price of oil fell rapidly, leading to a shrinking of the economy, rising interest rates and the devaluing of the Mexican currency, the peso. At this time of great crisis for many companies, Carlos Slim Helu seized the chance to purchase companies at rock bottom prices. He invested in businesses such as Reynolds Aluminium, the Mexican division of General Motors, Hershey’s and British American Tobacco. As the economy began to recover and the share prices of the recently acquired businesses began to rise, Slim Helu used the capital to make a move into the financial services industry too.

Education Education was important to the Slim Helu family, and even though the family were by now comfortably wealthy, Carlos was encouraged to study hard and get a good education. Carlos’s talents lay in engineering and mathematics, and he studied Engineering at Mexico’s National University. After University, Carlos Slim Helu lost no time in building the foundations of his business empire, and started to invest in property. Throughout the 1960s and 1970s, Carlos Slim Helu continued his strategy of researching and making clever investments in booming industries, mainly in commercial property, mining and construction.

Telecommunications By the start of the 1990s, Carlos Slim Helu’s clever and timely investments during the economic downturn were beginning to reap huge dividends. The telecommunications industry was taking off in Mexico at the start of the 1990s and once again, Carlos Slim Helu was in the right place at the right time. He invested in the Mexican national landline telephone company when it was being floated by the government, and soon diversified into cell phone technology. Currently, around 90% of all Mexican landlines and 80% of cell phones are operated by Telmex, owned by the Slim Helu family. The recent economic crash of the late 2000s has left Slim Helu’s fortune largely unaffected, and due to the diversification of his interests and the fact that he is not reliant

on one industry only to provide an income, it seems certain that the Slim Helu family will be remaining at the top of the Rich Lists for several years to come. Other interests One of the markers of Carlos Slim Helu’s success has been his ability to buy and sell at the correct times. His investments in the downturn of the 1980s were the foundation of his wealth, and throughout the 1990s he continued to sell businesses which were successful then use the return to invest in others which were up and coming. Slim Helu has bought and sold interests in tobacco and cigar manufacturers, retail operations such as Saks and tile companies. His six children, and especially oldest son Carlos, look set to continue their father’s success as they have taken on roles in several of his business interests. Good causes Being the world’s richest man gives Carlos Slim Helu the opportunity of not only a lifestyle which most of us can only imagine, but also the chance to make a real difference to the lives of people who are less fortunate. His charitable organization, Fundacion Telmex, was founded in the mid 1990s, and sponsors projects such as the redevelopment of rundown areas in Mexico City, museums and art galleries and investments in sports and grassroots charity projects throughout Latin America. There has been criticism of the wealth of the Slim Helu family in a country where so many are living in extreme poverty, and the charitable works and investment in the future of Mexico goes a long way to counteract this criticism and build a firmer foundation for Mexico’s future prosperity.

May 2012 • GBM • 25

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franchising law

Franchising Law Franchising Plans for Global Century As the U.S. economy recovers from recession, still held back by factors such as lack of capital access and high unemployment rates, the largest U.S. franchise brands have looked overseas for growth. This major international expansion has led to the increase of U.S. exports, as well as the creation of jobs at home.

By Beth Solomon, Vice President, International Franchise Association

Yum, McDonald’s and Dunkin’ Brands – early adopters of international expansion strategies – have begun to report impressive results. Yum achieved growth that wasn’t expected until 2015, with 75% of their $900 million 2011 profit coming from its international businesses – mostly in China where the company has 4200 units. McDonald’s compensated for slower U.S. growth as its stock hit new highs in 2011, with European sales up 16%, and Asia/Pacific, Middle East and Africa regions up 20%. Dunkin' Brands opened its 10,000th donut store in Xi’an, China, attributing much of its growth to rapid global expansion, with a further plan for 500 units in India within the next 15 years. This success for the world’s largest franchise brands is unprecedented. Now, the International Franchise Association (IFA) plans to expand access to international markets to all of its members – including small- and medium-sized enterprises – through new initiatives which will proactively assist U.S. brands with the advocacy and services they need to be successful abroad. Franchising offers products and services in over 300 business categories that include; food and beverage, lodging, health and educational services, professional services, auto care, accounting and tax services, real estate, home services, IT services and retail products. U.S. franchise products are attractive to buyers in other countries – especially emerging economies with high growth rates. This is due to the perceived high quality of the products, the strong appetite for U.S. culture and lifestyle, and the undeveloped service sector of these economies. The franchise model is appealing to these markets due to its detailed systems and processes, training, support, marketing, technology and planning. Twenty-nine of the ‘Top 50’ global franchise brands are U.S. brands, according to Edwards Global Services, a leading franchise export facilitator. The franchise model exports an entrepreneurial system, including IT

28 • GBM • May 2012

services and retail products. This fosters small business ownership and growth at home and abroad, thus advancing the entrepreneurialism, independence and empowerment of individuals. Beyond the world’s largest brands, most franchise companies seek international development. A recent IFA survey found that 74% of franchisors plan to start or accelerate international operations, and 16% generate 25-50% of revenue internationally, while about 50% have dedicated resources for international growth. At a recent IFA Convention, over 50 franchisors sought to meet with U.S. Commercial Service representatives to discuss international development. With such a strong appetite, the franchise industry is ready for significant international growth. However, many U.S. franchise brands are small- and medium-size businesses (SMEs) themselves. Contributing $2.1 trillion to the domestic economy in direct and indirect impact, they are nonetheless dispersed as approximately 3,000 companies. Since the 1990s, the International Franchise Association has been working to facilitate international growth by small and medium-sized U.S. franchise brands. IFA’s Executive Committee recently identified international growth as the industry’s number-one mid- to longterm priority. There was acknowledgement that increased focus and activity by the association was needed to enable members – especially SMEs – to access unprecedented global opportunities. In 2011, the IFA participated in trade missions to India, Vietnam and Indonesia. This has led to tangible results and long-term projected growth. Participants included: Great American Cookies, MaggieMoo’s, Marble Slab Creamery, Pretzelmaker, Pollo Tropical, Rita’s Italian Ice, Round Table Pizza, Which Wich, Wing Zone, Crestcom, The Vitamin Shoppe, Applebee’s, Denny’s, Johnny Rockets, The Melting Pot, Carvel Ice Cream, Cinnabon, Schlotzsky’s, Moe’s Southwest Grill, Auntie Anne’s Pretzels, and Seattle’s Best Coffee. One can see in this list the diversity and new interest of franchise brands in going international. In fact, a survey of trade mission participants found that most of the participants plan to open multiple locations in each of the countries visited. Notable highlights from this trade mission include: A 1950s-themed American restaurant

concept, that expects to sign one to two license agreements in India and one in Vietnam within three years of the 2011 trade missions. Each agreement should generate $4 million within five years, for a minimum of $8 million in U.S. export value. The company expects to open a minimum of 20 restaurants in India and 10 restaurants in Vietnam over the longer term. A successful U.S. family-dining concept, that expects to sign three separate development agreements for between 35-40 restaurants in India within five years. The company also expects to sign a development agreement for Vietnam for five to six restaurants and a development agreement for Indonesia for twelve restaurants by 2016. A U.S. brand that signed one master franchise agreement in India and expects at least one more agreement in that country. The India agreement will yield approximately $2 million of export value in the first five years. Growth and revenues are expected to increase after five years as the system grows. The company also expects one agreement each in Vietnam and Indonesia as a result of the trade missions, for an expected total of $2.5 million in five years. Revenues are expected to grow significantly in the second five-year period as the system expands. The IFA wants to help its members continue building on this success. To expand access to international growth and corresponding job creation in the U.S. and abroad, the association plans to increase its international programming. This is to include expanding its trade mission schedule and international legislative advocacy, as well as increasing its communications, information and research. “We know that the future for U.S. brands is increasingly overseas,” says IFA President & CEO Steve Caldeira. “The IFA is going to help them get there.”

The International Franchise Association is the world's oldest and largest organisation representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.

Contact: For more information please visit www.franchise.org

May 2012 • GBM • 29

franchising law

GERMANY

Franchising Germany Report German Franchise Disclosure Requirements Since 1980, Pre-Contract Disclosure requirements under German law have, in the absence of any franchise-specific legislation, been developed and defined by German courts. They require that franchisors provide complete and accurate information on their system and the underlying business model. This system information should not only deal with the franchised concept, but with the

franchisor (company) and its representatives; its history; existing trademarks; a competitive review; the number of franchisees; and indepth information on ones that have exited the system. Information on the business model should deal with the key obligations under the franchise agreement (including the financial terms such as franchise fee, royalty and marketing contribution payments); the investments required; and the profitability of the franchise business.

German Statutory Rules and Legislation on Franchise Agreements In Germany, various types of contracts are specifically regulated by statute under German civil law. This includes purchase or service agreements. As franchise agreements are not amongst these types of contracts, it follows that in principle the parties have the freedom to construct the contract. However, while negotiated franchise contracts may differ from legal guiding principles, in some areas the content of the agreement is still regulated by compelling law. For example: the law provides that if the franchisee is a business start-up and the franchise agreement includes an obligation for the franchisee to purchase and deliver certain system products at periodic intervals, the franchise agreement has to be concluded in written form. In this case, the franchisor is obliged to inform the franchisee about the latter’s two weeks right of withdrawal from the contract. In other cases franchise contracts can also be concluded verbally. However, this is not recommended because of the difficulties of proof and legal uncertainty. Therefore, provisions of the franchise agreement must not infringe other statutory prohibitions. Applicable Antitrust Law in the German Legal Environment Franchise networks are subject to European and German antitrust rules. The basic antitrust rules applicable in Germany are established in Article 101 of the Treaty on the Functioning of the European Union and in Section 1 of the German Law Against Restraints On Competition (GWB). To obtain the necessary exemption from the statutory prohibition of restraints on competition, the agreements and the day-to-day practice in the franchise network must comply with the rules stipulated in the European Vertical Block Exemption: An example being, in Germany – as in other European countries – a franchisor must refrain from resale price fixing.

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AUSTRALIA

Robert Toth 30 years franchise industry knowledge and experience Tel: +61 3 9612 7297 Fax: +61 3 9629 4035 robert.toth@wisemah.com.au www.wisewouldmahony.com.au

The Franchise Market in Australia Australia has weathered the global crisis extremely well compared to many other countries, with an economy that remains structurally sound and relatively stable. Currently, the Australian dollar is above the US dollar at 1.028. While this works well for importers, it makes it difficult for Australian companies to export competitively. As a result, Australia is seen as a viable market for overseas companies and franchisors to expand into. In Australia, franchising operates under a mandatory Code of Conduct, under the Trade Practices (Industry Codes – Franchising) Regulations 1998. Franchisors must comply with the Code, and provide a disclosure document with a draft of the proposed franchise agreement to franchisees. The Code requires mandatory disclosure of at least 14 days to franchisees, before entering into, renewing, extending or receiving a non-refundable payment under a franchise agreement. It also provides franchisees with an additional seven day cooling off period after signing the agreement. International franchisors must also provide a disclosure document to franchisees or their master franchisees, but not to area developers. As funding by banks and institutions remains tight, a key issue for international franchisors is whether to appoint a master franchisee, enter into an area development agreement or look to different business models such as joint ventures or distributor rights. Bank funding remains tight, so a suitable area developer or master franchisee may not have the funds or capital necessary to take up the franchise rights. International franchisors also need to ensure that their business model is viable in the local market, as the market and demographics vary considerably from state to state in Australia. For example: a system successfully established in Queensland may not expand as successfully in New South Wales or Victoria. Franchising, as a system, has proven successful worldwide and with globalisation of business, there is pressure on small business operators to look to a franchise group as a solution. However, high labour, leasing and occupancy costs in Australia results in increased fixed operating expenses for franchisees, which needs to be factored into the business model. So while there is great opportunity for international franchisors in Australia, it requires on the ground local knowledge and conducting market and feasibility research. A leading specialist franchise law firm, Wisewould Mahony has a network of consultants that can assist overseas companies to establish their franchise systems and company operations in Australia. The firm is a member of the International Franchise Lawyers Association (IFLA), Franchise Council of Australia (FCA), Franchise Association of New Zealand (FANZ) and the US Commercial Service. Robert acts as a Public Officer and Resident Director for a number of overseas companies in Australia.

cZECH rEPUBLIC

ZILVAROVÁ CTIBOR HLADKÝ (ZCH) JUDr. Jiří Ctibor, LL.M., Ph.D. Attorney/Partner Tel: +420 225 020 500 office@z-c-h.cz www.z-c-h.cz

Zilvarova Ctibor Hladky Law Firm (ZCH) - the Franchising Specialist Although franchising is an established system with an appropriate legislature in many countries, only now is the legal system of the Czech Republic beginning to respond. At present, franchising is not specifically treated or defined by Czech law and, unlike Germany or Austria, the relevant court judicature is also missing. Despite this absence of a specific legal regulation in the Czech environment, the timing for franchising is favourable, as Czech law doesn’t prevent or rule it out. However, the situation calls for more emphasis on contractual documentation, which in the absence of legal regulation protects the weaker of the partners. Currently a political discourse exists with the aim of regulating franchising within Czech law. Apart from the elements of franchising as it is normally understood, the goal is to also anchor pre-contractual information obligations. This would provide relevant information to those interested in franchising, as well as prevent abuse of its reputation. Due to these suitable conditions and new business opportunities, the Czech Republic is becoming a sought-after place for the expansion of franchised enterprises. This growing interest is evident from the increasing number of franchising system opportunities in the Czech Republic, compared to other EU countries. As one of the few relevant law firms in the Czech Republic, ZCH has responded to this economic and legal development by becoming a leading franchising specialist. ZCH provides legal assistance, particularly with regards to franchise contracts and related documentation. We provide consulting in master franchising regarding disclosure, and in building, operating or restructuring franchise networks. In addition to this, we also provide advice to those interested in franchising, in negotiations with the franchisor, or dealing with franchisees. ZCH has received numerous awards confirming its reputation in both the national and international arena. The best in the field, our experienced lawyers guarantee quality services. In particular, JUDr. Jiří Ctibor, LL.M., Ph.D. excels in the area of franchising, drawing on invaluable experience abroad, so key to the development of franchising within the Czech Republic. ZCH has prepared an analysis of legal regulations for franchising in individual EU countries, as well as a proposal for a new legal regulation of franchising within the Czech Republic for the Ministry of Industry and Trade. JUDr. Ctibor was subsequently instructed to prepare materials for the Parliament of the Czech Republic, which will now serve as the basis for future legal regulations in the franchising environment. ZCH is a member of the International Franchise Lawyers Association (IFLA), which creates opportunities for cooperation among over 70 franchising lawyers within 40 countries. The potential of the Czech market combined with ZCH’s expertise, provides a climate with enormous potential for wide collaboration. May 2012 • GBM • 31

franchising law

UK The Franchisor’s Guide to International Franchising There are no legal requirements in the United Kingdom to disclose any information to prospective master franchisees or prospective franchisees. Franchisors should be wary as to claims made in prospectuses, brochures or similar publications for prospective master franchisees or franchisees, particularly if they relate to earnings. In the UK, the law of misrepresentation applies to franchise agreements, as it applies to all contracts. Statutory Rules and Legislation on Franchise Agreements

Article 101 TFEU applies if the franchise agreement has the object or the effect of preventing, restricting or distorting competition within the EU. An example of an anti-competitive practice is that a franchisor generally may not fix prices for a franchisee. Characteristics of Master Franchising and Area Development in the UK Basically, there are three main ways of carrying out international franchising: The Master Franchise Agreement (‘MFA’)

As there are no registration formalities in the UK or special laws that apply to franchises, the general law applies. This means that franchise agreements are governed by the same rules, which apply to all contracts.

This relationship is where a franchisor from Territory A (e.g. USA) grants to a master franchisee the right to grant (sub-license) franchises to franchisees within Territory B (e.g. United Kingdom). In this event, the master franchisee is itself a franchisor for Territory B rather than a franchisee.

Applicable Antitrust Law

The Area Development Agreement (‘ADA’)

In the UK, franchising is governed by the provisions of the Competition Act 1998. For the most part these provisions reflect the antitrust provisions of the EU (except that they are applicable only within the UK). The main provisions are divided into two – the Chapter I prohibition and the Chapter II prohibition. While the Chapter I prohibition may be relevant if the franchisor has a significant market share in the UK, the Chapter II prohibition is rarely relevant in franchising.

This is a facilitating agreement for a developer to become a franchisee of multiple units. He has no right to sub-license and all units must be opened by the developer himself as franchisee. A separate franchise agreement (‘FA’) is entered into in respect of each outlet.

In addition to domestic competition law, EU competition law will apply directly in the UK.

David Bigmore David Bigmore & Co© Tel: London Office: +44 (0) 0208 947 1948 Northern Office: +44 (0) 1978 855058 db@dbigmore.co.uk

The Joint Venture (‘JV’) Relatively rare, a JV is entered into when the franchisor wants a stake in the master franchisee or the area developer in Territory B, or when the prospective master franchisee or area developer needs financial assistance to buy or carry on the business.

HUNGARY Making Use of the Flexible Franchise Law Franchise agreements are not specifically codified in Hungarian law as a type of agreement. Instead the Civil Code of the Republic of Hungary (Act IV of 1959) – in particular its chapter on the general rules of contract law – apply to all agreements including franchise agreements. However, the parties may deviate from most provisions of the civil code concerning the general rules of contract law with mutual consent. While there is no mandatory specific legislation concerning franchise agreements in Hungary (i.e. no disclosure requirements), certain mandatory requirements do influence franchise relationships and govern franchise agreements – primarily antitrust law and intellectual property laws. Nevertheless, on this basis, Hungarian law is rather flexible concerning franchise contracts and provides a great deal of freedom for the franchisors to draft their franchise agreements. Franchising is generally recognised and established in Hungarian business and master franchising is also widely used as well. Among these systems are large multi-national franchises, as well as franchises of Hungarian origin – the largest Hungarian franchise providing master franchising being Fornetti, a bakery franchise. 32 • GBM • May 2012

SBGK Law Office is a leading and internationally recognised firm in the area of intellectual property law. The firm's practice covers all areas of intellectual property law, as well as competition law, advertising law, franchise law and corporate law. In the field of franchise law, SBGK Law Office regularly advises both foreign and domestic franchisors concerning reviews of franchise agreements. They provide advice on the Hungarian legal environment and also with regards to litigation. In this respect, SBGK Law Office regularly assists businesses, and aims to utilise the flexible legal regulations in order to protect clients’ interests as much as possible.

SBGK Law Office Andrássy út 113, H-1062 Budapest, Hungary Phone: +36 1 461 1000 Fax: +36 1 461 1099 www.sbgk.hu Dr. Péter Lukácsi partner, attorney at law lukacsi@sbgk.hu

bELGIUM

Contacts for DBB Franchising Practice Pierre Demolin – Avocat pdemolin@dbblaw.eu ; T. + 32 (0)2 555.11.29 Véronique Demolin – Avocat vdemolin@dbblaw.eu ; T. + 32 (0)2 555.11.40 Benoit SIMPELAERE – Advocaat bsimpelaere@dbblaw.eu T. + 32 2 555.11.31 Leonard HAWKES – Solicitor (Juriste conseil) lhawkes@dbblaw.eu T. +32 2 213 14 52 www.dbblaw.eu

Mandatory Pre-Contractual Rules for the Establishment of a Belgian Franchise In Belgium, the law of 19 December, 2005, on pre-contractual information regarding agreements to form a commercial business relationship (the ‘PCL’) regulates the pre-contractual information that must be provided by all franchisors to candidate franchisees. Legal Framework The PCL (whose scope, as its name implies, extends more widely than just to franchise agreements) requires that, apart from providing a draft contract, the party granting the rights must deliver a precontractual information document incorporating certain prescribed information, at least one month before the contract ends. The entire agreement can be cancelled during the two year period starting from the execution date of the agreement if: the draft contract, or the pre-contractual information document, was not transmitted or was incomplete; the parties signed the agreement before the month expires; a sum of money has been solicited or paid, or an obligation was entered into; before the one month suspension period expired. Interpretation In a May 2009 judgment, the Liège Tribunal of Commerce confirmed that a franchisor who merely provides a copy of the proposed contract before it is signed, does not comply with the legal obligations arising from the PCL. Moreover, the court held that the fact that certain obligations of the franchisee were not mentioned (in this case, commissions and delivery costs) in the draft agreement was a failure, which made the signed agreement void; since the information requirements of the PCL are mandatory. This case appears to indicate that a breach of any single information obligation will be enough to mean that the agreement is void because it was concluded contrary to the mandatory requirements of the PCL. The tribunal also clarified that the consequences of nullity are: firstly, that the admission fees paid by franchisee for access to the franchise network have to be returned; secondly, the goods delivered to the franchisee must be returned to franchisor (if that is not possible, the franchisee will have to account for the un-returned goods); lastly, fixed and variable fees must be returned pro-rata to the franchisee, unless the franchisor can show that it provided services which justify the payment of such fees. Conclusions As judicial interpretation of the PCL is at an early stage, it will be interesting to see whether the judges will consider whether to apply any discretion to depart from the requirement of nullity when there is a minor breach. Questions will also arise where the franchisee’s request for nullity is clearly abusive and about the supply of incorrect information (not dealt with per se in the law). Pierre Demolin and Leonard Hawkes

VIETNAM

D&N International Dang Thi Hong Thuy Managing Partner Tel: + 84 4 35 62 50 16 thuydang@dnlaw.com.vn www.dnlaw.com.vn

With a population of 87 million (65% of which are under 35 years old), one of the fastest economic growth rates in Asia, and a very dynamic emerging consumer class with a strong preference for foreign brands, since Vietnam joined the World Trade Organisation and set up a basic legal framework for franchising, recent years have seen the country witness an unprecedented level of interest from the international franchise community. The Commercial Law 2005 and its implementing regulations govern franchising in Vietnam. These include Decree 35 (amended in 2011 by Decree 120) and Circular 9, as well as the Intellectual Property Law and Technology Transfer law. We look at some important features of franchise regulations in Vietnam. Conditions to Conducting Franchising Activities Franchisors are subject to the following conditions: (i) Franchisor must be a lawfully established enterprise either in Vietnam or in a foreign country; (ii) The franchise business system must have been in operation for at least one year; (iii) The franchising activity must have been registered with competent authority; (iv) Goods and services which are subject of the franchise contract must not be prohibited from circulation in Vietnam, or if circulation is restricted or conditional the necessary conditions for circulation must be satisfied (i.e. business license). Franchisees must also have a business registration that is appropriate for the franchise business. Franchise Contract and Disclosure All franchise contracts must be made in writing or in another legally equivalent form. With the exception of outbound franchise, they are required to be in the Vietnamese language. The term of a franchise contract and the franchise fee is open to negotiation between the franchisor and the franchisee. Unless the parties otherwise agree, a copy of franchise contract and the franchise description document must be sent by the franchisor to the franchisee at least 15 days before the signing date of the contract. The disclosure document should be prepared in accordance with Circular 9, which requires specific details. However, licensing of industrial property rights should constitute a separate part in a franchise contract and be in compliance with the law on industrial property. Registration of Franchising Activity Prior to granting a franchise, franchising activities must be registered with competent authority by the franchisor (i.e. registration of each contract is not required). Franchisors are also required to report to competent authorities any changes in the franchised business within thirty working days from the date on which the change occurs, and must report annually by 15th January about any matters contained within the disclosure document. May 2012 • GBM • 33

trip advisor

World’s best beach destinations With scenic landscapes, soft sand and calm turquoise seas, the beach destinations are the world’s best according to TripAdvisor’s over 50 million users, who have tried and tested destinations in every corner of the world. “These are the best beach destinations the world has to offer according to those that really matter – travellers themselves,” commented Emma Shaw, TripAdvisor spokesperson. “Travellers seeking an escape in the sun will be pleased with any of these destinations.”

world’s best beach destinations: 1. Providenciales, Turks and caicos

watersports or beach relaxation.

Featuring the famous 12 mile Grace Bay Beach with fine, white sand, turquoise water and pristine coral reefs, Providenciales is paradise for travellers looking for natural beauty and a relaxed lifestyle.

As one TripAdvisor traveller said, “This is the best beach that I have been to. The sand is ﬁne and white, the sea is blue and the water is crystal clear.”

As one TripAdvisor traveller said, “Grace Bay beach is one of the most beautiful places we have ever seen. The beaches are private and the waves were so fun to play around in.”

2. Palm/Eagle Beach, Aruba Boasting calm waters, Palm/Eagle Beach is ideal for swimmers and snorkellers. Visitors can also enjoy the restaurants, shops and views of the high rise hotels dotted along the strip. As one TripAdvisor traveller said, “Loved this beach location. It has so many wonderful hotels and restaurants as well as being close to the mall.”

3. Tulum, Mexico Meaning “Wall” in Mayan, Tulum is the perfect destination for travellers seeking variety. Combining serene beauty and culture, travellers can take a stroll along the sandy powder beach and move on to visit the Mayan ruins. As one TripAdvisor traveller said, “In most parts of the beach it is possible to sunbathe and swim completely alone, it is really amazing.”

4. Negril, Jamaica Known amongst travellers as the “seven mile beach”, Negril is famed for its stunning sunset views and majestic cliffs. With jumping points reaching more than 40 feet, thrill-seekers are often seen diving into the sea. As one TripAdvisor traveller said, “We visited the seven mile beach and the cliﬀs. It was so relaxing and the views are amazing overlooking the water, especially during sunset.”

5. Saint Pete Beach, Florida, United States Home of clear gulf waters and a pristine - white sand beach, Saint Pete Beach also attracts travellers with the famous Salvador Dali museum and St. Petersburg Pier. As one TripAdvisor traveller said, “I would deﬁnitely go back to St Pete Beach, there is plenty to do and see.”

6. Boracay, Philippines Whether you want to laze the day away, indulge in local cuisine or immerse yourself in activities, Boracay has it all. Comprised of three ‘barangays’ (villages), travellers can take their pick of the restaurants,

34 • GBM • May 2012

7. cancun, Mexico Located on the South-east coast of Mexico, Cancun is a world-renown tourist destination. Filled with modern shopping complexes, bustling nightlife and a picturesque beach that goes on for miles, the city is also enriched by its Mayan culture present in impressive architecture and art. As one TripAdvisor traveller said, “The beach is clean and pristine. I loved walking along it as you can go forever.”

8. Punta cana, Dominican Republic Dotted with palm trees along its landscape, Punta Cana is known for its breathtaking beaches and scenic setting. With an abundance of high forested mountains, large river valleys and spacious land, visitors can enjoy bike rides, boat trips and endless rounds of golf. As one TripAdvisor traveller said, “One of the most beautiful places we’ve been to. Peaceful tropical surroundings, amazing turquoise water and a steady breeze.”

9. Miami Beach, Florida, United States Famous for South Beach and hundreds of nightclubs, restaurants and hotels, Miami Beach has vibrancy like no other. The Art Deco District is particularly lovely, featuring the largest collection of Art Deco architecture in the world, comprised of hotels, apartments and other structures. As one TripAdvisor traveller said, “White sand, a perfect shade of blue, crystal water...it’s a dream beach.”

10. Varadero, cuba Also called “Playa Azul”, which means “blue beach” in Spanish, Varadero is a picture-perfect nirvana. With a seemingly endless stretch of white-sand beach and calm waters perfect for watersports, this destination cannot be improved. As one TripAdvisor traveller said, “This beach is the most breathtaking place we have ever seen. Soft, ﬂour like sand and warm water. Perfect.”

For more information on these properties, including reviews and travellers photos, visit www.tripadvisor.co.uk/TravelersChoice-Beaches-cDestinations-g1

May 2012 • GBM • 35

LUXUry Brand series – goLF resorts

Golf Resort s

LUXUrY BrAND SerIeS

36 • GBM • May 2012

The Kildare Hotel and country club – The K club Ireland

The Kildare Hotel and Country Club, affectionately known as The K Club, drew international acclaim when it hosted the 36th Ryder Cup in September 2006. Already a well known golfing destination having hosted 13 Smurfit European Opens (1991 – 2007), the eyes of the world were drawn to this magnificent resort to see the who’s who of the Global Golfing World take their place, centre stage on the Arnold Palmer designed Ryder Cup Course. The Palmer Ryder Cup Course is recognised as one of Europe’s most spectacular courses, challenging and dramatic, the layout and design takes your breath away. At every turn, fairway, cascading water feature or leafy, verdant space a challenge ensues, can you pit your wits and skill against the golf guru himself, Arnold Palmer, can you follow in the footsteps of the worlds best golfers? The 7,350 yard course is set around the mighty River Liffey which flows through the 550 acre lush Kildare estate. Mature indigenous Irish trees, carve their way around the fairways, towering over head, arms outstretched just waiting to catch a ball which may have made its way a little off course. Meanwhile, numerous water hazards and ‘beach-like’ bunkers lap the waters edge. Greens are lightening fast and too much action on many of the greens could lead you to a ‘watery grave’!

every bit as challenging as the Palmer Ryder Cup course. While the Palmer Ryder Cup Course is generally described as a mature parkland course, the Palmer Smurfit Course is a surprisingly link-style course. On the Palmer Smurfit Course the 7th is a long and genuine three shotter. The magnetic feature is a ‘Swallow Quarry’, a vast man made rock face that rises some 60 feet out of a glorious lake. A series of waterfalls cascade the water hazard but its beauty belies its treachery and players are well advised to admire the view from the centre of the fairway! Both courses are tantalising, challenging and have a degree of difficult to suit all levels. With two championship courses, offering 36 of the most exciting and dramatic holes in Europe, golf at The K Club is a truly unique experience. The K Club also includes a luxurious resort spa, fishing on the River Liffey and a selection of dining experiences. Have you had your serving of Special K yet? Call (01) 6017200 or log on to www.kclub.ie for more details.

The walk through the course is a true joy, a myriad of land marks can be spotted throughout, adding interest and surprises at every stage, a quaint 19th century iron bridge at the 16th provides players with a safe passage to an emerald island which is hugged by two watery arms of the River Liffey, while the ruins of an ancient church can be spotted as you approach the 13th. Views of ‘Straffan House’, the hotel itself can be seen through the trees at the 17th. Dating back to 1832, Ireland’s first AA Five Red Star Property is the original home of classic Irish hospitality and is just the place to sit and relax tired, golfing bones. Not content with creating one internationally acclaimed Championship course, Dr. Michael Smurfit joined forces with Arnold Palmer once again to create a second stunning 18 hole course. The Palmer Smurfit Course is May 2012 • GBM • 37

LUXUry Brand series – goLF resorts

Stella Di Mare Golf, Spa and country club Stella Di Mare Resorts Ain Soukhna, Red Sea, Egypt

Stella Di Mare Golf, Spa and country club: Gently embraced and surrounded by a beautiful golf course, the Stella Di Mare Golf, Spa and Country Club is the ultimate retreat for those requiring some quiet rest and relaxation. Located by the Red Sea, this luxurious hotel is the perfect escape for Golf, Spa, and Beach holidays. The Stella Di Mare Golf, Spa and Country Club is a 5* boutique hotel. With rooms beautifully decorated to the finest standard, this hotel is in a class of its own.

Tiley (2010) and Paul Broadhurst (2011).

The magnificent 18 hole links golf course is of fantastic standard all year round. The Championship Par 72 golf course is designed by the world famous architect Karl Litten. Measuring a distance of 6,550 metres from the Professional tees and with a total of 4 different tee choices available, the course is a test for any level of golfer. Stella Di Mare boasts a unique aqua driving range, short game area, and an 18 hole Himalayan style putting green. There is also a fine Golf Academy with PGA Qualified Golf Professionals on hand for tips either on the practice facilities or on the course.

Located within the resort is one of Egypt’s finest Thalasso Spa’s. Guests can enjoy massages from within the hotel or take the short golf cart shuttle ride to enjoy all of what the Spa has to offer. A wide range of treatments are available such as facials, full body massages, waxing and even an escape golf tonic treatment. Our treatments can be purchased individually or as a package spanning from one to six days. Full qualified Therapists are on hand to deliver only the best in service. The spa has a private beach so guests can exclusively relax by the Red Sea. Adjacent to the private beach is the 1km long golden sandy beach open to all hotel guests, which is known as one of the best natural beaches in the Red Sea region.

The course plays host to the every increasingly popular annual ‘International Pro-Am’. The event attracts many European Tour stars, who play for an individual prize fund of over $40,000. Previous winners include European Tour Professionals Steven

This boutique hotel offers warmth, friendliness, and luxurious service. Each room is elegant, simple, and decorated in a manner to give the hotel a special touch that golfers will especially appreciate and enjoy. Once you enter the doors of our five star

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luxury hotel, you will find our rounded lobby with a marble and alabaster ceiling which give a spectacular colour effect according to the daily weather and sunlight. The Golf, Spa and Country Club offers 51 rooms, none of which can be classed as standard rooms. The rooms are elegantly crafted with a vision to warmth and privacy, all offering stunning views of either the golf course or garden areas. The spacious and elegant rooms offer room service and are all air-conditioned with satellite TV. Within the Golf, Spa and Country Club lies The Links Restaurant which serves the finest International cuisine. A la carte, drinks and refreshments are offered in the relaxing atmospheres in either Heaney’s Bar or Tiger Club. Or guests can take advantage of one of the other 12 restaurants and bars that the resort has to offer, varying from a fabulous fish restaurant on the beach to a shisha and coffee bar under the stars. When staying at the Stella Di Mare Golf, Spa and Country Club, guests can also enjoy the

facilities of its two sister hotels, the Stella Di Mare Grand and Stella Di Mare Sea Club. The Resort has various swimming pools (heated/ indoor/outdoor), tennis courts, squash courts, table tennis, volleyball, beach football, water football, various water sports, archery, american pool, snooker, amusement Rooms, mini golf, and much much more! The resort offers a 5* PADI Diving centre onsite. Located on the resorts beach, the diving centre is open daily and run by qualified diving instructors. There are daily boat trips with the five main dive sites being; Dolphin Reef, Turtle Reef, Harris Rock, Kurkle Reef and Aquarium Reef.

Tel: +20 (62) 325 0300 Fax: +20 (62) 325 0003 Mob: +20 100 177 4779 gm.golf@stelladimare.com golf@stelladimare.com www.stelladimaregolf.com www.stelladimare.com Address: Km 46 Suez – Hurghada Road Ain Soukhna, Red Sea, Egypt www.facebook.com/stelladimaregc www.twitter.com/stelladimaregc

The hotel offers trips to the Great Pyramids, National Museum, River Nile and many more tourist favourites. With guaranteed sunshine, superb golf, spa and hotel facilities, as well as golden beaches and crystal clear waters of The Red Sea........ Stella Di Mare is the place to be!! May 2012 • GBM • 39

LUXUry Brand series – goLF resorts

The Belfry England, United Kingdom

Doing Business At The Belfry Taking a client or business prospect to The Belfry could produce the kind of response that saw Irishman Paul McGinley celebrate in style after holing the winning putt for Europe on the Brabazon’s 18th green at the Ryder Cup contest a decade ago. Following in the footsteps of golfing greats like Seve, Faldo, Monty, Woods and McIlroy – who hit his first shot as a professional on the famous 10th hole – corporate golfers can now enjoy a memory-filled Brabazon Experience, while conducting business in a relaxed atmosphere steeped in Ryder Cup history. Everything at the four-time Ryder Cup venue is geared towards a stress-free environment in which the best business conversations and decisions can be made. That includes the immaculate set up of the Brabazon course with its carpet-smooth greens and majestic fairways, widely regarded as one of the UK’s best-conditioned courses. On arrival, guests can warm up at the PGA National Golf Academy using the practice facilities and driving range. They are then allocated their own personalised lockers in the exclusive changing room and given practice range balls, course planner and Brabazon bag tag as part of the package. “Business executives travel from all over the world to play this famous course and we have devised a personalised service to suit their requirements to the letter,” said Gary Silcock, The Belfry’s Director of Golf. “As we’re centrally located in the UK with good road, rail and air links, visitors can get here easily and make the most of the Brabazon Experience.” In addition to the flagship Brabazon course, 40 • GBM • May 2012

corporate visitors can also play the nearby links-styled PGA National course. With dramatic green run-offs and pristine sloping fairways, the PGA National provides another testing challenge for any golfer. For a shorter outing, the 6,057-yard Derby course – like The Brabazon designed by legends Peter Alliss and Dave Thomas – caters for the less advanced golfer. Across the three courses, a 50-strong greenkeeping team maintains tournamentstandard conditions all year round, ensuring corporate outings can go ahead during the winter months when The Brabazon operates on a 10.30am shotgun start. Winter tees and greens are not used, so golfers can enjoy full greens and tees all year round. The Belfry also plays host to the PGA National Golf Academy – the ultimate facility for tuition or practice before a round. With nine leading golf equipment brands under the one roof, the Academy is the largest dedicated custom-fitting venue in Europe and offers visitors more than 12,000 different club and shaft combinations created by the resort’s custom-fitting specialists. And with 34 bays, five specialist video technology suites and two short game areas, there is something for every group of visitors. Although golf is the subject that first comes to mind when thinking about The Belfry, there is plenty more to take advantage of when visiting on business. “As well as a firstclass golfing experience, corporate visitors can expect to be thoroughly entertained off the course too,” explains Silcock. Doing business at The Belfry – 2 After walking off the 18th green and having a well-earned drink, guests can dine in the 50-seat Ryder Room or the 200-seat Warwick

Room. Or, for more special occasions, the European and American Ryder Cup Team rooms can be reserved. Alternatively, business discussions could continue with a meal in the highly-rated French Grill restaurant or a drink in The Belfry Bar. And as a finale, The Belfry’s popular Bel Air night club is open well into the night. Guests can also relax in the famous Belfry Hotel that boasts 324 bedrooms, including numerous top-end suites to match every special occasion. More people than ever before are complimenting their rounds of golf with a stay in the hotel. Indeed, The Belfry recently announced an 8% increase in the number of golfers – leisure and businessbased – booking ‘Stay & Play’ deals at the resort. There are also 22 different conference and meeting rooms on offer, providing a tranquil and bright setting to impress potential clients and motivate staff at important corporate gatherings. Each room can be fully AV equipped to create the optimum environment for inspiration and success, with a comprehensive Conference and Events team on hand to listen to requirements, recommend the best solution and deliver the highest levels of service. For those business trips taking on a more leisurely pace, facilities at The Belfry’s Health & Wellness centre more than hit the spot. As well as a gym with the latest state-ofthe-art equipment, the centre also includes the popular AquaSpa. This specialist facility consists of 11 rooms made up of a variety of sauna and steam rooms, plus a hydrotherapy pool, sanarium, relaxation room and hot and cold showers. Such high levels of service were paramount in helping The Belfry claim the title of

‘England’s Leading Golf Resort’ at the 2011 World Travel Awards, widely known as the ‘Oscars of the travel industry’. An award chosen by over 200,000 travel agents and visitors, it appraises the total experience enjoyed by visiting golfers from start to finish. More recently, the resort was recognised by the golf benchmarking company, 59Club, with four top awards for outstanding customer service within golf - making it the most successful golf resort in the UK. For more information on special offers or to book a business trip to The Belfry, visit www. TheBelfry.co.uk or call 0300 500 0405.

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LUXUry Brand series – goLF resorts

Lisboa Golf coast

Lisboa region is the perfect golf destination. The tranquillity and satisfaction to be found on the greens are matched only by the quality, number And diversity of lisbon’s golf courses. The region’s natural features are a major attraction for this inspiring and invigorating sport. The nearly year-round sunny and temperate climate combined with a striking landscape of ocean, beaches, rivers, cliﬀs, dunes and lakes make this a truly exhilarating experience.

symbols of the city – Mosteiro dos Jerónimos and the Torre de Belém recognised as a World Cultural Heritage site by UNESCO. PARQUE DAS NAÇÕES Located in the eastern part of Lisboa, this extensive cultural, entertainment, residential and corporate complex is a focus of the city's cultural and modern life. The gardens along the river, frame the facilities at the Parque das Nações, including the Pavilhão Atlântico, venue for concerts and major international sports events, and Casino Lisboa.

Over 20 golf courses can be found along estoril & sintra, the oeste region, and setúbal/tróia. All courses are top notch – the only diﬃculty is selecting one.

Is ideal for all ages.

Lisboa is much more than outstanding golf courses, it’s an intimate personal experience waiting to be discovered.

The Estoril and Sintra region, has a few superb golf courses to choose from. This unique part of Europe, just half an hour from Lisbon's International Airport, offers good weather all year round among its many attractions. Golf courses designed by the world's most famous architects to satisfy the demanding golfer, and a wonderful varied coastline.We also have Europe's largest casino, excellent hotels and restaurants, Sintra's World Heritage area full of culture and history, sparkling nightlife, great shopping and a whole lot more. All within easy driving range!

LISBOA Between Strokes THE HISTORICAL NEIGHBOURHOODS Bairro Alto, Chiado, Alfama, Baixa – in central Lisboa are perfect for visitors to the Portuguese capital to experience for themselves. Their culture, the history, the architecture and the people are fundamental aspects of Lisbon’s identity, and those who explore them will discover their own personal map. There are so many possibilities, don't let them get away. BELÉM Is the neighbourhood with the largest number of heritage sites connected with the Portuguese voyages of discoveries. It was from the beach in Belém that Vasco da Gama set sail to discover the sea route to India and the grandiosity of the former empire can be sensed throughout the area. Here you can visit two of the most imposing 42 • GBM • May 2012

ESTORIL & SINTRA ALL IN ONE, ALL YEAR ROUND

Golf Courses: Belas Clube de Campo Clube de Golf Quinta da Marinha Estoril Golf Course Oitavos Dunes Natural Links Golf Penha Longa Hotel Spa & Golf Resort Pestana Beloura Golf Resort SETÚBAL / TRÓIA This region has a wide natural diversity of landscapes and environment, favoured by the presence of the sea, and is a wonderful region

to discover. This area also extends into the interior, combining unforgettable beaches, with two estuaries, mountains and pure vegetation on the quiet inland plains. The area boasts a mixture of colours that radiate a unique light that always has a special charm. Golf Courses: Montado Resort Clube de Campo Aroeira I Quinta do Peru Golf & Country Club Ribagolf I Ribagolf II Santo Estêvão Golfe Tróia Golf Championship Course OESTE The Oeste is a fertile region, full of natural and cultural attractions. Its landscapes, full of colour, varying with the seasons of the year, are dominated by thousands of hills scattered with whitewashed villages and the characteristic windmills that symbolise the Oeste region. The Oeste connects the sea and the countryside, in a land with the marks of many different cultures. With its golf courses, golfers can find here the perfect symbiosis between the sea and the countryside, in a wonderfully peaceful atmosphere. Golf Courses: Bom Sucesso Golf Campo Real Golf Resort & Spa Golden Eagle Praia d’el Rey Golf & Beach Resort Royal Óbidos Spa & Golf Resort Turismo de Lisboa atl@visitlisboa.com www.visitlisboa.com

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improve yoUr goLF game

health & Fitness

improve your golf game Golf is a game that many of us enjoy whether it’s for business or pleasure. We watch the professionals and wonder in amazement how they make the game look easy. These individuals have made the game of golf their life and spend hours on the course and on the range improving every element of their stance, grip, balance and swing. However, for us mere mortals the short periods of time we have between personal and business life to improve on our handicap should be utilised to improve the overall enjoyment of our golf game. There are many factors that influence one’s overall technique and ability such as experience, height, build, and learning. However, there are certain things that you could do to help you get to that dream of playing like a professional!

clothing

equipment

As funny as it may sound but wearing the correct clothing may help to improve your game. In years gone by many thought that the only time they should worry about their attire was adhering to the rules of the golf club and looking the part on the course. Yet the millions spent by sport firms in research and development on golf clothing proves that it can actually help your game.

Golf club

Step 1 Buy golf shirts that are breathable and have a material that helps evaporate moisture and keeps it away from the skin. Step 2 Choose a top of the range golf glove. A stiff, out-of-shape glove will cramp your game and your hand. A high-quality glove that is kept in good shape will help you get a better feel for your club. Step 3 Saving money when choosing golf shoes is not a good option. A suitable pair of golf shoes will help your feet stay comfortable and they will also assist you get a good foothold when playing. Step 4 You may want to be stylish, but it's vital to be comfortable in the late stages of a round. Quality garments that are soft and don't irritate the skin will go a long way towards improving your game.

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In the olden days a golf club had a wooden shaft and metal head. Today we see and hear of clubs “made from the latest space age technology!” or “used by the top professionals the world over!”. Ensuring that you have the right golf and being comfortable with is is probably the most important factor in the game. It is the one tool that you need to hit the ball hard, precisely and the furthest distance. Don’t go cheap and don’t just choose an iron just because a professional uses it. There are hundreds and thousands of different gold clubs out there all with amazing features such as a comfortable grip, titanium heads and even curved shafts! However the cheap brands usually don’t do anything and are made from standard irons. Hybrid golf clubs are becoming more popular incorporating wood and iron to give a fantastic balance, weight and feel. Go to your local gold store and ask about the golf clubs in stock and choose a range that you’re comfortable with. Also make sure that they have been tested and certified by the Royal and Ancient Golf Club of St. Andrews and the United States Golf Association. Golf Ball Yes that right, choosing the right type of ball will help your game! There are many types of golf balls on the market, and customers often face a difficult decision. Golf balls are

divided into two categories: recreational and advanced balls. Recreational balls are oriented toward the ordinary golfer, who generally have low swing speeds (80 miles per hour or lower) and lose golf balls on the course easily. Advanced balls induce a greater amount of spin from lofted shots (wedges especially), as well as a sensation of softness in the hands in short-range shots. However, these balls require a much greater swing speed that only the physically strong players could carry out to compress at impact.

Step 1

Step 2

The palms of the hands face each other on the grip.

Fitness

Step 4

A good backswing starts with the arms - not the hands. You don't want to pick the club up at takeaway. You want to draw it away in a one-piece motion. As the club starts back, the left shoulder and hips should turn naturally to allow weight to transfer to the right side. The hands should begin to set at waist high. As the club continues to the top, the shoulders should continue to turn. At the top it is important to have the hands set but not broken down. Over swinging at the top will create negative club speed and inconsistent swings.

Golf isn’t a game whereby you just swing the club and hope for the best. Nor is it about a relaxed stroll across the course whilst eating and drinking your favourite fast food. Golf is a sport for athletes and what many see on the TV, is not some obese guy/women waddling down the fairway. Many of these athletes have a “Golf Training Programme” that they stick to religiously day-in, day-out. Step1 Improve your diet. Eat foods that will keep you going for the course of the 18 holes. Eating healthy not only gives you the energy but also helps to shed them un wanted pounds! Choose to eat smaller meals in the day that include your five daily fruit and vegetable. This can be the difference hitting the ball them few extra yards or just tapping the ball off the tee! Step 2 Exercise. This does not mean joining your local gym and going on a programme to become a body builder. Go out for long walks, jog a kilometres in the week or start a light training programme that will keep you fit and trim. Step3 Drink plenty of water before during and after your round. The amount of people who don’t do this is shocking. Water helps you stay alert, fresh and hydrated. A lack of water can make you tired and hamper your swing or even your putt.

the grip A great golf grip is the single most important element in the game and can help to get you off to a great start. Gripping the club like a man about to chop down a tree isn’t the greatest technique and can even result in injuries to the hand, arm and even someone else!

Step 2 The palms of the hands face in the same line as the leading edge of the clubface. Step 3 When attaching your grip, make sure that you have equal pressure on all sides of the shaft. The left side of the shaft goes across the mid points of the left hand. Close the last three fingers and the heel of the hand first, then the index finger and then the thumb. The thumb is neither long nor short, but is naturally positioned just to the right of the middle of the shaft. Step 5 The right side of the shaft goes across an angle that is parallel to the angle the shaft went across the left hand, but about an inch farther down in the fingers. Close the middle two fingers first, then cover the pocket of the palm of the hand over the left thumb. Curl the index finger, the thumb goes to the left side of the shaft and the pinkie goes in the groove between the left index and middle fingers. Step 6 There are no gaps ... everything fits nicely together. The hands are compact and unified. The grip pressure is created by the form of the grip. Step 7 The back of the left hand is the clubface; the palm of the right hand is the clubface. Where the hands are the clubface will follow.

the swing Too much thinking and pondering can often result in a poor swing. A golf swing is about having good rhythm and an accurate motion. Swinging back too fast will result in the club and body working against one another and will definitely result in a bad shot. The secret to a good swing is creating speed and power on the down swing and not the back swing. Step 1 Take the club away slow for better motion and rhythm. Because the backswing sets up the downswing, we will discuss it first.

Step 3 The object of the downswing is to return the club head to the ball with the highest controllable speed. Just as too fast of a backswing is no good, too hard of a downswing can also cause bad golf shots. There are many theories on what should start the downswing. I find that most players who think about pulling with their left arm from the top will create a more consistent swing with all body parts working together. Many players from watching the tour players tend to try to lead the downswing with the left side, and as a result slide ahead of the ball at impact causing weak slicing shots. Step 4 To complete the swing you must have a good finish. The finish in the golf swing, unlike in baseball, needs to be high, not left. We find most beginners find it more natural to finish low and left causing topped shots and difficult to get the ball airborne. The clubface needs to stay square for several inches after impact to create proper flight on the ball. Also, in the finish the weight that you transferred to the right side in the backswing now must transfer to the left side. With a good finish your right knee should face the target, right foot up so all spikes are visible, and hands high close to your left ear. Well, there you have it! A good look at improving your golf game. Now it’s up to you and to get on the golf course and getting that club swinging!

Disclaimer: The above information is for educational purposes and is not endorsed by any association, health authority and/or body. The information is not intended to be used as a training programme, guide or the likes.

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FamiLy Law

Family Law The Services and Role that the Family Law Bar Association (‘FLBA’) Plays Nationally and Internationally As of 2011, there were around 12,000 barristers in independent practice in England and Wales, with about 10% of that figure Queen’s Counsel (‘QCs’). Regulated by the Bar Standards Board, the Bar’s professional body is the Bar Council, which provides representation, support and services for barristers in England and Wales. The FLBA is the specialist Bar Association for family barristers and has over 2,500 members. It is actively involved in promoting Family Justice through all of its work. The current chair is Nicholas Cusworth QC who took up the position in January of this year and who will hold this office for two years. About the FLBA All barristers practising family law are encouraged to join the FLBA. The FLBA National Committee now delegates much of its work to sub committees whose members are comprised of National Committee members and others co-opted from time to time. The sub committees are split into practice and administrative areas of fees, practice, training and diversity, child law, money and property and the website. These committees meet regularly, although the full FLBA committee also meets monthly. The FLBA national committee is made up of 38 elected members, in addition to the chair, vice chair, secretary and treasurer. The regions are also represented on the committee by Regional Representatives. Membership is open to the following category of barristers: those in independent practice in England and Wales; those employed in a firm of solicitors in

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England and Wales; those employed in the Government Legal Service or for a Local Authority in England and Wales; those working in academia in England and Wales; and any other barrister approved by the Committee. International connections The Bar of England and Wales is very internationally oriented. A significant proportion of its members have an international practice and that number is increasing all the time. Clients in need of international legal advocacy or advisory services in any field of law can find the right experts at the English Bar. Every two years, the International Council of Advocates and Barristers (ICAB) organises an international legal conference in a different worldwide city. After a highly successful conference in Sydney, the next event will be in London from 29th June to 1st July 2012. This is the only conference, which brings all members of ICAB and guest jurisdictions together for three full days of exclusive visits, debate and discussion. The committee Structure The FLBA’s elected National Committee is based in London and is headed by a team of Executive Officers. In addition to this, the FLBA has a strong regional network as a result of its regional committees. The FLBA organises conferences, seminars, meetings and social events for its members. Each spring there is an annual conference, held at Cumberland Lodge, deep in The Great Park, Windsor. This year is the Association's

Deborah Dinan-Hayward Deborah Dinan-Hayward is a matrimonial finance barrister of 24 years call, practicing from Albion Chambers in Bristol where she is Head of the Family Team and Chair of the Bristol FLBA. She is also a Regional Representative on the National FLBA and sits on the Money and Property sub committee.

31st annual weekend conference. It also has a national conference each autumn – the location of which varies from year to year. In 2011 the national conference was held in Chester and in 2012 it will be held in Winchester. What the FLBA Oﬀers its Members The FLBA holds a series of accredited CPD lectures each year, which cover a wide spectrum of family law topics – from financial remedies – to international child abduction. This ensures that the Association’s members are well informed by current case law and judicial thinking. This also assists with meeting members’ obligations for continuing practice development (‘CPD’), which is currently a minimum of 12 hours a year. The FLBA produces a magazine, Family Affairs, three times a year, to keep its members up-to-date with events around the country and important developments in family law and procedure. Regular updates are also provided via e-mail to FLBA members. The FLBA also publishes At A Glance annually, which has become an invaluable reference guide for practitioners and the judiciary conducting finance cases. On behalf of its members, the FLBA actively strives to not only represent the interests of the family bar, but to broadly promote the enhancement of family justice to the government and those influential in matters of public policy concerning family law and the family bar. It does this through responses to public consultations, the commissioning of research, as well as other forms of engagement and dialogue.

The Institute of Family Law Arbitrators (‘IFLA’) recently launched a scheme to enable family disputes to be resolved by arbitration. The IFLA is the result of collaboration with the Chartered Institute of Arbitrators (CIArb), the Family Law Bar Association, Resolution (the body that many family solicitors are members of), and the Centre for Child and Family Law Reform (CCFLR). In March 2012, the launch of the new Family Law Arbitration Scheme was marked by an evening reception at Inner Temple, which was addressed by the former Lord Chancellor, Lord Falconer. Arbitration under the scheme is conducted under the Family Arbitration Rules, which have been developed by the IFLA for the scheme. This means that divorcing couples can agree to appoint their own arbitrator, or have the IFLA select one for them from its panel of approved arbitrators. The scheme covers disputes in relation to matrimonial finances arising from: divorce; family inheritance claims; financial claims made in England and Wales made after there has been a divorce abroad; claims for child maintenance between unmarried parents; cohabitation and property ownership disputes; and civil partnership financial claims. Disputes will be resolved by applying the laws of England and Wales, in the same way as applied in the Family Courts. consultation with the FLBA Judiciary and government departments consult the FLBA, including the Legal Services Commission and the Ministry of Justice, in all-important initiatives affecting family law and family barristers. In recent

times, the FLBA has been particularly active in responding to the proposed changes in the public funding of family law cases. Throughout the last 18 months, the Family Justice Review Panel has fully involved the FLBA as it carries out its research and analysis. The FLBA has been invited to give oral and written evidence to the panel on several occasions, and views on discrete topics have also been sought in more informal workshops and meetings. Recently, the FLBA has been consulted on the Home Office consultation on Forced Marriage; the Parliamentary Joint Committee on Human Rights’ call for submissions relating to the inquiry into the role and independence of the Office of the Children’s Commissioner for England; and the Bar Standards Board’s consultation on review and amendments to the Public Access Rules – the latter recently closing. In the wake of the government’s response to the Family Justice Review, on the horizon is the modernisation of the Family Justice System that is currently being overseen and driven by Mr Justice Ryder. This will of necessity lead to a significant change in the culture of the Family Courts. In April 2013 there is also the prospect of the coming into force of LASPO – the Legal Aid, Sentencing and Punishment of Offenders Bill 2010 - 2012 – and the consequent removal of most private family law matters from the scope of Legal Aid.

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family law

london

Hong Kong & china

RadcliffesLeBrasseur Caroline Penfold | Partner and Head of the Family Law Department Tel: 0207 227 7448 | caroline.penfold@rlb-law.com www.rlb-law.com Carina Smith | Assistant Solicitor Tel: 0207 227 6716 | carina.smith@rlb-law.com Ruben Sinha | Assistant Solicitor Tel: 0207 227 7310 | ruben.sinha@rlb-law.com www.rlb-law.com

Securing or Avoiding Proceedings in the Divorce Capital of the World It is widely acknowledged that the UK is the divorce capital of the world. As a result, the rewards of securing proceedings here can be plentiful for the less wealthy spouse contemplating divorce. Equally the rewards of securing proceedings elsewhere in the world will be considerable for the wealthier party and can avoid a hefty financial payout. RadclifflesLeBrasseur’s family team is headed by partner Caroline Penfold and can offer specialist advice, to ensure that your proceedings are brought in the jurisdiction most beneficial to you. A couple with connections to both the UK and a member of the European Union could most likely issue proceedings in either jurisdiction. However, current legislation provides that the proceedings will progress in the country where they are issued first in time. As such, it is vital that advice is sought at the earliest opportunity. This is no less important in relation to those with connections to non-European countries. Following the introduction of new legislation in April last year, whether proceedings can successfully be brought is a complex and new area of law. RadcliffesLeBrasseur’s family team can guide you through the law and ensure that you get the best settlement possible. Recommended by the Legal 500, our team advises a broad range of clients on divorce and all areas of matrimonial finance work, including pre-nuptial and post-nuptial agreements. Cases with an international element are a particular specialism and the team has advised clients with assets from as far afield as Argentina, Azerbaijan, Cambodia, the US and the Bahamas, as well as property closer to home in European destinations. The team also specialises in private law children work, including disputes surrounding residence and contact, and also applications for leave to remove a child from the jurisdiction. The family team is part of RadcliffesLeBrasseur’s wider private client department, which has won a number of awards in recent years including the Corporate International Award for Tax Planning Law Firm of the Year in UK. As a result, we are able to offer a full service encompassing both onshore and offshore tax advice where necessary – the aim being to ensure that settlements are not just favourable but also tax efficient. Such international experience has enabled us to build connections with lawyers and other professionals overseas, so that we can easily draw in foreign legal advice where necessary. 48 • GBM • May 2012

Hong Kong & China - Divorce and family law In terms of stressful events, divorce undoubtedly figures in the top three. At Oldham, Li and Nie (OLN), we pride ourselves on working with clients through this emotional and financial upheaval, minimising its effect on the parties, children and finances. Hong Kong (HK) raises specific issues in matrimonial matters as international elements probably feature here more prominently than anywhere else in the world. This international element has now become the norm, whether due to the husband or wife (or both) hailing from different countries or because joint property and assets are held outside of HK. With offshore companies, overseas properties, conflicts of laws, international custody and schooling, it is more critical than ever to ensure your lawyer is familiar with every aspect of your matrimonial situation. At OLN, we understand and focus on the challenges provided by this international element and concentrate on providing practical legal solutions. OLN advises on many matrimonial disputes involving complex financial structures, in particular in relation to timing of various international matrimonial applications, the feature of financial settlements and the tax implications in different jurisdictions. OLN is increasingly consulted in respect of prenuptial agreements involving substantial assets and can advise on the choice of jurisdiction and the applicable law most appropriate to facilitate their enforceability. OLN advises on all aspects of children cases, with particular experience in applications to remove children temporarily or permanently from HK, prevent wrongful removal of children from HK and obtaining the return of those wrongfully removed. OLN has a highly regarded matrimonial and family law (MFL) practice. Set up by Stephen Peaker in 2000, the practice quickly expanded with Paul Firmin in 2002 and Pamy Kuo and Kenneth Yung in 2006 and 2008 respectively. All members of OLN’s MFL practice are members of the HK Family Law Association and, in accordance with the Hong Kong Family Law Association’s Code of Conduct, are committed to a conciliatory and constructive approach, rather than a hostile or confrontational one. OLN's MFL members have access to top matrimonial lawyers worldwide via the International Academy of Matrimonial Lawyers (“IAML”) and in the UK through the UK Solicitors Family Law Association (Resolution). We have the assistance of colleagues in the firm’s commercial and litigation departments and through our membership of Globalaw, access to major law firms in most cities worldwide. Members of the MFL practice have expertise and a wealth of experience in many areas touching on family law, including (among many others): divorce and nullity, pre-nuptial agreements, disputes involving children, adoption, financial orders following divorce, trusts, and tax and immigration issues consequent on divorce.

England and Wales Jurisdictional Disputes With the financial consequences of divorce varying enormously from country to country, the importance of establishing a Court’s jurisdiction can make a difference of many millions of pounds to the final financial award. In England and Wales (and in all EU countries bar Denmark) jurisdiction is governed by Brussels II. This provides that the courts of a member state can accept jurisdiction if one of the parties is habitually resident in, or a national of that country (subject to certain requirements) or jurisdiction can be founded on a spouse’s domicile. It is therefore possible to establish jurisdiction in England and Wales even when neither spouse is an English national. Where more than one member state potentially has jurisdiction (as is frequently the case with international couples), immediate action must be taken, as Brussels II advocates the ‘first past the post’ rule with the issuing of proceedings. Outside the EU, the laws of each country determine the question of jurisdiction. However, even where a national Court is already dealing with a divorce, it may still be possible to issue proceedings in a second jurisdiction, on the basis that it is the more appropriate forum (i.e. a greater connection with that country or location of assets). Alternative Dispute Resolution

Harcus Sinclair Kathryn Peat/Roger Cobden-Ramsay Partner Tel: 020 7242 9700 Kathryn.peat@harcus-sinclair.co.uk Roger.cobden-ramsay@harcus-sinclair.co.uk www.harcus-sinclair.co.uk

Some disputes can only be resolved in the Courts (or through negotiations) and our clients value a robust and no-nonsense approach to litigation. However, some cases are better suited to other forms of dispute resolution. Mediation is a consensual process in which a neutral third party helps the couple to reach a mutually acceptable compromise. Mediation can be very effective for resolving disputes about the upbringing of children. In Arbitration an Arbitrator is jointly appointed by the parties to determine the dispute, and they are bound by his decision. The advantage of Arbitration over Court proceedings is that it can be less expensive, the parties are much more in control of timing and it is always confidential. Family Law Expertise Harcus Sinclair advises on all aspects of family law, with particular emphasis on complex, high net worth financial claims and the negotiation of nuptial agreements. Often our work has an international dimension and we have considerable experience in dealing with jurisdictional disputes. We combine family law expertise with a recognised specialism in trusts and tax, which ensures that we take full advantage of the estate planning opportunities afforded by divorce. Whilst we provide personal legal services of the highest quality, we are a dynamic and tight-knit team to ensure that work is carried out in the most cost-effective manner possible and tailored to each client. Kathryn Peat is a Resolution qualified Mediator, an IFLA accredited arbitrator, and a member of the Chartered Institute of Arbitrators.

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public procurement A Public Procurement Forecast for 2012 and Beyond What’s holding back greater economic growth? The principal roadblocks are not to be found in the behaviours of producers and consumers. That part of the supply-anddemand system seems to be working. And though the 2012 GDP forecast in developed countries is for modest growth of 1.5% (+ 0.3%), it is hoped that the 2012 growth rate will prove to be the lowest rate for the remainder of the decade. While housing markets and financial institutions continue to recover in the aftermath of financial implosion, the greatest impedance to growth at this time stems from the intangible yet tremendously influential lack of confidence in the fundamental creditworthiness of many governments that comprise the advanced economies. Advanced economies are the United States; European Union-15; Japan; and Others – Canada, Switzerland, Norway, Israel, Iceland, Cyprus, Korea, Australia, Taiwan Province of China, Hong Kong, Singapore, and New Zealand. Collectively, advanced economies contributed to 49.8% of 2010 global GDP. The critical challenges facing advanced economy governments in 2012: • Debt restructuring and long-term fiscal responsibility plans for EU-15 countries, Greece, Ireland, Italy, Portugal and Spain. • In the U.S., overcoming the political stalemate necessary to achieve alignment of political will with fiscal responsibility. The prospects for the EU look substantially more positive than in 2011 with Greece and Italy both moving forward restructuring and economic austerity proposals in March. The

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austerity requirements of these proposals face great resistance from each country’s citizenry, yet both countries are loath to be excluded from the EU, which is the stark alternative to internal financial reforms. Great progress seems to have been made with the recent negotiations and agreement between the European Central Bank and Greece. For the United States, 2012 is a presidential election year, which suggests that party politics will prolong realisation of substantive budget reform. Meanwhile, U.S. government bond ratings continue in the crosshairs of Moody’s and Standard & Poor’s, and – barring intervening bi-partisan budget compromise in the coming months – an automatic budget cut of $109 billion will take effect January 2, 2013, evenly split between defence and non-defence programmes. Those pressures may not be enough to offset election year party positioning. The win-win solution for both parties is to claim victory that the bi-partisan deficit reduction plan adequately reflects the fundamental principles of each party’s ideology. That, however, may only be possible after the election takes place and a clearer mandate for one party or the other is manifest. Increasing International Focus on Public Procurement The global recession and accompanying politics continues to burden government procurement professionals with the responsibility of maintaining operations with less financial and human resource. While that burden is not unfamiliar, for many procurement professionals it has come with even greater pressure to be sensitive to how contract awards contribute to supporting

economic growth and supplier segments. The good news-bad news of the elevated attention directed toward procurement is that procurement managers are given the opportunity to both demonstrate their unique position to influence the success of their entity, and in the process educate its leaders on the value of maintaining the integrity of procurement practices that serve the long term interests of their agency and community. In 2012, collaborative practices both internal to agencies and across jurisdictions will continue to grow into standard, institutionalised practices. With expanding interest in the ‘lean thinking’ buzz that started to catch on more broadly with public sector managers in 2011, procurement departments already demonstrating a collaborative, customer-oriented disposition, will find their approach reinforced by the cross-functional spirit of lean thinking. Heightened interest in the value of procurement is not unique to the U.S., Canada or developed nations. Developing nations such as China, India, Mexico, Brazil, South Africa and Saudi Arabia – to name just a few – are focusing resources on developing effective government procurement processes and practices. As such, the already substantial recognition and adoption of the Values and Guiding Principles of Public Procurement in North America is poised for global proliferation in the coming year. Building on the Value and Guiding Principles, NIGP: The Institute for Public Procurement and the Chartered Institute for Purchasing and Supply (CIPS) jointly announced late this past March the global

release of standardised practices of public procurement. The first ten practices released reflect the need to at once normalise and professionalise how governments conduct their procurements. Additional practices will be added over time and existing practices in constant process of review for relevance and accuracy. Through the combined efforts of NIGP and CIPS, an authoritative reference relevant across borders is available to government procurement agencies seeking to benchmark or improve their agency’s contracting practices. Demand for procurement professionals Demographics and professional trends reflect the ongoing need for certified government procurement practitioners: • Aging workforce and succession challenges. In the U.S. 15% or more of the existing federal and state procurement employees are eligible to retire in the next three-to-five years. Forecasting out as far as 2018, the percentage of federal acquisition employees eligible for retirement jumps to 60%. The U.K. and Canada have similar stories to share. • U.S. Federal hiring plans call for adding more than 12,000 new procurement / acquisition / contracting personnel by 2015. However, should automatic budget cuts take effect in 2013, there will be a negative impact on the hiring plan, though specific numbers have yet to be defined. • The transition of procurement from a transaction-centric function to a centre for applied strategic business practices, demands workers with a strong education; business, contracting, legal, and/or finance acumen; systems awareness; and effective communication and partnering skills. • Governments increasingly seek, if not require, procurement practitioners to hold or obtain professional certification as a condition of employment. Universities in general have been slow to establish programmes to support the increasing demand for procurement professionals, though there are hopeful signs of growing awareness by higher education communities of this need. Meanwhile, professional associations like NIGP and CIPS

continue to provide certification-supporting professional development programmes: and the Canadian Supply Chain Sector Council (CSCSC) was founded by the Canadian government in recognition of the pending gap in both public and private supply chainrelated personnel. Succession planning and ‘right-sizing’ – staying out in front For government agencies with little or no training dollars, effectively supporting - or even developing - a succession plan may be low on the managerial priority list. Still, public sector leaders will need to prepare for the inevitable transition of their procurement workforce. Succession planning often focuses on developing the necessary skills and abilities required of procurement personnel, or otherwise acquiring the required experience through the hiring process. The legacy of this recession for most agencies will be reduced procurement headcounts and budgets for training and development. Successfully adjusting to this aspect of ‘new normal’ may influence renewed interest in examining the scope of procurement, and the balance between technology-based tools and human resources necessary to achieve the procurement’s agency mission. In the process, additional momentum for lean thinking may come into play, as entities consider pan-agency resource sharing and opportunities for alternative strategic approaches that support community needs. Trends of note for private sector Demand for procurement professionals is not unique to public sector. Private companies that have not focused attention on their longterm procurement staffing needs should take note that there will be increased competition in the coming years for well-educated contracting employees. As agencies adjust to reduced staffing and budgets, we see strengthened growth in the use of cooperative purchasing programmes and collaborative practices across government entities. Since their appearance in the early-/mid-2000s, the larger cooperative programmes have generally experienced double-digit year-over-year growth in spend volumes. Companies should be aware of these cooperative programmes

and be considered for inclusion in their government/education sector sales plans. Procurement entities increasingly seek suppliers who have or can provide an online business transaction capacity. Implementations of procurement-financewarehousing ERPs slowed during the middle part of the earlier decade and the economic downturn exacerbated that trend. However, as we look ahead over the coming year and into 2013-2014, agencies increasingly realise the need for IT solutions that offset loss of human resources, and their demand for integrated systems that can provide the business intelligence needed to make sourcing decisions that maximise every tax dollar. Forecast summary For the majority of governments, 2012 will be more of the same – with just a little less. Professional politicians around the world will be challenged to fulfil the duty intrinsic to their station: effective governance and fiduciary responsibility. Slow economic growth in 2010 and 2011 with projected continued slow growth in 2012, hints at an economic system in process of righting itself. The principal catalyst for growth is re-establishing credibility in government creditworthiness. As government behaviour takes front-andcentre on the macro-economic stage in 2012, procurement leaders can anticipate yet more attention backstage from colleagues in government who take increased interest in lean management practices, looking to procurement as part of ‘the solution’ and the global desire for principled procurement processes. The long-sitting U.S. Senator, William H. Borah (serving 1904-1940) observed, “The marvel of all history is the patience with which men and women submit to the burdens unnecessarily laid upon them by their governments.” As members of the public and the public procurement profession, 2012 will be another year requiring much patience. Let us be marvels.

Brent Maas is the Marketing Director for the National Institute of Governmental Purchasing (NIGP), a professional association providing education, research and promotional programmes to more than 16,000 procurement professionals from over 2,400 U.S. and Canadian federal, state, provincial and local member agencies. Contact Brent at bmaas@nigp.org. Learn more about NIGP at www.nigp.org.

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Public Procurement Public procurement, public tendering, government contracting and government procurement are among the terms used to describe the purchasing of goods, services and works by public authorities. This purchasing activity accounts for a huge chunk of international commerce; estimated to account for 19% of EU GDP and averaging around 15% in OECD economies. The United States federal government is known to be the world's largest single purchaser of goods and services. Public contracts mean big business. Having an understanding of the rules which govern tender processes and how public contracts are awarded is vital for organisations looking to win business in this substantial marketplace. Given the economic significance of these contracts, public procurement can be intensely political. The European Commission recently announced proposals with the stated objective of improving the conditions under which EU businesses compete for public contracts in third countries. Under these proposals, it would

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be possible to exclude tenders if the relevant goods and services originate from a country that does not have substantive reciprocal arrangements in the EU. The United States, Japan and China were all explicitly mentioned, prompting a cautionary editorial in The Wall Street Journal. In the UK, the award last year of a £1.4bn contract for new trains on the Thameslink service to Siemens, a German company, in preference to Britishbased manufacturer, Bombardier, following a tender exercise, sparked intense political recriminations. Businesses chasing these contracts across national boundaries have to deal with the fact that different rules apply in different countries. However, there are many commonalities in the aims being pursued and also in the form of the rules. Most obviously, the rules aim to deliver value for the public purse by (usually) compelling competitive tendering of contract opportunities with a value exceeding stipulated thresholds. The rules also reflect agreements made at the inter-governmental level, with a view

to breaking down barriers to international trade, most notably the Agreement on Government Procurement through the World Trade Organisation. At the European level, the rules play an important role in the EU’s ongoing pursuit of market integration and share the same legislative basis, although some differences remain at the national level. Public procurement rules do not only apply to public authorities. For example, in the EU, many entities active in regulated sectors such as water, energy, transport and postal services, are subject to procurement rules similar to those which cover the public sector. If such a market is subject to normal competitive pressures and this can be demonstrated, it is possible to apply to the European Commission for exemption. Finally, purely private sector entities can also find themselves caught by the rules if certain types of contract they are entering into are heavily subsidised with public money. Purchasing activity is increasingly used by public authorities to pursue a range of

other policies such as promoting equalities considerations, protecting the environment, delivering additional social benefits through public contracts, encouraging the participation of SMEs, and general economic development. It is possible for public authorities to pursue these aims via procurement, but the manner and extent to which they can is often constrained by procurement law. Procurement rules also serve an important function in the fight against corruption, as contracts awarded through fair, competitive tender procedures should (in theory) be awarded to the best bid, not the favoured supplier. In Europe, breach of anti-corruption laws can lead to permanent disbarment from public contracts. Given this multiplicity of aims, the constant complaint from companies is that public procurement is simply too complex, with process getting in the way of and adding to the cost of doing business. Governments, generally, are cognisant of this perception and are increasingly seeking to run lean procedures, introduce e-procurement and

David McGowan Treasurer & Membership Secretary The Procurement Lawyers’ Association Maclay Murray & Spens LLP

encourage greater participation. How successful these moves are is a matter for debate. Given the growing complexity of – and increasing focus on – public procurement and a perception that expertise in public procurement law is emerging as a distinct specialism, The Procurement Lawyers’ Association (PLA) was established in 2008 with a view to bringing together lawyers working in the field. The PLA aims to act as a platform to promote and strengthen procurement law expertise. We act as an external collective voice, for example, in responding to consultation exercises, and putting forward the various viewpoints raised by our members. Our members particularly welcome that we also act as a forum for in-depth discussion and debate about key procurement law issues, particularly for those members who choose to participate in our working groups, which offer the opportunity to work with their contemporaries in preparing papers, looking in detail at topical procurement issues.

The PLA does not represent any particular constituency or point of view and welcomes all members regardless of whether they are lawyers in private practice or in-house, work in the public or private sector, or are solicitor, barrister or academic. Many of the PLA’s 300+ members are based in the UK and Ireland, but we also have members from other EU Member States and from beyond, as we are always keen to collaborate with and hear perspectives from our international colleagues. We typically hold around four well-attended events each year, allowing our members to hear presentations and ask questions on the latest issues, as well as providing an opportunity to network with fellow specialists. If you are a procurement lawyer of whatever description, we would like to hear from you. For further information about The Procurement Lawyers’ Association, please contact:

1 George Square Glasgow G2 1AL United Kingdom david.mcgowan@mms.co.uk

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Denmark Horten Law Firm Andreas Christensen Partner and Head of Department Tel: +45 33 34 42 26 ac@horten.dk www.horten.dk

Experience as an Award Criterion – the Danish Approach The distinction between selection criteria and award criteria and particularly, the use of experience as an award criterion, has long been the subject of heated debate among public procurement professionals. In Denmark, the case law of the Complaints Board for Public Procurement has consistently held that experience can – lawfully – be used as an award criterion by contracting authorities.

of Justice, the Danish Complaints Board held that as the sub-criterion 1) related to the general suitability of the tenderer, the criterion could not be applied under the Classic Directive. On sub-criterion 2) the Danish Complaints Board held that the criterion was ‘closely linked to the performance of the contract in question’ and therefore aimed at identifying the economically most advantageous tender.

The distinction between selection criteria and award criteria has been one of the most debated issues in public procurement in the last decade. While the selection phase is aimed at evaluating the general suitability of the tenderers, the award phase is aimed at evaluating the bids on the basis of the subcriteria chosen by the contracting authority, when applying the most economically advantageous tender as the award criterion. A major part of the debate has related to the question of whether contracting authorities may apply sub-criteria aimed at the experience of the tenderer.

Danish contracting authorities are therefore allowed to apply experience as an award criterion, when the information received on the basis of this criterion is not used to evaluate the tenderers’ suitability to perform the contract, but to evaluate the specific bid pro rata the service/work to be delivered. While the position of the Court of Justice might be a sound literal interpretation of the Classical Directive, it is commercially unsound. When contracting authorities award contracts for highly specialised services, it is vital that they are then carried out by skilled professionals.

Whilst the Court of Justice has been hesitant to allow for experience-related sub-criteria, national case law has been less strict. In Denmark, the Complaints Board for Public Procurement has consistently held that while experience of the tenderer primarily is to be regarded as selection criteria, experience should be allowed as sub-criteria when awarding certain service contracts. The case law of the Danish Complaints Board is well illustrated by the Danish Complaints Board's decision in the case HedeDanmark A/S vs. Greve Spildevand A/S, concerning the award of a service contract. The contract in question concerned the draining of sludge beds by specialised longrange excavators. As the operation of the long-range excavators required great skill and finesse, the contracting authority had (among others) applied the following two sub-criteria: 1) the relevant experience of the tenderer, and 2) the relevant experience of the operator of the excavator. In accordance with the case-law of the Court

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The Reform Proposal It seems that the European Commission has taken note of the extensive debate, which has left the national approach to the experiencecriterion somewhat inconsistent with that of the Court of Justice. In the recently published legislative proposals, the Commission has included the possibility of applying experience as a sub-criterion. The proposal directive for public procurement (art. 66) as well as the proposal utilities directive (art. 76), thus state that the most economically advantageous tender shall be identified on the basis of criteria linked to the subject matter of the contract in question. For service contracts and contracts involving the design of works, the organisation, the qualification and experience of the staff assigned to performing, the contract may be taken into consideration. However, if experience is taken into consideration at the award stage, it is with the consequence that, following the award of the contract, such staff may only be replaced with the consent of the contracting entity which must verify that replacements ensure equivalent organisation and quality.

The approach laid down in the proposal directives is a welcomed codification of the current approach in national jurisdictions, and will provide a clear legal basis to ensure the necessary legal certainty for public authorities. Specialised Legal Assistance Hortens public procurement team is specialised in the complex and highly regulated area of public procurement law. We advise public authorities and companies as well as private tenderers of all aspects of the procurement process or call for tenders – including Public Private Partnership (OPP) and privatisation of public companies. We have wide experience in planning, drafting and carrying through calls for tenders and ensure a solid quality control of the tender procedure and tender documents. We investigate whether the competing offers are in accordance with the given procurement and tender rules. Our lawyers have solid experience in conducting cases at the Complaints Board for Public Procurement and the courts. In fact, we are the law firm in Denmark with the greatest experience in conducting cases at the Complaints Board for Public Procurement. We are also experienced when it comes to international procurement and calls for tenders. With thorough knowledge of the procurement and tender procedures abroad, we assist Danish tenderers bidding on international purchases and projects as well as public players receiving tenders from foreign companies.

The Role of Social Buying in UK Procurement Processes The UK procurement regime is based on the European Procurement Directives and focuses on open access to suppliers from all EU member states, incorporating the EU Treaty cornerstone principles of equal treatment, transparency, non-discrimination and proportionality. Recently in the UK, concerns have been expressed about the impact on the national economy of high value contracts being awarded to manufacturers whose factories are located in other EU countries. This is in the context of the perceived need to rebalance the economy following the financial crisis – a recent example being the high-profile failure of Bombardier to procure the Thameslink contract in Derby. There have now been calls for procurement processes to recognise the importance to the UK economy of supporting the wider supply chain, and providing opportunities for training, apprenticeships and small and medium-size enterprises. Social and community Benefits Local authorities have for some time been aware of ‘wise purchasing’ in order to promote employment opportunities, social inclusion, accessibility and ethical trade. After all, ‘sustainable procurement’ is not a new concept, as the European Commission issued an interpretative communication back in October 2001, setting out the possibilities offered by procurement law at that time, to integrate social considerations into procurement processes. Despite this, there is often nervousness on the part of public bodies to incorporate anything more than the very basic requirements on social and community benefits into their procurement processes. The principle is that procurement processes should not favour local suppliers and should not discriminate on the grounds of nationality, yet still be perfectly correct. This leaves many running scared when they detect any hint in a procurement that there is an obligation or advantage available to potential suppliers if they use local labour, buy from local suppliers, or intend to benefit the local community in any way through their contract.

Thinking Socially Social impact is of course not at odds with procurement law, but it does need to be carefully considered so that it fits in with, and does not impinge on, overriding principles such as the need to treat all suppliers in a manner that is not discriminatory on the grounds of country of origin. There are opportunities at each stage of a process to incorporate social considerations, for example; when setting technical specifications, choosing selection and award criteria and contract performance clauses. The Public Services (Social Value) Act 2012 that was passed earlier this year, applies to public services contracts (including those with an element of supply of goods or works). It is a step towards redressing the balance and encouraging public bodies to ‘think socially’. When awarding contracts the Act requires contracting authorities in England (and some in Wales) to look beyond the price and quality of the services to be provided, and consider not only the social impact of the award of the contract, but what the benefit is to the local area and community in terms of its economic, social and environmental well-being. The Overall Outcome The Act does not provide any derogation from the basic procurement principles, and it does not require or permit the award of contracts in favour of local suppliers where there is no objectively justifiable basis for doing so on the basis of the evaluation criteria and methodology in question. However, what it does do is bring to the forefront of public authorities’ procurement processes, the need to consider the outcome holistically and not in isolation in terms of – for example – price alone. Examples given in the guidance which accompanies the Act include: A proposal for a mental health service to be provided by an organisation that actively employs people with a history of mental health problems to help deliver the service; A contract between a housing Arms Length Management Organisation (ALMO) and a private sector

repairs company to provide greater social value by promoting careers in construction and trades to local schools; A proposal for NHS consultation events to be run by a patient group, which can then use any profits to increase beneficial activities in the local community. The Act suggests, but by no means expressly states, that it is within the gift of the public body to include higher scoring criteria for such social benefits. Therefore, it is likely that this will only ever be justifiable where it is appropriate and directly linked to the subject matter of the contract. Working community Participation So in practice what difference will it make? This remains to be seen. Given that it only applies to services contracts so as for preserving the jobs of many in the traditional manufacturing industries, it seems unlikely, and certainly as it is currently drafted it would not go far enough to do that in any event. However, what it does fit well with is the Localism Act 2011, which encourages community participation in service provision where there are clear benefits to the public body for doing so. This, together with other initiatives such as the ‘Big Society’ agenda and the move towards social enterprises, shows that the Government is clearly keen to encourage communities to work together. When the new procurement directives are finalised by the European Commission, there is likely to be wider scope to incorporate social and community benefits into procurement processes, in particular, selection and award criteria. This is the first step to a regime which actively encourages these considerations. Alison Walton, Principal Associate, Eversheds LLP

May 2012 • GBM • 55

pUBLic procUrement

Denmark DLA Piper Ellen Williamson Partner Tel: +61 3 9274 5692 ellen.williamson@dlapiper.com www.dlapiper.com

Public Procurement in Australia Australia is a federation of six states and two self-governing territories, forming the Commonwealth of Australia (Commonwealth).The Commonwealth, states and territories are each separate legal entities and their procurement is regulated to a greater or lesser extent by their own governing constitutions, legislation, policy and guidelines. However, while the Commonwealth is a party to a number of bi-lateral free trade agreements, it is not a party, only an observer, to the plurilateral Agreement on Government Procurement and it is not regulated by the European Commission rules. Although there is no uniform regime, the core principles underlying public procurement in all Australian jurisdictions are value for money (VFM) and ethical and transparent purchasing. The benchmark regime is that set by the Commonwealth and its key instrument is the Commonwealth Procurement Guidelines (CPGs). The CPGs incorporate all relevant international obligations and establish the underlying procurement principles for all Commonwealth procurements and the detailed mandatory procedures for non-

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exempt procurements meeting designated thresholds. Increased Commonwealth public spend and greater accountability for that has led, as in other parts of the world, to tighter regulation and increased transparency. The Commonwealth has tightened its regulation of procurement activities through a series of amendments to the Financial Management and Accountability Act and Regulations 1997 in 2009, which provide that the CPGs are a legislative instrument and require that officials performing procurement duties must act in accordance with the CPGs. Previously, officials were required to comply to the greatest extent possible with the CPGs and to have regard to them. To reinforce their elevation beyond policy guidelines, from July 2012 the CPGs will be called the Commonwealth Procurement Rules. An increased level of transparency is being achieved through the online system, AusTender which is now widely mandated to manage and report Commonwealth procurements, and includes the capacity to issue tender documentation and receive tender submissions. There is also an increased focus on smarter procurement by

Australian governments aimed at improved VFM, based on volume buy, collaboration with industry and increased competition. The CPGs encourage coordinated government procurement arrangements, cooperative agency arrangements and multi-use lists. As legal service providers to government, we not only advise on these arrangements for other suppliers, we have to comply with them ourselves. In Australia, DLA Piper is at the forefront of recognising and responding to public procurement issues because it is a market leader in public procurement. We act for over 45 Commonwealth departments and agencies and over 25 state government departments and agencies in key centres around Australia. We have more than 80 specialist government lawyers in our Australian offices, as trusted advisors on day-to-day government business and development of public procurement policy. This depth of experience has, increasingly, provided the springboard for us to work with the private sector, as it too becomes more focused on formulating procurement policy and regulating its procurement functions to deliver improved pricing and to manage risk.

Skadden, Arps, Slate, Meagher & Flom LLP

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Skadden’s Brussels office handles merger control, cartel, abuse of dominant position and state aid issues. We advise clients on investigations before various agencies and in litigation, including enforcement proceedings, before European courts. Our lawyers assist businesses and governments on regulatory and liberalization issues, and we work closely with clients to design, implement and monitor worldwide antitrust compliance programmes. Our focus is on EU competition issues raised by mergers, acquisitions and joint ventures, and we are highly experienced in dealing with EU institutions and member state authorities.

Skadden’s Brussels office was recognized as one of the top firms in the area of European Union and International Competition by Chambers Europe 2011 and The Legal 500 2011. ‘This US M&A powerhouse has a highly respected competition and antitrust practice operating on both sides of the Atlantic.’ Chambers Global 2011 ‘An extremely strong player in the US and worldwide.’ Chambers Europe 2011 ‘Delivers an excellent service.’ The Legal 500 EMEA 2011

great Leadership sKiLLs

What indicators can tell know that you have reached excellence in your communication skill level? Here’s the answer: you’ll be at the standard where, after each and every interaction, you will have availed yourself of all ten principles listed herein:

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Be Empathetic: There’s one classic adage that goes something like this: “people simply don’t care about how much you know, until they know how much you really care.” In business theory, leaders are taught to be standoffish and distant. This advice will only allow you to hear what others believe you should hear, and not the reality of a situation. Unless you are able to create consequential connections with those around you, you’ll never truly get to the crux of the matter. And when, and if you ever do get that all-important information, it just might be a little too late to be of any significant value.

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Keep it straight and above board: Generally speaking, people are skeptical of those who come across as a bit distrustful. If they get a gut feeling that a leader is deserving of their trust, then they will be more willing to get invested and take risks. On the other hand if this same individual proves to be of shady character and has a less than worthy track record they may be less accommodating. It’s good to note that, if you can build trust then people are far more willing to overlook certain mistakes. However they are much less likely to be forgiving where trust is not present in a relationship.

Say what you mean: Being specific crushes its antonym, being ambiguous, more times than I care to mention. Be clear and to the point. Time has become a scarce and highly sought after product, around the world’s markets today. It is of utmost importance that you are able to master the arts of brevity and clarity, in order to get your point across before your audience loses interest. The ultimate objective is to make certain that your words have weight and are not just inconsequential fluff.

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Any proficiency or inherent wisdom gained through studying is limited to the scope, in which it may be practically used. Experience shows, the foremost quality that good communicators have in common, is the ability to apply their knowledge in the right place and at the right time. The ability to read a person or group of persons, allows an expert communicator to determine the dispositions, interactions, opinions, morals and distresses of those being assessed. They can adeptly read their surroundings, tailoring their message to fit the current conditions. How this message is delivered has little, if anything, to do with the contents of the message, but rather to do with making the listeners feel that their expectations are being met.

One

It’s not hard to believe that the majority of leaders experience times during their busy days, where they must interact with others. It’s even less shocking that a great deal of misinformation and erroneous decisions are down to less than stellar communications. This is precisely the exact reason why leaders need to be obsessed with becoming great communicators. Successful communication makes up an indispensable part of corporate success, regardless of the circumstances. Although attaining great communication skills is not that difficult to accomplish, summoning up the courage to rely on said expertise, when your cards are on the table is not such a simple task.

GReat leadeRsHip sKills

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Becoming a great leader requires superlative communication skills. Hopefully you picked up on the fact that being a good talker was not mentioned– huge difference there. The fundamentals to developing the art of an adept communicator are rarely found in the pages of a college textbook. We are conditioned to concentrate on enunciation, pronunciation, grammar and the meaning of words and encouraged to keep the focus on what we need to learn. As crucial as these elements are to the learning process, it is only by mastering communication techniques, with the focal point on others that leaders can truly succeed. The ability to build a finely tuned understanding of others separates the truly competent communicators, from those who blindly fumble their way through conversations. This article will endeavor to show various methods of communicating. By implementing these procedures into the way you communicate, you will attain excellent results.

Stress their benefits not your profits: The trick is simple. Always leave them feeling fulfilled, satisfied and as if their point was received loud and clear. Giving is better than receiving therefore, by concentrating on how your words can benefit your listeners, you will succeed. It may not be something you do instinctively, but by keeping the focus on the other party’s thoughts, you will get much more information than by keeping the spotlight on you.

Replace being right with compassion and understanding: Being honest and direct is always good, however delivering this message in a way that is compassionate and caring will reap dividends. Leaders who communicate with empathy are viewed as real people – people who come across as truthful and open. In contrast those who chose to use their egos as a prop for espousing their personal agendas, are seen as disingenuous and fake.

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One mouth, two ears: The best leaders are programmed to be able to turn it up, off and down – instinctively. Repeating the same old message over and over just won’t have the same impact, as an intimate and meaningful discussion. However you must realize that the greatest dialogues occur during a conversation and not in a speech or sermon from a pulpit. After the penny has dropped, and you understand that the key to gaining knowledge is by un-clogging your eardrums, rather than gabbing away, you will have made that all-important first move towards being an expert in communication.

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Keep the door open: Going through life with blinkers on is the most detrimental way to block your access to new ideas and ventures. The second that a leader decides to converse with those individuals diametrically opposed to their own opinions, with a view to comprehending their stance rather than to change it; then they will have transcended into a much higher level of communicating. The mind boggles when confronted with persons who are deathly afraid of anything differing from their viewpoints - when they should be inquisitive and wanting to know more. What they fail to recognize is that these types of interactions can make you think deeply and question your own preconceived notions.

Leave your preconceived notions at the door: Every great leader will be able to read between the lines and decipher what is behind the words they are hearing. Simply because leaders will garner the utmost respect from others, should not give them carte blanche to fill every speaking opportunity with fluff. Shrewd and perceptive leaders have already figured out that they can gain a lot more respect by taking a back seat and allowing others to come to the fore. It has become so easy to send a piece of communication that the art of listening to the response has being lost. By keeping quiet and listening you will be far more likely to get to the next level. Have all bases covered: Know what you are talking about and stay in command of the subject matter. If you don’t know your topic inside and out, no one will want to know either. If you fake it to make it, you will find yourself on the other side of credible and in a place where everyone will have tuned out or walked away. Another saying goes, “it’s not what you say, but how you say it,” which does have some truth to it. However in my mind, what you say is extremely important. Being confident enough to factor in, not only the “how’s” but also the “why’s, is crucial to create the impression of a leader who has substance as opposed to one who is full of hot air. Create a one-on-one atmosphere: In a perfect world, leaders would have the comfort of conducting their speeches in an intimate and personal setting. However the topnotch communicators can create an atmosphere where they are able touch everyone individually in the room – whether that room is a stadium capable of seating 20,000 or a small conference room, designed for 10. The formula to successfully getting your point across relies on your ability to form an honest and sincere connection with your audience, as individuals.

This tip’s for free - Nothing’s ever written down in stone: Be flexible and willing to make changes, when and if necessary. When the communications strategy goes a little awry, it is rare to see a backup plan in place. Therefore a good leader and communicator will ensure that contingencies are in place to combat any negative feedback. One way to take control back from a situation that is reeling out of control is to remember to listen, and get to grips with the objective of those with whom you are communicating. If, after employing all of your knowledge and expertise, you are still unable to turn things round successfully, then you may have to take more drastic action. Making a direct and bold statement could engage that connection and elicit the confidence and reaction you need. Keep in mind, however, that using a tactic that could possibly offend or be greeted with strong emotions should be a reserved for only the most critical of situations.

Simply because you are ready to talk shouldn’t be the major indicator that your party is ready to converse with you. Making the effort to place stepping stones that will pave the way towards creating a fulfilling conversation, will pay dividends. In addition, you can’t expect your party to read your mind, so you must make yourself heard. How many occasions can you count where you have been told that a person assumed everyone knew what needed to be done – without ever actually communicating his or her intentions. Without creating a solid reasoning to justify your ideas, you just won’t get the projected positive response. What have we learned? – Keeping your focus on the contents of your discussions and tailoring them to be truthful accurate, and supported by logical business sense will save you from a world of headaches. Above all, keep in mind that the first rule of communication is most definitely not about you, your beliefs, your ideals or your situation. Remember that by recognizing and empathizing with the wishes and needs of other, you will succeed. By just doing this one thing, all of the miscommunication and problems you may have had in the past, will be just that – a thing of the past.

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Real estate sector report

Real Estate Sector Report

Real Estate: Lenders hold the key

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2011 has been a challenging year for some, a feast for others. This trend is going to continue, with a fine line dividing those that have their powder sheltered from the rain and those unrealistically leveraged, with unrealistic expectations. Banks, some troubled themselves, will continue delivering blows to anyone with less than impeccable records, while some cash rich investors feast

in a market where Darwin’s law has partly done its job. The Situation for borrowers on either end of the quality spectrum is no secret. Top clients have little trouble raising neither equity nor debt, while at the bottom end the lights are off. The broad middle range borrowers however will keep struggling

along, as banks avoid foreclosure, as long as you own a property good enough to keep lending against. At the same time asset values are starting to get more realistic, at least for any asset considered core. Everything else? Who knows what the values of some of the peripheral assets really are? Without consensus, there will be no improvement in bad asset sales or significantly renewed interest or capability in lending. No wonder that property markets perform widely different. Core is trading for big money, with yields in London, Paris and such reaching their peaks while much of the rest is left out in the cold. Aside from some lenders not being allowed to fail, the overall picture remains somewhat dire. The weight of the distressed portfolios on the banks balance sheets combined with some well-intended tightened regulations make the resuscitation of anaemic lending activities unlikely. Refinancing and restructuring existing debts absorbs a great chunk of those banks ability, which in turn means less well capitalised developers and investors inevitably will feel the pinch and lose out. Without easing lending conditions other sources have to fill the gap. So, where will the money come from? Like in most organic systems, alternatives pop up. Well capitalised insurance groups are tapping in but also Private Equity Funds, debt REITs are developing and even CMBS are far from history. However lending gap to fill is so huge and the reluctance and inability to face up to the multi billion asset problem will further delay a significant upturn in real estate fortunes on either side of the Atlantic. Markets to watch Some emerging markets keep thriving, others are emerging. Latin America bears enormous potentials, specifically Brazil, Mexico and Colombia. Flooded with foreign capital, fired by low interest rates, QE programs and the likes, these economies are filling the need for vision and potentials much desired by returnstarved investors. Asian markets likewise have long been focal points for money, with opportunities aplenty. Though widely different, emerging markets are similar in terms of sporting a young population, a growing middle class and long term dynamic

growth perspectives and general favourable economic indicators. On the other hand, investors are facing a lack of transparency, corruption and a “flexible” regulatory environment. It’s the stuff that creates opportunities but the risks attached are significant for those lacking access and connection to the local network, if existent at all. The importance of the modern marketplace Established or emerging: doing business is as old as mankind itself. Success and failure in business are divided by an ability to effectively liaise. Whereas in Europe or the US transparency levels and, track records allow for much more efficient business, finding reliable partners to team up with in Brazil, India or Russia is often the key issue to solve. It’s not surprising that the shake out of the financial crisis has left even fewer players thriving in those new markets. It’s the ones that have built in the long term for the long term. The others pulled out. The original setting for business is the historic marketplace. A good market would be frequented by the market goers you need to meet and need to know to do business. They did specialise, they did develop, but the underlying idea is still the same. Today’s market places are not necessarily as physical, but their value is as new as the day of their inception. Trade shows, conferences, meetings are all satisfying the need of bringing like minded groups of people together. While the virtual world is changing everything, there is still a benefit of face to face exchange, especially when bridging culturally diverse partners. Associations, Organizations or Industry clubs like the Global Real Estate Institute (GRI) are all fulfilling such needs in different

ways. Our Institute, the GRI has had many years of expertise in facilitating a platform where senior decision makers come together regularly elaborating opportunities, doing business, finding partners or simply stay in touch. The GRI has been actively approaching new markets with such a vision in mind, concentrating local know how, foreign capital on an exclusive basis that specifically enables time deprived business leaders to allocate their resources most efficiently. The access to global senior executives in combination with the club like private setting uniquely guarantees that all of the 12 GRI club meetings across the globe function as an incubator for building and maintaining business connections. As its most important feature, club meetings are strictly devoid of selling pressure, much like a living room conversation with like-minded colleagues, friends or soon to be business partners. Like one friend recently put it, the best business is done during the time it takes to navigate an 18 hole golf course. After that you know where you stand and you either part ways or can sign in the clubhouse.

Ronny Gotthardt Managing Director GRI - Global Real Estate Institute www.globalrealestate.org Tel: + 44 (0) 20 7121 5060

May 2012 • GBM • 61

Real estate sector report

Japan Recent Japanese Law Reforms to Islamic Finance A recent amendment to the Japanese laws will facilitate Shari'a-compliant financing structures within Japan. Historically, it had been difficult to structure Shari'a-compliant financing structures in Japan due to a number of factors, including the tax treatment of the distribution of profits to overseas Islamic investors. In fact, there had been only one reported real estate investment in Japan made in a Shari'a-compliant manner. However, a recent amendment to the Japanese Asset Securitisation Law, together with certain tax reforms, has made investing in Japan in a Shari'a-compliant manner more attractive. It has also helped to level the playing field between conventional financing

and Islamic financing for such investments in Japan. These amendments came into effect on 24 November 2011. In this article, we discuss the consequences of these latest legislative amendments for the development of Islamic finance in Japan. The 2011 Japanese Law Reform Before the reform, distribution of profits under sukuk were, for an investor, less advantageous from a tax perspective as compared with payment of interest under conventional bonds. This was an impediment to the development of the sukuk market in Japan. As a result of the reform, preferential tax treatments will be given to foreign investors who purchase ‘Bond-Type Beneficial Interests’, which are quasi-bond beneficial interests (shasai teki jyueki ken) of a ‘Specified Purpose Trust’ (SPT) established under the Asset Securitisation Law. Going forward, this will be the basis for the issuance of sukuk in Japan. Requirements Under the Asset Securitisation Law

Clifford Chance Law Office Eiichi Kanda Partner Tel: +81 3 5561 6643 eiichi.kanda@cliffordchance.com Leng-Fong Lai Partner Tel: +81 3 5561 6625 leng-fong.lai@cliffordchance.com www.cliffordchance.com

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In order to issue Bond-Type Beneficial Interests, the following items need to be provided in the SPT Agreement in accordance with the new Article 230 of the Asset Securitisation Law and the relevant Cabinet Order and Cabinet Office Ordinance: Firstly, the amount of each distribution must be set out in the SPT Agreement in the form of a pre-determined amount (or an amount determinable based on a method for calculating interest in the financial market). Secondly, for the structure of payments the principal must be redeemed at one or more pre-determined points in time or upon the occurrence of certain conditions such as following an event of default. Thirdly, the holders of Bond-Type Beneficial Interests are not granted voting rights save for certain prescribed resolutions, such as in relation to the amendment and termination of the SPT Agreement. Fourthly, the distribution of profits arising from management or disposition of trust assets is made every month, three months, six months or one year, and the principal amount of Bond-Type Beneficial Interests is not changed except as a result of redemptions thereof in whole or in part. Lastly, if Bond-Type Beneficial Interests contain a condition that the settlor is required to repurchase the trust assets under the SPT Agreement, or the SPT Agreement provides any other conditions (as provided in the Cabinet Office Ordinance) that the

settlor's creditworthiness has a material effect on the investors' investment decisions, the settlor is required to give notice to the trustee without delay under the SPT Agreement, if an event has occurred or may possibly occur, that affects or is likely to affect, the creditworthiness of the originator. Tax Treatment Preferential tax measures have also been introduced for the Bond-Type Beneficial Interests of an SPT held by investors who do not have a permanent establishment in Japan. The first measure provides that interest and gains on redemption from the Bond-Type Beneficial Interests (issued on or before 31 March 2013) received by nonresident individuals or foreign companies, are tax exempt under certain conditions. The second tax measure provides that any capital gains that arise from a foreign company or a non-resident individual disposing of BondType Beneficial Interests, will not be taxed in Japan. Thirdly,any profit distributions paid by a SPT are deductible in calculating taxable income of the SPT, provided that the qualifying requirements are satisfied. This means that an SPT is effectively a tax-pass through vehicle. Finally, there is also a measure that provides that if the originator repurchases assets entrusted to the SPT on the termination of the SPT Agreement, the repurchase will be exempt from taxes if certain conditions are satisfied. This measure is particularly significant in cases where underlying assets are real estate, as a transfer of real estate assets can otherwise attract significant acquisition and registration taxes. Conclusion and Observations These reforms have levelled the playing field significantly between conventional financing methods and Islamic financing methods in Japan. This legal platform is intended to open up the Japanese market to investors who require the investment structure to be Shari'acompliant. It also facilitates the ability of Japanese institutions to utilise assets on their balance sheet, to raise asset-based funding from capital markets investors who can only invest in Shari'a-compliant structures. Such reforms are very much welcome, as they are consistent with the current global trend for financial centres without a tradition of Islamic jurisprudence to carry out legislative changes. This will help to create a legal environment where Islamic finance can flourish.

cayman islands Real Estate in the Cayman Islands Following the high point of 2007, the real estate market in the Cayman Islands has, along with markets across the developed world, suffered from a lack of liquidity, with banks understandably placing much more stringent demands on their lending, effectively limiting this sector of the local economy. However, recent times have seen an upturn in the real estate market, which has provided a much-needed boost to residents and investors alike. In this article, Ian Jamieson, Head of Banking and Property Finance at Solomon Harris provides an overview of the current situation. The low of 2010 Since 2007, the number of real estate transactions taking place in the Cayman Islands had reduced year on year, hitting a nadir in 2010. In fact, that year was the ‘annus horribilis’ for the Cayman Islands real estate market, with the number of real estate transactions hitting just over 1,000 with a collective value of around US$315m. The global recession, coupled with the uncertainty around the US treatment of offshore holdings, prompted many potential investors to look elsewhere, leading to a surfeit of property for sale and a lack of suitable buyers. 2011 recovery However, 2011 saw the first shoots of recovery, with an increase of around 27% in the volume of real estate sales compared with the year before. Interestingly, the value of those transfers almost doubled from US$315m to US$606m – the third highest year on record. This was mirrored by an increase for the 14th consecutive month in a row of the number of tourists visiting via air. As these people are typically purchasers of resort properties, it is fair to assume that part of this real estate market recovery has been driven by the non-resident demographic. So far 2012 appears to be continuing this upward trend,

CAYMAN ISLANDS ATTORNEYS -AT - LAW

and with exciting new projects ahead it could feasibly surpass all expectations. New projects in 2012 Two new major developments have now been given the green light, which it is hoped will increase the marketability of Cayman, as well as provide numerous jobs for skilled and semi-skilled workers alike. The first of these developments is a new 140-bed hospital currently known as the ‘Shetty Narayana University Medical Centre’. The general contractor has been chosen and ground is due to be broken in August 2012, with a view to completing the first phase in September 2013. Future phases will include an expansion of the hospital facility, an assistedcare community, a medical university and a biotech facility. The second development is the Cayman Enterprise City (CEC), which is to be situated in the Savannah area of Grand Cayman. Built on one campus, the CEC is a special economic zone that will contain industry specific business parks, encompassing Cayman Internet and Technology Park, Cayman Media park, Cayman Biotech Park, Cayman Commodities and Derivates Park, Cayman Outsource Park and Cayman Academic Park. The zone will also benefit from a waiver on import duties and work permits, all designed to encourage foreign companies and investors to relocate to Grand Cayman.

Demographics Assuming that the new hospital and CEC proceed as planned, these developments will attract many new workers of various skill sets to the Cayman Islands, as the current population of around 55,000 will need to increase by thousands in order to service these new developments. The Cayman Islands Government has sought to simplify the process of granting work permits to new residents, in order to enable them to settle more quickly. This is something that has been needed for some time and which should provide new blood to the island. Conclusion Although it is still too early to say that the Cayman real estate market has fully recovered from the recession, the shoots of recovery are certainly visible. Furthermore, with large investors now seeking to break ground on major new projects with the approval and assistance of the Cayman Islands Government, those of us who deal with such matters on a day-to day basis have reason to be cautiously optimistic. Ian Jamieson is the Head of Property and Banking Finance at Solomon Harris attorneys-at-law. He can be reached on IJamieson@solomonharris.com, or on +1 345 949 0488.

In addition to these upcoming projects, the new residential, office and social development at Camana Bay continues to improve and expand. A further 200 residential properties are due to be added to the existing infrastructure as well as improvements made to the town centre. The first nine-storey development on Grand Cayman – the Watercolours development on Seven Mile Beach – is continuing construction and is set to complete in December 2013.

Solomon Harris Ian Jamieson Attorney Tel: 1 345 949 0488 Fax: 1 345 949 0364 ijamieson@solomonharris.com www.solomonharris.com

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Real estate sector report

Australia Foreign Investment in Australian Real Estate With its stable and transparent real estate market, robust legal framework and efficient titles system, Australian real estate is attractive to foreign investors. While foreign investment in real estate is controlled, in recognition of the fact that it plays an important part in enhancing Australia both economically and socially the government welcomes it, provided that it is consistent with the national interest. Regulation of Foreign Investment In order to protect the national interest, the Australian Government regulates foreign investment through a regime established under the Foreign Acquisitions and Takeovers Act 1975 (‘FATA’). This

regime is administered by the Australian treasurer and the Foreign Investment Review Board (‘FIRB’). FIRB is an advisory body that examines proposals by foreign persons to invest in Australia and makes recommendations to the Treasurer. The Treasurer’s decision to reject applications or to impose conditions, is dependant on whether the foreign investment proposals are determined as being contrary to the national interest. For the acquisition of certain interests in Australian urban land notification to and, in some cases, pre-approval by, the FIRB is compulsory. This includes the acquisition of securities in an Australian urban land corporation or trust estate. Australian urban land refers to all Australian land that is not rural land – the latter being used exclusively for carrying on a substantial business of primary production. The Australian foreign investment framework is also supplemented by the foreign investment policy (‘Policy’). When is FIRB Approval Required?

Cameron Thomson Partner cameron.thomson@ashurst.com Ashurst - Australia D: +61 2 9258 5714 | M: +61 418 803 985 Rebecca Chan Senior Associate rebecca.chan@ashurst.com Ashurst - Australia D: +61 2 9258 6772 | M: +61 407 359 566

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The FATA and the Foreign Acquisitions and Takeovers Regulations 1989 have monetary thresholds to which the relevant FATA provisions do not apply. However, for US investors there are separate higher thresholds for acquisitions under the terms of the US-Australia Free Trade Agreement. Irrespective of the value or the nationality of the investor, the FIRB must be notified about acquisitions of all vacant land, residential real estate, shares or units in Australian urban land corporations or trust estates. They must also be informed about direct investments by foreign governments and their related entities, as well as proposals by them to establish new businesses in Australia or acquire interests in Australian urban land. All other acquisitions (including shares or assets of an Australian business) need only be notified if the target is valued at or above the applicable monetary threshold set by the Policy or the FATA. For example; the acquisition of developed commercial real estate or a commercial lease where the likely term is more than five years and valued at A$53 million or more (A$1062 million or more for US investors) requires approval. For commercial heritage listed properties where the acquirer is not a US investor, the threshold is A$5 million. Approval is also required to buy an interest in a primary production business, where the total assets of the business exceed A$244 million (US$1062 million for US investors). Foreign Governments and their Related Entities Regardless of the value of the investment, all

foreign governments and their related entities – companies or other entities in which foreign governments, their agencies or related entities have more than an aggregate 15 per cent interest – should notify the Treasurer and obtain prior approval before making a direct investment in Australia. In addition to this, foreign governments and their related entities also need to give notification of their proposal, and obtain approval prior to starting a new business or acquiring an interest in land. This includes any interest in a prospecting, exploration, mining or production tenement. The Approval Process For a proposed acquisition where the FATA provisions apply and notification to the Treasurer is required, an application form must be completed and lodged with FIRB, together with a cover letter explaining the key aspects of the transaction. Such applications should be lodged in advance of any transaction. However, in some cases, if the decision of the Treasurer has not yet been obtained, it is still possible for the contracts to be entered into, provided they are conditional on foreign investment approval. Under the FATA, the Treasurer has 30 days to consider an application and 10 days thereafter to advise the applicant of the Treasurer's decision. The Treasurer also has the right to issue an interim order, to allow an additional 90 day review period – although this is very rarely exercised. The decision of the Treasurer will either raise no objections and allow the proposal to proceed, impose conditions which will need to be met or prohibit the proposal. Final Considerations As FIRB assesses each proposal on a case by case basis, any foreign investment proposal that relates to Australian real estate needs to be carefully considered according to the specific circumstances. It is therefore necessary to determine whether foreign investment restrictions exist, whether foreign investment notification is required or advisable, when notification is to be given and what documentation should be submitted to the FIRB. At Ashurst Australia, we have expertise and extensive experience in providing advice on acquiring Australian real estate, and can guide our foreign investor clients through the approval process. Acting for various types of foreign investors and foreign government related entities, we have helped them to obtain FIRB approval for Australian real estate acquisitions that include commercial office buildings, hotels and rural land.

France The Latest French Tax Reforms – What is the Impact for Real Estate Investors? Provisions of the French Finance Act for 2012 and the French Amending Finance Acts for 2011 have strongly modified certain tax principles applicable to the real estate industry. Hogan Lovells (Paris) LLP comments on the latest French tax reforms, which may have a significant impact for real estate investors acting in France. New French Rules on Corporate Tax Losses The new rules, which are similar to German tax rules in this area, substantially impact the ability of French companies to carry Net Operating Losses (‘NOLs’) forward and back. Under previous rules, companies subject to corporate tax were not only allowed to carry back NOLs to offset taxable income in respect of the previous three fiscal years, but carry forward such NOLs indefinitely and use them without limit. The new rules restrict the NOL carryback to one year and introduce a cap of €1 million, with excess NOLs remaining available for carryforward. The NOLs from prior years can only offset up to 60% of the current year's net taxable income. This means that the remaining 40% of the current year net taxable income will be taxed at the general corporate tax rate. €1 million of NOLs can be used notwithstanding the 60% limit. In practice, the new rules will restrict the ability of large groups – most notably real estate companies – to make use of NOL carrybacks and carryforwards. These new restrictions only apply to companies whose fiscal year ends on or after 21st of September 2011. Duty Payable on the Disposal of Shares Disposals of shares in real estate companies are currently subject to a transfer tax of 5%. This is assessed on the net present value of the company, taking into account all its liabilities. In practice however, the taxable basis may be significantly reduced in cases where the real estate company is highly leveraged. Since 1st January 2012, the scope of this tax

has been expanded by taking into account: (i) the market value of the real estate assets or rights owned directly or indirectly by the real estate company; (ii) the market value of other assets, after deduction of debts linked solely to the acquisition of real estate assets and rights. All other liabilities such as tax and social debts, debts towards suppliers and debts contracted to finance operational activities, are now excluded from its scope. Such a measure was adopted to put an end to abusive tax planning situations where, before the sale, massive distributions were made financed by shareholders’ current accounts. However, there may be adverse tax consequences on companies who have no real estate activities but own the properties in which they carry on their business. New Formalities on Sales of Shares Conducted Abroad Since 1st November 2011, sales of shares in predominantly real estate companies conducted abroad have to be recorded by notarial deed drawn up in France, within one month of the sale. This new filing obligation means that the sale of shares in foreign real estate companies such as Luxembourg or Dutch companies, that are often used to hold French real estate assets (or shares in French entities that own such assets), must be recorded in France before a French notary. A consequence of this reform is that the French tax authorities will be able to collate information about foreign companies who own French real estate assets (such as the sale price of the shares and the amount of the gain, if any, realised by the shareholders). The New French Territorial Economic Contribution As a reminder, from 1st January 2010, the French Finance Act for 2010 repealed the French business tax (Taxe professionnelle) and replaced it with the Territorial Economic Contribution (Contribution Economique Territoriale). This reform bore a significant

Hogan Lovells (Paris) LLP 6 avenue Kléber Paris, 75116 France Téléphone : +33 1 53 67 47 47 Fax : +33 1 53 67 47 48 www.hoganlovells.com

impact on certain business sectors, particularly the real estate investment sector, which had remained so far outside the scope of French business tax. The new Territorial Economic Contribution will apply to all companies including real estate companies, regardless of their legal form, and is actually made up of two different taxes. French real estate property lessors that were previously outside the scope of application of the French business tax, now fall within the scope of the Territorial Economic Contribution. Even though it would be difficult for French lessors to pass on the Territorial Economic Contribution to tenants owing its specific computation rules, the tax effect of this reform should be kept in perspective. Firstly, considering the new computation rules of the Land Contribution of Enterprises, the said contribution will be only based on the real properties ‘at the disposal’ of the French lessor (presumably head office only) which should reduce the contribution liability to a minimum. Secondly, the contribution to the added value of enterprises, which will be the main tax burden for French lessors, will apply progressively in order to limit the immediate impact of the new contribution to the real estate investment sector. As a result, a special reducing discount on the overall contribution has been introduced as follows: (i) 90% discount from 2010; (ii) 70% in 2012; (iii) 50% from 2014; (iv) 10% in 2018. As from 2019, the new Territorial Economic Contribution will fully apply to real estate investment funds. Bruno Knadjian is based in Paris (France) and specialises in tax advice and planning for commercial and residential property in France for Hogan Lovells (Paris) LLP.

Bruno Knadjian Avocat à la Cour Tel: +33 1 53 67 47 47 Fax: +33 1 53 67 47 48 bruno.knadjian@hoganlovells.com

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advertising Law

advertising Law Advertising Standards Authority – Helping Advertisers in the Business of Reputation What’s most important to your company? A healthy profit? Dividends for shareholders? Growth? I’d wager that quite high up the list is your reputation. And you may not know it, but the Advertising Standards Authority (ASA) is in the business of reputation. Recent history shows just how damaging ASA action can be for a company’s reputation. Last year we referred Groupon, the ‘daily deals’ market leader, to the OFT for persistently breaking the advertising rules. That led to international media coverage and a severe round of anti-Groupon sentiment from the public. Moreover, the OFT has now obtained undertakings from Groupon that they will change their practices in the next three months or suffer legal consequences. We will do what we can to help them get their ads right, but for those readers who think there’s no such thing as bad publicity, tell that to Groupon. This case is obviously a relatively extreme example of what can go wrong, but it raises an important question: how best can advertisers avoid reputational damage? The ASA is the independent watchdog responsible for keeping advertising in the UK legal, decent, honest and truthful. We were set up by the advertising industry in 1962 to administer the Advertising Codes on behalf of consumers and business. This year marks our 50th anniversary. We act quickly and effectively to have problem ads withdrawn, and so help promote public trust in advertising while maintaining a level playing field for industry. Although the regulatory landscape has changed significantly over the

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last five decades, the overarching principles of our work have endured – that ads should not mislead, harm or offend. In terms of what might happen if you fall foul of the rules, the initial course of action available to the ASA is to have an ad withdrawn. That is not only often time consuming for a business, it can be expensive, particularly if the media space has been booked for a long-run or the ruling affects ads planned as part of an ongoing campaign. Beyond that, the publication of an adjudication on our website is one of our most powerful sanctions. Our rulings outline in detail on the public record, how and why an advertiser has breached the Advertising Codes. ASA rulings attract a significant amount of media interest. A quick online search of ‘advertising’ alongside the names of multinationals or household brands often brings up a host of news articles about ads that have been banned by the ASA. The media coverage can be widespread and, in the age of the internet, has a global reach. We know from conversations with Chairman and CEOs of small and large businesses, that they do not enjoy the negative publicity that often attaches itself to their organisation or brand following an ASA ruling (nor presumably do their shareholders). No business leader wants to start the day reading a national newspaper report or listening to a national radio programme that highlights why their company’s advertising has been judged to have misled, harmed or offended the public.

We also know that ASA rulings can affect companies’ share prices on domestic or international markets. That is exacerbated by the internet, with social media playing an ever more influential role in the court of public opinion. The judgement of a company online can be immediate, spreading inexorably and have long lasting consequences. You can’t moderate online forums and no one can ever have all the negative articles and comments in cyberspace removed. While consumer protection is very much at the heart of what we do, industry has always had a direct stake in the system. Primarily, it writes the rules that we administer. These Codes are written and revised by two bodies (who comprise trade associations, media owners, advertisers and agencies) – the Committee of Advertising Practice (CAP) for non-broadcast media and the Broadcast Committee of Advertising Practice (BCAP) for TV and radio. It also funds the ASA through an arms-length levy of 0.1% on advertising spend. A cost-effective system, the ASA operates on a budget of around £8m a year, with CAP members also helping to enforce our decisions. The Advertising Codes apply across media including, since our online remit extension in March last year, to companies’ own marketing claims on their own websites and social network spaces. We receive over 30,000 complaints a year about over 20,000 ads. Maintaining standards in UK advertising is

achieved through a system of self- and coregulation. We are not a statutory body. We do not issue fines or to take errant advertisers to court, although our legal backstops – the OFT and Ofcom – can. Our preferred approach to gaining compliance is through consensus and cooperation. The strength of advertising self-regulation lies in the buy-in of industry. Advertising self-regulation continues to work, I believe because of enlightened self-interest. Most advertisers, agencies and media recognise that, in the long run, they will do well by doing good. Good advertising is good for business. After all, if consumers do not trust ads then they are unlikely to part with their money. By writing strict rules and adhering to the ASA’s decisions, industry ensures that advertising is broadly trusted and there is public confidence in the regulatory framework around it. Self-regulation also engenders a sense of collective responsibility. On the rare occasion an advertiser refuses to operate within the rules, the strength of ‘self’ policing becomes evident. Bringing advertising into disrepute is bad for everyone, not just the organisation concerned. When CAP is alerted by the ASA to a problem advertiser who is unwilling or unable to cooperate, it can invoke sanctions that often bring them quickly back into line. They include the refusal of media space such as in newspapers and on poster sites, until advertisers give assurances that they will adhere to the Codes. Advertisers may also be required to have their ads mandatorily prevetted before media owners will accept them. The work of the ASA and the wider selfregulatory system is not about arbitrarily punishing advertisers who get it wrong. Our approach to advertising regulation is that prevention is better than cure. From online guidance and Help Notes – to e-newsletters and training events – we work closely with CAP to ensure that there is a wealth of resources available to advertisers, so they can avoid their ads prompting complaints and potentially running into problems with the ASA. We regularly host general and bespoke Advice:am training seminars at our headquarters. Here, ASA and CAP staff guide marketers, agency account staff, media ad people, compliance officers and lawyers through the rules and flag up the latest regulatory developments. Another integral part of helping the industry stick to the rules is the CAP Copy Advice service. Copy Advice staff offer non-broadcast advertisers free, confidential, expert advice on advertising copy before it appears in the public domain. The ASA will also, wherever possible, look to resolve problems informally. If an issue appears to us to be relatively minor but clear cut, we will, in the first instance, approach an advertiser and seek their agreement to have the ad removed or amended without the need for formal action. This is the quick,

inexpensive way of making advertising better. More importantly, our regular customer satisfaction research tells us it’s the most popular method of resolution for advertisers and complainants. The last 50 years have shown us that, like the businesses we regulate, our remit and challenges are always changing. Technological advances, new media platforms and different ways of advertising all mean we have to keep up to speed with developments to ensure we remain relevant. That is why our online remit – was extended. Now a year into its infancy, the story so far is positive: we’ve been busy, with 15% more staff managing an increase in work ranging from 70-115%. We’ve also had to work hard to raise awareness amongst SMEs, many of whom have had little experience of dealing with the ASA and the Advertising Codes. Working closely with website owners, in the vast majority of cases, we have been able to have problem claims removed. Where we’ve met resistance, we’ve taken a measured and proportionate approach. However, as necessary, we have begun listing repeat offenders on a ‘name and shame’ page on our website. We not only have an agreement with search engines to suspend paid-search ad campaigns that link to problem material on a company’s website, we can run our own paid-search ad campaign to highlight non-compliant businesses. We also won’t shy from referring appropriate advertisers who’ve still not got the message to the OFT, for consideration of legal action under the Consumer Protection Regulations. The next immediate challenge facing advertising regulation is how to address consent issues around Online Behavioural Advertising (OBA), where profiles of web users are built up using tracking cookies so more targeted advertising can be served to them. The legal uncertainty around how best to get consent for cookies is far from helpful, but there’s no doubting the direction of travel – more, not less, consent. The European ad industry and ad regulators, including the ASA, are working hard on an OBA Initiative that promises to provide far more notice of OBA and how it works than currently exists. An Ad Choices icon will appear on billions of online ads, each linking to a European-wide Your Online Choices website, where users can ‘turn off’ OBA with a few simple clicks. Watch this space. Despite what some advertisers may think, we’re not here to stifle creativity or freedom of expression. We recognise the value advertising brings to business, society and the wider economy. Our role as the advertising watchdog is two-fold. Firstly, it’s to effectively administer the Codes in the interests of consumers and business: Secondly, it’s to allow responsible advertising to flourish. Ultimately that can only be a good thing for the advertising industry’s reputation.

Advertising Standards Authority Mid City Place 71 High Holborn London WC1V 6QT Tel: 020 7492 2222 www.asa.org.uk Matt Wilson, Press Officer mattw@asa.org.uk CAP Advice and Training Created by industry for industry, CAP Services brings training and advice services under one roof, helping advertisers meet the requirements of the Advertising Codes and avoid the reputational damage that can come with an upheld ASA adjudication. cAP Services can help you to: • Ensure ad campaigns stand out without breaking the rules • Understand what is and isn’t acceptable to the ASA • Keep up-to-date with the latest developments and guidance in ad regulation • Help avoid reputational and commercial damage. CAP website: www.cap.org.uk Copy Advice: www.copyadvice.org.uk 020 7492 2100 Biog: ASA chief Executive, Guy Parker Guy became Chief Executive of the Advertising Standards Authority (ASA) on 29 June 2009. Previously, Guy was the Deputy Director General and Director of Complaints and Investigations at the ASA. He oversaw the handling of more than 25,000 complaints about broadcast and non-broadcast advertising received by the ASA each year. He was appointed Deputy Director General in June 2008. Guy is also an Executive Committee member of the European Advertising Standards Alliance, one-half of the Appeals Panel of the Cinema Advertising Association and a member of the International Chamber of Commerce’s UK Marketing and Advertising Committee. Guy joined the ASA in 1992 and has held a wide range of positions in the organisation. Guy read Politics and International Relations at the University of Kent.

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advertising law

Intellectual Property Issues in Online Advertising Sponsored online advertising is a multibillion dollar business. While not all sponsored ads infringe on intellectual property rights (‘IP’), the infringement of copyrights and trademarks in sponsored ads is a serious issue, and one that continues to evolve as websites develop new business models. For example; some online advertisers purchase other businesses’ brand names as keywords for search engines, thus enabling their products to be displayed among (or even above) results in searches for competitors’ brands and redirecting traffic to their own sites. Consequently, a trademark owner might end up having to bid for the use of its own brand to prevent others from being displayed above it in search results. And while sites that rely on user-generated content are slowly making strides in limiting copyright infringement, the fact remains that advertisements still routinely appear on websites alongside infringing content. Online Copyright & Trademark Use Even when the online advertiser is not the direct infringer of the trademark or copyright, the advertiser could potentially

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be liable under a theory of contributory infringement. As a practical matter, if the direct infringer is insolvent or beyond the jurisdiction of the courts, pursuing the online advertiser may be the IP owner’s best recourse. However, even if an IP owner is willing to pursue legal action to enforce its rights, winning in court against an online advertiser may be difficult, as both American legislators and courts are still struggling with and sorting through IP questions regarding copyright and trademark use on the internet. For example; in 2010, a federal district court in New York determined that, among other things, the Safe Harbour provisions for internet service providers (‘ISPs’) under Section 512(c) of the Digital Millennium Copyright Act (the ‘DMCA’) require IP owners to notify ISPs of each particular instance of infringement before the DMCA’s takedown procedure takes effect (see Viacom International Inc. v. YouTube, Inc.). That case is currently on appeal in the United States Court of Appeals for the Second Circuit.

publishers against an online advertiser for secondary infringement of the publishers’ copyrights, a federal district court in Massachusetts determined that the online advertiser could not be held liable for any direct infringement committed by the websites that used the advertiser’s services, because the advertiser ‘did not create, operate, advertise, or promote’ the infringing websites, and, though advertising payments by the advertiser made the websites more profitable, the revenue generated by the advertiser did not constitute a ‘material contribution’ to the infringement (see Elsevier Ltd. v. Chitika, Inc.). In its reasoning, the district court relied heavily on a decision from the United States Court of Appeals for the Ninth Circuit, but made hardly any mention of that decision’s dissent, which argued that this sort of participation in a sale of misappropriated IP was ‘not just an economic incentive, but an essential step in the infringement’ (see Perfect 10, Inc. v. Visa International Service Association).

Contributions to Infringement

In addition to continuing uncertainty in the law, pursuing traditional litigation can be expensive, and even then, a favourable

More recently, in a lawsuit brought by two

UNITED STATES resolution may be far too late for the purposes of the IP owner. However, forms of alternative dispute resolution (‘ADR’) are available, such as procedures for disputes over domain names. Access to such a procedure can cost an IP owner several thousands of dollars, but a resolution is typically reached within a few months. Online Advertiser Policies A further complication arises for IP owners who do not want to jeopardise their relationship with online advertisers, especially as business is increasingly being transacted online. Rather than resorting to a lawsuit or ADR, an IP owner may wish

to approach directly the online advertiser. To that end, some online advertisers have created policies to deal with allegations that its services are furthering infringement. However, the impact of these policies can be minimal. A typical policy allows an IP owner who believes its trademark or copyright is being infringed to file a complaint with the advertiser, but the advertiser ultimately makes the decision as to whether a use infringes on IP and should be disabled. Furthermore, some advertisers will offer protection no greater than what is clearly and presently being offered by the jurisdiction’s applicable laws. As has already been discussed, that might not be enough.

While IP owners might be frustrated with the present lack of remedies available to them for infringement by online advertisers, it is important that they remain diligent in enforcing their rights. IP owners should register their IP to the fullest extent possible, in order to give them the widest scope of protection permitted under law. Even before the legal landscape is settled – whether through new case law or new statutes – an IP owner should consider whether to engage in communications directly with advertisers to reach negotiated agreements that will save time and money, both in terms of the proper use of its IP and the costs saved in litigating its misuse.

Latham & Watkins LLP Perry Viscounty Partner and Global Co-Chair Intellectual Property Litigation Group Tel: 714.755.8288 perry.viscounty@lw.com www.lw.com

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advertising Law

Are Trademarks for Alcoholic Beverages Being Exploited Responsibly? For decades, scholars have considered trademarks as ‘trade symbols’ or ‘species of advertising’ (Ralph S. Brown Jr., ‘Advertising and the Public Interest: Legal Protection of Trade Symbols’, The Yale Law Journal, Volume 57, June 1948, 1185). Such a stance is now recognised by judges, in particular by those of the European Court of Justice. They consider that the essential function of a trademark, which is to guarantee the identity of origin of the trademarked goods or services to the consumer or end user, is also supplemented by additional functions such as ‘communication, investment or advertising’ (ECJ: 18 June 2009: L’Oréal SA v/ Bellure NV). How the concept of advertising is broadly defined under French law Article L. 3323-3 of the French Public Health Code (the ‘PHC’) states that it ‘is considered as an indirect advertising (…) advertising in favour of an organism, a service, an activity, a product or another article other than an alcoholic beverage which, by its graphics, its presentation, the use of a denomination, of a trademark, of an advertising emblem or another distinctive sign, brings to mind an alcoholic beverage’. French judges have also given a very broad definition of what is encompassed by the concept of direct or

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indirect ‘advertising’ for alcoholic products. They state that it includes ‘any act in favour of a corporation, department, activity, product or article, whose effect, whatever its purpose, is to bring to mind an alcoholic beverage’ (Cass. Crim. 3 November 2004). Given this stance, it is common for parties involved in the alcoholic beverage industry to unknowingly portray acts that qualify as this kind of advertising, and therefore not comply with the French law. Restriction on the advertising of alcoholic beverages Under French law, the so-called ‘Evin law’ (law n° 91-32 dated 10 January 1991) comprises something of a fortress to the advertising of alcoholic beverages. It has an exhaustive list of not only the materials and media on which alcoholic beverages may be promoted or advertised (Article L. 3323-2 of the PHC), but specifically mentions attached on materials and media which include ‘the indication of the degree of alcohol by volume, the origin, the denomination, the composition of the product, the name and address of the producer (…) the method of production’ (Article L.3323-4 of the PHC); or other references such as the land of production, the distinctions obtained and the applicable geographical indications/appellations. Failure

to comply with these PHC requirements is strictly sanctioned. Restriction to the diversification of the trademark owner’s activities The PHC constitutes the legal ground used by French judges to sanction any attempt, by the owner of trademarks registered to designate alcoholic beverages (class 33), to commercialise products other than alcoholic beverages. It considers that such practice amounts to a prohibited indirect promotion of alcoholic products. Consequently, this hinders any opportunities for a company exclusively active in the alcoholic beverage industry, to diversify its activities. Such analysis is notably supported by case law relating to tobacco products (where commercialisation and promotion are subject to similar provisions). For example; the French Supreme Court confirmed that the owner of a trademark registered for tobacco products could not exploit an identical or similar trademark for the commercialisation of other products such as watches, directly or indirectly, through a trademark licence agreement (Cass. Crim. 22 January 1997: ‘Camel trophy watches’). Similarly, French judges sanctioned the commercialisation of boots under a trademark registered in relation to tobacco products (Cass. Crim.

France 10 April 1997: ‘Camel Boots’). Therefore, the mentioned case laws should also apply, mutatis mutandis, to the owners of trademarks registered for alcoholic products. Restrictions to the filing of new trademarks Given the above, some trademark owners would argue that the registration of a new trademark in class 33 for alcoholic beverages, could result in impacting their ability to freely advertise and promote the goods or services (other than alcoholic beverages) covered by their own earlier trademarks. French judges have welcomed such an argument. This was demonstrated in the September 2000 case, where Victoria’s Secret opposed Roullet Fransac’s attempt to launch an alcoholic product under the trademark

Victoria’s Secret. The Paris Court of Appeal held that, as the result of the contemplated new trademark, the future promotion of the underwear products would amount to a prohibited indirect advertising for alcoholic products, and that the later trademark should therefore be revoked. Such reasoning was also recently confirmed in a case where Diptyque (a well-known manufacturer of candles sold under the eponym trademark) opposed Hennessy (a famous Cognac house), which had filed the ‘DIPTYQUE’ trademark registration for alcoholic beverages (Paris Court of Appeal, 26 October 2011). The Court considered that Diptyque’s claim, aimed at protecting ‘its freedom of promotional use of its trademark’, was well founded and held that ‘the filing of the trademark ‘DIPTYQUE’ by Hennessy

could therefore paralyse the use made by DIPTYQUE of its own trademark, who could not fully exercise its ownership rights over the trademark’. Emmanuel Baud and Edouard Fortunet (Avocats à la Cour, Jones Day, Paris. This report reflects only the personal views of the authors and should not be attributed to the authors’ firm or to any of its present or future clients. The authors express their special thanks to Clémence Lapôtre for her valuable input in the writing of this article).

Jones Day Emmanuel Baud Partner Tel: +33 (0) 1 56 59 39 39/39 18 ebaud@jonesday.com www.jonesday.com

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deaL directory

deal directory Better capital pcc limited 2012 cell On 16 April 2012, Better Capital PCC Limited (the ‘Company’) was pleased to report that BECAP12 Fund LP (the ‘2012 Fund’) had completed its second acquisition of all of the secured debt and a 90% stake in Jaeger Group Limited (‘Jaeger’) by a special purpose vehicle ultimately owned by the 2012 Fund. The aggregate cost of the acquisition was £19.5 million, the substantial majority of which was in respect of the acquisition of the secured debt with the remainder in respect of the equity stake. Jaeger is a UK-based high-end fashion brand and retailer of womenswear and menswear operating from a number of stores, concessions and outlets in the UK and overseas. Jaeger’s audited revenues and operating profit for the year to 28 February 2011 were £94 million and £1 million respectively. At that date the group’s net assets were £11 million. This investment opportunity was allocated to the 2012 Fund in which the Company’s 2012 Cell is invested, in light of the level of investment required relative to the uncommitted funds available to BECAP Fund LP in which the Company’s 2009 Cell is invested.

chariot Oil & Gas limited: acquisition of offshore exploration blocks Chariot Oil & Gas Limited, the independent Africa focused oil and gas exploration company, is pleased to announce that its wholly owned subsidiary, Chariot Oil & Gas Investments (Mauritania) Ltd. has entered into a production sharing contract (the ‘Contract’) with the government of the Islamic Republic of Mauritania (‘Mauritania’ or the ‘State’) for a 90% interest and operatorship in offshore Block C19, which covers an area of 14,125 km². The Contract remains subject to routine approval by the State before it becomes effective. Paul Welch, CEO of Chariot, commented: “We are very pleased to announce the expansion of our portfolio into offshore Mauritania and entrance into an already oil producing

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province. This has always been part of our longer-term strategy through which we aim to mitigate risk and balance our portfolio. The team continues to carefully evaluate African deepwater opportunities in order to find additional blocks of interest. We believe that our experience, skillset and capabilities, as demonstrated in Namibia, will enable us to unlock further potential in West African deep water assets and we look forward to doing so alongside the Mauritanian government in our newly acquired acreage.”

Greencore Group plc: acquisition of us business Greencore Group plc (‘Greencore’), a leading international producer of convenience food, announced the agreement to acquire Marketfare Foods, LLC, (‘Marketfare’) for a consideration of $36.0 million (£22.6m) (‘the Acquisition’). The transaction will be funded from existing debt facilities and is expected to complete on 18 April. Marketfare is a leading manufacturer of food to go products for convenience and small stores in the US. Its principal customer is 7-Eleven, which it has partnered for over 20 years, and it is the largest single supplier of Fresh to Go and 7-Smart store-branded sandwiches, servicing over 1100 7-Eleven stores in the Mid-Atlantic region. In addition, it is an exclusive manufacturer of Casa Buena Cheese and Chilli sauces for the entire 7-Eleven chain in the US and Canada. Commenting on the Acquisition, Patrick Coveney, Chief Executive Officer of Greencore, said: “The acquisition of Marketfare represents an excellent opportunity for us to further develop our food to go business in the US, building on the successful acquisition of On a Roll in December 2010. It builds additional scale with 7-Eleven, provides new competencies for us in the fast growing food to go category and extends our geographic footprint principally along the Eastern seaboard. The new product capability and geographic expansion provide the opportunity to expand further with our existing customers; the Acquisition represents the next step in our strategy to build a business of real scale in the US.”

Hubco: proposed acquisition of the énergie group of companies and suspension of trading HubCo, the PLUS-quoted investment company (the ‘Company’), announced that it is in discussions to acquire the entire issued share capital of Blusky Investments Limited (‘Blusky’), a successful fitness club franchise business operating under the ‘énergie’ fitness brand (the ‘Acquisition’). The Acquisition will constitute a reverse takeover under the PLUS Rules for Issuers and is therefore conditional, inter alia, upon the approval of HubCo’s shareholders at a general meeting. In addition, conditional upon completion of the acquisition and approval of the shareholders at a general meeting, the Company intends to withdraw the listing of its ordinary shares of 1p each (‘Ordinary Shares’) on PLUS and seek the admission of its Ordinary Shares to trading on the AIM Market of the London Stock Exchange plc (‘AIM’) and to undertake a placing of its Ordinary Shares. Trading in the Company’s Ordinary Shares has been suspended until such time as the admission document containing further details of the acquisition and Blusky is published. Stephen Bourne, Chairman of HubCo, said: “We are pleased to have made such good progress in implementing our investment strategy and look forward to the acquisition of such a successful business.” énergie is one of the fastest growing fitness club franchises in the UK. Through its portfolio of brands, the group’s club network has grown to 98 clubs with 73,000 members.

ite Group plc: acquisition of Beautex strengthens ite’s leading position in the ukraine market On 12 April 2012, ITE Group plc, the emerging and developing markets exhibitions specialist, announced that its wholly owned subsidiary, ITE International Holdings BV had acquired Kiev based limited liability company BeautexCo (Beautex) from BCI R&R Limited. Beautex runs two exhibitions each

year, Intercharm and Beautyexpo. Both are trade exhibitions for the professional beauty trade and cosmetic and aesthetic medicine industry in Ukraine. The exhibitions are forecast to generate revenues of €2.4m in the year ending 30 September 2012 and are expected to be earnings enhancing in ITE’s 2012 financial year. Commenting on the acquisition, ITE’s Chief Executive Officer, Russell Taylor, said: “The addition of these two exhibitions to ITE’s Ukrainian business is consistent with our strategy of building market leading positions in core markets and sectors and will complement ITE’s existing activities in Kiev. These events have strong market positions in Ukraine and will benefit from access to ITE’s expertise and international reach.”

macau property Opportunities Fund limited: acquisition of high-end residential asset Macau Property Opportunities Fund Limited (the ‘Company’), managed by Sniper Capital Limited, today announces the acquisition of a high-end residential asset located on Macau Peninsula for HK$92.2 million (c. US$12 million). The investment gives the Company exposure to one of its favoured asset types iconic, luxury residences which are in scarce supply in Macau - and is one of a number of pipeline sites on which the Company has been actively negotiating. David Hinde, Chairman of MPO, said: “This is an exceptional property which we believe has the potential for healthy capital appreciation, driven by the escalating demand for trophy assets across Asia.” The Company continues to progress negotiations on an attractive pipeline of sites totalling approximately US$500 million in combined acquisition value. This latest acquisition follows the completion of the bulk sale of nine individual standard units within the same development and forms part of the Company’s ongoing strategy of purchasing undervalued properties on an opportunistic basis.

porvair: acquisition of pulse instrumentation Porvair, the specialist filtration and environmental technology group, announced the acquisition of the business and assets of Pulse Instrumentation (‘Pulse’), a Canadian business focused on environmental laboratory supplies. Pulse manufactures and distributes water analysis products, principally supplying environmental laboratories in the Americas. Its main line of business is consumable lab-ware. The acquisition expands Porvair’s capabilities in the water analysis market by increasing the installed base of laboratories served, widening the range of products offered and increasing the proportion of consumables sold. Pulse will be integrated into Porvair’s Microfiltration division. Ben Stocks, CEO of Porvair plc, said: “Pulse complements our existing operations well. Porvair already has market leadership in the analysis of inorganic water contamination. Pulse will increase our customer base and product range, enabling us to pursue cross-selling opportunities in the environmental laboratory market.” Porvair is a group of specialist filtration and environmental technology businesses. Its businesses design and manufacture a range of bespoke products that are used in a range of niche filtration and environmental markets. Its principal markets are aviation, energy and industrial process, environmental laboratories and non-ferrous metals.

Randall & Quilter investment Holdings plc On 19 April 2012, Randall & Quilter Investment Holdings plc (‘R&Q’ or the ‘Group’) announced that it had agreed to acquire the entire issued share capital of Trimac Acceptance Limited (‘Trimac Acceptance’) and its wholly owned subsidiary, Trimac Exit Insurance Limited, (‘Trimac Exit’) a Barbados domiciled captive insurer, from Trimac Investments Limited Partnership. Randall & Quilter has pursued a buy and build strategy to create a comprehensive range of investment

activities and services in the global non-life insurance market. Commenting on today’s announcement, Ken Randall, Chairman and Chief Executive Officer of Randall & Quilter, said: “The acquisition of Trimac Acceptance and Trimac Exit demonstrates further our ability to provide attractive exit solutions for captive owners who have put their captives in run-off or are contemplating ceasing writing new business. Following this acquisition, we will optimise operational and capital efficiency through a novation to a Group owned cell within our Bermudian captive management operations.”

RcG Holdings limited: acquisition of 55% equity interest in most ideas limited On 23 April 2012, ‘RCG’ (the ‘Purchaser’ or the ‘Company’), a leading global provider of integrated biometrics and RFID security solutions, together with its subsidiaries (the ‘Group), announced an acquisition of 55% equity interest in Most Ideas Limited. The Purchaser and the Vendor entered into the sale and purchase agreement, pursuant to which, the Purchaser has conditionally agreed to acquire and the Vendor has conditionally agreed to sell, the sale shares, representing 55% of the issued share capital of the Target for a total consideration of HK$88,700,000 which will be satisfied by the issue of the convertible notes at completion. Upon Completion, the Target will become a non-wholly owned subsidiary of the Company, which will be owned as to 55% by the Company and 45% by Golden Matrix Holdings Limited. The Target is an investment holding company incorporated in the British Virgin Islands, with limited liability on 3 January 2012. The Target has two wholly owned subsidiaries, namely MGI and MGIE, which are the principal operating companies of the Target Group. MGI specialises in focusing on Web 2.0 projects and mobile marketing solutions, while MGIE focuses on developing entertainment applications for various mobile phone platforms

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deaL directory

smiths news plc: acquisition of Hedgelane limited Smiths News PLC, the UK’s leading wholesaler of newspapers, magazines and books, announced on 24 April 2012, the unconditional acquisition of Hedgelane Limited whose principal subsidiary trades as The Consortium for Purchasing and Distribution Limited (‘The Consortium’), the UK’s leading specialist distributor of consumable products to the educational market, for an aggregate consideration of £38.0m, equivalent to an enterprise value of £44.1m. Mark Cashmore, Group Chief Executive, commented: “We are delighted to be announcing the acquisition of The Consortium today which represents another significant step forward in our diversification strategy. We have talked about Smiths News desire to expand our operational footprint beyond the core newspaper and magazine business and this acquisition, alongside our two other transactions (Bertram and Dawson Holdings) since demerger, clearly demonstrates that strategic progress.”

spirent communications plc signs deﬁnitive agreement to acquire mu dynamics, inc. Spirent Communications plc (‘Spirent’, the ‘Company’ or the ‘Group’) (LSE: SPT), a leading communications technology company, announced on 20 April 2012 that it had entered into a definitive agreement to acquire privately held Mu Dynamics, Inc. (‘Mu’), based in Sunnyvale, California, for a cash consideration of $40.0 million. Mu is a security testing pioneer, offering innovative solutions that enable faster, higher quality

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deployments of Cloud applications and applications-aware networks. “Infrastructure security testing is critical to ensuring confidence in the use of globally-deployed networks and applications,” said Bill Burns, CEO of Spirent, “Mu Dynamics brings additional market-leading expertise in cyber security, usability and application emulation to the Spirent solutions portfolio. Combining Mu’s software-based applications and security testing capabilities with Spirent’s market-leading performance test platforms will enable us to rapidly create best-in-class security test solutions with higher performance and greater scale than any other provider. This acquisition aligns with our strategy of delivering profitable growth through expanding our capabilities in growing and emerging technology markets.”

tawa plc: acquisition of Hamburger internationale Rückversicherung aG On 19 April 2012, Tawa plc (‘Tawa’), the quoted insurance services provider and run-off investor announced the completion of the acquisition of Hamburger Internationale Rückversicherung AG (‘HIR’) following receipt of the necessary regulatory approvals. HIR is the holding company for the Chiltington Group of companies (‘Chiltington’). As part of the consideration, three million new ordinary shares of 10 pence in the share capital of Tawa (the ‘Consideration Shares’) have been issued to the vendors. The vendors have entered into a lock-in agreement with Tawa whereby they can only sell the Consideration Shares in certain limited circumstances for a period of five years from completion. Application has

been made for the Consideration Shares to be admitted to trading on AIM and admission was anticipated to have taken place on 20 April 2012.

uBm plc: acquisition of south america’s leading railway industry exhibition UBM plc, a leading global business media company, announced on 16 April 2012, it had acquired Negocios nos Trilhos, South America’s leading railway industry exhibition, from Grupo Revista Ferroviária on behalf of UBM Live (www.ubmlive.com). Now in its fifteenth edition, Negocios nos Trilhos – literally, `Business on Rails’ – is a cargo and public rail transport tradeshow, which is held annually in Sao Paulo. Last year’s show attracted 180 rail equipment and technology exhibitors from 14 countries and 7,000 railway professionals drawn from both the public and the private sectors. The 2012 event will take place 6 - 8 November. The passenger and cargo railway industry in Brazil and other South American countries is expanding rapidly as the region’s economic development advances. Brazil has also seen accelerated investment in mass transport systems driven by the World Cup in 2014 and the Olympic Games in 2016. Simon Foster, Chief Executive Officer of UBM Live, said: “We are delighted to have acquired such a well-established and market-leading exhibition in this fast-growing industry. Negocios nos Trilhos will strengthen our position in the transport sector in Brazil and complement UBM’s US-based rail industry product set.”

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