Global Business Magazine - January 2011

gbm January 2011

global business magazine

UNITED NATIONS ENVIRONMENT PROGRAMME FINANCE INITIATIVE INNOVATIVE FINANCING FOR SUSTAINABILITY

international tax Guide

india Country proFile

ConstruCtion seCtor

Visit www.gbmonline.net for more information on our FREE e-mag

ACROSS THE WORLD

Turkey

Türkiye

R EA L ESTATE IN V ESTMEN T

GRI2011

2011 EVENTS

TURKEY GRI 2011 Istanbul, 18 January

The GRI is a global club of senior real estate investors, developers and lenders that runs its activities through a collection of annual meetings focussed on different regions of the world.

2011

ASIA GRI2011

USAGRI 2011 GRI EUROPE CHAIRMEN’S RETREAT 2011 St Moritz, 20-23 January

ASIA GRI 2011 Singapore, 16 February

USA GRI 2011 New York, 2 March

DEUTSCHE

GRI

2011

BRITISH GRI2011 DEUTSCHE GRI 2011 Frankfurt, 3-4 May

BRITISH GRI 2011 London, 11 May

CHINA 2011 CHINA GRI 2011 Beijing, 2 June

GRI

EUROPE SUMMIT

2011

2011 GRI EUROPE SUMMIT 2011 Paris, 7-8 September

RUSSIA GRI 2011 Moscow, 20 September

2011

INDIA GRI

2011

INDIA GRI 2011 Mumbai, 5 October

New Europe

GRI2011

MENA

GRI2011

www.globalrealestate.org info@globalrealestate.org Tel: +44 20 8492 2634 Fax: +44 20 8445 6633

MENA GRI 2011 Sharm El Sheikh, 3 November

BRAZIL GRI 2011 Sao Paulo, 9 November

NEW EUROPE GRI 2011 Vienna, 22 November

All material throughout is subject to change without notice.

If building close relationships with the driving elite of the real estate industry at the most senior levels can be useful, we welcome you to join us.

CHAIRMEN’S RETREAT

GRI

At GRI meetings there are no speakers or panellists, just informal discussions in small groups, where everyone participates equally.

THE GRI EUROPE

INSIDE This Month:

international tax Guide

16

COUNTRY PROFILE

35

Business Talk 2010 posed many new and fascinating challenges for the business world.

With global economies looking at ways to stabilise their markets, individuals and businesses have had to look at how they can continue to trade in the commercial arena.

India was one such country that benefitted from the global credit crunch.

Many organisations were attracted to the nation’s rich source of natural and human resources. In this month’s issue, GBM looks at India in detail and the industry sectors such as, outsourcing, legal and media and what they can offer international investors. India, now seen as a major power house along with China, is now looking to expand its expertise beyond the Asian continent.

Another country under the spotlight this month is Mexico; with its close links to the US and a major player in South America, Mexico has long shaken off the stereotype of being a developing nation. The country can now offer organisations and institutions the same expertise and guidance one only unique to the financial elite nations.

The construction industry took a major hammering in the course of the financial turmoil, however through diligent planning and careful investment, the industry has started to show signs of revival with organisations looking at investing back into construction firms. We look at how construction lawyers are playing a pivotal role in trying to revive the industry.

Investment Tax has seen its fair share of publicity in 2010, with the US, European and Far-Eastern governments all taking decisive measures to protect their national interests. As a result, tax experts have seen major changes and fresh approaches to tax regulations.

We continue our look at the Luxury Brand Series and this month we indulge you in some of the most exquisite and elegant restaurants from around the world. Also, experts from around the world discuss a variety of issues in their specialist topic and subject areas in the International Advisory Forum.

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

gbm global business magazine

Cover story

6

international advisory Forum

9

oil & Gas seCtor

59

uK Family law Guide

61

aGriCulture

65

Competition law

72

property seCtor

74

deal direCtory

78

46

luxury Brand series - Fine dininG

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.

ConstruCtion seCtor report

67

January 2011 • GBM • 03

Business News

• Record Revenue for Wall Street Giants

THE biggest banks on Wall Street have completed a remarkable recovery since being bailed out by the US Government by recording their strongest two-year investment and trading performance.

JP Morgan Chase & Co, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley have all bounced back from the brink and will be buoyed by their projected 2009/2010 financial results.

According to statistics put together by Bloomberg, the banks look certain to enjoy improved fourth quarter results, which have been sparked by a higher volume in stock and bond trading and equity underwriting.

quarters of the year, compared with 50% in 2006 and 51% in 2005.

Investment and trading accounts for a third of the five banks’ revenue, ranging from 79% at Goldman Sachs to 21% Bank of America, according to official company figures.

But new guidelines that will force the banks to hold more capital and to move derivatives trading to clearing houses could make it more difficult for these firms to continue their recovery the worst financial disaster since the Great Depression. And analysts believe the growth in revenue might also be scuppered by narrower spreads than those that sparked fixed-income trading over the last two years and less client trading.

The recovery has come after the banks took a total of $135bn from the US Treasury and also borrowed millions more from the Federal Reserve’s emergency fund in 2008 and the early part of 2009 after the demise of Lehman Brothers. Since then, the five have benefited from low interest rates and the Federal Reserve’s purchase of fixed income securities.

These obstacles could force the banks to reduce bonuses as they look to cut costs and boost profits. Overall pay levels for investment banking staff on Wall Street are set to be down by 22% from 2009, according to figures from a specialist New York search and compensation consultancy.

The banks’ business during the financial year has focused on credit derivatives, trading bonds, interest rate swaps, commodities and currencies. The five firms’ fixed-income trading divisions accounted for 61% of total banking and trading revenue in the first three

Compensation expenses at Goldman Sachs in the first three quarters of the year were 21% down on the previous year, while salaries at both JPMorgan and Morgan Stanley were also down 10% and 8% respectively. Morgan Stanley has also informed staff to expect bonuses to be cut by 10%.

• Christmas Boost for Worldwide Stock Markets

STOCK markets are enjoying a festive boost across all four corners of the world – sparking hopes of global growth in 2011.

The FTSE All-World equity index has risen 0.2%, bonds and currencies are stable and commodities are stronger.

The positive news comes as traders confirm their confident stance that 2011 will see an improvement in global growth.

Improved US economic data and an easing of eurozone anxiety have helped stocks peak above recent highs and allowed traders to talk of a festive rally well into the New Year and beyond.

But some analysts believe that the S&P 500’s flat finish on Monday after a promising start could mark the end of Santa’s generosity.

Some commentators believe there is also evidence that some funds may well have

04 • GBM • January 2011

concluded their main trading for the year.

Last week the market suggested that higher Treasury yields were extremely positive for the dollar but on Tuesday the dollar index hit a three-week low Elsewhere stocks have been performing strongly. In Asia-Pacific, stocks were up with South Korea reaching a three-year peak, although shares in China shares were unpredictable amid fears Beijing might announce more cost-cutting measures. The FTSE Asia-Pacific index was up 0.7% on Tuesday, which was a five-week high, and Japan’s Nikkei 225 was up 0.2%.

Also on Tuesday, Australia’s S&P/ASX 200 rose 0.2% and the Hang Seng in Hong Kong went up 0.5%. China’s Shanghai Composite was up 0.1%, which came after Monday’s 3% rise.

The FTSE Eurofirst 300 was down 0.1% but

London’s FTSE 100 rose 0.1%, with the oil and gas sector enjoying a surge in demand due to the demand from the freezing weather in Europe.

The euro has also reached a three-week high against the US dollar and it is the second consecutive day the single currency has made headway while peripheral bonds have simultaneously deteriorated. The euro was up 0.5% to the dollar at $1.3455 and higher by 0.4% relative to the yen at Y112.07. The euro also rose 0.3% versus sterling at 84.71p. The US dollar index was down 0.2% at 79.14.

Strong commodities made sure Canadian stocks progressed for a third consecutive day, with the S&P/TSX up 0.4%. Financials were also in strong demand amid hopes that higher interest rates could help margins, in spite of a downgrade for the Royal Bank of Canada, which underperformed with a gain of a mere 0.1%.

• Nissan and Mitsubishi Team Up to Build Vehicles CAR giants Mitsubishi and Nissan are strengthening their levels of co-operation to take advantage of their huge resources.

truck to be produced at Mitsubishi’s factory in Thailand and for a 50-50 venture to produce 660cc mini cars in Japan to be set up.

A big part of the closer collaboration will involve Nissan manufacturing a van that Mitsubishi plan to sell across Japan.

The presidents of both companies say they aren’t thinking about a capital deal but added they would look to seek more opportunities to co-operate.

Mitsubishi will also manufacture a sports utility vehicle for Nissan that will be sold across the Middle East.

The two companies already have a deal to supply vehicles to each other that they have marketed under each other’s brands across Japan. They manage this via the Original Equipment Manufacturing scheme.

The two firms have also revealed that negotiations for Nissan to supply Mitsubishi with more expensive models for the domestic market in Japan are continuing.

Talks are also under way for Nissan’s Navara

News of the link-up pushed Mitsubishi shares up 8.5% to 128 yen by the close of play on Monday in what analysts put down to buying by retail investors who were sensitive to news flow on the stock.

As the strength of the yen continues and domestic sales plunge, Japanese carmakers are losing cash producing cars at home. They are examining ways to cut costs, including moving some production methods abroad.

Carmakers are also facing increasing political pressure to safeguard domestic jobs and to keep Japanese factories open.

Carmakers across the world are increasingly seeking partnerships to save money by sharing vehicle platforms and components.

Earlier this year Nissan and its 43% owner Renault joined forces with Daimler to share vehicles and engines with the maker of Mercedes-Benz cars.

To cut costs, Nissan has begun importing the March sub-compact sold across Japan from Thailand, while Mitsubishi is also planning to do something similar with its Global Small vehicle which is being developed in 2012.

The Mitsubishi-Nissan tie-up comes just a few months after PSA Peugeot Citroën, which has links with Mitsubishi, passed up the opportunity to strengthen its links with the Japanese firm by accepting an equity stake.

Earlier in 2010 Toyota revealed it would be entering the mini vehicle market that is unique in Japan, accounting for 35% of the declining market.

• High-Flying Airbus Raises 20-Year Forecast

AIRBUS has highlighted the strong growth in emerging markets by raising its 20-year forecast for passenger traffic and plane demand.

2010-2029 market forecast press conference.

The statistics are marginally less optimistic than the long-range predictions of its Chicagobased rival Boeing.

The European aircraft maker believes the expansion of no-frills airlines in Asia will help to boost global sales.

Boeing has claimed the global airline industry will need £2.2 trillion in new planes, or 30,900 new aircraft between 2010 and 2029.

Airbus is predicting the delivery of about 26,000 new freight and passenger aircraft worth about £2 trillion from 2010-2029. These planes will primarily be in the single aisle sector, in which the Airbus A320 competes.

Airbus says from the near-26,000 extra passenger and freight planes it believes is required, around 25,000 will be aircraft for passengers, which will be valued at more than £1.9 trillion.

That statistic equates to a rise of about 900 planes compared to the company’s previous annual forecast.

Out of the additional passenger planes, about 10,000 of them will replace less

The firm has cited booming demand for more eco-friendly planes, strong growth in emerging markets and the growth of low-cost and no-frills airlines across Asia.

eco-friendly and older aircraft, and about 15,000 will be earmarked for growth. When considering today’s passenger plane total of more than 14,000, the global fleet of passenger aircraft will go up to about 29,000 by 2029.

The company unveiled the figures during a

John Leahy, Airbus Chief Operating Officer,

revealed that the recovery would be far stronger than has been predicted and would reinforce and strengthen both the resilience of the sector to slumps and downturns. He said people simply wanted and needed to fly.

He said: “The single aisle sector is particularly strong and our A320 meets this future demand by providing our customers with the latest innovations and technologies whilst maintaining maximum commonality.

“Our entire product range is very well positioned to meet the economic and environmental needs for sustainable growth for the decades ahead.”

Chris Emerson, Head of Product Strategy and Market Forecast, said that airlines across Asia Pacific, including India and China, would carry about one third of the passenger traffic by 2029. This would make it the largest region, overtaking Europe (one quarter) and North America (20%).

January 2011 • GBM • 05

Cover story

A New Year (UN) Resolution.

The UNEP Finance Initiative paving the way to Rio+20 as we step into 2011 Author: Iveta Cherneva, UNEP Finance Initiative, communications@unepfi.org

Within the UN system, there is a place where 200 global financial institutions work together on environmental, social and governance (ESG) factors. This place is the UN Environment Programme Finance Initiative (the UNEP Initiative) - the oldest UN public private partnership dating back to the time of the UN Rio Earth Summit in 1992, when world leaders met in Rio de Janeiro for the first time to discuss environmental and development issues. It was at that time that the UNEP Initiative was born.

Stepping into 2011, one year separates the UNEP Initiative from its 20th birthday - a time to look back and consider what has been achieved and how much more there is to achieve. Today, the UNEP Initiative brings together 200 firms and banks from across the finance services spectrum.

Together they form the other face of finance: responsible and sustainable investment, banking and insurance. Partnering with some of the finance giants in the world - Deutsche Bank, JPMorgan, Allianz, Citi, UBS, Credit Suisse and HSBC - the UNEP Initiative brings the knowledge, capacity building, tools and training necessary for private finance to incorporate ESG factors into its operations.

Participating in the regional task forces (Africa, Asia, Europe, North America and South America) and thematic working groups (biodiversity, climate change, human rights, conflict and property), the financial institutions give direction to the UNEP Initiative and often speak with a unified voice on the most pressing issues.

A New Year (UN) Resolution And as with every New Year, here we speak of resolutions; but not of the ‘UN Resolution’ kind. Nearing its 20th birthday, the UNEP Initiative’s New Year resolution looks towards Rio +20, where capital markets are to play a critical role if the necessary and much

06 • GBM • January 2011

Today, the UNEP Initiative brings together 200 firms and banks from across the finance services spectrum. needed investment is to be steered into a new better green economy.

“As the economy and the financial sector begin to recover, we have both an opportunity and obligation to build sustainability into the way global financial companies do business,” thinks the Co-Chair of the UNEP Initiative and CEO of Calvert Investments, Barbara J Krumsiek. “[The UNEP Initiative] has for many years worked on developing the understanding of environmental, social and governance issues by financial institutions and the risks and opportunities emerging from them. The challenge remains acute on the road to the Rio+20 Summit,” adds Richard Burrett, Co-Chair of the UNEP Initiative and Partner in Earth Capital Partners.

ESG factors: From philanthropy to competitive advantage The mainstreaming of ESG factors has been at the forefront of efforts throughout the years. With very little or no presence on the private finance agenda in the 1990s, the decade between 2000 and 2010 witnessed a flourishing of sustainable finance projects and initiatives. ESG is now ‘in vogue’. And this is to a large extent due to the UNEP Initiative’s work over the years being the first initiative to champion the ESG issues. The value of the UNEP Initiative lies in moving ESG into the mainstream of finance operations in a shift from the PR, ethics, philanthropy, reputation and corporate social responsibility domains, into a domain of competitive advantage, profitability and incentives building the business case for sustainable finance and investment.

ESG analysis, apart from being able to identify adverse risk to investments and credit-returns, is also a predictor of quality of management. If a business cannot get employees’ safety right, for example, it is likely that the managers would not get other operational issues right on which profitability and investments returns are dependant.

Making competitors  large and small finance firms and banks  actually collaborate in the context of the UNEP Initiative working groups, has led the membership onto a path where they nowadays speak with a unified voice on some of the most pressing global environmental and social issues, including climate change.

Climate change advocacy Preceding the UN climate change negotiations UNFCCC COP16 in December 2010, the UNEP Initiative, together with its partners, brought together 259 investors representing over US$15 trillion, who issued a climate change statement, as reported by Reuters news agency, the Financial Times, Bloomberg and CNBC. As the largest ever investor group to urge action on climate change, the investors urged for domestic policy frameworks to catalyse renewable energy, energy efficiency and other low-carbon infrastructure, certainty needed to invest with confidence in receiving long-term risk-adjusted returns.

In order to attain no more than a two-degree temperature increase as pledged by governments, the investors further called on governments to reach an international agreement on climate financial architecture, delivery of climate funding, reducing deforestation, robust measurement, reporting, and verification, and other areas necessary to set the global rules of the road, bolster investor confidence, and allow financing to flow.

In addition, the investors, representing US$15 trillion, required international finance tools that help mitigate the high levels of risk private investors face in making climate-related investments in developing countries, enabling dramatic increases in private investment.

Preceding Cancun, the statement sent a strong signal towards

January 2011 • GBM • 07

Cover story

“

“As the economy and the financial sector begin to recover, we have both an opportunity and obligation to build sustainability into the way global financial companies do business,” thinks the Co-Chair of the UNEP Initiative and CEO of Calvert Investments, Barbara J Krumsiek.

Following the statement launched on 16 November 2010, on 17 November Australian Senator Milne proposed a related motion in the Australian Senate. In a press release, the Green Party Senator announced: “The Australian Greens today welcomed the statement from a group of the world’s largest investors, representing US$15 trillion, calling for both a carbon price and regulatory measures to drive investment towards renewable energy and other solutions to the climate crisis.”

Senator Milne’s communiqué announced that she would propose the Australian Senate note “that a statement from a group of the world’s largest investors, representing US$15 trillion calls for domestic and international policies to unlock the vast benefits of low-carbon markets and avoid economic devastation caused by climate change, cites potentially 20% losses to GDP by 2050 if climate change goes unabated, notes the benefits of both a carbon price and regulation in driving investment into renewable energy and other clean technologies; and calls for emissions targets, strong and sustained price signals, energy and transportation policies, the phase out of fossil fuel subsidies, adaptation measures and corporate disclosure of climate risk to be implemented”. The Milne motion further included a proposal to applaud the moves by elements of Australian business to embrace the opportunities provided by ambitious climate action, calling on the Australian government to consider the

08 • GBM • January 2011

increasing benefits of swiftly transforming the economy for low to zero emissions.

It remains to be seen what governmental and international action will follow postCancun climate negotiations. The investment community nevertheless sent a clear signal with a unified voice on the issue of climate change.

These and other climate change related projects originate from the UNEP Initiative’s climate change working group, chaired by Deutsche Bank and HSBC. Biodiversity: Demystifying materiality 2010 has not only been about climate change.

2010 was the UN Year of Biodiversity. While in October 2010, governments successfully negotiated pledges to biodiversity conservation in the context of the Convention on Biological Diversity in Nagoya, Japan, the first CEO Briefing on finance and biodiversity was born out of the UNEP Initiative. As reported

by Reuters news agency, Radio Free Europe and the Guardian, financial institutions representatives gathered in the Japanese city to witness the presentation of the business case for biodiversity from financial point of view.

The key word was ‘risk’.

“Nature is not just about fluffy animals or brightly coloured frogs - it’s central to the health of businesses that need to incorporate environmental impacts into their risk management,” Richard Burrett told Reuters.

Biodiversity presents larger risks to the finance sector than terrorism, said the Guardian headlines, pointing to a survey of attitudes across the industry cited in the CEO Briefing.

“The UNEP FI CEO Briefings continue to provide guidance to ASN Bank in formulating and implementing policy. ASN Bank hopes they do the same for other financial institutions,” says Ewoud Goudswaard, Managing Director, ASN Bank.

Training Working with the finance sector on ESG factors also means creating knowledge and capacity within the institutions, which enables them to take informed decisions. The trainings package the UNEP Initiative offers not only relates to assessing overall risk (environmental and social risk analysis), climate change (climate change online course) and responsible property finance

“

policy-makers, showing the level of interest by the industry. “We cannot drag our feet on the issue of global climate change,” Barbara J Krumsiek told the Guardian. Mark Fulton (Co-Chair of the UNEP Initiative Climate Change Working Group and global head of climate change investment research at Deutsche Bank Asset Management) told GBM: “Private finance for low-carbon endeavours in developing countries can and will only flow at the needed scale, if firstly, the risk-return profile of such investments is competitive with that of conventional investments and, secondly, if domestic policy frameworks on the ground display transparency, longevity and certainty.”

He added, “public finance from international sources will be needed to manage risks for investors and create the capacity in developing countries to attract and channel private finance into the green, low carbon economy”.

(energy efficiency financing in buildings online course), but also aims to ensure that the dayto-day operations of institutions themselves is environmentally friendly as well (corporate eco-efficiency and financial institutions online course). More than 2,000 finance professionals have been trained over the years.

Stepping into 2011

Moving into 2011 and a step closer to Rio+20, the UNEP Initiative is already preparing the Principles for Sustainable Insurance (PSI).

Following the successful establishment of the Principles for Responsible Investment (PRI) in 2006, the insurance industry is in the process of developing and adopting their own counterpart - a set of ‘principles for sustainable insurance’ in order to effectively promote and adopt ESG risk management and financing.

The PSI will be focused on ESG factors, tailored to the insurance business, grounded on risks and opportunities, and in line with the goals of sustainable development aiming to provide the global sustainability framework for the insurance industry.

Awaiting the PSI, Barbara J Krumsiek remains positive and forward-looking: “The challenges finance and investment face on the road to the Rio+20 Summit are considerable. It is a critical time to work for progress”, she concludes.

The UNEP Initiative wishes you a Merry Christmas and a happy New Year.

For more information about the UNEP Initiative, services and members visit www.unepfi.org.

Watch the Movie ‘The other face of finance’ at www.unepfi.org

International Advisory Forum

International Advisory Forum Japan Mr Ryuji Sakai Nagashima Ohno & Tsunematsu Tel: 81-3-3511-6124 Fax: 81-3-5213-2224 e-mail: ryuji_sakai@noandt.com Nagashima Ohno & Tsunematsu Nagashima Ohno & Tsunematsu (NO&T) is one of the largest law firms in Japan with approximately 350 lawyers and 350 staff members. NO&T was formed in 2000 as a result of the merger of Nagashima & Ohno and Tsunematsu Yanase & Sekine, and operates as a full service law firm covering all practice areas required by our corporate clients. We have more than 40 years of experience (including the firm’s pre-merger history) representing foreign clients doing business in Japan. M&A is one of the cornerstones of our practice, supported not only by our corporate partners, but also by experts in various specialty areas, such as competition, intellectual property (IP), employment and tax laws.

Legal system in Japan Japan boasts a reliable legal system, based on a civil law tradition but recently significantly supplemented by case law. In the past, the Japanese Diet was rather slow to modernise the country’s statutory laws to keep pace with the changing needs of the Japanese economy and society; but recently this has changed drastically.

Generally speaking, judicial proceedings are primarily presided over by career judges whose ‘integrity’ leaves little room for doubt. A possible drawback with Japan’s legal system is that, despite the rapid increase in the number and types of issues that should ideally be resolved through judicial proceedings or with the assistance from practicing attorneys, the human resources of the ‘judicial branch’ remain insufficient (the population of Japan is approximately 130 million, but there are only 3,600 career judges, 2,600 prosecutors and 27,000 practicing attorneys in Japan).

M&A law The most important body of law for M&A transactions is the Companies Act, which was rewritten in its entirety several years ago and now offers various techniques as tools to implement

M&A transactions, such as mergers (including triangular mergers), corporate splits, stock-forstock exchanges, in addition to straightforward stock and asset purchases. The Companies Act also allows for many different types of governance structures, including one, the ‘committee company’, that is quite similar to the governance structure of major US corporations. The securities law (now called the Financial Instruments and Exchange Act) and stock exchange regulations are also very important for M&A transactions targeting publicly-traded companies and provide detailed rules and mechanisms for such M&A transactions, including ‘take over bid’ system rules (which must be complied with, inter alia, for off-market acquisitions of more than a third of the outstanding shares of a publicly-traded company) The Anti-Monopoly Act requires pre-filing with the Fair Trade Commission and imposes a 30-day waiting period for large-scale M&A transactions, regardless of their form (ie, stock purchase, asset purchase or otherwise).

A foreign investor should also be mindful of the possible application of pre-filing (and de facto approval) requirements under the Foreign Exchange and Trade Act where the target company is engaged in certain restricted areas of business (eg, agriculture, fishery, oil, mining).

The most notable feature of the Japanese real property law is that Japan’s recording system is generally considered to be very reliable. In addition, it would be fair to say that Japan’s IP Laws (patents, copyrights, trademarks, etc) are close to world norms.

An important note for foreign investors is that Japanese employment law (statutes and case law) heavily protects the rights of employees and it is not easy to effect an involuntary lay-off of regular employees. M&A documentation practice and many of the concepts utilised therein (eg, representations and warranties, conditions precedent and indemnities) were originally imported from abroad, but they are now well

recognised and accepted in Japan, particularly in cross-border M&A transactions. The concept of, and necessity for, due diligence is also well accepted, and the management of the target company is generally cooperative in the due diligence exercise. Publicly-traded companies must comply with disclosure rules under the securities law and stock exchange regulations, but the information available from publicly disclosed documents is normally insufficient for the purposes of a potential purchaser (eg, disclosed business structures and investment risks are rather minimal, as a matter of practice, and copies of ‘material contracts’ are not publicly available).

Recent trends in M&A transactions Until ten years ago, full buyouts (going private) of publicly-traded companies were very rare; they are now quite common. However, hostile takeovers are still very rare and not very well received in Japan. It is our observation that although the stock prices of Japanese publicly-traded companies remain very low, and due to the prolonged slump of the economy, there should be many potential target companies for M&A transactions, whether they are publicly-traded or privately-held - there have not been many ‘in-bound’ M&A transactions for the past decade (this is in sharp contrast to the situation before 2000).

In summary Japan is the third largest market in the world with a relatively wealthy population, and, as noted above, there should be many good investment opportunities. With more than 40 years of experience, we stand ready to assist foreign investors planning to enter or expand their businesses in Japan.

January 2011 • GBM • 09

International Micro Finance Advisory Investment Forum Vehicles

Sweden Michael Lettius Partner Tel: +46 42 26 99 50 Michael.Lettius@glimstedt.se www.glimstedt.se

Competition law in Sweden at a glance and recent developments

appeal clearance decisions.

The Swedish Competition Act (CA) contains national versions of the prohibitions of article 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), ie, prohibition for: agreements and concerted practices restricting competition; and, the abuse of a dominant position.

Furthermore, the CA also includes merger control rules based on the rules in Regulation 139/2004. EU Competition Law is applicable and supersedes national legislation. In merger control, the Jurisdictional Notice (2008/C 95/01) is the most important guideline along with some national guidelines from the Swedish Competition Authority KKV (KKV).

The handling rules at KKV were recently changed (15 November 2010) and the important ‘completion notice’ of ten days was removed. For any notifications submitted before this date, KKV was obliged to, within ten days from receipt of a notification, formally declare whether the notification was complete or not. A decision that the notification was not complete could be tried by a court. A decision that a notification was indeed considered complete would start the clock for the 25-working-day phase one review.

During recent years (November 2008 and January 2010), the CA has undergone several chan-ges, and the practice of competition law in Sweden has been affected by recent case law (from the national courts as well as the European Court of Justice and the Tribunal), as well as other occurrences (such as major damage claims based on the breach of the TFEU).

Merger control In November 2008, new thresholds were set for the mandatory notification of concentrations. The thresholds are now: combined aggregate turnover in Sweden of all undertakings concerned more than SEK 1bn (approximately €100m); and, that each of at least two of the undertakings concerned has a turnover in Sweden of SEK 200m (approximately €20m). The review and trial with KKV can go through up to three phases, even though the vast majority of all notifications are handled in the first phase, which takes 25 working days after receipt of complete notification (‘stand still’ period). KKV will often contact the market (ie, customers and the competition) and the notification is required to contain detailed information about these.

When a case is pending with KKV, there are secrecy issues since, as a rule, the public is entitled to see any information available at public authorities. There are specific national confidentiality stipulations covering the documentation in these cases.

It is possible to notify a concentration as soon as the party can show that they intend to form a concentration, for example, by submitting a letter of intent or draft agreement. Undertakings and/or remedies negotiated during the proceedings (such as divestment) are possible, and the clearance decision will cover ancillary restrictions as well. Decisions against the involved parties can be appealed and tried by a court of law; and KKV must (if they intend to prohibit a concentration) take the matter to court. However, no party can

10 • GBM • January 2011

The appearance of claims for cartel damages in Sweden A recent occurrence in Sweden (something that has occurred more frequently in other EU countries) is that Swedish companies have now been exposed to substantial cartel damage claims. There is a lot of development in this legal field within the EU at present, and this development is applicable in Swedish courts and damages cases as well. There is an express stipulation in the CA facilitating such claims to be brought to the Swedish courts. The ‘passing-on defence’ (ie, the argument that a purchasing party is not subject to any damages since the ‘cartel prices’ are passed on downstream to the end consumer) is applicable. There has been some discussion in Swedish legal doctrine of whether the passing-on defence should be disregarded and that the ‘first party’ suffering from cartel pricing should, in fact, be entitled to damages.

New stipulations regarding unfair competition from government-owned entities etc.

From 1 January 2010, there are new stipulations in the CA prohibiting unfair competition from state- or city-owned entities. These rules exist parallel to the stipulations about state aid, where the EU regulation is directly applicable in the Swedish courts. Unfair competition from government-owned entities can be prohibited as of 1 January 2010.

Other recent occurrences in Swedish competition law KKV has recently assumed the full supervision over public procurement cases, etc, and, as of 1 July 2010, the public procurement legislation has been equipped with severe sanctions for procuring parties not abiding by the legislation. Agreements entered into after public procurement, where the rules have been disregarded, can be declared invalid according to this new rule.

Furthermore, a public procurement penalty (under the same construction as competition penalties) can be passed by KKV or by court after application by KKV if procuring entities do not abide by the rules.

Hideki Thurgood Kano is a partner at Anderson Mori & Tomotsune, one of the largest and most diversified full service law firms in Japan.

Thurgood has been practicing in the area of labour and employment since 1995. He acts on behalf of both Japanese and non-Japanese multinational companies, advising on all aspects of labour and employment, including, but not limited to: collective labour management (collective bargaining sessions with labour unions, handling of concerted activities of labour unions); individual labour-management (dismissal and voluntary resignation, disciplinary actions, whistle-blowing, employment of non-Japanese workers, among others); labour insurance, social insurance and pension plans (workers accident compensation insurance, unemployment insurance, health insurance, among others); and labour and employment related dispute resolution and litigation (labour/ employment-related litigation, mediation on individual employment dispute, among others).

Japan

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

Under Japanese labour/employment law, it is extremely hard for companies to try to unilaterally terminate an employee. Thurgood tends to advise companies on ways to avert formal labour and employment disputes, especially concerning termination cases. This is partly because it is very difficult, in general, for companies to completely win a lawsuit under the Japanese labour/ employment law as it is pro-employees, and partly because being involved in a time-consuming and costly lawsuit may not be good for the interest of companies in the long run. However, Thurgood is also an experienced labour and employment litigator, having successfully defended many cases.

Thurgood has written and lectured extensively on labour and employment matters.

The biggest labour/employment issue these days is that there are many employees who get mentally depressed due to bullying or too much work. Some of them even commit suicide, unfortunately. In such a situation, getting employees to consult a medical doctor and having an appropriate second opinion would be the best approach. Thurgood has maintained a good relationship with some excellent medical doctors who examine employees, from the viewpoint of companies.

Thurgood would like to draw the attention of the readers to some recent developments.

First, the Worker Dispatch Act. An accepting company is allowed to utilise a dispatched worker

“

“

Under Japanese labour/employment law, it is extremely hard for companies to try to unilaterally terminate an employee

with no limited period of time for 26 types of job (26-types), but only for three years concerning de-regulated types of job. Thus, there have been many accepting companies trying to disguise de-regulated types of job as one of the 26-types.

Recently, the Ministry of Health, Labour and Welfare issued two government ordinances concerning fictitious jobs under the 26-types (8 February 2010 and 28 May 2010), and is now trying to crack down on such fictitious treatment.

Second, concerning the Handicapped People Employment Promotion Act. Companies with 56 employees or more are required to hire one or more handicapped persons (1.8% being the statutory hiring rate). Until 30 June 2010, those companies failing to satisfy the statutory hiring rate had to bear and make a handicapped people employment contribution payment if the number of their employees was 301 or more. Since 1 July 2010, this has been lowered to a threshold of 201 or more employees.

Third, concerning the Old People Employment Security Act. Companies adopting a 60-yearold mandatory retirement system are permitted to select certain employees satisfying internal relevant selection standards from among all employees reaching 60 years of age and to continue to use such selected employees only. As a rule, the internal relevant selection standards are to be explicitly set out in a labour management agreement at the company. However, as an exception, a company with 300 employees or less is permitted to set out the internal relevant selection standards in its rules of employment when the company has made an effort to, but is unable to, enter into a labour management agreement. This exception will be abolished as of 31 March 2011.

The effect of this abolishment could be that, even a company with 300 employees or less may, as of 1 April 2011, be prohibited from selecting certain employees from all employees reaching 60 years of age, unless the company enters into a labour management agreement.

Finally, concerning the Next Generation Nurture and Support Policy Act. Companies with 301 or more employees are, for the time being, obliged to establish and report to the Regional Labour Bureau specific contents of action plans under which their employees will be urged to bear and raise children.

As of 1 April 2011, this obligation will be imposed on companies with 101 or more employees.

January 2011 • GBM • 11

International Micro Finance Advisory Investment Forum Vehicles

Brazil

Italy

Felsberg, Pedretti, Mannrich e Aidar Advogados e Consultores Legais Thomas Benes Felsberg Tel: +55 11 3141 9138, Tel: +55 11 3141 9101 thomasfelsberg@felsberg.com.br www.felsberg.com.br

Studio Legale Bana

Founded in 1970, Felsberg, Pedretti, Mannrich e Aidar Advogados e Consultores Legais (Felsberg e Associados) has grown to become one of the largest and most prestigious full practice law firms in Brazil, with more than 200 professionals strategically positioned around the world. Based in São Paulo, Brazil’s commercial centre and largest city, the firm also has offices in Rio de Janeiro, Brasilia, Washington DC, Shanghai, Düsseldorf and New York.

Overview of the basic principles of corporate liability in Italy

Well-known for its work in global transactions, Felsberg e Associados has a dynamic team of professionals with extensive international exposure, including working with foreign parties and issues, and sensitive to foreign cultural matters in negotiations and transactions. The firm also provides its lawyers with the resources and technology to provide legal solutions and service that meet and exceed the challenges faced by our clients. Our lawyers have experience in complex business transactions, such as privatisations, project finance transactions, corporate restructurings, and mergers and acquisitions.

Our client base includes companies in a wide range of industries and business sectors, as well as governments, banks, insurance and financial institutions, service providers, foundations, institutions, associations and individuals.

Our law firm advises clients on all bankruptcy and insolvency matters. The firm is prepared to assist borrowers, across all business sectors, in their debt restructuring and business reorganisation needs, and to provide counsel and support throughout the judicial process. The firm is equally active in its representation of creditors in bankruptcy and receivership cases, as well as in negotiating agreements on behalf of creditors to recover amounts due by borrowers in financial distress.

Also, the firm is specialised in developing aggressive reorganisation plans for its clients. These plans address funding and cashflow requirements and include the need to recruit new investors or to transfer controlling equity interests in a venture. The firm’s work may extend, as needed, to the appointment of executives in management positions, as well as to ventures undergoing reorganisation and the commitment of new investments in product lines, technologies, marketing and project implementation necessary for success in a competitive global marketplace.

Our lawyers are experienced in managing the varied and complicated relationships and partnerships between borrowers, financial institutions and other creditors, as well as creditor committees, consultants, advisers and others. Our lawyers have been involved in the landmark cases of Parmalat and Varig and have played, or are playing, an important role in many other very visible cases such as Infinity Bio-Energy, Agrenco, Independência, Arantes, Daslu, Selecta, Frialto among others.

12 • GBM • January 2011

Avv Fabio Cagnola Tel: +39 02 58303974 Fax: +39 02 58305005 e-mail: fc@studiobana.it www.studiobana.it

Corporate liability was introduced in Italy for the first time in 2001 with Legislative Decree 231/2001 (the Decree). The legislator had to overcome the basic principles of our criminal law, according to which only individuals can be held accountable for crimes.

For this reason, the kind of liability introduced by the Decree, although explicitly qualified as ‘administrative’, is considered as a sort of tertium genus in which the features of criminal liability appear to prevail.

The Decree set forth the principles of a specific liability of persons other than individuals in respect of certain criminal behaviours carried out by officers, representatives or other individuals acting on behalf of, or in the interest of, such persons. Not all the crimes give rise to the liability; only those explicitly envisaged by the legislator. The number of crimes has been gradually extended from 2001 to 2009.

The basic elements characterising this type of liability can be summarised as follows.

The crime must have been committed in the interest of, or to the advantage of, the person - assessed on a case-by-case basis.

The individuals actually committing the crime must: “exercise functions of representation, management or direction of the person or of any of its organisational unit provided with a functional and financial autonomy” or exercise “in fact the management and the control” of the person, pursuant to Section 5 of the Decree; or, be “subject to the direction or control” of the individuals exercising the powers and the functions described under above. In the latter case, the corporate is liable only if “the commission of the crime has been made possible by the non-compliance with the obligations of direction and control” pursuant to section 7, first paragraph of the Decree.

The corporate must have failed to implement an organisational model (procedures of internal control) capable of preventing the commission of the crimes. The said model must meet the following requirements: define the activities whereby a crime is more likely to be committed; provide for specific protocols for the adoption and implementation of the decisions of the person in relation to the crimes to be avoided; define the procedures for the management of the financial resources in order to avoid the commission of crimes; provide for duties to inform the body responsible for the control on the proper functioning and implementation of the model; and, provide for the existence of disciplinary measures in order to apply sanctions, should the measures indicated in the model not be complied with.

Finally, the penalties consist of: monetary penalties; banning penalties; forfeiture of the price or profit of the crime; and, publishing of the verdict condemning the person.

“ Japan

Yabuki Law Offices Kimitoshi Yabuki Managing partner Tel: 81-3-5425-6763 Fax: 81-3-3437-3680 e-mail: k.yabuki-yabukilaw.jp www.yabukilaw.jp

Ukraine

Irina Nazarova, Managing Partner Tel: +38 044 498 7383 irina.nazarova@engarde-attorneys.com Andriy Vyshnevsky, Senior Partner Tel:+38 044 498 7383 andriy.vyshnevsky@engarde-attorneys.com Tel: +38 044 498 7383 Fax: +38 044 498 7385 office@engarde-attorneys.com www.engarde-attorneys.com

Yabuki Law Offices is a firm specialising in antitrust and competition in Japan, representing international and domestic clients in information technology, intellectual property (IP), electronics, transportation, construction and other manufacturing industries, particularly in cartel, bid-rigging, unfair trade practice, private monopolisation (dominance) and merger cases.

The recent international cartel cases in which the firm has been involved include, for example, airline fuel surcharge, dynamic random access memory (DRAM), static random access memory (SRAM), marine hose, thin film transistor liquid crystal display (TFT-LCD), cathode ray tubes (CRT), high voltage power cable and forwarder cases. The firm has been involved in unilateral conducts and IP-related cases on the international stage. The firm has also worked on many domestic antitrust cases, such as the bridge construction bid rigging case, the forwarder price fixing case and the JASRAC (the Japanese Society for Rights of Authors, Composers and Publishers) private monopolisation case.

Kimitoshi Yabuki, managing partner of the firm, is the professor (antitrust law) at the Hitotsubashi University, Graduate School of International Corporate Strategy. He is also the secretary general of the Japan Competition Law Forum (the largest organisation of antitrust lawyers in Japan) and secretary general of the Task Force on Amendment

When we act for you, our commitment is total.

Engarde Attorneys at Law (Engarde) is a wellestablished dynamic Ukrainian law firm with a strong focus on representing and protecting the interests of clients in the domestic courts and arbitral institutions, international arbitration institutes and the European Court of Human Rights, corporate law, restructuring and bankruptcy. Engarde provides a full range of legal services to domestic and international companies and individuals.

With a decade of experience, Engarde constitutes one of the most capable expert panels in the Ukraine. We acquire a deep knowledge and understanding of our clients’ businesses and pride ourselves in dealing with our clients’ affairs in a caring and friendly manner tailored to their needs. We see opportunities where others see only obstacles. We go beyond the conventional to find new solutions. We pursue excellence and seek to innovate in everything we do. Whatever problems our clients face, wherever they occur, we are well placed to assist.

Our lawyers are eminently respected practitioners with authentic knowledge of the rules, procedures and cultural dynamics of the world’s leading arbitration institutions, and are deeply involved in their national arbitral institutions and associations.

Engarde combines knowledge and expertise of Ukrainian law and legal practice with the pervasive understanding and knowledge of a European legal approach and doctrines in major law areas in Ukraine and worldwide.

Our extensive industry knowledge enables us to

to the Antimonopoly Act at the Japan Federation of Bar Associations. He is also a member of the special committee for the ICN conference (2008) at the Fair Trade Commission, has participated in various international conferences organised by the IBA and the ABA as a speaker or a panellist, is the co-author of several law books and has written numerous articles in the antitrust area. Therefore, Yabuki Law Offices is delighted to report information on the antitrust and competition development in Japan.

In Japan, the Antimonopoly Act (the Act) regulates competition practice and the Japan Fair Trade Commission (JFTC) manages the Act and relevant regulations. The Act promulgates regulations on cartel, merger, private monopolisation and unfair trade practices. The National Diet of Japan has discussed the amendment to the Act and consequently the JFTC hearing procedure is to be abolished and all dispute cases are to be submitted directly to a court. On 11 November 2010, the JFTC issued guidelines on abuse of a superior bargaining position.

The JFTC has tried internationalisation of its regulatory practice of the past ten years, including introduction of the leniency system, severer penalties on violations of the Act and strengthening of its organisation and power in investigation.

propose creative business solutions and vigorously defend our clients’ interests when no amicable solution appears possible. Our counsels move easily between traditional litigation, arbitration and alternative dispute resolution, matching our renowned courtroom capabilities with exceptional arbitration skills. Engarde is able to resolve international disputes effectively through arbitration by being familiar with the treaties and statutory framework in which international arbitrations are conducted, and by having an extensive knowledge of the relevant aspects of the local legal systems and arbitration laws in order to employ them for the benefit of clients.

Engarde has already gained an excellent reputation in the market for all the range of dispute resolution services. This year, Engarde was involved in a series of sound and complex cases.

Recently, Engarde’s dispute resolution department has confirmed its high reputation among its colleagues at Engarde was granted the ‘Best law firm in dispute resolution of the year 2010’ and ‘Legal discovery of the year 2010’ awards by Yuridicheskaya Practika.

Aside from extensive experience in representing and defending clients’ interests in various lawsuits, our attorneys also have deep knowledge and vast experience in the areas of mergers and acquisitions, international trade and investments, intellectual property, competition and antirust, real estate and construction, and taxation.

Engarde’s goal is to do the usual things unusually well, make the complex simple, and help our clients build better, stronger businesses.

January 2011 • GBM • 13

International Advisory Forum

Italy Ichino Brugnatelli e Associati Carlo Fossati and Maria Clavarino Tel: +390248193249 Fax: +390248100102 E-mail: maria.clavarino@ichinobrugnatelli.it www.ichinobrugnatelli.it

Italy’s legal system, not necessarily a nightmare - if you have a point of contact there.

Mona Lisa’s smile still symbolises Italy to companies currently interested in doing business there. Beautiful, appealing, even conveying a sense of well being, but is there anything shady behind it?

Italy, especially the affluent north, has one of the highest per capita incomes in Europe. Italians can be enthusiastic consumers, albeit sophisticated and demanding. They are used to high-quality goods produced by domestic enterprises, and their pursuit of distinction is found when they do business with international partners. In fact, they are one of the most welcoming people on the globe. Nevertheless, Italian business etiquette can be different from international standards, especially in some areas. When expanding a business in Italy, a company will have to deal with a high level of regional segmentation. Last but not least, labour law can be a serious challenge to anyone reluctant to consult a local lawyer. Contracts of employment for both manual and white-collar workers are regulated by the Italian Civil Code, as amended by several pieces of legislation, but most importance is given to collective agreements. The onus is on the employer to comply with such a complex legislation. Employees hired locally in subsidiaries may have a different view of performance benchmarks, corporate culture, and acceptable business practice. Expatriate employees may encounter unexpected hitches and require more time to achieve their goals.

The key success factor for foreign investors is to identify the right advisers.

They must be deeply rooted in Italy, experienced across the whole country, but at the same time capable of interfacing cross-border requirements.

Ichino Brugnatelli’s relationship with prime banks, institutions, and corporations in Italy dates back to the founding of the firm in the 1890s.

Partners and attorneys were renown nationwide for their involvement with many aspects of the development of Italian society and economy through the 20th Century.

In recent years, while economic globalisation was getting underway, attorneys at Ichino Brugnatelli have been increasingly taking into account the needs of foreign companies interested in investing in Italy.

Law firm culture is strongly client-oriented, and always in pursuit of perfection. It also includes special dedication to professional development, teamwork and community support. More than 20 experienced attorneys can count on the full participation of junior lawyers and qualified assistants to meet the expectations of domestic and international clients.

Areas of practice include: labour law and litigation, corporate employment counseling, business law, bankruptcy law, dispute resolution, civil litigation and family law. Furthermore, a broad network of professionals specialising in different practices has been established, allowing the firm to provide prompt assistance with tax and accounting matters, as well as criminal law issues.

14 • GBM • January 2011

October January 2010 2011 • GBM • 37 15

International International Micro Finance TaxAdvisory Investment GUIDE Forum Vehicles

What is international tax planning?

Tax planning is the art of seeing what tax liabilities lie ahead and adjusting one’s path to ensure that the tax costs are, at any rate, no higher than they need be. In domestic tax planning, the taxes of only one jurisdiction are an issue. That is difficult enough: the practitioner needs to know a great deal about the tax system to guide his client down the optimum path. In the international version, the amount of information the practitioner has to have at his command is quite frightening. And the information, in both cases, is forever changing, with new statutes, regulations, decisions and treaties. I see that information requirement very clearly from my position as president of the International Tax Planning Association (ITPA). The function of this organisation is to disseminate information of this kind among its members through its meetings, publications and website (www.itpa.org).

16 • GBM • January 2011

If we take a look at, say, the programme for its next meeting in Montreux in March 2011, we see the kind of information involved. The meeting opens with ‘A fresh look at Monte Carlo’. Like everybody else, I know that if I go and live in Monaco, I will pay no income tax (unless I am an American), but when I go to see my international tax adviser, I expect him to paint a bigger picture - to tell me about the snags involved in living in Monte Carlo, and about the best way to hold my investments in UK property and my shares in a Spanish manufacturing company. And what should I do about my US royalties? The next speaker deals with quite different questions: his topic is ‘Detecting money laundering’.

In cross-border transactions, money laundering can be very difficult to spot. Advice from someone who has spent a lifetime doing just that is 40 minutes well invested. In the second half of the morning, the programme moves on to investing in real estate, first in France, then in the UK. Non-French investors in French property will want to know about the société civile immobilière; non-UK investors in UK property will be delighted to learn that they have no liability to UK capital gains tax, but will need to appreciate the point where a tax-free quick turn can become a taxable ‘deal’.

‘Company migration: Planning opportunities’ is the title of a talk by Roy Saunders. This is an area in which he has been doing some original and creative thinking: what his audience will essentially learn is to recognise situations where it could be advantageous for a corporate body to become resident in another jurisdiction.

Where a share in a business enterprise is not held by an individual but by some intermediary vehicle, the vehicle is

“

“

Thomas Edison said genius was ten per cent inspiration and 90 per cent perspiration.

often referred to as a ‘wrapper’. A wrapper can be, and often is, a holding company or a trust. Either of them can be administered in Luxembourg, as they can elsewhere, but Luxembourg also offers some other types of wrapper; these will be discussed by Herman Troskie at the beginning of the second day of the meeting. This talk is followed

by Stephen Gray’s talk on dealing with intellectual property. He looks at this topic primarily from a US perspective, which is both difficult and important: it is difficult in that the US tax system has a good claim to being the most complex and difficult in the world, and it is important because the US still has the largest economy in the world, much of it related to intellectual property.

Over the past few years, the offshore world has been hit by ‘storms’ of many kinds information-gathering exercises sponsored by the OECD (Organisation for Economic Co-operation and Development) and FATF (Financial Action Task Force), political pressures from the high-tax country and thefts of information by local employees.

How has this affected the offshore centres and how will it affect their future? This is Richard Hay’s topic. The final talk of the day deals with things that have not yet happened, but will have happened by the 15 March 2011. This round up of regulations, treaties, decisions and enactments will be presented by Philip Baker QC. There are many other areas where the wellinformed international tax planner needs to have, at any rate, some basic knowledge.

If we look through the programmes of later ITPA meetings, we can see several examples. In Monte Carlo, there will be a day devoted to investing in and out of the BRIC countries. On the next day, we find an update on Switzerland and the EU, and then come talks on choosing appropriate jurisdictions for asset protection, or one for an international charity. In the pipeline, for later meetings, are such topics as Islamic banking, private placement insurance, a fresh look at Austria, emerging markets

for offshore services, cross-border estate planning and what the client expects from his tax adviser.

International tax planning is not, as I said, a stationary subject; but many of the topics remain the same. It is interesting to go back to the programmes of the first ITPA meetings, in Amsterdam in 1975 and in Nice in 1976. I see that I was talking in Amsterdam about the ‘Stepping stone’ - the company interposed between a borrower and a lender or between the copyright owner and the ultimate licensee, for the purposes of obtaining treaty benefit on interest or royalties. This was a topic to which Michael Jones returned at the meetings in Amsterdam earlier this year.

But he had some very different things to say, because in the meantime a number of events had occurred - not least of which was the decision of the Court of Appeal in Indofood (a case which may well have been wrongly decided, but which has afforded splendid ammunition to taxation authorities all over the world).

The jurisdictions appearing in the 1975 programme might feature at a conference on international tax planning conference held tomorrow ¬ Luxembourg, Netherlands, Gibraltar, Switzerland and Monaco. But, again, the content of any talk given about any one of those would now be very different. There are some countries that used to be on the international tax planning scene, which are no longer: Canada featured in Nice, and Denmark in Amsterdam. They no longer offer the tax planning advantages they did. On the other hand, there are quite a number of advantages that have been highlighted at past meetings, which never had quite the impact one might have expected. In 1976, Marshall Langer’s talk had the unexpected title, ‘The United States as a tax haven’ - a good deal of what he said remains true today. The same programme included a talk ‘The Australian trust’: it was a little-known, highly cosmetic niche vehicle then, and so it is today.

There have been, however, a number of topics that seemed very important at the time but have, in the meanwhile, rather faded from view: for example, exchange control, bank secrecy, the Dublin IFC and (unexpectedly perhaps) asset protection.

Other topics, by contrast, covered what was then new and uncharted territory, but which subsequently became better known: guarantee and hybrid companies (1984), investing in China (1984), company redomiciliation (1986), Labuan (1993), New Zealand Trusts (1993) and, more recently, Israeli ‘offshore’ trusts (2007). The ITPA focus is still very much on the new - some topics at recent meetings would have been meaningless to the members who attended the earlier meetings: STAR trusts and hedge funds (Cayman, 2009), financial centres in the Gulf, the new Savings Directive (Geneva, 2010), and Blacklists, Greylists and Whitelists (Venice, 2010).

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

Speaking for myself, I have undoubtedly learnt a great deal over the years by attending meetings and reading the Journal.

January 2011 • GBM • 17

International Micro Finance TaxInvestment GUIDE Vehicles

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

by IFA (Institute of Financial Accountants), STEP (Society of Trust and Estate Practitioners) and a number of commercial companies offer opportunities to compile a list of this kind. It requires a certain amount of stamina to take advantage of every opportunity: it is very tempting simply to say ‘hello’ to the people you know and drift off to a nice dinner with people you like. It is a temptation to be resisted!

Thomas Edison said genius was ten per cent inspiration and 90

18 • GBM • January 2011

per cent perspiration. You could say very much the same about international tax planning. The breakthrough comes when the practitioner says to himself: “Suppose we do it a different way?” But before he can propose a different way, he has to know enough about the taxes of the jurisdictions involved to see that the different way is a better way, and that calls both for a lot of learning and also good relations with a number of wise counsellors.

ITPA Fact File Constitution Company limited by guarantee, incorporated in the Cayman Islands President Milton Grundy, barrister, head of Gray’s Inn Tax Chambers, London Committee Solicitors N Goodeve-Docker and R Pease, accountants F Hoogewerf and R Saunders, US attorneys S Gray and M Langer Meetings 2011 Montreux 13-15 March, Monte-Carlo 5-7 June, Luxembourg 16-18 October Website www.itpa.org Convention Director Elizabeth Husband, fax: +44 1732 746689, elizabeth@itpa.org Registrar David Singleton, fax: +44 1534 855488, singleton@itpa.org

Austria

Bilanz-Data Wirtschaftstreuhand GmbH is a tax law and accounting office which was established in 1986 by Mr. Erich Baier, MBA, LL.M. TEP, who is Certified Tax Advisor and was born in 1956 in Vienna, Austria.

This law firm will therefore celebrate its 25th anniversary in 2011 and provides a full range of corporate services to its domestic and international clients and has specialized in both domestic and international tax planning.

The tax law firm also establishes and maintains Austrian based trading companies, holding companies as well as Austrian private foundations.

The main strength of our tax law firm is not only its vast experience in its field of business on which both the domestic and international clients can rely on but also the personal engagement of both the owner and the staff is highly appreciated by the clientel of our tax law firm.

Bilanz-Data Wirtschaftstreuhand GmbH also serves as a consultant for consultants and supports them to implement and maintain Austrian based structures for their clients.

The Austrian tax system provides quite a large number of tax benefits both for individuals and corporations like tax incentives for individuals which receive income from the utilization of patens or the famous Austrian Holding Regime which enables corporations to obtain tax exempt dividends and tax exempt capital gains from foreign subsidiaries, even if Austria does not have a tax treaty with such countries.

This includes also typical off-shore companies, a regulation laid down in tax law which makes Austria unique in comparison to other jurisdictions.

Bilanz-Data Wirtschaftstreuhand GmbH Contact: Erich Baier Tel: +43 1 516 12 0 Fax: +43 1 516 12 14 e-mail: baier@austrian-taxes.com www.austrian-taxes.com

Another highlight in the Austrian tax law system is the famous Group Taxation Regime, second to none worldwide, which allows Austrian based corporations to set-off the losses of a foreign subsidiary from its domestic Austrian tax base. This is also true

for foreign based permanent establishments, such losses can also be deducted from the domestic Austrian tax base.

Austria does not know any CFC-legislation nor does it apply any thin-cap rules or debtequity rules.

Interest paid to non-resident lenders, regardless where they may be, are not exposed to any withholding taxes and are fully tax deductible for the Austrian borrower.

Austrian is also famous for its extensive tax treaty network, currently Austria has tax treaties with 89 other countries, the newest one is the tax treaty with Hong Kong, coming into force in 2011.

Austria has never been blacklisted by any other country and enjoys an excellent reputation.

The Tax Reform 2011 shows a significant improvement in regard of the fiscal support of research and development. Austrian corporations, engaged in research and development, will enjoy a 10 % r & d premium, based on the expenses for r & d and which will be paid in cash by the Austrian tax administration. This premium paid by the Austrian tax administration can lead to a situation where the overall tax burden of the Austrian company is less than 10 %.

A friendly, cooperative and open-minded tax administration with a high level of professional education which is willing to issue written rulings is another asset of the Austrian (tax) system which made Austria a favorite place for headquarters of international companies as well as for individuals, which want to enjoy their significant income in a secure and stable economy in combination with the tax benefits an Austrian private foundation can offer to them.

If you are interested in to learn more about these possibilities please feel free to contact me at any time.

January 2011 • GBM • 19

International Tax GUIDE

Brazil Andrade Advogados Associados André Martins de Andrade Principal partner Tel: 55 21 38755024 Fax: 55 21 38755025 E-Mail: andre@andrade.adv.br www.andrade.adv.br

Interpretation and application of tax treaties in Brazil Worldwide taxation in Brazil contemplates a non-deferral rule, meaning that all profits earned abroad are taxed at year-end regardless of repatriation. Brazilian tax authorities have been denying application of article 7 of the Double Taxation Agreements (DTAs) on the grounds that the commentaries on the OECD Model Tax Convention allow the taxation of profits by both countries whenever controlled foreign corporation (CFC) legislation is involved (see paragraph 23 of the commentary on article 1, paragraph 10.1 of the commentary on article 7 and paragraphs 37 to 39 of the commentary on article 10).

It is true that CFC legislation deems income of foreign subsidiaries to be realised directly by the shareholders or to be distributed to them by way of dividend (anti-deferral rules). But it is also true that due to its anti-avoidance nature, such rules apply to certain type of income (transactional approach) or to certain jurisdictions (jurisdictional approach). The underlying rationale is that situations involving passive income and the use of tax havens facilitate tax avoidance manoeuvres, and should therefore be treated exceptionally.

The problem with worldwide taxation in Brazil is that it applies to all and any income earned abroad, regardless of the characterisation or geography of its origin. It is, in fact, a non-deferral set of rules rather than an anti-deferral legislation.

The present approach by the Brazilian authorities is to apply the same legal treatment usually applied to the exception (CFC legislation) to a rule of a generic extension (such as the Brazilian rule on international taxation). In conformity, local authorities have been assessing tax with respect to any profits earned by foreign subsidiaries, regardless of the fact that in a number of cases they are located in treaty countries. This leads to a serious distortion in the application of the 29 DTAs in place today to which Brazil is a contracting state. In fact, it can be easily perceived that the problem to be raised relates to the total annulment of article 7 of the treaties.

The question arising from the present treatment by the Brazilian tax authorities therefore concerns the possibility of a treaty override under the Brazilian legal system.

The Supreme Court has ruled that there is no prominence of the treaty rule over internal law, wherefore a treaty rule can be overridden by an internal rule. Although international rules are converted into local legislation under the Brazilian treaty ratification system, they function as lex specialis and should therefore be applied in detriment of the local legislation whenever it is the case.

20 • GBM • January 2011

A subsequent local rule can only prevail upon the treaty rule when it deals with the same specific situation dealt with by the treaty rule.

In this context, a generic legal text on worldwide taxation determining that tax should be paid on earnings from associated companies abroad cannot prevail over a treaty rule specifying that companies located in a certain country should pay tax only to the country of domicile (article 7 of DTAs).

Moreover, Brazil has recently ratified the Vienna Convention, which expressly precludes the use of internal legislation to justify the nonapplication of treaty rules (article 27) as a result of the principle of pacta sunt servanda (article 26), which calls for performance in good faith.

The treaty itself can restrain the application of treaty rules. It is the case of the so-called ‘LOB (limitation on benefit) clauses’ that limit the benefit of the treaty under certain circumstances. The more recent DTAs, such as the one between Brazil and Mexico, limit the application of treaty rules in the case of local thin capitalisation rules, CFC or any other type of anti-deferral legislation.

Also, it might be admissible that the treaty not be applied whenever the tax authorities produce evidence sound enough to determine that the foreign entity is a sham with the only purpose of avoiding tax (abuse of tax treaty) and with no economic substance.

In conclusion, the present procedure utilised by the tax authorities in Brazil, which involves demanding the payment of tax on all income earned abroad by foreign subsidiaries of Brazilian legal entities, is entirely contrary to the principles and rules governing it legal system.

Singular cases have been brought to the administrative courts with erratic reactions from the judges, but no final ruling as yet from the Administrative Court of Appeal. In the judicial sphere, the Courts of Appeal have started ruling on cases involving the application of treaties with a clear tendency to acknowledging the prominence of article 7 of DTAs over local rules.

Unfortunately, under the Brazilian legal system, these lawsuits are subject to a long path (approximately five more years) before final judgement by the Supreme Court. That is unless the Supreme Court takes the shortcut of ruling on treaty application upon finalising the examination of the constitutionality of the Brazilian system of worldwide taxation as a whole, which is expected to happen in 2011. Or, otherwise, unless tax authorities perceive the adverse impacts of indiscriminate non-application of treaties and issue a specific ruling determining the situations in which article 7 of DTAs should prevail.

Cyprus

BYBLOSERVE

around the globe to establish international business companies with the purpose of carrying on and monitoring their international business operations.

Bybloserve Management & Financial Ltd (Bybloserve) fall under the umbrella of Frangos & Associates LLC, a lawyer’s limited company, licensed by the Cyprus Bar The high quality service industry of lawyers, Association. auditors, bankers, tax advisers and other relevant professionals strengthens Cyprus’ Frangos & Associates LLC is comprised position in the corporate services market. of high calibre lawyers, most of whom are The economical and political environmental UK educated, and has been providing high quality legal services to local and international stability, combined with a sound and wellclients, with particular attention on corporate, supervised banking sector, mirrors Cyprus’ commercial, banking, property and litigation inward foreign investment achievements over the years. Cyprus’ geographical position (a issues. cross border between three continents) and Bybloserve are specifically designed to its legal environment with English common provide services that include corporate law as historical and guiding mechanism, management, trust, fiduciary, bookkeeping, strengthen its already efficient capital market. tax advisory, corporate consultation and liaison with external auditor services to Corporation tax is a 10% flat rate, which is the a respectable volume of high net-worth lowest within the EU and the lowest noncorporations and individuals around the offshore jurisdiction corporate tax rate in the globe. world. As an EU member state, its tax system is inline with EU requirements and also The Bybloserve team is comprised of within the OECD (Organisation for Economic lawyers, chartered accountants, national and Co-operation and Development) requirements international tax experts, administrators and against harmful tax practices. staff with expertise in the field of corporate management and international tax planning.

In effect, Cyprus provides full tax exception on the payment of dividends to its nonWorldwide corporate services resident shareholders and has a real Bybloserve can register, manage, administer advantage over the other traditional holding and advise on the tax and legal implications of jurisdictions. companies or entities in all major jurisdictions and/or offshore, such as private and/or Main tax advantages are: the ability to receive public partnerships, European Companies, dividends on low or zero withholding tax investment, holding and insurance rate; no tax on profits from the sale of shares; companies, and investment funds. Advisory tax-free distribution of dividends to its services include among others: the selection, non-resident shareholders; and, flexible reestablishment and maintenance of corporate organisation rules, along with all the other tax or trust structures and/or foundations; considerations and incentives. restructuring of international and/or offshore jurisdictions; implementation of trading, There are currently more than 40 double investment and other structures; cubic/ tax treaties in force and many others being physical presence operations; contractual negotiated that in effect lower or eliminate matters, billing and other day-to-day affairs foreign withholding taxes on dividends, of corporate entities; domestic and overseas interest and royalties or capital gains. These property ownership; and, the utilisation of are therefore a useful tax-planning tool to double tax treaties protect businesses and individuals against double taxation of income earned in other Banking, management and administration, countries. accounting and tax implications, such as VAT, corporate and personal taxation and The future of the Cyprus company international tax planning, form part of Bybloserve’s daily professional work.

The attractive tax system of Cyprus, together with its EU accession, has helped Cyprus Domestic & international taxation establish itself as an ideal business centre The role of Cyprus in international tax within the EU. The growth of the use of planning has increased dramatically mainly Cyprus in international tax planning indicates due to its advantageous tax system, and it is the existence of clear advantages that attract now being considered as the most favoured both business entities and foreign private jurisdiction in Europe from which to conduct individuals. international business.

We do not foresee any amendments to the Although Cyprus is a low tax jurisdiction, it current tax or legal environment and it is is not classed as a tax haven, and, due to its expected to further strengthen its competitive favourable tax regime and its wide network advantage and image as a reputable financial of tax treaties, has attracted businesses from centre.

Bybloserve JOSEPH FRANGOS Managing Director jf@bybloserve.com Tel: +357 24812575 Fax: + 357 24812583 info@bybloserve.com jf@bybloserve.com

January 2011 • GBM • 21

International Micro Finance TaxInvestment GUIDE Vehicles

New Zealand Cone Marshall Geoffrey Cone Karen Marshall Tel: +64 9 307 3950 Fax: +64 9 366 1482 gcone@conemarshall.com kmarshall@conemarshall.com www.conemarshall.com

While something of an unknown quantity in terms of international wealth planning, investment, and business structuring, New Zealand is fast establishing a reputation as a dynamic jurisdiction with a high quality of home-grown professional talent, an extremely stable political and economic climate, and a progressive legislative and regulatory regime.

New Zealand’s government is a representative democracy and its legal system is founded on English common law combined with a statutory overlay. New Zealand is a member of the OECD (Organisation for Economic Co-operation and Development), has not been blacklisted as a tax haven by any jurisdiction, and recently ranked equal “cleanest” in the world (along with Denmark and Singapore) in Transparency International’s 2010 Corruption Perception Index.

Cone Marshall is a full service law firm with specialisations in wealth planning and international tax. The firm has developed an extensive network of professional associations with leading law firms and financial advisers over its nine-year history, and enjoys particularly strong alliances in Latin America and Europe. The principals of the firm, Geoffrey Cone and Karen Marshall, are highly experienced practitioners in their respective fields of expertise, and have the support of a staff of four lawyers, a dedicated accounting department and a number of administrative officers at their disposal. Cone Marshall leverages its natural advantage from a GMT+12 time zone to provide world-class responsiveness for its clients.

The main vehicles that Cone Marshall provides for its clientele are trusts, limited partnerships and companies.

The New Zealand foreign trust provides significant tax, asset protection and estate planning opportunities. A properly constituted foreign trust may receive foreign-sourced income and distribute that income to non-New Zealand resident beneficiaries free of tax.

Given that the trustee is considered the legal owner of the assets contributed to the trust, those assets enjoy robust protection from forced heirship, community property and creditor claims. The life of a New Zealand trust is a maximum of 80 years, which allows a client to place assets in a trust sound in the knowledge that future generations will be provided for.

New Zealand companies are a good illustration of why New Zealand’s popularity as a jurisdiction is increasing internationally.

Companies can be incorporated in less than 24 hours. There are no restrictions with regard to the purposes for which a company can be formed or on the kind of property that can be held. There are no minimum capital requirements and shares can be held by nominees. The taxation of companies has recently been modernised

22 • GBM • January 2011

by the government; dividends received from overseas subsidiaries are now largely exempt from tax, and income from controlled foreign corporations (CFCs) is no longer attributed to New Zealand shareholders on an accrual basis. Another development demonstrating the progressive nature of New Zealand’s legislature is the planned introduction of tax-transparent limited liability companies in the near future.

Limited partnerships are a relatively new addition to New Zealand’s legal landscape, but are already proving to be very useful in the context of international planning. They can provide an interesting synthesis of the benefits of both a company structure and a trust structure. They enjoy separate legal personality, but are transparent for tax purposes. Therefore, where the limited partner of a partnership is a New Zealand foreign trust, all of the tax benefits listed above can be enjoyed. An additional benefit is that the identity of the limited partner is protected as confidential information under statute.

Trusts and corporations formed in other jurisdictions can be migrated to New Zealand without difficulty.

As has been suggested above, New Zealand is positioning itself as a serious contender among those jurisdictions that have traditionally been considered as financial centres. As part of that process, the reforms to the taxation of companies listed above have been implemented, along with a host of other measures to ensure New Zealand is not only internationally competitive but also fully compliant with its obligations as an international citizen.

One of the most important developments in this area was the recent introduction of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. This legislation brings New Zealand fully in line with the OECD’s Financial Action Task Force best-practice standards, and further bolsters its reputation as being at the forefront of international efforts to eliminate the abuse of legitimate international structuring techniques.

New opportunities for international structuring utilising New Zealand vehicles are constantly presenting themselves, and two current policy initiatives are worth mentioning. The first recognises the commercial reality that ex-New Zealand investment in overseas ventures does not always take place through the conduit of a controlled subsidiary, and proposes extending the tax breaks given to CFCs to foreign companies in which ex-New Zealand investors have a significant interest, but which are not controlled from here. The second proposal is aimed at developing New Zealand as a jurisdiction for the management of mutual funds, and looks at exempting from tax the non-New Zealand sourced income of foreign investors derived through New Zealand domiciled funds.

Please feel free to contact us in regard to any of the information above, and we would be happy to speak with you further.

Russia

Essex Offshore Management specialises in international tax planning services, as well as the protection of assets for private and corporate clients that invest in various business projects in the territory of the Russian Federation and the CIS. Russia today, as well as other countries of the former USSR, is one of the most dynamically developing markets with huge potential for investment. The new Russian tax legislation, which has developed over the past 20 years, is fairly liberal.

Private and corporate income tax rates are as follows: general corporate profit tax is at a rate of 20% with dividends are taxed at 15%; and, individual income tax is at a rate of 13% with dividends are taxed at 9% (both flat rates).

Essex Offshore Management Ltd Vladislav Varavin Partner Tel: +7 495 648 4267 Fax: +7 495 545 3889 moscow@essexom.co.uk www.essexom.co.uk

These tax rates may be further significantly lowered if the investor’s corporate structure uses companies incorporated in countries that have a double taxation treaty with the Russian Federation. As of 2010, Russia has signed double taxation treaties with more than 65 countries.

According to most of these treaties, the following favourable withholding taxes are imposed: 5% or 10% on dividends paid

by Russian companies to foreign parent companies; and, 0% on the interest on loans, royalties and other types of income as indicated by the relevant treaties.

It is also necessary to say that Russia does not have any controlled foreign companies (CFC) legislation. An investor who is a tax resident of Russia, is only obliged to pay taxes on private income.

development; processing industry; and, retail.

Our company has offices in Russia and in Cyprus that successfully manage hundreds of client companies. Besides, Essex Offshore Management has associates among more than 400 legal, auditor and consulting firms located in ten major Russian cities. This enables us to provide high-quality acrossthe-board support to the companies (both Russian and foreign) that are part of the corporate structures of our clients.

Investors from Europe, North America, India, South-East Asia and their colleagues from Russia and the CIS are able to avail themselves of the various services provided

by Essex Offshore Management, including: the planning and implementation of corporate structures utilising Russian and foreign companies; the administration of foreign companies working in Russia and the CIS; the full legal support of all business processes; and, accounting support of foreign holding and trade companies.

Since 2008, Essex Offshore Management has been publishing the magazine to Private Investor, and since 2010, this magazine is published in the Russian and English languages and has a circulation of 20,000 copies. Apart from this, hundreds of legal and financial professionals take part in conferences organised by Essex Offshore Management, while our managers hold master classes for MBA and DBA students in the leading business schools of Moscow.

We believe that the Russian Federation has signed the most attractive double taxation treaties with Cyprus, the Netherlands, the UK and Luxemburg, which explains why the these countries are currently the leading investors into the Russian economy.

We believe in the social responsibility of small and large businesses, that is why our company works with charity foundations and supports numerous families and children suffering from serious illnesses.

Over the past five years of our work in Russia, we have realised tens of successful projects in the following spheres: oil exploration, processing and sales; metallurgy; banking and investment; telecommunications; construction and

Thanks to its professionalism, dedication and high ethical standards of work, Essex Offshore Management has become one of leading companies specialising in international tax planning in the Russian market.

January 2011 • GBM • 23

International Micro Finance TaxInvestment GUIDE Vehicles

UK

KPMG LLP Erica Howard Partner Tel: +44 207 311 2549 E- Mail: erica.howard@kpmg.co.uk www.kpmg.co.uk/transferpricing

KPMG’s global transfer pricing services (GTPS) practice has the experience to develop globally consistent approaches to transfer pricing to help meet the requirements of national tax authorities.

Drawing on a large team of experienced transfer pricing professionals from KPMG’s global network, KPMG provides a range of services including, compliance and documentation, defence against tax audits, advance pricing agreements, Sarbanes Oxley (S-O) controls and tax efficient business reorganisation. The GTPS practice approach also goes beyond tax law to cover broader commercial issues, with a strong emphasis upon economic thinking  KPMG firms pioneered the use of economists in this area. With a presence in many of the major trading nations, our member firms offer a team that works together across national boundaries.

KPMG’s UK transfer pricing (TP) team is spread across the country, meaning that experienced resources are close at hand. By bringing together accountants, tax advisers, economist and ex-HMRC (HM Revenue & Customs) staff in one group, KPMG offers an outstanding range of professionals.

The team includes professionals in industry sectors such as, financial services, oil and gas, telecommunications, pharmaceutical and automotive. KPMG’s team also has experience in funding, valuations of intellectual property, competent authority and advance pricing agreements. The TP team works closely with professionals in other parts of KPMG to ensure that any strategy properly considers other tax issues and is consistent with the client’s broader business objectives.

The number of countries that have transfer pricing regimes has grown significantly in the past decade, and continues to grow today.

The tax authorities of virtually all the major market economies have implemented transfer pricing rules, often accompanied by documentation requirements with significant penalty provisions.

In the past, it was possible to focus on transfer pricing compliance on the requirements of just one country; but now multinational companies must respond to an ever-changing landscape of court decisions, rule making, regulations and pronouncements. With an increasing range of challenges, transfer pricing policies and documentation are designed (to the extent possible) to satisfy the requirements of each tax authority that has an interest in the transaction.

Dealing effectively with tax authorities is complicated by differences in transfer pricing regulations and practices. The overriding principle of the ‘arm’s length standard’, as set forth in the guidelines of the Organisation for Economic Co-operation and Development (OECD), enjoys almost universal acceptance; however, local country approaches vary considerably. These differences need to be addressed as effectively as possible on a proactive basis. Given

24 • GBM • January 2011

the need to meet the requirements of two or more tax authorities with sometimes conflicting rules, transfer pricing becomes an exercise in risk management rather than simple compliance. With each new announcement of transfer pricing enforcement initiatives, the development of transfer pricing policies that meet corporate objectives, satisfy each of the tax authorities at issues and reduce the risk of double taxation becomes increasingly more complex.

The UK’s basic rule refers to a ‘provision’ made or imposed between two persons, where one controls the other, or both are under common control, by means of a transaction or series of transactions, which can include transactions with third parties. It requires the adjustment for tax purposes of income, profits or losses where that provision (including the terms and conditions attaching to the actual transaction or series of transactions) departs from the arm’s length standard and has created a potential advantage to the taxpayer for the purposes of UK taxation.

A potential advantage exists if, because of the actual provision, the taxpayer’s income or profits are less than, and/or its losses are greater than, they would have been had the arm’s length provision been made between the affected persons. Through this concept of ‘advantage’, the transfer pricing legislation permits adjustments only where these will increase taxable income or profits, or reduce allowable losses, or both.

When signing the declaration on the tax return, the taxpayer will need to consider whether any provision was made or imposed in relation to associates, by mean of a transaction or series of transaction, which was other than that which would have existed between independent enterprises. If so, the taxpayer must consider the tax effect of that provision. If the effect of the ‘actual provision’ is to confer an advantage on the taxpayer, then the taxpayer will be required to adjust the tax computation accordingly.

To satisfy the rules, companies need to document and monitor transfer pricing arrangements and stay abreast of a stream of new tax laws. Failure to comply can lead to extended tax audits, uncertainty about tax liabilities, double taxation and substantial penalties. It is therefore essential to find ways to manage these risks.

However, changes also bring opportunities. With many countries keen to enforce transfer pricing rules, governments are increasingly concerned to stamp out artificial tax avoidance. In aligning business and tax objectives, companies can achieve real tax efficiencies, in some cases reducing the group’s effective tax rate.

KPMG is a global network of member firms and provides audit, tax, and advisory services to local, national and multinational organisations. At KPMG, there are more than 100,000 employees and partners in member firms across 144 countries.

UK Vicena International Ltd Geoffrey Simpson International tax consultant Tel: 01689 898222 Fax: 01689 898333 g.simpson.consultant@vicena.co.uk www.vicena.co.uk

How offshore structures use the UK The UK is thought of worldwide as a high tax jurisdiction with strong tax avoidance legislation and a harsh attitude to users of offshore tax havens. This is often true for UK resident individuals that try to avoid UK tax by diverting earnings from UK activities into offshore structures. However, for individuals living outside the UK, and sometimes for UK residents who have the status of being domiciled outside the UK, the insertion of a UK entity into any offshore structure they establish will frequently help optimise its tax saving benefits.

Offshore entities in the Channel Islands, Monaco, Liechtenstein, Panama, or Caribbean locations, such as the British Virgin Islands (BVI), lack the tax treaty network available to a UK company that can secure favourable treatment on income and gains arising in over 110 jurisdictions. No other country has as many tax treaties as the UK, where dividends, interest, royalties, consultancy fees, marketing commission, etc, can all be received by a UK company without the level of overseas withholding tax or automatic ‘black list’ problems that would apply on direct payment to a tax haven entity.

International tax advisers would not normally create an offshore trust these days with a BVI holding company directly owning a mainland EU property development subsidiary if dividends there

Vicena International is located on the border of London and Kent, and provides a full range of tax and accountancy services. Particular expertise exists in providing creative solutions in the international tax arena so as to secure taxation advantages and minimise any potential fiscal difficulties.

VICENA INTERNATIONAL

from attracting local withholding tax were to be paid up to the BVI parent. Not only would the dividends be reduced by the full rate of local withholding tax, but so might the sale proceeds on a future disposal of the subsidiary.

If a UK holding company was inserted between the EU subsidiary and the BVI parent, then dividends would normally flow into the UK with reduced or nil withholding tax and a future share disposal should be exempt from overseas taxes as well. The UK holding company with an offshore parent could receive and pass on both income and gains proceeds without generating UK tax because no withholding tax applies to the payment of UK dividends. Most other forms of payment from a UK company out of overseas income can also be organised to give a similar tax-free flow of funds.

Another UK structure carrying tax advantages for the offshore world is the UK limited liability partnership (LLP).If one is formed by offshore companies, it can be used as an investor or as a trader entitled to UK VAT registration and can generate gains and overseas income free of UK tax.

So while one might expect UK laws to be unwelcoming towards tax haven arrangements, the reality is that UK entities frequently help the efficient diversion of funds into offshore structures to minimise overseas taxes.

beneficiaries of both UK and foreign trusts.

VAT planning and registration advice is also supplied for UK and crossborder trading, with a full support service to deal with the VAT reporting obligations imposed on a business.

Vicena International is a specialist practice with many year’s experience of assisting clients with sophisticated tax advice, as well as providing related services on taxation, accounting, company law matters and trusts. A strength is assisting with offshore fiscal structuring and in facilitating tax mitigation by linking UK companies with such structures.

As well as providing clients with a UK registered office address and arranging corporate officers if required for special purpose entities established as part of international tax planning arrangements, a full range of company secretarial compliance services are given.

Related corporate tax and personal tax compliance services are provided to supplement the tax planning and structuring advice. The firm’s clients include UK and overseas companies, non-UK resident and non-UK domiciled individuals, property landlords, company directors, plus trustees, settlors and

In addition to covering the fields of personal tax, corporation tax, vat and company law matters, Vicena International also provides related accounting services, such as the production of UK company annual statutory accounts, both generally and to ensure full in-house support for special corporate structures.

January 2011 • GBM • 25

International Micro Finance TaxInvestment GUIDE Vehicles

Principality of Andorra Augé Grup, SA Pere Josep Augé Sanchez Tatiana Shibinskaya Tel: +376 80 36 36 Fax: +376 80 36 39 E-mail: augegrup@augegrup.com www.augegrup.com

LEGAL, TAX AND ECONOMIC ADVICE, RESIDENCE PERMITS, FAMILY OFFICE

Augé Grup is both a law firm and a multi-disciplinary consultancy with a clear international vocation, dedicated to many different subjects, such as: family office, legal department (commercial, administrative, real estate and urban planning, civil, criminal, economic, tax and financial), intellectual property, trademark, tax department, economic area, consulting, immigration consulting and help with obtaining any type of residence permit, whether attached and not attached to a gainful activity.

Our advice is strategic, comprehensive, diversified and customised to the needs of our clients. We seek to optimise the benefits available to our clients and we coordinate the management of these inline with the issues that our clients are facing, for instance, their economic interests, family and property.

Our location in the Principality of Andorra is our main competitive advantage. Viewing the evolution of our country over time, we can say that it is a dynamic country, modern and with a bright future, optimal for both individuals and for the establishment and management of business interests. It offers several advantages, such

as high quality financial services, low taxation, and investment opportunities.

We are very experienced in the field of immigration, in particular, advising on all the requirements needed to obtain a residence permit not attached to a gainful activity. As for the cost of doing so, it is very competitive as to acquire a residence permit does not necessitate a large sum of money; all that is needed is a simple deposit that remains owned by the resident and which is returned when the resident leaves Andorra. This contrasts with the high demands of other countries in allocating residence permits.

Our experienced professionals, with a deep knowledge of national and international legislation, enhance and improve on the advantages of Andorra for the benefit of our clients, and offer the most comprehensive legal, fiscal and economic advice.

Augé Grup offers its international clients the opportunity to discover a different concept of counselling - more complete, global, profitable, secure and fully characterised.

Barbados Cidel E Adrian Meyer Tel: +1 (246) 430-5350 ameyer@cidel.com, invest@cidel.com www.cidel.com Cidel is an international financial services firm, providing a range of services to professionals and clients worldwide through offices in Canada, Barbados, Bermuda, South Africa and a presence in Latin America.

Asset management We provide superior institutional-style asset management to high net-worth clients with a unique offering of leading investment solutions, including discretionary asset management and investment advisory services.

In discretionary asset management, we focus on protecting capital in the management of our client assets. We achieve this protection through strategically allocating assets based on client-risk tolerance, investing with high-quality managers and proactively managing the client portfolio.

Our investment advisory services provide high net-worth investors with strategic direction in their wealth and ongoing oversight of their portfolio.

Fiduciary services Working in partnership with tax and estate planning professionals, we provide the efficient execution of a wide range of structures.

We are an industry specialist in providing fiduciary solutions, including:

26 • GBM • January 2011

Trust services: We act as corporate trustee in the following jurisdictions: Alberta, Canada; Barbados; British Virgin Islands; and New Brunswick, Canada (transnational trust company).

Corporate services: We manage the incorporation and annual maintenance of international business structures to ensure that they are set up and maintained in accordance with the client’s needs.

Active business services: We provide ongoing services to active businesses; services range from basic administrative services to oversight of an employee.

Charitable foundations: We manage the administrative and regulatory requirements of charitable foundations, allowing the client to focus on philanthropy.

Banking services: We provide treasury, cash management, multicurrency, and wire transfer services.

Investment platform services: We provide clients and advisory access to a wide variety of investment managers as well as consolidated reporting in any major currency through unique, open architecture.

Perhaps we should talk. After all, that’s how most lasting relationships begin  with a short, friendly chat.

Contact us to learn more about our global solutions.

Cayman Islands Thorp Alberga Attorneys-at-law Michael L Alberga Tel: 001 345 949 0699 Fax: 001 345 949 8171 e-mail: malberga@thorpalberga.com www.thorpalberga.com Thorp Alberga is a boutique law firm with highly experienced lawyers. The firm is a successor to Myers & Alberga, which was established in the Cayman Islands in the 1980s. The firm has offices in Grand Cayman and in Hong Kong, and provides a wide range of services to local and international clients, including the establishment of hedge funds and other investments vehicles.

Over the past 30 years, the firm has developed relationships with well-known firms of attorneys across the globe that assist clients with their international matters. These firms do not practise in association with Thorp Alberga.

As part of its provision of services to clients, Thorp Alberga ensures that a senior experienced partner provides personal attention to each client throughout every transaction. This effort has minimised client costs and assisted in developing long-term relationships.

The Cayman Islands is a tax neutral jurisdiction and imposes no income, estate or capital gains tax and has no exchange control restrictions. Planning from the certainty of a zero tax jurisdiction has assisted with the transaction of business on a global basis with each party and/or investor accountable to their own domestic

tax jurisdiction without having to be concerned about additional tax at the Cayman level. This type of certainty has proven itself, particularly with the growing uncertainty that surrounds tax regimes in today’s post-financial crisis era.

The Cayman Islands is a common law territory and its legal system is derived from the existing legal system in the UK. The country has a series of statutory provisions that have been developed and have enhanced global trade and investment over the past 30 years. The country has been able to maintain the correct balance of regulatory measures and has entered into tax information exchange agreements and cooperative agreements with many countries around the world.

Legislation, such as our anti-money laundering and anti-terrorist financing measures, have been recognised as ranking among the most efficient on a global basis. Commercial laws are constantly updated and revised to meet changing global conditions.

Despite the severe financial crisis, the Cayman Islands has continued to grow and provide the international community with the sophisticated professionals and intelligent legislation to enhance the global flow of capital and investments on an international basis.

Cyprus Globalserve Consultants Ltd Dinos Antoniou, CEO Tel: 00357 25 824545 Fax: 00357 25 824055 E-mail:info@globalserve.com.cy www.globalserve.com.cy Globalserve Consultants Ltd is a corporate service provider and fiduciary firm based in Cyprus. Globalserve Consultants Ltd has been in the market since 1995, with presence and clientele in more than 25 countries within the EU and eastern European countries.

Profits arising on the disposal of securities in a private or public company by a Cyprus tax resident company are tax exempt from any tax in Cyprus.

There is no withholding tax on outward dividends paid to non-Cyprus tax residents this even includes offshore companies.

The company offers integrated solutions and the complete range of services needed by international clients,including: incorporation and provision of shelf companies from Cyprus and various other jurisdictions; company administrations;provision of nominee services and trusts; corporate and legal services; bank liaison facilities; accounting, VAT and audit; and office facilities through its own dedicated business centre, in order to satisfy the need for substance.

There is no withholding tax on incoming dividends from EU countries as per the EU Parent Subsidiary Directive. There is a reduced withholding tax on incoming dividend from countries with which Cyprus has double tax treaty agreements.

Cyprus is a reputable and long established international business centre with a very attractive tax system, combined with highly efficient banking, legal and professional environments and a stable political and economic system.

The features of the Cyprus tax system that make the Cyprus company a very attractive special purpose vehicle (SPV) and popular international business company follows.

The tax rate in Cyprus is at 10% on net profit, which is the lowest in Europe. There is also no inheritance or wealth tax, and there is a full tax exception on dividends received.

Losses incurred abroad can be set off against the company’s profits, and losses can be carried forward indefinitely against future profits. There are also generous deductibility rules on expenses.

There is no tax on the profits of ship-owning companies with vessels under Cyprus flag, and ship owners, managers and charterers of all flags can elect to be taxed under Tonnage Tax.There is no tax on interest earned on the working capital of a Cyprus registered vessel, no tax on the income or profit made from the sale of a Cyprus registered vessel, and no tax on the wages or other benefits of officers and crew members of a Cyprus registered vessel.

In light of the above tax benefits, a Cyprus company is most commonly used as an intermediate holding company in cases where investors invest in EU countries or in countries with which Cyprus has double tax treaty agreements, as well as trading, financing, royalty, shipping and ship management companies.

January 2011 • GBM • 27

international miCro FinanCe taxinvestment Guide vehiCles

EL SALVADOR Consortium Centro América Abogados – El Salvador Office Diego Martín Menjívar (Partner) Juan Ernesto Menjívar (Associate) Tel: (503)2298-3900 Fax: (503)2298-3939 taxes@consortiumlegal.com www.consortiumlegal.com Salvadoran tax laws are based on a territorial income system that taxes income derived from goods located in El Salvador, as well as activities or capital investments performed therein, even if the income is paid outside of El Salvador.

This system was recently modified due to changes in the tax laws (December 2009 and January 2010). Before the changes, income derived from interests, awards and other profits obtained through deposits in financial institutions outside of El Salvador were not taxable. After the changes, the income derived from those sources is taxed at a 10% rate if no taxes are paid in the source country. If taxes are also paid in the source country, the Salvadoran taxpayer canapply theseas credit to the 10% rate and will only pay the difference left, if any.Where taxes are paid in excess in the source country, they cannot be deducted from the income of the taxpayer.

Also, the transactions between related parties or transactions performed with parties domiciled or constituted in low or nil tax countries or tax havens are now subject to Transfer Pricing Regulation.

The tax rate for businesses is 25%, one of the lowest tax rates in the region. For non-resident aliens that perform services in El Salvador, a withholding tax rate of 20% is applied to their income.

El Salvador offers a tax-free environment for businesses exporting goods to the US its after subscription to CAFTA (Central America Free Trade Agreement). Also, it offers fiscal incentives to the exporters of services according to the International Services Law,benefitting services such as theinternational distribution of goods, logistic operations, BPOs and international financial services. The fiscal incentives include income tax and municipal tax exemptions and tax-free importation of the goods, equipmentand machinery necessary to develop the activities, among others.

Moreover, the Free Trade zones Law provides very similar fiscal incentives and considers Free Trade zones as a territory outside of the country for tax purposes.

Other fiscal incentives include the Tourism Law (for the development of tourism projects) and the Law of Fiscal Incentives for the Promotion of the Renewable Energy for Electricity Generation (for businesses developing energy projects). A Double Taxation Convention was also signed between Spain and El Salvador in 2008. All of which demonstrates how El Salvador is keeping up with the growth of international trade and investment, and becoming a competitive player in the region.

Consortium Centro America Abogados is the largest provider of legal services in the Central American region.The El Salvador office’s tax practice covers corporate tax, international tax, transfer pricing, tax controversy practice, customs tax, municipal tax, tax planning and fiscal incentives.

HONG KONG, CHINA, SINGAPORE AND TAIWAN Charles Kwun Executive director Tel: +852 2521 3661 Fax: +852 2845 9198 E-mail: marketing@acceptor.com www.acceptor.com Hong Kong is one of the world’s freest economies with extensive international trade links and remains the most significant gateway into China. The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) provides eligible Hong Kong companies, including foreign-owned enterprises, greater access to the Chinese market.

Over recent years, it has been common practice for foreign investors to interpose an intermediary holding company to hold their investments in China for reasons including, risk management, structural strategy and double tax treaty benefits. Hong Kong companies have long been favoured.

Hong Kong is regarded as a ‘mid-shore’ jurisdiction  a bridge between the onshore and offshore sectors in Asia. It offers a strong legal framework, quality service levels, minimum bureaucracy and attractive tax policies. Hong Kong has low-tax, rather than zero-tax, rates levied on profits, salaries and property, and adopts a territorial basis of taxation so only profits derived in Hong Kong are assessable to tax. There are no capital gains, estate or sales taxes levied in Hong Kong.

Hong Kong offers credibility, a sound infrastructure and talent

28 • GBM • January 2011

pools to cope with sophisticated demands. Its corporate law is strongly based on British common law, and its efficient and dynamic banking system is designed to support and assist the world-class international business community. Most international financial institutions and all major multinational legal and accounting firms are present in Hong Kong. There are over one million companies incorporated in Hong Kong, so the business sector is also well served by local professional companies. Incorporation of a Hong Kong company can take less than one week, and directors and shareholders can be non-residents.

International investors can leverage Hong Kong’s capital investment entrant scheme, as a means to facilitate Hong Kong residence, through investment in specified permissible Hong Kong assets, and therefore have no need to establish or participate in any business activity.

Acceptor is the premier corporate services provider in Asia with over 30 years of proven expertise. Acceptor was founded in 1979

by The Hong Kong and Shanghai Banking Corporation Limited and leading Hong Kong law firm, Johnson Stokes & Master, before becoming privately owned in 1987. Acceptor has a dedicated, experienced and multi-lingual team of professionals with international qualifications in accountancy, company secretarial and law. Acceptor offers a comprehensive range of professional services to help facilitate the establishment and ongoing management of corporate entities in Hong Kong and across Asia. Acceptor can assist clients with company formation, company secretarial management, accounting and tax compliance, professional directorships, nominee shareholders, trade documentation, immigration and payroll services.

Indonesia KKP Panorama48 Tel: +62 21 3140 643 Fax: +62 21 3190 2817 e-mail: enquiries@kkppanorama48.com www.kkppanorama48.com

Oscar Budiwidiawan Senior partner Tel: +62 813 10704973 Japanese helpdesk Atsushi Sato Tel: +62 878 8909 0358

KKP Panorama48 (Panorama48) is one of the oldest administration and tax consultant offices in Indonesia. Led by the late Willem I Waworuntu, Panorama48 was among the first of its kind to cater administration and tax services to the public.

We provide our clients with a concise and thorough service with a personal touch. We acknowledge that financial and taxation matters are now one of the critical issues under the social business requirements of legal compliance, internal control and transparency, and we value the trust we are given.

Excellence and calibre of service are not only qualities we inherited, but also sought to maintain and improve wherever possible. Now led by the next generation, Maria Grace Waworuntu, Panorama48 continues the old tradition while embracing he new technologies.

With her Masters in international finance from University of Bridgeport Connecticut, her experiences in handling tax planning, review and tax cases, and also with her licence for the tax court authority, Grace has been in the international taxation field for quite sometime.

Our philosophy Harvesting for clients: We dare to take every challenge passionately and professionally. We believe every challenge has a fruitful harvest and that we are able to achieve clients’ requirements and satisfaction.

Innovation and experience for clients: Having been in the business since 1948, we are confident that we have the innovative techniques and expertise based on the experience that clients would need for us to support their business to grow further.

Growth for clients: To give good solutions for the issues arising from the diversification and globalisation of clients’ businesses, we also grow and seek to support more businesses in more counties and areas with our vast experience and knowledge.

Hospitality and reliability for clients: Distorting or evading facts cannot remedy any situation. We are always transparent to the clients regarding the facts and risks they are facing, and we keep their information confidential. We aim to deliver exceptional results with outstanding hospitality and professionalism. That’s why we are better and more reliable.

Isle of Man Stuart Smalley & Co LLC Tel: 01624 626557 Fax: 01624 672502 E-mail: mail@law-man.com www.law-man.com

STUART SMALLEY & CO LLC SOLICITORS Trust, Tax, Property, Company and Corporate Lawyers Founded in 1984, Stuart Smalley & Co LLC is a specialist limited liability company owned and managed by English solicitors offering advice in relation to company law, commercial law, international tax planning, trusts, trust litigation, estate planning, banking, financial transactions, captive insurance companies, wills and UK property.

From 1988 to 1995, Stuart Smalley & Co LLC was part of Jaques & Lewis (now Eversheds). Stuart Smalley & Co LLC was founded to specialise in international taxation and to provide a wide range of legal services to the offshore banking, trust, investment and insurance industries, as well as to private clients.

We provide quality advice on a range of international banking,

commercial and financial operations. We represent banks, insurance companies, investment houses, governments, trustees, corporate and trust service providers and high net-worth individuals. These clients require advice on direct and indirect tax in more than one jurisdiction and on a wide range of commercial and trust matters.

We also advise on both Isle of Man and English legal issues, so as to provide single source advice on both jurisdictions. We have substantial experience of the critical issues of conflict of laws that arise in most international transactions. Our aim is to provide our clients with the solutions they need speedily, competently and efficiently. Our briefing notes on Isle of Man companies, offshore trusts and conveyancing are available under the publications section of our website.

In 2009, Stuart Smalley & Co LLC celebrated 25 years of professional practice as solicitors on the Isle of Man. Stuart Smalley & Co LLC now has 20 staff and is one of the leading commercial law firms on the Isle of Man. Stuart Smalley & Co LLC is recommended in the Legal 500 Europe, Middle East & Africa 2010 as being “strong on tax and on advice to high-net-worth individuals”. Stuart Smalley & Co LLC is also recommended in the Legal 500 Europe, Middle East & Africa 2009 as “specialising in private client work for the UK market and ongoing support for trustees” and “offering particular expertise in taxation”.

If you would like further information on any of the services we provide, please contact Alison Riley or Martine Fleming.

January 2011 • GBM • 29

International Micro Finance TaxInvestment GUIDE Vehicles

Israel Michael Shine,Tamir & Co Shira Shine-Fried Tel: 972-3-560 3001 Fax: 972-3-560 3002 E-mail: shira@shinelaw.com www.shinelaw.com Michael Shine, Tamir & Co is a leader in Israel in offering an Anglo-Saxon and internationally flavoured professional environment, coupled with a fully integrated local practice.

Additionally, the firm has developed a niche client base in the sphere of multinational family asset protection and structuring, and the firm maintains several in-house fully licensed foreign trust companies that solely service clients of the firm, thereby securing the highest standards of due diligence and compliance in this closely regulated area.

This article deals briefly with some of the reporting obligations concerning trusts (mostly foreign trusts with foreign trustees) to the Israeli Tax Authority. This is due to a unique piece of legislation enacted on 1 January 2006, known as Amendment 147 to the Income Tax Ordinance  New Version, 5721-1961 (the Amendment).

The key to the taxability of trusts in Israel is the tax residence of the settlor. It follows that it suffices that one of the settlors (directly or indirectly) and one of the beneficiaries of a trust (local or foreign, with assets in or out of Israel) is an Israeli resident, for that trust to be deemed an ‘Israeli Resident Trust’, meaning that the trust fund is fully subject to tax and reporting in Israel.

There are additional trusts that need to be reported (although they may be exempt from tax) to the Israeli Tax Authority  where an Israeli resident settles a trust in favour of non-Israeli resident beneficiaries, such a trust, if deemed irrevocable within the meaning of the Amendment, will be reportable in Israel (this trust is known as a ‘Foreign Resident Beneficiary Trust’). Additionally, a trust settled by a non-Israeli resident in favour of Israeli beneficiaries may be subject to tax and reporting if the Israeli beneficiary manifests control over the assets of the trust (this type of trust is known as a ‘Foreign Resident Settlor Trust’). It is important to understand that the assesse, in most cases, is the trustee (foreign or local).

It is worth mentioning that Israel has recently adopted interesting legislation for new immigrants. Today, anyone who immigrated to Israel as of 1 January 2007 enjoys a ten-year tax (income and capital gains tax) and reporting holiday on all foreign income. It is, however, important to take proper advice before immigrating to plan the best methods in which this tax holiday can be enjoyed.

Indeed, Israel has become an attractive jurisdiction for in-depth tax planning, and even though Israel is now part of the OECD and has signed many international tax treaties, the country is a perfect place for immigrants looking for extensive tax savings.

Luxembourg FIDOMES S.A. Noeleen Goes-Farrell Tel: +352 95 05 74 74 funds.luxembourg@tridenttrust.com info@fidomes.com

A Luxembourgish perspective: The Luxif platform Luxembourg is the prime location for fund administration and the second largest fund centre outside the US, with more than 3,600 entities holding €2 trillion in assets. One of its strengths is to offer flexible multiple vehicles for all investment strategies.

Luxif was created to meet a growing demand for a cost effective investment platform for wealth managers, financial advisers, fund managers, family offices and high net-worth individuals to establish their own onshore regulated investment vehicle (SICAV-SIF).

strategies is permitted allowing investment in a wide range of alternative strategies.

Luxif, in compliance with domestic regulation, appointed a major depository bank and a leading audit firm to provide investors with the necessary confidence  its board of directors have been fully approved by the CSSF. Luxif offers numerous regulatory advantages: among others, as an umbrella investment vehicle, all the dedicated compartments of Luxif are submitted to the ring-fencing principle and are consequently fully segregated. Should a decision to liquidate be taken by the governing body of Luxif, it will have no impact on other dedicated compartments. This dedicated compartment could be also created by a simple decision of the board of directors and with minimal formalities to be addressed to the CSSF. It should be noted that its broad investment universe can allow various investment strategies.

Luxif allows the creation and design of a dedicated compartment within an existing SICAV-SIF set-up under the Law of 13 February 2007 (the Law) and supervised by the Luxembourg regulator.

From an accounting and tax point of view, Luxif has also proven to be flexible, and, from a tax point of view, Luxif is only submitted to a registration tax amounting to 0.01% of the total assets under management entrusted to Luxif (€100 per million under management).

Among the many advantages are: immediate access to a regulated, operationally flexible and fiscally efficient multi-purpose fund; a short time to market, as the fund platform has already received regulatory approval; lower set up and running costs than alternative regulated fund structures, as a separate promoter is not required; the assets and liabilities of each compartment are legally segregated from those of other compartments; broad scope of eligible investors meeting the €125,000 threshold; and, flexibility in investment

Luxif has therefore reached the appropriate compromise between ensuring robust investor protection, regulatory flexibility and taking advantage of an attractive tax framework. It could be seen as a segregated platform with almost no limit to the investments. More importantly, it could be used as either the first step of an evolving programme that would lead to the creation of a stand-alone SICAVSIF or it could also fit the needs of professionals looking for holding vehicles for a tax planning strategy.

30 • GBM • January 2011

Malaysia Malaysia Shearn Delamore & Co Ms Ka Im Goh Partner, head of tax & revenue practice group Tel: 603-2027 2848 Fax: 603-2072 5499 kgoh@shearndelamore.com www.shearndelamore.com

There is also a limited form of capital gains tax in Malaysia known as real property gains tax, which only applies to capital gains in relation to a disposal of real property or shares in a real property company.

Within Malaysia, a different tax regime applies to the island of Labuan in Malaysia, where a Labuan company carrying on Labuan trading activities would either be charged to tax at the rate of 3% or elect to pay a flat tax of RM20,000 (approximately US$6,500) .

Labuan companies enjoy other tax benefits that include being exempted from having to withhold tax on royalties, interest and technical fees paid to non-residents.

Shearn Delamore & Co, with a history of over 100 years, is one of the oldest and largest law firms in Malaysia. We provide a comprehensive range of services that can be broadly organised into seven practice areas, namely: tax and revenue, dispute resolution, corporate and commercial, intellectual property, real estate, financial services, and employment and administrative law.

We have been consistently ranked as a top tax law firm in Malaysia by various publications for the past few years, including: Chambers Asia, The Asia Pacific Legal 500, Asialaw Profiles, World Tax and Tax Directory Handbook, and we won the Malaysia tax controversy (litigation) firm of the year award in the Asia Tax Awards presented

by International Tax Review four years in a row from 2007 to 2010.

Malaysia has a territorial income tax system as opposed to a world wide income tax system where the main act governing the imposition of income tax is the Income Tax Act 1967. The current corporate tax rate is 25%.

A significant recent tax development was the introduction of legal provisions on transfer pricing in Malaysia, requiring the application of an arm’s length price for the acquisition or supply of property or services in a transaction with an associated person.

Thin capitalisation provisions were also introduced at the same time, but no details of the acceptable debt equity ratio have been announced yet.

There has been much publicity surrounding the proposed introduction of a goods and service tax (GST) in Malaysia, which was first mooted in the 2005 Budget.

The GST Bill 2009 had its first reading in parliament last year, but the government since announced in October 2010 that the implementation of GST would be deferred. GST would have replaced the sales tax and service tax that is currently in force in Malaysia. With the deferment of GST, the service tax rate is proposed to be increased from 5% to 6% next year.

Netherlands NC Trust BV Mr Gerald Kotterman or Frank Nagel Managing director Tel: +31 20 521 63 44 Fax: + 31 20 521 63 49 enquiries@nctrust.nl www.nctrust.nl NC Trust BV NC Trust was established in 1984, is located in Amsterdam and has been independent of any financial institution since 2001. Starting off as a subsidiary of Aviva Group, one of the world’s leading international insurance companies operating in over 60 countries, the shares of the company were sold at the beginning of 2001, at which point the management took over control of the trust activities.

Specialising in the formation, management and administration of companies, partnerships and foundations for many years, NC Trust offers expert guidance to corporate entities and private individuals with their holding, finance or investment activities in the Netherlands.

Netherlands tax characteristics Besides the fact that the corporate income tax rate has been cut to a maximum rate of 25%, the Netherlands is one of the most attractive locations for tax structuring worldwide with regards to dividends, capital gains and royalties.

For instance, if certain conditions are met, all receipts of dividends

and capital gains are exempt if at least 5% of the shares in a subsidiary are held by a Dutch holding company (participation exemption). This may even be the case if the subsidiary is not subject to tax in its own jurisdiction. Furthermore, the interest withholding tax rate is zero on all outgoing interest and royalty payments.

Regarding dividend tax, the Mother/Daughter Subsidiary Directive is applicable. In other cases, the dividend withholding tax rate will be strongly reduced because of the numerous treaties concluded by the Netherlands for the avoidance of double taxation. The dividend tax on all outgoing dividend payments could even be completely avoided if a cooperative association (COOP) is used.

A COOP is a Dutch corporate legal entity that carries legal personality and has ‘members’. Because a COOP is considered to be a normally taxable entity, it is eligible for full tax treaty benefits.

Under Dutch domestic law, a COOP is not subject to dividend withholding tax as it is not mentioned as a taxable entity in the Dutch dividend withholding tax act. As a result, even in cases where there is no or limited tax treaty protection, no dividend withholding tax is due.

NC Trust has built an extensive, informal network of legal and tax experts throughout the world and responds actively to the needs of clients, ranging from traditional trust services to more complex tailor-made financial structures.

As a multi-lingual company where English, Russian, French, German, Italian, Turkish, Indonesian and Kazakh are spoken, NC Trust is highly efficient and well equipped to render services at the highest level.

January 2011 • GBM • 31

international miCro FinanCe taxinvestment Guide vehiCles

NEW zEALAND Nz Securities Trusts Limited Garth Melville Chartered Accountant & Managing Director Tel + 64 9 489 9453 Fax +64 9 489 9452 info@nzsecurities.com www.nzsecurities.com

THE NEW ONSHORE Following the G20 Summit on 2 April 2009 that cracked down on offshore tax havens, and the subsequent US attack on the Swiss UBS bank, the offshore industry realised that it could obtain equal if not better results on the reduction of tax, asset security and succession plans by utilising New Zealand as a base for business.

New zealand is onshore with no tax haven connotations, nor has it ever been black listed, and it is often seen as less expensive than traditional tax havens. It is a member of the OECD (Organisation for Economic Co-operation and Development), the World Trade Organization and the British Commonwealth, and has a common law system with the majority of its legislation founded on British law. There are also no capital gains taxes, inheritance taxes, forced heirship or stamp duties. New zealand has a same-day time zone for the Asia Pacific, and is 12 or 13 hours ahead of Europe. With a stable non-corrupt government, robust economy and competent professional advisers, it is a secure environment within which

32 • GBM • January 2011

global clients can position their business structures.

New zealand has 36 double tax agreements, with withholding taxes between the jurisdictions reduced to between 10-15%. New zealand also has 18 tax information exchange agreements.

New zealand’s commercial law is current and modern  its Foreign Trust Laws were updated in 2006 and the Limited Partnership Legislation was introduced in 2008. The Companies Act was totally rewritten in 1997 and is regularly updated, for example, as recently as July 2010.

Nz Securities Trusts Ltd is a boutique and independent international-structure service provider. It’s CEO Garth Melville, a practising chartered accountant, has specialised in international tax for over ten years. The business has global clients ranging from western and eastern Europe, Asia/Pacific and the Americas, and we will specify structures from the wide range of trusted intermediary providers.

We advise on, register and handle the compliance (including completing financial accounts with tax compliance) for the following business and wealth structures (among others): New zealand foreign trusts with private trust companies (no New zealand tax); pre-migration trusts (tax-free for four years); New zealand limited partnership for funds and traders (no New zealand tax); New zealand Agency company (a small amount of New zealand tax); standard New zealand company (fully taxable in New zealand); controlled foreign company (active business can defer taxes); and, re-domiciliation of offshore companies and trusts into New zealand.

All enquiries are welcome at: info@nzsecurities.com

ANGOLA Rui Gomes General manager Tel: + 244 222 337 218 Fax: + 244 222 337 218 E-mail: rui.gomes@oncorporate.com www.oncorporate.com onCorporate is a company that focuses a considerable part of its services on assisting clients on Angolan tax issues and prides itself in building relationships with clients based on transparency, trust, confidentiality and proactivity.

The Angolan tax system is composed of several taxes, namely on business and employment income, property taxes, taxes on consumption and on financial transactions, as well as taxes on imports and exports.

Industrial tax (IT) is applicable to Angolan companies at the general rate of 35% levied over their profits obtained worldwide. Angolan branches of foreign companies are also subject to a 35% IT rate, but only on profits deriving from their activities in Angola, or similar activities carried out in Angola directly by the head office.

Law 7/97, of 10 October 1997, establishes that service agreements are subject to IT withholding at a 5.25% rate, although a reduced 3.5% rate applies only to services regarding construction, beneficiation, repair or maintenance of immovable property.

Investment income tax (IIT) applies to income, such as dividends, interest and royalties. Dividends and royalties are subject to a withholding tax rate of 10% and interest up to 15%.

Personal income tax (PIT) applies to Angolan and expatriate

employees working in Angola. PIT rates are progressive and the maximum applicable rate is 17%.

Social security contributions are due by employers and employees at the rates of 8% and 3% respectively. Foreign employees working in Angola will be exempted from registering with the national social security system if they prove to be registered in, or contributing to, another country’s social security scheme.

Consumption tax (CT)is an indirect tax assessed on the production of goods locally, importation of goods into Angola and a range of sectors, such as tourism and hotel related services, telecommunications, water and power utility services. The standard CT rate is 10%. CT rates vary from 2-30%.

Stamp duty (SD) is an indirect tax imposed on contracts, agreements and other documents. SD is also assessed on receipts issued by Angolan taxpayers to their customers regarding payments made by the latter in connection, among others, with the supply of goods, equipment and the rendering of services. The SD rate for receipts is 1% of the gross value of each receipt.

Lastly,in order to attract foreign investment, Angola provides a number of tax benefits to be considered. The state may grant incentives depending on the location of the investment and sector of activity, which may include exemption of taxation under IT, IIT, custom duties and property tax, among others.

Considering the growing Angolan economy, and the advantages granted to investors, we have no doubt that Angola is the place to be.

Vasco Carvalho Marques and Sónia Reis International tax consultants to onCorporate

SWITzERLAND FBT Attorneys-at-Law Monica Favre Tel : + 41 22 849 6040 Fax : + 41 22 849 6050 mfavre@fbt.ch www@fbt.ch Founded in 1993, FBT Attorneys-at-Law (FBT) is a business law firm with offices in Geneva and Lausanne and more than 25 lawyers and tax advisers. FBT works closely and on a long-term basis, both nationally and internationally, with institutional and private clients, in particular in tax, banking, finance, corporate and litigation.

FBT’s tax group is composed of very experienced lawyers, highly regarded by their peers and Swiss and foreign authorities. Our team has far-reaching knowledge of individual and corporate taxation, taxation of financial institutions and instruments, high net-worth individuals and cross-border transactions.

Partner and head of the tax group, Monica Favre, holds a diploma as a Federal Tax Expert and has broad experience in tax and legal counselling to banks, financial institutions and multinational corporations, among others.

Partner Jean-Luc Bochatay is considered a leading expert in FrenchSwiss legal and tax matters. From October 2009 to date, under the leadership of Jean-Luc Bochatay, FBT has handled a large number of cases of disclosures involving French taxpayers with assets in Switzerland.

Partner Michel Abt is a highly regarded specialist in collective investment schemes structuring, including both tax and regulatory aspects. He has played a major role in the current French disclosure

programme (amnistie fiscale).

Switzerland is a politically stable country that offers ‘tax certainty’, notably through the negotiation of tax rulings with the Swiss tax authorities.

Swiss tax legislation is rather complex as Switzerland has federal, cantonal and communal laws, with rules and decrees existing at each level. Furthermore, the tax authorities also issue circulars (more specifically at federal and cantonal levels) in order to clarify the rules in practice. Thus, the attorney negotiates tax rulings with the tax authorities in order to ensure the predictability of his client’s taxation.

The new VAT law (LTVA) has brought about a large number of amendments in the VAT field. Often, new circulars, legislative adjustments, rulings and case laws make things move rapidly in this field.

Administrative cooperation, larger exchange of information, more research in tax optimisation, concern for clients to be ‘tax compliant’ and the French disclosure programme are the current trends within tax.

FBT has advised and assisted very important Swiss private banks in relation to administrative proceedings opened by the French tax authorities in view of regularising the tax situation of French individual taxpayers with the French tax administration.

FBT is constantly updating its knowledge in all of its fields of activities, in particular, as regards the latest developments on information exchange, mainly with France, in order to be in a position to advise potential French clients.

FBT works on a regular basis with the Swiss Financial Market Supervisory Authority (FINMA) in its capacity as expert.

January 2011 • GBM • 33

A LIFE LESS TAXING IN GIBRALTAR AND SPAIN Gonzalez and Partners is regulated by the Financial Services Commission in Gibraltar and has been established for more than twenty years. The primary element of our business is setting up and managing companies, trusts and other structures to meet the specific personal and business needs of our clients. Typically these needs would include tax planning, wealth protection, foreign property ownership and facilitating cross-border business.

We specialize in providing advisory, management and administrative services relating to offshore companies, corporate structuring, international tax planning, and trusts worldwide.

We create bespoke structures to assist our clients to preserve their wealth, whilst also providing flexibility over the management and distribution of their assets.

Our offices in Gibraltar and Spain are able to offer independent legal advice through our highly experienced legal advisers and related consultants. We can offer assistance relating to matters in the fields of corporate, commercial, property, tax, trusts, residency, wills & estates, and most other areas of general law.

We have also a list of selected business contacts from Independent Financial Advisors, Accountants and Wealth Managers to assist you.

We offer the best possible service to assist clients in every area relating to both Gibraltar and other offshore business.

This includes amongst other things, incorporation services, trust and trustee services, accounting, virtual offices, and the opening and administ administration of bank accounts.

Our specialised Company Administration department can help you incorporate and manage onshore and offshore companies in almost any international jurisdiction.

We endeavour to give advice on potential tax-saving devices and financial planning.

If you have an enquiry regarding our services please contact: Ms. Jennifer Monaghan Email: jennifer@gonzalez-partners.com Tel: 00350 200 71851

Country proFile - india

india:

A business profile

Mahendra Swarup President IVCA For further queries on India, please direct your questions to IVCA: info@indiavca.org

‘Largest democracy’, ‘emerging economy’, ‘densely populated’, ‘information technology’ and ‘high growth’ are some of the words that come to mind when one talks about India. In this article, we present the reader with necessary information about the subcontinent to demonstrate the potential the country holds for investors and businesses.

Geographical and political profile Located in South Asia, India is the seventh largest country in the world by area, and second largest by population. It is a secular and democratic country with a parliamentary system of government operating in a multiparty environment. India is currently made up of 28 states and seven union territories. The culture, demography and spoken language vary widely from one state to another. Apart from the official language Hindi, English is widely used for official and commercial communication purposes.

India’s climate is broadly classified as tropical. However, one can expect to experience four major climatic zones (tropical, sub tropical, arid and alpine) with temperatures ranging from sub-zero to 50 degrees celsius, owing to India’s diverse topography. The Himalayas along the north, the Thar desert in the west, tropical rain forests and islands in the south, and the Gangetic plains along the centre form the prominent geographic features of the Indian subcontinent.

Economic profile India has seen remarkable economic growth after the opening up of its economy in 1991. To boost the domestic economy, successive governments introduced several progressive reforms against earlier regimes of protectionist policies and regulations that were holding back the country’s potential since its independence in 1947.

Over the past six years, India’s real gross domestic product (GDP) has grown at an average rate of 8.33%. Despite the global recession, the GDP grew at 7.4% in the fiscal year 2009-2010 as compared to a negative GDP growth rate of 2.32% for the G-20 countries. The trillion-dollar economy is currently ranked the fourth largest in the world on a purchasing-power parity basis, and is estimated to become the third largest economy after US and China in 2030, touching approximately US$30 trillion.

Judiciary The Indian judicial system is comprised of the Supreme Court, High Court, District Court and other subordinate courts. The Supreme Court is the highest judicial authority and operates at the federal level. The rest of the courts operate at the state level. The judiciary is independent in its functioning and is responsible for safeguarding the Indian constitution.

Banking The banks in India are currently divided into nationalised (public) and private banks. The public sector banks are backed by the Indian Government and form the majority of the banking system in the country. The private sector banks, on the other hand, were set up during the 1990s after the economy opened up to private investors. Indian banks, both public and private, adhere to strict regulatory policies that are based on conservative fiscal principles by the Reserve Bank of India (RBI).The RBI is the central bank of the country and the sole authority on India’s monetary policies.

RBI’s primary role is to maintain the stability of the financial markets and the currency (Indian Rupee) and to safeguard the interests of investors and businesses.

Foreign Direct Investment Policy To encourage and invite foreign direct investment (FDI) into the economy, the government has taken several steps to liberalise and reform the FDI Policy over the past two decades. FDI up to 100% is now allowed in almost all business sectors without any pre-approval from the authorities, except a few sectors where prior approval from the Foreign Investment Promotion Board (a government authority) is required.

Foreign institutional investors, including asset management companies, pension funds, mutual funds, banks, investment trusts, nominee companies and university funds, have invested in increasing numbers in various sectors of the economy. During 2009-2010, the net inflow of foreign investment was US$69.56bn.

During the period August 1991 to August 2010, a cumulative foreign investment of US$290.26bn was infused in India, with the period from August 2001 to August 2010 contributing about US$256.29bn. Mauritius contributed to more than 42% of the total inflows into the country (due to a favourable tax treaty route) while Singapore (10%) and the US (7%) stood in second and third position.

January 2011 • GBM • 35

Country proFile - india

india:

Mahendra Swarup President IVCA For further queries on India, please direct your questions to IVCA: info@indiavca.org

A business profile

Untapped potential and immense opportunities in sectors (such as healthcare, education, infrastructure, retail, telecommunications, auto, biotech, broadband and energy) continue to drive foreign investment and growth in India amidst a slowdown in the economies of developed countries.

Hot sectors to invest in India Healthcare Education Infrastructure Retail Telecommunication Auto Biotech Broadband Energy

Entry strategies for foreign businesses A foreign firm planning to set up business in India can operate using the following two methods: As an Indian company

The United Nations Conference on Trade and Development (UNCTAD) in its report ‘World Investment Prospects Survey 2009-2011’ placed India as the third most attractive location globally for FDI for 2009-2011. With several factors inclined in its favour, it is anticipated that India would continue to attract new foreign investors and multinational companies.

Major sectors drawing FDI (April – June 2010) Sector Services Computer software and hardware Telecommunications Housing Construction

FDI 21% 9% 8% 8% 7%

Investment opportunities Investing in India has been on the radar of several funds and firms over the past decade. The stable policies and democratic political environment ensure that the long-term growth trajectory of the economy remains northbound.

The independence of the judiciary from the government, and the freedom of speech and expression guaranteed by the constitution of India, provide a fair framework for individuals, firms and institutional bodies to function.

Pro-development guidelines laid down by the government, via ‘five-year plans’, showcase the thrust behind implementing sustainable and farreaching reforms for all sections of society. This, to a great extent, drives investment in various business sectors.

The government has laid out double taxation treaties with over 65 countries to encourage trade and commerce and also alleviate tax hurdles faced by companies or individuals operating in India. The country is in compliance with World Trade Organization norms, and offers full current account convertibility of the Indian rupee. A powerful network of public and private banks helps facilitate the movement of funds both within the country and abroad.

Despite the progress of the economy since the early 1990s, the archaic and complex tax structure has lent itself to a lot of criticism from the business community, and is currently being reviewed for a major overhaul. The new ‘Direct Tax Code’ seeks to decrease tax burdens and simplify convoluted clauses for both corporates and individuals. Red tape is another phenomenon that India struggles with; a business operating in India has to comply with excessive rules and regulations. In recent times, however, reforms have been undertaken to improve the business environment, including setting up single window clearances, online registrations, e-governance and a reduction in the number of inspections required by businesses.

The Indian outsourcing story, in information technology and business

36 • GBM • January 2011

process outsourcing, fuelled by the availability of highly skilled talent, has led to an increase in income levels of the working middle class. The trickledown effect from the rising income level and growth in industrial production continue to drive the demand for goods and services in the domestic economy. Industries setting up base in the country can avail themselves of the rich natural resources available locally and tap into the abundant human capital for their manpower requirements.

A foreign firm can commence business by ‘incorporating’ a company in India using: a joint venture with an Indian company(s)/partner(s); or, a fullyowned subsidiary, holding up to 100% equity, depending on the FDI equity limit (if any). The incorporation of a company is accomplished by filling in an online application and sending business documents to the Registrar of Companies.

The entire process usually takes a month, after which businesses can commence operations and apply for further required licences. After starting the firm, the company is required to follow domestic business laws and provisions as applicable to the firms (Labour Laws, Indian Contract Act 1872, the Sale of Goods Act 1930, Anti-trust Regulations, Intellectual Property Rights, etc).

As a foreign company Foreign firms can also set up operations in India using: a liaison/ representative office (this route is suitable when no commercial activity is undertaken and no income is earned in India by the foreign company, for example, when a business is engaged only in collecting or distributing information); a project office (suitable for foreign companies planning to execute specific/temporary projects in India); or, a branch office (suitable for foreign companies engaged in import/export, consultancy services, research work, etc).

Tax system in India The tax structure and the authority to collect taxes are shared among the central, state and local government bodies. The responsibilities of each entity are as follows: central government (income tax, custom, excise and service tax); state government (value-added tax, stamp duty, state excise on alcohol, road tax, land revenue, entertainment tax and profession tax); and, local bodies (property tax, octroi (tax on entry of goods for use/consumption), tax on supply of water, sewage, etc).

A variety of tax incentives are available for businesses engaged in infrastructure development and industries located in special areas/regions Figures at a glance Size of Indian economy (at end of 2nd quarter of 2010) (April-June) Foreign exchange reserves (as at 5 November 2010) Amount of FDI inflows during 2010-11 (April-August 2010) Exchange rate: US$1 ` Exports (October 2010) Imports (October 2010) Average literacy rate (census 2001)

US$378bn US$300.2bn US$8.89bn 45.28 (as at 16 Nov 2010) US$18bn US$27.7bn 65.38%

Arjun Sen, Associate Editor,

Destination India India offers a total investment opportunity of $1 trillion over the next five years for both domestic and foreign investors, reports Arjun Sen A whopping $1 trillion! According to the Investment Commission of India and the apex industry body Federation of Indian Chambers of Commerce and Industry (FICCI), over the next five years, that is the size of the investment opportunity that exists in India for both domestic and foreign investors in five broad sectors – infrastructure, services, manufacturing, natural resources and knowledge economy.

According to the figures compiled by these two agencies, the infrastructure sector alone offers an investment opportunity of a whopping $440 billion over the next five years. Within the sector, the break up is as follows: $150 billion in the power sector, $76 billion in telecom, $90 billion in roads, $20 billion in ports, $9 billion in civil aviation and airports, $40 billion in petroleum and natural gas, and $55 billion in urban infrastructure.

Similarly, the services sector offers an investment opportunity of $149 billion over the next five years and the break-up is as follows: $40 billion in banking and financial services, $15 billion in insurance, $75 billion in real estate and construction, $6 billion in retail and $13 billion in tourism.

The manufacturing sector offers a total investment opportunity of $264 billion over the next five years. The break-up: $55 billion in metals, mainly steel and aluminium, $35 billion in textiles and garments, $20 billion in electronics and hardware, $75 billion in chemicals, $20 billion in automobiles, $5 billion in automobile components, $30 billion in gems and jewellery, and $24 billion in food processing.

The natural resources sector offers a total investment opportunity of $45 billion over the next five years. The break-up: $15 billion in coal, $5 billion in metal ores, and $25 billion in oil and gas exploration.

The knowledge economy offers a total investment opportunity of $39 billion over the next five years and the break-up is: $10 billion in pharmaceuticals and biotechnology, $25 billion in health care, and $4 billion in IT and IT enabled services.

Reasons to invest in India • India is the fastest growing free-market democracy, • It has a large and growing domestic market, • Versatile, skilled and cheap human capital abundantly available, • Abundant natural resources, • Robust legal and business support systems, • Sound economic fundamentals, • Stable economic reform regime, • Healthy, vibrant financial sector, • Global acceptance that India has emerged as a leading economic power.

India is the fastest growing free-market democracy India’s highly diversified economy has shown rapid growth and remarkable resilience since 1991, when economic reforms were initiated with the progressive opening of the economy to international trade and investment.

Since then, the average rate of growth has shot up further and the average for the entire decade 2000-2010 is likely to be around 7 percent plus despite the global economic crisis starting 2008. At present, among the large economies of the world, India is the second fastest growing economy after China.

Large and growing domestic market Over 300 million Indians (63 million households) are expected to have a household income of over $6,000 by 2015 (over $30,000 in purchasing power parity terms). India is experiencing a rapid growth in consumer spending. The economic reforms since the early nineties have unleashed a

IANS-Publishing arjun.s@ians.in

new entrepreneurial spirit creating a vibrant economy supported by rising per capita income.

Versatile, skilled human capital An unparalleled resource of an educated, hard-working, skilled and ambitious workforce is the hallmark of India’s human capital.

India is projected to stay the youngest with its working-age population estimated to rise to 70 percent of the total demographic by 2030 - the largest in the world. India will see 70 million new entrants to its workforce over the next 5 years.

Abundant resources A vast geography endowed with diverse topography has made India the repository of abundant resources that provide a base for world-scale manufacturing investment.

With an area of 3.3 million square kilometres, India is the seventh largest country in the world, and the second largest in Asia.

India’s reserves of coal, iron ore, manganese, bauxite and chromium are among the largest in the world. Large quantities of mica, titanium ore, chromite, natural gas and limestone are also to be found in India.

India has the second largest area of arable land in the world, making it one of the world’s largest food producers – over 200 million tonnes of foodgrains are produced annually. India is the world’s largest producer of milk, sugarcane and tea and the second largest producer of rice, fruit and vegetables.

Robust legal and business support systems India is a free-market democracy with a robust, well-developed legal and administrative system. The Indian legal system has been derived originally from that of the United Kingdom and is at par with that of any developed economy.

Accounting standards in India are similar to those followed internationally.

Many Indian companies are listed on the NYSE and NASDA Q and report their results under US GAAP. The original Indian Companies Act governing the incorporation and operation of limited liability companies dates back to 1882, though it has been extensively updated thereafter.

Healthy, vibrant financial sector The financial sector in India is characterised by liberal and progressive policies, vibrant equity and debt markets and prudent banking norms.

India has a transparent, highly technology-enabled and well-regulated stock market defined by the most modern, nationwide, on-line screenbased trading system (SBTS), a T+2 rolling settlement system and a market cap of more than $1.6 trillion as on November, 2010. With the largest number of listed companies – more than 10,000 – across 23 stock exchanges, India has the third largest investor base in the world.

The country also has a vibrant and modern commodities exchange market ranking among the top 3 global markets in terms of traded volumes and trades totalling over $650 billion in 2009-10. NCDEX, MCX and NMCEI are the major national exchanges with a diversified portfolio of commodities.

Emergence as a leading economic power There is now global acceptance that India has emerged as a major global economic power.

Conclusion Given this scenario, not investing in India is as good as missing the bus.

As Tom Enders, President and CEO of Airbus puts it, “You can’t be global without being in India”.

January 2011 • GBM • 37

Country Profile - iNDIA - Legal Services

Conscientia Law Associates and Conscientia Consultancy Private Limited www.conscientia.in The corporate carpenters...

K V Omprakash, Corporate lawyer and Director S Raghavan, PCS and director Offices at: Bangalore Registered office: 126/18, 2nd Floor, 8th Cross, Wilson Garden, Bangalore – 560027, Karnataka, India Corp office: 76/1, 1st Floor, 7th cross, Wilson Garden, Bangalore 560027, Karnataka, India Fax: +91 80 41467849 Tel: +91 80 22120078, +91 80 41311607 Chennai 39A, North Parade Road, Chakrapani Colony, St Thomas Mount, Chennai, 600 016, Tamil Nadu, India Telefax: +91-44-4351 9028 Hyderabad 3rd Floor, Jaya Mansion, Sarojini Devi Road, Secunderabad, 500 003, Andhra Pradesh, India Fax: +919949506677

Conscientia, commenced in 2005 specialises in corporate legal, advisory, regulatory and financial services and has its presence in Bangalore, Chennai and Hyderabad in India catering to the legal needs of its various corporate clients.

Conscientia Law Associates was found by committed professionals who have the right exposure for all your corporate legal support services, compliance, secretarial, commercial laws and regulatory services in domestic and international businesses. We provide a full range of legal support services and handle all the legal aspects of business and finance. We provide corporate legal advisory and support services; advise on intellectual property rights; Registration of trademarks and copy rights; advise on corporate structuring and restructuring; merger and amalgamation; legal support services which includes litigation and non-litigation.

Furthermore, Conscientia Consultancy Private Limited provides a one-stop solution for all corporate needs right from incorporation, setting up, obtaining various approvals and running the operation.

At Conscientia, we handle all matters pertaining to Registrar of Companies/ Reserve Bank of India/ other Government departments; Formation of wholly owned subsidiary/liaison/branch office in India, formation of wholly owned subsidiary/liaison/branch office abroad; assist in corporate secretarial compliance; advise on best practices in corporate governance; provide in-house support to legal departments of clients; advise on corporate tax planning and management; undertake registrations under various statutory and regulatory bodies under the Indian statutes and ensure compliance thereof; provide accounting and payroll support services and assist in labour law compliances.

Conscientia has a strong team consisting of qualified lawyers and company secretaries with good track records and experience for providing corporate legal support functions, corporate secretarial and regulatory support services. While providing legal service, we combine a personal approach with high professional standards and aim to provide a comprehensive legal support service to our clients.

38 •38 GBM • GBM • January • January 2011 2011

Juris Corp Ms Detty Davis Head - practice development Tel: +91 (22) 4057 5555 Fax: +91 (22) 2204 3579 e-mail: d.davis@jclex.com www.jclex.com Section 111A: In the midst of controversy Since the incorporation of section 111A into the Companies Act, 1956 (section 111A), it has been the subject of considerable controversy.

The debate centres on the scope of interpretation of this section that provides for free transferability of the shares of a public company.

Strategic investors, private equity firms or joint venture partners seeking to invest in a public company use various pre-emption clauses in investments agreement as a safety valve for their investments. These clauses are viewed as fettering the free transferability of shares in a public company and are seemingly in direct contradiction with the stipulations contained in section 111A. Earlier this year, two different benches of the Bombay High Court pronounced contradictory judgments on this issue.

A single judge of the Bombay High Court in Western Maharashtra Development Corporation Limited Vs. Bajaj Auto Limited [2010] 154 Company Cases, 593 (Bom) pronounced that any kind of restrictions on the free transferability of shares of a public company contravened section 111A, even if such restrictions had been imposed by a group of shareholders inter se on their rights: “The provision contained in the law for the free transferability of shares in a public company is founded on the principle that members of the public must have the freedom to purchase and, every shareholder, the freedom to transfer.

The incorporation of a company in the public, as distinguished from the private, realm leads to specific consequences and the imposition of obligations envisaged in law.”

However, the division bench of the same court differed in a later judgement, Messer Holdings Limited v Shyam Madanmohan Ruia [2010] 159 Company Cases, 29 (Bom). It rejected that interpretation and held that shareholders could restrict their right to freely transfer shares by entering into a private agreement. If the company wanted to restrict the shareholders from doing so, it could do so only by incorporating such a condition in its articles of association. It further clarified that the only purpose of section 111A is to curb the power of the board of directors to refuse registration of transfers in favour of bona fide transferees.

An appeal against the decision of the division bench is pending before the Supreme Court.

The division bench judgment prevails over the decision of single bench, and investors are hoping that the Apex Court delivers a clear verdict on this contentious issue.

Given the nature of Indian businesses, strategic investors putting their investments in these enterprises rely on the goodwill created by the promoter group. The exit of these promoters by selling their stakes to a random third party would cast uncertainty over the investments made by the investors. Therefore, recognising the preemption rights would give confidence to investors to further invest in India.

Poorvi Chothani, Esq. LawQuest Tel: +91 22 6615 6555 / 6562, Fax: +91 22 2287 2080 info@lawquestinternational.com

Tempus Law Associates P Raviprasad Partner Tel: +91 93 91160969 Fax: +91 40 40305005 e-mail: info@tempuslaw.co.in www.tempuslaw.co.in

Founded in 2003, LawQuest is a general business firm headquartered in Mumbai, India. LawQuest offers international quality services to global and local clients and our attorneys are equipped to handle several aspects of legal work for clients ranging from individual entrepreneurs and start-ups to multinational Fortune companies. LawQuest’s national and international networks enable us to render seamless, timely assistance to clients regardless of their location.

Tempus Law Associates (TLA), based out of Hyderabad, Andhra Pradesh, India, was co-founded by US- and India-licensed attorneys, with over 36 years of litigation and transactional experience. TLA handles substantial corporate, commercial and transactional work in industry verticals, such as pharmaceuticals, agri-business, education, infrastructure and technology. TLA is presently handling initial public offerings), qualified institutional placements, private equity investments and acquisitions, among others.

In addition, we steadfastly contribute to the betterment of our profession, the business environment and society by being involved with various interest groups. Members of LawQuest are often quoted in the press, invited to speak at local and international forums and contribute articles to numerous publications. We also regularly provide pro bono legal services to the community and volunteer at local charities.

The Inter Continental Finance Magazine and the Global Law Experts have awarded the Global Indian Immigration Law Firm of the Year, 2010 to LawQuest.

Areas of Practice Human Resources and Global Immigration Law Intellectual Property and Information Technology Law Sports Law Real Estate Foreign Direct Investment Corporate and Commercial Services Litigation and Dispute Resolution Personal and Family Law Partners at the Firm Poorvi Chothani, Esq. in her capacity as the Founder and Managing Partner of LawQuest heads the global immigration and foreign investment practice in India. She is licensed to practice law in India and in the State of New York, USA, and is also a practicing Solicitor of England and Wales. Poorvi’s areas of practice include corporate, commercial and immigration Law. Poorvi has been nominated two years in a row, amongst the world’s leading private practice lawyers in Who’s Who Legal for 2009-2011. She is an alumna of Penn Law. Ranjana Iyer in her capacity as a Partner has over 23 years of experience in civil litigation, international business and corporate commercial law. She heads the transactional and litigation practice at LawQuest. Ranjana is an experienced attorney with a broad legal background encompassing both litigation and corporate commercial law.

Vidhi Agarwal is also a Visiting Faculty in Asian School of Laws (ASL), Pune. She conducts courses and programs in subjects of intellectual property laws and corporate laws. Vidhi heads the intellectual property and sports law practice at LawQuest.

TLA provides services ranging from carrying out due diligence to drafting term sheets, letters of intent, memorandums of understanding (MOUs), preparing definitive share purchase agreements, investment agreements, and handling post-investment/ acquisition issues and filings with the Reserve Bank of India, authorised dealers and other regulatory authorities.

TLA regularly handles a variety of corporate transactions, including incorporation and setting up corporate entities, advising on legal and practical issues, conducting due diligence during proposed incorporations, investments or acquisitions, and advising on implication on existing share subscription, shareholder, share purchase and investment agreements.

TLA handles all the services during debt and equity infusion, drafting and advising on definitive joint venture/collaboration agreements, MOUs, asset and share purchase agreements, and so on.

TLA advises on the applicability of laws relating to the transfer of shares among and between resident and non-resident Indian, nonresidents and emergent legal compliances under the Companies Act, the Federal Emergency Management Agency (FEMA), and so on, in conjunction with other applicable laws specific to the deal.

TLA is regularly engaged to represent US and Indian corporates, promoters and directors, among others, for advice on proposed acquisitions through share or asset purchases, to conduct due diligence, represent in domestic and international M&As, investment deals, joint ventures and collaboration transactions.

TLA advises on structuring and restructuring corporate entities to achieve specific business objectives. We regularly advise and handle work for several funds and venture capitalists based out of Mumbai, Hyderabad and the US for their investment, acquisition and compliance issues. TLA advises and handles regulatory and compliance issues under the Securities and Exchange Board of India, FEMA and the Companies Act for various private, listed and unlisted public limited companies.

TLA handle matters related to patents, trademarks, designs, copyright and protection of plant varieties, including Indian, Patent Cooperation Treaty international and national phase and conventional applications. Our IP offerings include: end-to-end IP portfolio and IP asset management, including prior art search freedom-to-operate search, patentability opinion; drafting patent specifications and claims in accordance with the requirements of India, the US Patent and Trademark Office and the European Patent office; filing and prosecution of patent, design, trademark, copyright and plant variety applications; opposition proceedings; filing and prosecution of review petitions and appeal in Appellate Board; infringement analysis and remedies; renewals and maintenance; IP due diligence; and, compulsory licensing, among others.

January 2011 • GBM • 39

Country Profile - iNDIA - Legal Services

DAVE & GIRISH & CO. Advocates

Mona Bhide is a practicing lawyer in Mumbai and a partner with Dave & Girish & Co. e-mail: mona@davegirsh.com

India - the new target of investors Today, India is on the target list of every international investor. The huge population of young and talented resources available at a cheap price is a factor driving the herd of investors. English is spoken and understood by almost all the people in the cities. The legal system is based on common law principles and the judiciary is transparent. The judiciary is much slower than in most countries around the globe, but the consolation is that the High Courts are non-biased and fair. It is possible for an international investor to plough back profits from India and repatriate the funds to their home country without any problems.

Cross border transfers of funds are restricted to some extent in order to prevent unauthorised transfers, wrongful use, and prevention of terrorism and anti money laundering issues. However, the Indian government encourages foreign investment, and except for a few restricted sectors, most sectors have been opened for foreign investments. There are also special economic zones that are set up at various locations providing tax holidays and other benefits. There are special economic zones set up for the diamond industry and the software and technology projects.

Another major factor that has pulled resources to India is the sound and secured financial market and banking industry. Many multinational banks, which had to close down their operations in Europe and the US, have made profits in India and have either sold their Indian businesses for remarkable profits or have continued with their operations in India despite losses in the European markets.

The Indian banking industry was almost unaffected by the financial debacle or the losses suffered by its foreign counterparts because the Indian banks adopted very conservative lending terms. This helped in the prevention of bad loans and kept a check on non-performing assets. The Reserve Bank of India, which is the federal bank and the regulator of the financial industry, has done a commendable job time and time again, issuing necessary directions/guidelines and notifications to keep a check on the market trends.

The real estate market has also grown tremendously over the past three years. Property prices in a large city like Mumbai are next to New York and Hong Kong. The skyline of the metro cities in India is constantly on the rise, with new and tall buildings emerging in all directions. The Bandra-Worli Sea link Project is not only a pretty sight to see, but also a financial documentation structure worth studying for a finance lawyer.

The growth story of India is never-ending.

40 •40 38 GBM • GBM • January • January 2011 2011

Country Profile - iNDIA - Financial Services

Kotak Investment Banking Sourav Mallik Executive Director - M&A Tel: +91 22 66341100/ 1110 Fax: 91 22 22840492 e-mail: sourav.mallik@kotak.com www.investmentbank.kotak.com Profit from the India opportunity Kotak Investment Banking (KIB) is India’s leading full-service investment bank offering the complete suite of financial advisory services and capital market solutions to leading domestic and multinational corporations. Our services span M&A advisory, equity and debt issuances, private equity advisory, and infrastructure advisory and fund mobilisation.

KIB is a subsidiary of Kotak Mahindra Bank Limited, one of India’s foremost banking and financial services organisations.

Our credentials include, advising on some of the most significant M&A deals in India, a dominant franchise in the capital markets having managed 16 of the 20 largest transactions since FY 2000 and our comprehensive and incisive research capabilities, combined with one of the largest distribution networks to access global and domestic institutional and high net-worth investors.

India is today among the fastest growing economies in the world, with an average GDP growth rate of 8.5% for the past five fiscal years.

India’s growth is primarily a domestic consumption and servicesled story. India’s favourable demographics (with over 365 million poised to join the working age group over the next 15 years (Kotak’s Gamechanger report ‘365 million’)) and the Indian government’s focus on investments in infrastructure are also key enablers to the growth story.

We anticipate that India’s growth will result in significant interest among global players to develop and implement India-entry strategies and is likely to result in an increase in inbound deal activity in the near future. While internationally-accepted practices, such as non-disclosure agreements, valuation analysis, due diligence and transaction agreements, are commonly followed in India, it is critical when structuring a transaction to be intimately familiar with local regulatory provisions, manage individual promoter sensitivities as well as have a thorough understanding of Indian labour laws. Our M&A team is focused on partnering clients by offering our strong advisory capabilities and in-depth know-how of the local market, as well as guiding clients through the complexity of Indian regulations.

In September 2009, India’s capital markets regulator, Securities and Exchange Board of India (SEBI) constituted the Takeover Regulations Advisory Committee (Sourav Mallik of KIB is one of the panel members) to propose changes to the existing Takeover Code. Changes recommended by the committee include, among others, an increase in the open offer trigger limit from 15% to 25%, open offer to be made for all shares as against the current practice of 20%, and banning of any non-compete fees to be paid to the exiting promoter by the acquirer. The main principles behind the proposed new code are to treat minority shareholders equitably, while continuing to give majority shareholders the ability to steer the strategic direction of the company. The new code is expected to be finalised in the next few months, and once implemented, will have a far-reaching impact in the way M&As are conducted in the country.

January 2011 • GBM • 41

Country Profile - iNDIA - Mining Services

Indian Metals & Ferro Alloys Ltd Pincode: 751 010 Phone: 0674-3051000 Fax: 0674 2580020, 0674 2580145 e-mail: mail@imfa.in www.imfa.in Contact: Sanjeev Das Vice-president (corporate affairs) & group spokesperson Tel: 0674 3051126 Fax: 0674 2580020, 0674 2580145 sanjeevdas@imfa.in

Indian Metals & Ferro Alloys Ltd Indian Metals & Ferro Alloys Ltd (IMFA) is the leading producer of ferro alloys in India, with 187 MVA installed furnace capacity capable of producing 275,000 tonnes per annum of ferro chrome. It is a fully integrated producer by virtue of own chrome ore mines, a 108 MW coal-based captive power plant which it plans to expand to 138MW by January 2011, making it very competitive globally.

Founded in 1962, IMFA began operations with the production of essential inputs that go into manufacturing steel  ferro silicon and silicon metal. Being the first in the country to produce silicon metal, IMFA became the pioneering exporter from the sub-continent. Over the years, IMFA has successfully diversified its product portfolio and the bulk of its production today consists of chrome alloys. It is the largest exporter of value-added ferro chrome and has won several prestigious state and national awards.

IMFA has production facilities located in Therubali and Choudwar in the Rayagada and Cuttack district of Orissa, respectively. The company has an installed capacity of 275,000 tonnes per annum totalling six furnaces.

The production facility at Therubali is spread over a land of 600 acres and consists of three furnaces totalling 82 MVA. The complex can produce 120,000 tonnes of ferro chrome per annum.The furnaces are interchangeable and can produce ferro silicon and other alloys whenever required.

Spread over 270 acres, the Choudwar plant consisting of one 48 MVA, one 27 MVA furnace and a recently installed 30 MVA furnace, dedicated to ferro chrome production. Also, a 108 MW coal-based captive power plant, which not only meets the entire electricity requirements of the company, but also supplies power to the state grid. IMFA has plans to increase it’s power generation capacity to 258MW by adding and additional 30MW and 120MW. The complex can produce 155,000 tonnes of ferro chrome per annum.

The mining division of the company operates several chrome ore mines in the Keonjhar and Jajpur districts of Orissa, besides quartz mines for its silicon operations.

Annual chrome ore raising is in excess of 3,00,000 tonnes per annum, which is entirely consumed in-house and converted to value-added ferro chrome thus ensuring maximum employment & revenue generation.

IMFA’s 74% owned subsidiary, Utkal Coal Limited was allocated the Utkal-C coal block on 29 July 1999. The single allotment will be used for power generation and IMFA is awaiting stage-2 forest clearance from the Central Government. The geological estimate of the mine is 193m tonnes. The company will use the coal for captive power generation.

The product portfolio of the company includes Ferro Chrome, which imparts the non-corrosive property to stainless steel, high-purity ferro silicon that is used in specialised applications like electric grade steel, ferro silicon magnesium, chrome ore and quartz.

Since it commenced operations, IMFA has focused strongly on creating valueaddition. The range of activities taken up by IMFA covers the entire spectrum, from mining chrome ore to delivering ferro chrome to the customer’s doorstep.

IMFA is unique as it has a comprehensive multi-product and multi-location ISO 9001 quality management certification and ISO 14001 environment management certification with all activities, such as ferro alloys production, electricity generation, chrome mining, commercial activities (import and export), etc, being covered.

42 • GBM • January 2011

What would you drink?

One in eight people don’t have safe water to drink. This and a lack of sanitation result in the deaths of 4,000 children every day.

WaterAid’s vision is of a world where everyone has access to safe water and sanitation. We have already helped over 14 million people across Africa and Asia. With your support we can reach even more.

Please call now on 0845 6000 433 or visit www.wateraid.org.

Registered charity numbers 288701 (England and Wales) and SC039479 (Scotland)

Deutsche Bank DB Climate Change Advisors

We all have an investment in fighting climate change.

As one of the world’s foremost climate change investors, Deutsche Bank’s Asset Management division is a leader in ideas, research and investment strategies that enable our clients to identify and channel capital towards companies that will help the world to mitigate and adapt to the shifting climate.

The financial potential is significant — the environmental rewards incalculable. www.dbcca.com

DB Climate Change Advisors is the brand name for the institutional climate change investment division of Deutsche Asset Management, the asset management arm of Deutsche Bank AG. I018636 (08/10). The services described in this advertisement are provided by Deutsche Bank AG or by its subsidiaries and/or affiliates in accordance with appropriate local legislation and regulation. © 2010 Deutsche Bank AG.

Luxury Brand Series – Fine Dining

Luxury Brand Series

TheWorld’s Finest Dining Experience There are a million and one restaurants to dine at, but it is when you want only the best that it becomes difficult to choose exactly where you are going to enlighten and delight not only your taste buds but also your entire gastronomical journey.

46 • GBM • January 2011

Dining at a restaurant has moved on leaps and bounds ever since man first invited others to share the delights of his culinary skills. However, today the restaurant is more than just an establishment where one may repress their pangs of hunger or take the family out to eat. Restaurants have evolved into institutions, where the location and ambience plays just as prominent a role as the food itself .

With so many places to choose from, just where do you look to go when you want only the best cuisine? This guide shows you

the restaurants that excel in their trade and offers you something beyond the norm. The restaurants featured offer food that was once only dreamt of and surpass capabilities of the average chef. The cordon bleu at each of these restaurants exceed the highest expectations of all food connoisseurs and are further enhanced by their locations, exemplary service and amazing experiences.

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

The Red House Seafood Restaurant Location: Singapore

Brazil

Established since 1976, Red House is one of the pioneer restaurants at the East Coast Seafood Centre.

Well-known for our dedication to serving the best quality seafood in town, our timeless favourites include the Steamed Scottish Razor Clams and Sri Lankan King Crabs in Chef’s Special Blend of Spicy Black Pepper.

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

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

Located in a quaint corner of the city centre, Red House at The Quayside is Robertson Quay’s prime dining spot. Tucked snugly along the riverfront, diners can enjoy a lovely view whilst feasting on delicious seafood. The cosmopolitan feel of Red House

Red House Seafood Restaurant Blk 1204, #01-05 East Coast Parkway Seafood Centre Singapore 449882 Tel: +65 6442 3112 Operating Hours: 5pm – 11.30pm (Mon – Fri), 11.30am – 11.30pm (Fri, Sat, Public Holidays)

at The Quayside is the result of a unique restaurant bar concept where you can enjoy drinks “By The House” before and after a scrumptious meal.

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

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

Dress casually and relax in the homely atmosphere at Red House.

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

Red House at The Quayside Group Restaurant Manager: Sunny Goh #01-13/ 14 The Quayside, 60 Robertson Quay sunny.goh@redhouseseafood.com Singapore 238252 Operations Manager: Jocelyn Ng Hotel: Business Tivoli Ecoresort Praia do Forte Tel: +65 6735 7666 jocelyn.ng@redhouseseafood.com Location:&Bahia, Brazil Operating Hours: 11.30am – 11.30pm (Mon – Corporate Communications Creative DevelFri), 10am – 11.30pm (Fri, Sat, Public Holidays) opments: Yee Ling Chang dine@redhouseseafood.com yeeling.chang@redhouseseafood.com

January 2011 • GBM • 47

The Chedi Location: Muscat, Oman Luxury Brand Series – Fine Dining

Embark on a culinary journey of irresistible dining and entertainment pleasures at The Chedi Muscat. Whether you are in the mood for a fine dining experience with only the very best seafood and crustaceans or an evening outdoors whilst enjoying traditional Arabic grilled dishes with soft live Oud music playing in the background or just a relaxed tapas dinner by The Chedi Pool, you will find it all at Flavors from around the world are brought together in the four display kitchens at The Restaurant featuring Asian, Arabic, Indian and Contemporary cuisine. Embark on a culinary journey of memorable dining experiences with the ambience, service and vast choice of dishes at The Restaurant that has been awarded for the last 6 years consecutive “Best International Restaurant” and “Best Service”. The Restaurant is open for breakfast, lunch and dinner and offers 6 private dining rooms for groups of up to 60 guests.

For a romantic meal head to The Beach Restaurant located at an unrivalled beachfront. A mix of award winning cuisine, an impressive wine list and a stunning décor are just some of the ingredients for a memorable, romantic dining experience at The Beach Restaurant. Its superb selection of seafood and crustaceans and its unique ambiance is bound to please both the palette and the eye. The Beach Restaurant is open for dinner every evening from 7pm – 10.30pm.

A full spectrum traditional Arabic dining experience is available at the Arabian Courtyard at The Chedi Muscat. Situated in the courtyard adjacent to The Restaurant, the venue offers a unique authentic outdoor dining experience. Live Oudh music and a large selection of Sheesha further complete this truly amazing setting of Arabian delights. The Arabian Courtyard may also be used for private functions of up to 50 guests. The Arabian Courtyard is open for dinner every evening from 7pm to 10.30pm.

Casual dining is available by the pool side at two exquisite cabanas, The Chedi Poolside Cabana and The Serai Poolside Cabana. Adjacent to the stunning 42m infinity pool The Chedi Poolside Cabana offers light meals, assorted refreshments throughout the day. The Serai Poolside Cabana overlooks the breathtaking dark tiled Serai Pool and tranquil gardens, making it an ideal setting for an afternoon meal of sandwiches and light bites.

Commenting on the food & beverage outlets Christopher Girsch, Food & Beverage Manager at The Chedi Muscat said, “The choice of dining and entertainment options available at The Chedi Muscat is truly spectacular. We look forward to a great season with old friends and new guests enjoying our facilities and promise to provide a superb dining experience and excellent service in unique surroundings”

Tel: +968 24524343 restaurant@chedimuscat.com

Hotel: The Bauer Hotels Country: Venice, Italy 48 • GBM • January 2011

Aroloa Vintetres Location: Sao Paulo, Brazil

Arola Vintetres is located on the upppermost floor (the 23rd) of the Tivoli São Paulo – Mofarrej hotel, in the heart of the Jardins district. The restaurant features windows that ensures a breathtaking view of the city of São Paulo. Restaurant, bar, and lounge, it is the place where diverse groups come together.

Arola Vintetres is Sergi Arola’s first restaurant outside Europe. The renowned Spanish Chef – with a twostar Michelin Guide rating – offers a shared dining experience in which guests help themselves from dishes placed in the center of the table. In addition to this unique concept, the restaurant has a two-thousand bottle wine cellar. Selections are paired with dishes from the menu, combining Arola’s traditional recipes with Brazilian flavors and ingredientes.

www.tivolihotels.com www.ecoresort.com.br

January 2011 • GBM • 49

Luxury Brand Series – Fine Dining

The Saxon Restaurant Location: Johannesburg, South Africa

The Saxon Restaurant Understated and private, the Restaurant at the Saxon Boutique Hotel, Villas and Spa will take you on a journey of discovery, exploring the world’s finest cuisines, whilst our accomplished pianist creates an enchanting atmosphere to complement your culinary experience. The restaurant is fully graced with an elegant cocktail bar and buffet area to further cater for your every need.

Our world-class chefs reinvent the menu afresh frequently, using only the choicest organic and seasonal ingredients to create gastronomic masterpieces designed to delight any discerning palate.

Our highly acclaimed and awardwinning sommelier will use his vast knowledge and experience to suggest the perfect wine from the perfect vintage for each course. All our fine wines come from renowned international and local estates giving you the option of pairing your meal in whatever exotic combination you desire.

Dinner can be enjoyed either inside the restaurant, or outside on our wooden deck under a canopy of lush African foliage, with just a glimpse of the sky above. Alternatively the outside Terrace overlooking the hotel’s infinity pool and rolling lawns of the Saxon

Tel: +27 11 292 6000 info@saxon.co.za www.saxon.co.za

50 • GBM • January 2011

will create the perfect setting for an experience second-to-none.

For something really special – and really different – you can enjoy our newly established Chef’s Table, dressed with crisp white linen and the finest silver, crystal glassware and bone china dinnerware located in the heart of our state-of-the-art kitchen. Here you can indulge your personal tastes completely with a menu created bespoke for you and complemented with the very best from our wine cellars. With the Executive Chef and Sommelier as your hosts, this will experience will prove to be the epitome of fine Saxon dining.

The Saxon is also able to accommodate private parties for dinner in one of several discreet and highly private dining settings; two wine cellars, one for white wine and one for red, are imbued with a very particular and romantic ambience. Here guests are treated to the finest silver-service and vintage wines; all served to perfection in this most select of dining settings. Or enjoy our private dining library, housing an eclectic mix of reading material and decorated with watercolours depicting ancient indigenous African weaponry is perfect for bigger parties or even corporate dining. Finally, reflected in the warm waters of our heated outdoor pool is our Bedouin-inspired gazebo which lends itself perfectly for a romantic dinner for two.

Saffron, Banyan Tree Location – Mayakoba, Mexico Banyan Tree Mayakoba – Saffron Experience Banyan Tree Mayakoba is the most exclusive branded luxury All-pool villa resort in the Mexican Caribbean, where sea, jungle and sky emerge together in a Sanctuary for the Senses. The resort is located in an integrated luxury resorts complex at Mayakoba which considered as the most exclusive area in Riviera Maya. Our private villas have been specially designed to become a private paradise that allows guests to connect with nature while still living in luxury.

Banyan Tree’s signature restaurant serves contemporary Thai cuisine.

Overlooking the lagoon and the mangroves, the restaurant’s three pavilions provide an intimate romantic setting. Dishes featured on our menu are served family style and prepared with a modern approach, while still preserving traditional Thai cooking techniques.

About Saffron – Banyan Tree’s signature restaurant Saffron is a crocus thought to have originated from the Greek island of Crete whose flowers produce saffron.

Use: For flavoring and as a natural colourant. Native to: Europe, South and Southwest Asia.

Just as 75,000 flowers are needed to produce just one pound of saffron, it is the myriad ingenious elements of Saffron restaurant that give Banyan Tree’s signature Thai restaurant its exciting reputation for innovative cuisine. Saffron first opened its doors at Banyan Tree Phuket in 1995. Since then, it continues to create authentic Thai flavors interpreted in a contemporary fashion.

Thai cuisine is heavily influenced by its neighboring countries like Laos, Vietnam, Cambodia, China and Malaysia. As in any Asian cuisine, emphasis is on fresh ingredients, light preparation and quick cooking techniques. The secret to gourmet Thai cuisine is the use of fresh piquant and aromatic herbs and spices.

Our Saffron restaurants, also take inspiration from the local cuisine, with the underlying commitment to modernize traditional dishes and create innovative new dishes that are both rich in traditional flavors, yet refreshing in taste, and exquisitely presented to enhance your dining experience. The restaurant walls feature elegant lotuses and high backed chairs upholstered in fine silk, impressing diners with its rich yet contemporary Asian heritage.

Tel +52 984 877 36 88 Email: mildred.gorostiza@banyantree.com www.banyantree.com

January 2011 • GBM • 51

Country proFile proFile -- mexiCo mexiCo Country

www.promexico.gob.mx

mexico: already nafta’s manufacturing hub and the world is following The Mexican market is considered one of the main engines of global growth in coming decades, according to ‘Great Expectations: Doing business in emerging markets’, a report developed by UK Trade and Investment (UKTI) in cooperation with the Economist Intelligence Unit.

taxpayers from being assessed for taxes of a similar nature and in one same period by two or more fiscal jurisdictions) with more than 30.

According to World Bank’s 2011 ‘Doing Business Index’, Mexico is the 35th easiest place in the world to make business (shifting six places from 41st in 2010). This index requires the compliance of certain guaranties on regulations and protection of property rights. Among the Latin American countries, Mexico was the best rated. Considering the BRIC countries, Mexico is placed above them: China is in 79th place, Russia in 123rd, Brazil in 127th and India in 134th.

Mexico is the main destination for aerospace manufacturing projects in the world, the largest producer of smart phones, the second largest exporter of televisions and the third of refrigerators. Eight out of the ten largest electronics assemblers companies manufacture their products in Mexico.

Indeed, the economic policies of the past few decades have been a determining factor in guaranteeing the sound and stable macroeconomic environment that persists in Mexico. The country has well-balanced public finances and a wide margin for manoeuvre in critical circumstances.

Likewise, it shows external accounts with very moderate deficits and one of the lowest inflation rates among Latin America’s main economies.

Why do companies choose to manufacture in Mexico? The reasons behind this are many: it is already the 13th economy in the world, and growing; the level of its competitiveness in relation to costs and the expertise of its human capital; the wide web of free trade agreements that give Mexicanbased companies access to over one billion consumers; its strategic geographical location, placed between North America and Latin America, the Pacific and the Atlantic, and Asia and Europe; and, the size of the country and its unique mixture of industrial infrastructure and access to natural resources, among others.

The World Trade Organization says Mexico is the 10th biggest exporter in the world. It is even bigger than countries such as India or Brazil. In terms of economic structure, Mexico is focused on the secondary sector.

Mexico has reached a stage in which its economy engine is propelled by this sector. There are areas in which strategic industries, such as the automotive and aerospace ones, have developed thanks to the competitive manufacturing costs the country has to offer.

This article discusses Mexico’s current capabilities and its future opportunities, going into more detail on each of the reasons mentioned above.

For the past 25 years since Mexico became member of the GATT (General Agreement on Trade and Tariffs), the country has followed a path that cannot be stopped, looking for and promoting stronger trade and commercial ties with other nations. Today, Mexico is wide open to endless opportunities with a network of 11 free trade agreements involving 43 countries.

Because of this, Mexico is a strategic port of entry to a potential market of over one billion consumers, representing 60% of world GDP (gross domestic product). Likewise, the country has signed agreements on the reciprocal promotion and protection of investments (which foster legal protection of capital flows intended for the productive sector) with 28 countries and signed agreements to avoid double taxation (which prevent

52 • GBM • January 2011

From January to August 2010, the automotive (76.8%), electrical (26.1%), electronic (23.8%), and chemical (21.1%) sectors were the most dynamic in terms of Mexican exports.

Sector exports (million USD) Source: Global Trade Atlas (GTA)

www.promexico.gob.mx

Within the manufacturing industry, exports of metal products, machinery and equipment, amounted to US$133.2 billion in January-September 2010, representing a growth of 38.6% over the same period last year.

Exports by manufacturing branch (million USD) Source: Banco de México

future, the planes we will fly on will be too. Aerospace companies are streaming to Mexico, drawn by lower costs, a certification agreement with the US and an increasingly sophisticated workforce.

Over the past five years, Mexico’s aerospace-related exports have more than tripled and the number of companies established in the country keeps on growing. Almost all of Mexican aerospace sector exports are directed at the US market (81%); this is followed by France and Germany, each with 2.8%, and Canada and the UK come in third place with a participation rate of 2.6% each.

Currently, Mexico is the ninth largest provider to the US aerospace market and the sixth supplier to the European one.

Mexico is not a stranger to the global aerospace industry. The country’s participation in this sector took off almost 40 years ago; but it was in 2004 that it rocketed, with two-digit export growth figures and a three-fold increase in the number of established aerospace companies.

Automotive sector exports of metal products, machinery and equipment grew 66.8% annually, by adding US$48.3 billion during the first nine months of 2010.

Meanwhile, equipment and electrical appliances, and electronic equipment exports totalled US$48.8 billion, representing a growth of 19.8% for the same period.

Metal products, machinery and equipment exports (million dollars) Source: Banco de México

The evolution of exports and the increasing number of companies in the industry have progressed hand-in-hand with an intense diversification process. At an initial stage, Mexico manufactured simple parts, auto parts and assemblies. Today, the country is at a second stage, which includes the manufacturing of turbines, fuselage, harnesses and landing gears, among other products. The thrust not only comes from traditional manufacturing activities, but from a growing diversification towards areas such as maintenance, engineering and design. The country envisions entering a third stage in which complete airplanes will be designed and assembled, and Mexico will be consolidated as a first class innovation centre for the global industry.

The aerospace sector is a good example of the unique combination of toplevel expertise at affordable prices that distinguishes Mexico from other OECD countries. Large companies, such as Bombardier and EADS, have identified this opportunity and have made significant investments.

The automotive industry is the second most strategic sector of the Mexican economy after the oil industry. It is also the most important branch of the manufacturing industry (contributing 17% to domestic production) and its activity generates around 3% of the country’s GDP. Despite the crisis, Mexico reasserted its position as a strategic platform for the automotive industry. In recent years, this has led the major manufacturers to reinforce their business presence in Mexico as a production centre and to increase their investments.

With some 1,500 companies and a workforce of around half a million workers, auto parts has been one of the manufacturing areas that has benefited most from the recovery of the automotive sector. Besides, the manufacture of auto parts for export represents a large area of opportunity for Mexican-based manufacturers, as international enterprises are increasing their purchases to improve their competitiveness and efficiency levels.

High added value, low cost: An unlikely combination?

Around the world, millions of people own cars built in Mexico. In the near

Other sectors that are particularly attractive in Mexico are: the IT industry, both as a near-shore base for BPO and as a creative and competitive design and programme development hub; the mining industry, which is largely underexploited (and yet Mexico is already the largest producer of silver in the world); the infrastructure sector, which is benefiting from an ambitious six-year $250 billion investment plan by the government; as well as the retail sector (during 2010 and up to October, Wal Mart set up 139 stores in Mexico; it now has 2115 stores and is growing).

ProMéxico is the Mexican federal government’s organisation in charge of the promotion of foreign trade and attracting direct foreign investment.

We coordinate communications between federal and state governments in Mexico with the private sector, to put in place programmes, strategies and resources to support the internationalisation of the Mexican economy.

Our vast network of foreign offices is the point of contact for foreign investors and importers. We also attend to Mexican companies that wish to export or to consolidate their position in the international market.

Foreign companies that are interested in doing business in Mexico receive our detailed and personal support in making contacts when purchasing Mexican products, and with any other requirements they may need for investing in our country.

We are very keen to establish fresh links and points of contact with companies and organisations, and to foster prosperous working relationships with them. If you have any questions regarding our work here in the UK, please do not hesitate to contact us either on +44 (0) 207 8115040 or at alexandra.haas@promexico.gob.mx.

January 2011 • GBM • 53

Country Profile - Mexico - Language Translation Services

Corporate Translations Alejandro Berea Tel: +52 (55) 5250 2687 E-mail: alejandro.berea@ corptranslations.com www.corptranslations.com

Translation projects: Partnering with your translations agency There are no statistics to prove it, but a vast majority of consumers around the world purchase goods and services not-produced locally.

And what happens when the instruction booklet comes in harsh, inaccurate and often absurd wording? Some consumers will laugh, others will get upset, but even more will feel offended. The fact is that our native language is an asset and proof of identity; in consequence, when we purchase a product with clear mistranslations, this makes it much harder to interact or use the product and it also adds a great deal of frustration to the process. The result? Expensive losses in terms of customer loyalty and repeat purchases, not to mention harm to the brand’s image. And, it is obvious, begs the question: “If these people were so interested in my buying this product, the least they should do is get this tiny booklet right.”

When a parent company enters a new market with a new language, inaccurate communication (both internally and externally) often results in disastrous consequences: poor employee satisfaction, low productivity rates, lack of identity, thwarts to customer loyalty, poor brand image, etc. This shows just how important it is not only to get an appropriate translation/localisation service, but also to place special attention on the whole translation project. Therefore, sending out documents to a prestigious translations agency when entering a new market will not do the job. Translations required for the new market should be viewed as an integral project involving both the client and the translations agency. In order to successfully reach consumers, both parties must team-up to: 1. Design the project, by defining scope, target, budget and any other elements identified as crucial to attain success; 2. Define the roles of the parties involved, for example: the translations agency should never limit itself to receiving documents and returning translated versions.

It should provide extensive consulting regarding the implications of the materials, suggest different language-related solutions, etc; and, 3. Translated versions should be carefully checked by the client to go over all adjustments with the agency in order to build a solid understanding of the client’s needs, terminology, language specifications and communication goals.

This project-oriented philosophy is the backbone of our operation in Corporate Translations. Not only do we guarantee a smooth communication for any global company seeking to enter the Mexican market, we partner with our clients, gain deep understanding of their goals and then provide technology-driven, integral language solutions. All this in addition to the certainty we can offer through our staff of experts who put their minds to work for our clients’ success.

54 • GBM • January 2011

CountrCountry Profile - MexicO - Legal Services Tipografía

RAIGOSA CONSULTORES Paths

Raigosa Consultores Juan Pablo Raigosa T Tel: +52(81) 8378-4470 Fax: +52(81) 8335-9147 E-mail: info@raigosaconsultores.com www.raigosaconsultores.com Azúl Raigosa

c 100 m 80 y 0 k 65

Gris Raigosa

r 0 g 0 b 89

pantone pendiente hexagesimal #000059

c 0 m 0 y 0 k 45

r 140 g 140 b 140

pantone pendiente hexagesimal #8c8c8c negro 45%

Raigosa Consultores (RC) was founded in January 2005 with one goal in mind: to offer an experienced, flexible, honest, innovative and practical legal team that promptly delivers legal protection to its clients while being responsive, having absolute availability and always with competitive fees.

Looking to innovate the way legal services are rendered, at RC we offer a business-oriented practical approach to legal issues arising in the day-to-day operations of our clients. We have a diverse mix of clients benefiting from our way of handling legal matters, ranging from multinational corporations and Fortune 500 companies, to domestic companies and individuals.

RC specialises in the drafting, review and negotiation of all types of commercial agreements, strategic legal planning and general advice to solve and follow-up on questions or legal issues arising from daily operations. This facilitates our clients’ relationships with suppliers, clients and prospective business partners by giving legal form to agreements reached in principle.

Our Strategic Foreign Investment Consulting division (SFIC) constantly assists foreign entities and individuals looking to invest in Mexico, providing a one-stop approach to foreign investment services. Our attorneys have experience abroad that allows us to compare filings, procedures, regulations and applicable provisions required in our country with those of other jurisdictions. We truly enjoy helping our foreign clients with the entire process of setting up their Mexican operations or investing in real estate developments within our country.

Mexico can be a complex jurisdiction and our goal is to make it as friendly and accessible as possible for our clients.

In addition, other practice areas of our attorneys are the following: corporate governance, corporate secretary services/entity formation, estate planning/trusts, financings/security agreements, franchises, infrastructure projects/government contracts and relations, intellectual property, international trade, mergers and acquisitions, mining, real estate transactions, and renewable energy and natural resources.

We are proactive and practical in each and every one of our clients’ matters, while being keen on preserving the highest ethics and quality standards. RC will only represent a client if we are certain that such client will benefit from our services.

Despite the negative publicity that Mexico has received in the past few months, we are more than convinced that Mexico continues to be an attractive investment destination with tremendous potential. Monterrey offers a qualified and talented workforce, state of the art business facilities and infrastructure, convenient access to the US border and to the rest of the country, but, most importantly, a competitive and profound working culture. Make Mexico the gateway of your business into Latin America.

Quintana Arouesty, SC Juan Carlos Arouesty Founding partner Tel. (52) (55) 5280 6090 jcarouesty@qaa.com.mx www.qaa.com.mx

Quintana Arouesty, SC is a transactional law firm established in 2006 by Juan Carlos Arouesty and Miguel A Quintana, along with a team of highly qualified attorneys from the most prestigious universities in Mexico, the US and Europe.

Quintana Arouesty differs from other law firms due to our experience, knowledge and specialisation in each of the firm’s practice areas, and we maintain an unbeatable quality standard in our services by strictly limiting our work to these specific areas. This not only avoids deterioration in the quality of our work from trying to attract a larger volume of business, but also maintains the confidence and loyalty of our clients and our ability to offer them a personal treatment and immediate response.

Quintana Arouesty specialises in the following: corporate law and foreign investments, real estate, energy, finance, governmental procurement and concessions.

In the real estate sector, we provide legal counseling to investors, developers and construction companies in the commercial, industrial, residential and tourism sectors, and we advise our clients on acquiring, developing and financing such projects. We have broad experience in the drafting and negotiation of lease and purchase contracts for industries and large-scale commercial establishments, including land regularisation.

We are one of the few firms with real experience and specialisation in the implementation of real estate projects for tourist-residential purposes known as ‘fractional ownership’, ‘vacation clubs’, ‘destination clubs’, hotels, residential developments and ‘time share’, as well as real estate/financing projects involving a combination of some or all of those types of business.

This is quite important if we consider that in Mexico the laws and regulations concerning the foregoing real estate business are rather slim, therefore investors and developers can be deceived, making their business or investments more complicated, expensive and without the necessary legal certainty and safety.

In the energy sector, we advise our clients on the planning, structuring and development of energy projects, including: power, gas, oil, petrochemical and water regulatory and permitting issues; negotiation of the entire spectrum of agreements relating to projects and structured financing, including PPAs (power purchase agreements), EPCs (engineering procurement and construction agreements), O&MMs (operation, maintenance and management agreements), FSAs (financial services agreements), etc; as well as negotiations with PEMEX and the CFE (the Federal Electricity Commission), the CRE (Energy Regulatory Commission) and other regulatory entities.

We also provide all the legal services in relation to the corporate and financial aspects involved in some projects, including incorporation of companies, assets transfers, credit agreements, guarantees, etc.

Our experience in the corporate and financial sectors is based on years of working with well-known international companies, including structuring of transactions that often involve complex corporate issues, M&As, joint ventures, trusts and contracts in general.

January 2011 • GBM • 55

CountrCountry Profile - MexicO - Legal Services

Ríos y De la Sierra, SC Contact: Roberto Ríos Partner Tel: (52 5) 55500131 Fax: (52 5) 55500073 e-mail: rrios@rios-sierra.com www.rios-sierra.com

This article comments on the Decree that amends certain articles of the Commerce Code (CC) and the General Corporations Law (GCL) published in the Official Gazette of the Federation on 2 June 2009.

The purpose of the amendment is as follows: to suppress the registration requirements in certain commercial acts, surviving the mandatory registration of the most relevant acts of a corporation; to provide an optional regime for the registration of the powers-of-attorney granted by corporations, as well as for the appointment of managers and officers; to change the reference to “public deeds” to “public instruments”, in order to clearly define whether the instruments generated by a commercial notary public vis-à-vis the instruments generated by a notary public, are the subject of registration; and, to suppress the mandatory registration or deposit in the Public Registry of Commerce of the financial statements approved by the shareholders meeting.

With regard to the Registry of Commerce, article 19 of the CC provides for the cases in which it is mandatory to register the commercial acts of corporations, including incorporation, corporate transformation, merger, spin-off, dissolution and liquidation.

With regard to the commercial folio provided for in article 21 of the CC (which provides for all the acts subject to mandatory registration), the amendments suppresses, in general, all the acts that involve any amendment to the by-laws of the corporations, and only limits it to the amendments regarding any of the acts referred to in the paragraph above.

With respect to the registration of general powers of attorney and appointments of managers, officers and employees, as well as resignations and revocations, the amendments provide that for purposes of commerce and electronic consultation these are optional.

The amendments clarify that only the increases and decreases in the fixed capital of the corporations must be registered, and the increases and decreases in the variable capital of the corporations are not require to be registered.

Article 177 of the GCL (that refers to the deposit of a copy of the financial statements in the Public Registry of Commerce) is suppressed.

Amended article 194 of the GCL suppresses, in general, the requirement of registration of the minutes of extraordinary shareholders meetings of the corporations, except in the cases where such meetings resolve to change the corporate name, domicile, corporate purpose, term, and the transformation, merger, spin-off, and the increases and decreases in the minimum fixed capital of a relevant corporation.

56 • GBM • January 2011

Country Profile - MexicO - Financial Services

Wagner Muñoz & Partners SA de CV Thomas Wagner Managing director Tel: 0052-442-2958272 Fax: 0052-442-2958273 e-mail: wagner@wmpbc.com www.wmpbc.com

Wagner Muñoz & Partners SA de CV was founded in Queretaro, Mexico with the mission to provide international companies with a solution to all administrative problems regarding the set-up and management of foreign subsidiaries. Our consultancy services are specialised in the Mexican market and based on long-term international experience as well as the comprehensive specialised knowledge of our staff. We have offices in Mexico City and Queretaro.

When companies establish themselves in Mexico, the most relevant statutes and codes they face are the Civil Code, Labor Law, Foreign Investment Law and Tax Law. Indeed, the tax system poses a great challenge for many international companies wishing to expand to Mexico. The constant changes in tax laws, annual tax reforms and a high degree of bureaucracy lead to much confusion and little transparency of the tax policy.

In Mexico, the tax system consists of the federal, state and local taxes.

The main taxes that are incurred for businesses are income tax, flat tax, VAT, salary income tax and property tax. Furthermore, companies are liable to adhere to tax obligations that include different monthly and annual declarations and payments for income tax, flat tax and VAT. Companies also face another adjustment with the implementation of the digital invoice in 2011 and all the additional obligations that come with it. This new requirement can help facilitate many administrative processes if it is applied correctly. Therefore it is important that companies wishing to expand to Mexico work with reliable consultants who can support them in the successful establishment and running of their business.

Wagner Muñoz & Partners is one of them. We offer assistance for the areas of company formation in the legal framework in Mexico, accounting and administration of the Mexican company, and tax consultancy in international surroundings. Our local performance is based on a global perspective, relying on a company policy of top quality services for our customers, in order to transmit confidence and security that allows them to focus their efforts on the core competencies and the growth of their businesses. We are also familiar with US/ Canadian and European management systems and thanks to our English- and German-speaking employees, a smooth communication with the parent companies is ensured. Furthermore, our services can be arranged individually to best meet the customer’s needs.

Whether a complete package with office space is required, or a company simply seeks assistance in tax matters, for every situation we can find the right solution, assisting in all operations with the Mexican venture.

With our experience we provide these services to many international companies today, supporting them with their successful businesses in Mexico.

January 2011 • GBM • 57

Mexico Law Firm of the Year 2009

Law Firm of the Year Central America and Mexico 2005

Mexico Law Firm of the Year Award 2007, 2009 and 2010

Mexico Law Firm of the Year 2006

Chambers and Partners

Chambers and Partners

IFLR Americas Awards

• • • • •

• • • • •

Antitrust and Competition Banking and Finance Bankruptcy and Restructurings Capital Markets Climate Change, Clean Development and Renewable Energy Corporate and Commercial Dispute Resolution Employment and Labor Energy and Infrastructure Environmental

Who’s Who Legal

• •

• • • • • • • •

Insurance and Reinsurance Intellectual Property and Entertainment Law Mergers and Acquisitions Mining Private Equity Real Estate Tax Telecommunications Transportation Pro Bono

Paseo de los Tamarindos 60 Col. Bosques de las Lomas, 05120, México, D.F., Tel. +525511050600; Fax +5255511050690; Batallón de San Patricio No. 111 Office 1902, Torre Comercial América, Col. Valle Oriente, 66269 San Pedro Garza García, N.L. Tel. +528183634221; Fax +528183635102; www.creelmx.com.

oil & Gas seCtor

OIL AND GAS INDUSTRY - Investment Overview The oil and gas industry is something of a behemoth in the global economy, providing not only a huge slice of the energy requirements of modern society, but also a feedstock for a range of material products, from fertilisers to plastics. It encompasses a broad spectrum of activities, from geophysical surveys, to well drilling and production, through to refining and transportation. The players in the market are equally diverse, ranging from small independent exploration boutiques, to national oil companies, to multinational giants with massive economic power. And with oil supply and demand on the cusp of an historic divergence, with peak oil possibly around the corner, the scope for high oil prices, and enhanced returns, appears a certain one for the industry. This all adds up to a massive investment opportunity- but one of dizzying complexity, for which investors will need the most professional, and diligent, of advisers. It is essential to ensure that all of the legal and financial knots are unravelled, before investing, so that the real potential is fully realised.

History The oil and gas industry can trace its history back into the late 19th century, but it only developed in its modern form 20th century. The story really started to roll in North America, under the auspices of John D. Rockerfeller, whose entrepreneurial eye for an emerging market led to the creation of Standard Oil. He took the cut-throat competition that was undermining the industry, and formed the the first oil ‘major company’ through a trust which sought to increase prices. Once petroleum became the fuel of choice for the burgeoning market in auto-mobiles, a tremendous wave of capital investment in drilling, and oil and gas exploration began. Since then prices, and investment, have been on a century long roller coaster ride.

The initial boom in exploration, and frenetic race to maximise production, led to a dramatic fall in prices. This persisted until World War II, when demand for all forms of refined petroleum products increased, and worries over depletion of reserves focussed attention on the potential of the Middle East.

This ushered in the post-war golden era of the American oil companies, who ploughed into the region to secure the unprecedented reserves discovered there.

The 1950s were a time of low-cost oil, when huge new fields produced easily and rapidly, and in response the American consumer literally drove forward consumption to new levels, taking over a third of the world’s petroleum. But the low prices left many producers unhappy, and in the 1960s they banded together to form the Organisation of Petroleum Exporting Countries- OPEC. In the 1970s that they flexed their new muscle in the market, producing major price spikes. These in turn started the first serious efforts to look for alternative forms of energy, as well as new sources of supply. The most immediate effect of these efforts was to increase supply from non-OPEC sources, and oil price fell back again.

But the modern era of tightening supply, and rising prices, can really be traced back to the 1990s, with the supply disruption resulting from the Gulf Crisis of 1991. Although prices fell after that event, they never threatened to fall to the levels of ‘cheap oil’, and have spiked repeatedly since then. This new reality of high and volatile oil prices has driven the oil industry into ever greater innovation, both technical and financial, to efficiently utilise capital to continue to produce hydrocarbons profitably.

Structure of the oil and gas industry The oil and gas industry is currently composed of three main groups of corporate players. In many developing and OPEC countries, it is the National Oil Companies (NOCs) that hold sway, particularly in terms of their control and ownership of the resource. In the developed economies of the West, the multi-national integrated oil companies (IOCs) are the globally-dominant providers of capital and expertise. They cover everything from exploration, to production, refining and transport of hydrocarbons. Finally, these big players are supplemented by a host of independent oil exploration companies, who have a focussed expertise in the calculated risks that exploration demands.

Drilling for oil is is risky business, with large upfront costs, and only low probabilities of success in new exploration areas.

January 2011 • GBM • 59

Family Oil & Gas LawSector

Current state of the industry The current situation in the oil and gas industry is one of a continuous expansion of horizons - in technological, financial and geographical terms.

The driver of this ferment is an increasingly sticky supply, even as global demand recovers, as the world economy pulls out of recession. The need to increase supply has seen activity expand across a number of fronts. This includes reworking of old fields, using enhanced oilfield recovery techniques; the exploitation of more technically challenging environments, such as the ultra-deep offshore fields; and the opening up of new alternatives, such as shale gas reserves. All of these are frontiers that have been opened up by the new regime of erratically high oil prices.

Investing in the industry- many avenues, and significant potential Moving money into a focused oil-and-gas sector strategy is a useful investment tool for diversifying portfolio risk. Most index-linked stocks and shares are in companies that are consumers of oil and gas, whose profits are hit by oil price rises. Having a targeted investment in the hydrocarbon sector provides a counterweight to this effect- with increased returns during oil price rises, and so a reduced risk for the overall investment portfolio.

The avenues for investing in the oil and gas industry are, however, many and convoluted. Because of this, it is advisable for any would-be investor to make sure they go through the proper professional channels. Oil and gas legislation, in particular, varies from jurisdiction to jurisdiction, and has a direct impact on the value of investments. It is important to choose investment and legal advisers who can deal with the these vital aspects of the investment - and do so with the utmost diligence.

Some of the most popular avenues for investing in the oil and gas sector are: 1) Shares in integrated oil companies(IOC) This is the blue-chip approach to oil-sector exposure, and offers a relatively simple method of participating in oil price rises. But it is worth remembering that not all of the price variation in an OIC stock can be attributed to oil price moves. There is some correlation to more general economic performance. And it is important not to weigh an investment too heavily into one companyindividual companies are often exposed to reputational risk, as was seen so dramatically with BP and the DeepWater Horizon disaster.

2) Shares in Independent Oil Exploration companies These lie at the riskier end of share investment - independent companies are usually involved in risky exploration wells, many of which are not commercial. As a result, such stocks are incredibly volatile, varying wildly according to the information coming from the drill-site. Such companies do offer major potential for significant returns; but selecting those companies that have the best risk-to-reward ratio, and experience in the region being explored, requires a great deal of professional expertise and advice.

3) Drilling Programs and Royalty Pools This is another risky, but possibly rewarding, approach to participating in

60 • GBM • January 2011

exploration risks- either a direct investment in the upfront costs of drilling programs; or putting up money for a potential of sharing royalties from any commercial oil found on exploration. Here the legal issues as to what obligations the drilling company, or pool operator, has to the investor can be thorny. Oil ownership issues between state, company and investor are notoriously tricky, so expert legal advice is essential before signing up to any contract.

4) Production aggregators A recent development has been the buying up of complementary producing assets, by operators who are seeking to improve their cost structures. They are operated by large institutions, who raise capital on the open market for these ventures. They offer a low-risk exposure to beneficial price appreciation due to owning producing oil reserves- and also provide a return from ongoing operations. These can be excellent investment vehicles, provided the economic fundamentals have been properly assessed upfront, by suitable professionals.

5) Private equity funds This category covers a diverse range of private fund involvement in managing, or funding, oilfield operators. Quite often they extend their coverage across the industry, and may include production from fields, oil pipelines and even oilfield service companies in their portfolio. That does diversify the risks of that would be incurred investing in a single sector or company, but it also reduces the extent to which your gain from oil price moves- which is often a major incentive for getting involved in the oil and gas sector in the first place.

Future Trends Oil and gas are likely to continue to remain a dominant part of the global economy’s energy mix, even with downward pressures from carbon emission reduction programs. This is simply a factor of increasing demand from developing countries driving prices higher; inevitably this makes a greater proportion of hydrocarbons economical to pull from the ground.

The International Energy Agency (IEA) sees overall energy demand rising by 1.5% per annum, mainly from the developing giants of India and China, adding up to 60% growth by 2030, compared to 2000. With little prospect of a major revolution in energy sources, over the next decade or two, the lion’s share of that demand will presumably have to be met by increased oil and gas production.

The scenarios that are likely to evolve depend on whether we have reached ‘peak oil’. The idea of peak oil is one that has gained strength, over the last decade; it proposes that the total producible volume of oil is about to peak. In this scenario, supply can’t keep up up with increased energy demand, and a series of price spikes lie in the future. More optimistically, many in the oil and gas industry see gradually increasing prices bring an increase in productionand a softer peak in production, that is still decades away. In either scenario, the oil industry is likely to benefit, from either increased returns, for those that innovate to produce, or increased volume of sales across the industry.

Investment in the sector can only gain in the long-term.

UK Family Family LawLaw Guide

London David Allison Chair Resolution www.resolution.org.uk.

Doing business the resolution way Code into their Family Law Protocol, effectively making it the good practice standard for all family lawyers.

To ensure the Code is a living document that our members adhere to, we offer training in working to the Code. We also enforce it through a complaints procedure over and above that which the Law Society operates, whereby we accept complaints from anyone involved in the proceedings A handful of lawyers had grown where they believe a Resolution increasingly concerned about the member has breached the Code, confrontational conduct of family and we are talking to the judges and cases. In December 1982, those others in the family justice system lawyers met to talk about better about how to ensure compliance with ways to conduct family cases and the the Code.

Solicitors Family Law Association (SFLA) was born. The first task the As well as trying to improve the skills newly-formed association took on and understanding of family lawyers was drafting a Code of Practice to improve family dispute resolution (the Code) for family lawyers. The through traditional methods, Code emphasised encouraging a Resolution has also developed and constructive, non-confrontational embraced new ways of promoting approach to resolving family disputes. constructive, non-adversarial The Code was designed as a statement solutions to family breakdown.

Mediation was introduced in the of good practice that family lawyers should follow. It set out, among other UK for family law over 20 years ago ď‚ž largely provided by non-lawyers. things, the need to encourage clients Over ten years ago, Resolution started to put the interests of their children training and accrediting mediators, first, not to regard family disputes as and now has around 300 mediator a contest in which there are winners members. Resolution members are and losers, and encouraged solicitors actively encouraged to refer clients to to keep finance and children matters mediation. separate.

Resolution has also embraced the The Code has been the foundation of development of collaborative family Resolution (as SFLA was renamed in practice. The collaborative family 2005) since its inception 28 years ago. law process is a relatively new way It is now an association of over 5,500 of dealing with family disputes. Each lawyers. In that time, the culture of person appoints their own lawyer, but family law in England and Wales has dramatically shifted from gladiatorial instead of conducting negotiations by letter or phone, you all meet to work battle to a more managed process in things out face-to-face. which a more positive resolution of family breakdown is promoted.

Each person has their lawyer by their side throughout the entire process, Resolution has pioneered new and benefits from legal advice as they approaches to family law in England go. The aim of collaborative law is and Wales (Scotland and Northern Ireland being separate jurisdictions in to resolve family disputes without going to court. Resolution has now the UK). Membership of Resolution trained over 1,400 collaborative family requires members to abide by the Code. The Code has since become the lawyers and has developed its own industry standard for family lawyers. trainers and training courses.

The Law Society incorporated the We have also developed a training In the early 1980s, family law in the UK was treated as a branch of civil litigation. Family cases were pursued with the aggression of a contract dispute, with scant regard for the impact on family relationships.

Family law, like many other branches of law, was not recognised as a specialist area.

and accreditation process for financial advisers who support the collaborative process, and are exploring training and accreditation for family coaches and for other professionals who support the collaborative process.

Resolution is also exploring the use of other alternative dispute resolution methods for family disputes, including the development of arbitration, early neutral evaluation and directive mediation.

As well as offering training and accreditation in new and related ways of helping clients going through family breakdown, Resolution has devoted resources to developing training for family lawyers to encourage family solicitors to develop the other skills they need to assist their clients. Listening skills, understanding child development, learning about addictive behaviour, negotiation skills and understanding the impact of family breakdown on children, to name but a few of the courses we have recently put on.

Family law is increasingly an interdisciplinary field of practice, relying not just on lawyering skills but also counselling, financial expertise, child psychology, the dynamics of human relationships, recognising and dealing with domestic abuse and, in some fields of family law, medical expertise. Increasingly, solicitors are working with other disciplines to mitigate the effects of family breakdown and need to understand the role that other disciplines can offer and when to involve them.

Lawyers themselves need to widen their skill range to be able to offer a more rounded, human and holistic approach to their clients. Resolution aims to arm lawyers with those skills, and to work with other family justice professionals to promote interdisciplinary working and learning.

January 2011 • GBM • 61

UK Family Family LawLaw Guide

West Midlands Blair Allison Mari Meisel Senior Partner marimeisel@blairallison.co.uk Rayner Grice Partner raynergrice@blairallison.co.uk Tel: 0121 233 2904

Blair Allison was founded in 1978 and is a niche firm dedicated to family practice. The firm has grown in size and strength over the past 30 years and its base in Birmingham City Centre provides an excellent venue to ensure its links with other professionals, the Court and commercial institutions. The reputation of the firm was recognised in the Birmingham Law Society Legal Awards 2010, where Blair Allison were successful in winning the Law Firm of the Year (sole practitioner and up to four partners) category. The firm continues to be successfully listed in Chambers & Partners for 2011 and the Legal 500 Publication of leading family lawyers in Birmingham. The firm has been recognised in both publications since it was first set up ten years ago.

The practice sees stability as a key factor in its success. Mari Meisel, the firm’s current senior partner, has been with the firm since its inception. The firm’s two other partners, Rayner Grice and Grant Bird, both carried out their training contracts with the firm.

All three partners are either Members of the Law Society Family Law or Children Panels.

Blair Allison’s specialist lawyers deal with all family law matters, including dealing with complex and high net-worth divorce cases, the breakdown of civil partnerships and non-married family relationships. The firm also gives advice on the law relating to children.

The firm is securing a reputation for work involving pre-nuptial agreements. This includes representing celebrity clients and presenting talks to outside professionals on the subject. The Supreme Court has made it clear that pre-nuptial contracts will be very important in the future.

Blair Allison’s reputation is based on the level of service provided to the clients. It is the ethos of the firm that the client receives a high standard of personal service along with up-to-date tailormade legal advice.

Costs are discussed right at the start, and clients are helped to make balanced decisions so that family assets are not wasted on unnecessary legal costs.

We are aware of the pressures that the current economic climate places upon clients, and the firm does offer fixed-fee interviews.

Mari Meisel and Rayner Grice specialise in ancillary relief matters, including advising on pre-nuptial and post-nuptial agreements.

62 • GBM • January 2011

Tyne & Wear Ward Hadaway Jonathan Flower Partner, Head of Family and Matrimonial Tel: 0191 204 4376 Fax: 0191 204 4430 jonathan.flower@wardhadaway.com www.wardhadaway.com

Family law is personal: family and matrimonial matters are unlike any other area of law. By definition, they can be sensitive and complex. To manage these issues effectively and help clients ultimately reach a fair resolution is at the heart of Ward Hadaway’s approach.

We offer a five-strong team of dedicated lawyers specialising solely in family law, delivering clear advice and solutions appropriate to you – and never simply textbook theory.

We appreciate that instructing lawyers to deal with personal issues can be stressful and worrying so we work to build a relationship of trust with you, ensuring that an exceptional personal service is provided.

We provide clear advice on the full range of family and matrimonial matters including: • Divorce and financial settlements • Pre-Nuptial Agreements and Separation Agreements • Unmarried couples and related property disputes • Children including Parental Responsibility, Residence and Contact • Adoption and Care proceedings • Child Support • Inheritance disputes • Domestic violence • Registered Civil Partnerships As a Top 100 UK law firm, we can draw on a wealth of expertise from other specialist teams within Ward Hadaway including the Company and Commercial, Pensions, Private Wealth, Tax and Countryside groups. We can therefore deal with your situation with discretion, continuity and a highly professional and personal service.

When it comes to resolving your situation, litigation can be timeconsuming and costly, so we look to achieve fair resolution with as little litigation as possible. The team will always endeavour to work with lawyers for all parties in a sensible and constructive manner to reach a fair conclusion.

Our approach is particularly sensitive when children are involved, encouraging parents to recognise the importance of an ongoing relationship with their children and the need for amicable settlement.

Where litigation becomes the only option, you can be assured that you have the region’s most experienced and dedicated family law team working on your behalf.

You don’t have to take our word for that – Legal 500, one of the UK’s leading independent legal guides, described Ward Hadaway as “a ‘go-to firm’ for matrimonial work”, adding that “Ward Hadaway’s family law knowledge is exceptional, and is bolstered with excellent team work.”

Individuals within the team are also highly rated. Jonathan Flower, who heads the team, is described as “utterly relentless on behalf of his clients” by independent legal directory Chambers & Partners.

Associates Sarah Crilly and Teresa Davidson have also been praised for their expertise and approachability.

All members of the team are members of specialist family lawyers’ association Resolution, the Law Society’s Children Panel and the Advanced Family Law panel. We also have a trained collaborative lawyer so you know you will always be in good hands.

London Levison Meltzer Pigott Simon Pigott Partner Tel: 0207 556 24100 spigot@lmplaw.co.uk www.levisonmeltzerpigott.co.uk

Levison Meltzer Pigott was founded in 1998. The firm was in the vanguard of niche practices specialising in family law and quickly established itself as one of the leaders in the field and has maintained that reputation to date.

The firm has knowledge and expertise in all areas of family law, but our strengths lie in dealing with important or complex financial and children work, with a significant emphasis on international cases, where either the parties may be foreign nationals, where some of the assets may be overseas, or where there are jurisdictional issues. Simon Pigott and Jeremy Levison are fellows of the International Academy of Matrimonial Lawyers and through that organisation they have contacts across the world on whose expertise we can call and to whom we often provide advice.

Family law in the UK has, over the past decade, been the subject of significant change. The changes continue - it is a moving landscape. We provide a personal service; every case is partnerled or supervised, and targeted and managed with regard to the client’s wishes and what they are able to afford. The law is expensive, so it is vital that the advice you receive is also cost effective and pragmatic.

The current ‘big issue’ is pre-nuptial agreements. ‘Prenups’, as they are known, are an increasingly frequent area of law on which we are asked to advise. Initially, prenups concerned couples who were from, or who were married in, countries where prenups were both common and binding. With international marriages and the international movement of labour, it is no surprise that prenups gathered momentum in England and have recently been the subject of a decision of the Supreme Court. Prenups will not be for everyone. In some cases, they will simply not be necessary; in others, they will be seen as the antithesis of all that marriage stands for. If a prenup is felt to be appropriate, however, it is crucial that its negotiation, timing and terms are all the subject of expert advice. Prenups and their ‘twin’, ‘post-nuptial agreements’, are areas of law on which our advice is increasingly sought.

The vast majority of us enter into marriage in the belief that it will last forever. No one, except perhaps the extreme cynic, anticipates divorce; so, if divorce comes, it can be a painful, bewildering and distressing period of your life. It makes sense to ensure that you are working alongside a solicitor who is sympathetic to your position, understanding of your concerns and on whom you can rely to see you through the difficulties and challenges that you will face.

London Blake Lapthorn For more information, please contact Fiona Wilson on 020 7814 5466 or at fiona.wilson@bllaw.co.uk.

With over 20 years of family law expertise, Fiona Wilson leads the Family Law team at Blake Lapthorn in London and specialises in resolving issues relating to finance both at the start and end of relationships, whether living together, married or civil partners.

Blake Lapthorn has strong international connections and one member of the firm’s Family Law team, Irpreet Kaur Kohli, has developed a niche area of practice in dealing with Asian aspects of family law.

One of the issues that we are often asked about is the importance of obtaining a clean break on divorce - the following story recently reported in the press highlights the benefits: A £56m Euromilllions winner had to pay £2m of his winnings to his ex-wife from whom he had been separated for over ten years. This puts into focus the risks that lie in the future where a couple divorce and either do not reach an agreement on finances at the time or come to an agreement that involves the payment of ongoing maintenance for one of the parties - in other words, where no clean break is made.

Parties going through a divorce should always bear in mind that unless a clean break is made with a formal court order terminating future financial claims, those claims are left open and can be revisited as long as the party who receives the payments has not remarried. It is possible to get a clean break put in place after the original order was made, but often only where the original maintenance payments are capitalised.

The amount to be paid is calculated on the basis of what the court assesses the correct level of maintenance payments to be, multiplied by a figure that would represent what capital would be needed to pay that income to the party with the maintenance order either for the rest of their lives or a specified number of years.

The lessons to be learned are: try and get a clean break order made at the time of the divorce. If that’s not an option, try and limit the number of years that an ongoing maintenance order can run for; and be aware of the risks of future claims being made and look to negotiate terms to resolve and capitalise the claims as quickly as possible.

We would be delighted to help with any questions or matters on family law, and other teams at the firm help us make a real difference in the support we offer. We take great pride in taking time to get to know our clients and understanding their individual situations, providing tailor-made advice.

January 2011 • GBM • 63

uK Family law Guide

LONDON Stala Erimos Charalambous & Co Contact: Mrs Stala Charalambous Principal and solicitor Tel: 0208 886 5970/ 07966591318 Fax: 0208 886 1290 stala@stalaerimoscharalambous.co.uk stalacharalambous@btinternet.com www.stalaerimoscharalambous.co.uk

What happens in divorce proceedings when a client produces documents obtained without permission belonging to a partner?

The Hilderbrand Rules (Hilderbrand v Hilderbrand [1992] 1 FLR 244), which may have ‘tolerated’ the copying of such documents, have been shaken by Imerman v Imerman EWCA Civ 908 [2010].

This case showed that a party cannot just help themselves to their partners documents without permission .The media referred to it as the ‘cheats charter’ as it was seen to assist a party that wanted to hide assets.

Radmacher v Granatino [2010] UKSC 42 raised awareness of the importance of pre-nuptial agreements to show the ‘intention’ of the parties. In the UK, ‘prenups’ are not as yet universally legally

binding, each case decided on the facts and taking into account section 25 Matrimonial Causes Act 1973.

The recent case of the £56m lottery winner Nigel Page and his ex wife’s application for a further payment from him ten years after she left him resulted in an out-of-court settlement, which should encourage couples to try to achieve a ‘clean break settlement’ of financial matters on divorce or separation instead of agreeing to make low maintenance payments.

A person doesn’t need a solicitor to either apply for a divorce or to separate, but may benefit from obtaining advice on the options available in complex matters on divorce/separation.

Relationship breakdowns bring forth a multitude of emotions and a solicitor can try to negotiate a settlement that may have the least detrimental effect on the business or assets.

The fear of the ‘unknown’ causes stress. A family solicitor needs to listen to the client, deliver clear and simple advice including options available. Also, directing a client to other organisations and resources available to assist with either the emotional or financial fallout from the breakdown of their relationship.

I encourage clients to adopt a non-confrontational approach to keep the channels of communication open, explain the advantages of identifying and narrowing the issues, and progress negotiations for matters to be resolved as amicably and speedily as possible.

A successful outcome is one where I see the difference my approach to a client’s case has made to the client, who leaves my office a confident person reassured of the direction the case is going, understands the legal procedures involved, knows what he/she hopes to achieve at the end and who goes on to assist in a settlement that doesn’t require attendance at a contested court hearing.

The firm is based on the belief that a client’s needs are of the utmost importance, and we meet those needs in every case. As a result, we have a high percentage of repeat business.

Collaborative Chambers Collaborative legal practice is a new, even-handed approach to relationship breakdown based on face-to-face negotiation with your partner, with the full support of your lawyers alongside you.

See further details on our website:

The aim is to achieve an amicable out-of-court settlement that achieves the best possible outcome for the family and avoids the uncertainty and ill-feeling of an imposed solution.

www.collaborativechambers.co.uk

Contact Jane Oakes - Family Law Solicitor Tel: 01223 253733 Mobile: 07740 282387 Collaborative Chambers Compass House Chivers Way Histon Cambridge CB24 9AD Sensitive approach - Potential for local visits - No obligation

64 • GBM • January 2011

aGriCulture

Agriculture

Agriculture houses a volley of activities like production, processing, marketing, and use of foods, fibers and by-products from plants and animals. Agriculture is becoming increasingly trade oriented and trade sensitive. It is one of the major occupations adopted by people throughout the world and it is a highly influential factor in determining the position of a nation’s economy. In 2007, one-third of the world’s workers were employed in agriculture.

Agriculture has played a pivotal role in the growth and development of human species. It has contributed immensely in the advancement of the entire human civilization. A remarkable shift in agricultural practices has occurred over the past century in response to new technologies.

Development of new techniques has enhanced agricultural productivity extensively.

In the past century, agriculture was all about increased productivity, the use of synthetic fertilizers and pesticides, selective breeding, mechanization, water contamination and farm subsidies. As environmental awareness has become widespread amongst people in the 21st century, there has been a significant movement towards sustainable agriculture by some farmers and consumers and policy-makers to a considerable extent. Organic movement is a resultant of the concern throughout the world regarding the harmful environmental affects due to mainstream agriculture. The European Union first certified organic food in 1991 and began reform of its Common Agricultural Policy in 2005 to phase out decoupling, i.e., commoditylinked farm subsidies. The growth of organic farming has kick-started research in alternative technologies such as integrated pest management and selective breeding. Another important technological contribution in the recent times is genetically modified food. Agriculture plays a dominant role and demands close analysis for sustainable development.

An agricultural subsidy is a governmental subsidy paid to farmers and other people involved in businesses related to agriculture to supplement their income, manage the supply of agricultural commodities and influence the cost and supply of such commodities. In Europe, agricultural and fisheries subsidies account for

more than forty percent of the Union’s budget. As the budget of the European Union is €120 billion, it implies that €48 billion is spent on subsidies.

Starting from 1992 and especially since 2005, the EU’s Common Agricultural Policy has undergone a sea of change as subsidies have been decoupled from production. About €30 billion is spent as direct support for farmers.

Some critics of the World Trade Organization have noted that export subsidies, by driving down the price of commodities, can provide cheap food for consumers in developing countries. But low prices are also considered harmful to farmers not receiving the subsidy.

Because it is usually wealthy countries that can afford domestic subsidies, critics argue that they promote poverty in developing countries by artificially driving down world crop prices.

Agriculture is one of the few areas where developing countries have a comparative advantage, but low crop prices encourage developing countries to be dependent buyers of food from wealthy countries. So, local farmers, instead of improving the agricultural and economic self-sufficiency of their home country, are instead forced out of the market and perhaps even off their land. Agricultural subsidies often are a common stumbling block in trade negotiations.

Agricultural policies are constituted keeping various goals in mind such as conservation, economic stability, environmental stability, food quality ensuring that the food is of good and consistent quality, food safety ensuring the food is free from contamination, food security meeting the needs of the population with its supply and poverty reduction. It is quintessential to follow agricultural laws framed by the governing bodies in order to avoid any discrepancies. Agricultural law deals with laws on seed, water, fertilizers & pesticides, infrastructure and on more dynamic issues such as agricultural labor, agricultural marketing, and agricultural insurance, farming rights, land tenure and laws on processing and rural industries. Agriculture is at the heart of so many issues that impact our lives each day – from producing food and fiber and the fuel that supplies our vehicles to the conservation of our natural resources and the economic growth and jobs in rural areas. The responsibilities and goals of the Agriculture Committee are as diverse as the needs of world agriculture. The policies developed by the committees will support efforts to move forward, help rural communities grow

January 2011 • GBM • 65

aGriCulture

and succeed and help boost the rural economy to preserve opportunities for the next generation.

Advancement in communication, production and packaging are revolutionizing the agriculture industry. Combined with the tremendous increment in safe and plentiful requirement of food, the agriculture professionals must explore the challenges of a “Globally Local” world. The landscape of our global agriculture market is changing rapidly. Economic growth of world markets, governmental regulations and food safety issues influence the field of agriculture to a vast extent. The need of the hour is to appropriately address the population explosion and its increased need for food and preparing for the future at the same time.

By 2050 the world population would have risen to nine billion. Demand for food would grow with rising land and water scarcity as well as increased environmental pressures. 25 per cent of the world's population lives in the rural areas of the emerging economies of India, Brazil, China and South Africa. Agriculture can contribute optimally to enhance rural employment opportunities and to eradicate poverty. Growth in agriculture on an average is two or three times more effective in raising incomes of the poor. However, to realize its full potential as a promoter of growth and as an alleviator of poverty, agriculture itself needs to grow. Innovative agricultural methods have to be developed and existing food production systems improved to cope with the projected increase in world population. At the same time, these new systems and processes have to address many concerns of society, such as the sustainable exploitation of natural resources and environmental considerations. It is essential to promote agriculture as it, in turn, can accelerate the growth of the emerging bio-based products industry. The emerging bio- based products industry uses crops, trees, residues, and wastes to produce chemicals and materials such as plastics, paints, and adhesives. Growth of this industry will facilitate use of plant and crop-based renewable resources to supplement fossil-based resources and will help serve national goals for energy and the environment.

Talking in terms of investment, in today’s times, investment in agriculture is looked upon by many investors as a way to build a consistent income stream that is unaffected by the ups and downs of traditional investment markets. Investing in agriculture is an ideal strategy to earn income to

66 • GBM • January 2011

replace the lost 'risk free' income on cash deposits that has come about as a result of low central bank interest rates. According to the investors, a cash quarterly annual income of between 6 % and 10 % is a lucrative deal in the present economic climate. A well-versed investment into an agricultural land would not only yield ample cash in cash return but abundant capital growth as well. Investors are putting in their cash in agriculture in a well planned manner wherein they are minimizing their risks of losing income in the form of dividends from equity holdings, rental income from commercial or residential real estate. It has been observed that income is being lost as businesses close up shop or downsize premises and tenants in residential property struggle to afford rent, agricultural investing provides the investor with a chance to stem the flow of capital loss. As well as the obvious income benefits of investing in agriculture, long-term uplifts in soft-commodity prices are essentially captured in the capital appreciation of agricultural land, and fixed lease agreements with commercial farming tenants smooth out any short-term cyclical volatility in the price of food commodities as input and output pricing risk is borne by the farming tenant rather than the landowning investor.

Over the past 30 years, the world's population has grown by more than 50 per cent to over 6 billion, and is expected to increase by the same proportion again by 2050. Yet the world's food supplies are failing to keep up. Many of the farms in developing countries produce small yields, and need help and more modern farming equipment to help them produce larger amounts of produce.

And while there is still plenty of undeveloped land around the world, which may be suitable for agricultural expansion, it takes many years to cultivate it so that it will produce a good yield.

Meanwhile, the increase in demand for biofuels is also distorting the agriculture market, as increasing numbers of farmers are being given incentives to sell their crops to produce bio-fuels.

Therefore, agriculture has a vast expanse left to be navigated and put to proper utilization for optimum progress and development. The need of the hour is to create patterns of growth in response to the growing aspirations of the people in these new realities, i.e., today’s times and that is possible with a holistic approach where a robust agricultural economy will deliver the desired results.

ConstruCtion seCtor report

ConstruCtion seCtor report

It is widely known that investments in infrastructure have been below par for countries across the world. Even places of ‘social superiority’ such as the US were not fully prepared to cater for the expansion of road users at the turn of the century, the same can be said of India, they were equally as unequipped for many years and failed to provide increased facilities to deal with the population increasing at an almost exponential rate.

Those same countries and many more are now turning to the private sector for investments to deal with the demand for global infrastructure.

Investing in infrastructure is now poised to become one of the most lucrative investment opportunities of recent years, bringing with it, sturdy income, stable expansion and solid diversification to all investors adding it to their portfolios.

Infrastructure can be seen as a wise opportunity as it can remain somewhat unaffected by market forces, in fact during economic downturns, the standard procedure for governments is to increase spending on infrastructure in an attempt to get stimulate the economy, there has been many cases of this happening, none more successful as China in 2008 when the government introduced a stimulus package at a total cost of 4 trillion. The package was said to have changed the entire Chinese economy in a ‘fundamental’ way – coming from radical changes to its structural capacity, the structural change sparked growth in domestic demand that now outweighs international demand, helping China to profit from rising GDP levels, making China the economic giant that they currently are.

However, the structural growth in China has not stopped there, in a report by; Mckinsey Global Institute, they project that ‘by 2025, almost 350 million people will move to urban centres’, which they suggest is the equivalent of ‘building 20 New York cities from scratch.’

economic hardship, but the demand for the facilities supported by the structural sector is rarely reduced as the facilities that comes under the jurisdiction of ‘infrastructure’ will always be of necessity to the people, so much so that in the 1930’s in America a company was not granted a business charter to build any such infrastructure unless it was shown to serve the public good and with the current rate of global population levels rising, so will public need. Law firms are now the common medium for due diligence for construction and infrastructure projects, Lawyers are now as necessary as the bricks and mortar itself, they take care of a whole range of aspects including; procurement of any resources necessary, health and safety and any contentions to the work being carried out and above all, insurance. Due to the mass of infrastructure projects, a top law firm is necessary for all projects as they can be prone to contentions from a number of individuals/organisations.

To monitor the continuing success of the infrastructure sector, one has only to turn the clock back to 2000, during the global economic slump during 2000 to 2003 where the MCSI World index slumped by 30% yet, the UBS Global Infrastructure Index surged 17%.

Investing in global infrastructure boasts stable, positive long term returns, this is due to the length of time that infrastructure projects take to complete.

Infrastructure is home to extremely high barriers to trade and a distinct lack of competition, which is the result of the asset class as the majority of the infrastructure organisations act as monopolies.

Since 2000, infrastructure companies that are listed on the global stock exchange have outperformed global equities whilst still showing lower volatility.

It is not just China that profit from structural reform, there are many other countries the world over that enjoy economic prosperity from structural investment and from an investors point of view, investments like these should be music to their ears (or portfolios), they certainly are for Pension Investment schemes, as they are the latest investment schemes to add structural investments to their portfolio.

And who could blame them, with the current economic climate the cost of infrastructure is now at its lowest for some years whilst still retaining constant demand, globally, now could be the most profitable time to invest.

Not only is economic policy on the side of structural change in times of

January 2011 • GBM • 67

ConstruCtion seCtor report

London is currently undergoing a huge change in infrastructure, for the last two years England has been preparing for the 2012 Olympic games, the city is undergoing monumental work such as; new rail road’s, stations, motorways, public amenities and project-specific tasks such as, stadiums.

The games will bring some much needed good news to the UK’s public sector as it was recently hit with large budget cuts. A report from top property letting agency, Savills said that the housing market will benefit hugely from the games as home prices are set to surge in the run up to 2012 and thereafter as it will attract a lot of international buyers, the news of the budget cuts will be a long forgotten story if all goes to plan.

The UK economy will also benefit from an increase in jobs with a projected 75,000 new business opportunities in the city and surrounding areas.

The low-cost hotel chain, Travelodge have already splashed out £84 million on six new buildings in and around London which, that alone will give jobs to 200 people involved in the hospitality and catering sector.

so many in Europe and the US did. Canada, also have low unemployment, they also boast attractive interest rates which is leading some home buyers are likely to use home equity loans to renovate their homes, which leads to positive growth in their economy as more and more home owners are spending still.

A more modest increase (an increase nonetheless) was happening in the UK where home prices repositioned itself back to positive year on year territory, the first time of which it has happened since the worst of the economic collapse in 2008.

Sweden and Switzerland also both reported slow growth.

However, France was still under some strain; however the results from Q1 were exceptionally better than those of 2009; however they still reported a marginal loss.

The total cost of the games which is estimated right now at £4 billion which is expected to increase to a staggering £6 billion, which is £3billion less than the previous games in Athens.

Australia and Canada have displayed positive growth in recent years, there are also a number of other factors such as; In Australia, they do not suffer with a high volume of unemployment, they also did not overbuild in the ‘boom’ years like

68 • GBM • January 2011

Also, despite Japan suffering a two year slump in real estate the country’s currency; the Japanese Yen went from strength to strength which will send an all-round positive message and help to restore some degree of confidence in Japan’s domestic sectors.

Japan was not the only country in Asia to do well, Home prices released in November show an increase of 0.3% which now makes the real estate market up 7% from last year. China’s home prices have now grown three months in a row and in an effort to cool the real estate market the Chinese government are introducing strict economic policy measures.

Investors should be now looking to take advantage of those low interest rates that have become a familiar occurrence in central banking policies.

At the beginning of 2010 the road to recovery was underway for the global economy and jumping onto the new found optimism was global real estate markets, the vast majority of advanced nations were reporting of growth in the first quarter, this was due to some nation’s governments introducing investment schemes and record low interest rates.

Places such as Australia and Canada saw demand soar at double-digit rates.

reported healthy macroeconomic austerity measures, which was seemingly welcomed by real estate investors as the UK reported 0.8% GDP growth while it was expecting 0.4% increase, combined with that news, Standard & Poor, the debt regulator upgraded the AAA rating from negative to once again, positive, this showed that investors and regulators alike were confident that the new budget cuts were going to rein in spending.

In the U.S, house prices had finally emerged into year-on-year positive, the likes of which had not been seen since 2006.

In October, 2010, stock prices in Global real estate had posted a gain, the news comes after the US Federal Reserve introduced a second bout of Quantitative Easing (QE2) the United Kingdom

The real estate market is now finding its feet once again at a fast rate, with the global recovery well on the way and banks now more willing to supply to credit markets it is helping to improve corporate liquidity. The banks are now returning to the mortgage backed securities market by packaging new loans, whilst a more lenient approach is being taken to the existing loans.

Moving into 2011, the global market for real estate is set to grow which makes real estate investment once again a completely viable option for investors looking to diversify their portfolio or looking for a sound long-term income investment.

MEXICO Since opening in Mexico in 1961, Baker & McKenzie has positioned itself in the market as the most commonly recommended legal and business consulting firm, both nationally and internationally, due to its wide range of specialties and highly team comprised of attorneys, tax practitioners, and economists. Currently, the firm has offices in the cities of Mexico City, Juarez, Tijuana, Monterrey and Guadalajara.

As the most consistently recommended law firm across all major practice areas worldwide, it comes as no surprise that the Mexican offices of Baker & McKenzie are regularly involved in major mergers and acquisitions, privatisation of government-owned companies and sophisticated financial transactions, often involving several jurisdictions. Its international network of 68 locations in 40 countries, allows the firm to create teams of specialists that extend beyond borders.

The firm is well known for the high level of specialisation of its professionals. Partners and other members of the firm are recognised as the top experts in their respective practice areas. It is the only firm in Mexico that has an integral highly specialised professional team in a wide variety of legal practices that includes attorneys, tax practitioners and economists, all focused on a variety of legal specialisations.

In addition, each specialist is closely coordinated with the highly regarded professionals of the firm at a global level. This unique legal team enables the firm to be exceptionally positioned to respond to the legal needs of sophisticated companies in Mexico and abroad.

Baker & McKenzie’s practice groups are led by partners with extensive professional experience, not only in Mexico, but also at an international level.

These practice groups cover the most important areas of law, such as: banking and finance, corporate/M&A, environment and natural resources, foreign trade and customs, intellectual property and telecommunications, labour, litigation, real estate and infrastructure, tax and transfer pricing.

When it comes to real estate and infrastructure, solutions do not always have to be big and complex.

The real estate and infrastructure practice group, liaising with our other areas of specialty, has a vast and prestigious experience in complex real estate transactions, including (among others), their tax, regulatory, financial and environmental considerations, as well as (but not limited to), representing the most important industrial, resort and tourism, commercial and housing developers, construction companies, and Mexican and foreign entities and individuals intending to invest on real estate projects.

At Baker & McKenzie, we help our clients find the best way to deal with real estate and infrastructure matters because we have the knowledge and experience that this activity requires due to the risk, complexity and

costs involved.

We have developed a strong practice in connection with infrastructure projects, including those arising from the various levels of government and the public sector. Our team has participated in a number of high-premium deals, recognised as among the best in privatisation, bid procurements and major projects transactions.

The real estate and infrastructure group advises on: the acquisition, sale, development and lease of real estate through multiple legal and financing mechanisms, including incorporation of real estate trusts; negotiations and elaboration of ‘tailor-made’ construction, development and lease built-to-suit contracts for infrastructure, industrial facilities, condominiums, resorts, housing developments and office buildings, among others; the transformation of property under the ‘ejido’ regime to private property; and, secure multiple subsidies for real estate related transactions, taxes and fees at various governmental levels. They also advise on the legal compliance related to urban development, zoning and construction, and carrying out investigations at the public registries on the legal status of title to real property, among other services. The group is also involved in: the preparation of title search; zoning; acquisition of property; development and grading of sites; governmental incentives; environmental concerns; development of industrial parks; zoning regulations; covenants, conditions and restrictions; utility infrastructure development and contracting; real estate appraisals; construction contracts and related permitting; and, mergers and subdivisions in connection with numerous commercial, industrial, residential and tourism real property all over Mexico.

Juan Bernardo Garcia-Garza (Monterrey) juanbgg@bakermckenzie.com Tel: +52 (81) 8399 1344 Gaspar Gutiérrez-Centeno (Mexico City) gaspar.gutierrez-centeno@ bakermckenzie.com Tel: +52 (55) 5279 2900 Jose M Larroque (Tijuana) jose.larroque@bakermckenzie.com Tel: +52 (664) 633 4300 Fabian Monsalve-Agraz (Guadalajara) fabian.monsalve-agraz@ bakermckenzie.com Tel: +52 (33) 3848 5300 Benjamin Torres-Barron benjamin.torres-barron@ bakermckenzie.com Tel: +52 (656) 629 1300

On the infrastructure side, we advise our clients on private investments in different sectors and projects, such as independent power producers, self-supply and cogeneration, telecommunications services, railroad services, highway development, natural gas transportation, distribution and sale, mining exploitation, city water distribution and treatment, sewage networks, use of federal zone, and airport services, among others. We also advise on securing permits and concessions to perform such activities, as well as preparing documentation required to participate in public and private bids and related due diligence process in these areas, among others.

With more than 200 specialised professionals in Mexico, and more than 3,500 throughout its 69 offices in the world, Baker & McKenzie offers both experience and excellence in the quality of its services, always providing value added to its clients.

January 2011 • GBM • 69

ConstruCtion seCtor report

CANADA Established in 1964, Shibley Righton LLP (Shibley) is a full-service law firm with offices in Toronto and Windsor, Ontario, Canada.

From its main office housed in the historic Bank of Canada Building in downtown Toronto, and its newer Windsor office, Shibley has a rich history of serving clients locally, nationally, and internationally. It has been in the thick of many important Toronto business transactions, and has been instrumental in resolving many major disputes, from high profile to discreet.

Shibley Righton Helder Travassos Position: Partner Tel: 416-214-5229 Fax: 416-214-5209 helder.travassos@shibleyrighton.com www.shibleyrighton.com

Internationally, Shibley is a very active member of two prominent associations of law firms: Multilaw, an organisation of more than 60 firms in more than 50 countries around the world; and, Lexwork International, whose member firms are based in Europe and North America.

Every law firm has a unique personality. At Shibley, we provide ‘big-firm’ legal services  top professionals reliably handling matters at all levels of complexity and difficulty with a personal touch, and cost-efficient rates.

Yet behind all that is something more  we’re practical, live in the real world and understand that our job is to deliver solutions for our clients. Our legal knowledge is a tool that helps us find those solutions. It is a formidable tool, but it is only one tool. Also valuable are our understanding of our clients’ goals, our experience with business and our common sense.

That’s what our clients want from us. They want us to understand the real situation they are facing  a personal or commercial dispute, a business opportunity, a property acquisition, a tax planning issue  and to give them practical advice on how best to handle that situation. That’s something we know how to deliver.

Construction law is a specialised area in civil litigation, often having its own rules, technicalities and terms of art. It is important for a client, when choosing a professional, to ensure that there is knowledge, skill and experience to manoeuvre through the twists, turns and pitfalls that inevitably occur in a construction law dispute. Add to that the vast quantity of documents that flows from most construction projects, and you have a situation that can become overwhelming unless the right ‘hand’ is guiding the process.

Shibley has acted for clients in every aspect of the construction industry. Our clients include owners, sureties, contractors and design professionals, and our experience as litigators encompasses trials and appeals of a myriad of construction law issues, including, delay claims, deficiencies, construction and mechanics’ liens, surety bond claims and inadequate/negligent design and specifications.

Charles Simco, Helder Travassos, Sandra Dawe, Sean Lawlor, Heather Paterson and Megan Marrie are members of the firm’s civil litigation group, and also handle the special needs of our clients involved in construction claims.

70 • GBM • January 2011

UK AND WORLDWIDE Fenwick Elliott is the largest specialist construction law firm in the UK working with clients around the world in the building, engineering and energy sectors, including oil, gas and power. Fenwick Elliott provides a comprehensive range of legal services on every aspect of the construction process.

Our expertise, clients and projects Our expertise includes: procurement strategy; contract documentation and negotiation; risk management and dispute avoidance; project support; and, decisive dispute resolution, including international arbitration, mediation and adjudication. The firm acts for state corporations, owners/developers, main contractors, specialist subcontractors, consultants, institutional investors, local authorities, and utilities.

Fenwick Elliott has a well-earned reputation for advising clients in the oil and gas sector, upstream and downstream. Projects range from refineries to crude oil and natural gas pipelines, process plants, floating production, storage and off-loading vessels.

The firm has been involved in some of the world’s most important oil and gas developments, including the Kashagan field in Kazakhstan, the Baku-TbilisiCeyhan crude oil pipeline project, the Shah Deniz natural gas development in the Caspian, and a planned major European gas pipeline project.

Fenwick Elliott Neil Elliot Partnership Manager Tel: 0207 421 1986 nelliot@fenwickelliott.com Tony Francis Partner Tel: 0207 421 1986 tfrancis@fenwickelliott.com Richard Smellie Partner Tel: 0207 421 1986 rsmellie@fenwickelliott.com Fax: + 44 (0) 207 421 1986 www.fenwickelliott.com

We have acted on a range of major infrastructure construction projects, including power stations, refineries, pipelines, process plants, dams, bridges, roads, airports, stadia, hospitals and schools. We also advise on issues involving public/private finance initiatives.

Our approach In advising our clients, we focus on the issues that really matter. Our passion for achieving outstanding results is inherent in all that we do. Our drive to go beyond expectations means that the firm is not just regarded as ‘part of the pack’. In particular, we believe in maximising our clients’ satisfaction by delivering the highest quality legal advice at the best value.

We understand construction and infrastructure projects - how they are managed, where and why problems occur, and the underlying commercial imperatives. The inter-relationship between legal analysis and practical project advice is where we excel. We forge strong, long-term relationships and partnerships with our clients and this helps us devise practical solutions to any issues that they confront.

Our clients welcome the results we achieve through our commitment, knowledge, experience and motivation, which are second to none.

An important part of our philosophy is providing a consistent legal team and the continuous involvement of the partner in charge. Our dedicated and responsive client care guarantees a seamless service with ‘hands on’ partner management at all times; we roll up our sleeves and focus on the issues that really matter. Further, we believe in keeping a firm hand on the size of the legal team; we have found small dedicated teams to be most efficient for the successful provision of legal services.

January 2011 • GBM • 71

Competition law

Competition law and the role of law firms in business expansion programmes If a business wants to expand its market share, or to reduce the impact of its competitors, what would it do? It will have many choices: expand its size and operation by merging with a competitor; introduce pricing arrangements to attract more customers; dominate the supply or distribution chains for its products…

question employees and take away copies of business records.

The company’s management may be excited about its big plans, but they must not forget that there are issues which must be addressed.

One of these is the laws against anti-competitive behaviour.

Finally, the Secretary of State has, in limited and rare cases, decision-making powers.

The aim of competition law Competition law exists to prohibit individuals and businesses from engaging in behaviour which affects trade and reduces competition in the market, to the detriment of consumers. It is based on the view that a level playing field which allows fair competition between different businesses achieves the best result for the consumer.

Many countries in the world have a regime of competition law to achieve this, enforced by different regulatory bodies.

UK competition law The enforcers The regulatory bodies which enforce the law in this area are: • the Office of Fair Trading (commonly referred to as the “OFT”) • the Competition Commission • the regulatory bodies in certain sectors such as gas, electricity, water, telecommunications and rail • Secretary of State for the Department of Business, Innovation and Skills The OFT has the power to conduct investigations, issue guidance, make decisions on infringements of the law, and impose penalties.

It can also review commercial practices or particular markets, with a view to refer cases to the Competition Commission. It has wide ranging powers, perhaps the most famous of which is conducting “dawn raids” – visiting the premises of businesses unannounced, to

72 • GBM • January 2011

The Competition Commission can investigate mergers and markets if a reference is made to it by the OFT. The regulatory bodies in certain sectors have a similar role as the OFT in their particular sectors. So, for instance, they can conduct investigations, impose penalties and issue directions to end anticompetitive behaviour.

The coalition government announced in October 2010 that it intends to merge the OFT and the Competition Commission to create a single regulatory body, responsible for all investigations and regulation. The plan is to have a public consultation in early 2011 on this proposal.

Conduct prohibited under English law UK competition law is heavily influenced by developments in the EU. It is therefore important not just to follow developments and case law in the UK alone, but also in the EU. The main prohibitions are against: • agreements between parties which may affect trade and are aimed at (or have the effect of) preventing or restricting competition.

Agreements need not be in writing to be caught. Nor is it necessary that the activity covers a substantial part of the UK – activity limited to a particular locality or trade can also be caught.

Typical examples of this type of behaviour include: • price fixing • joint venture activities, such as cooperating in certain functions (e.g. distribution) • joint use of the same contract terms • sharing market data, customers or suppliers • bid-rigging (where a collection of firms which are bidding for a public sector project agree among themselves as to how to bid) Mergers may or may not infringe the rules. In the UK, unlike

in some countries, there is no legal requirement to seek advance clearance from regulators before a merger can take place. The parties have to satisfy themselves that they do not infringe the law. Otherwise they risk the transaction being referred to the Competition Commission and ultimately being prohibited.

• abusing marketing position which may affect trade and have a similar effect on competition.

Whilst it is not illegal to have a dominant market position, abusing that position is not permitted. Behaviours which fall within this category include: • excessively high pricing • excessively low pricing (to undercut competitors with a view to eliminate them) • refusing to supply Exemptions and exclusions do exist, so that certain business activities will not fall foul of legislation.

Just like the UK, the Competition Authority can conduct investigations, order fines or impose injunctions (court orders which prohibit parties from doing certain things). Infringements attract civil and criminal penalties.

Mergers need to be notified in advance if certain conditions are met.

Again, a failure to comply will have adverse consequences for both the business entity and its officers.

The importance of good legal representation Having seen how complex and highly regulated this area of law is, it is obvious that businesses should seek out good quality legal representation. As mentioned above, the consequences of not complying with the law – and a lack of knowledge of the law is no defence – is very serious indeed.

To avoid the adverse consequences, it is important to engage a law firm, and to do so early, before the problems arise. The benefits of having a law firm are many:

Consequences of infringement of anti-competition law The consequences of infringing competition law can be very serious indeed. They can include any or a combination of the following: • fines of up to 10% of an entity’s worldwide turnover for the previous business year • parties can be ordered to terminate or change their behaviour • any offending agreement entered into by the parties concerned will be void and cannot be enforced in the courts • the parties concerned may be liable to third parties who have suffered any loss due to their anti-competitive behaviour • the directors of the companies may be disqualified

• it is necessary to have a lawyer familiar with the latest law. A good lawyer will follow cases and investigations closely, not just in the UK but also in the EU and further afield. These developments highlight the regulators’ current concerns, and how the law is applied

• adverse publicity • loss of management time during the investigation

• a law firm will often have contacts in the industries and regulatory bodies, and will know their way around the institutions and procedures

If an entity belongs to one of the regulated industries such as gas and electricity, it may face sanction from both the regulator of its sector and the OFT. The regime in other countries All major countries have their own competition laws to prohibit similar behaviour. For example: United States The law in this area is enforced by the Department of Justice, the Federal Trade Commission and the state attorneys general.

Restrictive trade practices are prohibited and attract both civil and criminal sanctions. For instance, there can be a fine of up to US$100 million, as well as liability towards third parties who has suffered loss. As in the UK, there are exemptions and exclusions that parties may benefit from.

Unlike the UK, mergers of a certain size and involving parties of a certain size have to be notified to the regulators in advance. The merger transaction cannot complete until a waiting period has expired. Failure to wait through this period will result in a daily fine, which can be imposed against both the entity and its officers.

France The Ministry of Economy and the Competition Authority enforce the rules in this area.

• an understanding of economics and how different sectors work is crucial. Anti-competitive behaviour will be different in different industry sectors, and the thresholds of whether someone has a “dominant position” will be different in different sectors and localities. Having to consider all these factors calls for experience and resources

• a law firm can provide training to senior executives in a business, for instance about the kind of policies and practices it should or should not adopt • a firm who understands an entity’s business and industry can draft, or help prepare, policies and guidelines for employees • involving the lawyers early in a transaction may avoid potential problems from a competition law angle, before the transaction gets too advanced • the lawyers can be a “sounding board” for proposed transactions when they are being structured • firms which are multi-disciplined can provide a business solution as a whole package, so that, for instance, a commercial arrangement drafted by the commercial lawyers can be reviewed by the competition lawyers to ensure that they do not fall foul of the law • should a business be subject to a “dawn raid”, its lawyers can quickly advise how to respond and what further steps to take For businesses which have, or are looking to get into, overseas operations, legal representation is even more important. Here, a law firm which have offices or affiliated firms abroad will be a distinct advantage. This kind of firm will be able to look at the entity’s global business as a whole, but at the same time have the resources to navigate the many different legislation and regulatory bodies in different countries.

January 2011 • GBM • 73

property seCtor

End of an illusion and where should property investors head in 2011?

What is happening with Europe?

2010 was the year things should have changed direction; and they have, just the wrong way.

Academics knew it all along: a monetary union without a fiscal/political union will eventually fail.

In a half-realised union where monetary policy is centralised but fiscal and social policies remain on a national level, the result was doom. Unfortunately, it stayed academic. The illusion of an integrated union remains one until today. It is probably the short sightedness of politicians and their fear of the electorate that hindered integration into a full EU. Or simply the diversity of an ever-larger Europe that has made this aim ever less achievable. Today’s euro zone crisis is a result of economics - the financial bust that followed the liquidity bubble, the reckless spending of governments fuelled by the benefits of EU membership and low cost financing. But equally important is the failure of Europe’s leaders to take control of events. A crisis mastered will give politicians more credit than a crisis prevented. So far we haven’t seen either.

Up until recently, the problem was on Europe’s periphery; meanwhile investors turned their backs not only on Greece, but also on Ireland, with Portugal and Spain next.

There are only two options - a bailout by Europe’s taxpayers or a sovereign debt restructuring. Both have big risks attached. A permanent bailout will neither economically nor politically be sustainable.

The default option would virtually exclude those governments from capital markets. It has to be pure political willpower that now keeps the prospect and hope of a unified Europe alive, on a thread.

74 • GBM • January 2011

to those emerging countries as investors are seeking higher risk assets and higher potential returns. This in itself could further heighten any tensions, though the overriding expectation is that China especially will gradually allow exchange rate adjustments, benefiting economies that can reap from China’s growing domestic demand for foreign goods.

Real estate investments: All eyes on Asia The acceleration in commercial real estate investment activity should continue. International property agents Jones Lang LaSalle forecast a rise of 25-30% in 2011 compared to this year. This, however, will vary widely, not only by geography but also by sector and product type. Emerging markets will outperform Western Europe and the US. Furthermore, the trend towards prime properties in prime locations will dominate activity.

Half the world’s GDP growth comes from Asia, and that is a trend just gaining momentum. With favourable demographics, healthy economies, low labour costs and buoyant domestic markets, this is the most attractive region for long-term investors.

The world upside down While Europe is sinking deeper into a sovereign debt crisis, the confidence in the economic outlook stays remarkably high, as executives and consumers weathered tougher government budget cuts by countries struggling to convince investors that they won’t need aid.

Europe’s recovery will likely lose some momentum as governments across Europe step up spending cuts to reduce deficits. After the surge in exports and a rebound in investment helped faster growth in 2010, leading economists expect sentiment to turn trend in 2011.

The US economic growth outlook appears to be sluggish. The US Federal Reserve lowered forecasts to a growth of 3% for 2011, with unemployment remaining at just under 10%, both significantly worse than recent predictions. On the back of that, the Fed is pushing more money into the economy by buying further US$600 billion in government bonds over the next eight months in an effort to avoid a double dip recession.

The global economy seems increasingly to be split in two. China, India, Brazil and other emerging markets are surging ahead and risk overheating and inflation.

Most parts of the emerging world remain financially strong, having avoided the credit boom and bust experienced by many advanced countries. Many emerging countries have undervalued currencies and low interest rates, together stimulating growth and capital inflows. As a result, emerging market countries should make a strong contribution to global economic growth in 2011, with China most likely expanding the fastest.

With the Asian population becoming wealthier, consumption is picking up and so are their savings, which should benefit the real estate sector. At the same time, lenders in Asia are increasing their risk tolerance and loosening their underwriting criteria as Asia Pacific continues to outperform other regions.

China and India are the region’s powerhouses, but countries like Indonesia, Vietnam, and the Philippines are just emerging.

Although far from the price levels seen in 2007, the long-term outlook for retail and residential property is strong as increasing wealth and urbanisation is expected to lead to stronger consumption. In addition, a number of markets are developing as global financial centres, which benefits the office sector.

The consensus of many analysts is that Asia Pacific as a region provides excellent opportunities for riskadjusted returns. The challenge is how to access these markets and the way to operate within them.

Ronny Gotthardt, Senior Director, GRI Global Real Estate Institute. The GRI is club of senior investors, developers, lenders and hotel companies that runs a series of 12 annual meetings worldwide, incl. US, Europe, Asia, Middle East and Latin America. Unlike other conferences, those meetings are entirely based on small and informal discussions, allowing everyone to participate and engage with each other in an atmosphere devoid of selling pressure. For more information see www. globalrealestate.org

On the other hand, currency tensions between China, Brazil, etc, and net import countries are rising.

Ironically, a chunk of QE2 capital will get exported January 2011 • GBM • 75

Property Sector

Professor Mark Sharp CEO Association of International Property Professionals (AIPP) Tel: 0203 207 9095 www.aipp.org.uk & www.aipp.ie

Formed in 2006, the Association of International Property Professionals (AIPP) was set up to bring standards and accountability in the sale and re-sale of real estate in an unregulated and volatile market. Estate agents in the UK have not enjoyed the best of reputations in the past, and this reputation is largely repeated when buying property outside of the UK. By encouraging best practice and introducing industry standard training, AIPP works to ensure that the overseas property industry operates within recognised professional guidelines. Governed by an elected board of members, the organisation is not-for-profit and has no agenda other than improving the market.

In the absence of formal regulation in much of the sector, AIPP is an organisation of some 300 companies worldwide that have come together and pledged to work under a professional framework. From estate agents and developers to lawyers and currency exchange brokers, members of AIPP voluntarily signed up to be bound by a code of conduct and a disciplinary process, indicating the trust they have in how they operate their businesses.

To give the public confidence, AIPP set up a professional code of conduct that members must abide by with recourse to AIPP should they breach the rules.

Early in AIPP’s history, success was gained by helping consumers to retrieve over £250,000 in what would otherwise have been lost money. Also, a number of members were expelled from membership due to the severity of their breaches.

This success led to consumers gaining confidence in AIPP members, who had for the first time an organisation that would not flinch in trying to assist them in their quest to deliver a professional service as standard.

AIPP will continue in this vein, recruiting more and more professional companies to widen our reach and provide a safer marketplace in the long-term.

There have, of course, been challenging times in recent years with property markets across the world having various degrees of prosperity or dire calamity.

Never more so was there need for AIPP. Members can prove their professionalism to ensure clients can have confidence in being represented; plus have a range of services and toolkits that can enhance

76 • GBM • January 2011

AIPP will continue in this vein, recruiting more and more professional companies to widen our reach and provide a safer marketplace in the long-term.

business competitive advantage.

Consumers can buy in confidence on seeing the AIPP badge as it means that that organisation has been approved via a rigorous validation of business credentials.

There is much you can do to ensure your purchase is pain-free, and it is important to remember your responsibilities as a buyer. Below are a few basic points that will further enhance your safety in avoiding pitfalls: How much can you afford? Before you start looking for properties, make a rough calculation of your limits  however tempting the mansion of your dreams is at £12m, the likelihood is that you will have to settle for the £180k villa and make it your own mansion.

Lack of independent legal advice: AIPP always advocates that you use an independent lawyer. A relatively small sum of money here could save you thousands in the long run Foreign exchange rates: As well as being aware of the small print, if you are borrowing money for a mortgage it is normally better to pay the mortgage in the same currency. If buying off-plan, be aware that exchange rates can vary dramatically over the time it takes to complete the purchase.

What do you want the property for?

Investment only, holidays only, renting out when you are not there  will you need a management company to do this on your behalf and have you taken typical management costs into consideration with your affordability calculations?

What type of property do you want? Offplan, new build, re-sale, fractional, house, villa, apartment, etc.

Due diligence: Make sure you undertake due diligence on all of the people you will be dealing with, for example, the developer - ask to see developments they have already built and ask questions of people who have purchased there already. Ensure you agree terms with the agent before entering into an agreement.

Tax liability: Ensure you understand the taxation system in the country in which you are buying (your independent lawyer will be able to assist). Have you considered the impact on your last will and testament? Are you aware of the national peculiarities, such as issues with title deeds for registration, etc?

Inspection trips: This is not a holiday for a couple of days; ensure you know the conditions prior to going on the trip, be prepared to view a number of properties, and while viewing take notes and photographs in order to remind yourself of which properties you have seen.

It is important for AIPP to ensure that the consumer is educated and informed about their purchase; this can significantly reduce the risk of problems occurring in the first place. We recognise that, despite all due diligence, from time to time things can and do go wrong. Just as in the UK, any form of investment does carry a certain amount of risk; however we hope that your overseas purchase will be a trouble-free and enjoyable experience.

January 2011 • GBM • 77

Deal Directory

Central Asia Metals Plc - admission to AIM On 30 September 2010, Central Asia Metals Plc (CAML) announced its admission to trading on AIM. CAML also announced the successful completion of a placing that raised gross proceeds of £38.1m (US$60m). Pursuant to the placing, CAML issued 39,735,100 new ordinary shares at 96 pence each (the placing price) to institutional and other investors. At the placing price, the market capitalisation of CAML immediately following completion of the placing and admission to AIM was approximately £82.7m.

Proceeds will be used to fund the construction of a commercial solvent extraction - electrowinning (SX-EW) plant at Kounrad, Kazakhstan, and also to further develop CAML’s exploration assets at Alag Bayan (copper/gold) and Handgait (molybdenum), Mongolia, in addition to funding working capital.

KPMG Corporate Finance was nominated adviser to CAML, led by Susan Walker, and Mirabaud Securities LLP was lead manager

Central Asia Metals Plc admission to trading on AIM Lead manager and broker to the company

English legal counsel to the company

Legal counsel to the company as to Kazakh Law

Legal counsel to the company as to Mongolian Law

78 • GBM • January 2011

and broker. Field Fisher Waterhouse LLP was legal adviser to the nominated adviser and the broker.

Maxim Telemtayev, managing partner (Kazakhstan), led the deal at Macleod Dixon.

Macleod Dixon handled all Kazakhstan law issues, including due diligence of the local assets, issuing various legal opinions required for the transaction, review of the admission documentation, drafting certain sections of the admission documentation related to Kazakhstan and so on.

Maxim Telemtayev commented: “Raising funds in the current financial environment is a challenge by itself. The company needs financing to develop the mining assets. And the investors should benefit as the assets are well managed.”

The work was coordinated by Ashurst, UK counsel to CAML, and headed by Sergei Ostrovsky.

D Khand, senior associate, led the deal at Tsets.

Tsets carried out overall supervision of the due diligence review process. G Bahdal, partner at Tsets, commented: “It was undoubtedly a good deal for our client. According to the company’s senior management, the IPO will help to raise the company’s profile internationally, and the proceeds will be used, inter alia, to further develop the company’s exploration assets at Alag Bayan and Handgait in Mongolia.”

CAML is a mining exploration and development company focused on base and precious metals in Central Asia. A UK-incorporated company, it currently has interests in a number of copper, gold and molybdenum mining exploration and development assets in Kazakhstan and Mongolia.

In Kazakhstan, CAML has advanced plans for the construction of a plant at the former Kounrad copper mine that will have the capacity to deliver 10,000 tonnes per annum of near term, low-cost copper production. Kounrad, acquired in September 2007, is the most developed asset.

It was formerly an open-pit copper mine in Kazakhstan that was operated between 1936 and 2005. The site around the mine contains

a number of dumps of waste material from the mine from which copper can be extracted through an in-situ leaching process followed

by SX-EW. A pilot scale SX-EW plant has been commissioned at the site and has been operating successfully since August 2008. To date, CAML has produced over 320 tonnes of cathode copper from the processing of material in the dumps for sale to third parties. Initial construction groundworks for the commercial SX-EW plant have already been started.

CAML plans to construct a commercial SX-EW plant at the old Kounrad mine in a joint venture with a Kazakh government entity, Saryarka.

Capital expenditure for the commercial SX-EW plant is estimated to be US$46.9m with low direct cash operating cost estimated at US$0.38 per pound of copper produced. Production at the plant is expected to commence in the fourth quarter of 2011, which will provide CAML with an early revenue stream.

CAML also has exploration opportunities with the potential to deliver substantial additional upsides. One of these is Alag Bayan, an early stage exploration project in Mongolia, where CAML is focused on outlining a potentially significant copper/gold porphyry target. This asset is situated close to the Oyu Tolgoi copper mine being developed by Rio Tinto and Ivanhoe Mines. In addition, CAML plans to develop further its molybdenum exploration project, Handgait, in Mongolia.

CAML has an experienced management team that has a proven track record of developing and commercialising mining opportunities in Central Asia. CAML plans to use this experience to look at additional opportunities in the region and is already in early stage discussions in respect of a new exploration and development opportunity.

Nick Clarke, CEO of CAML, commented: “We are delighted that the company’s shares have commenced trading on AIM. Central Asia Metals has a well-balanced asset portfolio of production, development and exploration assets, with the Kounrad Project on track to increase production at a very low operating cost. We already have an established presence in Kazakhstan and Mongolia along with a track record of successful operations in each country.

“We also have the added benefit of being in close proximity to China, which is by far the world’s largest consumer of copper and many other industrial commodities. This growing market and the positive forecast for the copper price positions the company well. We look forward to keeping our new shareholders informed of the company’s forthcoming developments.”

First Quantum Minerals Ltd - acquisition of Antares Minerals Inc

On 18 October 2010, First Quantum Minerals Ltd (First Quantum) and Antares Minerals Inc (Antares) announced that they had entered into a definitive agreement pursuant to which a wholly-owned subsidiary of First Quantum will acquire all the outstanding securities of Antares. The transaction will be carried out by way of a statutory plan of arrangement pursuant to the Business Corporations Act (Alberta) and must be approved by the Court of Queen’s Bench of Alberta and the affirmative vote of 66 2/3% of Antares’ shareholders at a special meeting of shareholders. The total consideration for the purchase of 100% of the fully diluted shares of Antares is approximately C$460m.

First Quantum is a growing mining and metals company engaged in mineral exploration, development and mining. First Quantum’s assets in Zambia include the Kansanshi open pit copper-gold mine, the Trident project, the Fishtie copper project and the Bwana Mkubwa SX/EW facility and sulphuric acid plants. First Quantum also holds strategic investments in Mopani Copper Mines (16.9%), operator of the Nkana underground copper mine and cobalt refinery and the Mufulira underground copper mine, smelter and copper refinery, as well as Equinox Minerals Ltd. (16.32%), a publicly-traded company that operates the Lumwana copper mine. In Mauritania, First Quantum operates the Guelb Moghrein copper-gold mine and is currently developing the Ravensthorpe nickel project in Australia and the Kevitsa nickel-copper-PGE project in Finland. Operations at the Frontier copper mine and development of its Kolwezi copper-cobalt tailings project, both in the Democratic Republic of Congo, are currently suspended and subject to international arbitration.

First Quantum’s market capitalisation was approximately C$6.7 billion based on the closing price on the TSX on October 15, 2010.

Philip Pascall, chairman and chief executive officer of First Quantum said: “The acquisition of Antares is another step in First Quantum’s stated strategy of geographical diversification.

Haquira is a project which we consider that, with our experience, we can add material value to during the process of bringing it to commercial production and then subsequently through cost effective operation. Haquira is a world class copper project and has the potential to significantly increase First Quantum’s copper production profile.”

Antares is a successful mineral exploration company with highly experienced technical and management teams. Antares is focused on precious- and base-metal exploration properties in Latin America that can be quickly and

cost-effectively advanced to the discovery and production stage. In addition to the Haquira Project in Peru, Antares is also currently exploring the Rio Grande (Cu-Au porphyry) project in the Salta Province of northwest Argentina in a 50/50 option/joint-venture basis with Pachamama Resources Ltd, a spin-off from Mansfield Minerals Inc. Commenting on the transaction, John Black, president and chief executive officer of Antares said, “When we formed Antares in 2004 our objective was to discover a significant mineral deposit and develop it to the stage where it would be of interest to a major mining company. The proposed transaction with First Quantum represents the culmination of our efforts over the past six years and the successful achievement of our goal. As we have stated before, the Haquira deposit represents one of the most attractive undeveloped copper projects in the world owned 100% by a junior explorer. We believe that First Quantum has the experience, track record and financial capacity to develop Haquira into a world-class mine.

We have deliberately structured the proposed transaction so that our shareholders can elect to exchange their Antares shares for First Quantum shares, thereby providing the opportunity to continue to share in the success of Haquira through an entity that has far greater capacity to fully develop the Haquira project.”

The proposed transaction is expected to close in December 2010, shortly after receipt of shareholder and court approvals. The completion of the transaction is subject to customary closing conditions, including the receipt of any required regulatory approvals.

In the event that the transaction is not completed, Antares has agreed to pay First Quantum a termination fee of C$13.5m, under certain circumstances. Antares has also provided First Quantum with certain other customary rights, including a right to match any competing offers.

First Quantum Minerals acquire Antares Minerals

Legal advisor to the acquirer

Financial advisor to the acquirer

Legal advisor to the acquirer

Financial advisor to the acquirer

First Quantum intends to fund the cash portion of the transaction from its existing cash resources. The transaction is not contingent on any financing condition.

Grant MacKenzie and Bill Maslechko, corporate securities legal advisers, led the deal at Burnet, Duckworth & Palmer LLP (corporate counsel to Antares since its inception). Grant MacKenzie commented: “We are very pleased to see Antares successfully realise value for its shareholders on a project on which it has dedicated a great deal of time, effort and resources. We were fortunate to be able to work with such a talented and dedicated management team whose focus and knowledge enabled the transaction to run smoothly.”

Fasken Martineau LLP were counsel for First Quantum, with a team led by John Turner and Daniel Batista. BMO Capital Markets were financial advisers to the acquirer, and Dundee Securities were financial advisers to the vendor.

January 2011 • GBM • 79

Deal Directory

Healthcare Locums plc - acquisition of Healthcare Australia Holdings Pty Ltd

On 26 November 2010, the board of Healthcare Locums plc (HCL) (the board) announced that HCL had entered into an agreement to acquire the entire issued and to be issued share capital of Healthcare Australia Holdings Pty Ltd (HCA) for a total consideration of AU$122.5m (approximately £75.2m) payable in cash on completion. The agreement is subject to certain conditions precedent, including finalisation of the debt financing for the acquisition. The consideration payable will be satisfied from new debt facilities and HCA is being acquired on a free-of-cash and free-of-debt basis.

Commenting on the acquisition, Kate Bleasdale, executive vice chairman, said: “This acquisition is expected to create one of the largest specialist international health and social care staffing agencies in the world. Importantly, it will enable HCL to further reduce its reliance on UK public sector spending. With over four million vacancies for healthcare workers worldwide, HCL is excited by the opportunities which will be available to such a significant international healthcare staffing group.”

The board recently stated its intention to pursue international acquisitions that will generate additional revenue outside of the UK. Currently, HCL derives less than 50% of its gross margin for the overall business from the NHS. The completion of this acquisition will broaden the HCL customer base outside of the UK and diversify the client base even further.

HCA was established in 2004 and is a leading provider of nursing agency staff to public and private health institutions in Australia. HCA has grown rapidly by acquisition in recent years and is today the largest national nursing agency in Australia, with a database of over 6,500 active nurses, which represents over 30% of the total nursing agency staff in Australia. The nursing agency market in Australia is highly fragmented and is estimated to be around AU$1bn in size.

The HCA audited accounts for the year ending 30 June 2010 show group turnover of AU$223.6m and profit before tax of AU$1.7m.

The EBITDA adjusted for non-recurring items was AU$17.2m. Therefore, the acquisition price represents a multiple of 7.1x adjusted historic EBITDA. The main reason behind the fall in

80 • GBM • January 2011

turnover and EBITDA in the 2010 financial year was the decline in billable nursing agency hours due to the shortage of available agency nurses.

As at 30 June 2010, HCA had net assets of AU$36.4m. HCA’s principal customers include the State Departments of Health, Healthscope Limited, and the Commonwealth of Australia as represented by the Departments of Defence, Families and Communities and Veteran Affairs.

The HCA business comprises two principal parts: Health Workforce Solutions (HWS), the provider of nursing agency staff accounting for approximately 85% of HCA’s revenue; and, Homecare (HC), a provider of professional nursing, health and support services to individuals in their homes, which accounts for approximately 15% of HCA’s revenue. The demand for HC’s services is being driven by the Australian government, which is looking to increase the level of homecare funding on the basis that it’s more cost effective than using medical facilities and individuals prefer to be cared for in their own homes. Of HC’s revenue, 86% is derived from government-funded sources, compared to only 50% of HWS’s revenue.

There are many similarities between the UK and Australian healthcare markets. Demand for HWS’s nursing agency staff is being driven by the ageing population in Australia, health providers looking to reduce operating costs by using an optimal mix of permanent and agency staff, and the demand by nurses for greater work flexibility. It has also been estimated that 40% of the nursing workforce in Australia will retire in the next ten years (source: Australian Nursing Federation website).

The largest Australian urban centres in New South Wales, Victoria and Queensland, account for over 75% of the nursing agency population in Australia. HCA has an opportunity to expand significantly particularly in New South Wales and Queensland. The board considers that HCA has a strong management team that will remain with the business following its acquisition by HCL. The board of HCL believes that there are substantial cost savings that can be achieved by combining HCL and HCA, and that the majority of these benefits will accrue to the enlarged group in the first 12 months following the completion of the acquisition. Therefore, the directors believe the acquisition will be earnings enhancing in 2011.

The board considers that this acquisition will significantly enhance HCL’s international capability. HCL has been operating in the Australian doctors and social care markets since April 2009 and substantial synergy benefits should arise from this acquisition. Similarly to the UK nursing market, the demand for nursing staff in Australia exceeds HCA’s ability to supply. Currently, HCL has over 2,000 nurses on its international database that have indicated that they wish to work in Australia.

Following a recent marketing campaign by the newly acquired UK nursing agencies (Redwood Health and Orion Locums), over 700 nurses have applied for posts in Australia. This cross selling opportunity between UK and Australian healthcare workers has benefitted HCL over the past few years, and the board believes that this acquisition will significantly accelerate opportunities for HCL in both markets.

Praesepe plc – acquisition of a further 14 operating adult gaming centres

On 29 November 2010, Praesepe plc (Praesepe) announced that it had agreed to acquire, via subsidiary Cashino Gaming Limited (CGL), a further 14 operating adult gaming centres from various members of the Noble Organisation (Noble) for £2.3m (the acquisition). Noble is one of the UK’s leading gaming operators.

This acquisition is in line with Praesepe’s stated strategy to build a diversified gaming group by pursuing acquisition opportunities in the lowstake high-volume (LSHV) betting and gaming sector in the UK and Europe.

Nick Harding, CEO of Praesepe, said: “We are delighted to be acquiring a further 14 sites from Noble. These additional sites provide us with an opportunity to generate further economies of scale and deliver increased revenue and earnings without the cost and time delay of starting up entirely new Greenfield sites. This acquisition further consolidates our position as the fastest growing AGC [adult gaming centre] operator in the UK and we are looking forward to integrating the new sites into our existing portfolio.”

Praesepe will acquire 14 adult gaming centres located in Scotland, Northern England, Birmingham, London, south west England and south east England. This will increase its UK presence to 96 high street gaming venues, four family entertainment centres, six bingo clubs and an online bingo website.

The adult gaming centres are being acquired from a group of companies that are members of Noble.

Estimated EBITDA attributable to the sites being acquired is approximately £0.5m on a full year basis.

Praesepe’s third acquisition in 2010, following the acquisition of Beacon Entertainments Limited in April 2010 and the acquisition of eight adult gaming centre sites from Noble in

September 2010, and its seventh acquisition since the initial public offering (IPO).

To finance the acquisition, Praesepe is issuing 28,535,981 new ordinary shares (the shares) at a price of 8.06 pence per share to raise £2.3m (the subscription monies). Falcombe Holdings Limited (Falcombe), a company connected to the rest of Noble by common ownership, has agreed to subscribe for all 28,535,981 shares.

Nick Harding commented: “Issuing these additional shares to Falcombe demonstrates the strong vote of confidence from Noble in Praesepe’s future. We believe there are great opportunities in the UK and European LSHV gaming industry and we will continue to explore these opportunities to deliver maximum shareholder value.”

The issue price of the shares is based on Praesepe’s 30-day average share price up to 25 November 2010, being the day immediately preceding the date of exchange of the acquisition.

Completion of the acquisition is conditional upon shareholder approval of the issue of the shares outside of the existing pre-emption rights authority, the admission of the shares (the admission) to trading on AIM and the satisfaction of a number of property conditions, including receipt of landlords’ consent for the assignment or underlease of the leasehold interests for all the sites being acquired. A shareholder general meeting will take place at 10am on Wednesday, 22 December 2010 at the offices of Jones Day, to approve the issue of the shares outside of the existing pre-emption rights

authority. Formal notice of this general meeting was sent to shareholders on 3 December 2010.

Within five business days after the receipt of the latter of shareholders’ approval and the satisfaction of the property conditions, the shares will be issued to Falcombe and application will be made to AIM for admission of the shares. The new ordinary shares will rank pari passu in all respects with the existing shares in issue.

Immediately following admission, the acquisition will complete and Praesepe will use the subscription monies to provide CGL with funds to pay £2.3m in cash to the members of Noble in respect of the acquisition.

Post-admission, Praesepe’s issued share capital will amount to 405,316,286 ordinary shares of 1p each, of which Falcombe will hold 41,869,314 ordinary shares representing 10.3% of the total issued share capital.

Nick Harding commented: “We are also pleased to note that the government announced the start of their consultation period on Category B3 Gaming Machines on 2 November [2010].

We are delighted that they are looking at ways to support the gaming sector and in particular UK gaming machine manufacturers and look forward to the outcome of the consultation early next year. As previously announced, Category B3 machines are an important part of Praesepe’s commercial offering and any increase in stakes would have a positive impact on our business and the potential for revenue growth.”

January 2011 • GBM • 81

Deal Directory

Pressure Technologies - acquisition of Hydratron and trading update

On 18 October 2010, Pressure Technologies plc (PT) announced that, on 15 October 2010, it completed the acquisition of the Hydratron group of companies (Hydratron) based in the UK, US and Australia, for a cash consideration of £3.3m.

An initial cash payment of £2.5m was made on completion. This will be followed by two deferred payments of £400,000 to be paid in October 2011 and August 2012. The consideration represents a multiple of seven times Hydratron’s UK operating EBITDA, based on unaudited financial statements for the year ended 30 April 2010. Hydratron had sales of £4.0m in the UK in the year ended 30 April 2010. The US and Australian operations are essentially start-up businesses. The net assets of Hydratron, after elimination of investment in subsidiaries, were approximately £1.1m, based on unaudited management accounts.

Pre-tax profit attributable to the net assets being acquired was £0.3m.

Hydratron designs, manufactures and sells a range of air operated high-pressure hydraulic pumps, gas boosters, power packs, hydraulic control panels and test rigs. The business was established in 1981 and Hydratron has since established itself as a leading supplier of quality high-pressure equipment to the oil and gas industries. The full range may be viewed at www.hydratron.co.uk.

Hydratron has sales and manufacturing companies in Altrincham, UK, and Houston, US. It also has a small stockist and distribution company in Brisbane, Australia, and a spread of third party distributors in key locations around the world. Hydratron currently employs 46 staff in the UK, five in the USA and two in Australia.

As part of the agreement, the Australian subsidiary will be closed. A full-time sales presence, however, will be maintained in the region to service Australia and the Pacific Rim countries with products supplied from the UK. Full provision for the closure was made prior to the completion of the acquisition and there will

82 • GBM • January 2011

be no costs to PT resulting from the closure.

The US business, Hydratron Inc, established in 2007, is strategically located at centre of the US oil industry in Houston and is expected to be a key contributor to growth. Its people and facilities will be utilised by Al-Met Limited (PT’s UK-based wear parts subsidiary) to service the US market.

Hydratron’s fabrication capabilities in the UK will also be used by PT to manufacture biogas upgraders for the Chesterfield BioGas division.

Philip Sanders, managing director and principal shareholder of Hydratron, has agreed to stay with the company until August 2012. He will manage the integration process, as well as lead the expansion of the US business. A succession plan had already been implemented at Hydratron and capable managers are in place at all levels in the business.

John Hayward, chief executive of PT, said: “Hydratron has been on our target list for a long time, as it shares Pressure Technologies’ passion for innovative design, high quality and solid engineering skills. The business has good growth prospects and synergies with other parts of our Group, as well as providing an anchor for other potential acquisitions serving the oil and gas sector and direct access to the US market.

It is a valuable addition to our portfolio of companies.”

As well as providing good growth prospects, the acquisition also strengthens PT through further diversification, as Hydratron is not dependent on the deep-water oil and gas market.

PT’s performance for the year ended 30 September 2010 is anticipated to be in line with market expectations.

The deep water oil and gas market, however, remains depressed, as a result of the economic cycle and the after effects of the Gulf of Mexico oil spill. Anticipated orders for deep-water projects at PT’s subsidiary, Chesterfield Special Cylinders, are still pending. Receipt of firm orders by December 2010 will be key to PT meeting current market expectations for the year ending 30 September 2011, which exclude the impact of the Hydratron acquisition announced today. Typically, the products produced by Chesterfield Special Cylinders for the deepwater oil and gas market are on lead times of up to six months. The board will be in a more informed position to update the market on the outlook for PT at the time of the final results for the year ended 30 September 2010, expected to be announced in December 2010.

PT is the holding company for Chesterfield Special Cylinders Limited, which designs, manufactures and offers retesting and refurbishment services for a range of speciality high-pressure, seamless steel gas cylinders for global energy and defence markets.

Chesterfield BioGas, an operating division of PT formed in November 2008 following the signing of a co-operation agreement with Greenlane Biogas Limited (the world leader in biogas upgrading from raw biogas to vehicle quality fuel), gives PT exclusive rights to market Greenlane equipment in the UK and Eire.

Al-Met Limited (Al-Met), which was acquired

by PT in February 2010, is a niche manufacturer of specialised, precision-engineered valve wear parts used in the oil and gas industries, based in Pontyclun, near Cardiff.

Diarrhoea took Beauty’s first child, please don’t let it take another.

Photo: Anna Kari

Diarrhoea is the biggest killer of children under five in sub-Saharan Africa. Every day, it takes the lives of more boys and girls than AIDS, malaria and measles combined.

Simply by improving access to safe water, hygiene and sanitation in the world’s poorest communities we can reduce these deaths by an average of 65%.

Please visit www.wateraid.org or email corporate@wateraid.org to find out how your organisation can help transform lives.

Registered charity numbers 288701 (England and Wales) and SC039479 (Scotland)

precision precisionamidst amidst complexity complexity For over 25 years, US Tax & Financial Services has For overUS 25 and years, & Financial Services has provided UKUS taxTax compliance and consultancy provided and UK and consultancy advice andUS services fortax UScompliance / UK individuals, corporations, advice and services forthroughout US / UK individuals, partnerships and trusts Europe. corporations, partnerships and trusts throughout Europe.

Meet us in our London, Zurich and Geneva offices for Meet advice us in our Zurichtax andissues.

Geneva offices for expert onLondon, multi-national expert advice on multi-national tax issues.

US US TAX TAX

ZURICH US Tax and Financial Services Sàrl USZURICH Tax and Financial Services Sàrl Tax1367 and Financial Services Sàrl POUS Box US Tax and Financial Services Sàrl Löwenstrasse 28 PO BoxZurich 1367 CH-8021 Löwenstrasse 28 Switzerland CH-8021 Zurich T: Switzerland +41 (0) 44 387 80 70 F: +41 (0) 44 387 80 79 T: +41 (0) 44 387 80 70 F: +41 (0) 44 387 80 79 GENEVA USGENEVA Tax and Financial Services Sàrl Boulevard Helvétique 36 US Tax Rue andPetit-Senn Financial Services Sàrl (entrance 2) Boulevard Helvétique 36 CH-1207 Geneva (entrance Rue Petit-Senn 2) Switzerland CH-1207 Geneva T: Switzerland +41 (0) 22 700 25 00 F: +41 (0) 22 700 25 26 T: +41 (0) 22 700 25 00 F: +41 (0) 22 700 25 26 LONDON USLONDON Tax and Financial Services Ltd Magdalen House USTooley Tax and Financial Services Ltd 136 Street Magdalen London SE1 House 2TU 136 Tooley Street United Kingdom London SE1 2TU T: United +44 (0)Kingdom 20 7357 8220 F: +44 (0) 20 7357 8225 T: +44 (0) 20 7357 8220 F: +44 (0) 20 7357 8225

ustaxonline.com enquiries@ustaxonline.com ustaxonline.com