Global Business Magazine - July 2011 by Corporate ABM

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Plastic Fantastic The new cash

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July 2011 • GBM • 1

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For more information go to www.gov.im/iomfinance or email enquiries@isleofmanfinance.com Tel: +44 (0) 1624 686400 2 • GBM • July 2011

· Well-established regulatory environment · Excellent quality of life · Clear and simple taxation policy.

INSIDE This Month:

countrY profile Brasil

ship & aircraft registration

Business Talk We kick off this month with a cover story that really will get you thinking. We all like to have our wallets and purses full of money, but today some of us carry more cash in a piece of plastic then the rest of can dream of! We ask the question if plastic is becoming the new cash and what the future holds for money in its tangibles form. Brazil is a country that is growing stronger and stronger day-by-day. We highlight some of the top firms and individuals who are helping to take their country to new heights and how others can capitalise on the Brazilian success story. Our other country profile stays in the same region (well almost… but a little up north). Canada, the largest neighbour to the US has masses of natural resources and fantastic industry knowledge. Canadians are a friendly nation but we show you firms and individuals who are just as tenacious in business as anyone in the world! We all pray and hope that one day we can put our feet up and retire from the busy world of corporate life, and enjoy the hard earned money that we’ve put into our pensions. The pension’s world is a very tricky and precarious business, so we’ve found the experts who help give you the low down and best advice on choosing and investing in the right pension services. Today it seems that the world of advertising has gone crazy, with nearly every facet of life plastered with someone or something tempting us to buy or invest into a product or service. Yet, there are legal experts who monitor and ensure that the consumer isn’t being ripped off or miss-sold something. We highlight individuals who advise the consumer and the business world on how to stay within the realms of honesty and a nations advertising laws. Ship and aircraft registration is an area of business that isn’t as popular as other topics or areas of business such as tax, investments or asset & wealth management; however it plays just as important a role as any of the above. Many firms trade across the world and hold fleets of aeroplanes and ships. Each and every year the rules and regulations around this changes depending on a vast amount of factors. Those involved find ship and aircraft registration difficult to get their heads around. However, specialists from around the world are at hand to give accurate and clear advice on how to navigate in this unique business arena. Tying-the-knot is probably the most important date of any person’s life and spending that dream honeymoon is the ideal way to spend those first few precious days alone together. You want to go to a place where every time you remember the honeymoon, it brings back memories that make you want to relive it time and time again. We scoured the world over and found the best and unique destinations that will either make you want to get married now or in some cases make you want to go on that second honeymoon! Finally, for those of you wishing to improve your swing, stance and grip, (and we are not talking ballroom dancing), we give you some fantastic tips on how to improve your game of golf and play like a pro!

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

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July 2011 • GBM • 3

Business News

• Peabody, Shenhua among Mongolia mine bid winners Mongolia has selected three preliminary winners to develop the highly sought-after Tavan Tolgoi coal deposit in the Gobi desert. The firms are US miner Peabody Energy, China’s Shenhua and a Russian-Mongolian consortium, said Reuters news agency quoting a government source. The Tavan Tolgoi deposit is one of the largest coal fields in the world.

Mineral-rich Mongolia is hoping to become a global mining powerhouse to kick-start its economy. Mongolia’s parliament will now consider the decision, according to a statement seen by the AFP news agency. Energy needs Last week, the Mongolian government said it had halved the shortlist of bidders to three from six. The deal announced Monday, is to develop the western part of the Tsankhi block of Tavan Tolgoi, which contains mainly coking coal used to make steel. Analysts estimate that whoever ultimately wins the bid will have to make an initial invest about $7bn (£4.36bn). Mongolia borders China and Russia, both energy hungry countries. China is the world’s largest consumer of coal, relying on it for most of its energy needs.

In turn, Mongolia relies on China to buy its commodities exports. The country is also looking to access new trading partners in the Far East by negotiation access to Russia’s railways and ports. Initially Mongolia had planned to sell 49% ownership of the Tavan Tolgoi field to foreign investors. The country later decided to keep 100% state ownership, only awarding development contracts. The eastern section, the Tsankhi coal block will now be kept for Mongolia and developed by state-owned company Erdenes-Tavan Tolgoi. The government plans a share flotation later this year to raise as much as $10bn to develop the field

• International banks and insurers will thrash out improvements to a plan for the private sector to contribute to Greece’s bailout effort at a meeting in Paris on Wednesday, in a bid to prevent the proposal coming unstuck.

The Institute of International Finance (IIF) lobby group said it will chair the meeting of private sector creditors and officials.

The IIF on Friday said banks supported proposals to aid Greece and were considering a small number of options. Creditors are now trying to hammer out details. A meeting involving some banks was held in Paris on Tuesday in an informal discussion to resolve issues, people familiar with the matter said. French banks, major holders of Greek sovereign debt, have proposed voluntarily renewing Greek bonds when they fall due, but on different terms, which could trigger a default. Getting clarity on the accounting treatment of France’s plan remains a key issue to getting momentum, sources said. Politicians and bankers had expressed confidence last week that the French proposal would not trigger a default, but rating agency Standard & Poor’s on Monday said it would involve losses to debt holders, most likely earning Greece a “selective default” rating.

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Under France’s plan bondholders would reinvest at least 70 percent of the proceeds from bonds maturing between now and the end of 2014 in new 30-year Greek debt. The IIF, which represents insurers and other financial firms as well as banks including BNP Paribas (BNPP.PA), Deutsche Bank (DBKGn.DE), HSBC (HSBA.L) and Societe Generale (SOGN.PA), is playing an informal role co-ordinating international banks to reach consensus about private-sector involvement in a bailout of debt-ridden Greece. Wednesday’s meeting will be chaired by Charles Dallara, IIF managing director. It is one of a series of meetings the IIF is co-ordinating, running in tandem with technical discussions held since an IIF meeting in Rome a week ago. (Reporting by Alex Chambers, IFR Markets; Additional reporting by Steve Slater in London and Jean-Baptiste Vey in Paris; Editing by Hans-Juergen Peters and David Hulmes

• Man-Scania merger will create a new force in trucks The German car giant Volkswagen is taking over the Munich-based truck maker Man and plans to merge the group with its Swedish truck business, Scania. The car maker now holds 55.9 per cent of Man’s voting rights and 53.7 per cent of its shares after more Man shareholders took up the €95 (£86) offer than VW had expected.

VW was required under German law to make an offer for Man in late May, when its shareholding rose above the 30 per cent mark. “Volkswagen is more than pleased with the result,” VW’s chief executive, Martin Winterkorn, said yesterday. “As a result, our objective of realising substantial synergies between Man, Scania and Volkswagen in the interest of all shareholders, employees and customers is moving closer.” A merger between Man and Scania is expected to produce cost savings of about €200m annually, according to VW, and the combined group will be on a scale to compete with the two behemoths of the European industry, Daimler and Volvo. Ferdinand Piech, the chairman of VW’s supervisory board, is already the chairman

of Man, which also owns 17 per cent of Scania, alongside VW’s 71 per cent. Mr Piech’s plan to bring the three companies even closer together has been in the pipeline for some time. But the takeover will need regulatory approval before it can proceed, and there has been some resistance to previous efforts. VW’s attempt to appoint members to the Man board was vetoed last month by the European Commission, which said the scheme required merger clearance to go ahead. Man is more than 250 years old, starting life as the first ironworks in the Ruhr region of Germany in 1758. The company started building heavy machinery through the Southern branch of the business, set up in 1840

• China’s Huawei in drive to be smartphone leader Huawei, the Chinese telecoms giant which makes infrastructure for companies including BT, will use Britain as the launch-pad for its drive to become one of the biggest smartphone brands. The company is to launch its first ownbranded device in the UK this autumn as part of plans to bring “smartphones for all” and it has kicked off a recruitment drive in this country. Mark Mitchinson, a telecoms industry veteran, was brought in to spearhead the drive earlier this year and the first Huawei phone, the Blaze, is close to release. He said: “By 2013, Huawei Device aims to be one of the world’s top handset manufacturers, and we are well-placed to achieve that goal. “We are going to get to a point where we’re a credible player in the market. I want to make an impact this year.” The company currently has 25 people working on the launch in the UK and will beef that up by “50 to 60 per cent”, according to Mr Mitchinson. The device unit currently makes up a small part of Huawei’s business, which in the UK has a total headcount of 500. It plans to double

that total by 2015, and will recruit 1,500 subcontractors. “It is a necessary change for Huawei. We are one of the dominant players in infrastructure. How much more infrastructure can we build? We believe there is enough space in a very competitive space like the UK,” Mr Mitchinson said. Huawei is targeting the so-called feature phones market, which it estimates makes up about 60 per cent of UK mobile sales. Feature phones are low-end, limited handsets that are cheaper than smartphones. “We have established ourselves in the infrastructure and technology space. There is no reason why we can’t expand that,” Mr Mitchinson said. The company also makes phones for other UK phone companies including Vodafone and Everything Everywhere, which owns T-Mobile and Orange. The Huawei Blaze, which will run the Android operating system and cost less than £100, will be the first of a series of phones and devices from Huawei, including tablets and media pads. A high-end smartphone is expected next year. Mr Mitchinson said: “There is an opportunity to bring smartphones to a wider audience.” He joined as executive vice-president of Huawei’s UK and Ireland

Device business from Carphone Warehouse in May. He spent a decade at Samsung, establishing the brand as a top player in the smartphones market in the UK. He said: “Smartphones for all is a key message. Huawei will open up the door for that. The next explosion is the data explosion.”It’s about the right proposition. The UK could be the blueprint of how we roll this business out into the rest of Europe. China and the UK are the two key markets for the launch of devices.” Huawei says it is targeting Britain because it is “the most established market in Europe”. “It is also the toughest. If we crack the UK it will set us up nicely,” Mr Mitchinson said. “We are lacking in marketing at the moment so we will push that. That will be across engineering, sales and marketing. Our competitors are watching... Our customers want Huawei in this space.” Huawei was established in China by Ren Zhengfei in 1988 and serves 45 of the top global mobile network operators, covering a third of the world’s population. It first moved into devices in 2003, making handsets for other companies. It will ship 12 million smartphones this year, with sales hitting $6bn (£3.7bn). July 2011 • GBM • 5

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plastic fantastic the new cash? Even fifty years ago, most people would have considered it almost inconceivable that, within their lifetimes, we would be talking seriously about the possibility of a cashless future. And yet, at the end of the twentieth century and moving into the twenty-first, this is exactly the kind of development that businesses, financial service providers and governments are looking at as a reality.

by Steven Miscandlon

What is perhaps most interesting is that such discussions about the future of cash in our economies are not driven by science-fiction inspired, outside-the-box conceptual thinking … but rather as a logical progression of recent and ongoing shifts in the nature of how we choose to transact and conduct business. “Cash”, as we currently think of it, has been in use for over two and a half thousand years, with the first coinage thought to have been in use before 500 BC. Banknotes were a later development, first coming into use in China around the seventh century — several centuries before the adoption of paper currency in Europe. With the use of cash being so firmly established as the basis of economic systems across the world, it makes it all the more intriguing to consider that we have reached a point where many companies see cash transactions as the exception, rather than the rule, when conducting business with their customers. A brief history of plastic One of the first tentative speculations about a “cashless” currency and society appeared considerably earlier than many might think. In 1888, American author Edward Bellamy published his socialist utopian science-fiction novel “Looking Backward: 2000–1887”. In it, he wrote about a man from 1887 who was thrown forward to the year 2000 — a world in which “a system of direct distribution … took the place of trade, and for this money was unnecessary”. Instead, Bellamy wrote, each citizen has “a credit card issued him with which he procures at the public warehouses, found in every community, whatever he desires whenever he desires it”. While Bellamy’s predictions may seem uncannily accurate in their view of the future, in other ways it could be argued that societies had been experimenting with alternatives to hard cash for centuries.

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In 198 4 becam , MasterCar d e the ﬁ card to rs use ho t credit image lograp s. h as a m This was do ic eans o ne fraudu f deterring lent us e.

Banknotes were first introduced as deposit receipts and promissory notes that obviated the need to carry large amounts of heavy coinage. Indeed, there is even evidence that over two thousand years ago, the ancient Romans used an early form of cheque (“praescriptiones”). However, despite any historical precedent, there is no disputing that it was the technological advancements of the twentieth century that brought us the universal credit and debit card systems as we know them today. In the first half of the twentieth century, some department stores issued metal “charge plates” or “credit coins” that were broadly analogous to modern store cards, while US petrol companies such as Texaco and Skelly issued paper “courtesy cards” to their customers as an alternative to immediate cash payments. It wasn’t until the 1950s that credit cards accepted by multiple retailers were introduced, with the first Diners Club Card transaction charged on the 8th of February 1950. At that stage, the card was still made from paper stock, rather than plastic — and much like the earlier proprietary cards issued by stores and oil companies, the Diners Club Card was really more of a charge card (requiring settlement of the monthly bill in full) rather than a credit card as such. By 1959, however, plastic credit cards in their current form had truly arrived, with the launch of the BankAmericard (later to become Visa) and the first American Express credit card. In 1966, the other major player entered the market, when an association of Californiabased banks introduced their Master Charge card (the forerunner to the MasterCard). The advantages of plastic For consumers, one of the main advantages of plastic spending is

perhaps best exemplified by the tale of Frank X. McNamara, founder of the Diners Club. After having enjoyed a business dinner at Major's Cabin Grill in New york City in 1949, he was embarrassed to realise that he didn’t have the cash to pay for the meal. The experience spurred McNamara to develop a credit-based payment system that would circumvent the need to always ensure you had the correct amount of cash to cover your purchases. The appeal of his vision to others was ably demonstrated by the swift success of his scheme — less than two years later, more than 20,000 Americans held Diners Club Cards. And that same basic benefit of the credit and debit card systems — convenience — still holds true today. For businesses, the benefits are perhaps less immediately tangible, but they exist nonetheless. Any retailer that has experience of cash handling will understand that physically managing and reconciling cash with sales records or account books is rarely as straightforward as it should be. Cashier or back-office errors, miscounting, and even employee theft, can all come into play. Cash storage and management, by its very nature, involves physical security systems that can by turns be cumbersome, time-consuming and expensive to install and maintain. While plastic payments have revolutionized retail transactions on the high street, a much greater impact and benefit to both modern businesses, and consumers, has been through telephone and internet ordering. Prior to the widespread adoption of credit and debit cards, mail order purchasing was largely a matter of sending a cheque (or postal order) to the retailer by mail, waiting for it to be processed and to clear, then waiting for your goods to be dispatched. Many of us probably remember the standard phrase “allow 28 days for delivery” in catalogues, magazine and comic advertisements — it’s highly doubtful that modern consumers would tolerate such an unappealing service promise when ordering the latest DVD from Amazon.com.

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Nowadays, businesses that don’t have an online presence are by far in the minority. Most high street retailers also operate web stores, and indeed there is any number of highly-successful Internet-only merchants. This would have been impossible if worldwide credit and debit card payment systems hadn’t been created and firmly established as a means of transacting. Security and other risks Cash-based transactions have their own risks attached — not least, armed robbery and other forms of theft — and cheque fraud had long been an issue for businesses, however right from the early days of credit cards it was clear that their use would present a whole new set of security concerns. In 1958, the BankAmericard (the precursor to Visa) was launched — and by October 1959, over two million of the credit cards had been issued in the state of California. In terms of customer take-up, it could be argued to be an unqualified success — and the cards were already accepted by around 20,000 retailers. However, the problems and risks inherent in the new “plastic cash” system were soon to become apparent. Police began to encounter the first examples of what was essentially a new crime — credit card fraud — and the Bank of America (who issued the cards) were faced with delinquent accounts in the order of around 22 per cent of all active cards, compared with the 4 per cent delinquency rate they had predicted. The bank faced both political and media criticism, and the period following the state-wide launch of BankAmericard saw Bank of America suffer losses estimated in the millions of dollars. While Bank of America were quick to recognize and address their mistakes, many of the same problems still apply to credit and debit cards today. Card fraud, in particular, continues unabated and can range from simple card theft, through identity theft to highly sophisticated organized crime. The annual cost of card fraud in the UK is estimated in the hundreds of millions of pounds, while figures for the US reach into the billions. These unfortunate facts mean that credit and debit card security is a vital concern not just for banks and card issuers, but for businesses of all sizes, across a wide range of industries and corporate sectors. While financial sector initiatives — such as 3-D Secure for online transactions, and “Chip and PIN” in the UK — are intended to help the card industry stay ahead of fraudsters’ criminal methods, equally high street and online retailers are having to adopt sophisticated anti-fraud measures. As recently as April 2011, we saw a major international corporation learn a tough lesson about online card security, as a security attack on Sony’s PlayStation Network resulted in the credit card details of up to 77 million customers being compromised. The event made for a sobering cautionary tale, but despite the data breach some comfort could be sought in Sony’s subsequent assurance that their customer credit card database was fully encrypted. Such precautions should form a fundamental control for any business that handles credit or debit cards as a matter of course. The future of cash? Since the widespread adoption of credit and debit cards for everyday use, new technologies, services and innovations have significantly shifted the ways that customers and businesses can choose to transact. The withdrawal of cheque guarantee cards in

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the UK this year for example, 42 years after the facility was first introduced, has effectively put an end to using cheques for payment in high street shops. Web-based payment systems such as PayPal — launched in its earliest form in 1999 — revolutionized cashless payments by allowing individuals to quickly and easily make online payments, funded by credit card or bank transfer, directly to other individuals and companies worldwide. Its adoption as the standard payment method by online auction site eBay helped PayPal’s business grow exponentially — by April 2000 over a million items listed for sale on eBay accepted payment by PayPal. Before this, eBay buyers had generally had to use the unwieldy system of posting a cheque to the item’s seller. PayPal became a wholly-owned subsidiary of eBay in 2002, and in recent years has become accepted as an online payment method by merchants such as Toys “R” Us, Domino’s Pizza, DHL, Interflora, Sega and literally hundreds of others. Just last year, PayPal reached an agreement with China UnionPay (China’s bank card association) to allow some 2.1 billion Chinese cardholders to use PayPal to purchase from international retailers. Other developments have precipitated further shifts from cash to plastic. For many years, cardholders have continued to use cash for smaller-value purchases. However, industry initiatives such as contactless card payments (Visa’s PayWave and MasterCard’s PayPass) are specifically pitched at facilitating quick and easy card payments for small transactions — allowing purchases under £15 in the UK and $25 in the US to be processed swiftly without the need for a signature or having to enter a PIN in the payment terminal. The difference in terms of time and convenience for each individual customer may seem minimal, but shaving just five seconds off every transaction can make a big overall difference to the retailer, particularly at peak trading times. This year the UK will see Barclaycard launch a scheme in conjunction with telephone network operator Orange that will allow similar contactless payments to be made by using enabled mobile phones, using “near field communication” technology. Director Jason Rees, speaking for Orange’s parent company Everything Everywhere, said: “Studies show that people are more likely to forget their wallets than their mobile phones. Trials have proved that customers love it, they love the simplicity of having their wallet all in one place and it means there is no more need to carry cash.” Similar systems already exist and are widely used in Japan, where both the concept and the technology of the Osaifu-Keitai or “mobile wallet” are already firmly entrenched. So could this be the future of how we transact? Not with coins or notes, not with cheques, but with plastic, or mobile devices, or a fingerprint system, or something altogether different that hasn’t even been invented yet? For certain types of transactions, it seems that the change has already occurred. When going to buy that shiny new £500 television, fewer and fewer people would even consider carrying a wad of cash, rather than handing over the ubiquitous plastic card. In the future, that shift in thinking, from cash to plastic, seems likely to continue, and it’s important that businesses not only be ready for such changes, but actively engage and invest in new payment initiatives and technologies, to allow them to fully embrace the potential opportunities.

a whole new world of fund solutions For innovative fund solutions please contact: Colin Stott Manager, Business Development Tel: + 44 (0) 1624 630660 Mob: + 44 (0) 7624 410660 Email: newbus@ifgfund.com IFG Fund Administration (IOM) Limited is licensed by the Financial Supervision Commission of the Isle of Man. IFG Fund Administration (IOM) Limited is a member of the IFG Group plc.

www.ifgint.com

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financial services round taBle

the financial world Brought to You! The world of finance is vast and broad, with many firms offering more than one type of service. Long gone are the days when you went to your local accountant to keep your books in order and an update of your business account. Today, the financial service firm can assist any business on areas such as advice on tax to the takeover of rival businesses. The industry is a one-stop shop for all matters that are finance related.

Why w as Civil W paper mone ar yc the US coin hoardin reated? paper government g caused cur to time in rency bills fo create r the ﬁ one of 1861. Each and ev rst the ﬁr st b ery by one of the ills was sign ed s worke d at th ix people wh e US T o reasur y.

The financial services industry has gone through many changes, trials and bad press over recent years such as the crash of financial institutions and economies. We have seen major corporations and government figures involved in scandals that tarnish the reputation of a sector that largely sets the benchmark and precedence that other sectors and industries follow. However, a lot has been learnt by financial firms, largely due to the fact that they have researched, investigated and communicated with their customers. Today we see financial firms creating services that support their clients and endeavour to find solutions that will only help to enhance the customer’s overall business. Tax, audit, actuarial, compliance and financial law are standard services that are on offer from most finance companies. Firms are now heading towards being the complete business solution and are offering services such as consultancy, business advice, financial security, transaction services, forensic services, strategy and even how businesses can assist in being more environmentally friendly. Also, these firms are now assisting governments and governing bodies on strategies and legislations to help develop economies, build standards and create financial practices that are more robust and unified the world over. However, there are firms out there that want to remain focused on the ‘core’ areas within finance. Although these boutique financial firms limit their clientele, they have been able to develop their skills and expertise to provide clients with a flawless service. Also, certain firms pride themselves on a complete global experience and can work with their customers across varying jurisdictions, industries and sectors. The Financial Services Roundtable (FSRT) will look to give the reader the opportunity to view and read articles written and presented by leading firms and individuals from across different countries, industries and sectors. These firms and individuals are seen as leading experts and specialist that will inform and educate the reader on the latest topics, news, and how the financial services industry is shaping-up across the world.

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oil and gas sector report 2011

SOUTH AFRICA David Lermer Partner/Director: *GT Leader |Corporate International Tax *Global Tax Comprises the PwC specialist divisions of international tax structuring, exchange control, Transfer Pricing and cross-border M&A

+27 (21) 529 2364 +27 (21) 529 3009 david.lermer@za.pwc.com www.pwc.com/za

Far reaching tax proposals tighten the noose on financing arrangements. The South African National Treasury recently released its proposed draft taxation laws amendment bills for the 2011 round of legislative amendments to the Income Tax Act. Within these amendments are a number of fundamental proposals that will render standard commercial financing and reorganisation transactions impermissible or unviable should they be promulgated in their proposed form. National’s Treasury’s particular concern is the abuse of excessive interest deductions or mismatches between deductible interest and exempt dividend income. The overall theme behind these proposals is the question of debt characterisation and the role of debt as opposed to equity in the South African fiscal environment. Intra group transactions The most significant proposal is the immediate suspension of section 45 of the Income Tax Act, from 3 June 2011 – the day after the proposals were released for public comment. Section 45 is one of the corporate reorganisation rules and essentially allows for the tax neutral transfer of assets between group companies. Typically, this is used to move assets or subsidiaries in the course of a rationalisation or restructure. However, Treasury is concerned that section 45, in conjunction with debt push down transactions and other financing schemes, is being used as an acquisition tool and part of larger abusive financing schemes that result in excessive interest deductions, and in certain circumstances, the deduction being matched against tax free dividend income (i.e. tax relief with no income pick-up). This proposal has caused great uncertainty and confusion as a form of group reorganisation relief has been available for over 15 years and, typically, debt pushdown transactions were thought to be regarded as an acceptable acquisition technique. The driver for these transactions is the fact that interest on financing used to acquire shares is non-deductible; it is therefore necessary to push the debt down into the target business to allow the interest to be set off against the business income. While a number of abusive tax avoidance schemes have been entered into using section 45 as a tool to facilitate these, they amount to few when compared to the number of legitimate commercial transactions that use this mechanism, ranging from simple group restructurings to black economic empowerment (BEE) transactions and commercially driven debt push down transactions. Hybrid Instruments Another concerning set of proposals are the amendments to the sections regulating the tax treatment of so called hybrid equity instruments, i.e. principally redeemable preference shares. These instruments are common financing instruments, particularly in respect of BEE and other minority acquisitions of shares.

Section 8E re-characterises dividend payments on redeemable preference shares as taxable interest where the term for redemption is within 3 years. Many companies have financing structures in place with instruments having redemption of between 3 years and 7 years. Such terms have prompted National Treasury to reconsider the rules by extending the 3 year redemption period to 10 years. This proposal is effectively retrospective in that it will apply to preference shares currently in issue should they be redeemable within 10 years from the date of issue. This is proposed to be effective in respect of dividend payments on or after 1 April 2012. Many BEE transactions are financed using preference shares. Taxpayers have raised their concerns that these proposals will render existing and future BEE transactions unsustainable as the tax cost of the debt financing will be excessive. Existing structures are also severely impacted by the proposal as the additional tax cost to the holder is generally passed on to the issuer through tax gross-up clauses, increasing the cost of finance. A further restriction on share-based funding is the proposed insertion of section 8EA: Third-party backed shares. These arrangements utilise third party collateral, for example call or put options, against the share —so the holder of the share receives tax free dividends on what is essentially regarded as a financing arrangement. These arrangements are proposed to give rise to ordinary revenue receipts and be taxed as such. Debt with no maturity date A third measure that attacks the debt characterisation of interest bearing instruments, is the proposed introduction of section 8G, which reclassifies interest on perpetual debt as dividends. Perpetual debt is widely defined as any debt instrument that does not specify a date of repayment – for example, many companies are capitalised by shareholder loans where no date of repayment is specified. This measure is proposed to be effective for interest payments on or after 1 April 2012 and is therefore effectively retrospective in relation to existing instruments.

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EUROPE, MIDDLE EAST AND AFRICA (EMA REGION ) Giles Williams Partner, Financial Services, KPMG’s Regulatory Centre of Excellence, EMA region Tel: +44 20 7311 5354 giles.williams@kpmg.co.uk www.kpmg.com/regulatorychallenges

The Race between EU and US Regulatory Reform Focus on regulatory change is clearly imperative for senior executives in financial services, and is likely to remain so for some time to come. The stated objective of the G20 is to create a more level playing field, coordinated globally; however, in practice local regulatory initiatives are diverging, which is proving quite a challenge. In particular, the pace of change differs considerably between regulations coming out of the European Union (EU) and the US, particularly under the Dodd-Frank Act. Regulations will have a major impact on how and where firms position their business in the US, Europe and elsewhere. It will be very difficult to effectively respond to regulatory change without taking into account the wide-ranging regulatory initiatives across jurisdictions. Trying to reconcile local implementation is proving a real challenge for global groups across the financial sector. There is still considerable speculation on what could happen, what it could mean, and what the market response will be. The multitude of regulatory initiatives and the competing rules coming out of different jurisdictions mean managing regulatory change needs both a global strategic view and a local tactical focus. Evidence of growing divergence between national jurisdictions will undoubtedly continue. EU officials argue that the US has not moved quickly enough with implementation, following the passing of the Dodd-Frank Act in July 2010. There are up to 386 rules to be defined, and still a long way to go. However, within the EU, there have been delays on a number of rules previously expected in July 2011, now pushed back to at least October 2011. Although the G20 countries are due to submit their national systemically important financial institutions (SIFI) lists to the Financial Stability Board (FSB) at the end of June 2011, national regulators are still focused on local stability. Both the US and UK have already launched unilateral

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initiatives around recovery and resolution plans (RRPs). European proposals will likely differ from those in the US, where the Fed is more focused on capital. US SIFIs are currently concentrating on assessing the scope for legal entity rationalisation, and the extent of interconnectivity and intragroup transactions. In the UK, the Bank of England has asked SIFIs to consider all the barriers to effective recovery and resolution and potential solutions. A pilot exercise last year helped clarify the approaches for SIFIs to identify and implement RRPs, which has influenced the EU approach to crisis management; but final rules are yet to be defined. In theory, a common agenda and global cooperation should mean one global RRP; in practice, it is more likely you will see duplication and complexity in the form of multiple and competing regulatory demands. US officials argue that European regulators give their banks too much latitude on capital definitions. The EU is also facing criticisms that its latest drive to increase capital requirements for banks under the Basel 3 Agreement has been diluted. However, the US has yet to fully implement Basel 2 (and it is unclear when, or if they will), whereas the EU did so in 2006. Most large US banks have already been subject to a proxy Basel 3 capital level, which may yet become de facto. Aspects of the wording within DoddFrank may actually make it difficult for the US to transcribe the Basel 3 proposals directly in to rules. The delays occurring in the EU, specifically on CRD4, raise questions as to the outcome, and how firms will address these when they are eventually published. CRD4 will provide a tighter definition of capital. Minimum capital ratios are expected to increase, along with conservation buffers and counter-cyclical capital buffers. There is still uncertainty on liquidity, especially in the longer-term net stable funding ratio. Many foreign institutions are rapidly unwinding or re-capitalising ‘intermediate

holding companies’, which were previously allowed a more ‘capital light’ and tax advantageous structure. Diverging views on the use of credit ratings by US and EU supervisors has already launched multiple debates. The current pressure by the European Securities and Markets Authority (ESMA) to force higher standards on US credit rating agencies is interesting given the Dodd-Frank proposals to ban the use of credit ratings in capital calculations; but US supervisors are still struggling to identify viable alternatives. The role of local boards and governance expectations are likely to have an impact on organisations with global operations. The issue of solo versus consolidated entities raises concerns around the requirements to comply under local governance rules in the EU, which could then cause conflict with global operations particularly based in the US. Firms need to be able to take a global view and address requirements on a strategic level. Finally, the details of European rules and Dodd-Frank are far from final. While firms need to make changes now to address these initiatives, they could look very different in 12 months time. No matter where an organisation's activity is undertaken, no one policy will define the business. Multiple rules from multiple regulators will converge and impact financial organisations. The only way to effectively navigate this is to look across the whole global regulatory agenda; there are major overlaps in impact and outcomes. A coordinated approach is essential to enable major processes and systems to be changed once, and done well. A siloed approach around any one jurisdiction or regulation could mean missing the opportunity and risking noncompliance.

SOUTH AFRICA John Sutherland www.leadership-initiative.co.uk john.sutherland@leadership-initiative.co.uk +44 15394 66000

‘The Age of the Guru is Over’ By John Sutherland Leadership development has failed to keep pace with the developing needs of business leaders and a radical overhaul is overdue. John Sutherland, managing director of The Leadership Initiative, believes that traditional models of high-end leadership programmes no longer deliver the results required to tackle the challenges of the global business community. In this article, he outlines his blueprint for a new approach to leadership development. The style of leadership development that has dominated corporate training for the past two decades, often called ‘experiential learning’ is no longer credible for the current economic climate. This old mind-set was based on the premise that you can teach people how to lead. We argue that this risks creating followers, not leaders. True leaders decide what to think and do, and how to develop and deliver their business plan. This means that the age of the leadership guru is over and in its place is a new age of selfdirected learning. A new disruptive technology for effective leadership development We believe the key to success lies in encouraging potential leaders to develop their autonomy and learn to trust their own thinking, instincts and decisions through a structured trial and error process. It is called ‘Action Inquiry’, which is a disruptive technology in leadership development because it encourages programme members to teach themselves and develop a lifetime habit of learning from experience and selfobservation while involved in leadership tasks. The business will benefit from leaders who know how to develop themselves without any further training budget spend because they have become the architect of their own ongoing development. Lack of focus on the real needs of the business If you ask business leaders or HR Directors to outline the specific leadership needs for

their business they can usually tell you or can easily find out – and this is where we place the focus of our work. Each of our clients co-design a specific leadership programme at the outset and we all avoid wasting time developing skills that are not relevant or are a low priority. Most open programmes can't tailor the offering in this way, which is one of the main reasons they tend to have a poor track record in transferring the learning back to the world of work. In addition most off-the-shelf leadership programmes require anything from a week to several months out of the office , and no time set aside to put new ideas into practice. In our experience it takes around 6-9 months to see lasting visible change and embed new habits in emerging leaders. Leadership presence or gravitas can be taught with a few simple techniques The popular view that people either have leadership presence, or they don’t is false. We have proved time after time that gravitas or leadership presence can be learned and developed. Just a few simple techniques can turn managers into the leaders an organisation needs to make a real impact on its future. I recently sat with an IT manager on a long flight who told me of an important presentation he had to deliver. I offered information on how he might grow the authority and presence he needed during his presentation delivery. We find that for many leaders it has a lot to do with actually being present, rather than having your mind wonder elsewhere. Of course different things works for different people and the trick is to try something new and see what works. The IT manager emailed me with progress updates and in a couple of months he refined his skill to a high level. Dealing with emotion in business The lack of emotional competence among leaders can have a catastrophic effect on an

organisation. yet most traditional leadership programmes avoid this important issue altogether. The corporate world is full of would-be leaders who lose respect and effectiveness through their inability to confront or deal with conflictive emotion. Media intrusion and a demand for greater transparency from customers mean that emotional issues will be reported more often, so modern leaders must learn to acknowledge, confront and manage emotion in the workplace. We find that working directly with each leader’s emotional 'hooks and scar tissue' almost always result in the release of a new leadership skill that had previously been out of reach. A checklist for success Whatever your thoughts on leadership development our experience recommends that you consider the following checklist; What leadership skills does your organisation need to achieve its business plan? What leadership skills are most obviously absent from the business? Where are you on succession planning? What would happen in your organisation if you developed leaders who stood in their own authority and collaborated from a position of clarity? How well do your leaders deal with conflictive emotion? Or do they simply duck emotional competence as a development issue? Before embarking on any investment in leadership development, make sure the programme has the flexibility to encompass all of the above. Remember, it’s not about emulating gurus; it’s about creating selfmotivated authentic leaders who can drive your business onto the next level.

July 2011 • GBM • 13

isle of man financial services Business round report taBle 2011

MIDDLE EAST

Investment funds and ensuring a joined up approach among the UAEâ&#x20AC;&#x2122;s regulators In January 2011, the UAE Securities and Commodities Authority ("SCA") published draft investment funds regulations (the "Regulations") for consultation. When implemented, the Regulations will transfer regulatory responsibility for the licensing and marketing of investment funds and for a number of related activities from the UAE Central Bank to the SCA. This move forms part of a wider project intended to broaden the remit of the SCA (which is currently limited to regulating local securities exchanges and activities concerning securities listed thereon) and to move regulatory responsibility for non-banking products and services from the Central Bank to the SCA. Pursuant to the draft Regulations, all funds made available to UAE investors (irrespective of minimum investments, the size, number or sophistication of investors, and of whether contact results from reverse solicitation) would need to be approved by the SCA and offered through a locally licensed placement agent. If implemented, this may cause problems for many firms located in the Dubai International Financial Centre ("DIFC") or elsewhere outside the UAE, who currently engage in a limited amount of cross-border business with non-retail investors in the UAE in a manner that was previously tolerated by the Central Bank. The proposed regime is more stringent than that applied by many other regulators in the region (where there is often an informal "tolerated practice" for nonretail business) or in Western jurisdictions (where there is generally an explicit exemption for private placements or exempt offers), and would be most comparable to the position in Saudi Arabia. Whilst this approach may serve a useful function in protecting retail investors, it provides little benefit to sophisticated or institutional investors, and makes it more difficult for foreign firms to offer fund units to sophisticated investors. Even where a fund manager is willing to incur the costs of having the fund approved, translating offering documents into Arabic, and hiring a local placement agent, timing issues (SCA approval may take up to 30 business days) and the limited number of UAE target clients for non-retail funds may mean that that the number and variety of investments available to UAE investors will sink dramatically. Additionally, the finished Regulations

14 â&#x20AC;˘ GBM â&#x20AC;˘ July 2011

may include an obligation to publish daily NAV figures and to submit audited accounts within 30 days from the end of each financial quarter, with which it may be difficult or impossible for funds investing in less liquid assets (e.g. real estate, private equity, illiquid securities) to comply. Whilst exemptions may be available on a case-by-case basis, many fund managers may decide that the cost and uncertainty involved are unacceptable and may simply not offer their funds to UAE investors. This may reduce investor choice, increase prices, and ultimately force wealthy investors to conduct more business offshore (as many Saudi investors already do e.g. in Switzerland). As a result, the draft Regulations may ultimately operate to the detriment of both the UAE funds industry and of UAE institutional and retail investors. Whilst some initially thought that the Regulations would benefit local firms (who would increasingly act as local placement agents and would be sheltered from foreign competition), local institutions have their own concerns regarding the Regulations. Placement agents may be required to "insure" investors against non-investment losses (such as those resulting from fraud or operational errors by the manager), and may be unwilling to take that risk in return for a relatively small placement fee. Firms establishing their own domestic funds would be subject to stringent investment restrictions (investing more than 10% of invested funds outside the UAE would require SCA approval) and to equally stringent limitations on borrowing and leverage. Proposed requirements that fund management, fund administration and custody services should be performed by separate and unaffiliated entities may require firms to significantly change their business model and to give other banks "access" to their balance sheets. The SCA received a significant number of consultation responses, including an industry response prepared by Clifford Chance LLP and endorsed by 19 firms, as well as individual submissions from many firms and trade associations. The target date for implementation of the Regulations has been extended more than once (most recently to late June), and many fundamental aspects of the Regulations (including the potential creation of an exemption for funds marketed by DIFC firms) remain under discussion within the SCA.

Tim Plews Partner tim.plews@cliffordchance.com +971 56 683 3427 Max-Justus Rohrig Associate max-justus.rohrig@cliffordchance.com +971 4 362 0665 Jodi Griffiths Associate jodi.griffiths@cliffordchance.com +971 4 362 0687

Notwithstanding the fact that regulations requiring Central Bank approval for funds to be publicly marketed in the UAE have not been formally repealed and that the draft Regulations have not been finalised or implemented, the SCA has already begun to approve funds to be marketed in the UAE (and the Central Bank has stopped issuing new approvals). The precise allocation of responsibilities between the SCA and the Central Bank remains unclear, and the position is further confused by the fact that local placement agents and fund managers would, under the draft Regulations, need to be licensed and supervised by both regulators. Whilst the current position is far from satisfactory, it remains to be seen whether (and how) these concerns will be addressed. Unfortunately, the SCA have indicated that the next published draft of the Regulations is likely to be final, which operates to limit the scope for further consultation.

countrY profile - BraZil

BraZil todaY the economy Over the past fifteen years, Brazil has built a new development model underpinned by monetary stability, reversal in external weaknesses, fiscal responsibility and social inclusion. This effort has led the country into a cycle of economic growth and a new level in the international context, with growing interest in investments. Maintaining the economic capacity to provide increased business opportunities has been a priority for the country. In this regard, there is a permanent commitment not only to the consistency of the economic foundations and social justice, but also to the overall soundness of the institutions. Brazil has endeavored to ensure universal, stable and clear rules for the productive sector that ensure predictability and transparency for those who seek to invest in the country. Dilma Rousseff, the first female president in the history of the country was elected at the end of 2010 on a platform of continuity of the economic and social achievements of her predecessor Luiz Inácio Lula da Silva.

According to the International Monetary Fund (IMF), in 2010, Brazil was the world’s eighth largest economy in nominal terms and the seventh in purchasing power parity (PPP). By 2012, it could be the sixth largest in PPP terms. By far the largest economy in South America, in 2010, the Brazilian GDP experienced a 7.5% growth, the best performance since 1986. This is due to an accumulation of good practices over the past years, with effective public policies directed at strengthening the macroeconomic foundations of the economy. These are comprised of inflation targeting, a primary fiscal surplus, a floating exchange rate regime, expanding domestic demand, encouragement of investment and exports, increasing international reserves and attracting foreign direct investment (FDI). Data for March 2001 from the Central Bank shows that Brazil’s net public debt currently stands at 39.8% of GDP - well below the average for most of the developed countries affected by the international crisis - these figures have contributed to significantly reducing the risk profile of Brazilian government bonds. With a population of 192 million, Brazil has a large and fast growing consumer market. Since 2002, mostly as a result of social programmes implemented by the Brazilian Government, about 25 million Brazilians moved up to the middle level of the social pyramid. In 2010, despite of the international crisis, the middle class grew, reaching 103 million Brazilians, and will continue to expand in the coming years, with persistent decrease of lower classes. The average income of the Brazilian population has been increasing and since 2003 real average wage went up by 35%, while inequality in income distribution has been decreasing, reaching the mark of six percentage points since 2001. The stronger demand in the domestic consumer market has had a marked impact on the Brazilian economy. First, it was the

16 • GBM • July 2011

Brazil h larges as the world t econ omy. S ’s tenth major ome o export f th coffee , cars, s are aircraf e t, beef, s iron or e, corn hoes, steel, e d orang and te xtiles. e juice

vital force helping the country to avoid the worst effects of the 2008 economic crisis. Second, it has instigated investment in productivity: of the total imports in 2010, 46.2% were of raw material and intermediate goods, whereas only 22.6% were of consumer goods. This economic expansion trend is likely to continue, 2010 figures show that Brazilian industrial production reached its highest level since 1986. In 2010 the rise in industrial production was of 10.5%, in relation to 2009, when a retraction of 7.4% was noted caused mainly by the world economic crises. Brazil has been able to keep inflation under control, allowing it to rescale sovereign debt that had previously been contracted under difficult conditions and with extremely volatile interest rates. At the same time, since 2001, the trade balance surplus has allowed Brazil to build its international reserves reaching a level of US$328 billion in April 2011. The external market has also played an important role in Brazil’s development and its strong macroeconomic stability. In 2010, total trade reached US$383.6 billion, a 36.6% increase in relation to 2009, when it registered US$280.7 billion. Exports reached US$201.9 billion and imports peaked at US$181.6 billion. Compared to 2009, these numbers mean that exports have risen by 32%, and imports by 42.2%. Over the past years, Brazil has become an important supplier of agricultural products and commodities, as shown in the rankings below. In 2010, manufactured (40%) and semi manufactured (14%) products accounted for 54% with basic product accounting for 44% of total exports. Brazil attaches great importance to a successful conclusion of the Doha Development Round of the World Trade Organization (WTO). The country has made a huge effort during the negotiations to ensure a positive outcome for all WTO

Products Sugar

World

production

exports

Coffee

Orange juice

Ethanol

Bovine meat

Tobacco

Iron ore

Soybeans

Leather and fur

Poultry meat

Footwear

Soybean residue

Maize

Soybean oil

Airplanes

Pork meat

Cotton

Cars

Aluminium

Steel

members. At the regional level Brazil is working closely with its neighbours to create a peaceful and prosperous space in South America. Regional integration is a top priority of Brazil’s foreign policy reflecting the confidence shown by international markets in the region. With the economic outlook improving, Brazil’s immense market remains the largest recipient of FDI in Latin America and one of the top ten FDI destinations in the world. According to the recent FDI Global Outlook Report published by the FDiIntelligence, Brazil moved rapidly up the rankings of the leading FDI locations in the world in 2010. With 28% growth in greenfield FDI projects, Brazil was the seventh leading location for projects in 2010, up from 11th place in 2009. Capital investment into Brazil increased by 19.7% and job creation by 64.5%, making it the fourth biggest country in the world for greenfield investment and jobs. The country experienced very strong growth in inward investment in the renewable energy, electronics, chemicals and food and beverages sectors in particular and in 2010 the flow of FDI into the country reached US$48.4 billion. For the first three months of 2011, the FDI inflow reached

US$17.5 billion, an increase of 218% in comparison to the same period in 2010. With the incentives for long term financing, the private sector is expected to play a key role in long term investment initiatives. Brazil does not impose any restrictions on foreign capital repatriation and continues to be an attractive investment destination for both FDI and portfolio investment. In recent years Brazil has earned investment grade status, according to the evaluation of rating agencies such as Standard & Poor’s, Moody’s and Fitch. Many challenges remain for Brazil. One of the most important is to expand infrastructure in order to maintain its economic development. Introduced in January 2007, the Growth Acceleration Program (PAC) is a set of long-term public investments in economic and social infrastructure in the sectors of transportation, energy, water, sanitation, and housing. The programme also includes several measures to encourage economic development, such as stimulus to credit and financing, improvement in the investment environment, tax relief, and long-term fiscal measures. The second phase of the programme (PAC 2) launched in March 2010, plans to invest up to US$ 571 billion in the period 2011-2014 and US$ 376 billion after 2014. The plan is focused on the areas of logistics, energy and urban infrastructure, but extends priorities to social areas such as housing, health and public safety. The largest share was allotted to developing transportation and logistics, with a view to expanding and connecting Brazil’s highways, railways, waterways and airports, and also to secure and increase energy supply. The Brazilian Development Bank (BNDES) predicts that between 2010 and 2013, US$51 billion will be invested in electric power, US$37 billion in telecommunications, US$22 billion in sanitation, US$16 billion in railways, US$33 billion in roads and US$14 billion in ports. The capacity to innovate in science and technology has also enabled Brazil to lead the way in deep-sea oil exploration. In addition to exploring deposits in other parts of the world, the state-owned energy company Petrobras is now embarking on a new challenge closer to home: that of exploring potentially enormous underwater deposits in the ‘pre-salt’ layer beneath the seabed off the coast of southeast Brazil. This could double Brazil’s reserves and place it among the top five oil-producing nations in the world. The oil and gas sector alone is set to receive investment of around US$224

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

Embassy of Brazil 020 7399 9000 secom@brazil.org.uk www.brazil.org.uk

July 2011 • GBM • 17

countrY profile - BraZil

Joao Worcman Partner Director 55-21-2537-1211 55-21-2537-4876 joaoworcman@synapse.com.br www.synapse.com.br

Brazil’s economic growth drives media transformation Since the 1990’s Brazil has made a number of efforts in fronts such as fiscal sustainability and inflation control. It took a while for such efforts to pay off but the economic stability they brought led, slowly, to an increase of competitiveness and to an immense development and economic growth of the country’s internal consumer market. According to Fundação Getúlio Vargas, one of the main Brazilian academic institutions, from the beginning of 2003 to May 2011, 48.7 million people have emerged to classes A, B and C. From these, 39.5 million people alone (almost the entire Spanish population) emerged from class D to class C. The power of this internal market was exactly what allowed Brazil to be less affected by the 2008 crisis. In 2009, the country’s economy rapidly recovered culminating to a GDP growth of 7.5% in 2010. Such a growth was reflected in the majority of the sectors of the Brazilian economy but few were as positively affected as the media sector. According to study Project Inter-Meios, conducted by Meio e Mensagem Group in partnership with Pricewaterhouse Coopers, the overall investment in publicity in Brazil jumped 17.7% from 2009 to 2010, reaching US$ 22.46 billion. And, although new media such as the internet has been fragmenting ad spending, Free TV went to gain its largest share of overall advertising dollars since the study began in 1990�62,9% of share with a growth in ad revenues of 21.59% from 2009 to 2010. Still, according to the study, online ad spending grew by 27.96% and movie revenues by 12.97%. The pay TV sector, which has historically suffered with low adoption and penetration, has found in the economic stability and consumer market power the perfect environment to flourish. With greater buying power consumers from the lower social classes have discovered cable and satellite TV. Counting with several more subscribers, pay TV operators were able to reduce subscription costs. As a result, consumers who used to subscribe to low cost/ low quality pirate pay TV services operated by the organized crime are switching to legal pay TV operators. Therefore, according to a study conducted by telecom consulting firm Teleco, Brazil’s pay TV subscriber base grew from 7.47 million subscribers in December 2009 to 10.65 million subscribers on April 2011 (42.57% growth). The Brazilian independent audiovisual content production sector, fuelled by a well thought and developed policy of government incentives, has gained strength and is starting to take off as a consolidated industry. There are a number of incentive laws in place through which local firms or individuals may invest a percentage of the annual taxes they owe in the local production of genres ranging from feature films to animation series. And some of these incentive laws were specifically developed so that companies that deliver content to the end consumer (i.e. free TVs, pay TV channels, home video distributors) are enticed to co-produce with Brazilian independent production houses. Among projects that received incentives are the feature film Tropa de Elite 2, the largest Brazilian box office to date and animated series Fishtronaut, the most watched title in Discovery Kids Latin America, also licensed to Canada, Israel,

18 • GBM • July 2011

Middle East, Turkey and South Korea. Teleco informed that by the end of the first quarter of 2011 there were 14.5 million internet broadband connections in Brazil. New entrants such as NetMovies or more traditional companies such as local bookseller Saraiva have developed Video on Demand platforms and have been making efforts to exploit this potential market. NetFlix, the giant American On Demand rental movie company already stated its plan to operate in Brazil sometime between 2012 and 2013. On the live events arena, large telecom and internet firms such as Terra Networks and Google have been battling for Brazilian online rights to high level events like the Olympic Games (transmitted by Terra in 2008 and already secured for 2012), Football America’s Cup and even the World Cup. Subscription and ad revenues generated by these services are yet unknown and probably not high. But according to research firm ComScore there were, in May 2010, 73 million web users six years or older in Brazil. As more Brazilian users migrate to broadband in the following years this market, which is in an infant stage, will become very attractive. The economic cycle that Brazil is going through is leveraging our media sector and transforming the way Brazilians consume media. This trend is deemed to continue as the country will host the 2014 World Cup and the 2016 Olympic Games. Media executives seem not to have much to worry about in the coming years. They just have to keep competitive and to understand consumer needs as they will become more and more sophisticated.

Cristina de Andrade Salvador Partner Tel:55 11 5502 1275 cas@mnadv.com.br

Corporate social responsibility Corporate responsibility sets in as the result of the ongoing process of market globalisation worldwide. Its emergence does not have a chronologically defined history; what happens is a change in organisations’ attitudes towards social problems, triggered by a series of key socio-political events, and also those deriving from technological innovation. Social welfare has been a concept mostly associated with the role of the state in social life, as the principal agent ensuring the universality of rights, goods and services. In the 1980s, with rising unemployment and economic crisis, this model unveiled its inability to provide compensatory guarantees required to counteract the harm caused by the capitalist market. Over the decades and globalisation, the line between public and private realms has become increasingly difficult to draw. Corporations and companies start playing roles aimed at social responsibility, partly due to movements of demands for participation. It is possible to draw an evolutionary line of business competitiveness factors. Nowadays, we are located at the level of social responsibility. Corporate social responsibility is the ethical relationship in all of a company’s actions, policies and practices aimed at reaching sustainable development, conserving environmental resources for future generations, respecting diversity and promoting the reduction of social inequalities. Ethics in business takes place when decisions of a company’s interest also respect the rights, values and interests of those affected by them. From the outside, companies cooperate with schools, nurseries and municipal administrations. Inside, social responsibility can translate into the care displayed to employees. A socially responsible company respects their individual characteristics and their development aspirations. It fosters an environment in which credibility and trust are so critical that they become a means for business development. The welfare state has been gradually achieved through advances in Brazilian legislation and taxation towards inclusiveness and benefit diversity, as well as in labour aspects, curbing discriminatory dismissals. The Judiciary embraces several types of workers who need treatment and discusses the possibility of providing for their job tenure, whether under collective agreements or by operation of law bills, preventing arbitrary dismissals and litigation while avoiding damage to employees. Some benefits guaranteed by law to these people are based on access to all medical information, the possibility of withdrawing the federally managed severance pay fund (FGTS), PASEP and PIS social-contribution-tax-related amounts, and the licence for health care of workers who are disabled to perform their work or usual activities for more than 15 consecutive days. Disability retirement is also guaranteed if the person is no longer capable of working. Also, in some cases, the patient, the challenged or insureds over 60 are entitled to a monthly life annuity, if they are unable to earn their own living.

Milena Galbossera Delfim Trainee Tel: 55 11 5502 1287 mgd@mnadv.com.br F: 55 11 5505 5089 www.miguelneto.com.br

Another important benefit is the health or insurance plan, in which companies must commit to providing full services to the patient since the contract execution. In addition to the protection provided by the Labour Law, challenged people or people with illnesses are also entitled to tax benefits, and the first is the income tax exemption. There is also the possibility of federal value-added tax (IPI) exemption on adapted car purchases, in addition to exemption from tax on financial transactions (IOF), and in some cases, from the state value-added tax (ICMS). Regarding vehicle property tax (IPVA), applicable law in some states expressly provides for exemption for challenged people who acquire their car. Other benefits guaranteed by law for challenged people consist of supplying medications via the public unified health care system (SUS) and the right to an interstate free pass (which allows those with low income to travel across the country by bus, train or boat without paying for the ticket fare). Another important right to be highlighted refers to full home financing release. When the purchasing of one’s own house is financed by the housing finance system (SFH), along with the monthly instalments to repay the financing, an insurance policy is taken out to pay off the house in case of death and/or disability. Nowadays, companies increasingly adapt to these patterns of inclusiveness, and contribute to the Brazilian social progress. People with serious illnesses and/or physical disabilities, previously marginalised in the labour market, today rely on a legal framework designed to ensure their stability and independence, both financially and morally. Social responsibility goes well beyond a company’s image. This image certainly influences customers, related companies and the entire environment within which it is located. However, attention should be drawn to increasingly accessible communication tools that allow everyone to monitor the companies’ practices, to enable one to judge their actions as truly committed ones or just ‘marketing pitches’. There is no specific social responsibility model to be followed. Each company adopts and enforces policies that reflect what they have as values. There are, however, some guidelines for companies seeking to follow this path: adopt values and work with transparency; place significant value on their employees and co-workers; do more for the environment; engage partners and suppliers; protect customers and consumers; and, promote the community and commit to the common good. Improving the companies’ images and hence their credibility prompts them to conduct processes of inclusiveness, social and environmental responsibility. Fostering diversity and coexistence is everyone’s duty as citizens. Therefore, companies that pursue this policy should be taken as mirror models to society as a whole.

July 2011 • GBM • 19

countrY profile - BraZil

Wolfram Goebel Graduate Engineer in Architecture, Dipl.Ing.TUM (Technical University Munich) Rua Almirante Alexandrino 306, Santa Teresa CEP 20241-260, Rio de Janeiro RJ, Brazil 55 21 9252-0211 info@brasildesign.com www.brasildesign.com

Brasildesign - real estate and related services in Rio de Janeiro State, Brazil We offer fine real estate and services with intercultural competence related to real estate orientated undertakings in the state of Rio de Janeiro, Brazil.

Since 2001, we receive clients from all over the world and help them to realise their visions in Brazil. We focus on international clients, private persons or companies, looking forward to investing in Brazil. In terms of real estate, we offer, among others: beautiful villas, mansions and family homes in Rio de Janeiro, both historic and modern, in attractive neighbourhoods such as Santa Teresa, Laranjeiras, etc; land for house building projects, as ‘minha casa, minha vida’; and, industrial areas and office buildings for the implementation of companies. As owning a home or a business in a different country demands a wide range of considerations, with our network of specialists we provide knowledge and accompaniment in the decisionmaking process given the different mentalities and cultures. Whether it’s residence, language, feasibility of projects, regions, locations, business partners, type of real estate, architecture and modifications, restoration, national heritage, special materials, environmental restrictions or the graphical representation of a new project, we aim to develop integrated and impartial solutions for our customers. An important part of our philosophy is to contribute positively to the sustainable development of Rio de Janeiro State and Brazil, facilitating foreign investment in real estate, tourism and renewable resources, preservation of historic buildings and national heritage, as well as respectful treatment of environment and nature. We decided to incorporate these five major themes: International cooperation: Even in an ever more globalised world, communication between foreigners and locals as landlords, construction companies, administration and city officials tends to be rather complicated and needs intercultural competence. Investment: Every idea, vision or plan needs resources for realisation in the physical world. Real estate: Any vital investment needs a location, a place and a physical shell to operate.

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Design: A master plan is needed, in the sense of the essence or shape of an entity’s complete form, a science and art to integrate the most diverse requirements in effective ways. Architecture: Inspiration, thought, and knowledge give form to future structures. The potential energies of international society and foreign investors can be channelled for local action in the State of Rio de Janeiro, together with the preferable involvement of local workers and companies. The possibilities of the international exchange of ideas and knowledge should be used where these can best contribute to the common good and to guarantee a sustainable, socially and environmentally responsible development. Rio de Janeiro will be able to employ its enormous potential only if the integration of natural beauty, culture, trade and industry, including tourism, is be well managed. These themes are closely interrelated and must be considered in an overall context in order to achieve maximum benefit in a broad sense. We believe that Rio de Janeiro State offers excellent opportunities for development, not only overcoming its structural problems, but also to turn into an exemplary region with projection beyond its borders and the possibility of being a future model for other states in the long-term. your contact person is Mr Wolfram Goebel. Having graduated in architecture at the Technical University of Munich, Germany, since 2000 he’s living for the most part of the year in Brazil. He is fluent in English, German and Portuguese, both spoken and written, however, you’re welcome to get in touch in French or Spanish as well.

Aoki Advogados Associados Erica Aoki Founding Partner Tel: 55-11-21224020 Fax (Optional) erica.aoki@aoki.adv.br www.aoki.adv.br

The Brazilian Laws and the Economy Growth After several decades of political uncertainty and high inflation levels, Brazil is experiencing a period of accelerated economic growth and increased prestige and confidence from the international community after being capable of sustaining the stability in its economy and policies even after almost a decade of a leftist’s government in power. The Brazilian economy is now considered to be the seventh largest in the world with the highest GDP of Latin America. Brazil will gain more visibility and international exposure with the chance to host the next Football World Cup in 2014 and the Olympic Games in 2016, which will also bring new investments in infrastructure and services. It is expected that the World cup will raise almost R$ 105 billion in investment projects and the hosting cities will develop necessary infrastructure and logistics to host tourists, thus generating new jobs, modernising transportation systems and other related projects not only in the big cities but also across the country. It is expected that another R$ 30 billion in investments will be generated from the Olympic Games, just two years after the World Cup. All the changes in the economy were followed by an introduction of new sets of laws and gradual changes in the judicial system. All these measures started in the mid-nineties aiming at stabilising the Brazilian economy, with the implementation of the ‘Real Plan’, implemented by then Minister of Finance, Fernando Henrique Cardoso. With all the changes in the economic scenario, the international financial community is renewing its interest in the country and the increased global need for commodities has positioned Brazil to gain a more influential position in the world. Now the largest country in Latin America, with huge natural resources, Brazil boasts a stable economy, consistent and consolidated politics based on democracy, a relatively modern infrastructure, the increase of a consumer market by the ascension of the lower classes that was possible after the Real Plan, is taking Brazil into the next decade as the

regional economic superpower. The growth of a new middle class and its expansion of purchase power, is proving the power of a new consumer market, making Brazil very attractive for investors. With all the changes in the economic and political arenas, Brazil has implemented new laws to regulate new demands and to guarantee that it is complying with international standards in some fields. The Consumer Protection Code (Law nº 8.078, of September 11, 1990), Software Protection Law (Law no. 9.609, of February 19, 1998), Copyright Law (Law no. 9610, of February 19, 1998), Industrial Property Code (Law no 9.279, of May 14, 1996), Anti Trust Laws (Law no. 8.884 of June 11, 1994) and many other laws, including a big reform in the Civil Code (Law nº 10.406, of January 10, 2002) was implemented in recent years. However, the flourishing economy and the implementation of modern laws still is not enough to heal all the social issues that are still very present in the Brazilian social system. The government’s poor historical habits are very present in constant scandals of bribes and illegal use of public money. Also, the Brazilian labour, tax and monetary system do not reflect all the modernisation and are points that new investors needs to consider before investing in Brazil. Brazilian labour cost is very high and historical tendencies of the Labour Courts in making decisions always favour the employee, which is a sign that some characteristic of a third world country with a tendentious judiciary system is left. Also, the complex taxation system and a tentative legal reform in the tax laws that started in 1995 to give continuity of a tax reform planned in 1992 is not even close to be implemented. The tax reform should be one of the next steps to guarantee the economic growth that Brazil is experiencing and it is very important to reflect the actual necessity of the country. For example, to regulate the deductibility of royalties and payment of technical assistance, Brazil is using Law no. 3470 of November 28, 1958 which is not reflective of the modern Brazilian spirit. Likewise, the several legal restrictions for the remittances of hard currencies abroad. The capital control laws, that regulate the foreign capital in Brazil, Law no. 4131 of September 3, 1962 is still in place. Although this law can be interpreted to refrain some of the investments in to Brazil, the opposite view is the existence of this law in fact, avoided and have minimized the effects of the worldwide economic crisis in Brazil. To guarantee the social stability, Brazil has already taken measures to guarantee a more transparent and fair judicial system. By punishing corrupt judges, the judiciary system implemented a regulatory body, the Conselho Nacional da Justiça (CNJ) to control the quality and capacity of judges and registrars.

July 2011 • GBM • 21

Business facts

interesting business… The world of business is full of fascinating and interesting facts that many do not know about. We consistently see, hear, interact, use and buy many brands from across the world including Microsoft, Google, McDonalds and many more, yet there are some interesting facts about many businesses that we don’t know about.

22 • GBM • July 2011

Here are some facts that about the business world that will really astonish you:

If all the gold in the world was divided up every one would receive 3grams.

The first owner of the Marlboro Company died of lung cancer.

90% of all restaurants fail during their first year of operation.

Al Capone's business card said he was a used furniture dealer.

Apple's cash pile is now $65.8 billion, which means it still can't afford Facebook!

The founder of McDonald's has a Bachelor degree in Hamburgerology.

India has displaced US as the secondmost favoured destination for foreign direct investment (FDI) in the world after China according to an AT Kearney’s FDI Confidence Index

There is no tipping at restaurants in Japan. The most productive day of the workweek is Tuesday.

A company in Taiwan makes dinnerware out of wheat, so you can eat your plate.

The average company saves over $7,000 for each employee suggestion that is enacted!

The original name of Bank of America was Bank of Italy.

Nearly 22,000 checks will be deducted from the wrong account over the next hour.

Harrods have three private wells to supply their water!

The first product that Sony came out with was the rice cooker.

Visa actually stands Visa International Service Association.

Clans of long ago that wanted to get rid of their unwanted people without killing them used to burn their houses down - hence the expression "to get fired."

In 1987, American Airlines decided to omit one olive from each salad course in the first class. As a result, they made a savings of $40,000.

Foun der John of the S pers D. Roc tandard o k whe n ever t efeller w Oil Com n o pan as h be e He i s co achiev come a the ﬁrst y, ed t n billio he eve sidere n adju r and h d the ric feat in 1 aire is pe sted 916. hest rs to USD A 192 be som onal we merican alth billio ewh is e n to USD re betw e 323 e billio n n.

Employees of “Google” encouraged are to use 20% time workin of their g on their o wn projects Google New . s, Orkut are examples o both f projects th at grew fro this workin m g model.

If t h the e ent i w the orld re pop n6 is t ula a t hal p f of eople ken a ion of the wo s 10 0, tota uld l w hold eal th.

y pan m co 00 age $7,0 e r e av ver loye The ves o emp at is sa ach n th e for gestio ted! u s g enac

July 2011 • GBM • 23

ship and aircraft registration

ship & aircraft registration Ship and Aircraft registration is about providing expert advice and a comprehensive range of services to ship owners, brokers, operators, financiers, yards, P&I clubs, financial institutions and international ship registries in the shipping industry.

Areas of expertise within the field of maritime and aircraft matters include refinancing, all aspects of ship registration of new buildings or change of ownership of yachts, passenger vessels and tankers at the British Ship Registry, International Registries and flags of convenience. Dealing with the registries of the major flags of the world, completing the notarial certification of bills of sale, ship mortgages and registration forms. Advising ship owners at all stages of sale and purchase, liaising with ship registries and brokers as required. Acting for financial institutions with regard to construction and acquisition finance. The area of ship and aircraft registration also includes giving advice on charters, P&I Clubs, bills of lading, other carriage contracts and related disputes, cargo issues and ship building and repair contracts. Aircraft owners are drawn to make use of these services as they desire reduced bureaucracy and costs combined with a high degree of efficiency. The global ship and aircraft industry contributes hundreds of billions of dollars to the world economy. Research forecasts that 10,000 business planes valued at $260 billion should be shipped until 2020, with another 14,000 worth $366 billion delivered over the following decade. 2011 has also seen a continued high level of activity in terms of ship registry transactions (re-mortgaging, de-registrations, registrations, name changes, and registry transfers). This reflects a continuing level of shipping business through the local maritime sector by 15%.

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jersey The importance of seeking specialist advice when considering the purchase of a super yacht The number of yachts being built in excess of 50 metres has increased dramatically over the past ten years, and, although the industry has been hit hard since the economic downfall in 2009, the top end of the market still appears to be doing well, although the production and sale of yachts under 40m have suffered substantially. The boom years in the yacht-building industry between 2000 and 2008 meant that many yacht owners purchased their yachts without seeking expert advice, particularly in relation to incurring VAT liabilities. As a result, many of these yachts have been operating outside of EU VAT regulations and have consequently attracted the attention of EU customs officials, which in turn has meant that the EU and its member states have been reviewing their VAT legislation pertaining to both private and commercial charter yachts operating in EU waters. Many of these yacht owners have suffered fines and penalties, and, in some cases, have seen their yachts being detained by customs pending the payment of VAT. With VAT rates varying between 15% and 25%, a 50m yacht costing €60m would incur a VAT liability of approximately €12m. Therefore, when considering entering into a build contract or sale agreement, expert advice is required to ensure that the purchaser's requirements relating to his use and enjoyment of the yacht are accommodated at the same time as tax and other liabilities are mitigated as far as possible. Giving proper consideration to these factors, as well as to the specification of the yacht itself, will dictate what type of ownership vehicle is required, where the ownership vehicle should be established, the type and jurisdiction of flag, crewing requirements, ongoing operational requirements and the costs involved, which, as a rule, amount to between 7% and 10% of the yacht’s value. When does a VAT liability arise? Generally speaking, if a purchaser is

resident in the EU and intends using his yacht in EU waters, a VAT liability will arise upon the yacht entering EU waters. The VAT amount payable will usually be based on the purchase price or market value of the yacht. If a purchaser is resident outside of the EU, and does not wish to charter the yacht to third parties, no VAT liability will usually arise upon entry into the EU. Such a yacht may enter EU waters under Customs’ regulations known as ‘temporary importation’, which permit entry into EU waters for periods of up to 18 months. There are various methods of mitigating VAT on the purchase or importation of a yacht including: the set up of a commercial charter business; certain leasing structures whereby VAT is apportioned only on the deemed use of the yacht in EU waters; importation via a low-VAT jurisdiction; and, for older yachts, paying VAT on a lower than market valuation. Unfortunately, due to the different interpretation by member states of EU VAT legislation, as well as differences in domestic VAT legislation, no ‘ideal’ structure exists that is totally without risk of attack. Even when VAT has been paid on a yacht, customs have still been known to challenge its VAT-paid status on the grounds of the jurisdiction of the owning entity, its flag or even its past movements. These attacks may not be successful, but they can cause huge disruption to the yacht’s schedule and result in substantial legal and other fees as well as lost charter income.

the yacht and administer its charters. Commercially flagged yachts have onerous obligations with regard to safety and operational matters and attract attention from EU port and Customs authorities, mostly relating to the purchase of duty free fuel and VAT exempt goods and services. Customs and port authorities will be vigilant in ensuring that commercially flagged yachts are operating in accordance with domestic legislation relating to charters, which in some jurisdictions may require the submission of cruising plans or the obtaining of a licence. The management of private yachts is less onerous and does not require the appointment of an international safety manager, a charter broker or VAT agent; the flag-state requirements for private yachts are also less demanding and therefore less costly. In conclusion, in view of the many complexities involved in purchasing, flagging and operating yachts, particularly in the EU, it is imperative that specialist marine advice is sought at the outset. For further information relating to the VAT-efficient ownership and management of yachts, please contact the author, Janette Gabrielsson, who specialises in marine services.

Yacht management The management of commercially flagged yachts chartering in the EU requires the owning entity to be registered for VAT; this is irrespective of the residence of the beneficial owner. If the yacht is over 500 gross tons, a dedicated international safety manager must be appointed and it is usual for a charter broker to be appointed to market Bedell Trust Company Limited 26 New Street,St Helier Jersey, C I, JE2 3RA DD: +44 (0)1534 814634 janette.gabrielsson@bedellgroup.com www.bedellgroup.com

July 2011 • GBM • 25

ship and aircraft registration

INDIA EFS Consultants (India) Pvt. Ltd. (EFS) is a Mumbai based management consultancy focusing on forming Indian Companies for clients from all over the world and providing a range of corporate services supporting Buy-ins or the newly established companies.

EFS makes the process of setting up a business anywhere in India easy and smooth. Our Consultants speak English, Hindi, German, Chinese and Spanish and have assisted in over one thousand company formations, Merger and Acquisitions (M&A) and expansion objectives. Our legal staff can provide you with standard company setups, tailor made companies with customised memorandum and articles of association, securitised Joint Ventures (JV) and assist in finding and ensuring beneficial Buyouts. Our administration and accounting staff will ensure a seamless path to receiving any kind of licenses and permits, as well as assisting in setting up a well-functioning company infrastructure. EFS is a part of a Group of companies with offices and associated companies across the globe. EFS also maintains a UK trading arm and administrative office situated in the City of London at 150 -152 Fenchurch Street. Other offices are in Shanghai and Zurich. Our Mission The corner stone of the EFS Group's success spanning over a decade of loyal services is to provide our clients with a complete quality corporate service both on a local and on an international basis, while committing ourselves to building and preserving a close, lasting, mutually beneficial relationship based on personal service, diligence and absolute confidentiality. Our Team Our team of consultants and administrators are professionals such as Business Administrators, Financiers, Lawyers, Paralegals, and Accountants. We are experienced, professional and multi-lingual and place a significant emphasis on continual personal and professional cross border development in order to ensure to meet our clients expectations each and every time. Our friendly administration staffs are are well trained and able to assist our clients with even the most complicated request.

26 â&#x20AC;˘ GBM â&#x20AC;˘ July 2011

Our Approach We will find you a solution! We strongly believe in building up a strong and professional relationship with our clients, all geared up to knowing what is expected from us and meeting those expectations. We are committed to assisting our clients in their international expansion aspirations whilst respecting the discretion and confidentiality sought by them to protect their assets and interests. We provide individual attention and commitment on a senior level where requested or required. Our clients are always personally known to us and never treated as a number. We take great pride in our reputation for acting with the upmost of discretion and diligence. EFS Consultants Services At EFS Consultants (India) Pvt. Ltd., our services are rendered to help Indian entrepreneurs to explore offshore markets and earn profits involving them in the Global Investment project. We also help the offshore companies to tap the huge potential that India offers to foreign investors. With our group member companies and our network of agents worldwide we are well equipped to structure solutions ensuring asset protection, tax reduction, double taxation avoidance, cost savings and maximizing profits in the long term. We act as arbitrators in cases of intellectual property disputes and real estate matters. Our experienced and qualified team of lawyers is capable of providing the best legal expertise to our clients. There are many jurisdictions that may be of interest and be beneficial for Indian entrepreneurs. However, we offer company incorporation services almost in any country worldwide. So for any jurisdiction you are looking for ,you can contact us and we will respond to you with details of how we can incorporate your business in the countries or regions that meet all your needs. Our major focus is on selling shelf companies to our clients avoiding much time and inconvenience that may cause. We have introduced automation and efficiency measures to ensure that our

services are most cost effective. We offer a comprehensive corporate and family office management for international holding structure through our global affiliation and partner network. We create and manage holding company and subsidiary company structures worldwide.

business legal entity to suit your individual or business circumstances. Over a last decade we have helped thousands of clients to achieve effective, safe, confidential and affordable corporate structuring, tax planning and asset protection guiding them every step of the way

Overseas Services

EFS in India

Going Overseas nowadays is the most popular way of starting or managing business. Overseas companies not only offer tax exemption what made them popular but also more important is the freedom of operations .Overseas company incorporation is the best way to protect your personal and financial privacy and your future wellbeing. If you wish to involve in the global investment project or to start your international business, going Overseas is the best decision for you. Placing your assets Overseas you can protect yourself from illegitimate creditors. Whether you want to incorporate Overseas or you are looking for Overseas company formation forming a Limited liability company you can avail our Overseas company formation and online Overseas incorporation services.

EFS Consultants is a way to company incorporation in India. The rapid growth in economic sector has given space to worldwide entrepreneurs to choose India for setting up their business.

Each year an increasing number of investors around the world are attracted by international financial centres to establish their business in the form of an Overseas company or an Overseas trust. Our consultancy has been establishing to provide practical guidance and qualified assistance in starting and running a business within United Kingdom and other jurisdictions. We provide advice on the most appropriate

India is flanked by the borders of Pakistan, Myanmar, China, Nepal, Bangladesh, and Bhutan. Hindi is the national language of India but English is commonly used for official purpose. 325 languages are spoken in this vast country, out of them 17 are official. New Delhi is the capital of India and the financial capital is Mumbai.

India is the world’s largest democracy and second most populous country. It has emerged in to a major power after centuries of foreign rule. It is a country located in South Asia and is a republic consisting of 31 states and seven union territories with parliamentary system of democracy and is also a member of United Nations. Its economy is the world’s 12th largest economy at market exchange rates and the 4th largest in purchasing power. It is the 7th largest country in the world and second largest in Asia with the mass of 3.29 million sq km.

The world is focusing on India as it is a land of lucrative business opportunities due to boom in business sector. Thanks to the favourable financial policies of Indian government, a large pool of trained software professionals and skilled talent is a unique advantage for the companies which invest in India. Success in the foreign land requires, land holding to start-up a new business in the shortest possible time period at reasonable cost. A new spirit of economic freedom is stirring in India. India is firmly into the front rank of rapidly growing Asian Pacific Region. India’s time tested institution offers foreign investors a transparent environment for safety and a good return on their long term investments. It has a judiciary which can and does overrule the government, a sophisticated legal and accounting system and a user friendly intellectual infrastructure including a large pool of scientific personnel and the trained manpower. Most evident in the widespread use of English as the principal language of commerce, Administration and higher education, India’s dynamic and highly competitive private sector has long been the backbone of its economic activity.

Julie Rosenthal Director Tel: +44 (0) 7501 259 578 Fax: +44 (0) 8704 865 532 j.rosenthal@e-f-s.net www.efs-consultants.com

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ship and aircraft registration

GUERNSEY (Channel Islands), GREAT BRITAIN Guernsey is just one of the 12 British territories that constitute the Red Ensign Group, in addition to the UK, and operates a Category 2 shipping register. Although this means that the Register is limited in terms of the maximum size of vessel that can be registered (150 gross tonnage), it has a well-established and enviable reputation for providing a personal and friendly service, as well as seeking to avoid potential delays by ensuring that applicants’ vessels are well matched to the Register. This means obtaining a clear idea of requirements prior to starting the registration process. Where a vessel will exceed the Register’s limitations, the Registry will always try to assist an applicant in identifying another suitable register either from within the Red Ensign Group or beyond. Josh Paine, the assistant registrar at Guernsey, has over ten years experience in this field and tries to anticipate problems by ensuring that applicants, or their agents, are provided with all the information they Registry of British Ships, Guernsey Joshua Paine Assistant registrar of British Ships Tel: +44 (0) 1481 705822 +44 (0) 1481 720229

require: “When an initial approach is made to the Registry, it sometimes becomes evident that applicants are trying out the registration process for themselves for the first time, rather than using an intermediary. The level of assistance, advice and personal service we provide has often remarked upon as both unexpected and refreshing by vessel owners. We try to ensure that the registration process causes as little inconvenience as possible whilst achieving the desired outcome of a globally recognised vessel registration. “Sometimes owners or their agents have not dealt with a British Registry before and we like to ensure their first taste of the Red Ensign will encourage them to use other members of the Red Ensign Group for the registration of larger vessels. Being one of the restricted registers does not limit our approach to quality of service. Traditional values of trust and respect are important to us, as is a high quality of service delivery.

“While there has been a trend for upsizing by vessel owners in recent years, I suspect that smaller, more efficient vessels with greater flexibility may receive more favour in the future, particularly with the ongoing global rise in fuel costs. Owners are very discerning and will also want the best service from their chosen flag administration.”

Fax: +44 (0) 1481 705824 +44 (0) 1481 714177 shipsregistry@gov.gg www.shipsregistry.gov.gg or via www.redensigngroup.org

SEYCHELLES ABC International Services (Seychelles) Limited (ABCISL) has been licenced in the Seychelles and is an international corporate service provider since 2006. ABCISL is a member of ABC Group of Companies from Mauritius. ABCISL is dedicated to

providing a platform for our clients to achieve their financial and business objectives while guarding their assets and legitimate confidentiality.

of companies.

ABCISL not only provides company formation, trusts across various jurisdictions but we also provide management and administration services. This is why the relationship between our team and all our clients goes beyond the formation and registration

• Formation and maintenance of Seychelles companies

As a corporate service provider in the Seychelles, we offer the following services:

• Domiciliation and registered office facilities • Professional directors, nominee services and company secretarial services • Accounting and bookkeeping services • Corporate banking and finance • Advice and supporting services relating to international business transactions • Ship and Yacht registration • Foundation (coming soon)

ABC International Services (Seychelles) Limited 1st Floor, Dekk House Zippora Street, Providence Mahe, Seychelles Tel: + 248 374 088

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Fax: + 248 374 188 www.abcmanagementservices.com v.sowumber@abcmanagementservices.sc

MALTA Malta: A premier European jurisdiction With a rich maritime tradition, excellent natural harbours and famous for being a meeting point of diverse cultures, it is no wonder that Malta is internationally regarded as a premier maritime hub. The Maltese shipping flag is today the second largest in Europe and the seventh in the world by tonnage registered. Established in 1891, Fenech & Fenech Advocates is the oldest and one of the leading law firms in Malta providing valuedriven, tailored legal services across all practice areas. The firm is acknowledged as having one of the foremost shipping practices on the island, including a dedicated maritime litigation team led by managing partner Ann Fenech. Since Malta moved away from being an offshore jurisdiction to an onshore one that has been a member of the European Union since 2004, the ship registration department of the firm experienced continued exponential growth. Today, Fenech & Fenech Marine Services Ltd, a subsidiary of the firm, boasts a wide portfolio of ship sale and purchase, ship finance and ship registration clients, including some of the leading cargo lines, passenger lines and finance parties in the world.

to offer expert, streamlined and efficient advice, enabling timely registrations irrespective of where deals may be closing. Access to the administrators and decision-makers at the Ships Registry within Transport Malta is a key factor to minimising delays and providing on-thespot solutions required by the international ship-owner on a day-to-day basis. Malta is also seeking to emulate its success in ship registration and attract aircraft registrations. The government has in fact recently revamped the legal regime for the registration of aircraft and ratified the Cape Town Convention. The firm has a strong aviation practice advising national airlines, manufacturers, owners, managers, lessors, lessees, financers and aircraft MRO (maintenance, repair and overhaul) facilities. Experience spans structured sale/leaseback transactions, financial leases, sale and purchase deals, management operations and aircraft registrations giving the firm’s aviation

department a thorough knowledge of the aviation business. Drawing on the multi disciplinary expertise of the firm, the commercial, corporate, tax and security concerns of international lending syndicates, lessors and owners attracted to Malta’s offering are addressed through seamless legal solutions. Having a largely international practice, Fenech & Fenech Advocates is rooted in tradition but committed to innovation and is a recognised leader in a number of other areas including marine litigation, tax, financial services, ICT (information and communications technology), banking and asset finance. The firm’s services are complemented and supported by its corporate services companies providing company formation and administration services, back-office and corporate administration, trustee services and management consultancy, among others.

Our long-standing experience and excellent working relationship with key personnel at the various regulatory bodies allow us

MALTA Malta - why relocate your aviation business? Aviation legislation in Malta builds on the success achieved by Malta in the shipping industry. Malta has launched the National Aircraft Register and recently introduced various legislative measures that render aviation in Malta highly attractive and promise to replicate the success achieved in the shipping sector. A number of airlines and aircraft owners have relocated to Malta over the past years and Malta’s new aviation legislation is expected to encourage the rapid growth of this sector in Malta. Malta’s attractive tax system is based on a full imputation system whereby tax paid by a company is fully imputed to the shareholder. Furthermore, shareholders of Malta companies are entitled to claim certain refunds of tax suffered at company level. The full imputation system, the refund system and the absence of withholding taxes on outbound dividends render Malta a highly attractive tax jurisdiction. In the aviation industry, the above is complemented by a number of other benefits such as exemptions from VAT on certain aviation and aircraft activities,

capital allowances on aircraft airframe, engine or aircraft overhaul, the absence of withholding tax on lease payments in certain instances, investment tax credits and various incentives to crew members. Apart from tax benefits, Malta also provides the aviation industry with benefits such as flexibility, wide registration criteria also allowing the registration of aircraft under construction, possibility of joint and fractional ownership, transparency as to rights and interests in aircraft as well as effective security and enforcement of financiers’ interests through the Cape Town Convention. Other benefits include exemptions from airline licences and air operator’s certificates in certain instances, among others. Finally, Malta enjoys a first class regulatory regime in terms of air safety and

airworthiness and a Category 1 rating from the US FAA. FJV Aviation Ltd was set up by Francis J Vassallo (ex governor of the Central Bank of Malta) and by Frans Camilleri (a leading aviation expert in Malta). FJV Aviation Ltd forms part of the Francis J Vassallo & Associates Group, which consists of six companies located in Malta and Luxembourg. The Group’s specialisation is primarily in the provision of tax and advisory services, corporate and management services, among others. The success of the Francis J Vassallo & Associates Group results from its team of highly qualified professionals who are committed to ensuring that all aspects of their clients’ business requirements are managed with high levels of integrity, competence and diligence.

Mr Frans Camilleri frans.camilleri@fjvaviation.com Dr Mariella Baldacchino mariella@fjvassallo.com www.fjvaviation.com +356 2299 3100

July 2011 • GBM • 29

ship and aircraft registration

BARBADOS Barbados has established a legal and regulatory regime that may yet allow it to become one of the preeminent jurisdictions for aircraft and ship registration. The focus has been and continues to be the development of a framework that encourages commercial operations related to aircraft and ship registration, including financing, leasing and the conduct of international transport operations. This framework is within the context of the international legal obligations, which generally attend such commercial activities, and Barbados is a party to the principal international legal arrangements and treaties that regulate and affect the conduct of commercial operations.

maintains tax treaty arrangements with the established principal capital jurisdictions as well as with several territories in the other geographic regions, including territories within the regions of Europe, Africa and the Americas.

In addition to specific international air and sea law international treaties, the attractiveness of Barbados as a domicile for these commercial operations is enhanced by the strong international tax and bilateral investment treaty network. Barbados

In addition to the international tax benefits, the domestic tax framework also provides fiscal advantages for commercial operations related to aircraft and ship registration. There is no capital gains tax in Barbados, and further the Income Tax Act provides relief in respect of the income earned from

The significance of these several tax treaty arrangements is that they preserve the sole taxing jurisdiction to Barbados where there are profits derived from the operation of ships and aircraft in international traffic, including profits that a commercial enterprise may derive from its participation in a pool, a joint business or in an international operating agency.

Chancery Chambers Andrew Ferreira Attorney at Law +1 246 431 0070 +1 246 431 0076

chancery@chancerychambers.com www.chancerychambers.org

the operation of ships or aircraft owned, chartered or operated by a non-resident that either grants exemption relief where the territory of residence of that person grants similar relief, or limits the direct tax to 5% of amount payable from operations within Barbados. Further, and with specific reference to financing and leasing operations in respect of aircraft and ships registered in Barbados, note should be taken of the developments in the corporate law context that permit for the segregation of assets and liabilities, either by way of companies with separate account or through segregated cell companies. There are consistent efforts to maintain and develop the legal and regulatory framework for enhancing Barbados as a jurisdiction that is continues to be attractive for aircraft and ship registration and the related commercial operations. The government of Barbados has recently commissioned an exercise to deal specifically with updating the Shipping Corporations Act (which includes fiscal and currency control benefits for entities incorporated under that regime). Further there is a continued emphasis on expanding the range of bilateral and multilateral treaties necessary to ensure the stability of Barbados as a reputable jurisdiction.

The Leader in Canadian Aviation Law and Aircraft Financing.

For sophisticated legal advice in the aviation and aerospace industry, sign on with Blakes. For information, please contact the Co-chairs of our Aviation & Aerospace Group: Donald Gray t: 416-863-2750 donald.gray@blakes.com

MONTRÉAL

OTTAWA

30 • GBM Office • July *Associated

2011

TORONTO

CALGARY

Nathan Cheifetz t: 416-863-2969 nathan.cheifetz@blakes.com

VANCOUVER

NEW YORK

CHICAGO

LONDON

BAHRAIN

AL-KHOBAR*

BEIJING

SHANGHAI*

blakes.com

Blake, Cassels & Graydon LLP

ELVINGER, HOSS & PRUSSEN LUXEMBOURG LAWYERS

Quality Innovation Independence

Corporate and Tax Banking, Insurance and Finance Commercial, Employment, Litigation and Arbitration Investment Funds and Asset Management Administrative, Property and Construction Law Insolvency Law and Restructuring

Elvinger, Hoss & Prussen 2, Place Winston Churchill BP 425 L-2014 Luxembourg

www.ehp.lu

countrY profile - canada

Country Proﬁle canada When you ask people about Canada, generally you get the same response. A beautiful country with friendly people. However in the business world most people miss the trick. The country offers more than just a friendly customer experience delivered with a smile. Canada boasts the 2nd largest country in the world, the 9th largest economy, a member of the G8 countries, abundant natural resources, and have made important contributions to the corporate and business world. Canada has one of the uppermost levels of economic freedom in the world. Nowadays Canada closely resembles the U.S. in its market-oriented economic system, and pattern of production. As of December 2010, Canada's national unemployment rate stood at 7.6% as the economy continues its recovery from the effects of the 20072010 global financial crisis. In May 2010, provincial unemployment rates varied

from a low of 5.0% in Saskatchewan to a high of 13.8% in Newfoundland and Labrador. According to the Forbes Global 2000 list of the world's largest companies in 2008, Canada had 69 companies in the list, ranking 5th next to France. As of 2008, Canada’s total government debt burden is the lowest in the G8. International trade makes up a large part of the Canadian economy, particularly of its natural resources. In 2009, agricultural, energy, forestry and mining exports accounted for about 58% of Canada's total exports. Machinery, equipment, automotive products and other manufactures accounted for a further 38% of exports in 2009. In 2009, exports accounted for approximately 30% of Canada's GDP. The United States is by far its largest trading partner, accounting for about 73% of exports and 63% of imports as of 2009. Canada's combined exports and imports ranked 8th among all nations in 2006.

An unu su is whe al fact abou t re its n ame o Canada from. r ig It in Lawre comes from ates nce Iro a St. kanata q , which uoian word, means or sett lemen village t.

Canada has considerable natural resources spread across its varied regions. As an example, in British Columbia the forestry industry is of great importance, while the oil and gas industry is important in Alberta, Saskatchewan and Newfoundland and Labrador. Northern Ontario is home to a wide array of mines, while the fishing industry has long been central to the character of the Atlantic Provinces, though it has recently been in steep decline. Canada has mineral resources of coal, copper, iron ore, and gold. Canada attracts many investors, because it boasts multiple advantages and unparalleled potential, it is a nation where businesses can achieve excellence on a global scale.

Actions Speak Louder Than Words After 50 years of operation, Xstrata Copper Canada’s

residents, hiring local contractors for the reclamation work,

mining and metallurgical facilities in Murdochville, Québec,

and helping the town transition to a new economic life.

were officially closed and rehabilitated as of 2010.

Our aim was to leave a positive, lasting legacy.

The event marked the completion of one of the largest reclamation programs in Canada. To the end, we maintained

At Xstrata Copper we take pride in our reputation for strong

our commitment to the community – consulting with

and respectful community relations.

www.xstratacopper.com

32 • GBM • July 2011

countrY profile - canada - legal services

Innovation and intellectual property in Canada Despite political recognition of the importance of innovation, individual businesses or institutions often underrate the value and utility of intellectual property. In a keynote address to the Conference Board of Canada in May 2008, the Ontario Minister of Research and Innovation commented: “[In] all high wage, high value dollar jurisdictions, it is innovation that drives prosperity. We are never going to be able to have an economic plan based on the fact that we are going to be cheaper than somebody else, that we are going to copy somebody else’s technology. We are a jurisdiction that has to be committed to being at the forefront of innovation and the ability to take new ideas and bring them to the market.” Furthermore, innovation was credited by a federally appointed Competition Review Panel as likely being the “difference between success and failure in the global marketplace”. Nonetheless, as pointed out by the Canadian Intellectual Property Council in its report A Time for Change: “The scale of Canada’s innovative economy is often underappreciated. One subset of this sector alone, the creative industry, is three times larger than Canada’s agricultural sector, comprising 7.4% of GDP and employing more than one million people.” A recent example of the value of intellectual property was shown in the well-publicised lawsuit between i4i Limited Partnership and Microsoft Corporation. In that patent infringement case, i4i, a Toronto software business, successfully won almost $300 million against Microsoft. The spectrum of intellectual property assets appropriate for any given business or institution will depend not only upon the business plan but also upon the nature of the innovation, the legislative and legal framework in each jurisdiction and the administration of public offices responsible for registration of some of those intellectual property rights. For example, a copyright registration and certificate can currently be obtained from the Canadian Copyright Office in less than a week; an industrial design could be registered within six to seven months; but a patent application may require between 18 and 33 months for a substantive response (depending upon the field of technology). In response to the patent application timelines, the Canadian Intellectual Property Office (CIPO) has recently made efforts to establish worksharing agreements with other nations by way of bilateral treaties to implement what is termed as the ‘patent prosecution highway’ (PPH). The PPH allows an applicant for a patent, whose claim is determined to be allowable by the first Intellectual Property Office they file it with, to file the corresponding patent application in another Intellectual Property Office and

have it prioritised for examination there. As an illustration, in the CIPO Annual Report 2009-2010, it was reported that: “As a result of efforts undertaken under this agreement [the PPH pilot agreement with the United States Patent and Trademark Office], the organization [CIPO] is able to do in three months what might have taken between 18 and 33 months for applications that did not make use of the PPH.” Canada currently has PPH agreements with the US, Japan, the Republic of Korea and Denmark, but is continuing to work toward PPH agreements with the intellectual property offices of other nations. Of course, the major benefit of intellectual property assets is that the owner/creator defines the monopoly claimed. As such, the enforcement of that right and the speed with which that right can be enforced is also important. In Canada, the Federal Court deals with the vast majority of intellectual property disputes. The Federal Court has made significant improvements in the speed with which it can resolve intellectual property disputes. The number of patent and trademark cases pending, or in the queue for a hearing, has been reduced by the Federal Court by 30% and 25% respectively over the past ten years, despite the number of new proceedings commenced not changing significantly over that period. As a result, the Federal Court has been able to state that intellectual property disputes should proceed to trial within two years from the commencement of the proceeding and that they are willing, at the outset of case managed proceedings, to set down a trial date to determine the dispute.

Dimock Stratton Michael D Crinson Partner Tel: 647 288 9529 Fax: 416 971 6638 mcrinson@dimock.com www.dimock.com

In Canada, the result of the political recognition of the value of intellectual property to Canada’s economy has led to administrative improvements and efficiencies in the process of acquiring and registering intellectual property, and more effective and timely opportunities to enforce those intellectual property assets in Canada. Dimock Stratton LLP practices exclusively in the area of intellectual property law. We have been consistently named as one of Canada’s most frequently recommended firms and recognised by Chambers Global Guide to the World’s Best Lawyers as a “first-choice IP boutique” and by Managing Intellectual Property as a top-tier firm. Dimock Stratton provides services for the acquisition, exploitation and enforcement of intellectual property to a wide spectrum of clients in all technologies from large sophisticated corporations, to start-ups relying on intellectual property to establish themselves in competitive markets, and to institutions such as universities working to translate innovative research into intellectual property assets.

July 2011 • GBM • 33

countrY profile - canada - legal services

Sandy Walker Partner, competition, antitrust and foreign investment review group Fraser Milner Casgrain LLP sandy.walker@fmc-law.com

Bill Jenkins Partner, co-chair, mergers & acquisitions group Fraser Milner Casgrain LLP bill.jenkins@fmc-law.com

Recent Canadian M&A activity shines spotlight on foreign investment approval regime Potash, once a relatively obscure commodity, became the unlikely centre of a foreign investment review controversy in Canada in 2010 as the Canadian government rejected BHP Billiton’s bid for Potash Corporation of Saskatchewan under the Investment Canada Act’s ‘net benefit to Canada’ test. The decision raised concerns that Canada was closing the door on foreign investment. To those familiar with the legislation, however, the decision was viewed as an anomaly - only the second time in the history of the Investment Canada Act (outside of the cultural sector) that a deal has been rejected. The first was the 2008 proposed acquisition by an American company, Alliant Techsytems, of the geospatial business of MacDonald, Dettwiler and Associates Ltd for national interest reasons relating to the protection of Canadian sovereignty in the Arctic and of Canadian-funded technology. Interestingly, however, the Canadian government may in short order be again required to consider a controversial foreign investment proposal. On 9 February 2011, the TMX Group Inc (TMX), which owns and operates the principal Canadian stock exchanges and trading markets, announced an agreement to merge with the London Stock Exchange Group plc (LSEG). While described as a “merger of equals”, the LSEG shareholders will hold 55% of the combined entity, which will be led by the CEO of the LSEG. At the time of writing, the 30 June 2011 shareholders meeting at which the LSEG/ TMX proposal will be voted on is quickly approaching, and a rival bid from a consortium of financial institutions calling themselves the Maple Group has emerged. Further, any LSEG/TMX combination will require a series of approvals from Canada’s provincial securities commissions in addition to Investment Canada Act approval. Nevertheless, the Canadian government may be under pressure to veto the transaction from market participants who fear the impact of the transaction on Canadian capital markets. Should that occur,

34 • GBM • July 2011

the impression that there has been a sea change in Canadian receptivity to foreign investment will be reinforced. At present, there is no reason in our view for apprehension about Canada’s openness to foreign investment, particularly given the Conservative Party’s success in achieving a majority government in the 2 May 2011 Canadian federal election. The circumstances surrounding the Potash decision suggest it was exceptional and that it will remain ‘business as usual’ for most foreign investments, although high profile investments in politically sensitive sectors such as the LSEG/TMX proposal can expect to be more carefully scrutinised. The Potash decision is widely regarded as the result of the confluence of two factors: the intense public relations campaign led by the Premier of Saskatchewan (the province in which most of Potash Corporation’s mines are located) to characterise potash as a ‘strategic asset’; and, the minority government status of the reigning Conservative party in an election year (which made it more vulnerable to the highly charged public opinion). The Potash decision has taught foreign investors some key lessons. First, it has underscored the broad latitude given to the Minister of Industry when determining what constitutes a ‘net benefit to Canada’. The concept is an elastic-one based generally on economic considerations and industrial and economic policy objectives of Canada and the provinces likely to be significantly affected by the investment. These latter objectives, in particular, generate uncertainty for investors as they allow the Minister to invoke vague and unspecified factors when making a ‘net benefit’ determination, although for routine transactions that are not politically sensitive, the types of commitments an investor must make are generally predictable. Second, the Potash decision also highlights to foreign investors the potential for Canadian stakeholders affected by a proposed foreign takeover to lobby the

government to advance their own ends, especially where the target is a Canadian icon or in a high profile or politically sensitive sector. In particular, provinces are now alert to the possibility of having a significant influence by shaping public opinion. This underscores the importance for investors to consult early on with legal counsel and public/government relations specialists to pre-empt possible backlash against a transaction. In addition, having a friendly target to support the foreign investor’s advocacy on the ‘net benefit’ of the proposed transaction can assist greatly in facilitating the approval process. Third, some foreign investors may wish to address uncertainty raised by the Potash decision by making minority investments and/or entering supply agreements instead of acquiring ownership interests. Minority investments of less than a third of a corporation’s voting shares may reduce the economic or political risks of a full takeover because such acquisitions are not subject to ‘net benefit’ review under the Investment Canada Act (unless they would be potentially injurious to Canada’s national security). In the resource sector in particular, foreign businesses may also wish to negotiate a right to receive a share of production or an ‘off-take agreement’ as an alternative means of securing long term access without triggering review under the Investment Canada Act. Finally, one of the consequences of Canada’s rejection of BHP’s bid was a decision by the Canadian government to subject the Investment Canada Act itself to review. This review will likely cover the transparency of the review process, the review criteria and holding investors accountable for their commitments to the government. In the meantime, foreign investors will no doubt be closely monitoring the government’s review of the LSEG/TMX proposed merger to test whether the Potash decision was really a ‘one-off’ or evidence of a new economic nationalism in Canada’s approach to foreign investment.

countrY profile - canada - legal services

How should a foreign bank carry on business with residents of a country? As financial markets continue to change, and banks look for ways to increase their revenues while minimising their costs, an important issue is whether banks should, and whether they are permitted to, carry on business with residents of another country without having a physical presence in that country. I will discuss this situation from the perspective of a non-Canadian bank that wishes to carry on business with Canadians. I will refer to the model by which a foreign bank carries on business with residents of one country (Canada) without having a presence in Canada as the ‘cross-border model’ and the alternative model where a foreign bank carries on business with Canadians through a Canadian entity as the ‘in-country model’. There are material cost advantages in the cross-border model, since the foreign bank is not required to have personnel or premises in Canada, nor is it subject to regulation by the Canadian banking regulators. Currently, a foreign bank may carry on business with Canadians using the cross-border model, provided it avoids the prohibition against a foreign bank carrying on business in Canada with Canadians. Although a foreign bank may carry on business with Canadians from outside Canada, it may not do so from within Canada unless it does so through a Canadian entity. A foreign bank would generally be in compliance with the cross-border model when carrying on business with Canadians provided that: it signs all relevant credit documentation after all the other signatories and its representative was not in Canada when he or she signed the documentation; and, all material negotiations take place without a representative of the foreign bank participating while in Canada. Although the cross-border model is legally available, experience has shown that many multi-national banks believe there are advantages in having a physical presence in Canada. For example, in the past few years, Barclays Bank plc has joined several other foreign banks in establishing a Canadian Branch and Wells Fargo Bank, NA is in the process of doing so. By establishing a Canadian presence, a foreign bank subjects itself to Canadian regulation. The extent of the regulation depends upon the minimum amounts the foreign bank wishes to borrow and from whom. If it wishes to borrow in amounts of $150,000 or less, then it could only do so through a Canadian bank, the most stringent type of regulated entity in Canada. If it were willing to borrow only from financial institutions, then it could establish a lending branch, which is subject to only minimal

regulation and requires only capital of $100,000. In fact, if it wished, it could establish a nonregulated Canadian entity. In practice, most foreign banks that choose the in-country model establish a full service branch that may borrow funds from any person provided the borrowings are in amounts greater than $150,000. In return for being able to deal with a broader group of funders, a full service branch is required to maintain a capital equivalency deposit equal to 8-10% of third party liabilities. In addition, it is also subject to some other Canadian bank regulation, such as having to satisfy the regulators as to its material policies and procedures. Historically, the type of Canadian presence chosen by a foreign bank was largely dependent upon the extent to which it wanted to borrow funds. However, I think that we will see an increasing tendency in Canada (and elsewhere) by regulators to require foreign banks that wish to deal with Canadians to do so through the in-country model. I think this will particularly be the case with respect to those foreign banks wishing to deal with Canadian consumers. Like most other developed countries, Canada has a broad array of consumer protection legislation. However, if a foreign bank is dealing with a Canadian consumer and does not have a Canadian presence, it is difficult in practice for that consumer protection legislation to be imposed upon the foreign bank. As a result, there will be more circumstances where regulators will require that, if a foreign bank wishes to deal with Canadian consumers, it will have to do so through a Canadian presence.

Blakes John Teolis Tel: 416 863 2548 john.teolis@blakes.com www.blakes.com

Once the foreign bank has a regulated affiliate in Canada, it will be subject to Canadian regulation. Canadian regulators are rightfully experiencing worldwide praise at the safety of their regulation during the financial crisis. Since they will undoubtedly be blamed for the failure or improper conduct of any financial institution carrying on business in Canada, it is inevitable that, over time, the Canadian banking regulators will increase the scope of regulation of a foreign bank that deals with Canadians using the cross-border model. Although this may not be desirable to a foreign bank, nevertheless, it may be the ‘cost’ of dealing with Canadians. If you have any questions regarding this article or Canadian financial law in general, please do not hesitate to contact the author, John Teolis of Blakes, by e-mail john.teolis@blakes.com or by phone 416-863-2548.Contact:

July 2011 • GBM • 35

countrY profile - canada - energY, mining & natural resources

Basic Design System

基础设计系统

Ever since its inception in 2003, Jiangsu yagui Power Fuels Co., Ltd has become a stockholding enterprise in energy import and export, port logistics and consulting services. The company currently employees 35 people and is headquartered in Nanjing, Jiangsu Province, China, in the Zifeng Tower - the seventh highest skyscraper in the world. The company also has its branches in Lianyungang and Xuzhou City.

Mr Qicheng Zuo 20th Floor, Zifeng Tower, 1 Zhongshanbeilu, Nanjing, Jiangsu Province, China Tel: 86 25 83108167 86 25 83304145 Fax: 86 25 83307545 zuoqicheng@163.com cszhai@gmail.com www.jsyagui.com www.coal-link.com

36 • GBM • July 2011

The company has a highly professional sales force in the coal import and export business with over 20 years experience, and with good relationships with several well-known domestic enterprises, such as, among others, the BaoSteel Co., Ltd in the coking coal supply business; and, the China National Coal Group Corp. and Shanxi Coal Import & Export Group Co., Ltd in the thermal coal and coking coal export business. In the international coal trading business, the company imports thermal coal and coking coal from Australia, Indonesia and other countries. In addition, the company is the only private company in the province exporting high-quality thermal coal to the Marubeni Corporation, Nippon Steel and Sumitomo Metal. In 2010, working with a famous listed enterprise, the company began its negotiations in purchasing an Australian coking/thermal coal mine

covering an area of 125 square kilometres. The project is currently in the due diligence stage. The company has been invited by some of the Canadian mining companies for equity purchasing and offtake commitment and by Canadian timber and logging companies to set up a joint venture for wood processing. Since 2008, the company has invested over RMB 300 million yuan in the Lianyungang Development Zone, Lianyungang City, Jiangsu Province, to establish a comprehensive logistics park (Phase I). The park covering an area of 310,000 square metres, is a key project in Lianyungang city and a first-class timber logistics park in China. It now enjoys a high reputation in the port. Jiangsu yagui Power Fuels Co., Ltd’s mission statement is to do business with integrity and honesty, and being pragmatic and professional for a stainable development. Looking ahead, we are confident and determined to create a better future with all old and new friends!

We Make Life Greener Electronics are part of our everyday lives and their use

other electronic wastes from landfill. We are at the forefront

continues to grow worldwide. Xstrata Copper started

of precious metal recycling, working to return valuable metals

recycling electronics at our Horne Smelter in Canada more

back to the market for usage in new applications.

than 30 years ago. Today, we are one of the world’s largest

Xstrata Copper has earned a reputation for safe,

recyclers of electronic components, helping to safely divert

environmentally responsible actions, and we continue to

millions of tonnes of obsolete cell phones, computers and

build on it.

Toronto Ontario

East Providence Rhode Island

San Jose California

Zug Switzerland

Penang Malaysia

+1 416 775 1204

+1 401 438 9220

+1 408 998 4930

+41 41 723 1250

+6 04 229 5589

xstratarecycling.com xstrata.com/sustainability

recycling

July 2011 • GBM • 37

gloBal round taBle

Forests provide a host of ecosystem services that all economic activities and human life rely on. What forests provide is fundamental: they stabilise the global climate system, regulate water cycles, provide habitat for biodiversity and people and host genetic resources of unimaginable potential. However, forests and their services remain undervalued by today’s economic and political decision makers, which results in their rapid destruction.

38 • GBM • July 2011

There is increasing consensus at national and international levels and within the UNFCCC climate change negotiations for the need to include efforts to reduce deforestation and forest degradation as well as to accelerate reforestation in a new climate change deal. This has become an important component of the global response to the challenge of climate change. Given the investment required, USD 17 – 33 billion per year, to half emissions from the forest sector by 2030, there is a clear yet unaddressed need to mobilise private sector financing at scale, in addition to government investment. There are many important roles that financial institutions and policy makers can play in this respect.

bankers and environmental experts at Bank of America-Merril Lynch’s London headquarters in March. The study provides private sector actors, particularly financial institutions, with an overview of the current and emerging business opportunities in forest-based climate-change mitigation, including an assessment of the risks involved and possible measures to reduce them. The report is also useful for policy makers in helping to understand the approach and needs of financial institutions. Part 1 addresses the following questions: o

What is the current shape and status of forest carbon markets?

In a recent two-part report, the United Nations Environment Programme Finance Initiative (UNEP FI) offered guidance and recommendations to both finance institutions and international climate change policy negotiators regarding how to best mobilise private finance to ensure that forests continue to assist in keeping the planet cool.

What are the emerging opportunities for, and potential roles of, investors and financial institutions?

What experiences have financial actors had when establishing operations in this space?

What are the risks and barriers that private actors face?

Part 1: Speaking to Financial Institutions

Part 2: A Briefing for Policy Makers

The report’s first part was launched in the presence of a large attendance of

In a second part, UNEP FI found it important to provide an assessment of

that the financial sector must step up its engagement in the emerging green market, and makes the case for improved regulation to facilitate this. Part 1 of the report stresses how private sector participation in REDD+ and deforestation activities can lead to a win-win scenario for the finance sector and governments, since such projects can translate into both lucrative investment opportunities and cost-effective strategies to abate carbon emissions and protect biodiversity and livelihoods.

current international regulation as well as recommendations to national and international policy makers for ensuring what the international regime under the UNFCCC effectively mobilises private finance and investment for forest-based climate change mitigation. This analysis, which is slated to be released in late July, will also be useful for financial institutions in understanding policy design and implementation. Part 2 addresses the following questions: o

What policy options are most conducive towards effectively financing forestbased climate change mitigation?

How does policy design and implementation reflect the risks, barriers and issues of forest-based mitigation opportunities as perceived by the private sector?

On the occasion of the launch of Part 1 of this UNEP FI report at the Bank of America Merrill Lynch’s European headquarters in London on May 6th 2011, leading financial institutions discussed their future role in mitigating climate change as they called for more effective forest-carbon regulations. Over 170 banking, insurance and investment senior representatives at the event welcomed the findings of the new study, which stresses

However, while private sector finance involvement in REDD+ financing is paramount, there are a number of issues that are cause for concern for some governments, non-governmental organisations and civil society groups. These include the issue of price volatility when carbon credits derived from REDD+ project are fungible thus potentially ‘flooding’ carbon markets and depressing prices. There is considerable debate, however, whether this would indeed be the case. Another issue is the fact that different types of forests with different types of tenure exist, making it potentially difficult and costly for financial institutions to differentiate between different forest asset classes, which could potentially lead to the least commercially interesting forest types to be ignored by investors. Safeguards are another contentious issue addressed within this two-part report. The most effective way to deal with these challenges is for private sector finance to demonstrate successful projects that embrace the need to actively address social and environmental concerns in any project or investment in parallel with profit orientation. The fact that the private sector has little or no influence over climate policy or regulatory risk remains a key obstacle in the investment decision process. In Part 2 of this report, which will be launched during an online event on July 27th, UNEP FI has outlined the most important scenarios that are currently being debated during the international climate change negotiations, and they also indicate which would be most investor friendly.

institutions. However, in order to mobilise this private sector capital at the required scale, it is paramount that policy-makers increase the financial competitiveness of forest-based climate mitigation investments, and minimise the risks involved. While a global framework for forest protection, conservation and enhancement is now a top priority in the international climate negotiations, there is no guarantee that a framework agreed at this political level will be investor-friendly. Nonetheless, policy and regulatory initiatives designed to attract or guide capital are evolving at both international and national levels. In broad terms these seek to (a) improve potential returns through support for new markets, and (b) decrease risk, either directly through access to risk mitigation products, or indirectly through policy design and implementation. It is therefore essential that: (a) Financial institutions fully understand the nature of the commercial opportunities, potential investment mechanisms and risk mitigation instruments available within the forestry sector, and; (b) Policy-makers understand the needs of private sector investors, lenders and insurers in relation to the specific characteristics of forest sector emissions abatement opportunities. Improving the understanding of both stakeholder groups is the fundamental objective of this two part series. UNEP FI will be hosting their biennial Global Roundtable in Washington DC on October 19th and 20th 2011. This event arrives just a few months ahead of the landmark United Nations Conference on Sustainable Development (UNCSD) scheduled for June 2012 in Rio de Janeiro, Brazil. The event agenda has been conceptualized to: 1.

Bridge the gap between financial sector and policy-makers: plenaries will take the form of a dialogue between CEOs from the banking, investment and insurance industries and high-level policy-makers;

Discuss in depth the most pressing issues for the financial sector.

Online Launch Event REDDy – SET – GROW Part 2 Recommendations for International Climate Change Negotiators: designing an eﬀective international regime for financing forest-based mitigation Launch: July 27th 2011 Time: 9:00 GMT & 16:00 GMT There are many reasons why forest-based mitigation should be interesting to financial

A unique cross cutting session during the Global Roundtable has been dedicated to the topic of forest-based climate change mitigation. yvo de Boer, former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) is the official keynote speaker for this session. UNEP FI Global Roundtable registration is now open. http://www.unepfi.org/ events/2011/roundtable/register

July 2011 • GBM • 39

metals, mining, & minerals

global Roundtable 2011 Washington, DC, USA 19-20 October 2011

THE Tipping poinT

Sustained stability in the next economy

Tipping point (physics): the point at which an object is displaced from a state of stable equilibrium into a new, different state. Tipping point (sociology): the event during which a previously rare phenomenon becomes dramatically more common. Tipping point (climatology): the point at which global climate changes irreversibly from one state to a new state.

What is the next tipping point...? Join world-class experts to hear (and debate) their answers: gordon Brown, former Prime Minister of the UK, current MP nassim Taleb, author of best-selling book The Black Swan James Balsillie, co-CEO of Research in Motion and member ofÂ the UN High Level Panel for Global Sustainability

UNEPFI_GRTAd207x277Q150611

Yvo de Boer, former Secretary of the United Nations Framework Convention on Climate Change (UNFCCC) and KPMG Global Advisor on Climate Change and Sustainability.

For more information and to register, visit www.unepfi.org/washington Proudly sponsored by:

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15/6/11 3:39 PM

Pension services

Pension Services: Safeguarding Your Future

In the past, in order to secure your retirement and be financially comfortable, a person had to save a little every month in the hope that once they retired, the cash amassed was enough to get them through a time in their life that they could relax and enjoy. Then came the time when companies wanted to offer their employees the opportunity to invest in a fund with the promise of giving them a decent return in their retirement years. Today, this service has become a multibillion dollar industry worldwide and is an area that many firms and individuals still do not fully understand. The pension services industry is crammed with different packages and plans that can become complicated and confusing even for the educated in this area. Firms must take the stance of what it recognises is the best for the employees and must manage the risk and costs. Employees must assess whether what they receive is beneficial to them, and Trustees as unsecured creditors must act autonomously in safeguarding the position of the pension. The solution to providing a good pension service and also taking on a good retirement option is influenced by many factors. Pension service teams are now built up of individuals with knowledge and understanding of financial services, actuarial specialists, lawyers and strategists. All these individuals compiled together provide varying pension plans based on past, present and future economic and financial trends. As a result, Pension service experts can offer clients the most accurate and diverse range of services in a manner that can be tailored to each firm’s and individual’s needs. In addition to understanding how pension services operate, individuals and firms also need to take into consideration the laws and regulations put in place by governments to ensure fair and legal services. Beyond this, governments who also provide their elderly with pension services are also regulated by laws that differ from the private sector. Fortunately, there are individuals across the globe that make understanding pension services their life. These individuals and their teams can provide the right information and advice to clients that can help to make crucial choices. Pension service experts can provide clients with advice that could potentially save money for them, but importantly insure that the individual receive the most rewarding and robust retirement package that they deserve. July 2011 • GBM • 41

Pension services

USA

The state of public pensions in the US The Center for Budget and Policy Priorities in the US reports that pension contributions represent a modest share of state budgets; typically between 2% and 5%. Yet articles abound about costs crushing state and local governments, and that the ‘deterioration’ of public pensions must be addressed immediately.

William B (Flick) Fornia President Pension Trustee Advisors, Inc. 7600 E Arapahoe Road, Suite 125 Centennial, CO 80112 Tel: (303) 263-2765 flick@pensiontrusteeadvisors.com

Clearly, the market losses of 2008-2009 created a substantial burden for retirement systems as liabilities were discounted assuming 7%-8% investment returns, while the market was delivering a 24% investment loss. This differential means that returns were roughly 40% worse than they would have been had the markets performed as expected.

Other changes being considered or implemented include reductions in cost-ofliving-adjustments (COLAs), and delay in full retirement age. For example, the Colorado Public Employees’ Retirement Association has reduced its COLA from 3.5% per year down to 2%, and the City of Baltimore now requires its police officers and fire-fighters to work until they have 25 years of service or reach age 55, up from the previous 20-year eligibility for full retirement benefits. Public plan pension funding

I believe that the focus on public pensions ignores the elephant in the room: Americans are nowhere near prepared for retirement, as the 401(k) experiment has fallen short. In addition to the market losses commensurate with (if not greater than) those realised by public pension plans, individual workers in 401(k) plans have the additional problems of underfunding their programmes, the inability to absorb the investment risk, generally lower returns, and not knowing how long they’ll need to be drawing their retirement savings during retirement. I expect that US workers will work much longer than they’d planned a decade ago. This will create pressure on job availability for younger workers, assuming that the older workers will be able to find jobs in which they can continue to work.

On the funding side, there have also been changes. Some proposals are that governments and their pension systems measure their costs and liabilities based on risk-free investment income rates. While some argue that this is sound economic policy, I see it as a red herring and sometimes a mechanism to encourage discontinuation of defined benefit pension plans. This proposal is included in the Public Employee Pension Transparency Act, introduced in the US House of Representatives. I believe that the adoption of this low, risk-free rate would overstate costs to current taxpayers, introduce unneeded volatility, distort the comparative costs of defined benefit pension plans to defined contribution savings plans, and undermine the defined benefit pension programme.

Although my primary pessimism is with private sector retirement programmes, there is much to do in the public pension arena. Pension Trustee Advisors consults to retirement systems, governments and labour organisations by analysing, informing and educating decision-makers in the financial implications of their pension programmes.

The Government Accounting Standards Board is proposing a more balanced change in pension cost determination. Their proposed changes would require more rapid recognition of the costs of plan changes and deviations from anticipated experience. But all these changes are meaningless for states such as Illinois and New Jersey, which dismiss the actuaries’ calculations and contribute less than a reasonable prefunded contribution amount.

Public plan pension changes The primary actions taken over the past 18 months are redesign of pension programmes and reconsideration of funding alternatives. Nearly every state and local government pension system and their sponsoring government entity have considered pension cuts. In most jurisdictions, changes for current workers encounter major legal hurdles, if they are possible at all. But changes aimed only at workers who have not yet been hired have no impact on the current unfunded liabilities, and only generate cost savings in the future. The ‘low hanging fruit’ are changes that close loopholes such as ‘salary-spiking’, ‘doubledipping’ and lenient granting of disability pensions. I think of salary-spiking as ‘double crossing the actuary’. We actuaries predict retirement benefits based on workers’ salaries and service. If they are able to ‘spike’ their salary through overtime, promotion or other compensation shortly before retirement, they

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end up with higher benefits than they paid for and higher than we estimated. While correcting for these low hanging fruit is good policy and good PR, the costs savings are generally not substantial enough.

While standards may be evolving, many pension systems are getting more creative in their funding policies. Underpinning any such policy should include a forecast of ongoing contributions, cashflows and liabilities to determine the likelihood of insolvency. Ten years ago, actuaries were calculating the various mechanisms to become 100% funded within a 30-year time frame. Today, unfortunately, we need to be looking at the worst-case scenarios of insolvency, because such scenarios are becoming more likely as some plans continue to be underfunded. In conclusion, the state of US public pensions is much stronger than the state of private worker retirement, but still problematic in many jurisdictions. Through prudent plan design and prudent funding policy, public pensions can continue to provide cost-effective retirement coverage for millions of public servants.

Master of your own financial destiny? It would be a rare senior executive or CEO who didn’t have a regularly updated business plan for the organisation they are running. But how many CEOs have a written financial plan for their personal finances? CEOs tend to concentrate their efforts on making a success of the business they are running and in many instances make the assumption that if they do their job well, they will be rewarded accordingly and things will just ‘fall into place’ - not a good basis for planning your personal financial future. You should understand exactly what your personal financial goals are and when you want to achieve them. However, sometimes articulating and prioritising these goals can be difficult for busy executives. CEOs often get caught up in earning big financial rewards but not feeling particularly wealthy. Earning £500,000 per annum is no use if your lifestyle is costing £550,000. Equally, amassing millions is of little value if you are doing a job you don’t enjoy. There’s an old saying: “If you don't know where you're going, you'll end up somewhere else.” Ask yourself a few questions, among others: What would you do with your life if you didn’t do your current job, money was no problem and you had more time available? What is it that’s important about money to you and why? Do you know if you are financially independent already, or when you could be? Do you put all those envelopes, paperwork and emails relating to your finances to one side to deal with later? If you had only a week to live, what would you regret about your life so far? A successful CEO tends to be a delegator by nature, otherwise nothing would ever get done in their organisation. Dealing with the detail of how to achieve the company’s goals is usually given to a finance director or chief financial officer (CFO), so in the same way it can help to appoint a ‘personal CFO’ to help you to achieve your personal financial and lifestyle goals as set out in your personal financial plan. The CFO of your financial plan should be responsible for the following, among others: conducting a comprehensive initial assessment of your current financial situation and future aspirations and goals; performing a quantitative analysis that enables you to determine your required rate of return to achieve your goals and how this compares with your risk capacity; considering ‘catastrophe planning’ scenarios and risk mitigation; leaving you free to get on with running your organisation knowing your financial affairs are in safe hands; and, meeting with you on a regular basis to report on overall strategy and performance against goals and make any adjustments as needed and answer your questions

will be able to keep you on track to reap the rewards that a scientific, disciplined and longterm approach can deliver. The role of CFO should be filled by a competent, experienced and professionally qualified financial planner. The task of finding the right planner can be onerous given the huge number of financial services firms competing for your attention. Below are some pointers on how to choose the right financial planner for you. The right skill set: Financial planners servicing high-net-worth individuals are a clear-cut group and the best will have a distinct skill set that planners dealing with clients of more modest means simply won’t have. They will provide a comprehensive service that will incorporate not just financial planning and investment management but tax planning and estate planning as well. Your planner will not necessarily provide the advice in these areas but will bring in other professionals and specialists as required and will oversee the advice in the context of your financial plan.

Alan JL Smith MIFP, Cert (PFS) Chief executive T: 020 7398 6600 M: 07740 705 050 F: 07092 980 995 www.camfinancial.co.uk

A small number of clients: A vast number of financial planners work on the ‘can fog a mirror’ approach to determine whether or not they will take someone on as a client. Financial planners specialising in the high-net-worth market recognise that the service required by their clients is highly tailored and to be able to dedicate the time needed to provide the best possible service to their clients, the number of clients for whom they can act must be limited. People like us: It makes sense to choose a financial planner who already has a number of clients in a similar professional position to yours, as they will be able to demonstrate an understanding of your specialised role as a CEO and be familiar with the kinds of challenges that you face. Appropriate qualifications: There are many financial services qualifications that prove a planner’s ability to remember large chunks of technical information and regurgitate them in an examination, but only one that demonstrates the ability to apply that knowledge in a comprehensive way to help a client to achieve their objectives. The certified financial planner (CFP®) licence is an internationally recognised qualification that demonstrates a planner’s ability to provide comprehensive financial planning. As CEO of your financial future, to create your financial plan will involve an investment of your time in the process but it will be time well spent. You may well look forward to 20 or 30 years of life after being a CEO, and by giving some serious thought today to where you want to be and planning for when that day arrives could help to make them the happiest years of your life.

Through this close contact, your personal CFO

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pension services

then the real value of a £10 000 income today would be £7,386 in 15 years’ time.

The Retirement Coach Limited Joanne Read Chartered Financial Planner 0770 2170013 jo@theretirementcoach.co.uk, www.theretirementcoach.co.uk

The retirement maze - the current challenges facing employers and employees The Chartered Insurance Institute calculates the retirement savings gap is nine trillion pounds! What are the government planning to do to support the shortfall? The answer is numerous changes that are contained in the 2010 and 2011 Budgets and the 2011 Finance Bill. These have succeeded in adding layers of complexity and cost to the ever-changing pension landscape. The key changes are: increases to state pension age, pension benefits no longer need to be taken at age 75, compulsory employer pension schemes and a myriad of terminology changes. So we enter the retirement maze at the accumulation stage; employees have to consider affordability, investment choice, product and risk. As they move through they acquire multiple schemes from job

mobility, these schemes are often small, written under different legislation and difficult to merge. Other points to consider on the journey are longevity, divorce, health, and economic and fiscal factors. At some point, you reach the vortex of pension decumulation, when income needs to be turned on at partial/full retirement. Which path do you take? Annuity, drawdown, qualifying recognised overseas pension schemes (QROPS)? The decision is complex and individual. I recently met with a 73-year-old divorcee who had a pension settlement. My client said: “It would take me the rest of my life to read and understand all my options” - under current life expectancy this is over 25 years! Consideration should be given to the five retirement risks, inflation, annuity rates, longevity, investment and the risk of change. If inflation were to run at a constant 2%, (which is the government’s target rate),

ENGLAND

The financial crisis has shown how important it is for people to save and prepare for their financial future. The outcome of investment research and its key conclusions are as follows: A balance needs to be achieved between taking sufficient risk to deliver an acceptable investment return and not taking excessive risk where losses are generated that discourage people from continuing to pay pension contributions. A lower risk approach for younger members. Most members are not qualified to make investment decisions and a default option is important. Finally, a choice of additional funds for

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It isn’t all doom and gloom though. The added complexity means increased choice and flexibility for employers and employees. Those that have taken advice and find the exit to the maze will enjoy the lifestyle in retirement they dreamed of.

consolidation phase over the ten or 15 years before their target retirement date. Members joining after around 55 will be defaulted into the consolidation phase.

EA Financial Solutions Ltd Minesh Patel Director Tel: 020 8446 3231 Fax: 020 8445 5612 minesh@eafsolutions.co.uk www.eafsolutions.co.uk

Investment options under National Employment Savings Trust (NEST)

The maze complexity increases for the employer; they currently have to contend with defined benefit scheme deficits and wind-ups, trustee responsibilities, age discrimination law, pension compulsion (introduction of ‘national employment savings trust’ in 2012), and numerous contribution and tax amendments. These are all costly additions to the balance sheet of many recession-hit businesses. The need to engage with professional advisers has never been more important. This can help reduce time, cost and create peace of mind with a pension strategy aligned to that of the core business. The selection of those professional advisers is often historic and with a corporate bias. In today’s world of employee engagement, development and retention, perhaps this should be reconsidered? Financial advisers do not solely advise on corporate pensions, but more importantly on pension accumulation and decumulation, a very valuable workplace benefit.

Consolidation phase: The stated objective is to gradually reduce risk and volatility based on the way that members want to take their benefits. specific investment needs should be available. The default option will be the retirement date funds; NEST expect there to be 45 retirement date funds, targeted to state pension age. The major objective will be to deliver returns in excess of inflation as measured by consumer prices index (CPI). Each retirement date fund will be split into three phases designed to reflect the risk level of members. Foundation phase: The investment objective will be to match CPI and is for younger members. Those joining at age 22 can expect around five years and ends at age 30, so anyone joining NEST who is older will be defaulted into the growth phase. Growth phase: Designed to outpace CPI by 3% and is where members spend the majority of their accumulation within NEST, where they join before around age 55. Members will be gradually switched to the

The choice of other funds will be restricted to five, which are extremely limited compared to stakeholder and personal pensions. An alternative is for employers to implement a qualifying scheme such as a group stakeholder pension plan or group personal pension plan with more investment options than NEST constructed on a fee basis. Our experience is that employees of all ages and income bands require advice on the best investment option for them. We work in partnership with employers so that each employee receives personalised advice about the best option for them and what they are likely to receive at retirement based on intended contribution levels. This creates greater value for both employer and employee because they have access to advice if required and the employer is helped to meet their regulatory obligations. EA Financial Solutions operate fee-based advice for pension scheme advice.

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Expert forum

Expert USA Dewey & LeBoeuf LLP Andrew N. Davis, Ph.D., Esq. Partner Tel: 212 424 8214 (New York & Hartford), 617 748 6826 (Boston) Fax: 617 897 9026 adavis@dl.com www.dl.com

Investors and the SEC drive disclosure of emerging and developing climate change-related business risks Emerging domestic and international climate change-related initiatives, along with a growing body of related case law, have the potential to materially impact the bottom lines of companies with large carbon footprints, especially those in the energy sector. As a result, publicly-traded companies should strategically evaluate potential climate change-related risks and, as appropriate, address those risks in disclosures required by the US Securities & Exchange Commission (SEC). Pursuant to Regulation S-K (17 CFR Part 229), publicly-traded companies must disclose certain categories of information to investors, including: a description of the company’s business (Item 101); any material pending legal proceedings (Item 103); a discussion of the most significant factors that make investment in the company speculative or risky (Item 503(c)); and, an explanation of the company’s financial statements, including forward looking statements, as appropriate, enabling investors to see the company through the eyes of management, i.e., Management’s

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Dewey & LeBoeuf LLP Aaron D. Levy, Esq. Associate Tel: 212 259 8543 (New York), 212 424 8543 (Hartford) Fax: 212 632 0126 alevy@dl.com www.dl.com

Discussion and Analysis (MD&A) of Financial Conditions and Results of Operations (Item 303). Although ‘climate change’ is not specifically referenced in Regulation S-K (nor is ‘environment’, for that matter), due in part to growing concern among individual and institutional investors (including through the Carbon Disclosure Project, currently in its 11th year, acting on behalf of institutional investors holding $64 trillion in assets under management) about the lack of climate change-related disclosure by publicly-traded companies, the SEC issued interpretive guidance specifically addressing disclosure requirements as they apply to climate change. ‘Commission Guidance Regarding Disclosure Related to Climate Change’, Release Nos. 33-9106; 34-61469; FR-82 (2 February 2010). According to the SEC guidance, the following climate change-related topics may trigger disclosure pursuant to Regulation S-K: the impact of legislation/regulation; international accords; indirect consequences of regulation or business trends; and, physical impacts of climate change. Due in part to the issuance of the SEC guidance, public companies are reevaluating and, in many cases, enhancing their public disclosures to specifically

address climate change-related risks. (Notably, climate change-related representations, warranties and covenants are also becoming increasingly common in M&A deals involving carbon-intensive assets.) In addition, companies are also evaluating and, as appropriate, disclosing potential benefits and opportunities related to climate change. For example, while companies with carbon-intensive electricity-generating assets (e.g., coal-fired power plants) are increasingly disclosing potential risks associated with the regulation of greenhouse gas emissions, companies with less carbon intensive assets (e.g., natural gas, wind, solar) are increasingly disclosing potential benefits associated with an increased demand for their products/ services. Despite the ongoing debate regarding climate change, the business risks associated with climate change, including those identified in the SEC guidance, are indisputable. As a result, public companies should continue to assess climate changerelated business risks and opportunities, and strategically evaluate whether those risks/opportunities should, or need to, be disclosed as investors continue to drive the evolution and development of environmental law.

Tim Harvey, JP, CFE Director of UK Operations, ACFE tharvey@acfe.com P: 020 7692 1888 M: 07891 467654.

Forensic accounting Unlike other crimes, fraud is only limited by the creative imagination of the fraudster. Indeed, Lord Macnaghien gave a succinct description of it in 1896 when he said in the case of Reddaway v Banham: “Fraud is infinite in variety; sometimes it is audacious and unblushing; sometimes it pays a sort of homage to virtue, and then it is modest and retiring; it would be honesty itself if it could only afford it.” (Lord Macnaghien, Reddaway v Banham, 1896, LR App Ca [1896] p 221.) Infinite in variety they certainly are, frauds evolve, mutate and change to take advantage of the existing circumstances. It often takes a good forensic accountant not only to unravel the complexities but also to clearly explain to members of a jury exactly what has taken place. This task is not easy; generally members of the jury will have little or no knowledge of complex financial transactions and little, if any, knowledge of accounting rules and practices. Very often in fraud cases, the facts may not be in dispute, but evidencing dishonesty may require proving who knew exactly what and when. By careful examination of the evidence and documentary exhibits, the forensic accountant can build a picture showing just that. Fraud examiners should try to keep accountancy evidence limited only to those issues that are disputed. Before criminal trials, the defence will examine the forensic accountant’s statement and highlight those issues that are in contention. Juries will quickly become uninterested if they are listening to information that they do not understand, so it is imperative that the forensic accountant explains transactions in clear simplistic terms, often using diagrams to assist. One method for having damning forensic evidence dismissed involves alleging collusion between the forensic accountant and those that instruct her. Consequently, a letter of engagement clearly identifying exactly what the forensic accountant should undertake must be carefully drafted, with another letter for any further work undertaken. It is imperative that the fraud examiner instructs the forensic accountant on what to do and not the other way around. The forensic accountant’s statement will always come with a caveat that they have based their work on the documents provided to them.

Accounting is not an exact science. When dealing with drug cases, the prosecution can prove by scientific analysis exactly how many grammes of heroin and of what purity are involved, but in fraud cases the valuation of assets, goodwill or economic damage is often the subject of interpretation, which is just one of the functions of the forensic accountant. Like scientists, forensic accountants must view the facts impartially and be able to support their findings with factual evidence. When their evidence is tested in court, they must be prepared for a robust cross examination challenging their findings. Quite often their work will involve examining the work of other accountants either knowingly or unwittingly employed by fraudsters. They will need to explain clearly and precisely the results of their findings and have a complete and thorough knowledge of all accountancy practices. Fraudsters are quick at taking any opportunity as it arises. Within days of the terrifying earthquakes in Japan, criminally constructed websites seeking charitable donations appeared on the web. Fraudsters are like water courses; they follow the lines of least resistance. When new technology appears to frustrate them, such as chip and PIN, they will change direction, in this case changing to application fraud.

Certified Fraud Examiners (ACFE), which not only provides its members with a Fraud Magazine and online FraudInfo newsletter, it also has forums where members from across the globe discuss the latest frauds and how to tackle them. When Dr Joseph T Wells formed the ACFE some 22 years ago, he described the ACFE as marrying accountants with investigators to produce fraud examiners. Now members can study to become Certified Fraud Examiners (CFEs) and while this is not an accounting qualification per se, it gives those studying a thorough understanding of the work of forensic accountants as well as explaining some of the tools they use, such as Benford’s Law, data mining and forensic data recovery software. With ever more complex frauds involving complicated financial transactions, I liken the work of the forensic accountant to that of a scientist, having the skill to explain in clear terms something I would otherwise not understand. They are invaluable in the fight against fraud.

With each new technological introduction, fraudsters are eager to see if it can be exploited. A relatively recent example of this is malware designed to steal virtual weapons used by the players of massively multiplayer online role-playing games (MMORPGs). These weapons have value and can be traded in much the same way as stolen credit card data is sold over the net. These unstoppable developments make it essential that the forensic accountant keeps constantly up to date with the latest fraud trends and schemes. The best way to do this is by joining the Association of

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expert forum

USA Jeremiah Grant Managing Partner jgrant@arrowfishconsulting.com Arrowfish Consulting

32 W 200 S Suite 209 Salt Lake City, Utah 84101 www.arrowfishconsulting.com Tel: 801 839 5778

Forensic Accountants: Why, When and How to Hire Them Nothing makes a person angrier than the thought of being cheated, robbed or otherwise financially hurt by the actions of another. Many civil lawsuits arise out of this basic desire to reclaim what one perceives he or she has unjustly lost, but it’s not always easy to define or measure the financial loss. Although it is often the job of an attorney to prove or disprove liability, the important task of investigating and quantifying the financial loss normally requires the expertise of a forensic accountant. Given their important role in resolving so many different types of disputes, it seems worthwhile to answer a few basic questions. What is a forensic accountant? Forensic accountants are professionals who use a unique blend of education and experience to apply accounting, financial analysis and investigative skills to uncover truth, assist in financial investigations and ultimately provide a credible analysis that may be relied upon in court or mediation. Forensic accountants are regularly retained by attorneys, insurers, companies and creditors to engage in investigative accounting or the calculation of economic or financial damages. Such analyses typically involve a written report, but may also include the delivery of testimony in depositions, mediation and/or trial settings. When could my clients or I benefit from the services of a forensic accountant? Because of the unique blend of education, skills and personality required, their expertise is relied upon in a wide variety of situations. Commercial damages: Most commonly, forensic accountants are asked to provide expert opinions in matters involving breach of contract, fraud, product liability, wrongful competition, construction claims and intellectual property infringement. Personal injury claims: In these cases, the forensic accountant’s role is to investigate the injured party’s financial or economic harm resulting from a loss of earnings or loss of household services. Medical malpractice, wrongful termination and

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wrongful death cases often require similar analyses. Shareholders and partnership disputes: Forensic accountants are often asked to perform a detailed analysis of accounting records to identify, trace and quantify the compensation, benefits or distributions received by shareholders or partners. Commercial Insurance claims: Examples of these types of assignments include business interruption, property losses and employee dishonesty (fidelity) claims. After a careful review of the policy to investigate coverage issues and the appropriate method of calculating the loss, the forensic accountant is then able to investigate and analyse the insured’s financial situation to provide a reliable and independent assessment of the loss due under the policy. In this capacity, the forensic accountant may be hired by the insurance company or by the insured. Business/employee fraud investigations: These engagements can involve tracing funds, asset identification and recovery, forensic intelligence gathering, suspect interviews and due diligence reviews. Matrimonial disputes: These cases often require a forensic accountant to trace, locate and value assets in order to ensure an equitable division of funds between divorcing parties or to determine the income available for child support. At what point should I hire a forensic accountant? Early is better. Don’t be the client that waits until the last minute, only to find your expert has already been retained by the opposing party. By waiting, you also forego the valuable services your expert can provide during discovery by identifying needed documents or preparing you to depose a witness or opposing expert. Such service early can actually save you or your client money. It is best to retain your expert too soon rather than too late. What should I look for? A capable forensic accountant should have the following skills and characteristics:

strong knowledge of accounting and financial analysis, curiosity, discretion, sound professional judgment and an ability to listen effectively and communicate clearly. A good forensic accountant must also be able to consider alternatives, scrutinise the fine details and at the same time see the big picture. In summary From the analysis of financial data in a commercial damages matter to the identification of assets in a marital dissolution or a fraud investigation, forensic accounting experts assist the attorney, insurance company, business owner and trier-of-fact by providing reliable, independent assessments of financial information in a wide variety of scenarios. Retaining your expert early enables you and your expert the time necessary to learn the facts of your case, which can aid in discovery and the identification of possible strengths and weaknesses of your case. Select an expert with solid accounting, financial analysis and communication skills and you’ll not only have an invaluable partner capable of investigating and quantifying financial loss, but one who can effectively and persuasively present his or her findings to a judge, jury or mediator. Arrowfish Consulting - Forensic Accounting Services Arrowfish Consulting is a national firm capable of handling a wide array of services due to the rich diversity of experience and stellar backgrounds of its experts. Our seasoned experts provide top-quality services in three primary categories: forensic accounting expert witness reports and testimony, business valuation and appraisal and corporate bankruptcy. We draw from a deep pool of CPAs, CFEs, PhD Economists, MBAs, CFAs, ASAs and other credentialed experts to provide the experience and subject matter expertise needed for each engagement.

NEW ZEALAND Steve Vaughan PhD CEng MIChem MIPENZ Executive Director New Zealand Society for Risk Management. Tel: +64 (0) 27 6832876

executivedirector@risksociety.org.nz www.risksociey.org.nz

The development of risk management – a New Zealand perspective While we humans have sought to understand and manage risks since the dawn of civilisation, systematic risk management is arguably a relatively modern phenomenon.

While the beginnings of the insurance industry lie in the operation of Lloyds Coffee House and similar institutions in the 17th century, at best this was really a risk spreading mechanism. The development of the discipline of risk management proper stems from the post World War II realisation that humanity had developed the means to cause massive disruption to itself and that these risks required managing for the common good. For example, the growth of a nuclear industry prompted the development of engineering risk assessment in an attempt to understand and control the prospect of catastrophic failure. However risk management is not simply a matter of engineering, much as engineers might like to think that it is. In the 1980s and early 1990s the UK Royal Society undertook a series of studies which culminated in the publication in 1992 of what would prove to be a highly significant report entitled Risk: Analysis, Perception and Management. The contributions to this report came from areas as diverse as toxicology, epidemiology, engineering, mathematics and sociology. The report made it clear that many professions were managing risks and that the techniques they were using had similarities, but there was little in the way of communication going on between these groups. At about this time one of New Zealand’s peculiar advantages came to the fore – as a small country, we talk to each other across conventional discipline boundaries. In New Zealand these conversations across boundaries resulted in two significant events; the formation of a learned society explicitly intended to advance the emerging discipline of risk management and the development of a joint Australian and New Zealand Standard documenting good risk management practice. Risk management standards The first document published in this part of the world setting out risk management practices, AS/NZS 4360:1995. Risk management, contained most of the elements of what are today regarded as

sound processes for managing risks. The later version of this document, published in 2004 filled in many of the gaps in the original document. It was used widely internationally (and in fact copied by some other standards organisations) as best practice in risk management. Following the success of the 2004 standard, the international standards organisation (ISO) determined there was a need for an internationally recognised document standardising risk management practices. This document, ISO 31000:2009 Risk Management- Principles and guidelines, directly copies the 2004 Australian/ New Zealand Standard in its treatment of risk management processes. It also adds and formalises the areas of organisation wide risk management frameworks and underlying principles – the beginnings of which can be found in the appendices of the earlier Australian/ New Zealand documents. More recently a specific standard setting out processes for managing disruption related risk (sometimes known as business continuity management) has been produced. This document, AS/NZS 5050: 2010 Business continuity: management of disruptionrelated risk, is consistent with frameworks, processes and principles laid out in ISO 31000. Recent major disasters in this part of the world including earthquakes in New Zealand and Japan and massive flooding in the Australian State of Queensland have underlined the importance of such standards. The New Zealand Society for Risk Management The conversations I have already mentioned showed a strong need for a mechanism to support and maintain a ‘cross professional boundaries’ dialogue. From this realisation was born the New Zealand Society for Risk Management. The Society was developed as and remains a learned society where the key criterion for membership is a professional interest in the discipline of risk management. The Society includes professionals in fields as diverse as engineering, insurance, law, auditing,

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expert forum

technology management, environmental specialists, government officials, local authority managers, and the academic world. The Society has as its core purpose the sharing and enhancing of skills and understanding amongst all sectors and disciplines about the management of risk. It does this by a number of means including running conferences, seminars and forums, providing a regular electronic publication called RiskPost, and a resource rich and regularly updated website. It also provides informal networking opportunities. Further, a number of Society members provide much of the development expertise for risk management standards and handbooks through the joint Australian/ New Zealand Standards committee responsible for Standards already described. Recently published guidance from this committee includes handbooks setting out good practice in consultation and communication in risk management, and risk financing as a risk treatment. Most of the Society’s membership is resident in New Zealand and Australia but there are also members in other countries, and members are welcome from any part of the world. More information about the Society can be found on the Society’s website www. risksociety.org.nz. The future My observation is that a lot of organisations have some distance to travel before they are being fully effective in managing their own risks. Most larger organisations have systems and protocols in place for identifying and assessing risks and finding ways to treat them, but often elements such as monitoring and review are ignored or at best paid lip service. Furthermore, such systems are often not well founded in terms of a true understanding of the organisation’s context and objectives. Is this true of your organisation? Can you really say that for all parts of your organisation: there is a current, correct and comprehensive understanding of the risks it faces the risks faced are within the organisation’s risk criteria. If not, it is time to take a hard look at those systems and protocols and maybe do a bit of updating. Look at Annex A of ISO 31000: 2009 for some guidance on how you can test your own risk management maturity. Beyond this, the time has come to extend risk management thinking away from reducing risks to using the discipline to be effective in risk taking.

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No organisation will succeed unless it takes some risks, and the reality is that risk management tools apply equally well in working out how best to do that risk taking. This does require a mind shift away from ‘risk management is all about keeping the bad things that might happen under control’ to clearly understanding the organisation’s objectives and using those same tools to make and execute the decisions needed to get there. This may sound theoretical but is can be and is already being done. A couple of local examples are useful to illustrate what is possible. AJ Hackett, one of New Zealand’s larger adventure activity operators (Hackett invented the modern sport of bungy jumping) has continually sought to take on new challenges to grow the business while maintaining extremely high safety standards and providing different and exciting experiences for its customers. Air New Zealand, by any measure one of the world’s smaller international airlines, has systematically sought ways to evolve long haul and regional services by taking measured risks with areas as diverse as seating design(the Economy Skycouch), and regional service budget seat choices (4 levels of price/service in one single configuration aircraft). Both are succeeding by the disciplined taking of risks. As I write this Air New Zealand, having done its risk management homework from the standpoint of keeping the service operating, is still flying in spite of the ash cloud over the region from the recent Chilean volcanic eruptions. Many of its local competitors have simply cited ‘safety reasons’ and stopped services completely. So from our perspective in a small Pacific nation of innovators, the next frontier in risk management is in fully using the tools of the modern risks management standards we had a hand in developing. This means making the mind shift to see both sides of the risk management coin, and becoming disciplined risk takers as well as risk mitigators.

CHINA V&T Law Firm Wang Jihong Managing partner Tel: 86-10-82255610 Fax: 86-10-82255600 wangjihong@vtlaw.cn www.vtlaw.cn

Financing modes of Chinese city rail transit Chinese city rail transit is developing at the highest speed in the world. Almost 30 Chinese cities were approved by the State Council of China, and are planning their rail transit projects and starting construction. The total amount of investment in newly constructed rail transit will reach RMB 993.77 billion by 2016, and local governmental funds can barely meet the demand. Traditional bank loans are usually affected by government policy, especially under such a tight money policy currently enforced by Chinese government. Therefore, cities are eagerly seeking multi-channel financing. The boosted market attracts foreign and Chinese domestic financial institutions and private equities. All parties are exploring new types of financing modes to meet the market demands. Public-private partnership (PPP) is when a government permits a non-government investor to invest in and construct a rail transit project that is traditionally invested and constructed by the government. The investor will operate and make profits from the project for a certain period, or the government purchases the project back after completing construction, so that the government may accomplish the rail transit construction by financing. Chinese cities, such as Beijing and Shenzhen, have already applied PPP mode to rail transit successfully by using BOT (build operate transfer) or BT (build transfer) mode. There is no unified PPP law. PPP practices are regulated by Administrative Measures on Public-Private Partnerships of Municipal Public Utility, and other local regulations. Special attention should be paid to the following legal issues when engaging in BOT in China: review the legality of procedures regarding initiating a project, as legislations do not describe the boundary of authorities; negotiate with government regarding the ownership of the project, as Chinese law does not describe the ownership of the project during the operation period; and, bring price adjustment and compensation issues

into the negotiation in advance and design reasonable price adjustment methods. In addition, as BOT period usually lasts for ten to 20 years, an investor should be particularly aware of limiting conditions that the government partially terminates the period, define the termination procedures, the investors remedy and compensation. In a BT project, an investor should pay attention to the calculation of investment cost and items consisting investment, and stipulate the profit rate in the agreement with the government, as China has no regulations governing the calculation of investment cost, which is base for the profit rate calculation. The investor should avoid demolition related work as much as possible except to undertake the demolition related costs, as demolition is a hard and complicated process in China. In a BT project, local governments usually reserve the right of choosing designer and supervisor. The investor should enter into a three-party agreement to choose designer and supervisor together with government. The investor would better stipulate the fund resources securing government purchase of the project in a BT agreement as well as set up guaranty for the purchase, as Chinese law does not provide the funds resources for such purchase. Financing lease refers to when a lessor purchases leasehold from seller according to the lessee’s selection and approval, and provides leasehold to lessee for his occupation and using, while lessee pay rent to lessor. High-speed development and high demand of Chinese rail transit in recent years, as well as characters and features of rail transit equipments, makes room for financing lease development in China. It is currently governed by Chinese contracts law and other related laws. The following legal issues should be taken into account: whether the lessor is the owner of leasehold; whether mortgage is limited and flaw exists; whether guaranty provided by lessee is legitimate, efficient and satisfied; whether rents and its adjustment are reasonable; and any insurance and claims for leasehold.

Debt is directly issued by governments, financial institutions and enterprises to social investors to collect capital, and issuers promise to pay the money back according to agreed provisions, and interests will be paid at certain rate as well. There are many enterprise debts issued by rail transit enterprises that collect a large amount of money for rail transit construction. Issuers should notice the following legal issues: companies or enterprises need to consider conditions on issuing debts after resolutions regarding debt issuance are passed; and, issuers need to ponder their demands, credit, capital market’s demand for debt and shareholders requirements for equity to decide whether issue optional debt. According to article 2 of Chinese Trusts Law, trusts are defined as a trustor appointing a trustee on the basis of confidential relationship, delegating their property rights to trustee, and the trustee manages and disposes the property according to trustor’s intentions in its own name for the trustor’s benefits or particular purposes. Laws governing trust financing include the Chinese Trusts Law and related laws and regulations. The following legal issues should be taken into account: trust funds are flexible to enter and exit, therefore, trustors and trustees need to design trust mode by draft complete contracts provisions. In addition, special attention is required for the ‘negotiation’ and ‘disposition’ of exit of trust funds. Listing is when a joint stock limited company offers and lists its shares on a stock exchange after being approved by authorities. Shanghai Subway Company is the only company in China that listed on stock exchange through reverse take-over. Chinese Stock Regulation Commission (CSRC) requires that “IPO companies must have been making profits for the latest two consecutive years, and netprofit is no less than RMB 10 million yuan”. Rail transit projects hardly become profitable in a short time due to their high investment and relatively low price ticket. Therefore, the requirement is not reachable for rail transit investors.

July 2011 • GBM • 51

Luxury Brand Series – Luxury Cruises

Luxury Brand Series

Luxury Cruises Before the dominance of the aeroplane, which began to relish commercial success in the late 1960s, passenger liners and cruise ships were the favoured mode of overseas travel.

Ships changed very little during the first half of this century. Although engine efficiency improved, passenger sleepers, public lounges, and deck space on a cruise ship built in the 1950s were not much different than those on the S.S. Titanic. Their purpose remained the same as well. Oceangoing vessels were primarily used to get from Point A to Point B and the most common voyages were from New York to London. The cruise industry broke new ground in the 1980s launching a fleet of giant passenger liners, some capable of carrying over 2,000 people. These megaships were built exclusively for holidaymakers, maintaining a cruising schedule to sun-drenched locations around the world. Unlike their predecessors, this fleet was designed as allinclusive magnificent floating hotels with casinos, running tracks, spas, champagne and caviar bars, basketball courts, private stateroom verandas, and three-story nightclubs. Suddenly, ports of call were not the main selling point for travellers. Instead, people were interested in the whole experience of just being on board. Carnival Cruise Lines made quite a splash marketing its shipboard experience rather than its destinations to the vacationing public. Quickly, many other major cruise lines followed suit. Throughout these new glittering palaces the

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message was “luxury for the masses,” and for the most part, this is still the rallying cry of the cruise industry. The Luxury cruises found their niche by using a fleet of smaller ships that can visit secluded ports, avoiding the popular bustle of big-name destinations. Additionally, concern for the environment has created cruise itineraries that involve ecologically friendly agendas. Termed “eco-tours,” this new branch of the tourism industry balances the needs of the environment with the desire to see the world. Companies specializing in eco-cruises focus on education, wildlife, and relaxation, rather than entertainment, gambling, and margaritas. The ships are small and fares are often high, but they guarantee exotic, quiet destinations and a healthy conscience. The markets continue to grow steadily for these specialised companies. Today there are cruise liners around the world that compete with what the airplane industry has to offer. These liners are massive, state of the art, luxurious sea-hotels that take passengers around the world. So why not sit back, put your feet up and enjoy what the best of what the seas have on offer!

Revolutionary Website Changes How Travelers Shop For Cruises Experienced travel shoppers know that the cost of a cruise varies; vacationers may find that there is a difference of hundreds, even thousands of dollars, even when shopping for the exact same ship, sail date and cabin. This is because pricing through a local or online agency is affected by many complicated factors. CruiseCompete is a revolutionary website providing an easy and convenient way to help cruise travelers do just that; they partner with hundreds of agencies to shop for the best deal on the cruise consumer's ideal vacation. The stumbling block for many vacationers is that there is no way to know in advance which agency will have the best deal on any given cruise. Because agencies aren't allowed to advertise anything but the cruise lines standard retail prices on their web sites, travelers need to know which of the thousands of travel agencies are likely to have the best deals. To get the best deal, they then have to ask these top agencies for oneon-one quotes for sailings, and compare. How CruiseCompete Works: Attached is a brief video overview of how to use CruiseCompete.com to get the best deal

on a cruise vacation. (Video Run Time: 2:39 -or see the directions below.) CruiseCompete operates under a very simple concept: consumers just select the cruise they want to take, and independent travel agents compete to offer them the best deal. The consumer compares the offers in their online account, and then contacts the agent or agents with the best offers directly via phone, e-mail or live chat to ask questions or to book. The first step: consumers choose the cruise they want quotes on. If they are still undecided, CruiseCompete provides a number of tools to help. Cruise shoppers can use the cruise search tool, browse special offers by category or call or chat online with an agent via the Live Help link.

they are- the process is anonymous). The agents use search tools themselves so they can quickly identify requests where they know they have a price advantage and submit a quote. CruiseCompete then e-mails the consumer to let them know when new quotes are available, and provides a link in the e-mail to return to their account and compare offers. CruiseCompete also provides customer reviews of each agency so the consumer knows who they're dealing with. Once the consumer has compared offers, they can use the included agent contact information to talk with desired agents, to ask questions about the packages or to book a cruise.

Next, consumers create a CruiseCompete account by selecting a username and password and entering an e-mail address. Once an account has been created, the consumer clicks on Create a new quote request. Once the traveler has submitted their quote request, CruiseCompete's hundreds of member-agencies can see what the consumer is looking for (though not who

www.CruiseCompete.com

July 2011 â&#x20AC;˘ GBM â&#x20AC;˘ 53

Luxury Brand Series – Luxury Cruises

Aurora Expeditions – Cruising to the heart of nature Aurora Expeditions is an Australian-owned adventure cruise company specialising in small group voyages to wild, remote destinations such as Antarctica, European Arctic, Scotland and the Faroe Islands, Russian Coast, Papua New Guinea and Australia’s Kimberley Coast. We offer passengers an intimate experience of these destinations, with the support of expert staff and flexible, innovative itineraries. Our small group voyages allow passengers to visit regions outside the reach of conventional ships, while Zodiacs allow for up close exploration.

Antarctica – Antarctic Peninsula, Weddell Sea, South Georgia and the Falkland Islands.

Deeply committed to education and preservation of the environment, Aurora Expeditions’ philosophy is to respectfully visit these wilderness areas in turn creating ambassadors for their protection.

Kimberley Coast - Broome, Lacepede Islands, Montgomery Reef, Horizontal Waterfalls, Bigge Island, King George Falls and Darwin

Having pioneered a number of adventure activities in remote destinations, Aurora Expeditions offers an extensive program of activities including mountain climbing, sea kayaking, scuba diving, camping and photography on selected voyages. All voyages are run under the guidance of experienced expedition staff, expert naturalists, guest speakers and crew, who give educational lectures on board and are on hand to answer your questions. Your security, well-being, enjoyment and understanding of the region are their priorities. As you step onboard, you will be warmly welcomed and greeted by a relaxed and exciting atmosphere with strong camaraderie amongst passengers and crew. Destination highlights: Scotland and the Faroe Islands European Arctic – Spitsbergen, Iceland and Greenland 54 • GBM • July 2011

East Antarctica & subantarctic islands – Commonwealth Bay, Dumont D’Urville, Campbell Island, Macquarie Island, Auckland Islands and Snares Island. Russian Coast - Franz Josef Land, Novaya Zemlya, North East Passage, Wrangel Island, Kamchatka, Commander Islands and the Kuril Islands. Papua New Guinea – Alotau, Sepik River, Madang and Rabaul.

So come and unlock the secrets of mysterious Russia; see your first polar bear sighting in the European Arctic; discover secret waterways and hidden locks in Scotland, Zodiac around icebergs looking for penguins and seals in Antarctica, paddle through tropical waters of Papua New Guinea or witness ancient rock art along the Kimberley Coast. Aurora Expeditions voyages will stir the soul, push the boundaries of adventure travel and deliver personal attention on unforgettable expeditions.

For more information, to order a brochure or to book, visit www.auroraexpeditions.com.au or call +61 2 9252 1033 or email our expedition experts on info@auroraexpeditions.com.au

A-ROSA River Cruises: Set course for recreation. Famous buildings, wonderful facades, ancient bridges. The most beautiful things that a town has to offer can mostly be found on the river banks. From the deck of a very modern A-ROSA cruise liner, and with stopovers in the ports of lively metropolises. A homogeneous, young fleet and an appealing product promise a successful, recreative vacation. The nine modern cruise ships of A-ROSA offers a lot of open space. At 125 to 135 metres, the ships spend space for various activities and a generous design of the public areas. The roomy cabins with an area of up to 16.5 m², are air-conditioned, sometimes with French balcony, elegant and comfortably furnished. Guests can relax on the sun deck by the pool or in the SPAROSA. There’s also no shortage of culinary treats on board. Our extensive selection of delicacies includes Mediterranean cuisine and regional specialties, and they are always presented perfectly – with display cooking or dinner on deck. Experience French savoir vivre –The two identically constructed sister ships A-ROSA LUNA and A-ROSA STELLA travel along the Rhône and Saône from and to Lyon, France’s secret capital city for connoisseurs. Routes go from 6 to 15 days and run first north up to world-famous wine-growing regions such as the Côte d’Or, unique landscapes such as Burgundy and then south to Provence and Camargue right down to Avignon and Arles. Every day, guests will experience a new aspect of France: whether it’s the cuisine, culture, architecture, impressive natural landscapes or romantic castles – every traveller will find the right combination. Danube: One river, so much to experience:Travel towards the sun along

Europe’s longest river from west to east – though you’ll barely have a spare moment to look up at the sky because your gaze will be drawn to the picturesque beauty of the Wachau valley and the Hungarian puszta to both sides of the boat. Discover the astonishing wine-growing and cultural regions of Lower Austria and the historic treasures in the cities of Vienna, Budapest, Belgrade and Bucharest. Marvel at the full beauty of Austria, Hungary and Slovakia, from the high mountains to the low plains, and enjoy a glass of wine and selected culinary treats as you do so. The enchanting Christmas markets are just too good to miss. Cruises are from 5 days to 17 Days. Discover the rhine: The three newest A-ROSA ships run the Rhine from/to Cologne or Frankfurt in a series of fiveand eight-day routes travelling north and south through Germany, the Netherlands, Switzerland, France and Belgium. Passengers can look forward to fascinating ports of call including Amsterdam, Antwerp, Strasbourg and Basel, unusual day trips, wonderful landscapes and sites like the famous Loreley.

A-ROSA Flussschiff GmbH Am Strande 4 18055 Rostock Germany 0049- (0)381-202 6001 www.arosa.com info@a-rosa.de July 2011 • GBM • 55

Luxury Brand Series – Luxury Cruises

Aqua Expeditions The award-winning, Aqua Expeditions (www.aquaexpeditions.com) launched the second of its two cruisers, the M/V Aria, in May 2011. The custom designed boutique cruise ship, is making its way up and down the Amazon River in Peru and into the remote Pacaya Samiria Reserve. Designed by stellar Peruvian designer Jordi Puig, the boat has 16 luxury outward-facing suites with floor-to-ceiling windows. The spacious suites are all air-conditioned with light seating areas and en-suite bathrooms with rain showers. There is also an on-deck Jacuzzi, two exercise rooms, a dining room and bar, observation deck, an onboard boutique and an open-air lounge. The observation deck is the perfect spots to sip a Pisco Sour and watch the world go by. The M/V Aria by Aqua Expeditions offers the experience of a 5-star hotel under the stars of the Amazon. To match, top Peruvian chef Pedro Miguel Schiaffino, has created a menu of gourmet Peruvian cuisine which is accompanied by a range of celebrated South American wines. With much of the ingredients sourced from Amazon and its banks, guests can revel in a truly authentic Peruvian experience. Year-round, the M/V Aria operates itineraries, ranging from three, to four and seven nights. Daily water-based excursions, on comfortable launch boats called skiffs, allow guests to view wildlife such as the Amazon Pink River Dolphin, the Red Howler Monkey and the Greater Fishing Bat more closely. Other unforgettable experiences include fishing for piranha, spotting six-foot water lilies and spending time with the communities that live on the banks of the river. Expert guides, many of which grew up in Amazonia, provide rich narrative detail 56 • GBM • July 2011

about life along the Amazon, enriching guests’ journeys to such rarely visited areas, with stories of life for the rivereños, folklore and information on the fragile ecosystems. The company’s commitment to protecting the Amazon and its wildlife has been integral in the construction of the M/V Aria. The boat uses fuel efficient motors with low carbon emissions, has an on-board water purification facility to ensure that river water is used wherever possible, and a meticulous waste management system. This combination of five-star accommodation, talented and experienced guides, gourmet cuisine make for a once-in-a-lifetime experience with Aqua Expeditions.

A three-night cruise starts from £1,555 per person, based on two people sharing, on a full board basis. This price includes all excursions, beverages (soft drinks, house wine and beer), transfers to and from Iquitos (if arriving on recommended flights) and entrance to the Pacaya Samiria Reserve.

For more information and to book, please visit www.aquaexpeditions.com.

Sanctuary Retreats The Sanctuary M.S. Yangzi Explorer introduces a new standard of cruising in China - more intimate and luxurious. With the largest cabins and suites on the river, all with private balconies, as well as the highest crew to passenger ratio on the river of 1:1, this is a cruise unlike any other. Carrying just 124 passengers, compared to the 300 plus accommodated on other cruise ships, the Sanctuary Yangzi Explorer offers the finest and most personalised service on the river. There are two options available. The three night cruise departs Chongqing on Thursday and travels downstream to Yichang, arriving on Sunday. Alternatively, you can travel upstream over 4 nights, leaving Yichang on Sunday and arriving in Chongqing the following Thursday.

The Sanctuary M.S. Yangzi Explorer is ideally equipped to host special groups. Two private rooms are available for that special dinner with family and friends, or as a conference venue with all necessary audiovisual equipment for meetings or lectures. For larger groups, a two-floor theatre serves as an auditorium for a guest speaker, film presentation or meeting.

including massage and beauty treatments are available for your enjoyment.

The ship also has the most spacious and indulgent spa on board any cruise vessel on the Yangzi. With an area covering more than 300 square metres, the Yangzi Spa is a haven of tranquility and rejuvenation. With six treatment rooms, guests will have the opportunity to truly indulge and relax while on board. A varied menu of spa services,

Sanctuary M.S. Yangzi Explorer Room 3007, 30th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong Tel: +(852) 3179 5900 Fax: +(852) 2866 0932 China@sanctuaryretreats.com www.sanctuaryretreats.com/cruises

Life aboard the spacious Sanctuary M.S. Yangzi Explorer is tranquil and unhurried. The cruise itinerary onboard the ship is designed for a relaxed pace and is tailored to water levels at different times of the year. Visit Daoist temples and shrines at Fengdu or alternatively get a glimpse of authentic local life, explore the towering peaks and remote villages of the Three Gorges - Qutang, Wu and Xiling - and see the controversial Three Gorges Dam Project. Onboard facilities include a la carte dining, a luxury spa, an observation deck, 24-hour room service, a two-floor theatre, Suite Lounge, and beauty and fitness facilities. A doctor also travels onboard.

July 2011 • GBM • 57

mind BodY and worK - golf tips

health & fitness

improve your golf game Golf is a game that many of us enjoy whether it’s for business or pleasure. We watch the professionals and wonder in amazement how they make the game look easy. These individuals have made the game of golf their life and spend hours on the course and on the range improving every element of their stance, grip, balance and swing. However, for us mere mortals the short periods of time we have between personal and business life to improve on our handicap should be utilised to improve the overall enjoyment of our golf game.

There are many factors that influence one’s overall technique and ability such as experience, height, build, and learning. However, there are certain things that you could do to help you get to that dream of playing like a professional!

Clothing As funny as it may sound but wearing the correct clothing may help to improve your game. In years gone by many thought that the only time they should worry about their attire was adhering to the rules of the golf club and looking the part on the course. yet the millions spent by sport firms in research and development on golf clothing proves that it can actually help your game. Step 1 Buy golf shirts that are breathable and have a material that helps evaporate moisture and keeps it away from the skin. Step 2 Choose a top of the range golf glove. A stiff, out-of-shape glove will cramp your game and your hand. A high-quality glove that is kept in good shape will help you get a better feel for your club. Step 3 Saving money when choosing golf shoes is not a good option. A suitable pair of golf shoes will help your feet stay comfortable and they will also assist you get a good foothold when playing. Step 4 you may want to be stylish, but it's vital to be comfortable in the late stages of a round.

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Quality garments that are soft and don't irritate the skin will go a long way towards improving your game.

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

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

Fitness Golf isn’t a game whereby you just swing the club and hope for the best. Nor is it about a relaxed stroll across the course whilst eating and drinking your favourite fast food. Golf is a sport for athletes and what many see on the TV, is not some obese guy/women waddling down the fairway. Many of these athletes have a “Golf Training Programme” that they stick to religiously day-in, day-out. Step1 Improve your diet. Eat foods that will keep you going for the course of the 18 holes. Eating healthy not only gives you the energy but also helps to shed them un wanted pounds! Choose to eat smaller meals in the day that include your five daily fruit and vegetable. This can be the difference hitting the ball them few extra yards or just tapping the ball off the tee!

Step 2

When attaching your grip, make sure that you have equal pressure on all sides of the shaft.

back, the left shoulder and hips should turn naturally to allow weight to transfer to the right side. The hands should begin to set at waist high. As the club continues to the top, the shoulders should continue to turn. At the top it is important to have the hands set but not broken down. Over swinging at the top will create negative club speed and inconsistent swings.

Step 4

Step 3

The left side of the shaft goes across the mid points of the left hand. Close the last three fingers and the heel of the hand first, then the index finger and then the thumb. The thumb is neither long nor short, but is naturally positioned just to the right of the middle of the shaft.

The object of the downswing is to return the club head to the ball with the highest controllable speed. Just as too fast of a backswing is no good, too hard of a downswing can also cause bad golf shots. There are many theories on what should start the downswing. I find that most players who think about pulling with their left arm from the top will create a more consistent swing with all body parts working together. Many players from watching the tour players tend to try to lead the downswing with the left side, and as a result slide ahead of the ball at impact causing weak slicing shots.

The palms of the hands face in the same line as the leading edge of the clubface. Step 3

Step 5 The right side of the shaft goes across an angle that is parallel to the angle the shaft went across the left hand, but about an inch farther down in the fingers. Close the middle two fingers first, then cover the pocket of the palm of the hand over the left thumb. Curl the index finger, the thumb goes to the left side of the shaft and the pinkie goes in the groove between the left index and middle fingers. Step 6 There are no gaps ... everything fits nicely together. The hands are compact and unified. The grip pressure is created by the form of the grip.

Step 2

Step7

Exercise. This does not mean joining your local gym and going on a programme to become a body builder. Go out for long walks, jog a kilometres in the week or start a light training programme that will keep you fit and trim.

The back of the left hand is the clubface; the palm of the right hand is the clubface. Where the hands are the clubface will follow.

The Swing

The Stance

Too much thinking and pondering can often result in a poor swing. A golf swing is about having good rhythm and an accurate motion. Swinging back too fast will result in the club and body working against one another and will definitely result in a bad shot. The secret to a good swing is creating speed and power on the down swing and not the back swing.

The Grip

Step 1

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

Take the club away slow for better motion and rhythm. Because the backswing sets up the downswing, we will discuss it first.

Step 1

A good backswing starts with the arms - not the hands. you don't want to pick the club up at takeaway. you want to draw it away in a one-piece motion. As the club starts

Step3 Drink plenty of water before during and after your round. The amount of people who don’t do this is shocking. Water helps you stay alert, fresh and hydrated. A lack of water can make you tired and hamper your swing or even your putt.

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

Step 4 To complete the swing you must have a good finish. The finish in the golf swing, unlike in baseball, needs to be high, not left. We find most beginners find it more natural to finish low and left causing topped shots and difficult to get the ball airborne. The clubface needs to stay square for several inches after impact to create proper flight on the ball. Also, in the finish the weight that you transferred to the right side in the backswing now must transfer to the left side. With a good finish your right knee should face the target, right foot up so all spikes are visible, and hands high close to your left ear. Well, there you have it! A good look at improving your golf game. Now it’s up to you and to get on the golf course and getting that club swinging!

Step 2

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

July 2011 • GBM • 59

advertising law

In 198 4 began , a Canadia nf renting ad spa armer ce on cows his

advertising law The business world has many products and services that it relates to its customer base through various mediums. Traditional print based advertising is still on the rise, along with radio and television. Another ‘medium’ that has come to the forefront today is the Internet. Businesses are now able to mix traditional mediums with online advertising such as SEO’s (Search Engine Advertising), website banners and even use online videos. Furthermore, the rise in ‘Social Media Networks’ and ‘online user experiences’ has enabled businesses to target individuals with products or services personal to that particular consumer.

In the ideal world this would be the perfect scenario; company advertises, consumer purchases. However, this is far from perfect, in-fact the legal ramifications of keeping to regulations for business becomes quiet complicated. Many factors have to be taken into consideration when a company decides to advertise their product or service. This can range from taking into consideration the target audience age, the culture, the country’s advertising laws, the regulations surrounding each medium and many more. Nonetheless, there is legal help out there that can be called upon and utilised if and when required. These advertising lawyers and specialists are able to clear the confusion for any business, including advising on how best to promote services and products. Advertising law encompasses many areas such as the regulations of advertising on the Internet and how it differs from jurisdiction to jurisdiction, the Associations and Bodies who control the standards in Advertising (again, from country to country) , and even the laws surrounding consumer protection. Compliance plays another major area for businesses in relation to advertising, whether it is the firm themselves or for the client. Understanding the environment and what the potential pit-falls could be, can save businesses countless time, effort and more importantly money. With advertising techniques developing at an unprecedented rate almost on a daily basis, and new variation stemming from these, it becomes more and more challenging for firms to keep track of what they can or cannot advertise. Along with this, advertising laws adjust accordingly depending upon the jurisdictions they influence and the impact of the advertising campaign. Although governments and bodies across the world endeavour to press standards and regulations, it is inevitable that these too can complicate the process or hinder progress for a campaign. Many organisations are now looking to advertising lawyers to work in conjunction with advertisers to plan a strategy that will hopefully result in adverts and not lawsuits.

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AUSTRALIA Gabrielle Kopke (National Brand Manager) Peter Le Guay Partner +612 8248 3424

+612 8248 5899 pleguay@thomsonslawyers.com.au www.thomsonslawyers.com.au

Staying ahead of the game in Australia In today's world the laws affecting advertising are increasingly complex and rapidly changing. From the Australian point of view, Peter Le Guay, Partner at Thomsons Lawyers discusses some things to be aware of to stay ahead of the game. The most significant recent change in Australia which affects advertising has been the introduction of the new Australian Consumer Law (ACL) which came into effect in January 2011. The ACL replaces the consumer protection provisions of the old Trade Practices Act 1974 (TPA) which has been repealed and replaced by the new Competition and Consumer Act 2010 (CCA). The ACL is found in Schedule 2 of the CCA and largely repeats many of the consumer protection provisions of the TPA such as section 52 (misleading or deceptive conduct) which is now section 18 of the ACL and section 53 (false representations) which is now section 29. However, there are additional provisions in the ACL which were not previously in the TPA of which businesses need to be aware. These include the specific prohibition of false or misleading representations concerning testimonials in respect of particular goods or services. These testimonials must be correct to avoid a breach of section 29 of the ACL. Additionally there are provisions for a range of new powers and penalties (that have been in operation since April 2010) which have provided the competition and consumer regulator, the Australian Competition and Consumer Commission (ACCC), additional powers to investigate and/or penalise individuals or companies that engage in certain prohibited conduct. For example, the ACCC can now ( and quite regularly does) issue individuals or companies with Infringement Notices who are alleged to have breached the ACL by engaging in such conduct as unconscionable conduct, unfair practices (other than misleading or deceptive conduct), pyramid

selling, non-compliance with certain product and safety information requirements and failing to respond to a Substantiation Notice or providing misleading information in response to Substantiation Notice. An Infringement Notice must be issued within 12 months of the alleged breach and the penalty payable can vary depending on the breach. However for the most part the penalty is AU$1,320 for individuals and AU$6,600 for corporations. Substantiation Notices on the other hand are essentially an investigative tool that the ACCC can employ to determine whether the advertiser possesses substantiating documentation that could support the claims made. For example, a Substantiation Notice can be used to investigate the ACCC’s concerns about was/now pricing claims, business opportunity claims, country of origin claims, composition of goods claims, health claims, environmental claims and product safety claims. It is not clear how heavily the ACCC has relied on Substantiation Notices to date (as there is no public register of them as there is for Infringement Notices) however if issued with one, the recipient has 21 days in which to respond. Failure to respond could result in an Infringement Notice or Public Warning Notice being issued, or the ACCC applying to the Court for the payment of a pecuniary penalty. The ACCC can also now issue Public Warning Notices, or “name and shame” notices as they have been called, to alert the public to a suspected breach of certain provisions of the ACL. A major consideration in the ACCC’s reckoning as to whether they should issue a Public Warning Notice is whether there an imminent need to inform consumers so they can avoid suffering detriment. To date the ACCC has issued one Public Warning Notice concerning misleading representations about potential earnings from a business opportunity.

marks. All businesses use trade marks, whether registered or not, to identify their goods and/or services, including by way of advertising. While a trade mark can function and be protected as such even if it is not registered, undoubtedly the best protection for it is obtained by registration. If the trade mark is not registered, the trade mark owner will need to establish significant use of, and reputation in, its trade mark in the marketplace in order to protect its trade mark rights at common law. This is an expensive and time consuming exercise which may be avoided if the trade mark is registered. A quick word on privacy. In the ever increasing online world, consumers are becoming more and more aware of the rights under the Privacy Act 1988 and the Spam Act 2003, and advertisers and their agencies need to be aware of the limitations that this legislation can place on their online activities. Privacy in particular has recently been the subject of a comprehensive review by the Australian Law Reform Commission (ALRC) which delivered 297 recommendations for change. When advertising goods and services, it is crucial that businesses are aware of their rights and obligations under local laws. Whilst the CCA, Privacy and Spam Acts impose certain limitations on businesses in respect of their advertising activities, businesses can stay ahead of the game by being aware of these limitations and putting systems in place to comply with them.

Aside from issues under the CCA, advertising raises issues surrounding intellectual property, in particular, trade

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LEBANON Badri & Salim El Meouchi Law Chadia El Meouchi Managing Partner Tel: +9611 995900 Fax: +9611 995906

chadia.elmeouchi@elmeouchi.com www.elmeouchi.com

Advertisement Laws In Lebanon – Overview Lebanon is a small Middle Eastern country that protects an individual's right for the freedom of speech and expression as a constitutional principle within the framework of the law (article 13 of the Lebanese Constitution). As a recognized form of expression, advertisements in Lebanon are subject to various laws and regulations. Lebanon does not have one single regulation governing advertisement, or a dedicated and comprehensive advertisement law but does have a multitude of laws and regulations that address various aspects of advertisement. None of those regulations provided for a clear definition of what is deemed to constitute an advertisement. We shall attempt, in this paper, to provide a summary of some of the main Lebanese laws and regulations governing advertisement. Advertisement from the perspective of consumer protection law: Law number 659 dated February 4, 2005 aiming for the protection of the consumer (the “Consumer Protection Law”), does not contain a definition of an advertisement, but contains a full section relating to false or deceiving advertisements. Pursuant to Article 11 of the Consumer Protection Law, a deceiving advertisement is “the advertisement that is conducted in any means, and relates to a product or service, which contains a promotion, offer or claim that is deceitful, or which is written using a wording that may directly or indirectly mislead or deceive the consumer”. Article 11 further states that “shall be deemed deceitful the claim or promotion that refers to, by way of illustration, any of the below items: •

The nature, composition, main conditions, or the constituting elements of the product, or quantities thereof.

•

The origin of the product, weight, size, manufacturing method, expiry date, conditions of use or the warning associated to such use.

•

The nature of the service, the place of delivery as well as the core constituents quality wise or from the perspective of the benefits deriving therefrom.

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•

The conditions of contract, the overall price and payment method.

•

The obligations incumbent on the advertiser.

•

The identification, qualifications and quality of the manufacturer.

Shall also be considered as a deceiving advertisement, any advertisement whereby the advertiser shall promote himself as having won prizes or diplomas, or official certifications or medals, as well as claiming scientific grounds whereby in reality these do not exist. Shall finally be considered deceitful, the advertisement that uses a logo or other distinguishing mark or an imitation of an existing trademark”. Article 13 of the Consumer Protection Law provides inter alia that the Ministry of Economy and Trade may recall an advertisement it deems deceitful and to request from the advertiser the publication of an erratum, or a correction thereof. The court may also exercise this prerogative. Advertisement from the perspective of the audiovisual law Law 382 of 1994 relating to the organization of the radio and television broadcasting (the “AV Law”) provides for an entire section relating to advertisement. Indeed, article 36 of the AV Law prohibits stations from airing deceitful advertisements that might harm the consumer or that might contain offensive material that may be deemed harmful to the youth or public morals. Article 37 of the AV Law provides that advertisements shall be produced in a manner that would differentiate them from other programs and news anchors may not feature in an advertisement. Finally, Article 40 of the AV Law provides that a special law will be enacted to organize all the aspects that have not been catered above. To date, such special legislation was not enacted. Printed advertisements and billboards Decree number 8861 dated July 25, 1996 (as amended by decree 1271 dated September 10, 1999) (the “Decree”) defined the advertisement by its support as being

any billboard, writing, insignia, poster, image, sign, rendering or signal that aims to promote an establishment, a locale, products, trade, service or other activity including energy lit billboards or electronic format, whether fixed or mobile. Article 1 of the Decree excluded audiovisual and radio advertisements from the scope of this definition. The aim of the Decree was to organize visual advertisements and billboards as well as mobile ads that are attached to vehicles. Each entity wishing to have such advertisements must apply for a permit to be granted by the local authority. Any violation shall be sanctioned by the removal of the advertisements and the payment of a penalty. It is also worth noting that the advertisement should at all times comply with the public morals. To conclude, and based on the above, one may consider that an advertisement is a communication made to a consumer about a product or service. The advertisement should not be deceitful as to the qualities, origin and merits of a product or service. It is also worth noting that the AV Law adds the requirement that the advertisement has to have a different scope and form than the audiovisual program that is being aired so as not to confuse the advertisement with the main program, that it should not be offensive and respect public morals, and that news anchors may not feature in an advertisement. It is recommended that legislators consider establishing a framework law governing the entire advertising market. Indeed, and despite being one of the important advertisement countries in the Middle East, Lebanon has limited legislation organizing the market and the current legislation may be considered inadequate to address new forms of advertisement, including online ads and other forms. BADRI & SALIM EL MEOUCHI LAW FIRM: CHADIA EL MEOUCHI and RAMy AOUN

www.pwc.com/cy

PwC - Tax Services New Distinctions. Dynamic Challenges. The tax system in Cyprus

The new award by the World Finance Magazine as The Best Tax Firm of the Year in Cyprus - 2011 strengthens even further our commitment to offer services of the highest quality. It paves the way for new goals. And reinforces our resolution in addressing major challenges concerning the progress of our society and our economy. The tax team of PwC Cyprus is at the forefront of developments and pioneers in contributing with its know-how in establishing Cyprus as an International Financial centre. It is very important that our local efforts are supported by the global tax network of PwC. The award winning specialised tax team of PwC counts today 165 people, partners and staff. It has experienced rapid growth during the last six years based on the successful strategy of PwC. Strategy which focuses on the quality of our people, our clients and the services offered. In tax issues what counts above all is the result. This is where success is determined. And here, the know-how, experience and expertise of the tax team of PwC are verified. Our services cover all the tax needs of a corporation or an individual across all industry sectors as follows: Corporate: Tax planning on structuring, mergers and buyouts and other business issues, tax returns administration, agreement with Tax Authorities and obtaining tax rulings. VAT: Advisory services for tax planning, VAT recovery and VAT minimisation and tax compliance (administration of tax returns, communication with VAT authorities, agreement of disputed assessments etc). Personal: Tax planning, completion submission and agreement of tax returns, tax services to expatriates, pensioners and other non-Cypriot individuals. The “Tax Facts & Figures - Cyprus” guide includes the recent changes in Tax and VAT legislation. It is a comprehensive source of Tax information for clients, associates and the society in general and it is published by PwC for the past 19 years in both Greek and English and for the past two years in Russian. The guide for 2011 is available at no cost from the reception areas of the PwC offices all over Cyprus. You may also find the guide in electronic form from our website www.pwc.com/cy. PwC Cyprus Julia House, 3 Th. Dervis Street, Cy-1066 Nicosia, Cyprus P.O.Box 21612, CY-1591, Nicosia, Cyprus T: +357 - 22 555 000, F: +357 - 22 555 001

©2011 PricewaterhouseCoopers Ltd. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Ltd of Cyprus, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

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Deal Directory

Deal Directory AdaptiveMobile acquires Sentry Wireless AdaptiveMobile, the world leader in mobile security, announced on 23 June 2011 the acquisition of Sentry Wireless, a developer of handset based mobile security applications. Sentry’s market-leading technology will be integrated into AdaptiveMobile’s Network Protection Platform to give mobile operators visibility when subscriber handsets become infected by rogue mobile applications and viruses, and limit subscriber loss of data and credit. Following consumer research from AdaptiveMobile that identified that

consumers now fear spyware, rogue apps and loss of data more than they do the loss of the handset itself, operators are looking for an all embracing security platform that will help them preserve subscriber trust in the network. Through the acquisition of Sentry Wireless, AdaptiveMobile will provide operators with white-label applications that subscribers can use to report SMS spam, check the validity of a downloaded app, and be notified securely by their operator if their handset is detected to be compromised.

In addition, the handset applications will allow individual subscribers and their children, or companies and their employees, greater control of who can contact them, when and for what reason. This unique combination of handset based policy management and network-centric enforcement enables mobile operators to step up and cater for customers who are looking towards mobile operators to provide them with protection against mobile threats.

Advanced Power Components plc: Acquisition of Quo Vadis Advanced Power Components plc (APC), a specialist distributor and manufacturers’ representative of electronic components, recently announced that it had acquired the assets of Quo Vadis Limited (QV) a Bedfordshire-based supplier of intelligent lighting systems. Established in 1995, QV operates across residential and commercial environments, designing and supplying bespoke lighting systems that improve energy efficiency and lighting performance through sophisticated

controls and sensors. QV will be rebranded as a new unit of APC called QV Controls Limited, which will continue to operate from QV’s current offices in Bedfordshire. While the acquisition will not constitute a significant transaction under the AIM Rules, the directors believe that the acquisition will add significant impetus to APC’s strategy of diversifying its current UK-focused component distribution business into the international deployment of environmentally friendly energy technologies.

QV has an impressive base of blue chip clients with whom they have demonstrated the effectiveness of their technology and believe that APC’s resources will allow QV to fulfil its ambitious expansion plans in the UK and overseas. Mark Robinson, APC’s chief executive, said: “The acquisition of QV is strategically important as we implement APC’s strategy of diversification into the growing international market for products and technologies which increase the efficiency of energy consumption.”

Assurant Specialty Property acquires SureDeposit On 22 June 2011, Assurant Inc, (Assurant) a premier provider of specialty insurance and insurance-related products and services, announced that it had purchased SureDeposit, the leading provider of security deposit alternatives to the multifamily renters industry, in an all-cash transaction from Converge Services Group, LLC. “Assurant targets acquisition opportunities which enhance our existing specialty businesses and provide long-term growth opportunities for our shareholders,” said Robert B Pollock, president and CEO of Assurant, Inc. “SureDeposit is an excellent

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strategic fit with our specialty property business and the purchase will be modestly accretive to earnings from the start. With a purchase price of less than $50 million, this acquisition reinforces our commitment to disciplined deployment of capital as we add complementary specialty products to our business portfolio in balance with share repurchases.” “The dynamic renters market in the US makes this new product offering for Assurant Specialty Property particularly attractive to multifamily property managers and consumers looking for alternatives to

traditional security deposits,” said Gene Mergelmeyer, president and CEO of Assurant Specialty Property. Stuart Litwin and Dan Rudd, founders of SureDeposit commented: “Our unique product offering continues to gain traction among multifamily property managers and owners nationwide, underscoring the strength of our company, the commitment and professionalism of our employees, and our great client relationships. With the added resources of the Assurant team behind us, we expect the momentum to accelerate.”

AXA Private Equity signs agreement to acquire 52.26% stake in Outremer Telecom AXA Private Equity (AXA), the leading European diversified private equity firm, announced that it had signed an agreement with Apax Partners and JeanMichel Hégésippe, the CEO and founder of Outremer Telecom, to acquire their entire 52% stake in Groupe Outremer Telecom at a price of €12 per share. Jean-Michel Hégésippe will re-invest along with the management team and AXA to lead a new phase in the company’s development. The transaction is subject to the approval of the French Competition Authority, and is expected to close in the next few weeks.

Outremer Telecom is the leading alternative telecoms operator in French overseas départements and territories.

the simultaneous challenges of growth, convergence and technological change in a stiff competitive environment.”

By acquiring a majority holding in Outremer Telecom, AXA wishes to drive forward the group’s organic growth and support external growth initiatives in the Caribbean and the Indian Ocean.

Jean-Michel Hégésippe, the CEO and founder of Outremer Telecom, says: “We would like to express our thanks to Apax Partners. We have joined forces with them to support our growth, and as a committed and innovative partner they will allow us to enjoy the benefits of their experience and skills in the sector. We are thrilled to be embarking on a new stage in our development alongside such a prestigious investor as AXA Private Equity.”

Philippe Poletti, MD at AXA, comments: “We are very pleased to be joining Outremer Telecom in a new development phase and have no doubt that with Jean-Michel Hégésippe and his teams we will rise to

CA Technologies to acquire privately held ITKO for $330 million On 29 June 2011, CA Technologies announced a definitive agreement to acquire privately held Interactive TKO, Inc (ITKO), a leading provider of service simulation solutions for developing applications in composite and cloud environments, for $330 million in an all-cash transaction. CA Technologies acquisition of ITKO will add a new and critical dimension to modern IT management and extend it to encompass the entire service delivery

lifecycle. In particular, the acquisition will help customers overcome the limitations of current organisational approaches, breaking down the silos across development, testing and operations. “The addition of ITKO to CA Technologies will extend our ability to deliver a complete set of capabilities to help our customers and partners to increase their adoption and value from cloud-based applications,” said David Dobson, executive vice president, Customer

Solutions Group, CA Technologies. “We are thrilled to join CA Technologies because it gives us a tremendous platform to take our growth to an entirely new level,” said Shridhar Mittal, president and CEO of ITKO. “Combining LISA with CA Technologies world-class IT management will give our customers a solution that is ready for where they’re going, not limiting them to where they’ve been.”

Encore Tickets & West End Theatre Bookings join forces Encore Tickets, the UK’s leading independent supplier of theatre, restaurant and attraction tickets, has joined forces with West End Theatre Bookings (WETB) in a historic deal that is great news for London’s West End. Encore Tickets Group has acquired WETB from Holidaybreak PLC in a deal worth over £10m. The combination of Encore, the market leader in B2B ticket sales and WETB, who have doubled in size over the past four years,

will deliver the largest number of ticket sales of any London theatre ticket agency. Supplier partners can now connect to hundreds of tour operators and online retailers reaching millions of consumers globally, plus domestic school groups, group organisers and coach companies, retail and concierge outlets across London, who will all be able to access the combined inventory at the touch of a button.

Tickets commented: “The consolidation of the two fastest growing ticket companies will deliver a more streamlined and efficient route to multiple markets for our partners, maximising efficiency and ticket yields. We are very excited about our future plans with the addition of the immense talent within WETB. ”

John Wales, managing director, Encore

Experian plc: Acquisition of Medical Present Value On 28 June 2011, Experian, the global information services company, announced that it had signed a definitive agreement to acquire Medical Present Value, Inc (MPV), a leading provider of data, analytics and software in the US healthcare payments market. The purchase price is US$185m, which will be funded from Experian’s existing cash resources. The transaction is subject to customary US regulatory approval. The acquisition of MPV broadens Experian’s addressable market to now include large

physician practices and create product synergies across the full healthcare payments lifecycle. The acquisition also provides access to MPV’s unique data sources, comprising commercial and government contract data covering approximately 90% of all insurance plan members in the US.

revenue growth over the past three years has exceeded 30%, driven by new business wins. In the year to 31 December 2012, Experian expects MPV to deliver approximately $45m of revenue and EBIT in excess of $10m. The acquisition will be earnings enhancing in the first full year of ownership.

MPV has highly attractive financial characteristics. Revenues are largely subscription based, with renewal rates in excess of 95% and average contract duration in excess of four years. Compound annual

MPV is being acquired from investors and MPV employees and. The assets acquired will form part of Experian’s North America Credit Services division.

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Deal Directory

GSV Capital Invests in Facebook On 27 June 2011, GSV Capital Corp (GSV) announced that it had acquired 225,000 shares in social-networking company Facebook at an average price of $29.28 per share. The investment of $6,587,500 represents approximately 15% of GSV’s total portfolio. “Facebook is a one-of-a-kind business which has created enormous network effects. With over 650 million people on its platform, or approximately 1/10 of the world's population, Facebook has established itself as a next

generation social communications platform,” said Michael T Moe, GSV’s CEO and founder. GSV Capital’s mission is to identify and invest in the premier VC backed private companies in the marketplace today — at attractive valuations. “GSV leveraged its network to quickly execute the transaction, entering the agreement to purchase shares of Facebook shortly after the close of our company's initial public offering. This is a true testament to the strength of our team

and a great example of how we intend to quickly seize opportunities on behalf of our investors,” Moe added. This purchase of Facebook shares was subject to certain closing conditions, including a 30-day ‘right of first refusal’ or ROFR, expiration. GSV is presently in the final stages with a handful of private company investments that it anticipates acquiring within the next 30 days, subject to applicable closing conditions.

Home Retail Group Plc: Acquisition of Habitat UK Brand Home Retail Group, the UK’s leading home and general merchandise retailer, announced on 24 June 2011 that it had agreed to acquire certain rights to the Habitat brand, one of the UK’s leading contemporary home retailers. The rights are for the exclusive use of the Habitat brand, its brand designs and intellectual property in the UK and the Republic of Ireland. In addition, Home Retail Group is also acquiring the Habitat

UK website, three of its London stores and certain brand support functions. The purchase price of £24.5m is being paid in cash to Habitat UK Limited (in administration). Terry Duddy, chief executive, Home Retail Group said: “The style led credentials of the Habitat brand, with its strong heritage, will be a significant addition to the Group’s

portfolio of own brands. In addition to operating the three London stores and the UK website, we will introduce Habitat products across the Group including a number of concessions in Homebase stores. We will also look to develop the online proposition leveraging the award-winning multi channel strength of Home Retail Group.”

JLT to acquire stake in Chilean insurance broker On 28 June 2011, JLT Group plc (JLT) announced that it had signed heads of agreement to acquire an initial 50.1% interest in the share capital of Alta SA with an option to acquire a further 25% in 2020. Alta is the holding company of Orbital Corredores de Seguros, the 4th largest insurance broker in Chile, and Alta Re, a reinsurance broker that commenced operations in April 2010. It has been a member of the JLT International Network since 2010.

It is anticipated that JLT will initially acquire 50.1% of the company from purchasing shares from the management of Alta. Jose Ignacio Lathrop, chief executive of Alta SA, commented: “This extension of our excellent relationship with JLT will provide our clients with enhanced access to international markets, experience and specialty skills. We see this deal as beneficial to our clients and our employees.”

operations commented: “This acquisition continues JLT’s drive to expand its Latin American businesses following a strong performance in 2010 … It is another step forward in JLT’s strategy of expanding the reach of our core specialisms and increasing our exposure to the world's faster-growing economies.” It is anticipated completion will take place in the second half of 2011.

Vyvienne Wade, CEO of JLT’s Latin American

Lok’nStore Group: Acquisition of Saracen Datastore for £4.0 million On 30 June 2011, Lok’nStore Group plc (Lok’nStore), a leading company in the UK self-storage market, agreed to acquire Saracen Datastore Limited (Saracen) for a consideration of £4.0 million using its existing revolving credit facility. Leo Kane, managing director of Saracen who has been with the business since 1995, retains a 9.4% stake in Saracen and will continue in his current role. Saracen, which is headquartered in Leatherhead, was established in 1991 and has four sites across the South East of England

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providing over 100,000 sqft of offsite records storage and document archiving. For the year ended 31 December 2010, Saracen achieved turnover of £1.6 million and adjusted EBITDA of £0.4 million. Commenting on the acquisition, Andrew Jacobs CEO of Lok’nStore said: “We have been looking to broaden our offering to clients and the acquisition of Saracen is an excellent entry point to a wide market segment complimenting our existing selfstorage activities. This acquisition extends

our existing self-serve archive service which we provide to around 500 customers. The acquisition will add over 300 customers and the Directors believe that this will enhance our focus on increasing cash generation from the business and value to shareholders.” Leo Kane, MD of Saracen, said: “Saracen has created a strong base for future growth and joining the Lok’nStore Group will provide further impetus to the business. I am excited about working with Lok’nStore to achieve the full potential of this business.”

Synchronica to acquire Nokia’s operator branded messaging business On 30 June 2011, Synchronica conditionally agreed to acquire Nokia’s operator branded messaging business providing email and instant messaging (IM) services to tier-1 mobile operators in North America. The acquired technology includes Nokia’s industry-leading email, IM and social networking gateway and client software. With the assignment of ten operator contracts, Synchronica plans to service AT&T, Verizon, T-Mobile, Sprint, Rogers, Telus and

other operators in North America. Deal will provide Synchronica with a complementary and successful North American business servicing more than six million active end users. This is a long-term relationship between Synchronica and Nokia for continued development, maintenance and support of the messaging gateway and client software shipping with millions of Nokia phones.

Synchronica will continue development of the acquired messaging software and plans to merge the product with its own Mobile Gateway infrastructure software in a converged roadmap, adding key features such as document transcoding, PIM synchronisation and RCS instant messaging. The acquisition will extend Synchronica’s total addressable market across all carrier customers worldwide to approximately 1.8 billion end-users.

Taleo acquires Jobpartners On 21 June 2011, Taleo Corporation, the leading provider of on-demand talent management solutions, announced that it had signed a definitive agreement to acquire Jobpartners for approximately $38 million. The acquisition expands Taleo’s ability to serve customers based in Europe and makes Taleo one of the largest SaaS-based talent management vendors in the region. Taleo’s acquisition of Jobpartners doubles its customers based in Europe, and more than doubles the size of its team of professionals in Europe, providing an unmatched ability to

serve the customers in this region. This deal signifies Taleo’s commitment to investing in growth and the strategic importance of having a strong team and established customer base in scaling a significant SaaS business. “We have been impressed by the capabilities of the Jobpartners team and the close relationships they have built with their large and sophisticated Europe-based customers. This acquisition creates an opportunity for us to accelerate our expansion outside of North America by increasing our customer

base, increasing our local sales and support capacity as well as taking advantage of the Jobpartners Eastern European development center,” said Michael Gregoire, chairman and CEO of Taleo. “ More than 350 customers internationally already realise the benefits of Taleo’s cloudbased talent management solutions for recruiting, performance management and learning. The combined strength of Taleo and Jobpartners make Taleo a global leader in Europe.

Terrace Hill Group: Acquisition of Foodstore Development Site On 28 June 2011, Terrace Hill Group (THG), a leading UK property developer and investment group, announced that it had exchanged contracts to acquire a development site in Sedgefield, County Durham. The site extends to 7.1 acres and the acquisition is subject to obtaining planning for a 50,000 sqft (gross internal area) foodstore and the signing of a pre-let. There is currently no major foodstore in Sedgefield and THG expects that the plans

will receive strong support from the local community. THG will be initiating a public consultation process at the end of June 2011, with a view to submitting a planning application by the end of August 2011, which should allow for a decision to be made within the first quarter of 2012. Commenting on the acquisition, Duncan McEwan, THG head of retail, said: “This acquisition, together with the recent announcements in relation to sites in

Prestwich and Herne Bay, underlines Terrace Hill’s ongoing focus on the foodstore sector, and we expect to announce further foodstore acquisitions in the coming months as we continue to build a strong position in this important sector.” Formed in 1986, THG is quoted on AIM and has five offices located in London, Glasgow, Teesside, Bristol and Manchester, managing a commercial development programme and a residential investment portfolio.

Verdane acquires seven e-commerce companies Secondary direct fund Verdane Capital VII closes its sixth portfolio transaction and invests in a portfolio of seven e-commerce companies. The companies are acquired from Aggregate Media and B Media Invest in what becomes Verdane funds’ fourth portfolio transaction with e-commerce holdings. The deal further strengthens Verdane funds’ position as the Nordic region’s leading private equity investor in e-commerce. The portfolio includes companies such as Compricer, a price comparison tool for insurance and mortgages, the pet food

website Foderbilen and Reseguiden, a travel website. Including this transaction, Verdane funds have invested in over 20 e-commerce firms over the past six years. The funds are currently owners of Bythjul, Lenson, Mathem, Outnet and another ten companies. “We are seeing a global migration to online markets, with typical growth rates in the EU-countries of between 10% and 30% annually,” says Staffan Mörndal, partner at Verdane Capital Advisors. “We have built

considerable experience through Verdane Funds’ investments in the space and the geographic footprint has allowed us to help build a number of local market leaders into strong Nordic players.” Jakob Tolleryd, CEO of Compricer says: “We are extremely happy to see Verdane as new owners in Compricer. They have established themselves as a leading investor in e-commerce and we are convinced that they can help us grow the business further.”

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conferences

conference – in focus

Conference – In Focus

Summer Conference and CM&AA Certification (Certified Merger & Acquisition Advisor) Date: Tuesday 19th to Thursday 21st July 2011 Venue: Hilton Chicago, USA Topic: Heating up: M&A Activity on the Rise Register at: www.amaaonline.org or call 877-844-2535 Further Information Heating Up: M&A Activity on the Rise – accurately sums up today’s mergers and acquisitions environment: • Half a trillion dollars of Private Equity capital currently awaiting deployment

Conference – In Focus

• Debt markets more receptive to financing M&A transactions • Strategic buyers shopping again, especially on the international front It is expected that there will be in excess of 400 attendees, including intermediaries, private equity sources, strategic and mezzanine investors, attorneys, CPAs, and other M&A professionals. Explore today’s market conditions, collaborate on industry best practices, and foster deal-making in the middle market. Delivering an increased focus on transaction-related content to help you successfully close in 2011, we have created 12 content-rich panel discussions (12 hours of CPE credits available), and returned our highly successful Deal Bash, and Private Equity Expo, where we connect buyers and sellers. Be sure to join us for power networking at our opening cocktail reception and sign up early for our annual boat cruise around Lake Michigan, an annual sell-out event.

The Alliance of Merger & Acquisition Advisors® (AM&AA), the Email: info@amaaonline.org leading association and credentialing Merger & Acquisition body for middle market Web: wwwCertificate 4thM&A November professionals, will hold the association’s 13th annual Summer Venue: DePaul University, Chicago, USA Conference; July 19-21, 2011, at the Hilton Chicago in Chicago, Illinois.

The event will feature two full days of education from industry experts on issues related to the current financial climate. In addition, the conference will include an enhanced and extended, daylong Transaction Exchange. Hundreds of leading intermediaries, investment bankers, attorneys, private equity professionals, CPA’s, business advisory firms and corporate development professionals are expected to participate. The conference is global, attracting attendees from Australia, Brazil and Germany, among others. Featured Speakers include: Jim Cohen, executive VP, Mergers & Acquisitions, Consolidated Graphics: He will discuss: A Consolidation Strategy that Works. Dr. John Paglia, Pepperdine University, will cover The State of the Middle Markets: Evidence from the Pepperdine Capital Markets Project:

Email: info@amaaonline.org Web: wwwCertificate

Merger & Acquisition

4th November Certificate Merger & Acquisition Advisor

Venue: DePaul University, Chicago, USA

Date: Monday 31st October to Friday 4th November Venue: DePaul University, Chicago, USA Date: Monday 5th to 9th December Venue: Pepperdine, Los Angeles, CA, USA For more information: Phone: 1-877-844-2535 Email: info@amaaonline.org Web: www.amaaonline.org

The CM&AA course objectives taught by seasoned M&A professionals, are designed to improve leadership competencies to a new ‘gold standard’ level of excellence. The Certified Merger & Acquisition Advisor (CM&AA) certification is the premiere advanced professional credential awarded to the best business transaction and advisory professionals, including MBAs, CPAs, CFAs, attorneys, and other highly qualified experts. The CM&AA training program is designed for M&A professionals

The M&A Faculty/Practitioner TeamIncludes the following and other Accomplished Experts

Rob Slee, CM&AA – Managing Director, Robertson & Foley Chris Blees, CM&AA, CPA – Partner, BriggsKofford P.C. David Cohn, CM&AA,- Managing Director, Diamond Capital Partners Kenneth H. Marks, CM&AA – Principal, High Rock Partners Inc. Agenda Summary (Syllabus details available upon request) • An Overview of the Private Capital Marketplace • The Dynamics of an M&A Engagement & Practice Management 68 • GBM • July 2011

seeking to develop their professional and leadership competencies to a new ‘gold standard’ level of excellence and to help make it easier for companies to select an M&A advisor of the highest calibre. The week-long program is aimed at business professionals working in the middle market ($5-500M). Investors and advisors will walk away with world-class information, certification and tools - and more importantly – extraordinary professional competence. The CM&AA Certification has become the “Gold Standard” for Middle Market Corporate Financial Advisors, earning up to 36 CPE credit hours. The Certified Merger & Acquisition Advisor® Credentialing Program provides comprehensive, current information, insight and inspiration from practicing M&A professionals of all different disciplines.

• Corporate M&A Development (new session recently added) • Buy and Sell-Side Representation, Traditional Investment Banking • Business Valuation and M&A Standards, Accounting, Finance, • Traditional Business Valuation and Transactional Valuation • M&A Legal and Tax Issues • Acquisition & Growth Financing • Review and Examination for Credentialing The Complete Five-Day Experience - $3,500 • Training Program includes exam fees • AM&AA membership dues for 1 year • Four books and support materials • Business Value software license for 1 year

corporate and Business conferences

Corporate and Business Conferences

In recent years, more and more firms are taking up the opportunity Corporate and business conferences take place all to host and deliver conferences as the benefits certainly outweigh over the world at various times of the year covering Corporate and business conferences take place all over the world at various times of the year covering nearly all aspects of business life. It is a great opportunity to the cost and organisation. Businesses have networked and found nearly all aspects of business life. It is a great find out latest news, information, updates, the latest innovations and inventions and what the future holds for a particular industry. vital links and partners that can help to improve the services opportunity to find out latest news, information, that they provide. However, issues that many people find is what conferences to attend and when. GBM have researched and In recent years, more and more firms are taking up the opportunity to host and deliver conferences as the benefits certainly outweigh the cost and organisation. updates, the latest innovations and inventions and compiled a list for you to see what events are taking place in the Businesses have networked and found vital links and partners that can help to improve the services that they provide. However, issues that many people find is w what the future holds for a particular industry. near future… conferences to attend and when. GBM have researched and compiled a list for you to see what events are taking place in the near future…

Conference

Place

Topic of Discussion

Contact and Weblink

Legal Process Enhancement – Corporate Counsel Transformation

Prince Hotel & Residence, Kuala Lumpur, Malaysia

25th – 26th July

This conference will approach means on how a transformed in‐house counsel can drive greater productivity from themselves and the function by enhancing legal processes to achieve greater revenue by saving within legal budget.

IT Law Summer School 2011

Downing College, Cambridge Regent Street , Cambridgeshire Cambridge, CB2 1DQ United Kingdom Downing College, Cambridge Regent Street , Cambridgeshire Cambridge, CB2 1DQ United Kingdom Johannesburg South Africa

1 – 5 August

A unique opportunity to gain a sophisticated understanding of today’s most crucial issues in IT law and practice.

Cherrie Koay CP21 Suite 2101, Level 21 Central Plaza 34 Jalan Sultan Ismail 50250 Kuala Lumpur Telephone: 603.2723.6662 Fax: 603.2723.6699 Email: CherrieK@marcusevanskl.com www.marcusevans.com Miss Stephanie Gilks Phone: +44 (0) 203 377 3371 Email: stephanie.gilks@informa.com www.informaglobalevents.com/event/it‐ law‐summer‐school‐conference‐2011

Intellectual Property Law Summer School 2011

Private Equity World

Dates

15 – 19 August

5th – 8th September th

7th Mini MBA for Lawyers

Metropolitan Hotel Toronto 108 Chestnut Street Toronto, Ontario M5G 1R3 Canada

12 – 13 September

Academy For Global Business Advancement (AGBA) 8th Annual Conference

Dongbei University of Finance & Economics (DUFE)Dalian, China

15th – 17th September

2011 2nd International Conference on Innovation, Management and Service (ICIMS)

Singapore

16th – 18th September

Now in its 11th Year, IBC Legal’s highly acclaimed Intellectual Property Law Summer School remains an unrivalled resource for the consolidation of, or initiation into all of the central concepts in IP, presented in the context of the latest developments in the industry.

Value Creation for Private Equity Investors

Discover how to properly analyse financial statements and interpret a company’s financial signals. Firm up your grasp of the valuation process. Explore the active role of corporate counsel in an M&A and the impact valuations play. Get up to speed on what the move to IFRS means for public companies and its implications on contractual agreements. Gain a better understanding of the growing role of corporate counsel in enterprise‐wide risk management. Uncover what lawyers need to know about the latest financing choices and investment alternatives in capital markets Business and Entrepreneurship Development in the Context of Globalization and Rise of China

Innovation Management and Service

Miss Stephanie Gilks Phone: +44 (0) 203 377 3371 Email: stephanie.gilks@informa.com www.informaglobalevents.com/event/int ellectual‐property‐law‐summer‐school‐ conference‐2011 Tel: +27 (0) 11 463 6001 www.terrapinn.com/2011/peza Ms. Danielle Delannoy Phone: 800‐363‐0722 x221 Email: danielle_delannoy@federatedpress. com www.federatedpress.com/pdf/HGLegal/M BAT1109‐E.pdf

Prof. Dr. Zafar U. Ahmed Email: zafaruahmed@gmail.com Mobile #: +60166884100 Skype ID: zafaruahmed www.agbaonline.org/8th_Annual_World_ Congress.html Secretary of ICIMS 2011 Address: Room5, 6/F., Shun On Commercial Building, 112‐114 Des Voeux Road, Central, Hong Kong. ICIMS 2011 E‐mail: icims@iedrc.org

Private Banking World Africa

Sandton Convention Centre, Johannesburg South Africa

26th – 29th September

This is Africa’s only conference and business zone dedicated to growing the private banking and wealth management sector and fully utilising high net worth wealth and family office investments.

www.iedrc.org/icims First Floor, Modular Place Turnberry Office Park 48 Grosvenor Road Bryanston 2021 South Africa Tel: +27 (0) 11 463 6001 Fax: +27 (0) 11 463 6903 enquiry.za@terrapinn.com www.terrapinn.com/2011/privatebanking worldafrica/index.stm

July 2011 • GBM • 69

WE CaN’t prEDICt WHat WILL HappEN. But we can Be prepared. We don’t know when or where the next emergency will hit. All we know is that children will be the most vulnerable. In the past year, we’ve responded to over 40 emergencies including Haiti, Pakistan, Niger and Japan. Please give what you can so that more young lives can be saved.

www.savethechildren.org.uk/donate

buy a hygiene kit £25 could to keep children healthy. buy 30 buckets to £50 could help families transport water.

0800 009 4001

PleAse HelP us be reAdy to Act quIckly ANd save lives.

NO CHILD 70 • GBM • July 2011

DIE

registered charity england and Wales (213890) and scotland (sc039570).

His dad’s smile

Our children are our future. They learn from us, share our interests and inherit our funny little ways. What will you leave children?

NSPCC registered charity numbers 216401 and SC037717.

Please add your thoughts on the website and inspire others to help protect children through a gift in their will.

www.whatwillweleave.org.uk

July 2011 • GBM • 71

72 • GBM • July 2011