Global Business Magazine - August 2011 by Corporate ABM

gbm August 2011

global business magazine

Infosys

Longevity of LPOs

mergers & aCquisitions

Honeymoon Hotels

transfer priCing

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

August 2011 â&#x20AC;˘ GBM â&#x20AC;˘ 1

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:

UNEPFI_GRTAd207x277MonoQuadri.indd 1

15/6/11 3:39 PM

INSIDE This Month:

mergers & aCquisitions

private equity & Capital trusts

Business Talk As the legal industry is embracing the benefits of legal process outsourcing, our cover story tackles its longevity, backed up by features on the revolution in legal services and the regulation of outsourcing in the UK. With the increasing globalisation of business, we offer an international perspective on employment law, an area evolving at a staggering rate, with insights including challenges in the marketplace and the benefits and pitfalls of social media. And as the consumer sector faces intense pressure, we show you why 2011 may be the most significant year in decades. M&A is maintaining its unyielding grip worldwide, and we delve into the sector, from key concepts for successful deals and ways to get more out of your joint venture shareholders agreements to the impact of the UK’s 2010 Bribery Act And with transfer pricing currently at the top of the tax to-do list of those doing business internationally, and with regimes evolving worldwide, we look at the differing aspects of transfer pricing across the globe. The UK and US provide a focus for the trustee services sector, including mediation in UK inheritance disputes and a look at US Federal Estate and Gift Tax Laws for 2011-2012.

Cover story

legal proCess outsourCing

mind, Body & work - yoga

suCCess story - sam walton

When it comes to private equity, the choice of jurisdiction is up there with the top decisions private equity professionals need to make. We look at what the world has to offer from business friendly Bermuda and the Isle of Man’s AIM and private equity offering, to private equity and venture capital funds in Spain.

trustee serviCes

Business faCts

transfer priCing

Feeling stressed? Then we show you ten easy ‘in office’ ways to get fighting fit in the office, why yoga is the perfect way for busy professionals to relax and gadgets that can make your working, and personal, lives a little easier!

rising star

work HealtHy

Finally, if you are looking for somewhere to honeymoon or renew your vows (or just indulge in some romance!), we proﬁle the leading hotels and resorts from the most talked about honeymoon destinations of 2011.

employment law

expert forum

teCHnology review

upComing events &ConfrenCes

deal direCtory

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

gbm global business magazine

luxury Brand series Honeymoon Hotels

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.

Country profile sweden

August 2011 • GBM • 3

Cover story

Due to my somewhat unique background as a general counsel and trial lawyer, with over three decades of experience prior to becoming the delivery head for Infosys’ legal process outsourcing (lPo), I would like to share my perspective on the longevity of lPos. It is my belief that, regardless of the future of the worldwide economy, lPos are here to stay.

for most companies, reducing costs while concomitantly increasing value and quality has become the norm. General Counsels will continue receiving pressure from their Ceos, Cfos and Coos to reduce their budgets, regardless of the economic forecast. After all, they are not in the business of litigating. In response, many general counsels have turned to the use of lPos — either directly or imposing it upon their outside law firms. Why should they even consider going back to the old days, when they paid substantially more for the same legal services that they are now receiving at reduced rates that are allowing them to conform to the budgetary constraints that are becoming a way of life? Unfortunately, large law firms have a notorious reputation for not providing much ’bang for the buck‘to their clients. Additionally, outsourcing their legal work provides companies with the opportunity to keep more of their legal work in-house, so long as they are willing to make the commitment to closely supervise the work being outsourced. More and more clients are requesting, or even demanding, alternatives to the hourly rate. These can take several forms, including blended rates, value adjusted rates, fixed fees and flat fees. There is no reason to believe that companies that have seen the benefits to be derived from paying their lawyers other than on a straight hourly rate will revert back solely to such a billing model. In order to increase their profits, law firms will be driven to reduce their costs under such alternative fee structures as their clients’ pressure mounts. This will incentivise law firms to outsource at least a portion of their work. Moreover, as alternative fee structures become ever more prevalent, clients will become further entrenched in their view that costs and expenses must continue to be reduced — a view that they will impose upon their law firms. Many companies are already comfortable using business process outsourcing. By doing so, they have been able to glean the benefits of increased value and efficiency through the use of qualified individuals residing in inexpensive offshore venues. As their numbers increase together, presumably, with their satisfaction with the value being attained, they will be more receptive to the idea of lPo.

4 • GBM • August 2011

Ira Jeffrey Bornstein has over 30 years of legal experience as a trial and appellate lawyer and as a general counsel. As a trial lawyer, he handled multi-million dollar lawsuits, arbitrations and appeals on both the federal and state level, all the way up to the supreme Court of the United states. He argued, and won, the case of Bendix Autolite Corp. v. Midwesco enterprises, Inc., one of the seminal Commerce Clause cases heard by the supreme Court in the last quarter century. He has also argued before both the Colorado and Illinois supreme Courts. He has tried both jury and

bench trials covering most types of complex commercial matters, including construction, contract, corporate, real estate, partnership, employment, insurance, intellectual property, business torts, franchising, law firm dissolution, securities, antitrust, stockholder and derivative suits, professional malpractice and class actions. He also acted for several years as General Counsel for Gorsuch, ltd. He is licensed to practice law in Colorado, Illinois and New York and before numerous federal district courts and courts of appeal. He has been rated for several decades AV, the highest rating

As to law firms, the law is a profession and must always be treated as such; it is the foundation of who we are and how we conduct ourselves. Notwithstanding that, lawyers are increasingly becoming aware of the fact that law firms must be run more like a business. That includes acknowledging the benefits to be derived from the strategic use of LPOs. By doing so, the law firms send the message back to their clients that they have heard their cries to reduce costs and increase value and will work as partners to achieve them. In return, those law firms utilising LPOs will see an increase in work, and therefore revenue, from their clients. even work that previously would not have been sent to outside counsel may now be considered within their purview if the use of LPOs sufficiently reduces the cost to the client. Once a law firm develops a reputation for providing lower costs and greater value through the use, among other things, of lPos, it should also see the ranks of its clients begin to swell. The utilisation of lPos also has the potential of increasing the productivity of both corporate legal departments and law firms. By outsourcing some of the more mundane legal work, their own lawyers can be freed up to focus their attention on more substantial and complex legal matters. With respect to law firms, these are the sorts of matters that can justify the fees they are charging and for which they will receive less grief from their clients. LPOs also provide the opportunity to level the playing field for both small companies and small law firms, and even sole practitioners. Smaller companies and law firms alike can utilise LPOs to ramp up for particular matters and to meet tight deadlines on labour intensive projects requiring a large commitment of personnel, even though they themselves may lack the manpower or expertise to match the larger companies and law firms. LPOs can thus be used as a buffer against being inundated and overwhelmed by large corporations and law firms. lPos can provide round-the-clock operations, which is further augmented by the time difference, for example, between India and the US. While western lawyers are understandably loathe to work under such conditions, lPos can provide teams of lawyers working

available, by Martindale Hubbell. He currently works as Delivery Head for Infosys lPo where his key responsibilities include performing program toll-gate reviews relating to the practice. He is directly responsible for Us and UK project deliverables, process compliance and thought leadership. Infosys lPo Delivery Head ira_bornstein@infosys.com +001 954-559-8289

throughout the day. Thus, time constraints become less of an issue for both in-house legal departments and law firms, while delivery times in general are reduced. Both in-house legal departments and law firms can also utilise LPOs to provide both onshore and offshore assets. This provides them with the flexibility to respond to specific projects or to the direct needs, constraints and parameters imposed by clients. It further makes available to them global knowledge, experience and information to which they may not otherwise have access. LPOs also provide both corporate law departments and law firms with the opportunity to utilise technology in a somewhat painfree environment. The lPos, several of which are derivatives of information technology outsourcing, tend to make extensive use of technology and processes. Many lawyers, on the other hand, have historically been technology averse. The lawyers that are responsible for directly overseeing the work being performed, if not already familiar with the technology being used, will be required to gain an understanding of it so that they can carry out their oversight obligations. Through outsourcing some of their legal work, lawyers can see firsthand the benefits that can accrue to their practices from the use of specific technology and processes — which technology and processes are to be embraced rather than avoided. lPos are not a panacea for everything that ails the legal profession. Corporate legal departments and law firms must make a strong commitment to evaluate both the benefits that will inure to them as well as the specific entities that will provide the LPO services. There are many potential pitfalls-many arising from the very fact that lawyers are professionals subject to codes of conduct and ethicsincluding, but not limited to: supervising the work; the quality of the work; potential ethical issues; training; weaknesses in soft skills; language and cultural disparities; and, statutory bars. But, if done properly, there is no denying the benefits that can flow from the use of LPOs — benefits that, rather than disappearing anytime soon, should be growing as lPos mature.

August 2011 • GBM • 5

Infosys, a world leader in IT and Business Process now offers a Total Solution to meet the challenges of Legal Services

Cover story

Infosys LPO Services

Contract Management

Managed Discovery Services

IP Services

Legal Research

Infosys LPO supports corporations and law firms worldwide to navigate the myriad challenges in today's legal environment. Our offerings include Contract Management, Managed Discovery Services, Legal Research, Litigation & Administrative Support, IP Services and Consulting. These offerings can be implemented either stand-alone or in combination. Our goal is increased operational effectiveness through the adoption of best practices and established quality models and methodologies leading to sustainable cost reductions of 10 to 45 percent. Write to us at askus@infosys.com

6 â&#x20AC;˘ GBM â&#x20AC;˘ August 2011

Litigation & Administrative Support

Consulting Services

legal proCess outsourCing

The regulation of outsourcing In recent years, some commentators have said that there has been a lack of policies or statements relating to lPo from legal regulators in any jurisdiction. The solicitors Regulation Authority (sRA) is aware of the growth in interest and increased use of different forms of outsourcing and of offshoring/nearshoring arrangements. The sRA aims to understand how the developing field of outsourcing could affect its regulatory objectives and, where necessary, to develop its regulatory arrangements, supervision and enforcement approach to ensure that outsourced work is properly regulated. There are few explicit references to outsourcing in the sRA’s current Code of Conduct 2007. Outsourcing is permitted provided all relevant regulatory requirements are met. These include the requirements that the outsourcing arrangements should be transparent and agreed in advance with the affected clients, and that confidential information should be carefully protected. In four months time, the sRA will introduce outcomes-focused regulation (ofR) - a more flexible, less prescriptive means of regulation. In general, the sRA’s approach under ofR will be to welcome reforms and innovation in the provision of legal services provided that clients and the public interest are properly protected (see paragraph 5 of ‘Delivering outcomes-focused regulation’, the SRA’s 30 November 2010 Policy statement, on the sRA website). This is the context in which the sRA will regulate outsourcing. The sRA’s new Handbook of regulatory arrangements, which is principles based and outcomes-focused, will come into force on 6 October 2011. The current draft Handbook is available on the sRA’s website. LPO issues of potential concern after October 2011 The sRA’s starting point is that responsibility for compliance with the new Handbook rests on the regulated entity and its managers. The fact that a firm chooses to outsource elements of its work does not absolve it from this responsibility. Within the new Code of Conduct, contained in the Handbook, there are two mandatory outcomes relating to outsourcing. first, reserved legal activities must not be outsourced to a person who

is not authorised to conduct such activity. The second outcome focuses on the following checks a firm must make before it outsources: outsourcing arrangements must not adversely affect a firm’s ability to comply with ofR or the sRA’s ability to monitor its compliance; a firm’s contractual arrangements with an lPo provider allow the sRA to obtain information from that provider; a firm’s obligations to its clients are not altered; and, any conditions relating to a firm’s continuing authorisation will not be affected. If the sRA has any concerns that an outsourcing firm is not achieving these outcomes or that its use of outsourcing poses a significant risk, it will use supervisory engagement to assess the situation (see paragraph 71 to 82 of ‘Delivering outcomesfocused regulation’ on the sRA website, as above). An sRA supervisory team looking at a firm’s LPO arrangements will ask whether the proposed outsourcing arrangements meet the sRA’s overarching principles, eg, who owns and controls the outsourcing provider and whether there are any risks to the independence of the outsourcing firm’s professional judgement. In addition, the sRA supervisory team may focus on the following issues. for example, it may ask whether the outsourcing firm has: undertaken due diligence both about the competence of the proposed provider and about legislative/regulatory issues arising from the location (jurisdiction) of particular outsourced services (eg, the risk of acting illegally or in breach of regulations in the supply of legal services); obtained the client’s informed consent to the proposed form of outsourcing - in addition to covering the other listed points, this might include discussions about charging, insurance and Data Protection Act issues; considered the potential for conflicts of interest (eg, whether the provider has any mechanisms in place to identify and avoid such conflicts) and how the provider will protect client confidentiality and privilege; and, put in place effective arrangements to supervise/ review the accuracy and quality of the outsourced work.

If the SRA finds that an outsourcing firm appears not to be achieving required outcomes, it may ask that firm to make changes to its lPo arrangements in order to comply. The sRA might direct the firm to existing guidance on an issue or identify relevant good practice it has seen elsewhere. In most cases it is envisaged that constructive engagement between the supervisory team and a firm is likely to resolve any issues. However, in cases where firms are non-compliant on outsourcing issues and are unwilling or unable to change their arrangements or where the issue is so grave that formal sanctions are required, matters will be referred for enforcement. What is the sRA doing to prepare for the supervision LPO arrangements? Prior to the introduction of ofR, the sRA is continuing to gather information about lPo and the differing approaches being taken by firms. It is gathering intelligence and assessing the risks of particular models, has had relationship management contact with firms using and planning to use LPO, has engaged both with lPo providers and with other regulators to understand and discuss their approach to outsourcing, and it is considering LPO and offshoring/nearshoring issues in connection with a review of its regulation of overseas practices. In this context, the SRA encourages firms to make contact about any relevant regulatory issues arising in connection with planned or existing lPos. Pending the introduction of new supervision arrangements under ofR, firms wishing to raise such matters should call the SRA’s ethics guidance team on 0870 606 2577 in the first instance. solicitors Regulation Authority Contact Centre: 0870 606 2555 Professional Ethics Helpline: 0870 606 2577; International: +44(0)1527 504450 freedominpractice@sra.orguk www.sra.org.uk

August 2011 • GBM • 7

legal proCess outsourCing

UK LPO – The revolution in legal services Although outsourcing back-office services can hardly be described as a new phenomenon, over the last couple of years those of us who actively work in the outsourcing industry have seen a significant shift in thinking around the outsourcing of legal services, otherwise known as legal process outsourcing (lPo). Whereas the outsourcing of legal work by law firms was, until recently, almost unheard of, increasing numbers of law firms, and a significant number of in inhouse legal departments, are now actively seeking out third party service providers to take on various aspects of their legal work. litigation and business document review, contract management, electronic discovery, legal analytics and document preparation are some of the services being sent to third party vendors. At the end of 2010, UK magic circle firm Allen & overy signed a deal with lPo provider Integreon to outsource litigation document review work to Mumbai and New York. Integreon says it undertakes work for 32 of the 50 biggest law firms, including magic circle firm Clifford Chance and national firm DLA Piper, and 11 of the world’s biggest companies for a fraction of the $150-£350 (£100-£250) an hour billed by a lawyer in major markets such as the Us and the UK. similarly, in-house legal departments are increasingly looking at outsourcing aspects of their legal function. In 2010, the general counsel at Rio Tinto plc, Leah Cooper, confirmed she had outsourced legal work to a team of 15 Indian-based lawyers at the legal outsourcer CPA Global. The move is estimated to have saved Rio Tinto around $8 million. Companies such as Canon europe, Carillion PlC, sun Microsystems, Inc., Novartis UK and Arsenal football Club are also aid to be using lPo to some extent. What has led to this revolution in legal services? I believe the increase in lPo can be largely explained by two reason: firstly, the economic downturn, and the impact that has had on the profitability of firms as deals have dried up, has led to many firms trying to find ways of providing the same services for a lower cost. similarly, in-house legal budgets have been slashed and many general counsel have been forced into looking at alternatives to employing large numbers of lawyers to service their needs. The second reason relates to the increase in confidence in the service providers. As we saw when global companies saw the benefits of offshoring their back-office IT services after testing the waters with software development during the late 90s when the spectre of the "Y2K bug" was causing anxiety among IT professionals everywhere, 8 • GBM • August 2011

the economic downturn has led to the initial pilot projects and experimentation with LPO now leading to far more significant partnerships developing between law firms, companies and mainly offshore service providers. How big could the lPo industry get? Although estimating the value of the lPo industry is certainly not easy, forrester Research has predicted that US$4bn (£2.6bn) worth of legal work will be outsourced to India by 2015. However, the market is still quite immature. The Indian lPo space is dominated by pure play lPo vendors such as Pangea3, CPA Global, Unitedlex, and evalueserve, with some of the more "traditional" outsourcing service providers such as Tata Consultancy services and Wipro now also entering the LPO market. However the number of vendors is still quite small. A recent report on lPo by Value Notes, an Indian research company, suggests that 10-15 established LPO providers currently generate two-thirds of total industry revenues. If a major scandal or data breach was to occur to one of these companies, the impact on the industry could be catastrophic. As for any outsourcing project, law firms and in-house departments need to consider the risks of outsourcing services to a third party, and undertake thorough due diligence on their vendor. outsourcing any service for an extended period of time is never an easy project to manage, and ensuring that there are resources allocated to supervise the performance of the service provider, review work as it is received and ensure that standards of quality are being maintained if not exceeded, will be vital. firms should consider running a pilot project with one or more vendors to see how efficiently the work is performed. It may also be a useful idea to place one or more lawyers from the vendor within the firm for a period of time so that they may understand the levels of performance expected. firms should also ensure they plan for the end of the relationship, and what they will need to seamlessly transfer services either back in-house or to another vendor. In terms of cost savings, running a competitive procurement exercise is also likely to improve the chances of getting a better overall deal. The benefits of outsourcing are wellunderstood. Cost savings, access to a large, educated talent pool and faster turnaround of work should all be easily obtainable from all of the tier 1 vendors in the LPO market. However, the risks of entering into a longterm engagement should also be considered to mitigate the potential for the relationship breaking down.

Peter Brudenall Partner, lawrence Graham Peter.brudenall@lg-legal.com

S:200 mm

Providing stability.

Securing the future.

For millions of people around the world, microfinance is a means of achieving their financial goals, economic self-sufficiency and reduced financial vulnerability.

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

That’s why ﬁrms worldwide partner with Citi.

www.transactionservices.citi.com www.citi.com/citi/microﬁnance

S:287 mm

Microﬁnance. Maximum impact.

mind Body and work - yoga

mind Body and work yoga. perfect relaxation for busy professionals. All busy, professional people need to find ways to relax and unwind outside of the work environment. Whether that be socialising with friends, family or work colleagues, relaxing with a few drinks, or even just lying on the sofa watching television.

Exercise is an effective way to release anxiety, frustration and tiredness collected over the course of the day. There can be no doubt that endorphins that flood the body after exercise make you feel fantastic and on a high, albeit a short-lived one. All forms of exercise focus on creating a fit and healthy body, and a healthy body is essential when dealing with the demands of a working day. Yoga has the added benefit of not only improving fitness and vitality, but also creating a healthy and relaxed mind. Switching off at the end of a busy working day is not always the easiest of things to do. As one day is over, it's often only a matter of time before we start thinking ahead to the next one, and we can very quickly find ourselves anxious or stressed about what tomorrow may bring. Human beings are slaves to their own thoughts, believing that they are the creation of their own minds, and not the other way around. one way to combat this is through meditation, which can work wonders to steady an active mind. However, sitting still in one position whilst letting your thoughts flow over you can be a difficult art to master, and a less than appealing prospect. This is where yoga comes into it's own, as it encourages the user to focus on different poses, concentrating their thoughts on their breathing and movements whilst letting go of the day, providing more involvement for the user, and allowing them to train their minds and bodies more efficiently, with the state of relaxation superceding the stress received from normal exercise.

10 â&#x20AC;˘ GBM â&#x20AC;˘ August 2011

The word yoga comes from the skanskrit word 'yuj' meaning yolk or to join and come together. An ancient practice that pre-dates even Hindu and Buddhist religions. Though yoga is not a religion in itself, it could well be described as a science of self - realization and transformation, guiding an individual into recognizing, understanding, and fulfilling their fullest potential and purpose in life. It has been embraced by western society, and the word 'yoga' is now a general term for many variations of the practice, the most common type being Hatha Yoga. Most of us are familiar with the image of gentle poses changing slowly from one to another whilst inhaling and exhaling deeply. Two other well known types of yoga are Ashtanga and Kundalini. Ashtanga yoga was made popular by Madonna, and was given the nickname 'power yoga'. Whereas Hatha yoga is gentle and relaxing, Ashtanga yoga takes the user quickly from one pose to the next, using the breath to heat the body, which enables you to move more freely and with greater flexibility. Ashtanga yoga is most suited to individuals who enjoy more rigorous forms of exercise. Kundalini yoga, also incorporates chanting, meditations, visualizations, and guided relaxation. It focuses on healing and "purifying" the mind, body, and emotions. This type of yoga is often used when dealing with addictions, and many people find it a natural way of releasing endorphins just by breathing and doing the poses.

Yoga poses or 'asanas' are a series of movements that are designed to increase flexibility, muscle tone and fitness levels. Many of the poses also stimulate the internal organs, for example, the shoulder stand pose aids in massaging the thyroid gland, creating balance in that area. With regular practice it can take a surprisingly short amount of time to progress from simple poses through to more advanced ones that will stretch your body, and mind, to it's limits. The one thing that all yoga styles and types have in common is breathing, or 'Pranayama', with Prana meaning 'life force' and 'Yam' meaning control. Breathing is essentially the most important part of yoga. It is by turning your attention to breathing and placing your focus there that will, in turn, encourage a healthy, still mind, and ultimately release stress from the body. It's not just the breath that is important, it's knowing how to breathe. It may sound strange to have to learn how to do something that occurs spontaneously, and naturally, yet the way we breathe has become restricted due to unhealthy habits developed over the years. More often than not we slouch rather than sit upright, and this diminishes lung capacity. our working life and all the responsibilities that come with it puts greater and greater demands on us, and as we tense up, it has a knock on effect, and changes start to take place in the body. The muscles that control the thorax and intercostal muscles between the ribs tense up, restricting inhalation and exhalation. our breaths become shorter and shorter, and as a result, we can become fatigued from the decreased availability of oxygen to our brains. Where we have a tendency to shallow breathe, meaning that we breathe into the chest, yoga breathing involves abdominal breathing. Try this exercise. sit up straight in a chair ensuring that your back is straight and placed firmly against the back of the chair, and with your feet flat on the floor. Place your hands gently on your abdomen, and slowly inhale through your nose, concentrating on allowing your abdomen to rise to it's full capacity. Then, when you can't fill your abdomen any more, slowly release the air out through your mouth, making sure that you fully exhale. Put all of your concentration solely on your breathing, allowing any thoughts that come into your mind to gently flow out again.

have to do any of the poses. Just simply sit and concentrate on your 'Pranayama' to still the mind and prepare yourself for the remainder of the day. Regular yoga practice delivers many benefits. The stimulating poses help to release tension around the heart and digestive organs, quickly reducing emotional and nervous anxiety, to improve the exchange of oxygen with carbon dioxide, to calm the mind, creating mental and physical balance, and to improve general relaxation and vitality. one of the more surprising aspects of regular yoga practice is the unexpected side effects that occur. With all that relaxation and stress release, you may find yourself becoming more compassionate and understanding. A calmness comes over those that practice yoga, and you'll find stressful situations easier to handle. As your fitness levels and body awareness increases, it's more than likely you'll want to eat better, fueling your body with healthier food options, if not so already. Yoga classes are without a doubt the best place to start on your yoga journey. Research local classes, or ask around for a recommendation. A good teacher will act as a guide, taking you through the poses, teaching you breathing and encouraging you to practice every day. If you can't get to a class, there are many excellent books and DVDs available for purchase, which will take you through this ancient art of combining body and mind. Yoga is also beneficial when done in a group. Why not encourage work colleagues to practice yoga with you, or bring a teacher in and set up a class during the lunch hour. When working with others, you can assist with poses, ensuring that you get them right, and also help each other with breathing techniques. A healthier workplace environment can be beneficial to work efficiency and output, as the sense of community formed by employees through these exercises can help alleviate stress in the workplace, making employees, and, indeed, employers, feel more comfortable in their environment, which should lead to better working proficiency. Whatever you choose to do, yoga can be as simple or as strenuous as you want it to be, but if you practice your poses and breathing regularly, you could very quickly find yourself fitter, calmer, and more relaxed, ready to take what ever life sees fit to pass your way.

A big plus point for yoga is that it can easily be performed just about anywhere, at anytime. You don't need special equipment, other than loose fitting clothes, though it is wise to invest in a yoga mat, as you'll be spending time lying on the floor perfecting your breathing and your poses.Yoga can easily be done in the office during a break, and you don't even

Disclaimer: This article is for information purposes only, and is not a recommendation in any way. When embarking on a new exercise regime, you should always consult your doctor.

August 2011 â&#x20AC;˘ GBM â&#x20AC;˘ 11

mergers & aCquisitions

& Growth & Acquisitions: key Concepts for successful Deals by Kenneth H. Marks and the AM&AA (Alliance of Merger & Acquisition Advisors)

After a long drought of M&A activity, the market for private companies is not just recovering …it is thriving. If you own, operate or advise a middle market company, $5 million to $500 million in revenues, how do you take advantage of this market dynamic to super-charge growth? M&A can be a viable alternative for accomplishing a number of strategic objectives in the context of building and realizing value for middle market companies. let’s take a high-level view of the typical M&A processes, and a framework for thinking about each. exits In many instances the distinction between selling a company (i.e. an “exit”) and raising capital is measured by the amount of equity sold and the contractual rights obtained by the buyer. financing growth raises the issue of long-term shareholder objectives, which many times involve eventual liquidity. As the wave of business transitions driven by baby boomers planning their legacy and succession continues, some shareholders are confronted with a multifaceted decision of how to finance the continued growth of their business, create liquidity for their owners, and lay the foundation for operations independent of the owner/founder. others see the opportunity to buy-out partners or create some liquidity while staying in the game for what may be deemed a second bite at the apple. This is the concept of selling a controlling interest in a company to a financial buyer (i.e. a private equity group) and rolling over or keeping a minority interest until a subsequent sale or liquidity event happens when the company is expected to have grown in value (under the watch of the new owners with their capital). There are numerous examples where the sale of the minority interest in the follow-on transaction (three to five years from the first transaction) resulted in as much economic gain as the original sale to the financial buyer. Recapitalization Generally a recapitalization will involve a lower cash-out (as a partial exit or staged exit) for the active owners than a buyout (which involves a change of control). A recapitalization will most likely be focused on changing the relative mix of debt and equity with an eye toward the growth objectives of the company and the required goforward capital. for example, a leveraged recapitalization will most likely increase the debt of the company in exchange for distributions, dividends, or purchase of equity. Acquisitions Acquisitions can meet a number of goals if approached and executed as part of a long-term strategy. some of the typical reasons executives pursue acquisitions include: accelerate revenue growth, 12 • GBM • August 2011

enter an adjacent market space, expand into a new geography or obtain a physical footprint in a new location, access new customers or technology, strengthen the pool of talent, augment a product or service line, or reduce costs. The first phase of a typical acquisition process will addresses finding a target company to buy; this begins with the strategic plan that should lay the foundation to determine many of the parameters and the focus of the process. The second phase of the process is to structure the deal, close the transaction, and integrate the business. The financing strategy to support the acquisition should initially be thought of in the context of the overall acquisition process and be defined as part of the acquisition strategy. If your company is cash flush or the acquisition target is immaterial in value, the financing strategy may be as simple as funding the transaction from operational cash flow or cash reserves. However, if the deal requires external funding, management must consider a financing strategy, which typically begins with understanding the acquiring or buying company. This involves: determining its valuation and financial strength; establishing financial objectives and benchmarks for vetting possible acquisitions; determining parameters around how much the buyer can afford; conducting internal discussions around an ideal or preferred deal structure; establishing relationships with financing sources; obtaining buy-in regarding the acquirer’s plans; and obtaining evidence for potential sellers of the buyer’s ability to finance and close a deal. From these parameters, management can then think about financing a specific target company …which is a function of the value of the target; the likely cash flow of the target; an the deal structure and the integration strategy. of the many core concepts that management should keep in mind …the most important is to focus on value creation. The essence of the process is analysis and understanding of the shareholders’ and company’s objectives, financial and competitive position, growth strategy and initiatives, and valuation. Kenneth H. Marks is the founder and Managing Partner of High Rock Partners, providing strategic and financial advisory services. He is the lead author of the Handbook of financing Growth” www. HandbookoffinancingGrowth.com. The AM&AA (www.amaaonline.org) is the leading association and credentialing body for 750 + middle market M&A professionals in 19 countries, providing connections, best practices and education. The primary goals of the AM&AA is to help members improve their level of knowledge, give them access to the tools to help them better market and deliver their services, and provide them with a network of knowledgeable.

NIGeRIA Johnson Bryant sym otike-odibi Partner Tel: 234 1 7742298 234 1 7732904 234 1 6283598

Info@Johnsonbryant.Com Www.Johnsonbryant.Com

In the wake of the global meltdown recovery process, we have been inundated with news of mergers, acquisitions, spin-offs, tender offers and other forms of corporate restructuring. Significant issues both for business decisions and public policy formulation have been paving the road to the recovery of the world’s economy. Given that economic activities thrive better when corporate entities pull resources together to minimise cost and maximise output, corporate restructuring has become attractive. M&A transactions may be: horizontal - undertaken between at least two companies with similar objects or line of business; vertical - undertaken with a view to concluding a forward or backward expansion in the chain of distribution; or conglomerate - formed through the combination of unrelated businesses. The principal laws regulating M&A in Nigeria include the Investment and Securities Act 2007 (ISA), the Securities and exchange Commission Rules and Regulations, the Companies and Allied Matters Act (CAMA), the Nigerian Stock exchange Guidelines on Takeovers and Mergers and the Companies Income Tax (Amendment) Act. Other sector specific laws include the Banks and other financial Institutions Act (banking industry) (BofIA), the Nigerian Communications Act (telecommunications industry) and the electric Power sector Reform Act (electric power sector). In relation to a merger, a number of specified filings are required to be made with the securities and exchange Commission (seC). A copy of the resolution of the shareholders of the merging companies approving the scheme together with the court order approving the merger and any returns relating to the name, directorship, share capital and other matters shall be filed with the Corporate Affairs Commission (CAC). Regarding takeovers, the company making the takeover bid must apply to seC for authority to proceed with the takeover bid. The application must be supported with particulars of the bid and the company

making the bid together with the relevant documents. A copy of the bid must be registered with the seC before it is dispatched to the shareholders. A public company involved in a takeover or merger is statutorily required by the Nigerian stock exchange (Nse) to submit all documents of offer. The documents must contain the date of dispatch to shareholders, precise particulars of the securities, all conditions attached to the offer, a detailed statement of fact regarding the beneficiaries of the securities, a statement indicating the intention to transfer securities under the offer, a statement indicating the existence of an arrangement between the offeror and any of the directors of the target company in connection with the offer and the intentions of the purchaser regarding the employees of the target company and the continuance of the business of the target company. The companies involved in a business transaction are statutorily required to disclose certain information to the seC and the shareholders, given that approval of a merger would largely depend on the information provided by the company. In a merger transaction, the court order approving the scheme must be published in the gazette and at least one national daily newspaper. for an acquisition or takeover, the takeover bid must be published in at least two national daily newspapers at the time the bid is dispatched to the shareholders of the target company. The takeover bid must contain the full name and particulars of the offeror, the proposed maximum number and offer particulars of shares to be acquired, the terms on which the shares are proposed to be acquired, and the number and other relevant particulars of the shares in the offeree company to which the offeror and any affiliate of the offeror is entitled to immediately before the date of the takeover bid.

to the seC before the date of the takeover bid terminates. In relation to approval and appraisal right, a majority of the shareholders of the companies involved in the merger representing not less than three quarters in value of the shares of the members present at the separate general meetings of the companies must agree to the scheme before the same is referred to seC for approval. Significant foreign investor participation is encouraged in Nigeria, The Nigeria Investment Promotion Commission Act (NIPC) permits 100% foreign ownership and board composition of Nigerian Companies. Further, 100% repatriation of foreign direct investment excluding taxes is guaranteed. Generally, the tax implications in every business combination are dependent on the structure of the business combination. should it involve the acquisition of assets, the company making the disposal shall be required to pay capital gains tax of 10% of the profits generated from the disposal. The assessment of the taxable income is within the prerogative of the federal Inland Revenue service. Transactions involving the transfer or acquisition of shares are excluded from the Capital Gains Tax Act Cap. A company interested in the acquisition of a company in bankruptcy, the offeror company shall have to liaise with the liquidator of the company in bankruptcy and not the shareholders or directors. Accordingly, the liquidator is vested with the powers to dispose the assets of the company, execute deeds on behalf of the company and perform all acts on behalf of the company in bankruptcy.

Notwithstanding the absence of specific statutory or judicial authorities, directors and majority shareholders owe a number of duties to the company involved in a business combination to preserve its assets, further its business and promote its main objects. These duties also extend to all shareholders and employees. Where a takeover bid has been forwarded to the directors of the target company, the directors are required to send a directors’ circular to all shareholders and

August 2011 • GBM • 13

mergers & aCquisitions

PolAND Gabriel olearnik senior associate Tel: +48 22 242 56 57 Fax: +48 22 242 52 42 golearnik@salans.com www.salans.com

shareholder value In a challenging atmosphere where deal flow and disputes are both on the increase, Gabriel olearnik of salans considers three ways to get more out of your JV shareholders’ agreements. It’s all there in the name: a shareholders’ agreement (sHA) regulates the corporate relationship between two or more shareholders in a company. The details of a sHA are as varied as the range of relationships and investments. In some circumstances, one shareholder will have specific technical or business knowledge to bring to the table, while the other shareholder provides the financing. Increasingly, we are seeing this kind of teaming up for large deals between private equity houses and strategic investors. This also goes hand in hand with the more usual arrangement, where parties with broad equality in terms of their input enter into a sHA for reasons of risk allocation. In the context of a commercial deal, there is sometimes a temptation to concentrate on what parties put in, and getting the deal done, at the expense of dealing with exits and problem areas. In this article, I review three common issues that can arise at some point in the lifespan of a sHA - specialist involvement in exit valuations, the use of arbitration clauses and dispute escalation. exits and valuation specialists A common mechanism is for a valuation of the exit price to be conducted by a third party as an expert. In that case, it is highly advisable to consider the following safeguards. Confirm the expert can act: The expert should confirm that they have no conflict of interest, that an appointment does not breach any professional conduct rules to which they are subject and that they will have the resources to perform their appointment. Written record: The appointment should be ideally recorded by means of an engagement letter, which sets out the standard of the expert’s services, the person who the services are provided to, and deals with any questions of the expert’s liability. Clarification of accountancy rules: Once the pricing methods are drafted in the sHA, it is useful for the expert to review them. Occasionally, very large differences can arise in local generally accepted accounting principles (GAAP). even using international financial reporting standards (IFRSs), we are aware of circumstances where the difference in two commentaries resulted in a price divergence running into tens of millions of dollars. Without these safeguards, the exit mechanics in the SHA may be unworkable or lead to surprising results. Arbitration Due to the international nature of many sHAs, it is normal practice to use arbitration clauses as an alternative to selecting a court. Arbitration is a contractual agreement by parties to use a private form of dispute resolution. In essence, the parties have waived their right to use national courts and have instead elected to use a system of private justice, which is binding on them. However, because arbitrations derive their binding nature from this

14 • GBM • August 2011

contractual agreement, it is difficult to add parties to an arbitration without their express consent. This issue can be particularly acute in a joint venture where there are project companies lower down in the chain from the company bound by the sHA. The project companies are often close to the income generating assets that form the commercial rationale for a deal. However, they may not be parties to the sHA. Additionally, their commercial agreements may have dispute resolution clauses that are different from those in the SHA. Practically, this can mean very significant headaches later on, with disputes arising in multiple jurisdictions and forums, where common sense would indicate that certain issues should be dealt with together. Problems like this can be minimised if: the arbitration clauses at the sHA and lower levels of a deal are the same; and if the parties procure in the sHA and other project agreements that selected disputes will be dealt with together. Changing faces In large international companies, personnel changes happen. In the context of a long running sHA, it is therefore possible that the individuals negotiating the sHA will not be the ones who help their respective companies perform it. Accordingly, certain knowledge and understandings may not always be passed on with a personnel change. It is therefore sometimes useful to have an escalation clause in the sHA where, in the event of any dispute, the process is elevated from the level of the manager performing the commercial project to a senior decision making level. This hopefully has the effect of lifting an issue into a more objective plateau. It also means that disagreements can be resolved without the involvement of lawyers! In summary While the suggestions above apply to situations that we see arising in the Polish market, they are generally applicable. Considering them at the negotiation stage can improve the end result and lead to a sustained business relationship, which is one way, at least, of improving shareholder value. Salans in a major international law firm and the largest by both lawyer headcount and turnover in Poland. Gabriel olearnik is a senior associate in the Salans Warsaw office who specialises in structuring shareholder arrangements as well as resolving the disputes that can arise under them.

ENGLAND AND WALES Travers smith llP Aaron stocks Partner Tel: +44 (0)20 7295 3319 aaron.stocks@traverssmith.com www.traverssmith.com

The impact of the Uk’s Bribery Act on inbound M&A Companies looking to invest in the UK should be mindful of the application of the UK’s extra-territorial laws, in particular, the Bribery Act 2010 (the Bribery Act), which came into force on 1 July 2011. The Bribery Act: The oﬀences Broadly speaking, under the Bribery Act, it is a criminal offence to: offer, promise or pay a bribe to any person; request, agree to receive or accept a bribe from any person; bribe a foreign public official; or, for a company to fail to prevent a bribe being paid to anyone “associated” with the company (such as its employees, agents or other representatives) in order to obtain or retain a business advantage for the company. A company convicted of the corporate offence may be liable for an unlimited fine and possibly a public procurement ban, and may suffer considerable reputational damage and loss of business as a result. extra-territorial reach What is most relevant to inbound investment into the UK is that the Bribery Act has extra-territorial reach in that it applies to a foreign company that carries on any “part of a business” in the UK, even if the bribery takes place outside the UK and involves non-UK persons. As an example, if a french company with operations in Africa decides to acquire a UK company through which it will carry on part of its business, the french parent will become subject to the Bribery Act. If one of its employees in Africa pays a bribe to a local official, the French parent could be liable under the Bribery Act for failing to prevent the bribery, whether or not the french parent was aware of the actions of the employee or whether any benefit accrued to it. This is in addition to any potential liability of the UK subsidiary. Perhaps a more topical example is the potential investigation by the Us Department of Justice, under the Us foreign Corrupt Practices Act of 1977 (FCPA), into alleged bribes paid by News International Ltd to UK police officers. such potential extra-territorial enforcement by organs of the Us government is not new, but similar actions by the UK government

are now a possibility under UK law. “Part of a business” is not defined in the Bribery Act, but a UK representative office or agent may be sufficient for the purposes of the corporate offence. Facilitation payments one key area of concern is that the Bribery Act (in contrast to the fCPA) contains no specific exception for payments made to facilitate or expedite routine government action, nor any affirmative defence for reasonable bona fide business promotion expenses, which in some parts of the world are commonplace. of some comfort is that on 30 March 2011 the UK Serious Fraud Office (SFO) and the UK Director of Public Prosecutions (DPP) published guidance on their approach to bringing prosecutions under the Bribery Act, which highlights the public interest test to be applied before a prosecution will be brought. This will be relied upon to ensure the Bribery Act is enforced in a “just and fair” manner. The guidance points to certain factors that will be considered, such as the size of the relevant payment(s) and whether it was a one-off incident or part of a “standard way of conducting business”. The “adequate procedures” defence Importantly, a company will have a defence in respect of the corporate offence if it can show that it had “adequate procedures” in place to prevent bribery taking place. In March 2011, the Ministry of Justice (MOJ) issued guidance on the implementation of “adequate procedures”, which includes six key principles: risk assessment; top level commitment;

due diligence; clear, practical and accessible policies and procedures; effective implementation; and, monitoring and review. It should be noted that following the MoJ guidance will not be a safe harbour from prosecution, and equally, departing from the guidance will not lead to a presumption that a company does not have adequate procedures in place if it has sound reasons for doing so. summary The UK government has been keen to point out that compliance with the Bribery Act is about common sense, not burdensome procedures, and that there is no ‘one-size-fits-all’ approach to compliance. each business will be unique, and implementation of a bribery policy will require original thought. The SFO/DPP and MoJ guidance notes place a great deal of emphasis on being able to demonstrate a proactive approach to combating bribery and the existence of a robust anti-bribery programme. It is essential that UK companies, and overseas companies who have or are considering acquiring “part of a business” in the UK have robust bribery policies and procedures in place. Acquirers should remember that just by buying a business in the UK, their own actions outside the UK may become subject to scrutiny and their entire organisation will need to ensure it has robust anti-bribery procedures in place and deployed.

August 2011 • GBM • 15

mergers & aCquisitions

lA PAZ – esTADo PlURINACIoNAl De BolIVIA PATeNT ATToRNeYs

PRofessIoNAl seRVICes oN All THe

TRADeMARK AGeNTs

INDUsTRIAl PRoPeRTY, DoMAIN NAMes AND

CoPYRIGHTs ATToRNeYs

CoPYRIGHTs PRoCeDURes.

Our Law Offices is integrated by professionals Attorneys at Law, specialized in the branch of the Private law, and it is orientated to the legal Advice and to the effective resolution, of any own matter of the Private, both national and International sector. Founded in 1968 by our Director, Dr. Germán Bermúdez y Tórrez (†) under the name of “ BERMÚDEZ – LAW OFFICES “, our firm has been characterized always for offered a serious and efficient legal service to our clients, both natives and foreigners, so much natural as juridical persons, with a staff of young and dynamic Attorneys, who possess a perfect domain of english, french and spanish. The principal professional speciality of “ B., BeRMÚDeZ & BeRMÚDeZ - s.C. “, our Law Offices, is the Intellectual Property, subbranch of the Commercial law. The above mentioned sub-branch, it divides in turn, in: Industrial Property and Copyrights. fully convinced that the Intellectual Creation of the man deserves a special protection, our members prepare and present with meticulous and punctual manner, all the files related to the application and registration of Products Trademarks, service Trademarks and other Distinctive signs, as well as those of the application and registration of Inventions

16 • GBM • August 2011

Patents, of Utility Models Patents, Industrial Designs and of Domain Names, between different many others, that from 1968, our office comes it prepares and deposits before the Trademarks, Patents and Copyrights Office of Bolivia, nowadays named Intellectual Property National service (Senapi). We come from the same way, with the requests of records of Copyrights. Likewise, we offer advising in the negotiation and writing of Contracts of Trademarks licenses, as well as for Contracts of Trademarks Assignments and of Contracts of Technology Transfer, patented or not patented. Also we offer services linked to punctual actions related to the suspension of activities of unfair competition, suspension of the illicit use of distinctive signs and to the suspension of the illegal exploitation of Invention Patents, of Utility Models Patents and registered Industrial Designs. At present, our offices possesses an important client´s portfolio, both natives and foreigners, to which we offer all our better effort.

B., BERMÚDEZ & BERMÚDEZ – S.C. – LAW OFFICES FOUNDED 1968

Mr. Dr. Paulo Rodrigo Bermúdez Durán Mr. Dr. Álvaro Germán Bermúdez Durán Edificio “Alfa Centauro” (Nº 73, Calle “e”, entre Calles “D” Y “f”), segundo Piso - Dpto. 2-C - Zona De Achumani - sector san Ramón, la Paz, lA PAZ – estado Plurinacional De Bolivia, P.o. Box: 3217 Tel: (00591) 705.75357 - (00591) 706.17066 Fax: (591-2) 271.04.59 Bermudez@unete.com www.bermudez- lawoffices.com

JAMAICA Paul Anthony Tai Partner Tel: 876-960-9008 Fax: 876-968-9612 ptai@nsdco.com www.nsdco.com

Businesses in Jamaica have been feeling the effects of the world economic recession and some long established companies are continuing to trim their employee count to cut costs and increase efficiency. Notwithstanding the challenges, there have been areas of growth in the financial sector as companies look to new means of raising revenues. The government has been looking to divest itself of much of its commercial activities, such as those in the tourism, agriculture and mining sectors. This will provide opportunities for both foreign and local investors who are able to access the capital required to enter these industries. Although one may have expected to see an increase in merger activity given the economic climate, there has not been much development in this area, although very recently some plans have been announced to merge some of our credit unions. one explanation for this is the fact that there are very few players in some of the sectors to begin with, such as health insurance and mobile telecoms. We have seen a fair level of activity in the area of acquisitions, notwithstanding the current economic climate, and the emergence of new businesses. New and smaller businesses are seeking to raise financing through IPOs at an increased rate in an attempt to avoid the cost of borrowing and the challenges that flow there from. The main challenges that most businesses face in the M&A arena are the high transactional tax burden that can flow from such transactions and the governmental bureaucracy and red tape that can lead to delays. The government has implemented policies that are favourable to business development and these include the reduction of the transactional tax burden. It is still, however, a significant burden. once the business is operational, it continues to face the challenges of governmental bureaucracy and red tape depending on its area of operation, and it will face a burdensome tax regime that can lead to a less than favourable return for investors. Notwithstanding these problems, however, investors, including some multinationals, have managed to operate successful businesses with satisfactory returns. on the positive side, there are no exchange control restriction laws in Jamaica and this has been the case for approximately two decades. The effect is that foreign owned businesses can freely repatriate profits. Another area of development that has proved attractive to some foreign investors is the major improvement in Jamaica’s road network and infrastructure to date. Plans exist for even more improvements. There are also no restrictions on foreign ownership and directorships of Jamaican companies so that a company may be fully owned by foreign nationals. In some respects Jamaica may be viewed as an emerging market with opportunities for investors, and with proper guidance from local advisers the opportunities for acquisitions may be capitalised on by investors with the appetite for a challenging but possibly rewarding environment.

leBANoN Walid Nasser Managing partner Tel: +9611 611337 Fax: +9611611339 walid@nass-law.com www.nass-law.com

In the midst of a growing global financial sector, smaller domestic organisations across the globe are in a constant struggle to stay afloat in this competitive and crowded market. As is common throughout the world, lebanese organisations use M&As to contend with foreign competitors. Despite a regional dip in the use of M&As in 2009, the Lebanese financial sector still recognises the importance of such deals. lebanese laws regulating mergers and acquisitions are divided into three categories: banks, insurance companies, and all other businesses. lebanon’s free market economy has resulted in minimal legislation dictating the rules of these transactions. However, mergers between banks remain subject to approval by the Central Council of the Bank of lebanon. As outlined in legislation, the Council has 60 days to render a decision on the request, provided the banks file the correct paperwork, including balance sheets from the previous fiscal year, as well as an auditor’s report. If approved, the Council has the authority to set deadlines and stipulate particular conditions of the merger. furthermore, the Central Bank of lebanon issued a decree banning a merger between the nation’s top 11 banks, in order to avoid the creation of a ‘super-sized’ bank. Yet, the Central Bank has made known its encouragement of the country’s other banks to amalgamate with one another, as over 25 bank mergers have occurred in the last decade. A similar regulation exists regarding the merging of insurance companies, as such a deal initially requires the approval of the Ministry of economy and Commerce (MeC), in coordination with the National Insurance Council. However, the law grants the MeC three months to decide on the application, which, if granted, compels the merging companies to adhere to certain conditions as determined by the MeC. Adherence to said conditions is rewarded with a partial exemption from the following fiscal year’s income taxes. finally, we turn to M&As involving all other organisations, which enjoy a greater freedom than the aforementioned sectors. Articles 210-213 of the Lebanese Code of Commerce offer the only existing regulations regarding mergers and acquisitions of lebanese companies. said articles provide inter alia that a merger must be approved by a resolution by the extraordinary general meeting of the shareholders of each of the companies involved, as well as the submission of a formal publication of the pending dissolution. Here is where we most clearly observe the country’s free market economy, opening the doors for the creation of larger domestic businesses. In 2003, the Investment Development Authority of Lebanon created the Investors Matching Service, thereby easing the process of finding both international and local partners for a potential M&A; and the country has responded. Although there is a general lack of M&As among the nation’s businesses, banks have taken full advantage of the opportunities given to them by the country’s rather lax regulations. With many recent mergers, it would be wise to expect these newly formed banks to compete effectively in the regional and global market.

August 2011 • GBM • 17

private equity & venture Capital trusts

The big g deals t est ﬁve priv ate eq ogethe uity the an nual b r are larger than udgets of the of a w The ﬁv orld’s larges ll but 16 t natio e bigg est de ns. more m a ls involve o budge ney than th d ts of R e ussia a annual nd Ind ia.

private equity & Capital trusts A private equity fund is a collective investment scheme used for making investments in various equity (and to a lesser extent debt) securities according to one of the investment strategies associated with private equity. Private equity funds are typically limited partnerships with a fixed term of 10 years. At inception, institutional investors make an unfunded commitment to the limited partnership, which is then drawn over the term of the fund. 18 • GBM • August 2011

A private equity fund is raised and managed by investment professionals of a specific private equity firm. Typically, a single private equity firm will manage a series of distinct private equity funds and will attempt to raise a new fund every 3 to 5 years as the previous fund is fully invested. Venture Capital is finance provided to a new, expanding or troubled business by an outside investor.

The capitalist provides funding with the knowledge that a significant risk is associated with the company’s future and cash flow. the finance that is invested into the company is in return for an equity stake in the business rather than as a loan.

Isle of Man Isle of Man AIMs for the clean tech sector The Isle of Man (IoM) continues to be a popular choice for non-UK companies seeking to utilise the advantages of an IoM vehicle to access the AIM market, with sector research conducted by Hemscott in November 2010 showing that the IoM has the largest number of non-UK AIM top 100 companies. The advantages to using an IoM holding company are now widely recognised. Not only do they provide tax neutrality at the holding companylevel, but there is also no withholding tax when paying dividends and no stamp duty payable on the transfer of shares. In recent years, their use has become popular not only with businesses with operations in emerging markets (including the BRIC nations) but also with global businesses investing and operating in the clean tech sector. Over the past five years, a number of IoM AIM companies have successfully invested into the clean tech sector including, renewable energy generation, alternative fuels, and the acquisition and trading of recognised carbon offset certificates. Although the sector has seen some consolidation over the past two years, new opportunities continue to present themselves as international organisations and governments around the world flex their policies and incentive schemes (grants, feedin tariffs) to promote inward investment, the creation of new green jobs, and the development of intellectual property. It is also hoped that new technologies and inward investment will go some way in reducing carbon consumption in order to meet carbon reduction obligations, which are becoming ever more challenging. Given the IoM’s strong presence in the clean tech sector, the IoM government is committed to the development and support of the sector, a sector that complements the IoM’s expertise in high tech manufacturing and business financial services. In order to promote inward investment, the IoM government has set itself ambitious goals, including a target to generate 15% of the IoM’s electricity needs from renewable sources by 2015. In the sporting world, June 2009 saw, as part of the IoM’s annual TT motorcycling event, the launch the first electric bike race around the Isle of Man TT Mountain Circuit. In 2011, these battery powered bikes now compete at speeds up to 150mph with the winner, Michael Rutter, completing the 37 ¾ mile circuit on his MotoCzysz machine at an average lap speed of 99.6mph. In June 2011, PwC IoM issued the results of a clean tech survey undertaken for the

IoM government. The survey identified a number of IoM companies which have operating activities that cover a broad range of sub-sectors within clean tech. Respondents stated that they had overcome a number of the typical issues to reach their current stage of operation, ranging from initial funding, technical issues, finding investment partners as well as sufficiently qualified staff. Interestingly, no respondent indicated that they had not been able to succeed in the IoM through lack of funding. For those companies listed on AIM who responded, the majority cited the attractive fiscal environment and quality of professional service providers on the Island as being key factors in their decision to locate their business in the IoM. For prospective investors, managers and advisers, the IoM offers an attractive fiscal environment. Corporate tax for general companies is set at 0%, the highest rate of income tax for residents is set at 20% (with the total amount of income tax payable by an individual capped at £115,000 per annum), and there are no capital gains or inheritance taxes. Companies are also able to register for VAT, and businesses in the Isle of Man are treated by the rest of the EU for VAT purposes as if they are in the UK. Therefore, there are many advantages to the IoM, whether your business is selling into the EU, investing overseas, or wishing to locate its intellectual property on the Island. Although a small jurisdiction, the advantages of the IoM’s size is that its law makers, decision makers and regulators are all at close quarters and have enjoyed a relationship of mutual understanding with business. The end result is a rapid decision-making process, as well as a stable, supportive and friendly business environment. This business environment coupled with the Island’s natural environment and renewable resources, such as wind, biomass and tidal give the IoM an enviable proposition to those wishing to invest the clean tech sector.

PricewaterhouseCoopers, Isle Of Man Nick Halsall, Partner nicholas.halsall@iom.pwc.com Tel Number: 01624 689680 Fax Number: 01624 689690 Website: www.pwc.com/im

While challenges will continue to face the broader AIM Market, and the return to the boom years is highly unlikely, new opportunities, such those in the clean tech sector, are expected to accelerate as governments around the world seek to invest in technology and businesses that promote cleaner as well as renewable energy generation. Being positioned to take advantage of these opportunities will include putting in place efficient corporate structures, protecting your intellectual property, as well as being located in a jurisdiction that will support your business’s growth. Given the fiscal environment, together with the support and commitment from the government and local business advisers, the IoM continues to be a very attractive proposition. August 2011 • GBM • 19

private equity & venture Capital trusts

BeRMUDA Business-friendly Bermuda There is an emerging trend among private equity (Pe) asset managers. More and more Pe asset managers are carefully evaluating their global corporate structures in search of ways to optimise their operations and growth potential. The choice of where to do business is an important, inevitable decision that all Pe asset managers must face when looking to build an effective global corporate structure. When selecting a jurisdiction, Pe asset managers have three main considerations: a location in which investors have confidence and will facilitate access to capital; a location providing the most appropriate structures and vehicles, suitable for both investors and investment strategies; and, a location effective and efficient for PE asset managers do to business from, for both personal and business reasons. A number of must-have qualities vault to the top of the list: reputation; access to global capital; effective regulatory environment; efficient tax regime; strong infrastructure and stable government; and, available talent. Bermuda is the offshore financial centre of excellence with the most convenient location to service Us, european and latin American markets. Bermuda’s tax efficiencies create an opportunity for the establishment of global fund platforms and locally based asset management and advisory functions, enhancing the ability to attract capital on a global basis. Not only a domicile of choice for offshore structures, Bermuda also plays an important role in facilitating capital-raising activities and cross-border investments. More and more investment professionals are interested in relocating to Bermuda to take advantage of: political and economic stability; an avowedly business-friendly government that understands the importance of a well-regulated international business sector; a safe environment; easy access via North American and european gateways; tax efficiencies; deep pools of talent; and, regular visits by high-calibre investors, professionals and business leaders. Regular dialogue between Bermuda’s international business and government encourages regulations that are innovative, while preserving the highest standards

of conduct. This approach to regulation accommodates a variety of structures for both hedge fund and Pe products, and for asset managers themselves, including Bermuda segregated account companies. Bermuda’s asset management industry is regulated by the Bermuda Monetary Authority (BMA), with legislation that provides a statutory basis for regulating the establishment and operation of funds and certain asset managers. The BMA’s regulation also provides for the licensing and supervision of Bermuda fund administrators. The regulations themselves are designed to be commensurate with risk - investment products with exposures only to institutional or sophisticated investors, who rely less on a public regulator, enjoy a significantly lower regulatory burden than retail investment offerings. Bermuda has an extraordinary concentration of intellectual capital, with administrators, lawyers, audit and tax professionals and independent directors with a history of dealing with international structures and complex products. Their experience working with emerging markets can provide a high level of customised service. Bermuda’s deep pools of intellectual resources and trusted regulatory framework have contributed to its emergence as a domicile fit for purpose. Bermuda also has a pool of internationally experienced non-executive directors that can provide ‘mind’ and management, evidence of substance of activities, and independent and objective oversight. Bermuda maintains a significant number of administration firms with skill sets spanning the hedge and Pe markets, in addition to supporting family offices. These firms service Bermuda-domiciled entities, as well as many entities domiciled in other jurisdictions. Bermuda is emerging as a strong choice for Pe houses, as these teams look to provide options and opportunities for their business and their people; in addition, it remains a jurisdiction strong in servicing the hedge fund industry, with boutique administrators providing highly customised, personal service in wellcontrolled environments. Asset managers also choose Bermuda for their key operations because it offers one of the world’s highest standards of living

PwC Bermuda +1 441 295 2000 +1 441 295 1242 pricewaterhousecoopers.bermuda@bm.pwc.com www.pwc.com/bermuda

20 • GBM • August 2011

and provides an efficient tax structure, both corporate and personal level. Bermudaexempted entities are provided a period of tax assurance to March 2035, under the exempted Undertakings Tax Protection Amendment Act 2011, such that certain taxes would not, if introduced, be imposed on these entities. Making the choice to operate your asset management business in Bermuda is a critical first step; setting up your operations in an efficient and effective manner will enable you to gain the benefits that Bermuda offers. PwC can advise you on how to set up and position your business to gain those benefits. PwC Bermuda, as a leader in the asset management market, has been servicing asset management clients for over 40 years including some of the largest asset managers and funds domiciled and administered in Bermuda and other jurisdictions. The firm has a dedicated asset management practice with extensive audit, tax and advisory expertise and draws on international tax and transaction services know-how from the global PwC Network. We can work with your existing business advisers to provide you with the best advice, make introductions to quality service providers, and can arrange for you to meet with the BMA and government officials. Our executive search and selection professionals can assist you to find the right talent on Island or elsewhere. Bermuda has a long history of providing the qualities so critical to building an effective global business structure. Bermuda’s geographic location positions the Island as a financial hub with convenient access to global capital. The regulatory environment promotes innovation and flexibility at the appropriate level of oversight. The tax regime is efficient and beneficial for both corporations and individuals. And the government is committed to the growth and expansion of the asset management industry. for all of the above reasons, Bermuda has become a recognised and sophisticated jurisdiction for asset managers and a servicing centre for many Pe funds.

www.pwc.com/bermuda

Having a global perspective

At PwC Bermuda we provide a broad range of assurance, tax and advisory services to private equity funds with multi-jurisdictional structures, including emerging markets and with different investment strategies. Our asset management group has close working relationships with international tax and transaction teams in other PwC network firms to ensure our clients receive the best quality service and advice available. Private Equity Funds George Holmes george.holmes@bm.pwc.com

Andrew Brook andrew.brook@bm.pwc.com

Belaid Jheengoor belaid.jheengoor@bm.pwc.com

© 2011 PricewaterhouseCoopers. All rights reserved. In this document, “PwC’ refers to PricewaterhouseCoopers (a Bermuda partnership), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

private equity & Venture Capital Trusts

spain Basic legal aspects for setting up and registering a private equity or venture capital fund in Spain Today, Spain has an extremely well established private equity and venture capital industry, with practices that are entirely on a par with standard practices in the most advanced countries in the EU and the English-speaking world, and whose legal aspects are addressed in Law 25/2005 [24 November 2005] regulating private equity entities and their management companies. The Private Equity Law (PEL) offers a flexible and modern legal framework for driving growth in the private equity business and a particularly attractive tax regime for the industry, while subjecting industry players to a system of authorisation, supervision and inspection by the Spanish National Securities Market Commission (CNMV). As the PEL does not draw any distinction between ‘private equity’ and ‘venture capital’, it is left to legal and business practice to flesh out the typical differences between these two areas. According to the PEL, there are two types of private equity entity: private equity funds (funds), which must be managed by private equity management companies (management companies); and, private equity companies (companies), which are corporations (sociedades anónimas) and can be managed by a management company or be self-managing. In order to commence operations, a fund or a company must first obtain authorisation from the CNMV, then be formed and finally registered on the CNMV’s register. The application for authorisation must include a report on the plan for forming the fund or company, a prospectus and questionnaires on good standing, and resumes of the fund or company directors and executives. The report must allow the entity to be properly assessed and must include, principally, the identifying particulars of the promoters and initial contributors and their contributions, the investment policy and a financial project. The prospectus will include management regulations (in the case of funds) or bylaws

(in the case of companies), and cover the main financial and legal aspects of the entity. Funds can be set up in a public deed executed before a notary or in a private agreement, and their registration at the Commercial Registry is optional; in contrast, as corporations, companies must be formed in a public deed and registered at the Commercial Registry pertaining to their registered office. Once set up according to the authorised plan for their formation, the funds or companies will be registered on the CNMV’s register. Apart from the ordinary regime described above, the PEL introduces the concept of funds and companies under the simplified regime. Entities will be subject to the simplified regime if the fund-raising offer is strictly private in nature, there are no more than 20 non-institutional investors, and the minimum investment commitment per non-institutional investor is €500,000. The main advantages of the simplified regime over the ordinary regime are a far more flexible operating and reporting system, the absence of any need to prepare a prospectus (although management regulations or bylaws do have to be drawn up, where applicable), and the possibility of issuing a class of shares different from the general class subscribed by the promoters or founders (this is a oft-used method in practice for instrumenting the carried interest of the management team). The simplified regime clearly predominates in the industry, in both the private equity and venture capital segments. Management companies, which are necessary where funds are being set up, are also corporations. The requirements for them to commence operations are basically the same as those described earlier for a company, except that a management company does not need a prospectus and the plan for its formation must be ruled on by the Minister for Economy and Finance at the CNMV’s proposal.

J&A GARRIGUES, SLP Francisco Martínez Iglesias Partner in the corporate/commercial law department, specialising in the private equity and venture capital industry -Madrid Office +34 91 514 5200 +34 91 399 2408 francisco.martinez.iglesias@garrigues.com www.garrigues.com

22 • GBM • August 2011

Due to their management role, when applying for authorisation both management companies and self-managed companies must demonstrate that they have a sound administrative and accounting organisation, directors and executives experienced in financial or business management matters, and the necessary human and technical resources. Among other requirements, this means that a set of internal rules of conduct must be prepared, as must an in-house handbook on anti-money laundering measures, which must be supervised and approved by the Enforcement Service of the Anti-Money Laundering and Monetary Infringements Commission (SEPBLAC), an agency attached to the Bank of Spain. As for the time frame, with the right advice it can take one to two months to set up a fund once it is clear what the structure and basic principles governing the venture will be and a minimum number of investors required for start-up have committed to it. In the case of a company, one or two more weeks must be added for registration at the Commercial Registry after its formation. Moreover, in the case of a management company or self-managed company, the SEPBLAC’s involvement may mean a delay of approximately one month, although in practice this formality can be partly fulfilled at the same time as seeking initial authorisation from the CNMV. Lastly, the involvement of the Ministry of Economy and Finance in approving the plan to form a management company will mean another two-week delay in practice. We would end by mentioning that, based our experience, the CNMV has proved to be cooperative when it comes to fulfilment of the formalities for setting up private equity entities, and its supervisory function offers investors much sought-after peace of mind.

suCCess stories

success stories sam Walton Founder of Wal-Mart

Have you ever gone shopping in any of the thousands Wal-Mart stores around the world? Were you impressed by the diversity of the goods? Probably yes. Wal-Mart is the Top Seller of products in the U.S., ranging from dog food to diamonds. Its success story is actually the success story of one ambitious businessman and entrepreneur, named Sam Walton. He founded Wal-Mart in the distant 1962 and had turned it up into the largest public corporation. Today the company has more than 7,500 department stores and over 2, 5 million employees worldwide. But surely a few questions pop up in your mind. What is the secret hidden behind Wal-Mart’s success? Which are the “rules of the road”, which the merchant king applied during the creation of the company? Born in a humble family, Sam Walton was brought up in a farm in Kingfisher, Oklahoma. A combination of circumstances led him to Missouri, where his father started working as a banker. He graduated the University of Missouri in 1940, where in fact he met his future life partner Helen Robson. He also served three years as an Army intelligence officer during World War II.

Since Walton's death the chain has come under fire for its labor practices and aggressive marketing tactics. Arguing that Wal-Marts drove out other merchants, many local communities fought to keep new stores from opening and in June of 2004 a lawsuit was filed on behalf of 1.6 million women, charging that Wal-Mart discriminated against female employees.

The idea of going into the retail business came in 1945, and by the time Wal-Mart first opened in 1962 in Rogers, Arkansas, Sam Walton owned a chain of 15 variety stores in Missouri, Arkansas and oklahoma. Together with his brother Bud Walton he entirely devoted himself to his retail business. Sam’s attention to detail and exceptional marketing skills led Wal Mart steps forward on the road to success. His store chain expanded throughout the United states and even in countries such as Mexico, Canada, Brazil and UK. By 1990 Wal-Mart was the nation's top retailer in terms of sales, and Walton was one of the richest men in the world. After his death in 1992 the company continued to expand, including online commerce and stores around the world. By 2009 there were more than 7,500 Wal-Mart stores worldwide.

Today you could learn a lot from Sam Walton’s business experience. There’s even a book, called “Sam Walton: Made in America” – a profound and inspiring autobiography, wherein Walton tells his fantastic story revealing the ten rules, that made him running a successful company: Commit to your business, share your profits, motivate your partners, communicate with them, appreciate everything your associates do for the business, celebrate your success, listen to everyone in your company and figure out ways to get them talking, exceed your customer’s expectations, control your expenses better than you competition. SWIM upstream. Go the other way. Ignore the conventional wisdom. Story and Images provided by Boompedia

August 2011 • GBM • 23

Trustee Services Report

Trustee Services Trusts and Trustees Dating back to the Middle Ages, trusts are a fundamental concept of English property law. They can be constituted formally by way of a trust deed or informally by action of law as a constructive trust. Most people go through life as a beneficiary of a number of trusts without ever realising it. The trust has shown an amazing ability to evolve and within the business context, trusts are used for succession planning (family and will trusts), employee remuneration (pensions, share ownership plans and employee benefit trusts) and raising finance (loan capital trusts and joint venture arrangements). Depending on the nature of the trust and the duties and responsibilities involved, trustees may include family members, employees, professional advisers or professional trust companies. The Association of Corporate Trustees (TACT) is the membership organisation of the UK corporate trustee sector. Its members include trust companies owned by banks and major financial institutions as well as those set up by firms of accountants, lawyers and pensions advisors. Those trust companies are responsible for the management of over £1trillion worth of assets, including sovereign and company debt of over £900million and occupational pension funds with in excess of 1.25 million members, representing over 10% of that sector. For many, trusts are associated with the offshore financial centres. The tax advantages afforded by offshore structures have been under concerted legislative attack from onshore jurisdictions, neutralising their effectiveness. The choice of trustee now tends to be dictated by the applicable law, the local regulatory regime and the perceived professionalism of the individual or company approached. For the owners of small and medium sized enterprises, trusts are an essential part of succession planning, protecting family wealth and ensuring that as far as possible, it remains within family ownership. Their usefulness in enabling an orderly 24 • GBM • August 2011

transition of ownership to take place has attracted the attention of families outside the Anglo Saxon world. English law trusts, which are regarded as tax neutral vehicles, have proved particularly attractive to Italian families and even the Germans, a jurisdiction notably hostile to trusts, have begun to consider their use in wealth and succession planning. Whilst family members and trusted advisers comprise the majority of trustees, there is much to be said for employing the services of a trust company to provide continuity, independence and professional standards. The provision of trustee services is not a regulated financial services activity in the UK as it is in the offshore jurisdictions, other than for the purposes of anti money laundering legislation, although most corporate trustees are themselves owned by regulated businesses. Many of the offshore jurisdictions did not have their own trust law until relatively recently, indeed Switzerland, which has a huge trust industry, still does not. Trusts had to be constituted under the law of a jurisdiction such as England and foreign resident trustees appointed. The choice of law and residence will depend on a number of factors. These may include: 1. How easy is it to communicate with the trustees; 2. How is the trust taxed; 3. How experienced are the trustees; 4. What regulation is in place to protect the beneficiaries; 5.

Does the jurisdiction recognise trusts as a legal concept and if so, does it have a trust law that reflects the current needs of trustees and beneficiaries;

6. How experienced are the courts at dealing with legal disputes. Rewarding employees Recent tax legislation dealing with disguised remuneration has killed off a lot of the more aggressive tax planning involving

employee benefit trusts. Share incentive and ownership plans however remain an attractive method of encouraging employee participation and are structured via trusts. The trustees are invariably corporate and unless the rules require that they should be UK resident, most of this work is carried out by trustees resident offshore in either the Channel Islands or the Isle of Man. There are still capital gains tax advantages, and that is where the experience and skill base lie.

The primary trust property is the obligation to repay principal and to pay interest, which the trustee holds on behalf of itself and the bondholders. It is extremely important to note that the Trustee represents the holders as a body or class of persons – and not the interests of each individual investor. In the simplest of terms, its role is to assist in the efficient running of the bond market, not to act in favour of, or against, a particular individual or investor.

Trustees of pension funds operate in a highly specialised and heavily regulated arena. Their work entails investing large sums often into complex financial products designed to match pension fund liabilities. They engage actuaries to produce complex valuations to determine the amounts likely to be needed to provide pensions far into the future. These depend on numerous assumptions such as future investment returns and estimates of how long scheme members will live. Whilst the actuary can advise, the trustee is responsible for the various assumptions. If the conclusion is that more funds are needed, the trustee has to negotiate with the sponsoring employer a recovery plan setting out how quickly any deficit can be made good. This can require considerable diplomatic and negotiation skills.

In some cases, a trustee may be necessary, e.g. because of a listing requirement or because of the need to hold security on behalf of the investors. Generally, the decision is based upon whether the advantages of having a trustee are sufficiently attractive. There are advantages both for the investors and for the issuer. Cost is not normally a significant factor, as the fees charged by trustees are usually minimal within the context of the overall expense of an issue.

Pension fund trustees also have to keep accurate data relating to scheme members, of whom there may be many thousands, perform complex calculations to determine with precision the amounts to be paid to members, and then deliver these payments on time. These tasks are usually delegated to specialist administrators, but the trustee remains responsible for ensuring everything happens as it should. The trustee is also responsible for communications with scheme members – not an easy task when pensions regulations are made ever more complex by Parliament and HMRC. The trustee is required to keep on top of all the regulation, as well as the complex deeds and rules that govern pension schemes Strictly there are no minimum qualifications for a pension fund trustee, but this is a highly responsible and technical role and it is essential to check that a potential trustee has a good track record in this specialist field . The Pensions Regulator maintains a register of trustees who have applied to and met its standards. Most are companies with large staffs that can field appropriate specialists in the differing disciplines involved as and when the need arises. Raising debt capital The City of London has a pre-eminent role in the international bond markets. This is in no small part down to the existence of a legal system that provides for loan capital to be issued via a trust arrangement. The trustee is the representative of the investors, and owes its duties to them (although its fees and expenses are paid by the issuer).

Wilson Cotton Director 020 7131 4224 020 7131 4033 Wilson.cotton@smith.williamson.co.uk www.smith.williamson.co.uk

The advantages of having a trustee include: 1. The trustee is independent of the issuer. 2. The trustee provides one responsible body as a focal point for investors. 3. The trustee has the ability to discuss confidential matters without causing market disturbance. 4. The issuer can deal directly with the trustee rather than the investors in the reporting of compliance with covenants. 5.

The trustee has the right to obtain information in order to monitor compliance with covenants, identify breaches and take appropriate action.

As the trustee is responsible for enforcement, proceedings are taken in one unified action on behalf of all the investors, and the legal and financial advice which the trustee obtains is for the benefit of all of them.

Any monies recovered by the trustee are distributed to all the investors pro rata, thereby avoiding any risk that only some investors may recover in excess of their entitlement.

Acting as a trustee of loan capital is a specialist role, carried out almost exclusively by trust companies owned by major financial institutions. Contacting TACT More information on trusts and the role of trustees can be obtained from TACT whose website is www.trustees.org.uk Alternatively the secretary of the association can be contacted by e-mail tact@cooden. fsbusiness.co.uk , telephone 01424 844144, or post WJ Stephenson Esq., 3 Brackerne Close, Cooden, Bexhill on Sea, East Sussex TN39 3BT.

August 2011 • GBM • 25

Trustee Services Report

Liechtenstein Dr. Markus Summer, LL.M, MBA Marxer & Partner Attorneys at law Heiligkreuz 6, P.O. Box 484, FL9490 Vaduz, Liechtenstein Phone: +423 235 8181 Fax: +423 235 8282

markus.summer@marxerpartner.com www.marxerpartner.com

The taxation of legal entities under the new Liechtenstein Tax Law On 1 January 2011, the new Liechtenstein Tax Act entered into force. With the new act, Liechtenstein introduced an attractive tax system that complies with European law. In fact, the EFTA Surveillance Authority (ESA) has confirmed that the rules for private asset structures and the new IP box regime are re-garded as compliant with the provisions of the EEA agreement. Below, some features of the new tax law for legal entities are described in detail. Corporate tax rate and tax base Legal entities that are taxable in Liechtenstein are now, under normal taxation rules, subject to the corpo-rate income tax on their net income at a rate of 12.5%. The net income is reduced by income from foreign permanent establishments, rental and lease income of foreign real estate, gains from selling real estate, dividends, and capital gains on the sale of shares. It is noteworthy that the dividend income and capital gains from the sale of shares are tax exempt irrespective of the percentage of the shareholding. As a result, not only income and capital gains from interests in partly or wholly owned subsidiaries, but also income and capital gains from shares held as part of a secu-rities portfolio, are tax-free. Notional interest deduction The new tax law introduced a notional interest deduction of currently 4% of the modified equity as a deemed expense to ensure equal treatment of debt and equity. The modified equity is calculated by deducting the following items from the net equity: shares in legal entities; net asset value of foreign real estate; net assets of foreign permanent establishments; and, assets not required for the company’s purposes. The reason for the first three deductions is that they produce tax-exempt income and capital gains and, therefore, cannot be used to create a notional interest deduction. Private asset structures As an alternative to regular company taxation and inspired by Luxembourg’s Société de Gestion de Pat-rimoine Familial (SPF), the legislator has devised a new tax privilege for legal entities that are only en-gaged in the management of their own assets and do not perform any commercial activity. Such private asset structures (PAS) are subject only to the minimum corporate income tax of CHF 1,200 annually without having to file any tax returns. The main feature with regard to the tax privilege is the lack of commercial activity. Article 64, paragraph 1a of the Tax Act exemplifies, by reference to the Asset Management Act, what is not considered as a commercial activity. This includes the acquisition, possession, management and sale of transferable secu-rities such as bonds, stocks, money market instruments, shares in investment undertakings and deriva-tives. Likewise, buying, holding and selling of precious metals, artwork and similar assets is generally possible. However, in its decision approving the provisions on the PAS, ESA indicates that transactions in securities when effected “as part of a commercial share dealing activity” constitute economic activity. Regular and active trading of securities (and other assets) is therefore not considered permissible for a PAS unless decisions are delegated to an independent asset manager. The purchase and sale 26 • GBM • August 2011

of securities as part of a long-term investment strategy is allowed in any event. As the mere exercise of ownership by an entity, and the extension of benefits by the entity to its share-holders or beneficiaries are not considered commercial activities, the holding of a property does not con-stitute commercial activity as long as the property is used by the PAS, or its shareholders or beneficiaries, and no rent is charged. When a PAS holds shares in a subsidiary that exercises a commercial activity, neither the PAS nor its shareholders or beneficiaries, are allowed to exercise any control through direct or indirect influence on the management of the subsidiary. Otherwise, the PAS itself will be regarded as commercially active and lose its status as a PAS. When comparing regular taxation to PAS taxation, it turns out that in some cases there may be only a small difference in the tax burden because even in case of regular taxation the income from the manage-ment of the legal entity’s own assets tends to be tax-exempt anyway. The following table shows where PAS taxation has advantages over regular taxation: Investment

Bonds

Revenues

Regular taxation (12.5% corporate tax)

Dividends

Tax-free

Realised capital gains

Tax-free Taxable if net profit exceeds the 4% notional interest deduction Taxable if net profit exceeds the 4% notional interest deduction Taxable if net profit exceeds the 4% notional interest deduction

Rent

Tax-free

Realised capital gains

Tax-free Taxable if net profit exceeding the 4% notional interest deduction

Interest

Realised capital gains Commodities (physical, eg, gold in a safe)

Real estate (nonLiechtenstein)

Derivatives

Investment funds

Treated as transparent; investments of the fund are treated as being held directly by the legal entity

Possible advantage of PAS (tax of CHF 1,200 annually only)

X X (except pure stock/ property funds)

In summary The specific features of the new tax system have turned Liechtenstein into an attractive jurisdiction for many purposes. With a corporate tax rate of 12.5%, and the possibility to reduce the effective tax rate even further through the notional interest deduction, Liechtenstein has joined the league of most tax-efficient jurisdictions by European standards. Furthermore, the PAS offers an attractive way for individu-als to structure their wealth. Dr Markus Summer, LLM, MBA, is a partner of Liechtenstein’s oldest and largest law firm Marxer & Partner Attorneys-at-Law.

USA Jennifer Jordan McCall 650 233 4020 jmccall@pillsburylaw.com

United States Federal Estate and Gift Tax Laws for 2011-2012 On 17 December 2010, US Congress passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the Tax Relief Act), which included new federal estate and gift tax laws applicable during 2011 and 2012. These laws provide opportunities to transfer assets to desired beneficiaries at a tax cost that is significantly lower than under the tax laws prior to 2010. The following is a brief summary of the new US federal estate and gift tax laws in effect for 2011 and 2012. Estate and gift taxes The Tax Relief Act establishes a $5m estate tax exemption (the applicable exclusion amount) and a 35% maximum federal estate tax rate, applicable from the beginning of 2010 through the end of 2012. However, the estates of decedents who died during 2010 have the option to elect out of the estate tax laws under the Tax Relief Act. In so choosing, the estate would be subject to no federal estate tax, but all inherited property would be subject to modified carryover basis for income tax purposes. The federal estate and gift tax exemption

amounts are unified under the Tax Relief Act, resulting in a $5m gift tax exemption applicable to gifts made in 2011 and 2012. The gift tax rate during this time is 35%. Allocation of available gift tax exemption during one’s lifetime will reduce the estate tax exemption amount available upon death.

grandfather to his granddaughter), called the generation-skipping transfer (GST) tax. The GST tax exemption and tax rate in 2011 and 2012 are equal to the applicable exclusion amount and maximum estate tax rate: a $5m GST exemption and a 35% GST tax rate.

Even if a person has already made taxable gifts and allocated the full $1m of the prior maximum gift tax exemption amount, such person will now have a ‘new’ gift tax exemption of $4m in 2011 due to the increase in the gift tax exemption to $5m under the Tax Relief Act. Opportunities exist to make ‘leveraged’ gifts to maximize the value of the additional exemption.

Allocation of GST exemption is automatic in some cases unless the donor timely elects out of this automatic allocation. The deadline for electing out of this automatic allocation is the gift tax return due date.

If Congress does not enact another gift tax law before the end of 2012, the estate and gift tax rate will increase to 55% beginning in 2013, and the estate and gift tax exemptions will return to $1m. Therefore, 2011 and 2012 are opportune years to make gifts of cash or other assets, either outright or in trust, if financial circumstances permit and one is so inclined. Portability for spouses The Tax Relief Act also establishes portability of the applicable exclusion amount between spouses. The portion of the $5m applicable exclusion amount not used by a deceased spouse’s estate may be used by the surviving spouse. However, under the Tax Relief Act, in the case of multiple marriages portability is limited to only the most recently deceased spouse. In order to take advantage of this rule, the executor of the deceased spouse’s estate must affirmatively elect portability on a timely-filed estate tax return. If portability ‘sunsets’ at the end of 2012, as the Tax Relief Act provides, this benefit will be lost, therefore reliance upon portability for estate planning purposes is risky. Generation-skipping transfer taxes The US federal government levies an additional tax on gifts to persons who are more than one generation below the person making the gift (ie, a gift from a

It may be advisable to allocate additional GST exemption to a trust that holds, all or in part, assets that are not GST exempt, as there is an increased GST exemption applicable in 2011 and 2012. For example, a trust that has been allocated the maximum available (before 2011) GST exemption amount of $3.5m but holds a total of $5m could receive an additional $1.5m of GST allocation in 2011 or 2012, to exempt the remaining assets from GST tax. As with gifts, tax planning can maximize the amount that can be GST exempt under the new law. If Congress does not act, the GST exemption amount will return to $1m (indexed for inflation, to approximately $1,360,000) with a GST tax rate of 55% for transfers made starting in 2013. Therefore, 2011 and 2012 provide an opportunity to make gifts to grandchildren and younger generations while the $5m exemption is in place and a lower 35% rate is applicable. About Pillsbury’s estates, trusts and tax planning practice Jennifer Jordan McCall is a partner in the New York and Silicon Valley offices of Pillsbury Winthrop Shaw Pittman LLP and is the Chairperson of the estates, trusts & tax planning practice section. Her practice focuses on the representation of individuals, families, foundations, museums and charities regarding domestic and international gift and estate planning. Her clients have included internationally renowned museums and corporations as well as domestic and foreign individuals and fiduciaries of estates, trusts, and charitable foundations. Ms. McCall is a fellow of the American College of Trust and Estate Counsel, where she serves as a member of the Estate and Gift Tax Committee, and has lectured and authored extensively on estate and tax planning. August 2011 • GBM • 27

Trustee Services Report

uk Inheritance disputes in England and Wales: Why and when to mediate English Inheritance Law

Why mediate?

In England and Wales, a person is entitled at his death to leave his property in whatever way he pleases, subject only to the provisions of the Inheritance (Provision for Family and Dependants) Act 1975 (the Act of 1975). The Act of 1975 enables surviving spouses, civil partners, cohabitants, children, persons treated as children of the family and other dependants to apply to the court on the ground that the disposition of the deceased’s estate effected by his will (or the intestacy rules) is not such as to make reasonable financial provision for the applicant. The only guidance given to the court as to the meaning of “reasonable financial provision” is that, in the case of spouses and civil partners, it means such financial provision as it would be reasonable for the applicant to receive whether or not required for his or her maintenance; and in the case of all other applicants, it means such financial provision as it would be reasonable for the applicant to receive for his or her maintenance.

Claims under the 1975 Act cry out for mediation. This is not just because of the uncertainty and expense of litigation. The Law Commission’s Consultation Paper on Intestacy and Family Provision Claims on Death (2009) began with these words: “Inheritance is a difficult subject. It is difficult not least because it goes along with bereavement ... The process of grieving, and adjustment to change, can be made far worse by uncertainty and anxiety about money or belongings.”

The most recent case law

Giles Harrap Leader of the Pump Court Inheritance Mediation Panel 3 Pump Court, Temple, London EC4Y 7AJ (also at Winchester and Swindon) Jonathan Cue Mediation clerk 0207 353 0711 jonathanc@3pumpcourt.com David Barber Chief clerk 01962 868161 davidb@3pumpcourt.com www.3pumpcourt.com www.3pumpcourt.com/areas-ofpractice/a.d.r/inheritance

28 • GBM • August 2011

Thirty years after the Act of 1975 came into force, it remains the case that, on a given set of facts, two different judges can come to different conclusions as to whether a will makes or does not make reasonable provision and neither decision will be open to challenge on appeal. A recent example of this is the adult child claim of Ilott v Mitson & others [2011] EWCA Civ 346, [2011] WTLR 779. The applicant left home aged 17 to live with a man she later married. There was little contact between mother and daughter and the mother decided to leave her estate to charity. The daughter was in her forties when her mother died and applied for provision from her mother’s estate. The district judge found that reasonable provision had not been made and ordered that she receive £50,000. A High Court judge on appeal held that in the circumstances leaving the daughter nothing was not unreasonable and so there was no power to make the order. The Court of Appeal, while holding that the High Court judge was not entitled to allow the appeal from the district judge, went out of its way to state that her conclusion that the provision was not unreasonable was “meticulously reasoned and well within the ambit of decisions that were open to her” if she had been the trial judge (Black LJ at 801F). An application for permission to appeal to the Supreme Court has been refused; so no further guidance can be expected in the near future.

Where disputes arise on death, the need to end the uncertainty and anxiety is all the greater. There is a need for a process that addresses the particular difficulties that arise following bereavement. Litigation, by its nature, tends to aggravate those difficulties. Experience shows that mediation by trained mediators with a good understanding of inheritance disputes can be a particularly well-suited process for resolving such disputes. Generally, it is quicker, cheaper, more flexible, less stressful and less likely to result in fractured family relationships. When to mediate? All parties to inheritance disputes are required by the Practice Direction – Preaction Conduct (2009) to consider whether some form of alternative dispute resolution (ADR) might enable them to settle the matter without starting proceedings. It is no longer a sign of weakness to raise the question of ADR. It is a duty placed on the parties and their advisers, and a duty that arises pre-action. Ideally, mediation should quickly follow a letter of claim, in which the proposed applicant sets out the matters he relies on, and the response of the defendants, in which they set out the necessary particulars of the estate and the matters they rely on. Reasonable exchange of information and, in particular, realistic valuation of the subject matter of the claim will generally be necessary, but subject to that, the sooner mediation is tried the better. A key factor in many mediations is the avoidance of litigation costs; so it is far easier to mediate at a time when there will be substantial savings by avoiding litigation or at least bringing litigation to an early end.

eNGLAND 2011- the path to the future: Increased transparency and sophisticated ﬁduciary services with competent advice In the spirit of advance disclosure, transparency and tracking of transactions, the UK tax authority, Her Majesty’s Revenue and Customs (HMRC) announced earlier this year an extension of the Disclosure of Tax Avoidance schemes (DoTAs) provisions to UK inheritance tax (IHT).

The QNUPs requires asset management and fiduciary services for the life of the client after the assets are contributed to the QNUPs free of IHT. The scheme also preserves the long-term relationship with the client lasting until the assets pass upon the client’s death, again free of IHT.

Consequently, this mandatory disclosure regime applies where property is, at some stage of a scheme or arrangements, transferred into trust and the IHT entry charge on such transfers is extinguished, reduced or delayed. schemes existing as of 6 April 2011 are exempt from this disclosure as are schemes involving immediate postdeath interest, a transitional serial interest, a disabled person's interest, a trust for a bereaved minor, or an age 18-25 trust. Under the scheme reference number (sRN) system, the ‘promoter’ (which could include a trustee or its adviser) of an IHT scheme will be provided with an sRN by HMRC when the scheme is disclosed. The promoter must provide the sRN via form AAG 6 (IHT) to any person (eg, the client) to whom the promoter provides, or has provided, services in connection with the disclosed scheme or any scheme that is substantially the same. This must happen within 30 days of either being provided with the sRN or becoming aware of any transaction that forms part of the scheme, whichever is later. The scheme user receiving an IHT advantage must include the sRN and other information on an IHT account (form IHT100) or on form AAG 4 (IHT).

As offset to mandatory disclosures and threats of criminal prosecutions and civil tax fraud investigations, HMRC has an ongoing voluntary UK tax disclosure facility, the liechtenstein Disclosure facility (lDf), available generally to persons with existing or newly established liechtenstein connections no later than April 2015 (unless extended further by HMRC). Where the trustee provides services to a client who may have past due UK taxes, the lDf is a favourable and relatively fast avenue of assisting the UK client (such as the trust settlor or beneficiary) to regularise their tax affairs as soon as practicable. The trustee could establish the requisite liechtenstein connection via an underlying liechtenstein bank account, establishment, company, insurance policy, etc. Alternatively, a trust with a majority of liechtenstein-based trustees could also serve as a meaningful connection. Then, in principle, the lDf will be available for all unpaid UK taxes on any of the client’s assets or interests as soon as the connection is established. HMRC has provided assurances against criminal investigations in cases of such full, accurate and unprompted disclosures. Until the lDf disclosure registration is done, the government of liechtenstein may and is expected to decline any request made under the Tax Information exchange Agreement (TIeA) with the UK if HMRC seeks to obtain information on a liechtenstein assets, account or structure. The lDf process above is also available to the trustee if in its fiduciary capacity it has unpaid UK inheritance, income or capital gains tax liabilities.

one scheme that can eliminate IHT and that has been approved by HMRC is the Qualifying NonUK Pension scheme (QNUPs). It is a pension product that is likely to continue on the path of increasing popularity with UKdomiciled persons and persons deemed domiciled for IHT purposes. The QNUPs must be recognised as a pension scheme in the non-UK jurisdiction where it is established.

such disclosure opportunities are of particular importance in light of the decision earlier this year of the Court of Appeal in Pitt v Holt and Futter v Futter [2011] EWCA Civ 197. The decision corrected a perceived misunderstanding of the rule in Re Hastings-Bass about the court’s power to set aside trustee’s exercise of discretion or power when its effect was not intended. Accordingly, the exercise of the trustee power will be void and ineffective if there was fraud on the power or if the exercise was otherwise beyond the trustee’s powers. In contrast, the exercise of the power will be voidable by the beneficiary who was

adversely affected if the trustee has breached its fiduciary duties (eg, disregarded relevant considerations or considered irrelevant considerations). If the exercise of the power was to achieve tax benefits, the trustee will not be liable if advice was taken from a qualified and competent tax adviser. Any resulting unforeseen tax liabilities will be a consequence (and not a mistake as to the legal effect of the transaction or as to an existing fact that is fundamental to the transaction). Consequently, the court will not set aside the voluntary transactions involved. losses due to erroneous tax advice will need to be recovered via litigation against the trustee and/or the lawyer involved. The LDF disclosure mentioned above might help alleviate such losses in certain cases.

Baker & McKenzie Zurich lyubomir Georgiev, llM Associate, member of Baker & McKenzie europe & Middle east wealth management steering committee and of global wealth management group, admitted to practice in England & Wales, US Tax Court, Washington, DC (US) Tel: +41 44 384 14 90 lyubomir.georgiev@bakermckenzie.com www.bakermckenzie.com/ lyubomirGeorgiev Dr Richard Gassmann Principal, head of dispute resolution practice group and member of wealth management group of Baker & McKenzie Zurich, admitted to practice in Switzerland Tel: +41 44 384 12 42 richard.gassmann@bakermckenzie.com www.bakermckenzie.com/ RichardGassmann

August 2011 • GBM • 29

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.

Dell Computers was started by a 19 year old with only $1,000.

Yahoo! was originally called ‘Jerry’s Guide to the World Wide Web’.

Henry ford, father of the Automobile, is also father of the charcoal briquette.

The most productive day of the workweek is Tuesday.

Apple gets $660 per iPhone on average including accessories and $604 per iPad on average including accessories. Crazy because the iPhone is a much smaller device.

Microsoft made $16,005 in revenue in its first year of operation.

Youngest member of The Forbes 400: Mark Zuckerberg, 25 Net Worth: $2 billion It takes about 63,000 trees to make the newsprint for the average sunday edition of The New York Times. The largest cereal company in the world is Quaker oats, located in Cedar Rapids, Iowa, UsA. In 1897, Bayer, who is the makers of Aspirin, once marketed the drug heroin. The first product to ever be scanned with a bar code was Wrigley’s gum on June 26, 1974. The first camera phone was released in Japan in 2000: the Sharp J-SH04. Americans spend 7.6 billion hours each year doing their taxes 84% of people think it is NOT AT ALL acceptable to cheat on your taxes

30 • GBM • August 2011

The creator of the NIKe swoosh symbol was paid only $35 for the design. Google came from the mathematical term googol. It’s the number one followed by one hundred zeros. The first ATMs were installed in NYC in 1977 at Citibank branches. David McConnell started the California Perfume Company (CPC) in 1886. Today the company is known as Avon, which he named after his favourite playwright William Shakespeare, and Stratford on Avon. The first chartered bank of the United states was the first Bank of the United States, formed in 1791 by The United States Congress. A rare set of fake bank notes Hitler had printed in a bid to ruin the British economy during World War Two are expected to fetch £2,000 at auction.

The com calle pany “ S d nam “Totsu ony” w as o k e e “ n pron S ounc ony” wo .” They riginally by a e. The uld be felt the “son cross b name w easier to soun us” an etween as inve d “s nte da the was nd soni onny.” T name d c man used to are de he nam rived e repr or b ener oy, whi esent a . Sonny ch getic yo youn would s ung h g co mpa ow a ny.

U.S. curren cy paper use d to be made of silk . After Worl d War I, the ﬁbre co mposition w as changed to 25 perce nt linen and 75 percent cotton. It w ould take a bout 4,000 double-fold s (folding fo rwards then backwards) to tear a no te.

rac e b ll, t inte uilt p he ba tte ar rn usi ation ts of i ry-ma ng t a ma l hea s new ker, teri dqu ow n w als fro arters mi ast e. ts

ard erC e a t s a us 4, M st to rds to 8 9 a r 1 In the ﬁ n its c . s wa ram o fraud g eter o l d ho

August 2011 • GBM • 31

Luxury Brand Series – Honeymoon hotels

Luxury Brand Series

Honeymoon Hotels We profile the leading hotels and resorts from the most talked about honeymoon destinations of 2011.

32 • GBM • August 2011

Hotel de EDGE by Rhombus, Sheung Wan, Hong Kong The latest landmark in Sheung Wan on Hong Kong’s fast-paced waterfront, Hotel de EDGE by Rhombus is a stunning redefinition of cutting edge urban experience. A sleek and sophisticated 32-storey glass tower, Hotel de EDGE by Rhombus exudes beauty and elegance. Rising elegantly over panoramic Victoria Harbour and verdant Sun Yat Sen Memorial Park, Hotel de EDGE by Rhombus is the new apple of Hong Kong’s eye. Easy access to major attractions and transportation, it is only 10 minutes walking distance from MTR Sheung Wan Station and the Macau Ferry Terminal. Spacious open-plan rooms are complemented by sheer walls and welcoming touches to soothe away Hong Kong’s busy cityscape. Take in the spectacular sights of Victoria Harbour, or lounge in front of a large-screen TV amidst the fine contemporary furnishings presented with a characteristically artistic touch. Your private room is explicitly designed to maximise freedom and minimise the many stresses of life. Located on the first floor of the hotel is glo restaurant + lounge, serving a variety of classic and inventive modern dishes. Immersed in a distinctively red ambience, light radiates off reflective panels against intimate furnishings to create a welcoming and relaxing atmosphere. Gastronomic cuisine and innovative cocktails highlight the freshest seasonal ingredients with a touch of flare and sophistication.

HK$1,398, and receive the below exclusive privileges: • Complimentary shuttle bus service from the airport to hotel • A special romantic set-up upon arrival • Complimentary daily breakfast for two persons at glo restaurant + lounge • Complimentary bottle of house red or white wine • Personalised “his and her” pillowcases • Sweetie turndown • Complimentary WiFi internet access • Complimentary late check-out until 3:00pm A more memorable experience with a 3-course Romantic Dinner at glo restaurant + lounge, a round-trip Peak Tram Ticket and Sky100 ticket, at only HK $300 per person. *Terms and Conditions apply Rate is subject to 10% service charge per room per night Valid until August 31, 2012

Hotel de EDGE by Rhombus 94-95 Connaught Road West, Hong Kong T: (852) 3559 9988 F: (852) 3559 9999 reservations@hoteldeEDGE.com.hk www.hoteldeEDGE.com.hk

Enjoy Hotel de EDGE by Rhombus’ special Honeymoon Package: “Embark the Start of your Romantic Journey”. Stay in an Executive Harbour View Room at only August 2011 • GBM • 33

Luxury Brand Series – Honeymoon hotels

Hotel LKF by Rhombus, Central, Hong Kong With its dramatic décor and luxury design, Hotel LKF by Rhombus is a deluxe boutique hotel TRULY located in the heart of Lan Kwai Fong, Central, one of Hong Kong’s trendiest, hip and vibrant neighbourhoods. This world renowned district is abuzz with bistros, al fresco bars, restaurants, pubs, shopping areas and art galleries. Its prime location allows you to access all parts of Hong Kong via Mass Transit Railway (MTR), Airport Express, buses, taxis, trams and ferries. The hotel’s distinctive rooms and suites are generously proportioned from 500-950 square feet, designed with liberal space for relaxing, and appropriately proportioned to create the comfort of home, enriched with warm fabrics - leathers and suede, in soothing shades of ivory, camel and wood. Cherish the precious moment and luxuriate in tailored bed sheets and goose down pillows, admire the deluxe Molton Brown amenities, wind down under the warm background lighting and be pampered by the 24-hour “ Care” one-stop service. On the 29th and 30th floors of the hotel, with a sweeping view of the vibrant city skyline is Azure Restaurant Slash Bar, acclaimed as one of the ‘Best Restaurants in HK’ by Asia Tatler 2008-2011 and ranked No. 7 in ‘The World’s 20 Best Sky Bars 2008’ by The 34 • GBM • August 2011

Sunday Times, UK. Transformed at the hand of award-winning interior designer Andre Fu, Azure is a sophisticated venue perfect for gastronomic pleasure, lively conversation and people-watching. For an aura of romance and intimacy, sample the creative cocktails during Happy Hour on the 29th floor and tantalise your taste buds with Chef Joe’s culinary delight on the 30th floor in a private and secluded VIP area with breathtaking views of Hong Kong’s vibrant skyline and dynamic scenery…an experience one will not soon forget. Enjoy the special Honeymoon Package: “Happily Ever After Starts at Hotel LKF by Rhombus”. Stay in a G950 LKF Suite at HK$6,938 and receive the below exclusive privileges: • Complimentary round trip airport transfer by hotel limousine • Welcome seasonal fruits and tea upon check-in • Exclusive champagne toast at Azure Restaurant Slash Bar • Complimentary in-room romantic breakfast • Complimentary daily mini-bar • Complimentary 3-course Set Dinner for

two persons at Azure Restaurant Slash Bar

• Personalised “his and her” bathrobes • Special romantic turndown • Complimentary in-room foot massage or Swedish massage for two persons • Complimentary use of Fitness Centre • Complimentary one pay movie per night • Complimentary late check-out until 4:00pm *Terms and Conditions apply Rate is subject to 10% service charge per room per night Valid until August 31, 2012

Hotel LKF by Rhombus 33 Wyndham Street, Lan Kwai Fong, Central, Hong Kong T: (852) 3518 9333 F: (852) 3518 9338 reservations@hotel-LKF.com.hk www.hotel-LKF.com.hk / www.azure.hk

Hotel Panorama by Rhombus Tsim Sha Tsui, Hong Kong Superbly located in one of Hong Kong’s most popular shopping and business hubs, Hotel Panorama by Rhombus is the ‘One & Only One’ tallest triangular deluxe business hotel overlooking Victoria Harbour in Tsim Sha Tsui. Quintessentially located near the trendiest shopping areas such as K11 Art Mall, iSQUARE, DFS Galleria and IMAX Theatre, it is also just a 2-minute walk to East Tsim Sha Tsui Station, one stop to MTR Hung Hom Station and 5-minute drive to Hong Kong China Ferry Terminal, which has convenient access to mainland China and Macau.

HarbourView Suite for three nights at HK$9,898, and receive the below exclusive privileges: • Complimentary round trip airport transfer by hotel limousine • Welcome Mimosa cocktails upon arrival • Complimentary in-room romantic breakfast or buffet breakfast at AVA Restaurant Slash Bar • Sunset Martinis at AVA Restaurant Slash Bar • Complimentary daily mini-bar

Most of the guestrooms and suites capture the magnificent Victoria Harbour and sweeping views of Hong Kong’s skyline. They are contemporary and charming with exquisite amenities, ranging in themes: Silver, Gold, Club HarbourView and Executive Club HarbourView. All guestrooms feature air conditioning, coffee/ tea making facilities, IDD with voicemail, 32-inch LCD TV, electronic in-room safe and broadband internet access.

• Complimentary 3-course Set Dinner for two persons at AVA Restaurant Slash Bar

Enhance your stay with extensive personalised care with the “ Care” one-stop service available 24 hours a day. Embrace the romantic ambience and unwind with your loved one at the Sky Garden, located on the rooftop, and take in some of Hong Kong’s most spectacular and idyllic scenery overlooking Victoria Harbour.

• Complimentary late check-out until 2:00pm

With modern amenities, magnificent Victoria Harbour views and highly personalised service, Hotel Panorama by Rhombus is committed to excellence and exceeding guests’ expectations every time during their stay.

• Personalised “his and her” bathrobes • Special romantic turndown • Evening photo shoot at Sky garden with own photographer. • Complimentary access to Rhombus Club Executive Lounge *Terms and Conditions apply Rate is subject to 10% service charge Valid until August 31, 2012

Hotel Panorama by Rhombus 8A Hart Avenue, Tsimshatsui, Kowloon, Hong Kong T: (852) 3550 0333 F: (852) 3550 0288 reservations@hotelpanorama.com.hk www.hotelpanorama.com.hk

Experience Hotel Panorama by Rhombus’ special Honeymoon Package: “Send Honey over the Moon with Your Personal View of Hong Kong”. Stay in a Club HarbourView Room at HK$7,898 or an Executive Club August 2011 • GBM • 35

Luxury Brand Series – Honeymoon hotels

Dinarobin Hotel Golf & Spa Mauritius An elegant luxury resort, Dinarobin Hotel Golf & Spa is a haven of peace and tranquility – the perfect sanctuary in an intimate village setting on the magnificent Le Morne Peninsula. Set in private bungalows, this resort is great for families and honeymooners alike – giving all guests as much privacy as they would like. Its cuisine is considered to be amongst the finest on the island, whereas its alluring Spa, tucked away in soothing greenery, is known to be the most glamorous in Mauritius. The ideal resort for sport-lovers, guests can play on three different golf courses, including the 18-hole golf course of a neighbouring Beachcomber hotel, the Paradis Hotel & Golf Club. Dinarobin also offers a range of complimentary land and watersports, including the Beachcomber HEAD Tennis Academy, football, bocciball, volleyball and table tennis, as well as waterskiing, windsurfing, sailing, snorkeling, kayaking and pedal boats. Guests can also enjoy scuba diving, deep-sea fishing, catamaran cruises and speedboats, which are all available with a supplement charge. Guests staying at Dinarobin can also share the restaurant and leisure facilities of Paradis. Beachcomber Tours offer 7 nights at Dinarobin on a half board basis including flights and transfers from £1,995 per person (www.beachcombertours.co.uk; 01483 445685) 36 • GBM • August 2011

Paradis Hotel & Golf Club A sister resort to Dinarobin in both location and spirit, Paradis Hotel & Golf Club is great for both sporty-types and families alike. Surrounded by seven kilometres of beach that stretches along the lagoon, Paradis Hotel & Golf Club offers outstanding standards of accommodation ranging from Superior rooms to private villas on the water’s edge amongst the lush grounds of the 150 hectare property. Being one of the best leisure hotels in Mauritius, this resort is truly a playground for pleasure seekers. Fine gastronomy takes centre stage at the four restaurants each with their own individual atmosphere, and sharing dining and sporting facilities with the adjacent Dinarobin Hotel Golf & Spa, (totalling seven restaurants) French, Italian, Indian and Creole cuisines are available. Its 18-hole Par 72 golf course is the only course in Mauritius to be built within the grounds of a resort, and the fantastic Golf Academy provides personalised training and tailor-

made coaching complemented by computer software and technology. Guests staying at this property can enjoy reduced rates at two neighbouring courses, making it the perfect option for golf-lovers! Watersports and land activities are also available, and the Bob Marlin mini-club is a perfect place for parents to leave their children whilst they take advantage of these facilities, or if they just want give themselves a break in the Clarins spa for a treatment or two! Guests at Paradis Hotel & Golf Club can now upgrade to the exclusive Half-Board Plus Offer from as little as £12 a day; this unique scheme gives guests the chance to essentially upgrade to a full-board basis for a fraction of the cost. Beachcomber Tours offer 7 nights at Paradis on a half board basis including flights and transfers from £1,790 per person (www. beachcombertours.co.uk; 01483 445685)

Hotel de Crillon Paris A brief history of a legendary palace… In 1758, King Louis XV commissioned the greatest architect of his day, Jacques-Ange Gabriel, to build twin structures fronting the Place de la Concorde in Paris. The result was a masterpiece of 18th century architecture. Behind one of these majestic facades rose a sumptuous private residence decorated by the era’s finest artists and craftsmen. Such are the origins of the Hôtel de Crillon, created to welcome the world’s greatest Ambassadors. Long owned by the illustrious family of the Counts of Crillon, this private mansion was transformed into a luxury hotel in 1909. Since then it has welcomed travelers from around the world in search of comfort and service in the incomparable luxury of this former private Parisian palace. Reza Shah Pahlavi of Iran, Emperor Hirohito of Japan, King George V of England, their Majesties King Juan Carlos and the Queen of Spain, U.S. presidents Herbert Hoover, Theodore Roosevelt, Richard Nixon and countless other statesmen, celebrities, and artists are among those who have signed their names to the Crillon’s guest book. The Crillon is the only French luxury hotel to have one of its rooms, the “Duc de Crillon Suite”, exhibited—complete with its period woodwork—at the Metropolitan Museum of Art in New York City. Its historic salons have often served as a backdrop for international diplomacy, and notably hosted the signing of the treaty to form the League of Nations in 1919. Flagship of the Concorde Hotels & Resorts Group, the Hôtel de Crillon is a member of Leading Hotels of the World. Situated in the heart of the City of Light on

the world-famous Place de la Concorde, Hôtel de Crillon is steps away from the luxurious boutiques of the Faubourg St.Honoré, and is within walking distance of the Champs Elysées, the Avenue Montaigne, the Louvre, the Tuileries Gardens and many more of this famous city’s most acclaimed attractions. The 103 guest rooms and 44 suites or “Grand Apartments” (including 5 overlooking the Place de la Concorde) have been restored in Louis XV style under the auspices of the French National Historic Landmark Commission and joint efforts of Sybille de Margerie. In April 2010, Christopher Hache and his new team reopened Les Ambassadeurs restaurant. Just one short year later, it is with great joy and pride that Hôtel de Crillon announces its first Michelin star.

Tel. 33 (0) 1 44 71 15 01 Fax 33 (0) 1 44 71 15 03 Email: reservations@crillon.com www.crillon.com

Thanks to its history, its charm, its outstanding service and its unique location that the Hôtel de Crillon has been granted the Best City Hotel in The World Award 2011 by UltraTravel. August 2011 • GBM • 37

Luxury Brand Series – Honeymoon hotels

Evason Ana Mandara Nha Trang Beachside Tran Phu Blvd., Nha Trang, Khanh Hoa, Viet Nam Ana Mandara is Vietnamese for a beautiful home for guests. It is the only resort sitting on Nha Trang’s beachfront with stunning views of Nha Trang Bay. Designed to resemble a traditional Vietnamese village, Evason Ana Mandara is a contemporary resort of 74 rooms housed in 17 villas, surrounded by acres of tropical gardens and with a beautiful central pool. The Pavilion Restaurant is the gourmet destination and serves classic Vietnamese dishes as well as more international favorites. And the Beach Restaurant presents the freshest local seafood, cooked to order in the open kitchen or on sumptuous barbecue on the beach. All ingredients are

sourced from local markets and the resort’s own organic garden. Signature and locally inspired treatments at the Six Senses Spa offer every opportunity for holistic rejuvenation and old fashioned pampering. For the more actively inclined there is a wide choice of activities to enjoy; tennis, beach volleyball, and all sorts of water sports including a 5 star Padi Scuba Diving Centre. Days out are a must and include guided treks through the countryside, picnics, cultural, river and morning market excursions.

Evason Ana Mandara Nha Trang Beachside Tran Phu Blvd., Nha Trang, Khanh Hoa, Viet Nam Tel: +84 58 3 522 222 Fax: +84 58 3 525 828 reservations-nhatrang@evasonresorts.com www.sixsenses.com/Evason-Ana-MandaraNha-Trang

Cam Ranh, the airport serving Nha Trang, is a thirty-minute drive from the resort.

Six Senses Ninh Van Bay Ninh Van Bay, Ninh Hoa, Khanh Hoa, Viet Nam The only way to get to Six Senses Ninh Van Bay is by boat. Arriving is simply splendid, the mountainside setting, the incredible rocks, the indescribable blue of the water, the beach, a glorious curve of golden sand. The 58 pool villas sitting along the beach, on the hillside, and over water are designed to complement nature. Villas nestle in the amazing rock formations with private pools scooped into the rocks themselves. Hilltop villas have personal spa suites. The restaurants at Ninh Van Bay are on the jetty – the deck of the bay - and on the rocks. The world class food and wine includes local Vietnamese dishes, East-meets-West specialties, as well as international menus. Most ingredients are sourced locally, or 38 • GBM • August 2011

grown in the resort’s organic gardens. The wine cellar has wines from worlds old and new and the bar a cocktail list which will last long after sundown. Signature and locally inspired treatments at the Six Senses Spa are enjoyed to the tune of a tumbling waterfall. Energy restored, the choice of what to do next is huge water sports and diving, snorkeling in the exquisite coral reef, teeming with beautiful marine life, tennis, a fully appointed gym and nature trails through the breathtakingly beautiful mountains. Six Senses Ninh Van Bay is accessible only by land and water, a 60-minute drive from Cam Ranh Airport and a 20-minute boat trip from the pier.

Six Senses Ninh Van Bay Ninh Van Bay, Ninh Hoa, Khanh Hoa, Viet Nam Tel: +84 58 3 728 222 Fax:n +84 58 3 728 223 reservations-ninhvan@sixsenses.com www.sixsenses.com/SixSensesNinhVanBay

The Danna Langkawi Langkawi, Malaysia THE DANNA Langkawi is a 5-star luxury beachfront resort located on the most stunning 2.80 acres of land in the west coast of the exquisite Langkawi Island. Nestled in a valley surrounded by green mountains, the 5-storey resort is situated at the mouth of the marina bay next to a stretch of white sandy beach.

charm. Choose to have your pre or after dinner drinks either at its bar, inside or outside the lounge.

It’s charming British ColonialMediterranean architecture accompanied by its breathtaking views of the surroundings give rise to a sense of warmth and stylish grandeur. Featuring the largest 3-tiered infinity pool on the island, the heart of the hotel opens up to a cooling courtyard planted to look like a tamed forest with lush greenery. The resort is only 15 minutes away from Langkawi’s International Airport and is a short distance away from the island’s popular tourist sites, major recreational hot spots and golf clubs.

Pool Café Serves local and European snacks and drinks by the beach and around the largest infinity pool in Langkawi.

FOOD & BEVERAGE OUTLETS The Planter’s: A fine dining restaurant overlooking the infinity pool and beach, guests can savour the tastes from a menu of deliciously cooked food inspired by British Malayan and Mediterranean flavours. Breezeway: Light meals, coffee or tea while enjoying the scenic views of the pool and beach. Al Fresco: Serves local and European inspired dishes. An idyllic spot for guests to feast on their meals while enjoying the spectacular views of the beach. Courtyard Dining: A setting inspired by the British Malayan days catering for lunch, evening cocktails and dinner. Straits & Co: A casual café with the Straits of Malaya concept serving Tiffin Afternoon Tea, up market local and European snacks.

The Drawing Room: Traditional wine and cigar room carrying more than 200 bottles of top end wines from all over the world with private setting.

LEISURE FACILITIES • Library and Reading Room • Games Room • Billiard Room • Children’s Club • Children’s pool • THE DANNA Spa • Straits & Co retail shop • Largest 3-tiered infinity pool (main pool size: 51.2m x 15m, depth: 1.35m) • Water sport activity • Yoga class • Fitness gym THE DANNA LANGKAWI Owner by Benua Perdana Sdn Bhd (337514-T) Resort Address PO Box 236, Telaga Harbour Park, Pantai Kok 07000 Langkawi, Kedah, Malaysia T +604 959 3288 F +604 959 3188 The Danna Sales Office Hotel Istana 2nd Floor, 73 Jalan Raja Chulan, 50200 Kuala Lumpur, Malaysia T: +603-2143 1010/1717 F: +603-2143 1333 sales@thedanna.com www.thedanna.com

The Verandah: Inspired by the class of the British Malayan days, this intimate lounge will captivate any guest with its old world

August 2011 • GBM • 39

Luxury Brand Series – Honeymoon hotels

Domes of Elounda Greece Domes reinvents Elounda, restoring its lost principal of exclusivity. The essence of the Mediterranean, the culture, the cuisine, the temperament, the architecture, are holistically captured in the form of a luxury resort consisting for the first time of only suites & villas that provide a small number of exclusive guests with all the amenities of a resort, while offering an abundance of living space, privacy and extraordinary service. Minimally interfering with the natural habitat and harmonically blended with their surroundings, domed structures with breath-taking ocean views emerge from the ground. Respecting its natural contours and creating a Mediterranean settlement on a hillside of flower gardens, stone pathways, and olive groves just a stone’s throw away from the Venetian castle on the island of Spinalonga, the setting for Victoria Hislop’s bestselling novel “The Island”... It is all is part of our new design inviting the senses to feast on sights, scents and tastes from the rich outdoors through large windows, and spacious verandas that capture sea breezes and provide the perfect setting for the ultimate fantasy getaway. We invite you to experience... Domes of Elounda. Honeymoon In this special time of your life, let us

40 • GBM • August 2011

make your honeymoon in Greece a time to remember. Domes of Elounda honeymoon resort specializes in creating the honeymoon of your dreams. Located in Elounda, Crete, one of the most exclusive romantic destinations of the world, let us cater to your needs while you immerse yourself in luxury and celebrate your love. Whether you plan on relaxing in your honeymoon suite by your personal pool, soaking in the sun on our sandy beach by the crystal blue waters of the Mediterranean, or self-indulging at the Domes spa we have ensured that your honeymoon in Greece will be more than you ever imagined! Thomas Kostopoulos Reservations Manger +30 2310 810624 +30 2310 810634 info@domesofelounda.com www.domesofelounda.com

Regina hotel Baglioni Via Veneto 72 – 00187 Rome A most established hotel and part of the privately owned Baglioni luxury chain, the chic Regina Baglioni is situated on Via Veneto, one of the most famous walkways in Rome, near to the Via sistina, the spanish steps and Trevi fountain. This elegant hotel, with sumptuous furnishings of fine art, precious fabrics and marble floors features the refined and stylish Brunello lounge & Restaurant and the more traditional Caffè Baglioni in the main lobby. spacious guestrooms are decorated with antique furniture and objets d'art, providing charming accommodation in the heart of the Eternal city. The 126 rooms, with internal furnishing in Art Decò and classic style, guarantee a unique atmosphere. The Regina Baglioni's position on Via Veneto, near to the church of santa Maria della Concezione, means you have some of Italy's most famous designer labels, delightful craftsmen's shops and the best sights all. Moreover, its panoramic hall on the top floor is ideal for meetings, banquets and charming weddings, with breathtaking views of the city of Rome

August 2011 • GBM • 41

Luxury Brand Series – Honeymoon hotels

Banyan Tree Seychelles Situated in the scenic Intendance Bay along the south western coastline of Mahe with spectacular views of the Indian Ocean, Banyan Tree Seychelles is only 30 mins from Mahe International airport and 45 mins from the capital, Victoria

dinning experiences also await – specially created and conceptualized to epitomize the romance of travel various dining experiences are available.. Sea and Stars experience, Grill on the sand, Moonlight Gazebo and Champagne on the rocks

Commanding majestic views of the Indian Ocean, the 60 luxuriously furnished pool villas are perched on hilly terrain amid exotic flora and fauna. These villas combine the very best of Seychellois architecture contemporary, colonial and plantation décor – from high sloping ceilings, airy verandahs to ethnic woven textiles.

Banyan Tree Spa takes a holistic approach to physical and spiritual well being, providing a sanctuary for the senses. Drawing on Asian traditions that date back to centuries, our intimate retreats blend romance and serenity with exotic sensuality. The architecture of our intimate spa pavilions draws upon local inspiration to blend seamlessly with the beauty of the natural environment. Rediscover inner peace amidst lush serene surrounds at Banyan Tree Spa. Soothing massages and therapeutic spa treatments rejuvenate the body mind and soul at this award-winning spa

Every villa features its own private infinity pool, spacious living and dining pavilions, bathroom with His and Her vanity counter, mini-bar, in-villa safe, coffee and tea making facilities, hair dryer, IDD telephone, ceiling fan, air-conditioning, DVD/CD player with stereo system, satellite television and internet connection Rediscover inner peace amidst lush serene surrounds at Banyan Tree Spa. Soothing massages and therapeutic spa treatments rejuvenate the body, mind and soul at this award winning spa. Let our professional therapists bring you to a state of oblivion amidst the dramatic setting of the Seychelles Connoisseurs will be spoilt for choice at each of the resort’s fine dining establishments. Banyan Tree’s signature Saffron tantalizes with award winning Thai cuisine and Southeast Asian specialities. Au Jardin D’Epices serves international favourites in a casual setting overlooking the bay whilst Chez Lamar offers exhilarating journey of Creole cuisine filled with an irresistible blend of spices and flavours. In villa dinning options include a comprehensive a la carte menu and BBQ under the stars. Intimate

42 • GBM • August 2011

The Banyan Tree Gallery offers signature amenities for the home meticulously created by artisans around the globe Other facilities include: outdoor tennis court, gymnasium, mountain bikes. Non

Water sports activities include Snorkeling equipment and kayaks are also available Water sports facilities such as diving and fishing can be organized offsite Prepare to set sail in the twin hulled catamaran – Banyan Lagoon 1 – take to the sparkling seas of Seychelles with upto 4 guests on overnight nautical cruises around the inner islands and experience first hand the sights and marine wonders of the archipelago Free phone reservations number 00800 300 200 00 Reservations email address reservationsseychelles@banyantree.com

Four Seasons Resorts Lanaì Lanaì, Hawaii On the pristine island of Lanaì in Hawaii, two Four Seasons resorts provide a one-ofa-kind experience – where turquoise blue water meets the lush verdant upcountry of mountain and forest. In these two exquisite resorts – frequently listed among the world’s finest – Four Seasons combines the very best of Lanaì.

Once the largest producer of pineapple in the world, Lanaì has reemerged as a luxury resort destination. The plantation character and genuine warmth of the people still remain, but the focus of this island ushered in a new standard of exotic luxury. Four Seasons Resort Lanaì at Manele Bay and Four Seasons Resort Lanaì, The Lodge at Koele are set amid two stunning, yet contrasting backdrops of mountain and sea, all beckoning to be explored. With two completely different, yet complementary resorts, guests here can have an “island-hop” experience without ever having to leave the island. Set cliffside, overlooking a protected marine preserve, Four Seasons Resort Lanaì at Manele Bay is a romantic retreat with championship golf, award-winning cuisine and offers some of the finest water sports in the world. Sun-seekers staying beachside can snorkel amid a pristine coral reef, spinner dolphins and colorful reef fish in Hulopoè Bay (complimentary snorkels, fins and masks – including prescription masks are available at the beach kiosk.) Those looking for an adrenaline rush can take surfing or standup paddleboarding lessons from a local surf champion. Just 20-minutes away is Four Seasons Resort Lanaì, The Lodge at Koele. The Lodge is the essence of unexpected Hawaii. Set in the verdant upcountry, the Resort is reminiscent of a country manor estate, surrounded by towering Cook Island pines and offering estate activities such as championship golf, horseback riding, horsedrawn carriage rides, sporting clays and archery, croquet, and lawn bowling. With just 101 rooms, guests can experience serenity and romance at this island oasis. While Lanaì boasts an abundance of activities, rejuvenating at The Spa should be high on the priority list. The Spa at Manele Bay specializes in authentic Hawaiian treatments using indigenous ingredients and techniques. Popular treatments include the Ki Pola Ho Òlu (Cooling Ti-leaf Wrap), a spiritual and re-energizing treatment using the healing powers of the ti-leaf plant or the Lomilomi Massage, using flowing rhythm it refreshes the body and spirit. The culinary component is an integral part of the guest experience on Lanaì. Guests can embark on a culinary journey with an array of dining options between the two resorts. There are five restaurants total, ranging from steak and Hawaiian seafood, contemporary Italian to classic European techniques. Regardless of your preference, your senses will be awakened. Offering experiences that cannot be found elsewhere, Lanaì is a true getaway for those who appreciate the beauty, privacy, adventure and richness of Hawaii the way it was meant to be. Act fast, Manele Bay is offering a 4th Night Free promotion and The Lodge at Koele is offering a 3rd Night Free Four Seasons Resorts Lanaì Reservations 1-800-321-4666 www.fourseasons.com/lanai.

August 2011 • GBM • 43

luxury Brand series – Honeymoon Hotels

Baros Maldives – The essence Of Maldives North Male’ Atoll

Nestled in a lush, tropical island set in the shimmering waters of a shallow lagoon and ringed by a reef vibrant with colors, fish, turtles, rays and corals; the award winning Baros Maldives offers understated elegance with a sense of authenticity, style and local culture. Baros Maldives, member of The Small Luxury Hotels of the World, is reached by speed boat only 25 minutes after leaving the airport. The island is designed by nature for a divine vacation with its vivid blue lagoons; glittering sun-soaked, golden beaches; exotic flowers blooming beside natural sandy trails, shaded by 50-year old palm trees. All 75 villas are elegantly designed with sandstone and timber, have fine furnishings, large windows to let in natural light, and are timeless in ambience. The Baros Residence, surrounded by green foliage and bird-ofparadise blossoms, is an intimate place to stay, to share secrets, to relax. It has a private swimming pool amidst the blooms of a tropical garden. A day bed on the sun deck, private spa massages, a linen canopied bed, tropical timbers and bas-relief; an extravagant bathroom. A butler on call to assure warm and willing service whenever required in this romantic hideaway. The Deluxe Villas, Baros Villas, Water Villas, Baros Pool Villas and Baros Premium Pool Villas offer luxury with tranquil refinement. Amongst other amenities, the Villas have king size beds, daybeds to chill out, lavazza espresso machines and a personal wine chiller with bottles selected on arrival. Some have complete open-air bathrooms, whereas others have contemporary bathrooms with rainfall showers. Water Villas boast bathrooms with a view of the lagoon and have steps to the water. luxurious communion with nature is the signature of Baros Maldives. soak in the lush beauty of the island and reconnect with nature by taking advantage of the tempting array of excursions or activities. on a typical day in this unique resort, excursions (private or as part of a group) include a sunset dolphin cruise or a half-day cruise around

44 • GBM • August 2011

North Male Atoll or a bespoke full day experience. experience a private sunset sailing cruise, a romantic dinner cruise, sensational snorkeling, divine diving or go on an island exploration trip, the options are endless! If you are simply inclined to stay on the island and relax, the sublime spa, the epicurean al fresco dining and the beauty of the sandy arbors will surely sweep you away. The understated elegance of the resort, combined with a sense of authenticity and local culture, make Baros a unique destination in the Maldives. Prepare to be amazed by outstanding local hospitality and breathtaking moments that capture the true essence of the Maldives!

Baros Maldives, PO Box 2015, Male’ 20-02, Republic of Maldives Tel: +960 664 26 72, Fax: +960 664 34 97 info@baros.com www.baros.com

Rosewood Tucker’s Point 60 Tucker’s Point Dr., Hamilton Parish, Hs 02 Bermuda Named one of the “World’s Top Hotels for Romance” in the Traveler’s Choice Awards by Trip Advisor as well as one of the “World’s Best Hotels” by Travel + Leisure, Rosewood Tucker's Point is the centerpiece of Tucker's Point Club, Bermuda's premier resort, golf club and residential community. Gracing 200 acres of the most beautiful waterfront landscape in Bermuda, the tropical honeymoon hideaway neighbors the estates of Tucker's Town and offers breathtaking vistas of Castle Harbour, Harrington Sound and the Atlantic Ocean.

offers snorkel tours, dive excursions, kayak and boat rentals, and catamaran cruises. Guests can also exercise in the state-ofthe-art Fitness Centre with a full line of cardiovascular and resistance training equipment as well as group exercise classes including Yoga, Tai Chi and Aqua Aerobics. The Spa at Rosewood Tucker’s Point invites you to indulge in an array of traditional and exotic therapies from around the world. Reserve the duet suite to enjoy a couples’ massage treatment or choose aqua therapy, facials, and rejuvenating body therapies as well as manicures and pedicures. Afterwards retire to the post-treatment relaxation rooms with cozy fireplaces or lounge in the peaceful outdoor garden area.

Rosewood Tucker’s Point provides an extraordinary atmosphere to celebrate your marriage. The intimate, 88-room hotel evokes the charm and romance of Bermuda’s halcyon days when Pan Am clippers brought 20th century socialites to Britain’s oldest colony for a highly desirous respite. Newlyweds luxuriate in the elegantly appointed guestrooms and suites that are decorated in true British seaside style with a serene, relaxed sophistication. Each guestroom has a large and inviting private balcony or terrace offering gorgeous water views as well as oversized luxury bathrooms with stand-alone, deep-soaking tubs. Guests of Rosewood Tucker’s Point may take advantage of the private Tucker’s Point Golf, Beach & Tennis Club. As a premier golf destination, Tucker’s Point Club offers an 18-hole, par-70 championship course in picturesque surroundings as well as a superb practice facility and clubhouse. The Tennis Centre offers four Har-Tru tennis courts. At the Beach Club, couples can relax on Bermuda’s largest private pink-sand beach, enjoy the infinity swimming pool and dine al fresco at the Beach Club Restaurant

For the finest culinary experience in Bermuda, dine at The Point Restaurant & Terrace in the Manor House at Rosewood Tucker’s Point to experience world-class international cuisine infused with fresh local ingredients. This stunning restaurant features fine linen, bone china and French cutlery to complement the classic service. Rosewood Tucker’s Point is an absolute paradise for couples. Inquire about honeymoon packages. Rosewood Tucker’s Point www.rosewoodtuckerspoint.com Reservations: 888.ROSEWOOD

and Bar overlooking the Atlantic Ocean. Additional recreation at the hotel include two swimming pools, a Croquet Lawn, and Dive & Watersports Centre, which

August 2011 • GBM • 45

transfer priCing

transfer pricing: the risks and the rewards We are delighted to introduce Global Business Magazineâ&#x20AC;&#x2122;s Transfer Pricing Report, which comes at a time when companies doing business internationally face increasingly demanding and sometimes conflicting transfer pricing regimes. How can multinationals handle transfer pricing in complex cross-border transactions? The answer becomes ever more important, as governments across the globe are looking for ways to increase their revenues by toughening their transfer pricing rules and intensifying enforcement. Today, a well designed, documented and implemented transfer pricing strategy can be a key competitive advantage for multinational companies.

Most countries in the world have some type of transfer pricing legislation in place. This legislation however is not always clear and consistent between different trading partners. Sometimes even within the same country there is tension between the transfer pricing regulations and the requirements of other revenue authorities, like customs agencies and other government bodies (e.g., competition authorities or health authorities). For most multinationals it is increasingly difficult to fully understand the details of different local transfer pricing requirements and to comply with the appropriate legislation. Hence, there has been a stark growth in the number of disputes in the field of transfer pricing worldwide. Moreover, governments are cooperating and sharing information more often in their attempt to stop international tax evasion. Tax authorities are adding experienced transfer pricing professionals to their teams, and they are becoming more confident to start lawsuits when necessary. Other stakeholders like non government organisations and consumers are also increasing the pressure on multinationals to pay their fair share in accordance with their corporate social responsibility statements. Multinationals that respond effectively to this complex environment can capitalise on their transfer pricing strategies and obtain a direct positive impact on their financial performance.

46 â&#x20AC;˘ GBM â&#x20AC;˘ August 2011

incentive tool. It is also very important for fiscal reasons. Small changes to transfer prices can have significant impacts in the tax burden of a company. for example, if a company located in a jurisdiction with an effective tax rate of 10% charges relatively high prices for the management services (e.g. booking services) which they provide to an affiliate located in a high tax jurisdiction with an effective tax rate of 30%, the company can reduce considerably their overall tax bill. Today, almost all countries in the world have some type of transfer pricing legislation in place. This legislation usually requires that transactions between group companies take place at arm’s length. That is, transactions within a multinational should take place on the basis of the same prices and conditions as comparable transactions with third parties. for example, if the head office of a multi-national entity charges a royalty rate to a third party for the use of the brand name, but is not charging the same royalty rate to a group company that uses the brand and operates under similar circumstances the group arrangement is probably not an arm’s length transaction. how important is Transfer Pricing for my business?

What are transfer prices? Transfer prices are the prices that a member of a multinational group charges another one for the provision of goods or services. In the hotel industry this could include: the management fees that the head office charges the local companies for head office support services (like human resources or marketing) the royalties the intellectual property owner charges the users for tradenames, trademarks or other group intangibles, the interest related to intercompany loans or other intercompany financing transactions like financial guarantees or leasing arrangements. Why is transfer pricing important? In general, transfer pricing is important as a means of financial control and as an

Agata Uceda Director of eMeA Transfer Pricing +31 20 5419 268 agata.uceda@dlapiper.com www.dlapiper.com

Historically, the pharmaceutical , financial services, electronic and automotive industries have been the main sectors attracting the attention of the revenue authorities. one of the largest transfer pricing adjustments to date involved the pharmaceutical company GlaxosmithKline (based in london with U.s. headquarters in Philadelphia) which agreed to pay $3.4 billion to the United states Inland Revenue Services (IRS) as a settlement in a transfer pricing dispute in September 2006. Glaxo publicly said that the settlement, whilst large, saved it from a possible tax bill as high as $15 billion if it had lost the dispute. In 2010 in the UK, Astra Zeneca announced that it had settled a dispute with HM Revenue & Customs for a sum in excess of £500m. other sectors of industry though are not immune from transfer pricing issues. for example, as transfer pricing legislation becomes more important in developing countries where the hotel industry represents a bigger share of the GDP, it is highly likely that, the sector will come under

closer scrutiny by the tax authorities in those countries. In Mexico, for example, the hotel industry is already on top of the list of industries that are frequently audited by the Mexican tax authorities. In China, one of the countries with recent and very demanding transfer pricing legislation, issued a Circular in July 2009 which stated that luxury hotel chains are one of their main audit targets (together with the pharmaceutical and infrastructure sectors). for most industry sectors, it is therefore a case of "when" and not "if" their group pricing structures of multi-national entities come under scrutiny. Are there any opportunities for my company in using transfer pricing? Transfer pricing is not only a risk management tool. Global companies with global supply chains can find opportunities when reviewing their transfer pricing policies. Having a critical look at the existing transfer pricing policies (or the non-existing ones) could help the company, to: identify ways to manage their cash more efficiently, reduce their tax bill in certain countries, avoid double taxation and/ or optimise tax compliance, simplify the financial reporting and control processes, allow for the release of certain tax provisions that may no longer be necessary, identify business/services that are underperforming or performing better than the average and that were not visible because of the intercompany pricing system; and facilitate the information necessary to design incentive programs that are aligned with the business and financial objectives of the group. Concluding Comments The consequences for not dealing at arm’s length vary by country but generally they could mean for the company: an increase in their overall tax bill, the need to pay possible penalties and interest, and in some cases even the imposition of criminal charges on some of the directors of the company. for all of these reasons, it is no surprise that sophisticated businesses that operate internationally have all put transfer pricing at the top of their tax agenda.

Robert Hartley legal Director - Tax +44 (0)20 7153 7829 robert.hartley@dlapiper.com www.dlapiper.com

August 2011 • GBM • 47

transfer priCing

GeRMANY

Dr Ulf Andresen Partner - International Tax Services / Transfer Pricing Tel: +49 6196 996 27133 Fax: +49 181 3943 27133 ulf.andresen@de.ey.com www.ey.com

Resolving transfer pricing disputes in Germany over the past couple of years, the focus of German tax audits has changed. In the past, a tax auditor would have concentrated on non-deductible business expenses, depreciation and other balance sheet related topics. Now, he has to spend more time on the audit of international tax matters. As a result, most German tax audits take longer than in the past, and the most controversial topic in any tax audit is usually the discussion around transfer pricing adjustments suggested by the tax office. At the same time, it is not uncommon behaviour of the tax auditor to expect that a settlement on transfer pricing matters comes at the price of the taxpayer agreeing not to apply for a mutual agreement procedure under one of the many double tax treaties Germany has entered into, or an arbitration procedure under the eU Arbitration Convention. As much as German tax auditors are criticised for this behaviour, taxpayers should be prepared to think about alternative dispute resolution procedures to avoid the resulting economic double taxation, ie, the taxation of the same income in two countries. The most common resolution mechanism is the treatment of the transfer pricing adjustment as an accounts receivable in the books of the German taxpayer. The other group entity involved in the cross-border related party transaction would book an accounts payable in the first open year with the approval of its local tax office to ensure tax deductibility there. After receipt of the payment, the accounts receivable would disappear. If no payment is made to the German taxpayer, such non-payment would be treated as a hidden profit distribution in the next tax audit because a prudent and diligent business manager would have insisted on the payment. In view of the fact that the above ‘tax accounting’ solution does not work with a number of countries, with some of them explicitly saying that Germany should use the procedures provided in its tax treaties to resolve double taxation (ie, the mutual agreement and arbitration procedures), resort may be had to other dispute resolution techniques. In the recent past, the majority of double taxation agreements entered into by Germany contain the equivalent of article 9 section 2 of the OECD Model Tax Convention on Income and on Capital. This provision foresees an automatic corresponding transfer pricing adjustment of the treaty partner if and to the extent that the responsible tax office in that treaty partner country accepts the initial transfer pricing adjustment made in the German tax

48 • GBM • August 2011

audit. In the reverse situation, ie, with a German entity on the receiving end of a transfer pricing adjustment, such negotiations about automatic corresponding adjustments have proven to be successful to avoid double taxation in the years in question, in or even without a tax audit. even in relation to countries, vis-à-vis which Germany has not negotiated the automatic corresponding adjustment (no article 9 (2)), there is a certain degree of openness at the tax office to develop flexible approaches to avoid double taxation. Experience shows, however, that flexibility and the desire to reach a reasonable compromise are not always available when large transfer pricing adjustments are at stake. In these situations, taxpayers should consider appealing the tax assessment with the transfer pricing adjustment to the Lower Tax Court directly with the explicit written consent of the local tax office. The normal procedure to appeal the tax assessment to the administrative appeals tribunal has proven to be a lengthy process that does not provide any benefit to the taxpayer because the administrative appeals tribunal, a separate department located in the tax office, usually does not have transfer pricing expertise and would invariably shy away from making a decision in favour of the taxpayer if large amounts are at stake. In an increasing number of situations, litigation appears to be a reasonable alternative to resolving transfer pricing disputes, in particular because the mutual agreement and arbitration procedures would be available still if the respective application is submitted to the Central Tax Office in a timely manner. Usually, these procedures would be dormant until the court hands down a judgment, or if a settlement can be reached between the tax office and the taxpayer after the judges have indicated which direction they would be heading with the transfer pricing case at stake. In a recent tax audit, where a multi-million euro transfer pricing adjustment was suggested by the tax office even though the multinational group as a whole was lossmaking in a particular calendar year, when the question was put to the tax office to agree on an appeal directly to the lower Tax Court, it immediately lowered the suggested settlement amount by €7 million. Another reason for opting for litigation is that the tax authorities co-operate more and more and know the negotiating positions of their respective counterparts in the other treaty country. Hence, they know what can be ‘achieved’ vis-à-vis the taxpayer. litigation may be an appropriate ‘weapon’ against such collusion between the tax authorities.

Transfer pricing in Israel Israel has long been considered to be at the cutting edge of the high-tech industry. As such, it has attracted numerous multinational corporations (such as Microsoft, Intel, etc) that have established subsidiaries that acted mainly as research and development centres and was the epicentre of local companies that have also grown and sprang subsidiaries throughout the world. The Israeli Tax Authorities (ITA) and indeed the local legislators identified the actual possibility for the misuse of aggressive tax planning practices, despite Israel’s favourable tax regime, and, within the scope of a broader amendment instated in 2006 (amendment no 132), added transfer pricing legislation to the Israeli Tax ordinance (ITo). The ITA has a dedicated unit that carries out rigorous transfer pricing audits. As the 32nd member of the OECD (admitted on September 2010), Israel’s transfer pricing legislative framework is largely based upon oeCD’s Transfer Pricing Guidelines. In addition, the Israeli legislation and regulations incorporate the approach of section 482 of the US Internal Revenue Code and the regulations promulgated there under. Main transfer pricing legislation Section 85A of the ITO, Israel’s main transfer pricing legislation, stipulates that all cross border transactions where the parties have a ‘special relationship’, have to be conducted at market value (ie, at arm’s length). A broad interpretation to each of the following terms was given by the tax ITA: ‘Cross border’: Although seemingly clear, the ITA stated on several occasions that intra-country transactions between related entities shall be subject to transfer pricing rules if found to be part of tax avoidance schemes. ‘Transactions’: This broad definition includes all transactions involving tangible and intangible assets, financial transactions, services, etc.

‘special Relationship’: A special relationship between parties shall be deemed to exist if one party to the transaction ‘controls’ the other party or are mutually ‘controlled’ by the same individual or corporation. Although ‘control’ is defined as direct or indirect ownership of at least 50% of the parties’ means of control (eg, voting rights, stock, etc), the ITA, in Circular 03/2008, stated that the 50% threshold is not to be viewed as a hard ownership cap. Consequently, each transaction shall be evaluated by the ITA on a case-to-case basis and parties may be deemed to satisfy the ‘special relationship’ criteria even if their factor of ‘control’ is below the threshold. Applicable methods The main directives for the application of the arm’s length standard are stipulated in Income Tax Regulations (the establishment of arm’s length conditions) (the Regulations) to which our office remarked before publication, and Circular 03/2008. As aforementioned, the Israeli legislation is based on both the oeCD and the Us approaches towards transfer pricing methodology. As such, while no official ‘best method’ hierarchy exists, the Regulations indicate that a preference should be given for the application of the comparable uncontrolled price (CUP) method and, in case of inapplicability, a reason for the disqualification of this method should be provided. other transaction based methods (ie, resale price method and cost plus method) and the profit split methods are regarded as equal and may be elected by the taxpayer if the CUP method was found inapplicable due to lack of sufficient comparable data or due to other reasons, such as the necessity to perform major adjustments. If the aforementioned methods are deemed inapplicable, the use of a profitbased method (ie, comparable profits method/transactional net margin method) is acceptable by the ITA subject to the performance of comparison between profit level indicators established in the tested and comparable transactions. other

IsRAel

Adv Yariv Ben-Dov founding partner Adv Dan Zaidman senior associate Bar-Zvi & Ben-Dov, Law Offices main@bbl.co.il www.bbl.co.il; www.transferpricing.co.il

economically viable methods may also be applied if none of the above were deemed suitable to evaluate the arm’s length nature of an intercompany transaction. Unique transaction The Regulations provide an exemption for a single intercompany transaction that is not a major part of the taxpayer’s routine business activity. such exemption is subject to the ITA’s prior approval and applies only to the execution of a full-scale transfer pricing analysis. Documentation requirements Section 85A stipulates that a taxpayer should maintain and submit within 60 days upon demand all documentation with regard to its transactions that are subject to the provisions of section 85A. Such documentation should include a transfer pricing study, intercompany agreements and any other material that may be deemed relevant by the taxpayer or by the auditors of the ITA. furthermore, a taxpayer is required to submit a compliance form (form 1385) along with its annual tax returns. Form 1385, in which the taxpayers declares that its intercompany transactions are conducted in accordance with the arm’s length standard as stipulated in section 85A, is signed by the taxpayer’s officer (generally the Cfo) and may bear general tax and criminal implications on the taxpayer and on the signing officer, who may be criminally liable for giving false statement (perjury) regarding the taxpayer’s compliance. The Israeli legislation does not have specific penalties associated with non-compliance with the arm’s length standard. However, general penalties and criminal ramifications are stipulated in the ITo, including monetary fines, upward adjustments of taxable amounts, adjustments to prior years and even incarceration for up to seven years for conducting tax avoidance schemes.

August 2011 • GBM • 49

transfer priCing

MeXICo ernst & Young Mancera s.C. Harili Tsoukia, Msc. Partner | Transfer Pricing Av. Ejercito Nacional, 843-B, 5th floor, Antara Polanco, 11520 Granada, Mexico City, Mexico Tel 1: +52 55 52 83 1488 (direct line) Tel 2: +52 55 52 83 1300, ext. 1488 Fax: +52 55 11 01 8453 www.ey.com eduviges lopez Assistant Tel +52 55 52 83 1300, ext. 1382

since the publication of the original transfer pricing guidelines in 1995, inter-company pricing has evolved to reflect the economic reality of the facts, rather than the form of the transactions. As a consequence, the oeCD reviewed the guidelines, including updated chapters regarding methodology (namely traditional transactional methods and transactional profit methods). Under the current guidelines, elements such as ‘intangible assets’ are much more relevant when evaluating intercompany transactions. There are two very important aspects that need to be considered as far as the presence and involvement of intangible assets in transfer pricing are concerned. The first is how to identify and evaluate the intangible assets that are being licensed or transferred, as well as their involvement and importance in the intercompany transaction analysis. The second is how to evaluate compliance with the ‘arm’s length’ standard when testing the transfer or licence of intangible assets. As to the first point, the OECD Guidelines do not provide an extensive guide on how intangible assets should be identified and further valued. In general terms, the three valuation approaches are considered, namely the income approach, market approach and cost approach (general valuation principles). According to the oeCD Guidelines, a reference as to the existence and an indicator of an intangible asset (registered or not) could come from the application of the residual profit split method. Regarding the second point, traditionally, when evaluating the ‘arm’s length’ compliance of the related party transactions, whenever the use of an intangible asset is involved, analysts have usually applied the comparable uncontrolled price method. However, this approach is too basic and does not necessarily capture the actual value (revenue-making potential) of the intangible asset being transferred or licensed. Therefore, methodologies that were commonly used when benchmarking transactions where intangible assets are involved are, by nature, more complex, and, if we are to consider the economic substance of the property being transferred or licensed, the analysis required is more detailed. A pure

50 • GBM • August 2011

comparable uncontrolled price method would be appropriate when defining or reviewing the ‘arm’s length’ standard of the royalty payment triggered by the use of an intangible asset, only when identical intangible assets are also licensed or transferred to a third party. In most cases, it would be necessary to conduct a detailed analysis of facts and circumstances surrounding the intangible property, including its nature, development, ownership (legal, and economic), earnings or savings generating potential, as well as a profit split analysis. one of the topics the OECD Working Party 6 focuses on is, in fact, the involvement of intangible assets in the intercompany transactions, their significance in generating value in the transaction, as well as the methodologies that could be considered when the valuation of intangible assets is considered.

Transfer pricing rules in Thailand The tax authorities around the world adopt the ‘arm’s length’ principle to protect their fair share of tax revenue. However, applications of the principle vary from one country to another. It is therefore imperative for directors of multinational companies to understand these differences in order to adhere to local transfer pricing regulations and avoid penalties and surcharges. This article provides some salient points on the transfer pricing rules and regulation that multinational companies should be aware of when operating in Thailand.

THAIlAND

PricewaterhouseCoopers legal and Tax Consultants ltd. Mr. PeeRAPAT PosHYANoNDA Partner (662) 344 1220 Fax (662) 286 2666 peerapat.poshyanonda@th.pwc.com www.pwc.com

There is no specific transfer pricing provision under Thai tax law. The Revenue Department (RD) relies on the general provisions of the corporate income tax law and the transfer pricing guideline to ensure compliance. Although not part of the tax law, the transfer pricing guideline forms the basis of transfer pricing documentation requirements. Transfer pricing documentation need not be submitted at the time of tax filing, but within one month of the request for review by the RD officer. There is no penalty for not preparing the documentation. However, the danger in the absence of transfer pricing documentation is that the RD officer would make his own assessment of the taxpayer’s transfer pricing practices based on his understanding of the taxpayer’s business. A maximum of 100% penalty and another 100% of surcharge could kick in if an assessment is made. What works in some countries may not work in Thailand. The RD looks not only at bottom line profits, but also profitability by product/supply chain. Payments for services to related parties would be disallowed as tax deductible expenses if the taxpayer did not have sufficient documents to support services rendered and benefits received. Payment for manufacturing know-how cannot be net-off against the transfer price of goods that the taxpayer sells to the owner of intellectual property. True-ups would be taxable in Thailand, while true-downs may not be allowed as tax-deductible expenses. As regards benchmarking, the RD generally accepts only Thai comparables. This is unless foreign comparables give a more favourable result to Thailand than the Thai comparables. There is no endorsed database for comparables search, so the focus is on the end-results. The RD would review all of the comparables selected by taxpayer to ensure comparability. They will try to reject comparables with low profitability and add those with high profitability. Transfer pricing documentation is one way to manage transfer pricing risk in Thailand. Advance pricing agreements (APAs) are another way to manage transfer pricing risk arising from differences in the applications of the ‘arm’s length’ principle by the various tax authorities. Thailand has so far concluded three bilateral APAs, and there are more than ten bilateral APA applications in the pipeline.

August 2011 • GBM • 51

transfer priCing

SWEDEN

Annika lindström Director and practice leader, KPMG Global Transfer Pricing services in sweden Tel: +46 8 723 6171 Fax: +46 8 10 55 60 annika.lindstrom@kpmg.se www.kpmg.se

Recent transfer pricing development in sweden Transfer pricing in sweden has evolved significantly during recent years, both from a company and tax authority perspective. Transfer pricing documentation rules were introduced 2007 and those were followed by advance pricing agreement (APA) legislation in 2010. Currently, a great part of the swedish

52 • GBM • August 2011

multinationals have transfer pricing documentation in place and the swedish Tax Agency has increased its focus against transfer pricing. This has been done through extensive education and by centralising resources in a special three-year nationwide project focusing specifically on transfer pricing. The project ended in December 2010, and the results from the project are presented in statistics recently released by the Swedish Tax Agency. During 2008-2010, the Swedish Tax Agency completed 188 transfer-pricing audits, of which 63 resulted in a monetary adjustment of the company’s result. In total, these adjustments have resulted in SEK 1.5 billion (US$240 million) in tax revenues including tax penalties. In addition, many audits are still ongoing and have not yet been finalised. This number is a significant increase

compared to previous years and it is a development that is expected to continue. Due to the relatively low historic transfer pricing focus from the swedish Tax Agency, sweden does not have a lot of case law related to transfer pricing. The increased number of audits will lead to more cases being appealed to court and eventually more extensive case law, which will reduce the uncertainty for the swedish tax payers. since many swedish multinationals have transfer pricing documentation in place, the types of transfer pricing issues that currently arise are more focused on business restructuring and tax efficient planning rather than compliance. This trend can, in particular, be seen as an effect of the deep recession that many multinationals have experienced. The business restructurings that many multinationals plan range from small changes in transfer pricing models to transfer of intangible property or closing down of, for example, manufacturing units. Major changes in transfer pricing models often lead to increased tax and transfer pricing exposure in one or more countries. one way to minimise this risk is to enter into APA procedures. even though multinationals more frequently conducts such business restructurings the number of APAs is still relatively low in sweden. only a few applications have been filed since the law was introduced in January 2010. However, considering the international development and the increased focus from the swedish Tax Agency, this opportunity is expected to be more utilised going forward.

rising star

rising star Most children have moments when they know what they want to become – whether a police office, doctor or astronaut. for steven le Vine, the founder of grapevine pr, his career was written on the wall before he even knew. This is because when he was growing up, he used to report to classmates on things he enjoyed, whether it was places he visited or things he did. In high school, this passion would manifest itself in other ways, when he would record albums he liked and share them with friends. It was around this time when his father suggested he should become a publicist, because he was a born promoter. What he didn’t realize was that he would end up starting his own business at such a young age – while only an intern! In 2006, Steven graduated from college and within his first week as an intern, he formed his own music PR label, GrapeVine Promotions. A couple months later, he accepted a position at a large real estate PR firm, and began to land clients coverage in top-tier outlets like the Wall Street Journal, a feat he was told no one else on his level had achieved. But he didn’t feel this corporate environment fit him and was determined to go off on his own. That was when he received an email response from a notable actor named Michael Carbonaro requesting a meeting to discuss his services. Things were about to change. Carbonaro was signed to the newly formed grapevine pr soon after, and then came forth a flood of other clients. Before he knew it, he was running his own firm on the side. He then began garnering himself press and appeared on the front-page of the Asbury Park Press’ business section. He knew once the head honchos found out, he would be forced to make a critical decision. Many of his friends and family lobbed dire predictions of him, telling him he would risk his career and reputation by becoming an entrepreneur at such a young age. But he refused to listen. It was in September 2007, when he was called into the office and with confusion, yet admiration, given an ultimatum. Would he stay or would he go? He said, “I’m not giving up my company, so do what you have to do.” It was only

a few months later when he moved out to los Angeles, where the firm is currently based. It has now been five years since he started his high-profile lifestyle and entertainment PR firm, and he has already become one of Hollywood’s hottest new publicists, having represented close to 100 clients, many of them celebrities and international consumer brands. le Vine is also frequently asked to contribute to industry articles and radio shows as a thought leader. Quite a success story for a 29-yearold! le Vine’s philosophy behind grapevine pr is that any good PR firm can get you press, but grapevine pr is more than just that – it seeks to become a “way of life” brand. The firm likes to offer clients personalized and personable service, flexible terms, reasonable fees, and always delivers on what it says, but never over-promises. The firm even has special departments focused on various niche markets, including the LGBT market -- for which the firm has received a substantial amount of press for being one of the first PR firms to specialize in. le Vine prefers going after the most edgy, innovative and fun brands that exist, and credits his influences as Virgin’s Richard Branson, Philippe Starck, Apple’s Steve Jobs, David Geffen, Tori Amos and Howard Bragman. He believes all have taken the status quo in their respective industries and turned it on its head.

story and Images Provided by Boompedia August 2011 • GBM • 53

Country profile - sweden

The Sw ed yellow ish ﬂag with c a ross backgr ound, on a blue d a least t o the 1 tes back at 6th ce ntury

Country profile sweden Sweden officially the Kingdom of Sweden is a Nordic country on the scandinavian Peninsula in Northern europe. sweden shares borders with Norway to the west and finland to the east, and is connected to Denmark by the Øresund Bridge. At 450,295 square kilometres (173,860 sq mi), Sweden is the third largest country in the european Union by area, with a total population of approximately 9.4 million. Compared to continental Europe, Sweden has a relatively low population density of 21 inhabitants per square kilometre (54 /sq mi) with the population concentrated to the southern half of the country. Over 85% of the population live in urban areas. Sweden's capital city is Stockholm, and with a metropolitan population of over 2 million, it is also sweden's largest city. 54 • GBM • August 2011

Merger Control Procedure in sweden The relevant rules on merger control in sweden are found in the Swedish Competition Act 2008:579. The regulatory authority is the swedish Competition Authority (sCA) and mergers have to be notified subject to certain criteria. From the date when the SCA decides that a notification is complete, it has 25 working days (phase I) to either make a decision that there are no grounds for action or that it shall undertake a special, indepth, investigation. That period is prolonged to 35 working days if a notifying party offers commitments. During the 25/35-day period no action may be taken by the parties to put the merger into effect. After a decision to carry out a special investigation (phase II), the SCA has the benefit of three additional months in which to take legal actions before the stockholm District Court in order to stop the proposed merger. The three month period may be extended by the Court provided that the notifying parties agree to such an extension or that there are particular reasons.

Undertakings may also voluntarily make commitments to the sCA and the commitment may be made subject to the penalty of a fine. Phase II investigations have been reasonably common in the past. However, the actual stopping of a merger in the stockholm District Court does not normally occur. That may be a result of the extensive practice of parties offering to make commitments or to divest parts of their businesses in order to get clearance from the sCA. The SCA encourages parties to contact them before submitting the notification, i.e. pre-notification contacts. Pre-notification contacts are confidential and may therefore begin before the merger is made public. The parties may submit a draft notification and/or make an oral presentation of the case.

A merger can be prohibited if it is liable to significantly impede the existence or development of effective competition in the country as a whole, or a substantial part thereof, and if a prohibition can be issued without significantly setting aside national security or essential supply interests. If it is sufficient to eliminate the adverse effects of a concentration, a party to a merger may instead choose to divest an undertaking, or a part of an undertaking, or undertake other measures having a positive effect on competition, and thereby avoiding the merger being prohibited.

Advokatfirman Lindahl KB Eva-Maj MühlenbockTel: 0046 08 527 70861eva-maj.muhlenbock@lindahl.se erik Brändt Tel: 004685277087 1erik.brandt@lindahl.se www.lindahl.se

August 2011 • GBM • 55

Country profile - sweden

Outsourcing Trends in sweden and the Nordics Bird & Bird LLP has offices in Beijing, Bratislava, Brussels, Budapest, Dusseldorf, frankfurt, Helsinki, Hong Kong, london, lyon, Madrid, Milan, Munich, Paris, Prague, Rome, shanghai, singapore, Stockholm, The Hague, Warsaw. Since they became mainstream practices in the late 1980s and early 1990s, IT and Business Process Outsourcing has continued to grow as a means of cost saving and business streamlining in sweden and the Nordics. sweden, much like the UK, is a relatively mature market when it comes to outsourcing, with many companies entering into second or even third generation outsourcing processes. With this experience has come an increased awareness of the issues which commonly arise in the process of tendering, procurement, negotiation and implementation – and of the potential problems as well. Certain outsourcing trends have emerged over the last few years in Sweden and farther afield, which continue to affect the nature and negotiations of outsourcing projects locally, including the increased prevalence of multisourcing, offshoring and nearshoring (considered below). The way in which businesses have gone about the process of outsourcing in Sweden has also been significantly refined. Increasingly, dedicated management teams focus on sourcing specific parts of their operations which are not part of their core businesses, rather than outsourcing larger branches or divisions. set out below are some of the key trends and tendencies which Bird & Bird has seen as a regular advisor on the procurement or provision of such services. 1. Experience in the Marketplace. The Swedish outsourcing market, both in the public and private sectors, and particularly in industries such as ICT, is comparatively developed and mature. Parties are therefore increasingly aware of the potential pitfalls in an outsourcing transaction, from difficulties in transition and implementation and relationship management, to lack of sufficient transfer of knowledge between the parties. A critical example is the often inadequate transfer of data concerning the customer’s business and technical requirements to a potential supplier. Poorly conceived outsourcing transactions can cause as many challenges as they may solve - many businesses have learned to their cost that the implementation and management of outsourced services requires experienced teams and resources to achieve full and effective functionality. Businesses are therefore increasingly attempting to achieve as much flexibility as possible when drafting and implementing their agreements in order to limit their contractual risk. one way in which they have sought to do this is to limit the duration of agreements, so far as possible, while retaining an option for the customer to call for and require an extension and/or transfer assistance when changing supplier or ultimately insourcing their operations. While first generation outsourcing contracts may be longer in duration due to more complicated transitions and transformations required, a standard term for a second or third generation outsource is now commonly three years. 2. Multisourcing. Another way to try to achieve flexibility, which has become an increasingly prevalent trend in recent years, is

the development of multisourcing. When looking to pursue a multisourcing strategy, it is important to focus on the integration issues that arise from having multiple vendors interacting with your business. More and more customers are looking to deal with these challenges by implementing supplier cooperation agreements which force the suppliers to work together for the benefit of the ultimate customer. Appointment of a dedicated business management team is often crucial to co-ordinate these services and manage increased levels of information. 3. Off-shoring. This has also been a major trend in Sweden, with many international service providers (such as Indian companies) increasingly doing business here. However, when swedish companies choose to outsource their own business overseas, they will often require a swedish counterparty in the contract, which will then use the offshore business entity as a sub-contractor. 4. Near-shoring. A further and perhaps more localised trend we have recently observed in sweden and the Nordics, is an increase in the numbers of near-shorings (outsourcing in a relatively proximate geographic area), for example to the Baltic or the Cee regions. 4. Cultural clashes and disputes when negotiating. Such issues in outsourcing agreements can also arise, often between large swedish companies outsourcing parts of their operations and large American service providers trying to obtain the contracts. outsourcing in sweden, as in many other countries, is a buyer’s market, where the customer is used to dictating the terms. As a service provider, despite the fact that you may be a large global company, you may still be a small player on the Nordic outsourcing market. outsourcing contracts are most commonly drafted on terms dictated by the customer, often resulting in biased and one-sided terms and conditions. While this might appear positive for the customer in the short term, our view at Bird & Bird is that businesses often find that such contracts do not have the most constructive results in the long run. Time and time again, companies have discovered, too late, that it is better to try to find a sound balance between the interests of the parties to the contract. This is particularly the case from the perspective of a relationship maintenance/contract management perspective (something which is increasingly reflected in governance schedules of an outsourcing agreement). While cutting costs may be the key driver in outsourcing, and the purpose of contractual negotiations is naturally to obtain the best result for your client/ business, that aim is not always best achieved when the final draft of the contract appears to benefit just one party. 5. Final general points - governing law and language, and supplier flexibility on limitation. It is worth noting that the vast majority of outsourcing contracts in sweden will be drafted in english, but will be governed by the law of one of the Nordic jurisdictions, most typically swedish. finally, we have increasingly seen suppliers who are willing to accept certain potential liability under a contract for a direct loss of profits and loss of revenue when negotiating outsourcing agreements. This is a trend we have observed in both sweden and the UK, where the only real remedy for a contractual breach which results in a loss of business to a customer, is the loss of profit or a revenue claim. edwin Moore-Gillon Bird & Bird llP Jim Runsten Advokat/Partner Tel: +46 (0)8 506 320 00 Fax:+46 (0) 8 506 320 90 jim.runsten@twobirds.com www.twobirds.com

56 • GBM • August 2011

foreign key personnel - executives, experts, researchers and others - may qualify for special tax relief when working in sweden. The legislation provides an additional advantage to companies who need foreign expertise for their swedish operations. The main feature of the legislation provides a 25% reduction of taxable income. Hence, only 75% of a foreign key personnel’s income is taxable. The reduced tax applies to all salaries and ‘perks’, such as employers’ contribution to housing and living costs. The legislation also grants the key person tax-exempt contributions from the employer, such as holiday travel to the home country and school fees for the children. The granted tax relief, however, does not limit the key person’s right to apply for tax deductions in sweden as a ‘normal’ taxpayer would have the right to do. Tax relief only applies to employees of a swedish company. Hence, a person who is assigned to sweden by a foreign company that does not have any operations in sweden will not qualify. However, if a foreign key person is assigned to sweden by a foreign company with a swedish subsidiary, and the assigned employee is remunerated by the subsidiary, the employee will qualify for tax relief.

in the near future. An application for tax relief is a straight forward process, but it must be submitted within three months of the start of the employment in Sweden. The reduction only applies to the first three years of the employment in sweden, provided that the key person does not have intentions to reside in sweden for a period exceeding five years. In order for an employee to qualify for special tax relief, it is of essence that the Taxation of Research Workers Board truly and fully understand the employee’s tasks and why the current knowledge cannot be found within the borders. Gärde Wesslau is happy in to assist you in the preparation of the application and explain the rules in further details.

The swedish government has recently indicated that they have plans to overhaul the current tax relief system and its tax breaks in order to attract expert knowledge within the financial field. Under the current system, only individuals with a monthly income above a certain level are eligible for special tax relief. The desire to make the process less subjective has been expressed and that the tax breaks are going to be based on earnings or earning potential. There is nothing decided yet, but the system will most likely be reformed in some way

Gärde Wesslau Advokatbyrå Ulf forsgren Partner ulf.forsgren@garde.se

Anneli lönnborg Associate anneli.lonnborg@garde.se Tel: +46 (8) 587 240 00 Fax: +46 (8) 587 240 01 www.garde.se

August 2011 • GBM • 57

work healthy

10 easy ways to help you get fit in the office Our quick and simple guide to improving your health if you’re deskbound

There’s no getting away from the fact that we’re spending more and more time at our desks, sitting down working on a computer. Our bodies are simply not designed to spend long periods of time seated, and as a result, our health suffers. It’s an increasing problem, advances in technology mean we don’t need to move around as much for work, but we do if we want to stay fit and well.

healthy waist measurement is defined as less than 31.5in (80cm) for women, less than 37in (94cm) for white and black men and less than 35in (89cm) for Asian men. (Source: World Cancer Research Fund)

As long as we exist in a world of email, IM, and video conferencing, the problem is only going to get worse. We’re moving less, eating more, and getting bigger. Fact.

http://www.nhs.uk/Tools/Pages/ Healthyweightcalculator.aspx

In an article published in the British Journal of Sports Medicine in 2010, Elin EkblomBak of the Swedish School of Sport and Health Sciences reported, "After four hours of sitting, the body starts to send harmful signals. The body's genes regulating the amount of glucose and fat begin to shut down”. Another study, published in the American Journal of Epidemiology, showed that workers who spend ten years or more in a sedentary job have almost double the risk of getting bowel cancer. Every extra inch on your waistline raises the odds of bowel cancer even if the rest of your body is trim, doctors have warned. A

58 • GBM • August 2011

Check your BMI (Body Mass Index) as an indicator of how seriously you should consider looking at your office habits in relation to your health and fitness.

If your body mass index is more than 25 – you should seriously consider losing weight. (Source: UK NHS). The Lancet medical journal reports that the global trend for obesity rates continues to rise. Look at the repetitive headlines in the news: Ten-fold rise in gastric bands and other weight-loss ops Obesity is 'leading driver' of breast cancer Cancer rate rising in middle-aged Snacking clue to obesity epidemic It’s worrying. But we can do something about it. We’re eating more food and taking in more energy than we are burning off. Our forefathers may have toiled in the fields and

walked 5 miles to work and back – but you and me - we’re sitting down 5 days week sending e-mail. •

The recommended daily calorie intake is 2,000 for women, and 2,500 for men

•

Factors that influence energy intake include portion size, energy density and the number of meals, snacks and drinks consumed each day

•

We should be doing 30 minutes of moderate exercise (like walking) 5 days a week.

(source: NHs Choices)

4 5

so, what can we do about it? Good health is about lifestyle change. It means slowly altering your daily routine so that a healthier way of living becomes normal – and is not considered to be a ‘diet’ or ‘exercise fad’. so when you spend at least 8 hours a day in the office, and a few hours sat on public transport or in the car commuting, how on earth can you achieve that change? The magic phrase is ‘cardiovascular exercise’. It’s all about the heart. We need to give it a bit of a surge every day. If we don’t, it gets tired and dull and could stop working properly, and you will too. The ‘30 minutes of exercise a day’ is still the mantra supported by governments and the British Heart foundation. The ideal way is to adopt a quiet, subtle but effective fitness routine to keep you fit and help you lose weight or maintain a healthy weight, whilst you do your online deskjob. Reducing the biscuits and crisps you snack on at your desk is a good start. They’re high carbs and high fat. Choose protein rich nibbles a few times a week instead: cheese, ham, crabsticks or nuts, for example. let’s be honest, no one really wants to follow the feature advice that says, “‘Hey, take a break from the computer and do 50 press ups on the office floor!’ So, what can you do every day to burn more calories during work time without your office colleagues giggling at you, and without you getting sweaty in your work clothes? The obvious one might be to walk or bicycle to work. Too far? Too impractical with all you have to carry? OK – then here’s our Top 10 tips to get fit at work:

1 2 3

Park the car at the far end of the car park. even if it’s only another 40 metres, that's 80 metres a day, 400 a week, 1,600 metres walked a month. That’s over one and a half kilometres every month (or 1 mile!). That means just by parking your car a bit further from the work entrance, you could burn up to 240 calories a month or - 2,880 calories burned a year. Are you guilty of emailing or IMing people in the office? stop. Get up and walk across the room and – speak to them instead! You’ll be surprised at the difference it makes over time to your energy uptake, and you may even start a new ‘speak to each other for real’ craze in the office. It’s obvious and often said but true – give the lift a miss and use the stairs. OK, the first day you’ll feel like your legs have turned to jelly, but by day 5 you’ll be taking the steps 2 at a time.

6 7 8 9 10

Have meetings standing up. Really! Not only will you burn more calories, you’ll find the meetings are quicker too, and save you time. It’s a classic technique used by forward thinking businesses. If you’re standing up, you get to the point more quickly, don’t waﬄe, you won’t get bored and munch on biscuits. You burn more calories standing up than sitting down. Walk around more in the office – fetch your own paper for the copier, offer to get drinks for others, put the post tray on the other side of the room and walk to it, and get up at every opportunity. As 2,000 steps burns about 100 calories, you could lose half a stone in just 7 weeks by getting off your chair that little bit more. exercise your eyes. staring at a computer screen for lengths of time at a short distance isn’t good for your eyes. Get up – part of your increased walking ratio – and go to the office window. Give your eyes a workout by looking in the distance and then something close and repeat. It’ll help keep your eyes healthy and help reduce soreness. Tighten your bottom and leg muscles without anyone noticing you’re doing it! You can clench your bum and do leg and feet stretching exercises under the desk. Do it while you’re on the phone - just think phone= bum clench. Drink water. Most offices have a water dispenser – another excuse to get up for a short pace to drink. Not only will the water help flush out toxins from your body, it will keep you hydrated and alert, and keep those dry office eyes moisturised. Avoid germs and getting sick. Offices are a breeding ground for nasties – and many staff will come in with a cold sneezing all over the phones and computers and spreading their germs, so you end up ill too. Get some anti-bacterial wipes – or better still - get the boss to supply them – and wipe over the phone, the keyboard, the mouse, and the door handles. Sit properly. Two thirds of us will suffer back problems at some stage. Your employer has a duty to provide you with a properly working and adjustable seat, and to show you how to sit properly at your desk for the task you are employed to do.

Bad posture can cause a whole list of health issues: headache, shoulder pain, lower and upper back pain, constipation, and aching legs. If you start now you can take steady, ongoing steps towards a healthier and happier worklife.so what are you waiting for? You can check your BMI now online, and then - stand up – and go and talk to a colleague. You won’t even need your tracksuit! Jane Green

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

August 2011 • GBM • 59

employment law

employment Law - an International Perspective The UK employment lawyers Association has over 5,900 members specialising in employment law. I am fortunate enough to chair ELA’s International Committee, which is comprised of 26 senior employment lawyers - both in-house and in private practice - with deep expertise in crossborder and multi-country employment projects. over recent years, numerous other national employment lawyer associations have been established across europe and elsewhere, to promote discussion on employment and benefits issues and to provide training to junior members of the profession. In May this year, members of my Committee met with representatives from AVosIAl in france, the AADA (labour law group of the German Bar Association), the Italian AGI, the Dutch VAAN and the spanish foRelAB to explore ways in which we might build links between our national associations. In october this year, elA will be teaming up with the American Bar Association for a one-day event on cross-border employment law. Meantime, we are hosting employment lawyers from India, China and Russia in london this year for discussions on developments in employment laws in those jurisdictions. All this activity confirms that employment law is evolving internationally at an impressive rate. The increasing globalisation of business continues to throw up cross-border employment and data privacy compliance challenges for

multi-nationals, often involving complex conflicts of law. Local laws are also being implemented continuously across the globe - just a few examples of which are provided below. This year has seen the overhaul of pay governance in the European financial sector. Amendments to the eU Capital Requirements Directive (CRD), known as CRD 3, imposed on a broad range of firms requirements to adopt new remuneration policies and practices with effect from 1 January 2011. And the EU Temporary Agency Workers Directive is likely to change the way in which european businesses structure their workforces particularly in the UK. from the end of 2011, Member States must ensure that the provision of basic working and employment conditions (for example, remuneration, paid holiday, working hours, overtime, maternity and anti-discrimination provisions) for assigned temporary workers are no less favourable than those offered to employees recruited directly by the hirer. Temporary workers will also be entitled to equal access to employment, collective facilities and vocational training. The UK Equality Act 2010, and the Bribery Act 2010 are compelling employers to re-visit their policies and procedures, and to adapt generally to important new legal concepts and obligations. employers have also seen significant changes in Italy, Belgium and france.

Christopher Walter Chair of ELA’s International Committee Partner, Covington & Burling llP +44.(0)20.7067.2061 cwalter@cov.com www.elaweb.org.uk/ www.cov.com/cwalter/ 60 • GBM • August 2011

UN ITe D KI NG Do M Russia has introduced a new labour migration regime for highly qualified specialists. Those falling within the remit of this new regime will be entitled to a number of benefits not available to those falling within other immigration categories. for example, highly qualified specialists will be treated as tax residents and will be eligible to use the 13% personal income tax rate from day one, as opposed to other foreign employees who will need to spend at least 183 days in Russia before switching from the 30% non-resident rate. In New Zealand, the employment Relations and Holiday Act implemented several key workplace changes for employers, particularly in relation to trade union rights, sick leave and annual leave. While in China, the PRC Social Insurance Law goes into effect in July. It establishes five new social insurance systems basic pension insurance; basic medical insurance; work-related injury insurance; unemployment insurance; and maternity cover. And the All China federation of Trade Unions continues to intensify its efforts to unionise foreign-invested enterprises and to implement collective bargaining agreements across China. The July issue of Global Business Magazine provides useful insight into these and other developments.

Ge RM AN Y Prof Dr stefan lunk Partner Tel:+49 40 4140 3128 stefan.lunk@lw.com www.lw.com

Businesses need eﬀective prevention and strong advocacy When it comes to employment law, businesses need effective prevention and strong advocacy. Challenges in the marketplace Current challenges that companies face with regards to employment and labour law include downsizings and restructuring projects, privatisation, collective agreements, codetermination, compulsory arbitration and, for example, flexible models for salary and working time always depending on the legislation the companies operate in. Latham & Watkins’ support for businesses When it comes to employment law, businesses need effective prevention and strong advocacy. The employment law group of Latham & Watkins offers both - counsellors experienced in providing services, training and advice that help businesses prevent employment disputes and litigators seasoned by defending myriad lawsuits, from individual employment claims to some of the most challenging class action claims in recent years. latham’s employment lawyers have broad and deep experience in dealing with the full spectrum of employment laws in different jurisdictions, such as the eU and the Us. They have extensive practical experience working closely with clients of all sizes, from large national and multinational corporations to mid-market companies and growing businesses. The employment and labour law experts assist clients with restructurings (in particular, headcount reductions and outsourcing), privatisation, collective agreements, codetermination, compulsory arbitration, managing director agreements, compliance issues, employment and freelance agreements, and flexible models for salary and working time, as well as social security law relevant to companies.

Latham offers counselling services in all matters of individual and collective employment law, in and out of court. At the same time, they place a priority on helping clients prevent costly employment disputes and litigation. Their advice to clients is based upon and thrives on their extensive litigation experience. on request, clients are assisted with internal human resources training on employment law issues. Another aspect of their service is transactional support, where the employment team works closely with latham’s corporate team. finally, latham’s global platform, together with the long history of seamlessly integrating multi-office staffing when appropriate, allows them to efficiently and effectively provide experienced employment counsel throughout europe and the Us to resolve cross-border and global employment issues. The sensitive nature of employment law matters often requires that they act promptly, but with discretion. Who they are and what they stand for Founded in 1934, Latham & Watkins is a leading global law firm that offers clients full-service legal consultancy in key marketplaces around the world. With over 2,000 lawyers in 31 offices, they advise their clients on every aspect of their transactional, corporate, litigation or regulatory needs, at home and across jurisdictions.

Whatever the home base of Latham’s clients, they act for them as a one-stop-shop to serve their legal interests throughout the world; from starting or expanding a business to day-to-day operations, company events and regulatory concerns. They do this by drawing on our global industry expertise across jurisdictions and practice areas. As part of their widely admired ‘one-firm’ firm approach, Latham’s lawyers share clients, cases and deals across offices and countries, assembling the best teams to represent their clients. The firm culture transcends offices, practice areas and national boundaries. Throughout the firm, their lawyers participate in the same global committees, use the same technology and firm systems, and adhere to the same principles of teamwork, collegiality and entrepreneurship. Clients do find that their ‘latham experience’ is the same whatever the office they work with. latham is dedicated to providing consistent quality and creativity in their work; it is both a matter of professional pride and a central part of their identity as a firm. latham lawyers are known for their ability to explore alternatives and identify fresh approaches to complex litigation and sophisticated transactions - work that requires strategic thinking, innovative problem-solving and sound judgment.

for the ninth consecutive year since the inception of its annual ‘A-list’ survey, The American lawyer has ranked latham & Watkins among the most prestigious US law firms. With regards to employment law, Latham & Watkins has also been attested a leading position in the market. According to Legal 500 for EMEA 2011: “… clients appreciate the dedicated employment team within the structure of a large international firm [in Germany]”.

August 2011 • GBM • 61

employment law

Ne TH eR lA ND s

Dealing with social media in your company: hype or hazard? With the dismantling of trade barriers within Europe and developing of eU-wide employment law policy, companies must formulate pan-european human resources and personnel strategies. In-depth knowledge of both local and eU legislation has become virtually indispensable. To service these needs, Baker & McKenzie has more lawyers with mastery of the subtle intricacies of labour, employment, benefits issues and data privacy issues in more jurisdictions around the world than any other law firm. one of the issues that we are often asked about is the importance of social media in companies. In the Netherlands, social media such as Facebook, Hyves, Twitter and LinkedIn are here to stay. Worldwide, the Dutch are the most frequent users of social media. More than nine million Dutch possess a Hyves-account. Almost three million Dutch are twitterati. As a result, employers have to deal more and more with the challenges of social media. The use of social media by employees can have direct consequences for the employment relationship. The employer, therefore, has the need to regulate the use of social media during employment, for example, to prevent suffering damage to its reputation. The employee should know what is allowed and what’s not. The information shared on social media does not only have influence during the employment relationship, but also beforehand: what can an employer do with information found on the Internet concerning a potential new hire? Is the employer allowed to use it in its hiring process? even after termination of the employment relationship, rules regarding the use of social media can be relevant. for example: how to deal with the former employee who approaches customers of the employer through his linkedIn account? In addition, there are many privacy and data protection issues involved with social media. The employer may, for example, have a need to monitor the employee’s Internet use for compliance with its policy. This is, in principle, allowed; however, it will have to take place in accordance with the applicable privacy and employment rules. Permanent or systematic monitoring of the employee’s online behaviour is in breach with these rules. Moreover, it does

not contribute to an atmosphere of mutual trust. In drafting a company policy, the employer will therefore primarily have to rely on the employee’s loyalty where it concerns the monitoring of the employee’s Internet use. Given the complex issues that may arise with respect to the use of social media, it is a must for an employer to draft a social media policy that provides clarity about the mutual rights and obligations. The employment law practice group of Baker & McKenzie Amsterdam assists companies in drafting a social media policy. We can advise on the dos and don’ts, how to deal with your works council regarding the implementation of such a policy and provide clarity regarding the privacy and data protection issues. The employment law practice group of the Amsterdam office is a prominent labour law practice in the Netherlands. our professionals advise large international companies as well as top executives on the full range of employment law issues, such as collective redundancies, post merger integration and harmonisation of employment conditions, dismissals of executives and statutory managing directors, disputes on non-compete clauses, unlawful employees competition, data protection and privacy in the workplace and pensions. The group is part of Baker & McKenzie’s global employment practice group, including over 500 lawyers worldwide. Baker & McKenzie Amsterdam is a leading provider of legal, tax and notary services. With more than 60 years of experience in national and international legal practice, we offer Dutch and foreign multinationals unequalled expertise, locally and across borders. We make complex issues simple and deliver service that is pragmatic and matches the business needs. Our Employment Practice Group is ranked Tier 1 Legal 500 Europe, the Netherlands 2011 our employment Practice Group is leading PLC Which Lawyer?, the Netherlands 2011

Karin Bodewes Partner employment law and joint head of the employment group of Baker & McKenzie Amsterdam. +31 20 551 7452 karin.bodewes@bakermckenzie.com Remke scheepstra

62 • GBM • August 2011

Partner employment law & data privacy +31 20 551 7831 remke.scheepstra@bakermckenzie.com Maarten Vestering senior associate employment law +31 20 551 7839 maarten.vestering@bakermckenzie.com

De NM AR K

Ronoe Jette Hassing 12, rg Boulevard SR Legal, Tubo , en Copenhag 2900 Hellerup, Denmark e Hassing Rono r ne rt pa 21 19 Tel: +45 21 12 fax: none jhr@srlegal.dk k www.srlegal.d

The article describes the principal Danish rules for financial employee benefits, which varies from those of most other countries. Financial Employee Beneﬁts – a challenge in Denmark. over the last years, many foreign companies that have employees in Denmark have experienced that their globally applied benefit programs require adaptation to Danish law regarding a number of important aspects. Generally this puts the Danish employees in a better position compared to other employees of the company overseas. Section 17a of the Danish Salaried employees’ Act, which is mandatory, states that an employee who leaves his position in the middle of a year has the right to get a proportionate part of his variable salary. The value of such benefit is also subject to holiday pay and shall be taken into consideration when calculating various compensations. over the years, the unions have claimed that section 17a should also apply to all financial employee benefits, such as stock options, phantom stocks etc. and a fierce fight has taken place before the Danish courts. Until now, the employers have not been very successful in their fight against section 17 a, and the battle continues. In 2004, the Danish government introduced a new stock option Act to prevent Danish employees being entirely eliminated from

receiving such benefit. It exempted any right for an employee to acquire or subscribe for stock at a future point in time from section 17a and exclusively being subject to the stock option Act, In brief, the stock option Act distinguishes between good leavers and bad leavers. Good leavers being entitled to keep their stock options and similar instruments as if they were still employed and bad leavers following the agreed program. However, new court cases based on section 17a continue to appear. Lately, in 2010, the Danish court stated that even a right to buy stock to a favourable price, share purchase programs, former considered as an investment for the employee and thus not subject to employment law, are subject to section 17a. We have definitely not seen the last Danish court case regarding the application of section 17a or the Stock option Act. employee ownership is in most countries considered a very important way to involve the employees in the company. But until now, Denmark has clearly decided that such financial instruments, no matter the possibility for the employee of economic gain, are purely salary.

August 2011 • GBM • 63

Expert forum

Expert Forum The role of corporate directors in the global economy: More than blue sky 2011 marks exactly 100 years since the first ‘blue sky’ law was passed in Kansas, becoming a model for the rest of the US. The idea behind such laws was simple: shares of stock should be more than empty promises. Today, as companies recover from the economic challenges of the past few years, some might fear a new ‘blue sky’ in the form of undue economic optimism. I am reminded of the actual science of blue sky. While you or I might not be able to explain why the sky is blue, the fact is that the interaction of molecules and our eyes will in fact cause this colour to be perceived. By the same token, there are invisible and complex forces at work creating the conditions for long-term recovery. One of those forces is the corporate board - men and women serving in boardrooms around the world. The roles that corporate directors serve are inextricably linked to our global economic future. As fiduciaries, directors not only represent their companies’ investors (among other stakeholders), but they also select and mentor the executives who will transform shareholder capital into economic value. To thoroughly understand the linkage, let’s start with the foundation that the purpose of a board is to direct the affairs of the corporation. This means making sure the corporation not only survives but also thrives. Strategy is the key: the best boards today are constructively engaged in the development and monitoring of winning corporate strategies. Corporations that are successful will create profits, and those that deliver sustainable profits (and consequently shareholder value) will provide jobs. And to complete the loop, jobs are required to create strong economies. Clearly, directors play an important role in economic recovery. How can they fulfil their duties to the best of their abilities? Many can and do rely upon the National Association of Corporate Directors (NACD) to stay on the cutting edge of their profession. Since 1977, NACD has focused on advancing exemplary board leadership, with emphasis

on facilitating unique insights for directors, driving impact in the boardroom and creating outcomes that benefit long-term shareholders and investors. Our efforts result in director professionalism, board effectiveness and, ultimately, sustainable profits and increased shareowner value. Our more than 11,000 members help one another anticipate emerging issues and trends, before impacts reach their boardrooms, and they use our broad, comprehensive suite of resources based on authoritative research to exercise leading practices. Through high-quality, peer-to-peer discussion, our members share and learn real world situations from within the boardroom. Furthermore, directors receive unique credentials that showcase their dedication and commitment to boardroom excellence by attending our director-led education courses. NACD also advocates for directors with legislators, regulators, investors and the media. Directors need their voices to be heard, and NACD serves as that voice. NACD’s members - representing public, private and non-profit companies such as Wal-Mart, American Express and Microsoft - are known for the company they keep, namely, more than 80% of the Fortune 50, including companies like JP Morgan Chase, Home Depot and Pfizer. Importantly, NACD’s programmes and services are delivered by directors for directors. Thus, our members benefit from the experiences and insights of other board chairs, lead directors, corporate counsels, committee chairs and board members. The value of this network is delivered through nationally led programmes and, locally, through our geographically dispersed system of 22 NACD chapters, which facilitate more frequent member-director collaboration. When directors need fast answers to tough questions and guidance to pressing opportunities, they can tap directly into NACD’s pool of governance experts. And when a board wants to discuss an opportunity in the confidence of their boardroom, NACD assembles experienced

Ken Daly CEO & president National Association of Corporate Directors ken_daly@nacdonline.org

64 • GBM • August 2011

directors and governance leaders to address the request. The cornerstone of NACD’s research is our series of Blue Ribbon Commission reports, which distil the results of convening leading directors and governance experts to study and make recommendations on critical boardroom topics. These studies are refined by NACD’s research team and augmented by subject-matter experts. Furthermore, NACD convenes relevant stakeholders such as directors, legislators, regulators and governance experts - to discuss and report their findings on board practices. NACD research also benefits members through detailed board benchmarking analysis, based on our annual governance surveys, and on-demand research services where members submit questions directly to our research team via phone or email. All on-demand research services are included as a complementary membership benefit. NACD provides a broad inventory of director-led education courses focused on helping directors stay in the know, and awards unique credentials upon completion of a designated curriculum to bolster investor confidence. Directors who complete NACD’s education curriculum become NACD board leadership fellows. The NACD fellows have demonstrated their commitment to adding definable value to their boards and shareowners, over time and despite change. Being recognised as an NACD fellow showcases a director’s proactive involvement in advancing exemplary board leadership. Most importantly for many boards, NACD is the voice of the director community by being its advocate to influence boardroom policy and practices. NACD expresses the needs and views of directors through congressional testimony and education for Congress and regulators. For example, I testified on the Hill in May, focusing on the potential unintended consequences of the DoddFrank whistleblower bounty programme. NACD also speaks for its director-members through: SEC comment letters that communicate the boardroom perspective to regulators; advisory councils of directors and stakeholders to help shape the governance landscape; and, education initiatives to increase awareness of boardroom realities on Capitol Hill. As the global economy continues to rebound, please thank the men and women that serve on boards and appreciate the stewardship they provide. My NACD colleagues and I awake each day to help directors serve investors and stakeholders to the best of their abilities. That’s a promise we can keep.

International Consumer Product Health and Safety Organisation The Consumer Sector is still a vital part of major western economies with it comprising approximately 64% of the UK and 70% of the US economies respectively. Room for further growth or sustained levels of expenditure is unlikely not least because the driver of the previous consumer boom, low interest rates and access to credit has diminished. In the UK for example consumer debt including secured debt is nearly £1.5 trillion (approximately 90% of UK Annual GDP), leaving little or no headroom for sustained spending or growth. Consumer spending in the UK has been in recession for the last three quarters, clothing, food and big ticket items being worst hit. CBI retail figures for June 2011 suggest they are down 2% compared with a year earlier.

Interestingly on the retail front the cooperatives, owned by members involved in the business such as employees or customers have bucked the retail trend, by experiencing growth of 4.4 % with the UK’s second largest co-operative John Lewis having a 20% increase in pre-tax profits. Some perceive this as a ‘flight to trust’ with the economy uncertain there ‘is a distrust about mainstream businesses’ (Josephine Moulds, The Telegraph, quoting Ed Mayo of research group Co-operatives UK 27th June 2011)). Consumer sector businesses need to continue to innovate and look to emerging markets, particularly the BRIC economies and the economies in these regions for growth. They need to continue to look to cost effective jurisdictions to manufacture – from China to Vietnam and Indonesia. As the supply chain further distends so too does the cost of evaluating and managing risk assessment and regulatory compliance requirements of the products countries of destination, particularly as scrutiny of such supply chain is legislatively increased by the likes of US CPSC under the CPSIA. Product design will have to change and broaden as the population of the western economies ages in contrast to those in the emerging markets. The Consumer Sector is under intense pressure: the credit crunch; vastly increased regulation with more to follow as well as enhanced market surveillance of consumer products from national and supra national authorities all present considerable challenges and additional cost. Australia, Canada, Korea and Japan in the last few years have introduced new or revised consumer product safety regimes increasing the burden of regulatory compliance for placing products on the market, notifying enforcement authorities and if deemed necessary recalling unsafe or non-compliant products. This applies to all in the consumer product supply chain – be that manufacturers, distributors or retailers and their network of service providers. With constraints on public spending there is also a need for regulatory authorities to demonstrate efficient use of resources by public agencies such as regulators and enforcers. Any increase in legislative remit in particular market surveillance activities will spread this valuable resource even more thinly Whether in countries such as the UK, this will put a burden on enforcement authorities to move away from the collaborative and preemptive approach of product safety enforcement with dialogue before action co-ordinated through the exemplary Home Authority scheme, towards a results driven

sanction led approach to product safety remains to be seen. The EU is consulting on the current General Product Safety Directive, (the principal legislation adopted in all Member States that regulates the safety of consumer products) with a view to broadening the reach of its regime so as to increase: - Cooperation and exchange of information among the national enforcement authorities both within and outside the EU - Consistency in enforcement and conformity assessment across the EU -

Communication and cooperation among the enforcement authorities at national level and within each member state including with those responsible for border control

- Transparency in the enforcement actions that may be taken by the authorities - More speed in action and information exchange about the product posing a serious risk The US Consumer Product Safety Commission. in March this year launched its database, which hosts complaints about consumer products giving open access to consumers globally. Consumers are encouraged to visit www.SaferProducts. gov to submit Reports of harm or risks of harm, and to search for safety information on products they own or may be considering buying. CPSC will review all online Reports and have five business days to transmit qualifying Reports to the manufacturer, where practicable. Manufacturers then have 10 business days during which they may respond and provide comments and/ or claims. At the end of the 10 day period, if all requirements are met, the Report and the manufacturer’s comments will be posted on SaferProducts.gov. The full ramifications of this site have yet to be realized. What is not is the potential for it to create unique challenges for manufacturers and their management and control of the supply chain. In addition there are increasing numbers of memoranda of understanding between the enforcement agencies for product safety of the key economic jurisdictions. – the US, Canada, EU, Japan, Korea, Australia and China. Notwithstanding this in the EU there were 2000 rapid alert product recalls of dangerous products in 2010 using its RAPEX system. This is as much an indication of increased coordination and enhanced market surveillance partially precipitated by the EU Commission and Prosafe’s joint Enhanced

August 2011 • GBM • 65

Expert forum

Market Surveillance Initiatives (EMARS I and II) as an increased incidence of unsafe products. By product category these comprised: Clothing, textiles and fashion items (32%);Toys (25%); Electrical appliances (11%);Motor vehicles (9%). Country of origin of the notified product: China including Hong Kong (58%);EU/EFTA (17%); Other countries (15%);.Unknown (10%) Businesses who operate in several jurisdictions have to absorb the legal and supply chain cost of designing, labeling and packaging many times over for different markets. New manufacturers entering the global stage face an almost prohibitive task in ensuring their products are designed, manufactured, tested, certified, packaged and labeled so as to comply with the laws and regulations of the jurisdiction into which the products are to be sold. As margins get squeezed who bears the burden of the cost of regulatory compliance? A trend that appears to be emerging for such new market entrants is the increase of ‘own brands’ with retailers providing an entry for smaller suppliers. A 2010 Nielsen study, (reported in EuroCommerce 2010 report on Own Brands) found that in France that there has been a significant increase in own brand products made by SME suppliers, with over 70% of French own –brand products made by SMEs. This is an interesting model as it may involve the sharing of regulatory burden by retailers which SMEs could not otherwise sustain. What is not revealed is whether the knowhow of retailers to do so is drawn from its larger suppliers, or is being developed in house. According to Mintel, Smartphones and particularly tablets and the use of QR codes and app technology, in the form of mobile commerce, have the potential if properly deployed to reinvigorate the consumers relationship with brands, retailers and each other enhancing the provision of location based services, promotions and solutions. Exchange on these issues and the constructive tension between the competing interests

of its participants in the supply chain are what the International Consumer Product Health and Safety Organisation at its various symposia around the world facilitates. Each year it holds an annual symposium for this purpose in the United States, alternating between Orlando and Washington DC as well as having an International symposium. These to date having taking place in Canada, Belgium, UK, and China. Its next venues for 2011 are Atlanta in August and Seoul, Korea in November. As a non-profit volunteer driven organization it is dedicated, as evidenced to its Bethesda declaration, to providing forums for the exchange of and reaching out for, ideas on health and safety issues related to consumer products that are manufactured and marketed in the global marketplace. Its participants are government agencies ( DG Sanco, CPSC, METI , AQSIQ, ACCC, CSA, KATs), a large number of the world’s preeminent manufacturers, retailers, industry and trade associations, lawyers, testing labs, standards developers, consumer advocates and academia, drawn from over 20 economies around the world. In its unique position as a multilateral and multijurisdictional organization it is uniquely placed to act, and has acted, as a substrate, for dialogue, interaction and adaptation in the consumer sector. It was recognized as being one of the few multilateral, multijurisdictional, multistakeholder organizations in the consumer product safety space by the OECD in 2010. This unique position as a body that represents the whole supply chain has arguably allowed it be the substrate and catalyst for memoranda of information and data exchange between the US,China and the EU; led to the current EU GPSD notification and recall regime; prior to 2005 the EU had no concept of recall but DG Sanco looked at and adapted the US model. Equally the Consumer Product Safety Commission has taken note of the success of the EU’s less sanction more pre-emptive/ collaborative approach with manufacturers and retailers. New or revised safety regimes in China, Canada, Australia, Korea and Japan have proliferated. The recent innovation has been to increase the role that the medical profession and the insurance industry have at our symposia so as (1) to assess injury data and (2) assess how a risk can be mitigated, for all in the supply chain. Jurisdictionally Latin America and the Indian subcontinent and the Middle East are recent joiners. The goal is now to widen the diaspora to Africa. By Mark Dewar President of the International Consumer Product Health and Safety Organisation (www.icphso. org) and Partner at the international law firm Simmons & Simmons (www. simmons-simmons.com) A U.S. Perspective

66 • GBM • August 2011

By Kenneth RossThis year is among the most exciting and scary years in decades for many businesses who sell consumer products in the United States and around the world. Product liability litigation exploded in the U.S. in the 1970s and 1980s. Starting in the 1990s, product liability theories of liability started to be exported to other countries around the world. And, product safety regulatory requirements have exploded in the U.S. and around the world in the last few years and especially this year. Just this year alone, Canada, Australia, and South Africa have adopted significant new product safety regulatory requirements. In addition, other countries are considering adopting new similar laws. All of these developments will have a profound effect on manufacturers who sell products anywhere in the world. It is very likely that legislators in many other countries will believe that their consumers deserve safer products like consumers in other countries and will be pressured to enact similar product safety requirements. While it is unlikely that any other country will allow product liability litigation to become as prevalent as it is in the U.S., other countries are loosening up requirements for bringing litigation, including class actions, which could result in much more activity. All of these developments will result in more safety reporting to governments, more recalls, more business documents residing in government files, more penalties assessed against companies for failure to report safety issues, more litigation generated by these reports and recalls, and more publicity, mostly bad, about a manufacturer who allegedly doesn’t care about safety. Businesses need to be more proactive in evaluating where it is acceptable to sell their products, how to meet the legal and technical requirements in these countries, and how to adequately address safety issues that arise after sale. - Kenneth Ross is one of the world’s most experienced and well-known product safety and regulatory compliance attorneys. He is an attorney with the national product liability law firm of Bowman and Brooke in its Minneapolis, Minnesota office. His extensive writings in this area can be accessed at www. productliabilityprevention.com.

Canada 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 purportedly for national interest reasons relating to the protection of Canadian sovereignty in the Arctic and of Canadianfunded technology. 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 recently aborted proposed merger of the London Stock Exchange and the TMX Group, which owns and operates the principal Canadian stock exchanges and trading markets, can expect to be more carefully scrutinised.

openness to foreign investment, 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 as well as industrial and economic policy objectives of Canada and the provinces likely to be significantly affected by the investment. While the types of commitments an investor must make to obtain ‘net benefit’ approval are generally predictable for routine transactions, the ability of the government to invoke unspecified and vague federal and provincial policy objectives generates uncertainty for investors - a risk that is exacerbated where the target is a Canadian icon or in a politically sensitive sector.

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), which characterised 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 highly charged public opinion). A third factor, which is not emphasised as broadly, is the hostile nature of the takeover bid that undercut BHP’s ability to garner federal and provincial government support.

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. 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.

Although, in our view, the Potash decision does not represent a sea-change in Canada’s

Third, some foreign investors may wish to address uncertainty raised by the Potash

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

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 ‘offtake 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 Canadian government’s review of the next big 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.

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

August 2011 • GBM • 67

teCHnology review - Business gadgets

Technology

BUSINESS GADGETS Technology is amazing, and in recent years leaps and bounds in all areas of computers and electronics have seen us receive an unbelievable number of innovative devices that make our lives at home and at work that bit easier.

of course some of these devices are also fun in just as much of a way as they are functional. one of the most common places we’ve seen gadgets that cross the line between useful and cool emerge, has been the office. An example of one of the most desirable gadgets of this mould to appear in recent months is the Z Pen. The pen combines the timeless and universally utilised ink pen, with advanced computer technology, allowing your fateful scribble to be transformed into text on your computer without the need for cables or for it even to be linked to your computer when you write. The Z Pen amazingly stores all your doodles and writing on a separate UsB drive that it transmits to as you write. The pen writes like an actual pen and is filled with ink, so you won’t look like your writing with invisible ink when you use it. After you finish writing the drive can then be linked to your computer in the usual way, through a USB port, and transfers all the transmitted

The Z Pen

68 • GBM • August 2011

Microsoft Arc Keyboard

writing onto your laptop or desktop in your handwriting. or, get this - your writing can also be turned into text on screen. The Z Pen can transform any sort of writing to text, including joined, capitals or whatever other way you choose to scribe. It can also store 1GB of information, which we assure you is a lot of writing, its rechargeable batteries also last for 75 hours – again a lot of writing. It is able to recognise 17 languages and uses standard ink refills if you run out. The Z Pen is an altogether amazingly useful device for students or professionals. If you’re more orientated toward typing the written word than scribing it in the traditional sense, but need portability, you’ll be glad to hear that Microsoft have created the amazing ergonomic Microsoft Arc keyboard. The Arc is an amazingly solid feeling travel keyboard that is surprisingly satisfying to use when you first scope its size. The

device is very compact; measuring about 310 x 155mm and is also a very stylish piece of technology. It connects via Bluetooth technology to your computer, thereby eliminating the need for wires and is ideal for carrying between the office, meetings and the kitchen. Its arched shape and deceivably deep isolated keys are a joy to use and it is comparable to the best full size keyboards out there for both comfort and form. The keys themselves are matt black and also have a tactile finish to prevent slippage. The device’s separated isolated keys are similar to ones seen on high end laptops and are excellent for those who type a lot. The isolated style means there is little overlap of fingers and fewer mistakes. It is also easier to clean – a great bonus if you share a keyboard and wish to ensure it is free of the germs that often lurk between keys. The device is universally connectable to any computer via the UsB dongle hidden tidily underneath the keyboard when not in use. The power source for the device is AAA batteries; these batteries are very efficient and give the keyboard adequate battery life to take on plenty of presentations in the office as well as allowing it to do much typing at home. However, if you wish to make the foray into connecting with your devices with the latest and most innovative technology, do we have the solution for you? The Light Touch interactive projector instantly turns any surface you wish into a touch screen. This projector device allows users to project their small screen onto a surface and then use their fingers and hands to interact with the screen as is done with touch screen phones, tablets and computers. The device produces a 10.1” screen on the surface and through the use of award winning Holographic laser Projection and integrated infrared sensors that detect motion allows the area to be used as a touch screen. The device is amazing and has a number

The light Touch

of applications for not only consumer electronics but will also be useful in the world of retail as it will allow customers a new kind of interactive experience the previously seemed the realm of science fiction. The device is so good that it recently was named a Ces Innovations Honoree in the Media Player and also the Personal electronics categories. We all know that all work and no play makes Jack a dull boy, so it is of premium importance to be able to relax once in a while. The best way to chill at work is usually over a hot cup of tea or coffee. Though what do you do when your break ends and you haven’t finished your cup of tea? Well the UsB hotplate provides the answer to that question. Placing a nice cup of tea beside the computer used to mean you’d be drinking a cold, tasteless mug after only a few minutes. The UsB hotplate keeps your tea warm for up to 30 extra minutes and all you have to do is plug the little plate into your computer’s UsB port. The greatest things in life are usually the simplest, and this little ditty will have you sitting nice and cosy beside your computer, allowing you to drink your beverage at your leisure, not the law of convections.

the use of technologically advanced sensors in the glove. A large number of golfing problems are caused by miscalculations or overexertion of strength in the grip or in the swing – the sensoGlove tries to prevent that by telling golfers where they are going wrong, while is also a high quality golf glove that can be used on a regular basis. Many of us have shaped our swings through muscle memory; this means our muscles are trained to swing in a certain way or at certain strength. This can be hard to correct without having someone constantly examining your hold on the club. The sensoGlove measures the pressure of the grip you are placing on the club through its sensors and will warn you through its onboard computer if you are gripping too tightly through a system of beeps and visuals. The glove has a number of sensors on each finger and will let you know exactly which finger is gripping too hard. It is even set up to let you know how much exertion you are placing on the club at the address of your swing – this allows you to change and adapt away from problems as they happen, without you having to recreate situations again and again.

When the working day is done, many of use love to do something to unwind, golf is possibly one of the best ways to do so – especially if you are playing well.

Through constant warnings the sensoGlove will see you hold your club at an appropriate pressure, thereby loosening up your swing and your hands. This in turn should see you and your scores tumble to single digits or even lower. This device is an amazing piece of technology and one that actually works through its utilisation of sensors and logic.

so, why not increase the chances of having the game of your life with this amazingly sophisticated piece of tech – The sensoGlove. Golfers know that the grip is one of the most fundamental parts of the game. A good grip can be the difference between not only winning and losing but even being a good or bad golfer. The sensoGlove is built from the ground up with this completely in mind.

All of these items offer amazing technology that in many cases was not for sale, let alone available as an affordable fun and functional device to make your life simpler and more enjoyable. These devices offer some amazing solutions for users in the home, in leisure and at work and will see may warm cups of tea at work and hopefully will also mean many shots knocked off your end of round score card.

The amazing sensoGlove helps golfers with this and will reduce their swing through

UsB Hotplate

sensoGlove

August 2011 • GBM • 69

ConferenCes

Corporate and Business Conferences 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 find out latest news, information, updates, the latest innovations and inventions and what the future holds for a particular industry.

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. 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 what 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…

enterprise Risk Management Conference 2011 InterContinental Chicago 505 North Michigan Avenue

We will hear how best to capture and communicate the value that eRM brings to organizations through sharing leading practices in risk management.

Chicago IL 60611 12 - 13 October, 2011 This conference will help risk executives and others involved with enterprise risk management understand how to effectively integrate risk thinking in their organizations. Attendees will discover methods to best assess, monitor and report risks. sessions are tailored to help executives in eRM facilitate the internal conversation on risks and opportunities in order to help the businesses meet their objectives.

InterContinental Chicago 505 North Michigan Avenue Chicago IL 60611 312 944 4100 customer.service@conference-board.org

spoBis 2012 (sport Business Conference) CCD Congress Center Düsseldorf stockumer kirchstraße 61 40474 Düsseldorf Germany 13 - 14 February, 2012 Europe’s largest sports business conference is to take place on 13 and 14 February, 2012. The SpoBiS will once again proven its worth with over 1,500 participants, 130 speakers, more than 50 active conference

partners and up to 14 special interest forums. In addition to the high density of top decision-makers, a large number of sponsors with budget responsibilities are once again expected at the CCD Congress Center Düsseldorf. frau Dorothée Jung + 49 (0)2 11 / 45 60 – 8404 jungd@duesseldorfcongress.de www.DuesseldorfCongress.de

2011 InnoTech Oklahoma Cox Business services Convention Center, Oklohoma City, Oklohoma 3rd November, 2011 The 6th annual InnoTech oklahoma, the region’s largest business & technology conference & expo, presented by InterWorks,Inc., returns on Thursday, November 3, 2011. Last year, InnoTech hosted over 1000 of the region’s top business & technology professionals at the Cox Convention Center for a full day

70 • GBM • August 2011

of education, innovation, hands-on exhibits, peer to peer networking opportunities, special events and more. Don’t miss this year’s InnoTech event! Karen Rodriguez Tel: 503-807-3900 www.innotechok.com/

2nd ANNUAL eNT INNOVATION sUMMIT The stanford Court Hotel 905 California Street Nob Hill, San Francisco, CA 94108 September 13, 2011 following the success of the inaugural eNT Innovation summit last fall in Boston, this year’s program has been enhanced to focus on the unmet needs in the following ear, Nose and Throat sub

specially areas: sinus Disease, osA-obstructive sleep Apnea and otology as well as provide broader perspectives from physicians, corporates, eNT Ceos and Investors. The summit will unite a group of industry leaders to advance the development and commercialization of innovative eNT medical devices and surgical procedures. Meeting content will be delivered by noted experts from academia, industry, and healthcare investors. www.entsummit.com/Home

9th Annual MidAmerica healthcare Venture Forum The Louisville Marriott Downtown 280 West Jefferson Street Louisville, KY 40202 November 8-9, 2011 The MidAmerica Healthcare Venture forum - unites leading Midwest and coastal investors with corporate business development representatives to syndicate deal flow and facilitate investment opportunities in promising Midwest based healthcare start-ups. The collaborative effort between the Mid-America Healthcare Investors Network and International Business forum, Inc. facilitate networking and investment opportunities among MidAmerica’s

most prominent players in biotechnology, medical devices and industrial biotech. You will have a chance to listen in on 50+ privately held companies raising follow-on rounds of capital, along with leading-edge panel discussions within the healthcare industry. The 2010 Forum will be co-hosted by the Michigan Venture Capital Association (MVCA) and MichBio. Carissa stavrakos carissa@ibfconferences.com|www.midamericahealthcareforum.com/ home.html (516) 765-9005 x 310

Financial Times Women at the Top 2011 shanghai, China 15th November, 2011

Given the opportunities and challenges ahead, the advancement of women to positions where they can make the greatest impact is increasingly no longer just an option but an imperative.

The global pool of talented, ambitious women is one of the business world’s greatest resources. Yet at the highest level, it remains largely untapped. As established economies grapple with the lingering effects of the financial crisis and emerging markets pursue their path to growth, it is critically important that companies open themselves fully to the contribution women can make.

Now in its second year, the Financial Times Women at the Top project aims to contribute to this advance by highlighting the growing influence of female executives and entrepreneurs, celebrating their achievements and debating the tools and measures that could open the door wider to the next wave of female business leaders.

Women have already made much progress towards the summit of the corporate world, even if significant barriers remain. The economic benefit of closing the gender gap is clear. Several studies have shown the link between women’s empowerment and economic growth, improved corporate financial performance and better environmental sustainability.

Aliki Varsamides aliki.varsamides@ft.com| www.ftconferences.com/womenatthetop/

Infrastructure Financing summit InterContinental Hotel, singapore, singapore, singapore 06th September,2011 Infrastructure financing summit is unlike other summits of its kind as here we get a true evaluation of Capital Markets for Infrastructure development. Various keynote speakers like Robert Zoellick, Tharman shanmugaratnam, James Harris, Richard Abadie, Mick Cornett etc will come and discuss various aspects and the role of capital market in the sphere of infrastructure development. Infrastructure financing summit is going to be held in Intercontinental singapore which is a prime location for various

summits and gatherings. subjective discussions, plenary sessions and debates will distinguish this symposium from the crowd of other symposiums. Thus Infrastructure financing summit will open new doors in the sphere of infrastructure investments. The World Bank 1818 H Street, NW, Singapore, Singapore Tel: 1-202-473-1000 www.worldbank.org/

August 2011 • GBM • 71

Deal Directory

Deal Directory Bloomsbury Publishing: Acquisition of Continuum On 11 July 2011, Bloomsbury Publishing Plc (Bloomsbury) announced that it had completed the acquisition of the entire issued share capital of Continuum for a total cash consideration of £20.1m from Nova/ Paul Investments Capital and management shareholders. Continuum, which is based in New York and London, is an international academic and professional publisher with a small trade list. It has world class academic lists, some of which date back over 170 years and

include a number of the most distinguished international authors in the humanities and social sciences. Continuum is the UK market leader in publishing continental philosophy, education and theology and biblical studies lists. It also publishes sizeable lists in history, literary studies, linguistics and politics. Earlier this year, Continuum was awarded Independent Publishers’ Group Publisher of the Year 2011 and Academic & Professional Publisher of the Year. Nigel Newton, Chief Executive of

Bloomsbury commented: “The acquisition of Continuum is a transformational step in the delivery of a long held strategic objective to grow our academic publishing.” Oliver Gadsby, chief executive of Continuum commented: “I am delighted that Continuum is finding a new home with Bloomsbury, a company we all admire. I am confident that the lists and teams of the two companies will make a powerful combination, capable of playing a major role in the academic publishing landscape in the years ahead.”

Chime Communications PLC: Acquisition of Reynolds-MacKenzie Limited On 13 July 2011, Chime Communications PLC, a leading marketing services group announced it had acquired 100% of the share capital of Reynolds-MacKenzie Limited (RML) for an initial consideration of £2.6m. The initial consideration comprises £1.6m in cash and the issue of 188,894 new ordinary shares in Chime, and £0.5m in cash representing working capital of RML at acquisition that is surplus to requirements after joining the group. Chime is acquiring the business from RML’s

two founding directors: Alison MacKenzie and Eva Reynolds. Following completion, Alison and Eva will continue to develop RML as part of Chime’s healthcare division, OPEN Health, which was launched in January 2011. RML specialises in healthcare communications for prescription medicines and its clients include Bristol-Myers Squibb, Roche and Pfizer. RML reported revenue of £1.5m for the year ended 31 December 2010 and operating profit of £759,000. The gross assets of RML were

£1,215,000 as at 31 December 2010. Further tranches of deferred contingent consideration totalling a maximum of £6.9m, may be payable depending upon the future trading performance of RML. At Chime’s option up to 25% of the deferred consideration may be satisfied through the issue of new Chime ordinary shares. Chime expects the acquisition of RML to be immediately earnings enhancing.

Halma PLC: Acquisition of Avo Photonics, Inc On 11 July 2011, Halma, the leading safety, health and sensor technology group, announced the acquisition of Avo Photonics, Inc (Avo) on 8 July 2011 from Blaine Hobson, Whitecap Partners, other shareholders and employees for an initial cash consideration of $9m (£5.6m). Avo, based in Pennsylvania, US, designs and manufactures advanced, miniaturised photonic components and subsystems for OEM customers serving a wide range of end-markets. Avo will join Halma’s Photonics

businesses in the Health and Analysis sector. Avo’s senior management will stay with the company after completion. For the calendar year 2010, Avo had unaudited revenues of $5.7m (£3.6m) and profit before tax of $1m (£0.6m). The acquisition, which is immediately earnings enhancing, has been funded from Halma’s existing cash and debt facilities. Contingent consideration of up to $11m (£6.9m) is payable to the vendors, based on

the growth in profit before tax for the period ending March 2012. Andrew Williams, Halma’s chief executive, commented: “Avo recently completed a highly successful collaboration project with Halma’s major Photonics business, Ocean Optics, and their addition to the Group will give all of our Photonics businesses access to more advanced technologies and manufacturing processes. Expanding their customer base both inside and outside Halma offers Avo exciting growth opportunities.”

Horizonte Minerals: Acquisition of Vila Oito and Floresta Nickel Projects On 12 July 2011, Horizonte Minerals plc, (the Company) the AIM and TSX quoted exploration and development company focused in Brazil, announced that it had entered into a definitive agreement with respect to the purchase by Horizonte of 100% of the Vila Oito and Floresta nickel laterite projects, located south of the Carajás Mineral District of northern Brazil, from certain affiliates of Canadian-listed Lara Exploration Ltd (Lara). The total consideration for the acquisition will be 8.5m new shares in the Company. Based on the 20-day average price as at 18 January 2011, the day of signing the heads of agreement with Lara,

72 • GBM • August 2011

the consideration equates to approximately C$2m. The acquisition increases the overall land position of the Company’s flagship Araguaia Nickel Project. The Vila Oito project has a non-compliant NI 43-101 potential resource at a 1% nickel (Ni) cut off of between 10 to 11Mt grading 1.3 to 1.4 % Ni. The Floresta project is a well-defined target with shallow auger drilling - results include 6.7m grading 1.28% Ni. The Vila Oito and Floresta nickel laterite projects will form part of the ongoing 20,000m resource drilling programme at Araguaia - with the potential to add to the overall project resource target

Horizonte’s CEO Jeremy Martin said: “We are pleased to have finalised this acquisition which further consolidates our position around our flagship Araguaia project. The Vila Oito target represents the western extension of one of the principal target areas on the Araguaia Project, from which we see immediate resource targets to follow up. The Floresta project has a well-defined geochemical anomaly that also requires follow up work. As part of the ongoing 20,000m drill programme these new areas will be evaluated with the aim of adding additional resources on the project.”

ICON acquires Firecrest Clinical On 14 July 2011, ICON plc, a global provider of outsourced development services to the pharmaceutical, biotechnology and medical device industries, announced the acquisition of firecrest Clinical, a market-leading provider of technology solutions that boost investigator site performance and study management. Founded in 2001 and headquartered in limerick, Ireland, firecrest Clinical provides a comprehensive site performance management system that has been used by nine of the world’s top-10 pharma companies to improve compliance, consistency and execution of

activities at investigative sites. “Delivering consistent, real-time information to sites and a clear path to follow in the conduct of trials not only boosts the quality of trials, it also drives efficiencies and improves study timelines,” commented Peter Gray, Ceo at ICON plc. “We have worked with Firecrest on a number of trials and have seen first hand how their technology improves quality through enhanced protocol compliance and drives efficiencies by reducing data queries and errors at sites. our combined commitment to quality and our shared vision for using innovative technology to deliver more efficient

and effective development programs make the companies a good fit.” “We are delighted to be joining ICON at a time when technology is driving transformation within the pharmaceutical and clinical trials industry,” commented Gary Hughes, firecrest Ceo and co-founder. “leveraging ICoN’s global presence and deep client relationships will enable us to continue to grow and develop new and innovative technology solutions. We also see real synergies between both companies in terms of technology vision and look forward to combining the expertise from both companies to drive innovation.”

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. John Wales, managing director, Encore 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. ”

ITE Group plc: Acquisition of 60% of YEM FUARCILIK A.Ş. On 13 July 2011, ITE Group plc, the emerging and developing markets exhibitions specialist, announced the acquisition by its wholly owned Turkish subsidiary, E Uluslararası Fuar Tanıtım Hizmetleri A.Ş(EUF), of 60% of the shares of YEM Fuarcilik a.ş (YEMF) from a group of private shareholders led by Mr Ugur Muldur (collectively ‘the sellers’). The consideration of TL32.64m (£13.1m) is payable in cash on completion with a further payment of up to TL8m (£3.2m) payable nine months after completion, based on YeMf

achieving performance targets in 2011. The remaining 40% of YEMF will continue to be held by Yapi-Endüstri Merkezi a.ş (Yapi), the leading provider of data and information services to the building materials and construction industries in Turkey. There are matching put and call options over the remaining 40% of the shares on agreed terms over a three/five year period. Commenting on the acquisition, ITe’s chief executive officer, Russell Taylor, said: “TurkeyBuild Istanbul is the market leading

building and construction exhibitions in Turkey. The addition of these three exhibitions to ITe’s Turkish business is consistent with our strategy of building market leading positions in core markets and sectors. ITe has a strong portfolio of construction exhibitions and an established base of supportive international exhibitors. YeMf’s events are already market leaders in Turkey but will benefit from access to ITe’s international customer base and its market leading construction events in Russia and CIs.”

Panther Securities: Acquisitions On 13 July 2011, Panther announced that the Company entered into contracts to purchase five freehold department stores, which are owned and were formerly occupied by the Anglia Regional Co-operative society Limited (ARCS) trading as Westgate Stores. The majority of the trade and assets of Westgate Stores were recently acquired by Beale PlC, a fully listed department store group in which Panther holds just under

20% of the issued ordinary share capital. The Company paid approximately £7.1m (in aggregate) for these five properties. The directors are extremely pleased with the range and spread of these properties, which, in due course, will increase Panther’s rental income by over £1.1m per annum, for an aggregate purchase price of £10.1m, including stamp duty.

The directors hope to be able to purchase other long-term investment opportunities immediately following the completion of the Company’s new loan facility, which was set out in the announcement of the Company’s final results on 20 April 2011. The current purchases set out above are being funded out of existing cash resources and short-term loan facilities available to the Group.

Sovereign Mines of Africa Plc: Admission to AIM and placing In accordance with its proposed move to the AIM Market of the london stock exchange (AIM) on 28 July 2011 (admission), Sovereign Mines of Africa plc (sovereign) released a Schedule One announcement on 14 July 2011. Sovereign has raised £1.25m before expenses via a placing of 12,500,000 new ordinary shares of one pence per share at a price of 10 pence per Placing Share. There are 6,250,000 two year warrants to subscribe for ordinary

shares at 10 pence share being issued on the basis on one warrant for every two placing shares. The warrants will be in certified form and will be despatched within 14 days of admission. The placing has been arranged by shore Capital stockbrokers limited. The placing is inter alia conditional on admission of the placing shares to trading on AIM. Application will be made for the placing shares to be admitted to trading on AIM and

it is expected that dealings in the placing shares will commence on 28 July 2011. following admission and completion of the placing, the placing shares will represent approximately 7.54% of the enlarged issued share capital of sovereign, which will then comprise 165,692,183 ordinary shares of one pence per share. The placing shares will, when issued, rank pari passu in all respects with the existing issued shares of sovereign.

August 2011 • GBM • 73

Deal Directory

Petmin Limited: Acquisition Hummingbird Resources plc and Petmin Limited announced on 11 July 20011, that Petmin had invested a further US$1.5m in Iron Bird Resources Inc (Iron Bird) the sole owner of the Mt Ginka iron ore exploration licence in northern Liberia. This concludes phase two of Petmin’s investment under the joint venture agreement with Hummingbird, announced on 25 January 2011, taking Petmin’s total investment in Iron Bird to US$2m. Under the terms of the joint venture agreement, Hummingbird and Petmin now each hold 50% in Iron Bird.

This investment means that Iron Bird is fully funded for the next stage of work, which focuses on geological mapping, trenching, drilling and metallurgical test work. This work programme is focused on obtaining representative samples of the ore body to confirm the earlier grab samples, which ranged from 33%-54% Mag Fe, and to demonstrate that the ore body is both extractable and economic. Future drilling will give an indication of the size of the deposit. Dan Betts CEO of Hummingbird commented: “We are very pleased that Petmin has invested a further $1.5m to

complete its second phase of investment. This investment underlines Petmin’s confidence in the potential of this project, which recent airborne geophysics have shown to be significant.” Jan du Preez, Petmin’s CEO said: “Our investment of the $1.5m secures our 50% interest in Iron Bird and highlights the potential of what we see in this well located project. It also further underpins the value of Petmin’s business strategy of investing astutely in projects which feed into the steel and infrastructure development value chain.”

Synergy Health plc: Acquisition of Malaysian Sterilisation Company On 11 July 2011, Synergy Health, a leading global provider of outsourced sterilisation services to the medical device market and healthcare sector, announced the acquisition of Sinagama II Technologies Sdn Bhd (Sterilgamma). Sterilgamma operates a gamma sterilisation facility in Rawang, near Kuala Lumpur, and an ethylene oxide facility in Kulim, near Penang. Sterilgamma also has a joint venture relationship with a second ethylene oxide facility in Port Klang. The business has been in receivership and has been purchased

as part of a sale process conducted by an appointed receiver at a value equivalent to 6.2x EBITDA. The business had revenues last year of MYR 20m (£4.1m) and will cement Synergy’s presence in the Malaysian market alongside existing gamma and ethylene oxide facilities in Kuala Ketil. The capacity expansion will help to maintain the Company’s ability to offer a full sterilisation service to its customers. Sterilgamma also has a joint venture with a private hospital group providing outsourced hospital sterilisation services to the Malaysian

market. Although still in its embryonic stage, it provides an important reference site that could support the development of Synergy’s hospital sterilisation network in this region. Richard Steeves, chief executive of Synergy Health, said: “This acquisition further strengthens our position in Malaysia and the wider Asian region whilst supporting our strategy to expand our international medical device sterilisation network. The acquisition will also allow us to explore opportunities to deliver further hospital sterilisation services in Malaysia.”

Xstrata PLC: Acquisition of remaining interest in Pallas Green On 13 July 2011, Xstrata Zinc Canada agreed to purchase the remaining 23.6% interest in the Pallas Green property in Ireland belonging to its current joint venture partner in the project, Minco plc, for $19.4m.

Green property, which is at pre-feasibility study stage. As of 31 December 2010 the JORC compliant inferred resource estimate is 25.9 million tonnes with 7.51% zinc and 1.38% lead at a 4% cut off (8.89% Zn eq).

Under the agreement, which is subject to Minco shareholder approval, Xstrata Zinc will become the sole owner of the project at Cahernconlish, Limerick County in the Republic of Ireland.

Xstrata Zinc chief executive officer Santiago Zaldumbide said: “This acquisition is consistent with Xstrata Zinc’s stated growth strategy and demonstrates our commitment to the Pallas Green project and our belief in its longer-term potential as a zinc operation. If developed, Pallas Green would be well positioned to supply our European

Exploration efforts have identified significant zinc mineralisation at the Pallas

smelters based in Spain and Germany. We look forward to working with the Irish authorities and stakeholders to develop these properties.” Headquartered in Madrid, Spain, Xstrata Zinc is one of the world’s largest producers of zinc and one of the commodity business units within the major global diversified mining group Xstrata plc. Xstrata’s zinc and lead operations and exploration projects are located in Australia, Canada, Germany, Peru, Spain and the UK.

Yorkshire Building Society agrees to acquire Egg’s mortgage and savings business Yorkshire Building Society announced on 25 July 2011 that it had entered into an agreement with Egg Banking plc, a subsidiary of Citigroup Inc, to acquire its mortgage and savings business, comprising a £2.5bn savings book and a £430m mortgage book (approximate figures as at 30/6/2011). As part of the transaction, the Yorkshire will also acquire the Egg brand. Yorkshire Building Society, which is the UK’s second largest building society with assets exceeding £30bn, focuses on providing its

74 • GBM • August 2011

members with financial security and longterm value across a comprehensive range of products backed up with excellent customer service. It has a national branch network and has invested substantially in its innovative Internet and telephone operations, ensuring members can deal with the Society in whichever way they choose. The acquisition of the Egg savings and mortgage books is in line with Yorkshire’s strategy to take advantage of opportunities that it considers to be in the long-term interests of its current and future members.

The acquisition is to be implemented by a banking business transfer under Part VII of the Financial Services and Markets Act 2000. This process is subject to approval by the High Court, which amongst other considerations will take into account the opinion of the Financial Services Authority (FSA). The acquisition is expected to complete in the fourth quarter of 2011.

August 2011 • GBM • 75

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 76 • GBM • August 2011

DIE

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