Page 1

gbm March 2012

global business magazine


oiL and GaS Sector rePort

Luxury Brand SerieS FormuLa 1 hoSt city hoteLS

women in Law

Visit for more information on our FREE e-mag

INSIDE This Month:

women in Law


oiL and GaS Sector rePort


Business Talk As Germany seems to be rising while the rest of the eurozone continues on a downward spiral, our cover story examines just how it has become europe’s economic powerhouse. the National outsourcing Association celebrates 25 years of advocating excellence in outsourcing, and we assess the benefits, put a spotlight on renegotiation, termination, exit and re-tendering, look at outsourcing in the Baltics and investing in Poland, all while taking the offshoring challenge. We review financial process outsourcing as value-adding business, foreign direct investment in india, New Zealand as a financial centre and its ‘look through’ companies, accounting and tax rules in Chile and business start-ups in Austria. We look at spreading knowledge globally and the draft proposal for a global corporate relocation treaty, patent law in America re-invented and an overview of the offshore investment funds industry. our competition law focus examines antitrust merger control going global, new competition policy legislation in Brazil, and Czech competition law. We cover the world energy sector in detail, risk and return in the oil and gas sector in 2012, opportunities in Australian oil and gas, Chinese outbound oil and gas investment, a new chapter in Angola’s oil industry, and increasing opportunities in developments in Kuwait economy and tax. We tackle the issue of women in law starting in Australia and moving on to iceland and gender equality, when gender is relevant for the business, and a quarter-century of progress in international arbitration.

cover Story


FinanciaL ProceSS outSourcinG


comPetition Law


FuLL Service Law FirmS


When it comes to doing business in europe, Hungary is an attractive business market for UK companies, and we examine the country, its success and how it has become a bridgehead between eastern and Western europe.

Luxury Brand SerieS - FormuLa 1 hoSt city hoteLS


And finally, if you’re looking for an easter getaway, feast your eyes on the array of hotels we review across the globe.

BuSineSS ServiceS


Contact Us:

comPany FormationS


deaL directory


For investments, we tackle luxembourg for wealth structuring, planning and estate planning structures, Mauritius as a competitive and dedicated global financial centre, and we ask whether 2012 is the year to invest in Gibraltar.

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

gbm global business magazine

Boutique Law FirmS

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 - hunGary


March 2012 • GBM • 3

cover Story - the Germany economy: a race enGine in a ruSty car?

the German economy: a race engine in a rusty car?

The German economy is being fêted as a beacon of stability in Europe. The secretary general of the OECD, Angel Gurría, offered “sincere congratulations for a well-managed economy,” at the launch of the Economic Survey of Germany report, singling out “[the] growth model [that] has been so successful in navigating through the stormy waters of the crisis.” But could the growth model that keeps Germany’s economic engine ticking over be the same motor that is shaking the rest of the eurozone apart?

4 • GBM • March 2012

The German economy drives on Despite a 3.5% drop in GDP in 2009 and another mild contraction of 0.2% in Q4 2011, the German economy has managed to avoid a technical recession (two consecutive quarters of negative growth). The February Bulletin from the German Bundesbank, published on the 20th of last month, said that, "the outlook for the German economy improved perceptibly towards the end of the reporting period," and although risks from the sovereign debt crisis remain, "rapid resumption of growth looks more likely to materialize at the present juncture." The German national statistical office reported that the final quarter of 2011 had seen a slight downturn in Germany’s exports and domestic consumption, but that investment in the construction sector was growing at a rate that would offset this so long as the Bundesbank remains committed to an expansionary fiscal policy. The Centre for European Economic Research published figures on the 14th of February 2012 showing that German investor confidence is at a ten-month high. The OECD Economic Survey of Germany did sound a note of caution, however, and the contrast between Germany and the rest of the eurozone couldn’t be any starker: while large parts of the rest of Europe struggle with rising unemployment, Germany faces skill shortages. The report suggested that the German government take measures to encourage women and skilled migrants into the workplace. Why is Germany able to maintain its success in the face of a global economic downturn? The secret lies in the composition of the German economy and its early identification of a growing export market. As early as 1975, when the rest of the West was regarding China as a threat, German economists were pointing out its potential as a growth market. Recognising that a growing population would mean growing industrialisation and a growing middle class, farsighted investment in specialist industrial goods and mass-luxury car manufacturing means that China’s growth is the German economy’s fuel.

specialist adhesives or packaging material. For every Bosch, there are hundreds of small manufacturers that perfect one type of component and corner the global market. These hidden champions only exist because of a quirk in the German investment market. Most of these manufacturers exist in markets where the return on investment is low but where long-term development can lead to steady prosperity. Most of these successful engineering groups, even the largest ones, are familyor foundation-owned. The Robert Bosch foundation owns 92% of Bosch, for example. According to Dr Olaf Plötner of the European School of Technology and Management in Berlin, these organisations don’t have to maximise return on capital employed as they don’t have shareholders to placate. They have chosen to pursue long-term stability instead, and the German economy is benefiting as a result.

Switching to a lower gear Germany also built shock-absorbing measures into its labour markets so that, as the availability of work contracted, the labour market could shrink without causing a noticeable upswing in unemployment. The OECD recommends that other economies follow Germany’s lead in implementing measures like overtime banking. In Germany it is common practice not to be paid for overtime during periods of growth, but to bank those hours against short working time in periods of contraction. Where overtime banks are not used, the German government will underwrite two-thirds of any salary reduction that comes from reduced working hours. These mechanisms keep employment and wage levels stable and avoid sudden contractions in domestic demand.

The “German euro” is undervalued

The triumph of the “hidden champions” Over 28% of the German economy by GDP comes from the manufacturing sector. But it is the particular composition of the German manufacturing sector that is responsible for absorbing the worst of the current economic shocks. The dominant sectors in the German manufacturing base are mechanical and electrical engineering, chemical engineering and pharmaceuticals, and green technology (Germany has the leading annual turnover in solar and wind power development and manufacture, at 200 billion euros), and Germany is the third-largest generator of patent registrations after the United States and Japan. Although 37% of the Fortune Global 500 companies are headquartered in Germany, the real export powerhouses are Germany’s “hidden champions” – super-niche industrial companies that have focused on becoming world beaters in one very small sector. For every Bayer there are several small and medium sized chemical engineers that focus on

Figure 1: Unit Labour Costs (relative to the year 2000), OECD Economic Outlook 90 Database Counter-intuitively, the German economy is also benefiting from the woes of the rest of the eurozone. While the eurozone countries can’t independently devalue their currencies to stimulate exports (and risk generating the same race to the bottom that plagued the world’s economies in the 1930s) the de-facto devaluation of the euro coupled with the continued strength of the German economy, is boosting German exports. One of the chief drivers of this undervaluation is the gearing between salary levels in different parts of the

March 2012 • GBM • 5

cover Story - the Germany economy: a race enGine in a ruSty car?

eurozone. Figure 1 shows the relative unit labour costs in multiples of salaries from the year 2000 according to data collected by the OECD. While German labour costs have remained more-or-less stable for the entire period 2000-2011, and are forecast to remain so, several other eurozone economies experienced rapid labour cost growth. Irish and Greek salaries are starting to return to lower levels after dramatic peaks in the late 00s, but Italian labour costs are forecast to continue to rise.

Figure 2: Current account balances (OECD Economic Outlook 90 Database) Figure 2 shows how the inequalities between current account balances in Germany and the rest of the Eurozone also account for much of the difference in currency strength, according to the OECD. During the lead-up to the credit crunch the rest of the eurozone was indebting itself, but German savers were building a positive current account balance. While this was not without its downsides - too high a credit balance indicates that investment opportunities are rare – it means that German consumers haven’t had to make the radical changes in spending that consumers in the rest of the eurozone have had to make.

Staying together or falling apart Germany is the fifth largest economy in the world by GDP with an estimated product of $3.085 trillion in 2011. That makes it ten-times larger than the Greek economy, ranked 40th with an estimated GDP of $306 billion. How can two such disparate economies stay yoked together? Angela Merkel and Nicolas Sarkozy have both spoken of the “structural defects” in the eurozone, which the failed treaty amendment at the end of 2011 was meant to address. Nobel Prize winning economist Paul Krugman, has said that the euro remains crippled by the “hubris” of the architects who founded single currency before putting in place a deeper political union that would enable the member nations to start functioning more like American states. Worse still, Krugman concludes that Europe is heading away from deeper political union, not towards it, and that years of pain lie ahead. The schism between the eurozone economies is also continuing to widen, despite efforts to shore up the debtor nations. The OECD forecasts that the economies of Greece, Hungary, Portugal, and Italy will all continue to contract through 2012. The 2011 OECD economic outlook report showed that “imbalances within the euro area, which reflect deep-seated fiscal, financial and structural problems, have not been adequately resolved. Above all, confidence has dropped sharply as scepticism has grown that euro area policy makers can deal effectively with the key challenges they face.” If these structural problems can be resolved, however, the outlook

6 • GBM • March 2012

for the eurozone could look more promising. If eurozone governments make a credible commitment to block contagion, and back that commitment up with adequate resources, then the OECD estimates that an earlier, stronger recovery could still take place. “To eliminate contagion risks, banks will have to be well capitalised. Decisive policies and the appropriate institutional responses will have to be put in place to ensure smooth financing at reasonable interest rates for sovereigns,” the report states; and the authors call for “rapid, credible and substantial increases in the capacity of the European Financial Stability Facility (EFSF) [and] greater use of the European Central Bank (ECB) balance sheet.” The benefits would be felt in the eurozone and the global economy as a whole: “By raising confidence, lowering uncertainty and removing impediments to economic activity, rapid implementation of such reforms could raise consumption, investment and early as 2013.” But member states have their part to play. The OECD calls on “advanced and emerging market economies to pursue a sustainable structural adjustment to raise long-term growth rates and promote global rebalancing.” Deep structural reforms are the only way to ensure that the mechanisms in labour and product markets are adequate to support the continued development of the single currency. Without these reforms, the euro project will fail to find the sound footing required if it is to survive this crisis and grow beyond it.

Will Germany’s strength tear the union apart? It isn’t Germany’s strength that is the problem. If anything, the strength of the German economy is helping the euro to hold its value. The strength of the German economy didn’t come from wage inflation, so it can’t be blamed from the high rises in labour costs in the other member states. But Germany is benefiting from the devalued euro. The drag on the currency exerted by the sovereign debt crisis benefits German exports, but those German exports are not necessarily helpful to the emerging economies within the eurozone who find themselves outflanked in terms of labour costs, productivity, and credit availability, and who are also starved of markets. Can the emerging economies learn from Germany’s strengths? There are measures that can be taken to prevent future shocks, such as more flexible working practices and overtime banking, but it’s too late to implement those now. The other economies can also learn lessons for the future about pay restraint and credit controls, but for the present only a sharp contraction will bring them even remotely in to line with the German economy. Could the euro survive the social unrest and the consumer slump that would follow? The emerging economies face a stark choice: undertake structural upheaval to be more like Germany now and risk recession, or hope for a recovery before making any changes and risk splintering the euro. Greece has already decided to bear the pain of austerity in the hopes of staying within the currency union. Would any structural reform be sufficient to hold the eurozone together? The German economy is atypical of Europe as a whole. The highly specialised manufacturing base, the low reliance on shareholder investors, and the focus on slow but stable prosperity have all contributed to Germany’s rapid recovery from the downturn, but these strengths simply aren’t present in the other European economies. It will require a great deal of political goodwill to design the sort of structural integration that would allow economies as diverse as Greece and Germany to coexist in a single currency. Whether that good will exists, only time will tell.

financial process outsourcing

Re-Devising Finance And Accounting Services To Re-Energise your Business “Having spent more than two decades in the finance and accounting (F&A) domain, I have seen changes from very close quarters within this business process. F&A is the backbone of any business, and re-engineering processes can make a world of difference to the bottom-line of any organisation. We at WNS, partner with our clients to provide outcome-based solutions that can help them achieve a sustainable advantage over a period of time.” Tasneem Lakdawalla Head, Finance and Accounting, WNS Global Services As businesses strive to accomplish more from less, there is intense pressure to lower operational and transactional costs. In doing so, businesses can gain from the constrained level of resources, such as global talent, capital and infrastructure, that they are currently operating in. In most companies, there exists an inherent division between the various departments. The chief financial officer (CFO) is, more often than not, viewed as someone who is intent on slashing the marketing budget;

8 • GBM • March 2012

while the CFO is of the opinion that the marketing team fails to effectively explain the basis and return-on-investment on communication spends. The result is the creation of silos between the two departments. From the point of view of the marketing team, this division can often lead to lack of financial commitments to marketing and sales campaigns. On the other hand, finance executives like to point out that without their stewardship, marketing can let costs get out of hand. The fact is that the finance team can be an effective partner to achieve any business goal. Hence, re-engineering finance and accounting services is one of the key drivers of business effectiveness today. Key imperatives for finance and accounting to achieve ‘outperformance’ An ‘intelligent growth’ agenda requires the following vital components for the F&A function: ensuring F&A is a strategic partner and catalyst for growth, enabling the timely and successful execution of strategic growth

(revenue through new markets, products, geographies) and operational (business platform transformation) plans; reducing the cost-to-serve for finance departments, improving the productivity of finance as a percentage of revenue; and, orchestrating business value networks, while optimising the total capital employed across the extended supply chain (such as first and second tier suppliers, distributors). A 2008 study by Deloitte, ‘A strategic approach to organising the finance function’, suggests that most F&A teams (almost 60%) still tend to focus on their traditional roles as being the custodian and manager of tangible and intangible corporate assets versus donning the strategic role of orchestrating value networks (such as supply chain management, business intelligence, decision support) and being in charge of the allocation of resources based on objective insights. Plan of action An ‘intelligent growth’ agenda requires F&A to improve both its efficiency (cost-to-

serve) as well as effectiveness (addressing strategic revenue and operational challenges). At WNS, we see a set of common success factors that are driving the outperformance strategies of our clients and market leaders: Be ambidextrous - focus on strategic and operational transformation of the F&A function Be efficient - more value for money: Consolidation and standardising transactional finance operations for scale, automation, self-service and shared services; moving finance organisations to least-cost locations for performing repetitive and rulebased activities; continuously evaluating their internal operations performance against third-party F&A BPO providers to assess the competitive advantage and opportunity cost of running captive shared services; and, leveraging BPO providers for their ready scale benefits. Be effective - do the right things: Managing by the numbers versus managing the numbers - the greatest need in business today is for a finance function that can offer timely and accurate insights and advice to business leaders on key operational and strategic revenue management decisions. The Deloitte survey suggests that 6070% of business partners have difficulty in getting timely and accurate financial information. Further, 60% of stakeholders do not understand the cost of their services, including total capital employed. And 50% of business stakeholders feel that their existing processes and systems are not competent enough to support their business needs. Driving value from the business value chains through continuous communication of business performance measurements and forecasts: reducing waste, providing sales and marketing real-time view of ageing inventories to re-allocate rather than continue production; improving speed-to-market by reducing the end-to-end supply chain cycle time, synchronising the sales and operations planning cycles - this involves the efficient and timely supply chain financing / settlement of supplier invoices to enable continuous replenishment, while reducing the total capital employed across the internal and extended supply chain; sales force effectiveness - transparent and dynamic sales compensation policies and practices to influence appropriate behaviour, reduce administrative burden on sales staff, while giving them a self-service view to forecast their potential earnings and risks; and, continuous risk management/value at risk analysis - market, operational, customer, capital market changes. According to the Deloitte survey, only 30% of business stakeholders believe they have a strong compliance and risk management capability.

Enterprise value creation - strategic business change execution Leveraging the investor relations role as a strategic corporate marketing opportunity to build investor confidence and thus access to funding sources to act on dynamic business opportunities as well as increase confidence in stakeholders (customers, partners, suppliers and employees). Developing a long-term investment pool and business success criteria measures. The Deloitte survey states that 50% of stakeholders feel that there is lack of understanding between investments made (program costs) and business outcomes achieved. Partner with business leaders in analysing and acting on opportunities arising out of market segment and business portfolio analysis (mergers and acquisitions, joint ventures, alliances) from executing changes to: the underlying business operating platform(s); and, new business models that build off the core business platforms (like channels, supply chain and distribution networks, key customers) to extend into new markets, products and geographies. Finance leaders need to seize the opportunity and proactively define their change vision. WNS is working with a number of clients to help them execute the transformation of their F&A functions in order for them to become more strategic and aligned with their business goals. WNS enables its clients to accelerate their transformation journey via its state-ofthe-art finance business process management centres. F&A service offerings from WNS WNS helps you ‘outperform’ with its outcome-based finance and accounting solutions. Our deep functional expertise, industry intimacy, focus on operational excellence and global delivery model gain help clients gain competitive advantage and remain ahead in the race. CFOs outsource accounting services to WNS so that their internal teams can focus on core business issues, while the WNS team delivers to goals of standardising finance and accounting processes, transforming the finance operations and lowering costs. Procure-to-pay Record-to-report including • General accounting • Fixed assets • Tax filing and reporting • Cost accounting • Inter-company accounting • Statutory reporting • Month-end reporting and consolidation

Order-to-cash Corporate functions • Treasury • Cash management • Financial planning and analysis • Tax and compliance • Decision support • Management accounting Supply chain finance Industry-specific accounting • Passenger revenue accounting • Revenue audit and recovery • Claims management • loan account maintenance • Royalty accounting • Fiduciary accounting • Cost accounting • Franchise accounting Our industry-focused and outcome-based F&A solutions cater to a wide range of industries: a. Banking and financial services b. Healthcare c. Manufacturing e. Insurance d. Utilities f. Retail and consumer packaged goods e. Shipping and logistics f. Telecommunications g. Travel and leisure To know more about WNS’s outcome-based F&A Solutions, write to us at: Tasneem lakdawalla leads the F&A Business Unit at WNS. Tasneem is responsible for expanding WNS’s footprint in terms of offerings, and drive towards market leadership for F&A outsourcing globally. Tasneem has almost two decades of professional services experience predominantly with the Big 4 global accounting firms, and has led engagements with some of the best- known names in the industry within India as well as internationally. Prior to joining WNS, Tasneem worked with Deloitte. She has also worked in KPMG, Ernst & young, the Emirates Group and Arthur Andersen. A Certified fraud examiner and a fellow chartered accountant, Tasneem’s key areas of specialisation include BFSI and private equity. WNS Global Services Telephone: (Toll Free) US: +1 (855) 422-5596 / UK: +44 0 (800) 756-2997

March 2012 • GBM • 9

FinanciaL ProceSS outSourcinG

Financial process outsourcing value-adding business Financial process outsourcing (FPO) is part of the overall outsourcing known collectively as business process outsourcing (BPO), which focuses on the contracting of services, operations and responsibilities to third parties outside of the companies issuing the instructions. The origins of outsourcing lie with Coca Cola, which applied it to the supply chain with the decision being focused on increased quality of the expertise available, and then linking to the perceived cost saving that derives from reduced capital investment, a lower cost base and greater flexibility. These principles apply to all forms of outsourcing and include FPO. BPO in its many forms has certainly experienced significant growth over the past two decades or more, but FPO has still to gain the momentum of the other sub-sections; as matters of finance have increased in their complexity FPO is now seeing a significant upturn. What are shared services? Shared services started in IT, payroll and purchasing with early adopters reporting a 30% increase in efficiency (The Shared Services and Business Process Outsourcing Association - SBPOA). SBPOA carried out a survey in 2004 that stated that core financial processes (eg, accounts payable, accounts receivable, fixed assets, payroll, general accounting) were those most likely to be outsourced and certainly current statistics would support that statement, save for the accounts receivable that as can be seen below had a good initial uptake, but has since stagnated. Top 10 services in initial shared services scope

Exhibit 1

Response   Accounts payable    General accounting    Fixed assets    Accounts receivable    Payroll    Travel and expense    Reporting – financial    Human resources    Credit and collection    Help desk   

Percent 79%

The rise in use of FPO FPO leads to transformation in a way, which means that change management will be required as will in most cases a revision of governance requirements. These factors have impinged on the growth of FPO; but research has now shown that these factors are playing less of a part in the increase of FPO. The table below shows that there is growth in a substantial number of areas, but that other areas are still not attracting outsourcing at the same rate as others. Commonly Outsourced F&A processes

Exhibit 3

What percentage of companies outsource each function or plan to do so in the next two years?

67% 78% 51% 72% 37% 46% 42% 49% 51% Source: SBPOA survey, 2010

Commonly Outsourced F&A processes

The above survey lays out the areas, which were the initial focus, but with compliance issues now coming to the forefront in the wake of Sarbannes Oxley there are additional areas that have gained impetus including internal audit, regulatory issues and HR.

Exhibit 3

What percentage of companies outsource each function or plan to do so in the next two years?

  Payroll, billing or A/P    IT/systems support    Tax services    Benefits and claims administration

69% 71% 55% 42%

  Legal services related to finance


  Advisory compliance services


  Accounting services (non basic)    Risk management    Internal audit    Human resource/hiring Asset management   

51% 46% 33% 27% 17% Source: KPMG survey, 2010

  Payroll, billing or A/P    IT/systems support    10 • services GBM • March 2012 Tax   

69% 71% 55%

Technology consultants IDC predicted the global market for outsourced finance and accounting functions would expand by 9.6% compounded annual growth rate and top $47.6bn in 2008, and continue to grow ( That prediction was in fact exceeded in that the growth rate experienced in 2008 was 10.1%, with a growth of 10.97% in 2010. The growth predicted for 2012 is in excess of 12% thus indicating a continued upward trend (

Technology consultants IDC predicted the global market for outsourced finance and accounting functions would expand by 9.6% compounded annual growth rate and top $47.6bn in 2008, and continue to grow (www.http.outsourcing. com). That prediction was in fact exceeded in that the growth rate experienced in 2008 was 10.1%, with a growth of 10.97% in 2010. The growth predicted for 2012 is in excess of 12% thus indicating a continued upward trend (www.idc. com). They have further stated that the finance and accounting functions will not in the foreseeable future be fully outsourced although growth of 9.8% in transaction management, 9.3% in tax management and 8.3% in general accounting are the latest reported figures ( Accounts payable is the most widely outsourced function whereas accounts receivable remains an in-house function for many as the way this is handled can affect customer relations and thus outsourcing does not have the same appeal. There is a mixed reaction from companies that have transferred some or all of their finance and accounting functions to outsourcing, with 43% reporting that by outsourcing governance and compliance have been improved, and 44% stating that that it has had no effect on existing processes ( The rise in the use of FPO is clearly based on the growing experience base of others, which has been positive, but also its cost effectiveness, the availability of a growing number of outsourcing companies who are able to offer areas of specialisation, and the complexity of areas such as taxation. Added to this is the need to keep pace with the changing legislation and practices involved in PAyE and VAT. This requires constant updating of software and also of the knowledge base, and with HMRC ever aware of the opportunities to charge penalties the benefit of outsourcing can readily be seen. Key benefits of FPO There are benefits across the whole spectrum of companies from owner-managed companies through to PlCs. The owner-managed company will acknowledge the need to keep goof financial records and have sound financial management which will include regular management accounts, but will see a greater need to apply his time and expertise to generating income for the company. There are outsourcing companies that will specialise in attending to the affairs of these companies on a holistic basis and thus the director is free to ensure that he is maintaining records according to law, filing statutory documents on time and thus focusing on running a successful business. This is at the lower end of outsourcing, which is all encompassing, whereas SMEs and PlCs will not wish to outsource all of the functions. By outsourcing defined elements of the accounting functions you will be calling on the expertise of people who have a specific interest in that element of accounting. PAyE and VAT as has been previously stated have taken on a very specific role in the field of outsourcing, with experts who are either members of the Chartered Institute of Taxation or Institute of Payroll Professionals being able to ensure compliance. For a company to employ these experts direct may not be cost effective, but to have their expertise available on a contract basis shows the benefit of outsourcing.

In terms of accounts payable the outsourcing will be able to ensure that payment terms are met, subject to the paying companies cashflow, and that the credit rating of the company is upheld. This function is key and thus if carried out in-house and that person falls ill late payment is possible. Outsourcing will prevent that and ensure continuance of supplies. Accounts receivable, if outsourced, will mean that the granting of credit will be supervised against a set number of standards and will almost certainly be supervised by a member of the Chartered Institute of Credit Management, who will be able to advise on debt recovery in all its stages thus reducing legal costs in respect of bad debts. Governance issues and internal audit are areas, which have assisted in the growth of outsourcing. The responsibilities placed on directors, both executive and non-executive has grown against a background of the history of Enron etc and the introduction of Sarbannes Oxley. Many companies were, and still are, not set up to ensure that the internal audit and reporting requirements of the Companies Act 2006 and other relevant legislation such as FSA rules are met, and thus by outsourcing to accounting firms, or those who specialise in this area they are ensuring compliance, which will protect the business. Failure for instance to comply with money laundering laws could cause the collapse of a company. Withdrawal of an FSA licence would immediately cause a company to cease trading thus outsourcing in these areas is a cost effective safeguard. The future of FPO The future of the FPO industry is bright and is supported by the increase in legislation that requires compliance, the growing need for expert knowledge in defined areas and the constant requirements for companies to be cost effective. To this must be added the situation where companies need the flexibility to reduce staff if business trends demand and with current employment this can be costly, whereas adjustment to contracts with outsourcing companies is somewhat easier thus granting flexibility. Maintaining sufficient knowledge internally to ensure that compliance issues are accorded the correct level of attention is not always possible and thus risk assessment would support outsourcing in these areas, thus encouraging the growth of outsourcing. However there are limitations in the area of outsourcing. Some companies view almost nothing as off-limit to outsourcing, whilst others have imposed strict boundaries. It is hard to generalise on what should or should not be outsourced but such areas as treasury, sash management, budgeting and forecasting are generally accepted as best done internally. Elements of Sarbannes Oxley, which relate to financial control are outside the scope of outsourcing, but the knowledge base that will ensure that the right controls are in place can be gained from outsourcing. It is the implementation that needs to be in house, and as the compliance laws grow so to does the need for outsourcing. Cost reduction and containment will always be a focus in respect of outsourcing, but many finance executives are centring in the ability to focus on the core business and thus augment the business productivity on the part of the CFO and the finance team, and this is best achieved by the outsourcing of those elements that have either a routine element or a specific knowledge base and then importing that knowledge. The significant statement on the future of FPO was in survey conducted by SBPOA, ‘Would you implement a shared services model for your organization if you had to do it all over again?’. An astounding number of respondents said yes (www.http.outsourcing. com). It would appear that the future for outsourcing is well established.

March 2012 • GBM • 11

women in Law

women in Law

The European Women lawyers’ Association (EWlA) was founded in 2000 and is a Brussels-based international non-profit association. Ever since its founding congress in Berlin, EWlA has aimed to promote fundamental rights and gender equality within law and politics. It has organised events and published statements and resolutions that highlight the issue of fundamental rights and gender equality to politicians and lawmakers. It has enjoyed major success in putting these themes at the forefront of some union policies. EWlA has become the main network of women from all legal professions all over Europe and beyond. To this end, it has status as an INGO (international non-governmental organisation) at the Council of Europe, member of the EU Fundamental Rights Agency (FRA) Platform and is asked to many meetings of the EU Commission and EU Parliament. Some of the many highlights of EWlA’s 11year history have been the annual congresses and special conferences in Brussels and Berlin on issues of corporate governance. Every year, EWlA holds its congress in a different country. The congress attracts high ranking speakers from the EU and Council of Europe (for example: Maud de Boer-Buquicchio, deputy secretary general of the Council of Europe; lenia Samuel, deputy director general of DG Employment, Social Affairs and Equal Opportunities, the European Commission; Diana Wallis, (first British) vice president of the European Parliament, UK MEP; Patricia Schulz, director of the Federal Office for Gender Equality, Switzerland; and, Mr Herman van Rompuy, president of the European Council, to name a few) as well as organising workshops around particular themes (for instance, company law, family law, human trafficking, and employment law) and provides a vehicle for women lawyers to network. The congress reflects EWlA’s goals and produces statements that are used in meetings with the EU Commission, EU FRA and national actors. For example, in March 2011, EWlA met with the EU Commission concerning quotas in boardrooms. EWlA hosts a very active website with up-to-date information of relevance to lawyers in the EU and Council of Europe ( and provides a space for lawyers to advertise their commitment to gender equality. President of EWlA: Prof Dr Jur Herdís Thorgeirsdóttir or

12 • GBM • March 2012


Janet Whiting, Partner Head of litigation Division in Melbourne | Corrs Chambers Westgarth +613 9672 3449 | +61 (0) 417 500 001 | |

WOMEN IN lAW The opportunities for women to progress in the law through private firms, the commercial sector and government have never been better in Australia. While they are not yet equal with those opportunities available for men, the gap is closing. The heightened awareness of the inequality has come from various quarters. Principally, from the women who have achieved great success in their careers and are now opinion leaders and major influencers. Also, senior men within the corporate sector who are experiencing the inequality - once removed. The experiences of their wives, girlfriends, close female friends and daughters have influenced their attitudes and inspired them to be true advocates for the cause! My own journey has been very rewarding and extremely interesting. While primarily a litigator, I have developed an unusual practice combining the trusted adviser role to a number of major commercial organisations with an extensive commercial litigation portfolio. The breadth of my work means I have extensive experience in competition, corporate and regulatory areas as well as being considered one of the pre-eminent litigators in Australia. Having been involved in the corporate arena as a director throughout my professional career, I have an insider’s appreciation of the issues that face business leaders. This is invaluable when advising clients in relation to ‘bet the company’ litigation or any important strategic decision. I have experienced very little discrimination throughout my career and been blessed with very strong mentors, both male and female throughout. However, there is no doubt of the importance that the individual take responsibility for charting their course and being prepared to face barriers with a positive attitude that they can be overcome or circumvented. I was aware early on that following the traditional path within a major commercial law firm would not guarantee me success; I needed to develop my own practice and earn a reputation as a quality adviser in the top

echelons of the profession. I have always had a leadership role within Corrs Chambers Westgarth, including Managing Partner of the Melbourne office and Chairman of Corrs Women in Business. In addition, from the start I was very focused on going beyond the traditional stewardship by senior partners. That was traditionally a path much more available to men, particularly having regard to the old school networks. In addition, in Australia the sporting clubs provide a strong, indeed entrenched, pathway for male dominated networks to be passed from generation to generation. While that path is available to some women, a passion for football codes is required - one I do not share! I have, however, enjoyed the benefits of my other great passion, the performing arts. From the beginning of my career I have had an active role in the performing arts in Melbourne. I have held leadership roles in the various cornerstone arts organisations including Vice President of the International Festival of the Arts. Directorships such as of the youth Arts Theatre, the Melbourne International Film Festival and the Melbourne Fashion Festival have allowed the creation of strong networks and close friendships through the business sector and government, across political lines. Not surprisingly, many professional and corporate executives also share a passion for such art forms and strong bonds and professional respect can invariably be earned and made around a board table in the arts world. Such respect for judgment, integrity, strategic advice and technical expertise are then transferred from the arts world into the more traditional legal services. I am presently the President of the Victorian Arts Centre (one of the largest performing arts centres in the world), the Deputy Chair of the Victorian Major Events Company and a director of Tourism Australia.

we all know a policy is only as good as those who embrace it and implement it. Happily, at Corrs Chambers Westgarth there is enormous goodwill in relation to achieving proper outcomes and equality. We are the only professional services firm in Australia to sign up to a diversity policy that is compliant with the Australia Stock Exchange Standards for the top 200 companies in Australia. We have committed to publicly reporting against that policy. Most simply, we strive to have gender equality as part of our business. The broader commercial sector continues to debate issues such as quotas for boards of listed companies and reporting on the number of females in senior executive positions. While of great assistance, there needs to be an overt bias to consider whether a female is the appropriate choice as distinct from automatically following previous pathways. It is still the position that unconscious bias effects many business decisions. Should we employ women as they may take maternity leave, be the primary carers in their families or have additional responsibilities to a male counterpart? Instead of seeing this as a negative the corporate world should see that women are capable of balancing all such matters and still being at the top of their field. Further, women often approach things differently and have different insights to men. The breadth of input can never be underestimated in making important decisions for business, a litigation tactic, a negotiation in an acquisition or persuading a board, a CEO, a judge or a regulator. As a mentor to many young women both within and outside the law, now is a wonderful time to be a female working in a professional environment. The future is bright and should only get brighter.

In Australia today, all major corporations and certainly all professional services firms have very specific diversity policies and report on their ratios of women to male. However, as March 2012 • GBM • 13

women in Law


Ashurst llP | María José Menéndez | Partner Tel: +34 91 364 9867 | |

WHEN GENDER IS RElEVANT FOR THE BUSINESS The legal profession is broadly dominated by men in most jurisdictions and Spain is no exception. yet, women are increasingly present in the faculties of law at Spanish Universities (recent statistics show that female students consistently account for more than half or nearly two thirds of the total law students), and women are also a majority of the newly qualified judges and public prosecutors who start such professions in Spain nowadays. The fact that fewer women hold top positions in the high courts and other elite legal bodies is sometimes explained as a factor of time: younger generations, which include more women, are not senior enough to reach those positions yet. As regards the world of corporate business, it is true that female partners are not a large proportion of partners in big law firms: recent statistics indicate that female partners are less than 15% of the total partners. The Madrid office of Ashurst, boasting a 22.2% female partner representation, is at the upper end of the scale. It would be true to say that gender is not relevant to most of the business matters that corporate lawyers, whether male or female, daily handle in Spain. Apart from everyone’s permanent efforts on work/life balance and from the different working styles that are generally assumed to apply to female professionals, when compared to men, it is not obvious that gender actually matters in business as long as the targeted results are there. Insurance is, however, one of the industries in which gender can actually be relevant for the business and we do have some experience of that. On 1 March 2011 the Court of Justice of the EU delivered a judgment that has become known as the ‘Test-Achats ruling’. This case originated in the appeal which TestAchats, a Belgian consumers’ association, filed before the Belgian Constitutional Court against the possibility for insurance companies to assess loss probability in light 14 • GBM • March 2012

of the gender of the insured person, based on Directive 2004/113, which enabled member states to acknowledge sex differences in the form of different insurance premiums and compensations whenever sex can be seen as an influencing factor in assessing risk. The Test-Achats ruling declared article 5(2) of Directive 2004/113 invalid with effect from 21 December 2012. All member states currently allow gender differentiation for at least one type of insurance. In particular, in all member states, insurers are allowed to use sex as a risk-rating factor in life insurance. The Test-Achats ruling will therefore have implications in all member states. From 21 December 2012 the ‘unisex rule’ contained in article 5(1) of Directive 2004/113 (the one section that continues to be valid) must be applied without derogation. As per the ‘unisex rule’, the use of sex as an actuarial factor in the calculation of premiums and benefits must not result in differences in individuals’ premiums and benefits. This rule does not prohibit the use of gender as a riskrating factor in general: such use is allowed in the calculation of premiums and benefits at the aggregate level, as long as it does not lead to differentiation at the individual level. The Test-Achats ruling only addresses the use of gender as a risk-rating factor and not the admissibility of other factors used by insurers. However, pursuant to article 2 (b) of the Directive, indirect discrimination occurs where an apparently neutral risk factor puts persons of one sex at a particular disadvantage. In contrast to direct discrimination, indirect discrimination can be justified if the aim is legitimate and the means of achieving it are appropriate and necessary. The consequences of the Test-Achats ruling apply to new contracts concluded as from 21 December 2012. Therefore, the concept of a ‘new contract’ is essential for the practical implementation of the ‘unisex rule’. Diverging interpretations of this concept based on national contract laws could generate a risk of different transitional periods, delaying the comprehensive application of the ‘unisex rule’, and also of an uneven playing field for insurance

companies. Member states have to adapt their legislation before 21 December 2012 in order to guarantee the application of the ‘unisex rule’ by insurers as required by the judgment. Over the coming months we should see some legislative changes implemented in Spain to ensure that the rule applies. Rare as it seems, gender can be relevant for business and the above topic is one on which we have had the opportunity to advise some of our insurance clients during the past 12 months. We have a thriving insurance practice encompassing all aspects of our clients’ business, from regulatory to M&A and contractual matters; our team is well known to all players in this industry, and we can therefore advise them on any legal issue that has an impact on their business, even if it is gender. María José Menéndez is a partner in the corporate department of Ashurst Spain. She specialises in corporate and commercial law, particularly in M&A, private equity and commercial contracts. She also has wide-ranging experience in the financial institutions and insurance sectors as well as other regulated sectors such as energy, telecommunications and environment. Ashurst is a leading international law firm advising both national and international clients from main economic sectors on a variety of corporate and financial deals. The corporate Spanish team have excellent experience in advising different types of clients on all aspects of general company law and, in particular, M&A, private equity, joint ventures and corporate restructuring.


Ashurst llP | Cristina Calvo | Partner Tel: +34 91 364 9846 | |

NEW RUlES IN THE SPANISH REAl ESTATE GAME After three years of real estate crisis in Spain during which commercial property investment has reduced dramatically, 2011 has shown clear signals that the time for distressed real estate transactions has arrived to stay for the next years. Spanish banks are ready to reduce their real estate exposure (as result of the crisis they have become the biggest real estate companies in Spain) especially in view of the financial reform of the banking system approved by the government in February 2012, which is aimed at cleaning up the damage from the property market crash, encouraging banks to restructure their balance sheets by acknowledging the loss in value of their properties and placing them on the market. According to the Bank of Spain estimates, real estate assets linked to loans to developers in the whole Spanish banking system amounted to €323bn by the end of June 2011. A total of €175bn is considered to be problematic (€73bn in land, €15bn in ongoing developments and €87bn in completed housing developments).

The financial reform obliges banks to establish, before 31 December 2012 (unless they undertake a merger process, in which case they have an additional 12 month grace period), new provisions and capital buffers so that 80% of the nominal value of undeveloped land, 65% of the nominal value of ongoing developments and 35% of the nominal value of finished properties are covered. As a consequence of these new requirements the banks will be keen to put the highest number of properties on the market at the best prices: the more housing stock the banks sell, the fewer capital resources they will need to reserve in order to cover their property portfolios. During 2011, we have seen many disposals of portfolios of NPls (non performing loans) and REOs (repossessed properties). During 2012, we expect to see more sales of NPls; however, in our opinion, the sale of portfolios by the banks at heavy discounts to opportunistic funds will lead the market. The real estate

department of Ashurst has been involved in the majority of the distressed real estate transactions carried out in the Spanish market to date having being instructed by funds such as Carval, Perella Weinberg, Cerberus, Benson Elliot, Mount Kellet and by banks such as Santander, Royal Bank of Scotland and Barclays. Cristina Calvo is partner and head of the real estate department of Ashurst Spain. She has advised Spanish and international clients in all areas of the property industry including acquisitions, disposals and construction, fund structuring, joint ventures, real estate financing as well as real estate litigation and arbitration. Ashurst is a leading international law firm that provides a comprehensive and top quality business law service to national and international corporations and institutions. The Spanish real estate team advises during the entire real estate process, from the planning and zoning aspects through the financing and construction, until the commercialisation and disposal of the real estate asset.

March 2012 • GBM • 15

women in Law


Studio legale Associato in Associazione con Clifford Chance | Simonetta Candela | Partner, head of Italian employment team Tel: + 39 02806341 | |

FIRST ClASS EMPlOyMENT ADVICE IN ITAly Simonetta Candela, partner at Clifford Chance since 2006, heads the employment law team. She graduated at Bologna University in 1993 and was admitted to the Milan Bar Association in 1996. She is also a lecturer in trade union law and employment relations at the University of Brescia. She is a member of the EElA (European Employment lawyers Association) and AGI (Italian Employment lawyers) with which she collaborates on the Commissione Formazione Continua (Commission for Continuous Professional Development). She has been a speaker at numerous national conferences and seminars on personnel restructuring, employee monitoring, corporate governance, health and safety of employees and financial instruments and has authored publications and articles in leading financial and legal newspapers. She has also lectured on courses at Bocconi University Milan and on the Ipsoa postgraduate course in human resources. Before joining Clifford Chance she practiced law at Trifirò & Partners law firm. She has 18 years experience acting principally for multinational corporations, international financial institutions, Italian public and private companies and, occasionally, high profile individuals on labour, HR and employment law matters, specifically corporate transactions, corporate restructuring, reorganisation of the labour force and individual and collective litigation cases, as well as employee share ownership plans. She also acts in drawing up employment contracts for top executives, confidentiality agreements and non-competition agreements, advising in the stages prior to and subsequent to the dismissal of executives and employees. Her outstanding ability is to provide strategic, practical and timely advice in the clients’ preferred format to help them deliver

16 • GBM • March 2012

effective business solutions. Her most significant recent experience includes: legal advice to primary financial institutions and companies on the implementation of employee share ownership plans: stock options, stock grants, lTIP, FCPE; drawing up employment contracts for top executives, confidentiality and no-compete agreements, stability pacts and individual and collective incentives to leave; corporate restructurings and labour cost containment measures; representing major financial institutions and multinational companies in litigation before the labour court in individual and collective employment law matters with a significant track record of successful cases; acting in many ‘ground-breaking’ cases. She has a prominent role in high profile employment cases, presenting innovative solutions to today’s complex employment law challenges. Head of department Simonetta Candela has a fantastic reputation in the field: [Simonetta] “… leads the team and receives warm praise from peers and clients alike” (Chambers Europe, 2010), and “Particularly efficient and excellent Simonetta Candela acts on complex restructurings, collective lay-offs, employment litigation and high-end transactional employment advice” (Legal 500, 2009). Clifford Chance has around 115 employment lawyers across the EU, Eastern Europe, Asia and the US with expertise in most financial and business centres across 24 countries with offices in all major financial centres. Clients can appreciate Clifford Chance network’s ability to provide legal advice from a local perspective backed by breadth of international know-how and resources. Clifford Chance employment practices are often market leaders in their local jurisdictions. Chambers Global 2010 stated: “The team takes a flexible, pragmatic and client-focused approach.”


louise Barrington - FCIArb (Chartered Arbitrator), lawyer and principal of Aculex Transnational Inc, Hong Kong, Paris, Toronto founding co-president of ArbitralWomen; director, Vis East Moot in Hong Kong Tel: +852 6409 0356 | +33 6 2573 3932 | +1 416 882 1078 | |

A QUARTER-CENTURy OF PROGRESS IN INTERNATIONAl ARBITRATION: PERSONAl REFlECTIONS FROM A SENIOR WOMAN PRACTITIONER In my early Canadian law practice, my sole arbitration encounter had involved a Quebec marriage contract containing an arbitration clause. The judge was dismissive: “Whatever the arbitrator decides will get appealed anyway. Let the parties come to court and explain things directly.” The following year in a Paris graduate class, I discovered it was a different world in Europe. Joining the ICC in Paris as director of the Institute of International Business Law and Practice in 1992, I worked with illustrious professors of international arbitration. Two months after arriving at the ICC I attended my first ICCA conference, in Bahrain. At one point, all the women in the room found themselves around the coffee table. Among about 250 delegates, we were nine. The topic of that conference is long forgotten, but to this day, the theme discussed amongst those women has remained in my memory: where were the women? Anecdotes abounded: the dearth of women on conference panels, the lone woman in a room of men, the lead counsel asked to bring coffee to her junior, male clients ignoring female advocates. We wondered if other women’s experiences were the same and how others were dealing with life in a world of males.

My curiosity piqued, I began to look for answers. Through a chain letter started with those nine women, I compiled a list of women in arbitration, with more trickling in. Assuming that some would be in Paris for the Institute’s Annual Meeting, I reserved a cosy room in a nearby bistro, sent out dinner invitations, and left on holiday. I returned to find 60 women registered, and had to find a bigger restaurant. We came from 13 different countries. Between the aperitif and the soup, each of the ten women at the first table rose briefly to introduce herself and her interest in arbitration. As each course and table took the spotlight, the atmosphere changed from friendly curiosity to electric enthusiasm. All these amazingly talented women - why hadn’t we met before? Those who shared that first evening still agree that it was an unforgettable moment.

In 2005, ArbitralWomen was born - initially a yahoo! network to foster the role of women in international dispute resolution. Since its formal inauguration in Montreal, the association has grown to close to 500 members internationally. In 2006, the Toronto chapter of the International law Association’s ‘Changing Face of International Arbitration’ panel featured a dozen prominent men and women commenting on the need for diversity in arbitration. CPR established a diversity committee that presents an annual award for diversity in arbitration. Global Arbitration Review (GAR) published its first list of the top 30 female arbitration practitioners in 2007. In GAR’s current list of ‘Top 40 under 45’, women occupy ten slots. Women now outnumber male colleagues at law schools around the world.

letters and suggestions from those women who had experienced the excitement of the evening encouraged me to follow up. Male colleagues remarked, “I’d be happy to appoint a woman arbitrator, but I don’t know any qualified ones.” That unassuming list I had created turned into a valuable method for recognising qualified women arbitrators.

In 2008, the AW mentoring programme matched experienced women in the field with those just beginning. ArbitralWomen supports teams competing in the annual Vis Arbitration Moots - provided they have at least 50% women. AW also introduced an award to honour men’s contributions to furthering the goals and values of the group.

I wanted more information. In 1995, an extensive questionnaire looked for factors contributing to women’s success in the field. Of the 80 female respondents, 30 felt that there had been progress for women in arbitration since the early 1990s.

At the 2011 ICC Miami conference, 45% of the delegates were women.

An invitation to present my findings to the Chartered Institute of Arbitrators in Boston in 1996 made me infamous. To men who came up to me saying: “So you’re the lady who wants to replace us” my answer then remains today: we don’t want to replace you - only to join you. In 2003, Focus Europe’s first study of large arbitrations highlighted the dearth of women in the top cases: only two women were arbitrating these cases. By the time Michael Goldhaber published his ‘Madame la Presidente’ article in 2009, the numbers had grown to 4%.

Over the past 25 years, as arbitration has grown, the feminisation of the legal professions and the efforts of many dedicated people are changing the face of international arbitration. As one GAR laureate commented: “…being female may even be an advantage in some respects. People nowadays are more conscious of the need to have balance. There are more opportunities for women.” We’ve come a long way from Bahrain. Hard work and dedication remain the keys for gaining and retaining each milestone. Reflecting on 1985, it’s comforting to know the door is now open to talented, persistent women who are looking to make their mark in the world of international arbitration.

March 2012 • GBM • 17

women in Law


Retter, Attorneys | Simone Retter | Founding partner Tel: +352 27 99 01 03 | Fax: +352 27 99 01 039 | |

Luxembourg is a very favourable environment for private clients and Luxembourg legal vehicles can very efficiently be used in wealth structuring, planning and estate planning structure. At Retter Attorneys, we specialise in and are exclusively dedicated to private investors and international families. Our strategy is to assist a small number of ultra-high-networth clients with highly personalised and specialised services addressing complex needs. Women lawyers are, in our view, very well positioned to be active in this practice area. Our founding partner is female and has been active in the private client sector for almost two decades, both as a partner of a leading law firm and as a founding partner of a boutique law firm. Luxembourg legal vehicles can very efficiently be used in wealth structuring and can address almost every need. The legal tools used in wealth structuring range from corporate structures and partnerships to contractual instruments such as insurance policies and fiduciary agreements on to civil law instruments such as donations, wills and matrimonial agreements. Luxembourg has signed a large number of Hague conventions relating to international private law issues and has ratified the Hague Convention on recognition of foreign trusts. From the tax side, Luxembourg can be a very interesting country of relocation for many families. Residents are submitted to worldwide taxation but may benefit from the large number of double taxation agreements signed by Luxembourg. Luxembourg tax residents are not submitted to wealth tax. The marginal rate of income tax has been increased from 38.95% in 2010 to 41.36% or and 42.14% as from 2011. Dividend income is normally taxed at 50 % of the rate. Capital gains on movable assets can be tax exempt under certain conditions. Interest income can benefit from a favourable tax regime as a final withholding tax of 10% applies to interest payments to residents. This withholding tax

18 • GBM • March 2012

fully discharges income tax if the beneficial owner is an individual acting in the course of the management of his private wealth (Law of 23 December 2005, as modified). Luxembourg international private law provisions elect Luxembourg law to govern the estate of a Luxembourg deceased resident under the last domicile rule. Under specific conditions there is no inheritance tax levied on ab intestat estates in direct line. Most significant changes affecting the private client area in Luxembourg over the past two years are the signature by the Luxembourg government of new OECD TIEA providing for exchange of information on request and the new Draft Savings Directive under discussion at EU level. This trend to global worldwide transparency is perceived as a challenge to the Luxembourg private banking industry. To the private client lawyers, it is bringing new opportunities as it changes the way how families will address their overall tax and estate planning and consider Luxembourg structuring vehicles, widely used in the institutional and private equity world, as efficient planning tools.



Narasappa, Doraswamy & Raja | Ms. Poornima Hatti | Partner Tel: 91.80.4268.6000| Fax: + 91.80.4268.6031 |

Poornima Hatti leads the dispute resolution practice at Narasappa Doraswamy and Raja. With a rich mix of domestic and international experience, Poornima advises a range of corporate and individual clients based in India and outside on various dispute resolution issues. Her key areas of practice include arbitration, pre-litigation and risk management advice as well as corporate and commercial litigation. She also regularly advises clients in relation to shareholder disputes and their resolution before various fora in India. Poornima also sits as an independent external adviser to Indian businesses in the context of initiatives relating to prevention of sexual harassment at the workplace. Poornima works closely with various chambers of commerce and industry in Bangalore to help shape policy and law. She has a keen interest in mediation and is working to making mediation more acceptable and sought after in India. Poornima has been trained and accredited by the Singapore Mediation Centre. Narasappa Doraswamy and Raja is a full service law firm with offices in Bangalore, Chennai and New Delhi. Other than dispute resolution its core practice areas include, private equity and venture capital funding, mergers and acquisitions, a strong technology practice and corporate advisory and employment law practice. In addition to the practical nature and the quality of the legal advice, the firm prides itself in nurturing its lawyers and retaining its talent. The firm’s lawyers have practiced in various parts of the words and are qualified in numerous jurisdictions thus providing advice with a cross-jurisdictional perspective where necessary. The firm prides itself on the smart and quality legal advice it provides while maintaining the highest levels of professional integrity. More than 60% of the fee earners at the firm are women. Narasappa Doraswamy and Raja values the perspective and outlook brought by its women lawyers.

Helga M. Óttarsdóttir, ll.M. | Eigandi / Partner Hæstaréttarlögmaður / Supreme Court Attorney lOGOS, Efstaleiti 5 , 103 Reykjavík IS Tel. + 354 5 400 300 | Fax + 354 5 400 301 Direct + 354 5 400 323 | / Shareholders should want competent persons acting on the company board and appoint those with expertise and experience. But diversity is an issue that has to be kept in mind. Iceland has been considered rather open to gender equality - the first woman to become a president in both Iceland and Europe, Vigdís Finnbogadóttir, was also the first woman to be democratically elected female head of state in the year 1980 worldwide. Iceland also has its first female prime minister. Furthermore, the legislation on parental leave has been considered to be in important step towards gender equality, giving mothers and fathers the same right to paid parental leave. In September 2013, new legislation enters into force requiring companies with over 50 employees to have representatives of both genders in their boards. When board members are more than three, the ratio of each gender shall not be less than 40%. Iceland has followed the initiative of Norway, but since 2008 similar requirements have applied in Norway. There are pros and cons with introducing such an obligation in law, but we must start somewhere. The quota helps in acting towards diversity. Many people against the quota have said that the best persons should sit on the boards at all times. If we are to seek diversity and at the same time ensure we have broad views expressed in the boardroom, we should certainly not exclude women just because they are not part of the male networks. Men are managing a much larger part of the business world than women, including those in leading positions and sitting on board of directors. Men have generally stronger networks than women and have been more active in participating on boards of directors. If legislation is needed to act towards diversity and gender equality, then laws have to be introduced - so far nothing else has worked. One day, there will be no need for such quotas and then we should ensure that the legal requirements are eliminated. Until then, the requirements will help in reaching our common aims of equality. Helga Melkorka Óttarsdóttir, partner, specialises in competition law, European law and corporate investments. She has been leading the EEA and competition team at lOGOS for some years, and worked on most of the competition cases dealt with by the firm, including pleading before the competition authorities and the courts. She has also given advice to clients in regulated environment, such as telecoms and electricity. She has an llM from Ruprecht-Karls-Universität in Heidelberg in European law and international law, has been a lecturer in European law at law faculties of the University of Iceland and Reykjavik University. She was a board member of the Icelandic Bar Association from 2003-2005 and vice-president from 2005-2006, and is an alternative board member of the EFTA Surveillance Authority, which she worked for between 1994-1999.

March 2012 • GBM • 19

women in Law


Smith & Partners | Terence lee / Karrie Cheung Managing partner / senior associate | Tel: (852) 2511 1970 | INTERNATIONAl EXPOSURE IN PRODUCT lIABIlITy ClAIM Hong Kong (HK) does not have a specific legal regime relating to product liability, particularly in relation to civil proceedings. Nor does it have statutory regimes around ‘lemon’ laws or strict liability as in some other countries. A product liability claim in HK is found within the traditional laws of contract and tort. Civil liability arises under the tort of negligence for a breach of a duty of care, of contract for failure to comply with the terms of contract or of statutory duty (eg, the Sales of Goods Ordinance SGO) for supplying a product that does not meet specific requirements imposed by statutes. Under the SGO, the contracting party is liable to the buyer for the defective products. The buyer can sue the manufacturer, the importer and/or the distributor in tort. In addition, the Consumer Goods Safety Ordinance (CGSO) imposes criminal liability on a person who supplies, manufactures or imports defective products into HK. For safety reasons, the Commissioner of Customs and Excise has the power under the CGSO to serve on a person a notice requiring the immediate recall of consumer goods that do not comply with approved safety standards. HK appears to be following the worldwide trend towards imposition of much more comprehensive regulation in the areas of consumer protection. There have been talks of introducing strict product liability and consumer protection laws, largely prompted by recent developments in the region and, in particular, Toyota’s worldwide recalls, as the ripple effect can be seen in increasing awareness among the public of product owners’ rights with regard to defective products. Manufacturers or suppliers of products in HK should not be resting on their laurels thinking they only face ‘limited’ liabilities under the laws of contract and tort in HK. They also need to be ready for increased demand in global e-discovery, enactment of new product liability laws and recall laws, increasing awareness leading to more product related litigation and complaints, increasing trends towards shifting of the burden of proof, aggressive use of internet communication and media, and the increase in punitive damages and criminal sanctions we have seen in other jurisdictions. Manufacturers or suppliers of products need to re-evaluate their product liability risks and consider being pro-active in preventing and minimising corporate liability. Karrie Cheung is a senior associate with CBM International lawyers llP (CMBIl), which practices under the name of Smith & Partners in HK. CBMIl specialises in international product liability laws, including litigation management and wide-ranging regulatory and related advisory work to all its clients in Asia. The firm’s product liability practice is a globally known leader in product liability defence with an impressive record of defence verdicts and other favourable results in the difficult jurisdictions of HK, PRC, Taiwan, Japan, Korea, Singapore, Malaysia, India and Sri lanka.

20 • GBM • March 2012


Zia Mody | AZB & Partners | Founding and senior partner | Tel: +91 22 6639 6880 Fax: +91 22 6639 6888 | Express Towers, 23rd Floor, Nariman Point, Mumbai 400 021. Our firm, AZB & Partners, is probably one of the most committed to supporting gender diversity. Over 50% of our partners are women and even at the first year associate level we are delighted to see more women recruits than men. We do not, however, have any separate career development or recruitment programmes especially for women lawyers. Sometimes some clients get nervous about engaging women lawyers simply because of the mindset they may have. But I think that once the women lawyers can prove their merit they are readily accepted - much more so than before. Some clients do discriminate against women professionals when selecting a lawyer, but I feel that this will reduce over the years. While I do not think that women lawyers of a certain stature are portrayed in the negative light in the media, I believe not enough is being done by the industry to promote equality - but again I think the next ten years will show a dramatic change. I think that the world of stereotypes is fast disappearing. Since AZB has a woman as the managing partner, we have a clear advantage on how our company policies are geared that take into account issues that women could face and probably provide them with more of safety net than others. Sometimes employers do feel that women in senior positions will leave because of maternity and parental commitments and that it has in fact happened. But that is a chance one has to take. I think the future is very encouraging for women lawyers and they should stay on course. AZB is a full service firm with deep strengths in M&A, private equity, banking and financing and other areas. Our law firm is young and is a result of two mergers. It is only 15 years old.



Schellenberg Wittmer | Nathalie Voser Partner | Tel: +41 44 215 5252 WOMEN IN lAW REPORT: TOP WOMEN 2012 Nathalie Voser is a partner in Schellenberg Wittmer’s dispute resolution group and head of the international arbitration group in Zurich. Her practice focuses on the representation of parties in international arbitration cases and on acting as arbitrator under various institutional rules or in ad hoc arbitrations. She has particular expertise in disputes relating to construction and civil engineering projects, mergers and acquisitions and joint ventures, international commodity sales and licence agreements, as well as the automotive and pharmaceutical industries. Nathalie Voser also has a strong academic background. Among other subjects, she regularly teaches international arbitration in the masters programme at the University of Basel. Nathalie Voser served as rapporteur for the 2004 IBA Guidelines on Conflicts of Interest and was a member of the Drafting Sub-Committee of the Taskforce on the 2012 Revision of the ICC Rules of Arbitration. She has been appointed to the board of the Arbitration Institute of the Stockholm Chamber of Commerce for 2012-2014. She was ranked in the top ten of the ‘most highly regarded individuals’ of Who’s Who legal Commercial litigation 2011 and ‘performs very strongly’ in the research of Who’s Who legal Commercial Arbitration 2012. Articles published by Nathalie Voser cover the areas of conflict of laws, international commercial litigation and arbitration, as well as some areas of substantive law. She has also given numerous oral presentations in these areas, both in Europe and the US. Schellenberg Wittmer is one of the leading business law firms in Switzerland. Over 130 lawyers in Zurich and Geneva advise domestic and international clients on all aspects of business law. The firm’s areas of expertise include: banking and finance, competition and antitrust, dispute resolution and international arbitration, intellectual property/ information technology, mergers and acquisitions, private equity and venture capital, private clients, trusts and estates, foundations, real estate and construction, restructuring and insolvency, taxation, whitecollar crime and compliance. The firm, as a matter of policy and practice, recognises the value of and supports part-time work schedules for lawyers in appropriate circumstances. Especially in cases of childcare, Schellenberg Wittmer is committed to seeking to balance the clients’ and the firm’s interest with the special needs of the concerned lawyers. The firm is committed to improving gender balance at the partner level. The part-time work options are available for associates and partners and aim at helping, in particular, our female lawyers in achieving an individual balance between their professional and family life. Schellenberg Wittmer also considers that promoting gender equality is a goal that includes other aspects such as recruiting, training, mentoring, and networking.

Sim & McBurney | Toni Polson Ashton | Partner | Tel: 416 849 8330 | Toni Polson Ashton’s commitment to trademark law and its evolution has led to serving as chair of the National Intellectual Property Section of the Canadian Bar Association, on the International Trademark Association (INTA) board of directors and its executive committee, steering council, legislative analysis, meetings, international, geographical indications, famous and well-known marks and INTA 2012 Annual Meeting Project Team Committees. She is currently a member of the University of Akron School of law IP Advisory Council. Toni is a senior partner, having practised since 1976, in intellectual property law, with particular concentration on all aspects of trademark and related law. Her 30-year legal practice encompasses counselling clients in the selection and availability of trademarks, portfolio management, prosecution, policing of trademarks, opposition and related licensing and packaging issues. Toni Polson Ashton is included in the Best lawyers in Canada, in the field of trademark law. The Best lawyers in Canada list is based on a rigorous peer-review survey that has been developed and refined for more than 25 years. She has spoken/lectured at the law Society of Upper Canada, the University of Toronto law school and for private/ professional organisations within and outside Canada. She has also instructed at Osgoode Hall law School (intellectual property llM programme trademarks). Toni co-authors Hughes on Trade Marks (lexisNexis Butterworths) and has contributed to Intellectual Property/Commercial Transactions, Canadian Forms and Precedents – Trade Marks (lexisNexis), Essential Commercial law Precedents (Butterworths, Canada), Halsbury’s laws of Canada, First Edition: Trade-marks, Passing Off and Unfair Competition 2007 (lexisNexis), and IP Benchbook – Trade-marks. Toni Ashton has appeared in the Canadian legal lexpert Directory, Euromoneys’ legal Media Group Guide to The World’s leading Trade-Mark Law Practitioners, Guide to the World’s Leading Women in Business, and, Chambers Global ‘The World’s leading lawyers in Business’. you’ll also find Toni profiled in the international Who’s Who of trademark lawyers and the international Who’s Who business lawyers, and other peer-review survey-based publications. As well, she is listed as a Canadian top tier lawyer by World Trademark Review for non-contentious matters, being noted as “knowledgeable, client focused and much respected for her opposition practice”. Canadian Who’s Who; Martindale-Hubbell DistinguishedTM rated. Qualifications: Admitted to the Bar of Ontario (1975); registered trademark agent, Canada. Education: BA, University of Toronto (1970); JD, Osgoode Hall law School (1973). Professional associations: Fellow - Intellectual Property Institute of Canada (IPIC), (vice chair, Trade-marks JlC Committee and member, legislative Committee); Canadian Bar Association Ontario/National Section on Intellectual Property law; International Trademark Association (INTA); Metropolitan Toronto lawyers Association; Fédération Internationale des Conseils en Propriété; Industrielle (FICPI); IPSKI (secretary general 2007-); Metropolitan Toronto lawyers Association Phi Delta Phi; special member, MARQUES; Pharmaceutical Trademarks Group (PTMG); and, AIPPI (member, Trade-marks Committee). March 2012 • GBM • 21

women in Law


Amarchand & Mangaldas & Suresh A. Shroff & Co. | Pallavi S. Shroff Senior Partner & Head Competition Practice T: 011 2692 0500 | F: 011 2692 4900 | E: Ms Pallavi Shroff is the only partner at Amarchand Mangaldas heading dual practice areas - litigation and Competition law. Nearly 30 years as a litigator, Shroff has successfully represented some of the most complex, commercial litigations, both nationally and internationally. She has represented clients in path breaking disputes pertaining to infrastructure, shareholder disputes, franchise agreements, banking and finance, telecommunication, oil and gas, etc. She also pioneered the development of competition law in India as a member of the Raghavan Committee that helped to design India’s Competition law and formulate its Competition law Policy. Apart from being a renowned legal expert, she is also looked upon as a mentor and guide for women in the legal arena. Her friendly attitude, logical approach to problems and warm nature make her a natural leader. She has played a crucial role in encouraging and grooming women to become strong litigators, partners and legal experts. Shroff has been instrumental in setting up a crèche facility in the office premises, first of its kind in an Indian law firm. As a senior partner, she has taken several steps to provide a secure environment for the women lawyers and has consciously encouraged a balanced female to male ratio across all levels. Traditionally, litigation is a male dominated arena where the acceptance of women lawyers has been slow. Shroff felt the best way to deal with the glass ceiling was to show one’s ability in a quiet yet firm manner. Although litigation continues to be a male dominated industry, she is one of the few female litigators who earned respect from her colleagues and successfully established herself. Shroff’s broad and varied representation of public and private corporations before legal institutions has won her international acclaim, rated by the Who’s Who of Commercial Arbitrators, “as one of the three leading practitioners involved with arbitration”, and Chambers & Partners (Asia) describes her as a “maestro” and “top class, star litigator”. She has also been recognised by international publications like Asia legal 500 for her “leading practice in dispute resolution and litigation”. Shroff has been invited by several international bodies, like the American Bar Association, International Bar Association, Association of Corporate Counsel and lex Mundi, to speak on arbitration and dispute resolution and competition law, and also addressed many forums organised by the Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (FICCI) and the Indian Bar Association. Recently, Shroff was nominated as the India expert and a member of the board of international arbitration at the Singapore International Arbitration Centre (SIAC). She is actively involved as a board member of the Institute of law, Nirma University, and the law School, under the Indira Gandhi National Open University, India. Shroff was mentioned as one of the ten rising stars among the most powerful women in Indian Business by Business Today; and one of the 25 superwomen of India, by India Today. The women’s wing of the Federation of Indian Chambers of Commerce & Industry (FICCI) has commended her with a special award for ‘Excellence in law’. She was awarded with the ‘leading woman consultant’ award at Women leaders Conference 2010. Shroff’s dedication, passion and sincerity make her an inspiration for all aspiring women lawyers. 22 • GBM • March 2012


Ana Tereza Basilio | Tel: 55 (21) 2277 4200 | Fax: 55 (21) 2210 6316 |

Ana Tereza Basilio has a bachelor of law from Universidade Cândido Mendes, worked in large offices of Brazil, among them, Sergio Bermudes’ firm, where she worked for 11 years. She was also a partner of Trench, Rossi e Watanabe Firm (Baker & McKenzie), being responsible for the civil and commercial litigation area in Brazil from July 2002 to December 2005. She is a post-graduate in North American law from Wisconsin University, and is a specialist in civil and commercial litigation as well as in arbitration. She taught civil law in the post graduation course of the Escola Superior de Advocacia (lawyer’s Superior School) from 1993 to 2001, and she’s the author of several books about corporate law. From 2004 to 2006, she was the president of the Mediation and Arbitration Chamber of the Brazilian Bar Association, in which she also acted as president of the Lawyer’s Association Committee from October 2003 to December 2006, vice-president of the Arbitration Committee during the same period, as well as being elected as chief counsellor of the Brazilian Bar Association during the three-year periods from 2000-2003 and 2003-2006. Additionally, she was appointed as member of the Committee to Fight Piracy and Unfair Competition of the Federal Committee of the Brazilian Bar Association during July 2005 to December 2006, and of the Special Committee to Fight Piracy and Unfair Competition of the Federal Committee of the Brazilian lawyers Association, of which she is still a member. She is also a member of the editorial committee of the Arbitration and Mediation Magazine, and member of the Corporate law Committee from the Escola da Magistratura (Judge’s School) of the High Court of the State of Rio de Janeiro. She is a professor in Fundação Getúlio Vargas, in the arbitration post-graduation course. In December 2010, she was elected a member of the TRE - Tribunal Regional Eleitoral (Electoral Court).


F Haskins & Co, College Chambers, 3-4 St James Street, St Peter Port, Guernsey, Gy1 2 NZ Email: | Tel: 01481 721316 | Fax: 01481 721317 F Haskins & Co was established in November 1996 by Felicity Haskins and Alan Merrien. The practice aims to provide a reliable, efficient and speedy service, personal attention at senior level and all the benefits of a medium-sized firm. The practice operates in all fields of law in the Island providing advice to domestic and international clients. In addition to legal services, the practice provides through College Chambers Administrative Services limited (CCASl) and College Chambers Trustees limited (CCTl) (both wholly owned and operated by partners of F Haskins & Co) a range of fiduciary services. The practice is a licensed fiduciary services provider in Guernsey. In relation to companies, CCASl provides corporate secretarial, related services and support while through CCTl a corporate trustee service can be provided. The practice is able to quickly and efficiently set up corporate entities, trusts and other similar structures administered by the above companies. Through its network of international contacts the practice can arrange incorporations in other international financial centres throughout the world, recognising that sometimes it is beneficial for its clients to have multi-jurisdiction structures and to have the availability of excellent professional advice in these other jurisdictions.

real property, probate and succession, and insolvency. She is a member of the Institute of Directors, the Chamber of Commerce and the Family law Bar Association. She is also a family mediator. Felicity is a member of the International Academy of Matrimonial lawyers, membership of which requires recognition by peers as one of the most experienced and skilled family law practitioners in their jurisdiction, an international element in their practice, that they demonstrate a high level of competence in matters involving international family law issues and are of good standing in their jurisdiction. The role of a Guernsey Advocate in family matters is stressful. The environment is fast moving both factually, where for example injunctions, changing locks and child abductions require urgent attention and legally, as it is a grey area of law where Judges have considerable discretion. The hours are long and demanding, but it is an ever-varied field and the job satisfaction is second to none. More information can be obtained by writing to or emailing the practice.

Felicity was born in Cambridge, England and was educated at Battle Abbey School. She graduated with a London University honours law degree in 1988, obtained certificate of linguists and worked in the United Nations in Geneva. Felicity was called to the English Bar as a member of the Inner Temple in 1989 and obtained certificat d’etudes juridiques francaises et normandes in June 1990. Felicity was called as an Advocate of the Royal Court of Guernsey in June 1990. Her areas of expertise are commercial and civil litigation, family law, March 2012 • GBM • 23

oiL and GaS Sector rePort

oil and Gas Sector report Contact and further details available at and follow us @WECouncil Article by Christoph Frei, Secretary General of the World Energy Council

Oil and gas in the global energy mix The past few years have seen an amazing shift in the oil and gas sector. What in the 1990s had seemed to be a stable and growing business with consistent growth patterns and well understood technologies, has been placed under significant stress and innovation. When we look at the issues that keep our energy leaders community awake at night, we see that the very solutions that were believed to provide the way forward only a few years back are now taxed with a greater deal of uncertainty.

©World Energy Council: 2011 WEC Issues Survey of our Member Committee Chairs in over 90 countries. The overriding context for this uncertainty continues to be a lack of clarity in respect of a clear climate framework. Such uncertainty in the context of the long-term investments required in the energy sector will lead to altered priorities and focus on the short-term. We can see that such pressures can adversely impact on the ideal balance required to meet the Energy Trilemma. To meet the long-term challenges of energy security, social equity and environmental impact mitigation, we need to be able to understand the resources that we have available to us, the policies that aim to deliver prosperity and the impact these policies will have on the future of the sector. This is why the World Energy Council looks specifically at these issues on a global, regional and national level. Demand for energy will continue to grow across the globe, mainly driven by developing countries. Our Global Transport Scenarios 2050 study has identified that fuel demand for all transport could increase by 30% to over 80% depending on the policies adopted globally. With today 96% of transport fuels derived from oil, representing 62% of global oil production, this will have a significant impact on the future of the oil sector. As we look to 2050, we considered two extreme futures based on the policy decisions available to governments: ‘tollway’, with heavy intervention, and a more market driven ‘freeway’ scenario. Depending on the priorities adopted, we see that the impact on the fuel mix in the transport sector could vary considerably, with a 24 • GBM • March 2012

resulting impact on CO2 emissions varying between 16% and 79% above 2010 levels, as shown in the graph below:

©World Energy Council: Global Transport Scenarios 2050 While transport CO2 emission today represents 23% of CO2 emissions globally the requirement from a climate change mitigation viewpoint is to reduce overall CO2 emissions by 50% by 2050; yet, emissions from transport will, according to our scenarios, continue to increase, which places great pressure on electricity generation. Still, we see that the decisions taken by policy makers can have a profound effect on future emissions from transport. The one thing that is clear is that oil will be an important part of the fuel mix well into the future. As our Survey of Resources and Technologies shows, with unconventional oil and gas, the sector’s resources are three to four times higher than proven reserves, or the equivalent of 150 to 200 years of demand based on current consumption. Therefore looking at the entire energy mix these new resources will relieve the pressure created by the prospect of depletion, and give us more time to plan for the future. These resources, which are generally more difficult to extract, will come at an economic and environmental cost. This also highlights the need for clear signals from a climate framework. One of the biggest changes to the sector has been the so-called ‘game changing’ technologies of the oil sands in Canada, the extra heavy oil in Venezuela, new ultra-deep pre-salt finds in Brazil and of course the shale gas in the US, with more plays being identified across the world. The industry is also preparing for a scale up of production in tight oil and oil shale. Meanwhile, we have seen that the rapid development of the shale gas in North America have had a profound effect on the tradition link between the price of oil and gas and on an even further price decoupling of the three regional gas markets in North America, Asia and Europe. The leading oil companies believe in the economics of shale gas. Exxon, Total, Shell, CNP, Reliance Industries and others have bought significant stakes in shale gas resources in North America. The rate of ‘shale gas globalisation’ and its impact on the market in the near future will depend above all on policies at the local and nation levels, and on the public’s trust in just these, as many countries are concerned with impacts of hydro-fracking on important natural resources like water. In general, European leaders indicate that energy security is a great concern, but unlike the US they have yet to embrace shale gas as a possible method to reduce that dependency. Although Poland has expressed concern about dependence on Russian gas, it has issued nearly 25% of the shale gas exploration permits to Russian companies. Given that Poland has a bifurcated permitting process (exploration and exploitation), it is yet to be seen how much of their shale gas resources will be put into the hands of Russian companies and Moscow.

Development also differs across the globe due the way in which property and mineral rights are managed at a national level. In the US, individuals can own the mineral rights for land they own. In many parts of Asia, Europe and South America this is not the case. Therefore, legal issues remain obstacles in resource exploitation across the globe. Given the capital requirements to develop shale basins where no infrastructure exists, these legal issues are important to attract the investment needed for exploration and exploitation. This means that it will take a long time for the rest of the world to catch up with the success of shale gas in the US. In the wider power sector we have seen that gas is being seen as an important transition fuel. The adoption of gas to provide power has seen a rapid increase in recent years. The lack of clear climate framework has contributed to this adoption rate. With an ability to scale gas power production, with relatively minimal investment compared to other technologies, providers are turning to this technology to meet short-term demand. With reduced gas prices due to the development of the shale plays and the lower CO2 emissions produced in comparison to other more conventional fossil fuels, gas is increasing seen as the short-term answer to meeting demand. It was significant that following Fukushima we have seen a significant rise in the market for liquefied Natural Gas. We see that the uncertainty caused by this incident has an effect across the world both on the gas market but also on policy decisions. The decisions taken by Germany, Italy and Switzerland to phase out the use of nuclear following the Fukushima incident will have impacts on all other fuel sources. However, these developments have only been one of many factors in recent years that have been keeping energy leaders awake at night. Middle East Dynamics have moved into the critical uncertainties space following the so called ‘Arab Spring’, which some now start referring to as ‘Arab Decade’, expressing the concern that the started process will not be over soon. The Middle East and North Africa region has 60% of total oil reserve and 45% of gas reserve further political instability on the global oil & lNG markets could have dramatic consequences on the already dire global economic outlook. However, there is currently no physical shortage in the oil market because OPEC members have increased their production and they have spare capacity. Speculation and psychology have a significant impact on price volatility. Low interest rates and tight supply and demand provide the perfect context for speculation. Today we see ten times more trade in paper than in the physical trade of oil. Therefore the need to clearly understand the reality of the current situation and envision the potential challenges in the future becomes more pressing. Risk management continues to be of concern to the sector, be that risk associated with the security of supply from the Middle Eastern region or risks associated with accidents. 2011 witnessed the impact of the dreadful tsunami on the north east coast of Japan and in 2010 the Deepwater Horizon accident showed that there are no risk-free technologies, and that safety efforts must move to the fore, but such efforts carry a price. The energy sector is very dynamic and fundamental to the sustainable development of our planet. The World Energy Council (WEC) is the principal impartial energy policy forum promoting an affordable, secure and environmentally sensitive energy for all. Working through our energy leaders’ community in over 90 countries we are committed to promoting a sustainable energy sector for the greatest benefit of all. Formed in 1923, WEC is the UN accredited global energy body, representing the entire energy spectrum, with more than 3000 member organizations located in over 90 countries and drawn from governments, private and state corporations, academia, NGOs and energy related stakeholders. WEC informs global, regional and national energy strategies by hosting high level events, publishing authoritative studies and working through its extensive member network to facilitate the Energy leaders’ dialogue.

March 2012 • GBM • 25

oiL and GaS Sector rePort

Helen Murphy, IPIECA 0207 633 2372

IPIECA, the oil and gas industry and partnerships for sustainable development IPIECA, the global oil and gas industry association for environmental and social issues, was established in 1974 in response to the formation of the United Nations Environment Programme (UNEP). Thirtyseven years later, IPIECA remains the oil and gas industry’s principal channel of communication with the UN. Over the decades, the organisation’s remit has expanded. Covering both the upstream and downstream sectors of the industry, IPIECA is devoted to improvements in environmental and social performance from the earliest phases of exploration to the end-use of the oil and gas that our members produce. Its membership is broad, covering the companies responsible for over half of the world’s oil output. IPIECA’s vision is for an oil and gas industry that successfully improves its operations and products to meet society’s expectations for environmental and social performance, and works to achieve this by developing, sharing and promoting good practices and solutions, enhancing and communicating knowledge and understanding, engaging members and others in the industry and, working in partnership with key stakeholders. IPIECA addresses a range of sustainability issues for the sector including biodiversity, climate change, health, oil spill preparedness, operations and fuels, reporting, social responsibility and water. The issues involving the environment and social responsibility are interconnected, and IPIECA recognises this through extensive links with other organisations. IPIECA worked with the International Association of Oil and Gas Producers (OGP), our sister organisation for the upstream industry, on the oil and gas industry’s representation to the World Summit on Sustainable Development in Johannesburg. IPIECA and OGP are united in preparing for the oil and gas industry’s participation in the UN Conference on Sustainable Development in June 2012, also known as Rio +20. Both

26 • GBM • March 2012

associations are committed to the principle that sustainable development is a shared responsibility that needs action today. Our industry’s challenge is to continue to find and provide essential fuels in ways that are environmentally and socially responsible. To do that, we are working with governments, business, academia and communities around the world. Our collective aim is to operate responsibly a commitment to safe, clean, reliable, efficient and ethical operations. But conducting our business along these lines isn’t enough in itself. We also recognise the oil and gas industry’s responsibility to provide energy products that contribute to global economic and social development. Oil and gas have a vital role in the energy mix. They benefit all by enabling and driving widespread economic growth. Moreover, the business of exploration, extraction, marketing and refining also provides economic and social development in itself. This happens by implementing programmes that encourage local content and capacity building as well as job creation and technology transfer. Our industry is also investing in new technologies to meet both demand and the challenges of climate change. All of these efforts depend on effective partnerships - even the biggest companies and the most dedicated organisations can’t succeed on their own. Joint action cuts even the greatest challenges down to size, makes progress possible, and also promotes a fact-based approach to problems, fosters innovation, encourages greater stakeholder participation and leads to better results. For these reasons, the oil and gas industry is involved in several partnerships. IPIECA’s work with the Voluntary Principles for Security and Human Rights, for example, has established links with governments, non-governmental organisations (NGOs) and other industrial sectors. Over the past five years, we’ve seen growing levels of trust, even among those partners traditionally holding opposing views. Another example is IPIECA’s alliance with the UN International Maritime

Organization (IMO), which together formed the Global Initiative (GI), bringing together participants from industry and government to develop and implement sustainable oil spill contingency plans. The GI also promotes ratification of related international conventions. Since its launch in 1995, 16 African nations have signed up to the International Convention on Oil Pollution Preparedness Response and Co-Operation. Many more have made significant progress in developing national plans or response systems. Another example is ‘Proteus’, which links companies involved in mining, technology and oil and gas with the UNEP World Conservation Monitoring Centre. Proteus exists to equip decision-makers with the facts they need about biodiversity and ecosystems. To that end, the partnership compiles, disseminates and develops the tools needed to address real-world needs. A critical partnership for IPIECA has been the UNEP hosted Partnership for Clean Fuels and Vehicles, launched in Johannesburg in 2002, which is how the oil and gas industry, through IPIECA helped to eliminate the use of leaded gasoline in developing countries, with particular focus on Africa. Just over a decade ago, nearly 100 nations still relied on leaded fuel. By 2014, none will. UNEP, the World Bank, IPIECA and others sponsored the first regional conference on the subject in Dakar in 2001, where 25 African countries agreed to phase out lead by the end of 2005. Building on this, the partnership launched a global push to gain the widest possible benefit. It worked. The result was one of the great environmental and health success stories of the early 21st century. Achim Steinar described this achievement as “one of the major environmental achievements of the past few decades and a triumph of diplomacy and public-private collaboration”. Business can better achieve sustainable development goals by working with others and the oil and gas industry, through IPIECA is dedicated to working in partnership to attain these goals.

Mexico’s oil and gas: Increasing opportunities As the Mexican energy sector continues to evolve and mature, following the reform to the sector a couple of years ago, Pemex (the Mexican national oil company) has come to realise of the potential benefits of implementing sound business models and contractual schemes that follow international standards and allow global players, from oil and gas independents on the exploration and production (E&P) side, oilfield service companies, to pipeline and terminal operators, to more actively participate in the sector and position themselves in a market with increasing opportunities. Much is happening during 2012 in Mexico’s oil and gas industry: Pemex Exploration y Producción (the E&P arm of Pemex) launched the second round of the so-called incentive-based contracts, which constitute an historical breakthrough on the Mexican E&P sector, which otherwise stayed contractually very rigid for more than 50 years. Under this incentive based scheme, Pemex awards a contract covering a block or geographic area for exploration and production for a term of up to 30 years (the first round contemplated up to 25 years) and, for the first time in decades, the contractor is paid by Pemex based on performance, that is, on a per barrel fee basis, thus allowing the contractor to have an upside on the results of the production in the block, and aligning the interests of the block operator and Pemex to increase production. In addition to the per-barrel fee paid to the contractor from the cash flow made available from the block, the contractor is reimbursed up to a 100% of its eligible exploration costs in some blocks, and up to 75% of its eligible costs during the production stage. For the second round of mature fields being placed to bid under the incentive-based scheme, Pemex chose four interesting onshore blocks in the Veracruz-Tamaulipas area in northern Mexico, which purportedly

01210 México, D.F Teléfono: (52-55) 3685-3334 Fax: (52-55) 3685-3399 e-mail:

contain highly interesting prospective resources in crude oil (the San Andres, Panuco, Tierra Blanca and Altamira blocks), coupled with two offshore blocks for shallow water Gulf of Mexico production: the Arenque Block in the coastal Tamaulipas area, and the Atun block in an area close to the onshore active area of Poza Rica. The blocks present a high unexplored potential, which coupled with an increasingly attractive contractual scheme and the importance of positioning as a player in the E&P area for potential further liberalisation, are bringing more than 30 interested players to the round. Further to this round, Pemex is seeking to complete, prior to the end of 2012 and of the current federal administration, two more rounds: one onshore round in the technically challenging Chicontepec paleo-channel, and interestingly enough, a first round of deepwater blocks. Pemex is yet to define the additional rules supplementing the structure on the deepwater blocks, but is expected to define reasonable incentives according to international standards to bring key players to the development. Concurrently with these developments, Pemex is taking a strong stance towards improving contractual standards in the oilfield services sector, in adopting more internationally oriented positions that allow rig operators to more properly manage their risk and follow a risk profile that make doing business in Mexico much more competitive. In the natural gas E&P side, the development of shale gas is expected to reshape the industry. Mexico’s shale gas reserves, according to a study by the US Department of Energy may surpass 681 TCF, quadruplicating its otherwise existing resources, and placing Mexico among the five greatest producers of gas worldwide. The problem is that Pemex does not have the incentives to develop this and instead, the Mexican government is promoting the construction of pipelines aimed at sourcing this rich gas from Eagle Ford, Texas. Mexico’s short-term challenges include


lópez Velarde, Heftye y Soria Guillermo González Camarena No. 1600, Piso 6-B Col. Centro de Ciudad Santa Fe

defining legal and contractual schemes that allow an efficient exploitation of these gas resources, considering the technological and environmental considerations of shale gas production. No doubt, Mexico’s upstream regulator, the National Hydrocarbons Commission, will play an important role in moving this promising industry forward efficiently. The downstream natural gas industry is also likely to see further active development during the 2012-2013 period, with a relaunching of the natural gas regulatory framework to increase efficiencies and allow for a more liberalised industry. Coupled with this, the government is seeking to anchor the development of further infrastructure to increase trunklines capacity in a pipeline system that requires considerable capacity enhancement features. A stronger gas marketing liberalisation and better rules for capacity usage and release are expected shortly. To supplement these interesting developments in the energy industry, Mexico’s ongoing presidential and congressional campaigns are placing as a central matter the role of Pemex in the Mexican economy and the need of further liberalisation to enhance and develop a stronger oil and gas industry and expand the role of the private sector in many areas, from gas production to refining and operation of terminals and systems. Significant political consensus will likely be reached for pushing further liberalisation forward. As the undisputed leader in legal advice in Mexico’s energy sector, lVHS is at the forefront in all the wide range of these projects and industry opportunities, and plays an active and significant role by providing to key players leading edge, added value in bidding, structuring, implementing and financing upstream, midstream and downstream energy projects in Mexico. By Rogelio lópez-Velarde and Jorge Jiménez

March 2012 • GBM • 27

oiL and GaS Sector rePort

Risk and return in the oil and gas sector in 2012 Industry analysts expect 2012 to be a year of considerable capital investment in the oil and gas sector; In a survey of senior oil and gas executives conducted by the Economist Intelligence Unit, a solid majority of respondents said they were planning to invest more in 2012 than in 2011. Increased energy demand (notwithstanding the continued global economic malaise) and concerns about supply, including related to unrest and political tensions in the Middle East, have pushed the price of Brent to a six-month high of $118 per barrel (as at 10 February 2012). Asian nations have entered into resource partnerships with Gulf and African producers to ensure supplies and investment in storage and downstream infrastructure at home - the cost of acreage in North America is increasing rapidly despite a dip in natural gas prices and shut-ins of capacity, and deep-water and unconventional resource exploration and production require increasing capital intensity.

28 • GBM • March 2012

But, as companies push into new frontiers (geographically to find resources not restricted to state-owned hydrocarbon companies and technologically to extend field life and push into new resources), the risk profile expands. Environmental and regulatory risks are ever-present for unconventional resource plays. France’s on-again-offagain approach to shale resources illustrates the tension. And one risk that investors may wish to consider particularly carefully in 2012 is enhanced political risk. Resource nationalism or simply energy sector reforms in many countries are challenges that will require particular attention in 2012. The oil and gas sector is, of course, no stranger to nationalisations or the adjudication of the lawfulness of such nationalisations by international tribunals (notable cases in the late 1970s and early 1980s include the three seminal Libyan oil arbitrations - BP v Libya, Liamco v libya and Texaco v libya and Aminoil v Kuwait). In the past two to three decades, investors in the oil and gas and mining sectors have become more accustomed to political risk manifesting itself

Latham & Watkins LLP Christopher Cross Hussein Haeri in regulatory interference and pressure to renegotiate commercial terms than to the more dramatic declared nationalisations. Where such pressures significantly reduce an investor’s expected returns, deciding between the potential benefits of an arbitration versus on-going access to a resource in an increasingly competitive market for access is not easy. For example, the Algerian government in 2008 and 2009 changed investment laws by decree to require majority Algerian participation in joint ventures, introduce a government ‘call option’ on many equity transfers and require accelerated reinvestment in Algeria of tax advantages, sharply reducing equity returns. Investments with positive returns went into the red overnight. For now, international energy investors appear to be negotiating within the new dispensation. Other African nations have announced broad natural resource contract ‘review and benchmarking’ exercises that seem likely to lead to negotiations for revisions to economic terms. However, the past few years have also seen something of a return of more formal nationalisations, alongside increased regulatory risk. Throw into the mix political instability, such as in North Africa, and it is easy to see how political risk is likely to remain at the forefront of many investors’ minds in 2012. In focusing on risk mitigation in 2012, oil, gas and mining sector investors we have spoken to are closely assessing the investment treaty protections that they may have under public international law and focusing on the underlying resource access contracts and exit or other monetisation terms - not necessarily to sue, but to have a strong negotiating lever to avoid suit and head off political pressure to change investment terms. Investors in the oil and gas sector are increasingly turning to investment treaties for substantive protections against alleged unlawful state interference with their investments, including expropriation, and the procedural right to have treaty disputes with host states adjudicated in international arbitration. Such claims are sometimes brought in tandem with proceedings in domestic or other international fora. Three high-profile ongoing investment treaty arbitrations in the oil and gas sector illustrate this phenomenon. The yukos arbitrations relate to actions taken by Russia between 2003 and 2006 relating to yukos Oil. Once the largest oil company in Russia, it went into bankruptcy in 2006. Investors in yukos have brought claims against Russia alleging that measures taken by Russia, including the imposition of billions of dollars in tax penalties on yukos, were arbitrary and discriminatory and constituted an expropriation of their investments In parallel proceedings (the European Court of Human Rights held in September 2011, that yukos was denied a fair trial in contesting the tax liabilities imposed on it in 2004. The court deferred the question of damages). The investment treaty claim of one of the investors, RosInvestCo, was upheld by an arbitral tribunal under the UK-Russia bilateral investment treaty in September 2010, with an award of damages to the claimant. The treaty claims of three other investors in yukos, yukos Universal (Isle of Man), Hulley Enterprises (Cyprus) and Veteran Petroleum Trust (Cyprus), which collectively owned over 60% of yukos’ shares, are ongoing. On 30 November 2009, the arbitral tribunal issued interim awards on jurisdiction and admissibility upholding jurisdiction under a multilateral investment treaty, the Energy Charter Treaty. The rulings on the merits of those cases are eagerly anticipated, not least given the fact that approximately US$100bn in damages is claimed, making these among the largest ever claims under an investment treaty.

The dispute between Exxon Mobil and Venezuela relates to Venezuela’s 2007 nationalisation of the Cerro Negro project in the Orinoco oil belt. This gave rise to a contractual claim, reportedly in excess of US$6bn, commenced under ICC arbitration rules by a subsidiary of Exxon Mobil against PDVSA, Venezuela’s state oil company. Exxon Mobil revealed in January 2012 that its subsidiary was awarded US$907m in the proceedings. In addition, Mobil commenced a parallel arbitration against Venezuela under the Netherlands-Venezuela bilateral investment treaty, which is ongoing. The International Centre for Settlement of Investment Disputes (ICSID) tribunal, (ICSID is an arbitration centre established in 1966 under the auspices of the World Bank), held in June 2010 that it has jurisdiction to hear that dispute and the merits proceedings are ongoing. Such is the financial significance of this dispute that it has been argued that it was behind Venezuela’s actions to terminate the Netherlands-Venezuela bilateral investment treaty in 2008 and file a notice of denunciation to withdraw from ICSID on 24 January 2012. No less contentious is the dispute between Chevron and Ecuador relating to alleged responsibility for environmental damage in Ecuador and an ensuing Ecuadorian court judgment in February 2011 awarding more than US$18bn to plaintiffs against Chevron. This judgement was upheld by an appeals panel in Ecuador in January 2012. Chevron, which claims that the judgment was procured by fraud, has sought to obtain injunctions against enforcement of that judgment in US courts. In addition, Chevron has commenced arbitration against Ecuador under the US-Ecuador bilateral investment treaty to prevent enforcement of the Ecuadorian court judgment. Interestingly, the arbitral tribunal hearing that treaty dispute issued an interim award on 25 January 2012 ordering Ecuador to take all measures at its disposal to suspend the recognition or enforcement of the judgment against Chevron, whether within or outside of Ecuador. This interim award is without prejudice to the merits of the case, the proceedings for which are ongoing. Given the value of natural resources to many governments’ plans for development and long-term reform and economic diversification and the continued existence of agreements that are perceived to be ‘overly friendly’ to international investors, it should be expected that political risk will continue to be a lively consideration for investors in the oil and gas sector in 2012. Against the background of certain investors turning to international arbitration under treaties for protection against state measures that they deem contrary to their rights and host states’ treaty obligations, we expect there to be more ‘reopener’ negotiations in which the possibility of a treaty suit can be a notable negotiating tool. Finally, the prudential need to assess international law and its impact on energy sector development before concluding agreements for significant investment has never seemed clearer. Prudent investors will increasingly seek specialist advice to ensure that they have investment treaty protection to mitigate against political risk for their investments. Christopher Cross is a corporate partner who regularly represents investors, states and lenders in natural resource transactions. Hussein Haeri is an associate in the international arbitration group who advises and represents investors and states on contentious and non-contentious public international law and international arbitration matters in the energy sector. hussein. By Christopher Cross and Hussein Haeri, latham & Watkins llP

March 2012 • GBM • 29

oiL and GaS Sector rePort


Stanley Jia, Partner Baker & McKenzie LLP T: +86 10 6535 9393 E:

Chinese outbound oil and gas investment Over the past two decades, China’s economic growth has averaged about 10% per year. Although enviable by many standards, this rapid growth has led to demand for energy quickly outstripping domestic supply capabilities, making China a net oil importer since 1993. The country now has the largest annual increase in oil consumption in the world. Despite recent efforts to slow down economic growth, China likely will still be the largest single driver of growth in oil consumption over the next decade. Domestic oil production, however, is forecast to remain relatively flat or start to decline from 2020, meaning that all incremental increases in demand will have to be satisfied by imports. The opening of the Australian supplied

Guangdong liquefied Natural Gas Terminal in June 2006 has also led to China becoming a natural gas importer for the first time. From the time China became a net oil importer almost 20 years ago, the Chinese government has been making efforts to secure additional sources of oil and gas. The first acquisition of a production asset outside of Chinese territory was the March 1993 purchase of operating rights for the Banya block in Thailand. Since then, Chinese stateowned oil companies have been increasing their expansion overseas, an effort that has been strongly favoured and encouraged by the Chinese government as part of its overall ‘going out’ or outbound investment strategy for all Chinese companies. It is likely that Chinese oil and gas companies will accelerate their rate of overseas expansion during the Twelfth Five-year Plan period (2011-2015).

Chinese companies are new players in the international oil business. This requires that they compete aggressively when making acquisitions or investing in existing oil and gas projects or companies globally. Resistance in certain host countries may sometimes be high to such investments. China has already had several high-profile setbacks in its attempts to buy into energy companies in Kazakhstan, Russia, the US, Canada, libya and elsewhere for fear of Chinese dominance or unfair investment practices. Another major issue is that the financial, managerial, and business management systems of Chinese state-owned oil companies are less developed compared to major international oil and gas players. They are not very experienced in managing investment and operational risks in association with their overseas acquisitions. Other challenges facing Chinese outbound oil and gas activity include potential social instability of the investment target countries, local legal compliance and issues related to post-acquisition integration. Since the 1990s, as a result of their late entry to the global oil and gas market, Chinese oil and gas companies have traditionally invested in less desirable assets in politically risky areas of the world. In order to change this situation and be able to compete with international oil companies in acquiring better quality projects and assets, they will need to transform themselves into globally competitive and market savvy energy corporations. With added pressure from the central government for accountability, more confidence and experience in foreign operations, an increasingly skilled workforce as well as access to strong financial backing, such transformation is rapidly approaching. For any information or queries please contact: Stanley Jia, partner

30 • GBM • March 2012

Opportunities in Australian oil and gas The oil and gas industry is a vital part of the Australian economy, with annual revenue currently exceeding $28bn, including over $10bn of income from lNG exports. This figure is growing as export volumes and prices increase. The Australian government forecasts receipts of over $2bn of Petroleum Resources Rent Tax alone in the 2011/2012 financial year. Australia has vast off-shore and on-shore reserves of natural gas, with estimated reserves of 400 trillion cubic feet (enough to power a city of one million people for 8,000 years), and expectations that even further reserves will be discovered through exploration. Conventional gas has been supplied and used domestically for over 40 years and lNG has been exported from Australia for over 20 years. Today, technology has advanced to a point where discoveries of unconventional gas (eg, coal seam gas and shale gas) have also become commercially viable. Multiple new projects are being developed to process and export both conventional and unconventional sources of gas as lNG. These are at varying stages of development and present many opportunities for investment and supply at all levels of the lNG production chain. An extensive network (more than 110,000km) of gas transmission pipelines and distribution systems has evolved across the eastern states to deliver known reserves of gas to the evergrowing markets in those states.

Direct: +61 3 9617 4322 Tel: +61 3 9617 4200 Fax: +61 3 9614 2103

Separate pipeline systems have been developed in Western Australia to enable major industrial customers and domestic markets to take advantage of that state’s significant, proximate and, until recently, low-priced reserves of gas. Australia’s enormous natural gas resources provide a potential short-term solution to Australia’s key priority of maintaining energy security at affordable prices for consumers, while also addressing climate change issues. Producing up to 70% fewer greenhouse gas emissions than existing coal-burning plants, gas fired power sources offer the only viable near-term alternative to large-scale, baseload coal generation. Gas-fired generation is significantly cheaper than renewables, including solar and wind power, and is not limited by weather conditions or the time of day. Surprisingly, however, in Australia less than 10% of electricity is currently generated by gas. Annually, Australia consumes approximately 1,250 PJ of gas and its energy markets (including its gas markets), infrastructure and regulatory frameworks are well developed. However, these markets are still evolving to meet the needs and challenges posed by a national gas market with multiple sources of supply and demand centres, sophisticated players, and the competition of global demands for Australian gas. This regulatory environment has recently been overlaid by the introduction of Australia’s Clean Energy Legislative Package. Despite the evolutionary nature of the regulatory environment, Australia provides a stable and proven investment environment.

Although more new gas reserves are being discovered than are presently able to be developed, in recent years oil production has decreased to a point where Australia currently has a petroleum trade deficit. Further exploration to discover new reserves is strongly encouraged and supported by the Australian governments through periodic new acreage releases and tax incentives. Baker & McKenzie's energy lawyers have played a part in many major oil and gas developments and projects in Australia over the past 20 years. The successful outcomes we have achieved for our clients are a direct result of our deep understanding of the issues and challenges facing the Australian energy industry and the global energy landscape. Surviving in today’s energy and natural resources markets is a challenge. Competition for investment dollars is on the rise and international markets are filled with legal, political, social and economic risk. The depth of our energy practice allows us to advise on all facets of the Australian petroleum industry (including conventional gas, lNG, coal seam gas and shale gas) and at all levels of the industry, from upstream equity investments to production and processing, transportation, storage, wholesale and retail sales and disputes. We are trusted advisers to many of Australia’s, and the globe’s, leading petroleum companies that we assist to navigate the risks and capture the opportunities inherent in oil and gas activities in Australia.

March 2012 • GBM • 31


Samantha Siebel | Partner Energy, resources, infrastructure & corporate Baker & McKenzie level 19, CBW, 181 William Street Melbourne Victoria 3000, Australia


oiL and GaS Sector rePort

Pedro Calixto Tax Lead partner PricewaterhouseCoopers (Angola), limitada

Angola: A new chapter in the oil industry Angola is still an economy based on oil revenue, despite efforts by the authorities in recent years to encourage investment in other sectors. The oil sector plays an important role in the Angolan economy, accounting for over 95% of export revenue and over 75% of National Budget revenue, according to the International Monetary Fund. Along with Nigeria, Angola has become one of the largest crude oil producing countries in Africa. As a result of the period following independence, when the country had a centrally planned Socialist-style economy, Angola is still a very bureaucratic and controlled economy (172nd on the ‘Ranking on the ease of doing business’, published by the World Bank). An example of this is the existing Foreign Exchange (ForEx) regulations controlling the import and export of capital to and from Angola, which is policed (directly or indirectly) by the Central Bank (BNA), meaning that any such operation requires the relevant approval to be obtained. The exception to this general rule is the oil sector ForEx regulations, which allows oil companies to proceed with the import and export of capital without the prior approval of BNA, although all such operations must be communicated to that bank. This regime allows also oil companies to have offshore bank accounts so as to pay foreign suppliers and secure their profits. However, a major change to this specific regime is on the cards, with a new ForEx framework for oil companies in Angola summarised in this article.

Phone: +244 222 311 166 Fax: +244 222 311 213

This new framework is stated in Law No 2/12 published on 13 January 2012, establishing a new ForEx regime applicable to the Petroleum Sector. The law comes into force 120 days after its date of publication and aims to standardise the rules for the oil sector, guarantee the fair treatment of various groups of investors, and require the financial intermediation of petroleum operations by banks domiciled in Angola.

Oil companies must sell foreign currency to the BNA in order to buy local currency with which to pay their taxes and local suppliers. The exchange rate will be the BNA official rate.

The law sets the rules concerning payment for goods, ‘invisible operations’ (eg, service fees and royalties) and capital resulting from oil operations, which are applicable to all oil companies, including the National Concessionaire, Sonangol.

Oil companies are authorised to pay for goods, services, capital operations, investment (internal or external for foreign Associates only), and transfer dividends and profits, without the prior approval of the Angolan Central Bank.

In accordance with this law, oil companies must carry out ForEx operations through Angolan commercial banks. This includes the acquisition or alienation of foreign currency, opening and operating bank accounts in foreign currency, opening and operating bank accounts in local currency and paying for goods, services and capital.

This does not, however, exclude them from compliance with their obligations to register and keep updated registers supporting such transfers, the terms for which have yet to be regulated by the BNA.

The law intends that all cash relating to investment and expenditure, incurred either in Angola or overseas, is banked in Angola and, in addition, that Angolan ForEx resident suppliers are paid in local currency. Oil companies will continue to be able to secure their profits overseas and, when transferred to Angola, to remit them overseas. To be able to carry out ForEx operations, oil companies must open bank accounts in foreign currency with Angolan commercial banks. These accounts should be credited with the funds required to finance their tax obligations and to make payment for goods and services provided by both resident and non-resident suppliers.

Unlike Angolan oil companies, foreign oil companies are allowed to maintain and dispose of their profits, dividends, incentives and other capital compensation, in foreign bank accounts.

In order to ring-fence the exposure of Angola to the investments in the oil sector, the law stipulates that foreign oil companies at their sole responsibility should finance the investment required for their operations in the oil sector exclusively in foreign currency, and Angolan commercial banks are prohibited from granting credit to any foreign company without the prior approval of the BNA. If authorised in advance by the BNA, oil companies are allowed to open and maintain foreign escrow accounts in foreign currency. The conditions for crediting and debiting these escrow accounts are those set out in the respective supply agreements, and any remaining balance should be transferred to an Angolan bank account within eight days. As mentioned, this new regime intends to bank all investment and expenditure related cash in Angola, and this will entail significant challenges for the oil sector, and in particular for the finance sector, which is still developing, and will have to be prepared for the substantial increase in financial operations required by this law. Angola still has a dollar-based economy, and this will be a major step towards transforming this into a Kwanza based economy. The major question is whether the financial sector will be ready for this challenge. In our view, there is still some way to go, but the authorities are aware of this and an implementation plan, to be published soon, is included within the law, defining a phased plan that, hopefully, will allow time for the banks to learn and adapt to this new chapter for the oil industry.

32 • GBM • March 2012

Developments in Kuwait economy and tax The Kuwaiti government favours a free market, with little official intervention. Kuwait has an open economy dominated by its oil industry, because of which other non-oil sectors of the economy, such as agriculture and manufacturing, play a lesser role in the economy. In 2010, the Kuwait government issued a large-scale five-year development plan. The need to diversify the Kuwaiti economy away from the oil sector and strong infrastructure development plans are anticipated to give rise to additional investments, both public and private, in various areas including technology, education, health care etc. The government also issued Kuwait Vision 2035, which aims for the transformation of Kuwait into a financial and trade hub and in which the private sector leads the economy. The government also aims to introduce reforms in various areas including education, labour market and other key laws and legislations and implementing projects through public private partnerships. Recently, a Capital Market Authority was also set up in Kuwait for the regulation of the Kuwait Stock Exchange and the securities business transactions carried out on the exchange. In order to encourage foreign direct investment (FDI), the Kuwait government has taken various steps including the issuance of FDI law, which provides benefits such as 100% ownership in a Kuwaiti company, tax breaks and customs duty exemptions. Approval under the FDI law is mainly available in sectors such as banking and financial services, water, wastewater treatment, power, and tourism. Certain sectors of the economy such as oil and real estate, are not open for foreign investment and are mainly controlled by the government. The oil sector in Kuwait is mainly run by the government -owned Kuwait Petroleum Corporation and its subsidiaries. The private sector’s involvement in the oil industry is restricted to construction and services on a contractual basis. The Kuwait government has also shown a keen interest in development of the petrochemical sector, which has grown significantly over the recent years. Kuwait also has an offset programme with main objectives of promoting transfer of technology and expertise to Kuwait, creating

job opportunities for Kuwaitis and education/ training of Kuwaitis. The offset obligation is currently applicable on all civil contracts of KD 10 million and more and defence contracts with value of KD 3 million and more and requires reinvestment of 35% of the value of the project into certain approved projects. Through the offset obligation, the government of Kuwait is looking for foreign companies to make long-term strategic investments in the country while fulfilling the above objectives. While there are no personal income taxes in Kuwait, foreign companies doing business in Kuwait have to pay corporate tax on the income earned from Kuwait activities. Corporate income tax is imposed on all foreign companies incorporated outside the State of Kuwait other than companies incorporated in the GCC and wholly owned by GCC nationals at a flat rate of 15% of taxable income. In the case of mixed companies, tax is levied on the foreign company’s share of profits (whether or not distributed) by the Kuwaiti/GCC Company plus any amounts receivable for interest, royalties, technical services and management fees. Under the domestic tax law, all government departments, privately owned and government-owned companies, are required to retain 5% from all payment due to entities until such entities present a valid tax clearance certificate issued by the Ministry of Finance in Kuwait to the contract owner.

Tel: +965 2295 5041

Please contact Alok Chugh for further clarification that you might require. We believe that successful tax functions recognise the potential of business change and build sustainable tax strategies that help your business achieve its ambitions. Our tax advisory team is dedicated to responding to that challenge. Our corporate and international tax professionals help structure transactions tax-effectively, manage the tax burden and improve sustainable growth. We mobilise our technical networks across the globe, to work with you to reduce inefficiencies, mitigate risk and improve opportunity, wherever you are and whatever tax services you need. It is how Ernst & young makes a difference. Ernst & young is a global leader in assurance, tax, transaction and advisory services. Ernst & young’s worldwide partnership is one of the leading integrated professional services firms in the world. Our firm employs more than 152,000 people in over 140 countries. In 2008, Ernst & young integrated 87 countries into one Europe, Middle East, India and Africa (EMEIA) area. The new EMEIA Area brings together over 62,000 people and 3,400 partners to create an US$11bn organisation, making us the first of the Big 4 to achieve integration on this scope and scale.

The tax law in Kuwait is very brief and several areas are subject to interpretation of the tax authorities, which may result in high tax amounts for foreign companies in Kuwait. Furthermore, Kuwait tax law has gone through several changes in the recent past. Therefore, it is essential that foreign contractors in Kuwait manage their tax matters in a careful and diligent manner from the initial stages of their projects in Kuwait. The tax regime in Kuwait is undergoing constant change and several new changes to the tax laws are being introduced at regular intervals. For instance, recently the tax authorities introduced a 15% withholding tax on dividend income earned from trading in securities listed on the Kuwait Stock Exchange. In addition, the Kuwait government along with other GCC countries has also decided to formulate a framework to introduce VAT in Kuwait. As of now, it is anticipated that VAT may be introduced by January 2015. March 2012 • GBM • 33


Ernst and young Alok Chugh Tax partner

oiL and GaS Sector rePort

CFRA – law Firm Patrícia Gomes de Almeida Associate lawyer Tel: 00 244 222 371 192

To create the essential conditions for the national financial sector to begin having an active role in financial intermediation of the petroleum operations, the Law on Foreign Exchange Regime applicable to the Petroleum Sector (law No 2/12) was enacted on 13 January. This establishes a single exchange rate regime applicable to payment of the operations arising out of prospecting, research, evaluation, development and production activities of crude oil and natural gas under article 1 of this Law. With this legislation, the Angolan executive intended not only to fight the current dispersion of exchange rate regimes applicable to the sector, focusing on a single legislation all the rules about payment of activities, but also to create conditions so that, in a phased manner based on a timetable to be set by the National Bank of Angola, the National Concessionaire (Sonangol, E.P.) and its national and foreign associates start holding all their currency movements in

34 • GBM • March 2012

Angola using the national monetary financial system for the intermediation of its financial operations. Currently, petroleum companies are allowed to make their transactions using financial institutions domiciled abroad, starting from the entry into force of this Law (120 days after its publication -article 27) to exist the obligation to deposit in commercial banks domiciled in Angola of the values needed for payment of charges and tax obligations to the State and for the settlement of goods and services provided by residents or nonresidents associated with the sector. This will require the National Concessionaire and its national and foreign Associates to open accounts in foreign currency and local currency through financial institutions domiciled in the country to perform in the first instance of tributary charges to the State and in second instance for payment of expenses (meaning payments for goods and services).

Fax: 00 244 222 372 002

It should be noted that the payments to be made to national service providers, namely the resident exchange foreign companies, should be conducted using a bank domiciled in the country in national currency, and payments to be made to foreign service providers should be performed with the use of the remaining, after the sale of foreign currency to the National Bank of Angola to comply with tax obligations, from bank account domiciled in the country in foreign currency. Due to the significant impact of this law, the Angolan executive cautioned the introduction of these measures in a phased manner so that the obligation to local clearance of deposits for payments that are associated with petroleum operations is performed in a transition process that allows a greater availability of financial information relating to the companies operating in the sector and a gradual adaptation of said companies in the financial operations of their business.

comPetition Law

competiton Law IBA Antitrust Committee The IBA Antitrust Committee focuses on providing antitrust practitioners with professional opportunities to expand their skills, network and profile within the international competition law bar. The Committee’s co-chairs are Cani Fernandez ( and Jose Regazzini ( The Committee organises a speciality competition law conference in Florence every autumn (15-16 September this year) as well as a roving mid-year conference that will be held in Madrid, Spain (co-ventured with Spanish CNC - Comision Nacional de la Competencia – and AEDC – Associacion Nacional de Defensa de la Competencia) on 14-15 June. We also will be co-sponsoring the cartels conference in Vancouver with the ABA Antitrust Section in early February, and we will combine with IBRAC (the Brazilian Institute for Competition, Consumption and International Trade) to offer a one-day conference at the time of the International Competition Network conference in Rio de Janeiro in April. The Committee will be presenting five sessions at the IBA Annual Conference this year in Dublin (30 September to 5 October). In addition, during 2012 we will also support the Corporate and M&A Committee at their conference being organised in Mumbai in March, the latin American Regional Forum with a competition session during their biannual conference in Bogota also in March, the Communications law Committee with two sessions at their Lisbon conference in May, and the European Regional Forum with a session in their conference to take place in Warsaw in November. The Committee has several publications, including Competition law International

Journal and the Antitrust Committee Newsletter, as well as access to the Committee’s website lPD/Antitrust_Trade_law_Section/ Antitrust/Default.aspx. Janet McDavid is the Committee’s vice chair and website officer (janet.mcdavid@hoganlovells. com). Publications are coordinated by our publications officer, Dan Swanson ( or the newsletter editors Thomas Janssens (thomas. and yong Seok Ahn ( The Committee is writing a book entitled Competition in the BRICS countries to be published in September 2012 at the annual conference in Dublin. This is a joint project of the Antitrust Committee, the European Regional Forum and Kluwer Publications In conjunction with the Trade Committee, we organise an annual writing competition and scholarship for lawyers age 35 and under. Further details can be found on the IBA website. The Committee plays a leading role in the international competition policy community as a contributor of submissions to government agencies considering proposed changes to competition laws or enforcement practices. Over the past five years, our working groups have made over 20 submissions to agencies in numerous jurisdictions including the EU, India, China, the UK, the US and Canada, which are publicly available on our website. The foundation of our success in this area has been active participation by geographically diversified groups of volunteer members. Our working group coordinators, Elizabeth Morony (elizabeth.morony@cliffordchance. com) and Philippe Rincazaux (princazaux@ are always on the lookout for

Cani Fernández, Jose Augusto Regazzini Cuatrecasas Goncalves Pereira SlP Calle Velazquez 63, Madrid, Spain, 28001 +34 915 247 123 TozziniFreire Advogados Rua Borges lagoa 1328, São Paulo, Brazil, 04038-904 +(55) 11 5086 5301

proposed changes in law or policy so that we can consider whether the Committee would submit comments. We look forward to having more antitrust lawyers become involved in the Committee.

March 2012 • GBM • 35

comPetition Law

BELGIUM Skadden, Arps, Slate, Meagher & Flom llP Simon Baxter and Fred Depoortere Partners Tel: 322.639.0300;

Antitrust merger control goes global and takes its time Countries around the world have responded to the increasingly global nature of M&A by arming themselves with the powers to review and even prohibit transactions. The US Department of Justice/Federal Trade Commission and the European Commission remain the most visible antitrust watchdogs globally, not least through their occasional high-profile opposition to proposed transactions (such as the European Commission’s recent veto over the Deutsche Boerse/NySE Euronext merger). However, there are now more than 100 antitrust merger authorities globally, all of which can potentially claim jurisdiction over cross-border transactions and, if necessary, take enforcement action to prohibit deals, or subject them to conditions. The 2008 introduction in China of a formal merger control regime garnered much attention (and continues to do so), but since then, there have been many more new arrivals. In Asia, India is the most notable example, but Pakistan and Indonesia have also introduced new antitrust laws, giving their national authorities the power to review and act against mergers. In latin America, long-established merger control regimes such as Argentina, Brazil and Mexico have been joined by Ecuador and Honduras. Examples on the African continent include Kenya and Zambia, both of which introduced amended laws with stronger merger control rules. In any crossborder transaction, it is now vital to analyse all countries where the merging parties have activities (subsidiaries, material assets or even mere import sales) in order to identify which regulators may claim jurisdiction. Whereas most jurisdictions review only transactions where there is a change in control over the target company, a growing number of countries will also review the acquisition of even passive minority stakes of as low as 15% (India) or 20% (for example, Japan and South Korea and in some cases, Canada). Minority shareholdings can also trigger mandatory approvals if the acquirer obtains certain information rights or a seat on the target’s board, as can be the case in Germany. In principle, one would assume that antitrust authorities would only review transactions where both parties have activities in the jurisdiction. After all, only such transactions may be said to have a direct effect on competition, which the authority can and should be interested in reviewing. Unfortunately, reality is not quite that simple. Many countries can take jurisdiction even where only one of the parties is active, typically (but not necessarily) the target. For example, Portugal, Spain and Taiwan, will

36 • GBM • March 2012

review transactions where the target has material market shares in a given product market, even if the acquirer is not active in the same market, or is not active in the country at all. And then there is the infamous ‘joint venture’ (JV) rule, which catches many small JV’s in the merger control net. For example, the creation or acquisition of a JV will be subject to the European Commission’s review and approval, if the parent companies realise sufficient revenues in the EU to meet the European Commission’s thresholds, even if the JV itself has very limited or no activities in the EU. Thus a small JV established in China to serve only the Chinese market can require the European Union’s approval if the JV’s parents have sufficient revenues in the EU. EU merger control has (justifiably) been a model for many merger control regimes, but this is one aspect of EU law that other authorities should probably not have adopted. Still, many did, and with a vengeance. While the EU rule is restricted to joint ventures that operate as “autonomous economic entities,” (ie, companies with a commercial market presence independent from their parents), other jurisdictions claim the authority to review any type of joint venture (China, Germany, Poland, South Africa, South Korea, etc.). In most transactions, and especially those that have very little effect on competition in a given country, obtaining antitrust approval is relatively straightforward. The problem is one of cost and time. Most antitrust jurisdictions seek to prevent closing, until the required antitrust approval is obtained. And many of those same jurisdictions take their time before issuing an approval decision after the transaction has been formally notified. A delay of two to three months is not unusual (not even accounting for the time necessary to prepare notification forms and formalities). In these uncertain times, where external deal financing tends to be difficult or at least expensive to obtain, a delay in closing of two to three months can be fatal. In this world of globalised merger control, understanding at an early stage where antitrust approvals will be required, and what their effect can be on the transaction timing, has become of crucial importance. Equally important is the question of how these effects can be mitigated, where necessary. The proliferation of merger control laws globally as well as their ever-extending reach, requires guidance and careful planning to guarantee a safe landing.

Skadden, Arps, Slate, Meagher & Flom LLP















523 avenue Louise, Box 30 | 1050 Brussels, Belgium | T: 322 639 0300

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

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

comPetition Law

CZECH REPUBLIC DlA Piper Prague llP Pavel Marc Partner Tel: +420 222 817 402

Zuzana Jiřištová Associate Tel: +420 222 817 308

Status quo of the Czech competition law The Czech Republic has competition law modelled according to EU laws on merger control, cartels and dominance. The national competition authority known as the Office for the Protection of Competition (Office) is outside of the capital Prague, in the second city, Brno, and enforces national and EU competition law in cooperation with the European Commission (EC). One might observe that competition policy is not a current priority in the Czech Republic; at least that is what official statistics suggest. The total value of fines imposed as well as the number of new proceedings initiated by the Office has been declining over the past three years. According to official annual reports, the number of all initiated proceedings decreased between 2008 and 2010 by 40% from 76 in 2008 to 43 in 2009 and 46 in 2010. Similarly, the total nominal value of fines imposed dropped down from €20m collected in 2005 and €23m in 2006 to just €0.72m in 2009 and €3.5m in 2010. 2007 was exceptionally successful for the Office, as the annual value of fines reached €38.24m. However, that year’s record is distorted by a single case - the Office fined 16 competitors taking part in a cartel in the market for gas insulated switchgear and collected almost €37.68m. Most filings to the Office concern merger control. In 2010, the Office initiated 45 proceedings on the basis of a merger notification. The average duration of the proceedings exceeded one year, and because none of the proceedings initiated in 2010 finished before the end of 2010. Nevertheless, in the same year, 40 proceedings, initiated in previous years, were concluded by issuance of an administrative ruling. The number of mergers reviewed by the Office is generally rather low compared to pre-2004, due to two principal reasons: most national transactions

38 • GBM • March 2012

are too small to meet the relatively high turnover thresholds set by Czech law; and, large cross-border transactions are often reviewed by the Commission, to the exclusion of the Office’s authority. On the legislative front, many observers were surprised as the breach of competition law was struck off from the newly introduced Act on criminal liability of legal entities, even if corporate crimes of comparable profile stayed on the list. No clear explanation of this policy decision was indicated to the public. Individuals (including managers and employees) continue to be prosecutable for committing a deliberate and aggravated competition law breach. However, according to MP Miroslav Svoboda, no individual has ever been prosecuted criminally for the conclusion of a cartel. Is this state of passivity in the Czech competition law policy and enforcement going to become even more prevalent in the near future? Not necessarily. The Office does not have the sole initiative in pursuing antitrust breaches. As the Czech Republic is an EU member state, the proceedings may be initiated also by the EC. Moreover, an investigation can be launched on the basis of a leniency application or simply a report of a competitor. The EC’s probe against ČEZ, the nation’s largest energy company, and J&T, a financial group whose subsidiary EPH operates in the energy sector, may serve as an example of cooperation between the EC and the Office. On 24 November 2010, 13 inspectors sent by the EC and the Office raided the premises of ČEZ and J&T seizing laptops and mobile phones of managers, sealing offices and accusing both companies of engaging in illegal anti-competitive practices. The EC has not announced the result of its investigation yet; however it will be influenced by a

premature leak of the raid to the media. In its leniency programme, the Office offers total immunity to a competitor that participated in a cartel and did not coerce others to participate in a cartel in exchange for information enabling the Office to launch an inspection at the premises of the competitors. As the fines imposed for competition breaches are severe and might reach up to 10% of the net global group turnover in previous accounting year, the total immunity or reduction of fine might be a good reason for application in the program. The Office has a track record of imposing material fines for hard-core cartels. However, for reasons yet unexplained, national leniency applications have been scarce despite the programme’s existence since 2001. In September 2010, the Office issued an award in the case of cartel among the producers of TV colour picture tubes. The proceedings were started on the basis of a request for application of leniency programme by Samsung. Samsung turned itself in and handed over enough information to be awarded total immunity. Chunghwa provided further information with significant added value and its fine was reduced by 50%. In total, the Office collected almost €2m. This, however, is an example of a pan-European leniency case. The EC and the Office encourage private enforcement of competition law. Anyone who sustains losses as a result of an antitrust breach should be able to claim remedy in a civil proceeding from the party who caused the harm. However, the slow and ineffective court system deters businesses from raising private antitrust claims against competitors. Moreover, there is no class action concept, which keeps private enforcement unavailable for consumers.


BRAZIL Eytan Epstein Tamar Dolev-Green Epstein, Chomsky, Osnat & Co. Rubinstein House, 20 lincoln St. Tel-Aviv 67134, ISRAEl Telephone: (972 3) 5614777 Fax: (972 3) 5614776

Jorge Fagundes (corresponding author) César Mattos Marcos Lima Av Conselheiro Torres Homem, 102, 01432-010, São Paulo, SP, Brasil Tel: (55 21) 9556-3206

Epstein, Chomsky, Osnat & Co. (ECO) is a law firm committed to providing its clients with quality and timely professional legal services. The firm has been listed repeatedly in both the Israel D&B 100 and the BDI Code as one of the leading law firms in Israel.

New legislation on competition policy in Brazil

located in the heart of Tel Aviv’s business district, ECO is a full service law firm, specialising in antitrust law, mergers and acquisitions, civil, corporate and commercial law and litigation.

By 30 November 2011, a new antitrust law was enacted in Brazil (law 12.529/2011) entering into force by the end of May 2012. The new law introduced pre-merger notification, replacing the rule that allowed merger notification up to 15 business days after its closing.

The firm is structured to answer and provide the full range of legal services required by local and foreign clients for their business, investments, ongoing management needs and civil litigation. ECO employs 25 professionals and renders ongoing and comprehensive consultation and representation services to a wide variety of international and domestic corporations and businesses engaged in a variety of activities (some of whom are listed in the Fortune 500), as well as to overseas governments and official institutions. ECO is the Israeli member of Multilaw, a multinational association of independent law firms acting in 62 countries. ECO has accumulated experience, expertise and a high reputation in the competition law area and among its ranks are to be found some of the leading attorneys in this field, all of them formerly worked at the Antitrust Authority in Israel and/or the Competition Authorities in Europe or the US. The firm’s antitrust group represents and advises leading domestic and international entities in respect of compliance with the antitrust laws - mergers and acquisitions, restrictive practices and monopolies, both within the context of private business dealings and in proceedings before the Israeli Antitrust Authority, the Antitrust Tribunal and all the other relevant legal instances. The firm represents clients both in criminal and civil antitrust litigation, including class actions. ECO also structures and supervises antitrust compliance programmes for its clients, considering each client’s specific needs. ECO regularly collaborates with leading foreign law firms in notifications and filings of international mergers and joint venture transactions. Further, the firm is in constant contact with and frequently advises leading international law firms and their clients in Israeli antitrust matters. Among the many international mergers handled by the firm in recent years are Johnson & Johnson-Synthes, Novartis-Alcon, Nortel-Avaya, Siemens-Nokia, ISS-Kfir and KlM-Air France. ECO has been repeatedly ranked by the European legal 500 Guide and Chambers and Partners among the top competition law firms in Israel and, since 2004, Global Competition Review (GCR) has repeatedly named the firm as one of the GCR’s 100 worldwide leading antitrust firms. In 2008, ECO was elected as ‘Competition law Firm of the year’ by ACQ Finance magazine. Advocates Eytan Epstein and Tamar Dolev-Green, who head the firm’s antitrust team, have a well-established reputation in the field. Eytan has been listed in GCR’s Who’s Who list of leading world competition lawyers since 2002. In addition, both Eytan and Tamar have been ranked by Chambers and Partners among the leading competition law practitioners in Israel.

Although there was a 120-day term to end merger analysis, antitrust officials seldom met this deadline. This happened since any request of information suspended that term. The new law established a maximum term of 330 days for merger analysis to CADE and removed the possibility of suspending the term. However, the most important change was bureaucratic restructuring. The Brazilian Competition Policy System (BCPS) was comprised of three different governmental bodies: the Secretary of Economic law (SDE) and the Secretary of Economic Monitoring (SEAE), both in charge of the investigative function and the Economic Defence Administrative Council (CADE), a Tribunal composed of six commissioners and a president responsible to judge the cases. SDE will become the ‘Superintendencia’ and CADE will become the ‘Tribunal’ and both were merged in the new agency (CADE). The mandates of the six commissioners and the president were enlarged from two to four years, without reappointment. The head of the Superintendencia got a two-year mandate (with reappointment). In law 8.884/94, there are two criteria to trigger a merger notification: any party got over R$400m of revenue in the year before the operation (about U$214m by 15 December 2011); the merger resulted in a relevant market share over 20%. The new law eliminated the 20% market share criteria and introduced a second revenue threshold of R$30m in the year before (about US$16m by 15 December 2011). The new law changed some rules of the leniency programme. Cartel leaders could not apply to leniency. The new law withdrew this constraint. Leniency became applied not only to the cartel crime, but also to other ‘connected’ crimes like fraud in public procurement. If a company is accepted as a lenient the coverage of the benefits is now extended to all companies of the same group and all employees. Fines for anticompetitive conduct ranged from 1% to 30% of the overall gross revenues of the company in the year before the conduct. Managers could be fined from 10% to 50% of the fines applied to the company. The new law changed both the level of the aliquots and the base of incidence. Aliquots were reduced to the range from 0.1% to 20% (1% to 20% of this fines for the managers). The new law established that these percentages should be applied to the revenues in the ‘field of economic activity’ where the conduct occurred.

March 2012 • GBM • 39

FuLL Service Law FirmS

40 • GBM • March 2012

Doing business in Nigeria: Developments in the area of personal income tax For companies seeking to do business in Nigeria, a good knowledge of local laws and current business practices is invaluable. Over the last decade, there has been a strong desire by African countries (Nigeria inclusive) to develop robust and investorfriendly legal and regulatory regimes with a view to promoting investment in economic and business activities in their territories. Incorporation procedures, residency and business permits, repatriation, foreign exchange and income tax laws are the first line of legal knowledge a prospective investor requires before making an investment decision. Nigeria recently effected an amendment to some provisions of the personal income tax law, the Personal Income Tax Amendment Act 2011 (the Act). Income tax compliance is necessary for a successful business in Nigeria. Permits from, and registrations with, relevant government departments cannot be obtained without evidence of payment of tax (usually a tax clearance certificate) by the promoters (usually directors of the company) of the business or their business partners.

G. Elias & Co. Fred Onuobia Managing partner

The Act simplifies the compliance process by consolidating the reliefs and allowances stipulated in the Act and lowering the burden on low-income earners albeit widening the scope of potential taxpayers in the process. Of interest to employers are the provisions that provide tax exemptions on National Housing Fund (NHF) contributions, National Health Insurance Scheme contributions, life Assurance Premiums, National Pension Scheme and gratuities paid to employees. Many of G. Elias & Co.’s corporate, banking, securities and real estate transaction work have been tax-driven. We have done extensive contentious work for leading corporate taxpayers. We have also advised on applications for tax immunity, corporate status and other privileges for multilateral lending institutions seeking to operate in Nigeria and diplomatic missions acquiring

Investing in Poland

with Polish courts.

According to the latest reports, Poland comes second in the group of the developing countries that provide the largest possibility of increasing revenues by companies and corporations in the three-year perspective. The largest barriers to running a business in Poland include the lengthy judicial procedures and overcomplicated tax system. It is indispensable to get advice and support from law professionals before commencing any investments and then at every single stage of development.

Although the rapidity of entertaining civil law cases has increased significantly over recent years, it should be the priority to develop the most professional contracts with all business partners. Due to various fears of foreign investors, we propose most frequently to establish a business in a form of a limited liability partnership (spółka komandytowa), whose general partner would be a limited liability company (spólka z ograniczoną odpowiedzialnością) and whose limited partner would be for example a natural person. This solution brings two types of benefits: first in respect of the responsibility for the company’s liabilities and second by providing a form of an advantageous tax structure. It is important to know that income of a company, eg, a limited liability company, is subject to 19% income tax, and then the dividend paid to shareholders is taxed again at 19%. Thus the actual fiscal burden amounts to 38%.

Our law firm provides legal security to the entrepreneur who understands that legal advice and support is one of the prerequisites for being successful. Partners and lawyers from Bobiński Ciepierski Kirchner Schwartz Adwokacka Spółka Partnerska are not only specialists in the individual areas of the law but also advisers who understand the business itself. Our foreign clients have learnt and understood very quickly that the risk of any legal complications in Poland is almost identical to the one in their native jurisdictions. Polish civil law resembles the German law closely, particularly in the Commercial Companies Code. Ownership, titles, copyrights and any other acquired rights are protected successfully in Poland, but accurately and professionally prepared contracts and thoughtfully designed arbitration clauses limit the risk related to running a business and minimise contact

Our law firm specialises in auditing our clients’ tax burdens and finding solutions for their efficient optimisation. We employ and cooperate with professionals who specialise in Polish and international tax law. The term ‘effective tax structures’ means tax planning that selects structures that minimise the tax burdens in compliance with the applicable regulations of law, which depends on good coordination in all areas of an entrepreneur’s operations. As we are aware of and know various

real estate assets in Nigeria. Perhaps our most original regulatory work has been in advising on quests for tax-free zone status and the development of regulations for the management and operation of free zones, and on bids for much-coveted oil acreage and telecommunications licences. Through our tax and regulatory advice, we support foreign clients intending to do business in Nigeria. Some of our other practice areas include project finance, capital markets, banking, mergers and takeovers, dispute resolution and intellectual property. In general, we aim to do the most complex, critical and innovative work. G. Elias & Co. is known for its sensitivity to clients’ business needs and concerns, as well as promptness in responding to and executing their requests in dealing with business law assignments of every complexity, magnitude and novelty.

Bobiński Ciepierski Kirchner Schwartz Partnership Law Firm Krzysztof Bobiński attorney at law | Managing partner Office in Poznan: Bobiński Ciepierski Kirchner Schwartz Partnership law Firm, Strzelecka Street 45/3, 61-846 Poznan tel.: (+48) 61 855 16 03 or 61 22 15 383 fax: (+48) 61 855 26 90 or 61 22 15 384 Office in Warsaw Sienna Street 72a/205, 00-833 Warszawa tel.: (+48) 22 620 22 94 taxation methods for individual business events in respective countries of the world, we consider these geographical factors when planning the events in order to minimise the tax burden. March 2012 • GBM • 41

FuLL Service Law FirmS

DlA Piper: Finance & projects practice in Ukraine A growth of economy in the recent years, coupled with the upcoming Euro 2012, has driven many large finance and infrastructure projects as well as development of legislative and regulatory framework aiding further investments to Ukrainian soil. Albeit the global financial turmoil, the Ukrainian market remains a challenging place, yet with a great potential. Established in 2005, DlA Piper Ukraine llC is one of top Ukrainian law firms and part of DlA Piper, an international law firm with over 3,500 lawyers, 77 offices operating in 31 countries across Europe, Asia, the US and the Middle East. With four partners and 31 lawyers based in Kyiv, Ukraine, we provide full range of legal services. The finance and projects team is dedicated to acting for clients in M&A, capital markets, banking, finance and infrastructure sectors, including all aspects of corporate and transactional matters. We represent all major international finance organisations, as well as both major stateowned and private Ukrainian borrowers in various industries, regularly acting on both the lender and borrower side of transactions. In particular, we provide legal support to clients in asset and debt finance, project finance, structured finance deals. Our team is regularly ranked in top tiers for banking and finance by major international and local rating agencies such as IFLR 1000, Chambers Global and Chambers Europe. Below we present a brief overview of recent trends in the Ukrainian market. Even in the midst of the global financial crisis, major international banks and international finance organisations, such as IFC, EBRD, Nordic Investment Bank and others, are actively lending in Ukraine. Moreover, Ukrainian subsidiary banks of large international banking groups are restarting their lending programs, providing financing to Ukrainian borrowers. For instance, recently we acted for one of the top Ukrainian banks in a complex project finance deal, being a first domestic finance transaction structured in line with lMA standards while tailored to Ukrainian legal and regulatory framework. Another notable deal involved a multi-million project finance transaction with a Ukrainian stateowned oil and gas monopolist, requiring complex structuring work and regulatory advice, as well as negotiations with various governmental authorities and officials,

42 • GBM • March 2012

further complicated by the cross-border nature of the project, its political resonance and a rigid ‘ex-soviet’ bureaucratic approach to the transaction. In the midst of financial crisis, even the most sustainable Ukrainian businesses faced liquidity problems and many of them were forced to consider debt and corporate restructuring as a means of survival. It has proven crucial for the distressed borrower to negotiate with creditors a solution in order to avoid insolvency. To this effect, usually a standstill agreement is signed, providing for particular restructuring measures, extension of terms under loan agreements, additional security, freezing of penalties and fines, early repayments, calling of defaults or enforcement against any collateral, etc. Sometimes a syndication of all existing loans into a single principal loan agreement is agreed to deal with the debt pool in a more organised and straightforward manner. The finance and projects practice of DlA Piper in Kyiv plays a key role in a number of complex projects as lead legal adviser to both debtors and creditors. For example, we acted for one of the top Ukrainian industrial groups in the first debt restructuring project ever completed in the market of Ukraine, as well as acting for a number of top international and local creditors in similar cross-border restructuring projects of one of Ukraine’s largest steel and machinery producers. Many Ukrainian businesses undergo corporate restructurings in order to attract additional financing, reorganise their business structure in view of listing at a foreign stock exchange, or even as means of preliminary M&A structuring. Often times such restructurings of Ukrainian corporates involve foreign jurisdictions where company shareholders are domiciled. For instance, we recently acted for an international manufacturer of household appliances in a complex multi-jurisdictional corporate restructuring project involving transfer of employees, sale of assets and transfer of manufacturing and supply contracts of a large Ukrainian factory. The project involved jurisdictions of Italy, Ukraine, Russia and Sweden, further complicated by global insolvency issues, entailing participation of the government of Italy in the bankruptcy and corporate restructuring proceedings. With the rise of liquidity problems, we see the growing interest towards transactions with debt portfolios of distressed Ukrainian

DlA Piper Ukraine llC Oleksandr Kurdydyk Partner, head of finance and projects Tel: +380 (44) 490 9570

borrowers. Many international players in the market of debt collection enter the Ukrainian market as we are increasingly involved in both incorporation and licensing work as well as transactional support of purchase of debt portfolios. Ukrainian businesses revive interest towards IPO listings as several companies in the agricultural sector prepare for listing at the Warsaw Stock Exchange, a popular platform for Ukrainian companies, where we act as legal counsel on matters of Ukrainian and foreign law for both issuers and underwriters in IPO projects. Another recent market trend is a developing interest of Ukrainian businesses towards hedging arrangements mitigating currency exchange risks and other derivatives transactions including cross-border arrangements based on ISDA standard documentation and its harmonisation with the Ukrainian regulatory framework. Finally, infrastructure projects such as development of alternative energy sources and construction of stadiums, hotels and infrastructure objects dedicated to EURO 2012, are being propelled and supported by Ukrainian government as we act for clients investing into development and construction of stadiums, hotels, wind and solar farms in Ukraine. Oleksandr Kurdydyk, partner & head of practice, and Rodion Ignatenko, senior associate.

GLOBAL EXPERIENCE LOCAL IMPLEMENTATION With 77 offices in 31 countries of the world, we provide our local and international clients with the full range of legal services, no matter where they choose to do business.

ContaCt us in ukraine DLA Piper Ukraine LLC | 77A Chervonoarmiyska Str. | Kyiv 03150 t +380 44 490 95 75 | F +380 44 490 95 77 For the full list of our legal services & locations see | DLA Piper

DLA Piper is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at FEB12 | 2062898

FuLL Service Law FirmS

AZB & Partners is one of the prominent law firms in India. Our aim is to provide clear, concise and practical advice based on an in-depth knowledge of the legal, regulatory and commercial environment within which our clients operate and a full understanding of their overall business objectives. The legal services rendered by us cover the corporate, commercial, regulatory, financial and tax planning aspects of modern businesses. We have been involved in advising in the field of mergers, acquisitions, joint ventures and general corporate, regulatory practice and securities laws, private equity, capital markets, funds practice, banking and finance, microfinance, derivatives, infrastructure and project finance, real estate, media and entertainment, information technology and business process outsourcing, employment, insurance, intellectual property, pharmaceuticals and biotechnology, taxation, aviation, competition law, and litigation and arbitration. The firm has received wide national and international acclaim within the legal sphere, some of which include the being selected as the ‘Most Active legal Advisor – M&A’ and ‘Most Active legal Advisor – PE" based on transactions for the year 2011at the Apex Awards, 2012 and ‘Private equity and venture capital India team of the year’, 2011, the ‘Mergers & acquisitions India team of the year’, 2011 and the ‘Firm of the year Mumbai’, 2011 at the IFlR Asian Awards. The firm has also been ranked as a ‘Tier 1 firm’ for corporate/M&A, projects and energy, real estate and tax and received the ‘Best M&A law firm award’ at the legal Era Awards 2012.

Established by Zeenat Al Mansoori in 1989, Zeenat Al Mansoori & Associates draws on over 20 years of experience in legal practice. The firm is acknowledged as a leading legal practice in the Kingdom of Bahrain that is unique due to having top-tier dispute resolution and corporate capabilities. Alongside the firm’s excellent reputation in dispute resolution and corporate work, the firm is also acknowledged as a leader in a number of industry sectors including the banking and finance, insurance, and real estate sectors.

Zeenat Al Mansoori & Associates Tel: +973 17 532012 Fax: +973 17 536255

44 • GBM • March 2012

PO Box 11522 Floor 05, Al Matrook Building, Diplomatic Area 1705, Manama 317, Kingdom of Bahrain Other offices: Doha, Qatar Nada Al Sulaiti & Partners

Express Towers • 23rd floor • Nariman Point • Mumbai 400021 • India TEl +91 22 6639 6880 | FAX +91 22 6639 6888 | EMAIl: AZB House • Plot No A8 • Sector 4 • Noida 201301 • India TEl +91 120 4179999 | FAX +91 120 4179900 | EMAIl: AZB House • 67/4 - 4th Cross • lavelle Road • Bangalore 560001 • India TEl +91 80 4240 0500 | FAX +91 80 2221 3947 | EMAIl: Onyx Towers • 1101/B • 11th Floor • North Main Road • Koregaon Park • Pune 411001 • India TEl +91 20 6725 6666 | FAX +91 20 6725 6600 | EMAIl:

Zeenat Al Mansoori & Associates builds strong relationship enabling it to deliver efficient and effective legal solutions with sharp thinking and impeccable execution based on a commercial awareness and a thorough understanding of the business of its clients. The firm’s main clients are leading global regional and national businesses, many headquartered outside the Kingdom of Bahrain. Zeenat Al Mansoori & Associates is a full service law firm. Areas of expertise include but are not limited to: litigation and dispute resolution; banking and finance; insolvency; corporate law; commercial law; shipping; insurance and reinsurance; telecommunications and media; employment; intellectual property rights; healthcare; real estate; and, construction and development. Tel: +974 44 513108 +974 44 513109 Fax +974 44 513128 P.O. Box 37785, Office GH18, Al Maamoraa 56, Halol Road, Doha, Qatar

Single shareholder joint stock company The new Turkish Commercial Code (the New TCC) aiming to change the future of Turkish commercial law will be effective as of 1 July 2012. The New TCC makes Turkish commercial law compatible with EU law. According to the current Turkish Commercial Code (the Current TCC), in force since 1957, a joint stock company (the JSC) is established with minimum five shareholders. The New TCC, by means of adapting the Twelfth Council Company law from EU law to Turkish law, allows the establishment with one or more founding shareholders. In the event of a single founder, such sole shareholder may exercise all the authorities granted to the general assembly of the JSC. It is common to see the JSCs in Turkey with four minority shareholders holding 1% of the capital or one single share. Through this significant change of the New TCC, the ‘real’ shareholder of the JSC will not be forced to add other minority ‘phantom’ shareholders, whose sole purpose is to fulfill a corporate formality. In addition, in the event that the number of shareholders drops to a single shareholder

due to a legal transaction such as share transfer, exercise of put/call options, inheritance, merger, demerger or squeezing out, the JSC will be able to continue its activities. The condition is that the board of directors of the JSC (the BoD) be notified in writing within seven days as of the date of such transaction. The BoD shall then have this change in the number of shareholders registered and announced with the relevant trade registry within seven days following receipt of this notification.

shareholder has all powers of a general assembly and the resolutions of a single shareholder in its power of general assembly should be in written form. Any agreement between the JSC and the sole shareholder in respect of representation powers except for daily, immaterial and ordinary matters must be executed in writing. It is also forbidden for the JSC to acquire (or cause third parties to acquire) its own shares to achieve the outcome of sole shareholder.

If the JSC is incorporated with a sole shareholder or the shares are collected by one shareholder, the information regarding the sole shareholder’s name, residence and nationality shall also be registered and announced with the trade registry. Otherwise, the single shareholder who fails to make a notification and the BoD who fails to register and announce the same shall be liable for any damages that may occur. This is a sign that the JSC and the sole shareholder are deemed as separate legal persons with separate properties and responsibilities. In sole shareholder JSCs, the single

GÜR lAW FIRM Sümbül Sokak No:61 34330 levent / Istanbul-TURKEy Tel: +90 212 325 90 20 Fax: +90 212 325 90 23 Tevfik Gür (Founding Partner) Isenbike Bilgili (Partner/Corporate Department) Çaka Kul (Partner/Corporate Department)

March 2012 • GBM • 45

triP adviSor

The World’s Best Hotels Going on holiday is one of life’s greatest pleasures, but with such an abundance of stunning hotels around the world, the decision of where to stay can be a difficult one. With over 50 million users, TripAdvisor travellers have visited and reviewed hundreds of thousands of hotels around the world and have honoured these properties as the world’s best. “These are the world’s best hotels according to those who really matter – travellers themselves,” commented TripAdvisor spokesperson Emma Shaw. “With their superior service, stunning accommodation and enviable location, these hotels are at the top of their game.”

the world’s 10 Best hotels: 1. The Phoenix Resort – San Pedro, Belize

6. Castlewood House – Dingle, Ireland

This beachfront hotel in San Pedro has been named the world’s best hotel by TripAdvisor travellers. With its stunning location, The Phoenix Resort is just a few steps from the beach, restaurants and shops in the charming town of San Pedro, while the rooms’ custom made Belizean furniture add a contemporary tropical feel to the décor.

Enjoy views over Dingle Bay and watch the world go by from the stylish drawing room, featuring a marble fireplace and comfy sofa. Guests are served complimentary homemade cakes, biscuits, tea and coffee – all to make you feel at home.

As one TripAdvisor traveller said, “Everything from the views, the pool, the spacious beautiful rooms and the friendly staff makes you never want to leave.”

2. Anastasis Apartments – Imerovigli, Greece Anastasis is enviably located on the top of Caldera cliff, perfect for views of the famous Santorini sunset. It boasts apartments and suites complete with balconies and furniture overlooking the Aegean sea. As one TripAdvisor traveller said, “Don’t go anywhere else for sunset, the best view on the island is right here! And I have never experienced service this good.”

3. Hamanasi Adventure and Dive Resort – Hopkins, Belize

As one TripAdvisor traveller said, “From the luxurious linens, luscious bath amenities, phenomenal breakfasts to the wealth of information provided by our hosts, we had the most delightful time in this magical place.”

7. Palais Amani – Fes, Morocco Beautifully located in the stunning city of Fes, Palais Amani is themed in an Art Deco style following its restoration between 1928 and 1930. This property prides itself on tradition and in keeping with that planted an aromatic ryad (garden) around a spectacular mosaic fountain, which in Arabic custom is found in the heart of the property. As one TripAdvisor traveller said, “Many people have called Palais Amani an ‘Oasis’ and it really is quite an apt description. The décor and look of the place defies description, it is fabulous.”

8. Loch Lein Country House – Killarney, Ireland

A secluded and intimate hotel, Hamanasi Adventure and Dive Resort is nestled between the turquoise Caribbean sea and Maya mountains, perfect for exploring the wonders of Belize on and offshore.

A welcoming country house boasting magnificent views over Killarney’s famous lower lake, loch lein offers true Irish hospitality. Located within a palatial landscape, take a stroll and experience the beauty surrounding this property.

As one TripAdvisor traveller said, “It’s hard to summarize how amazing the experience is at Hamanasi resort. The combination of a beautiful location, wonderful people, and amazing adventures is unmatched.”

As one TripAdvisor traveller said, “The location is beautiful and the house is excellent. We had a spacious room with a perfect lake view, and the service and food is first class.”

4. Riad Kniza – Marrakech, Morocco

9. Tambo del Inka, a Luxury Collection Resort & Spa – Urubamba, Peru

This 18th Century property located in the heart of the Medina of Marrakech was beautifully restored using traditional materials, recreating a truly authentic Moroccan experience from the décor through to the architecture. As one TripAdvisor traveller said, “The Riad is a beautiful sanctuary from the bustle of the medina, but you still feel that you are surrounded by the culture. The decorations and cuisine is authentic Moroccan, and the service is incomparable to anywhere we’ve stayed around the world.”

5. Derwent House Boutique Hotel – Cape Town Central, South Africa This boutique hotel in Cape Town combines chic African artwork with contemporary elegance. Centrally located in the Tamboerskloof area, this property is the perfect base for experiencing Cape Town. As one TripAdvisor traveller said, “If you are going to Cape Town, this really should be the obvious place to stay. We have travelled quite a lot, and Derwent House is one of the nicest places we ever have stayed at.”

This tranquil property is famed for its stunning location and relaxing spa. Situated in Urubamba beside the Vilcanota River, Tambo del Inka is the ultimate location to disconnect and pamper yourself. As one TripAdvisor traveller said, “This place is simply the best hotel I have ever stayed at. The spa is great, the food is amazing, the rooms are huge and there are great views of the mountains.”

10. Golden Well – Prague, Czech Republic This boutique hotel located close to Prague’s Castle offers breathtaking views over the city. Superbly designed in an antique-style décor, all 17 rooms and 2 suites reflect the property’s rich heritage. As one TripAdvisor traveller said, “I cannot praise this hotel enough. Apart from the wonderful rooms, the views of the old town from the dining room and outstanding breakfasts, what makes it so special is the friendliness of the staff. Everyone went out of their way to make our two night stay special and nothing was too much trouble.”

For more information on these hotels, visit 46 • GBM • March 2012

March 2012 • GBM • 47

Luxury Brand Series – Formula 1 host city hotels

Formula 1 Host City Hotels The corporate world prides itself on living life in the fast lane. From big business deals to meeting clients across the globe, everything moves fast but none more so than the cars of Formula 1! The Formula 1 calendar is one of the most anticipated schedules and many individuals not only plan their holidays around the events but even wine and dine their business clients at these exclusive occasions!

Continuing the luxury series, we look at premier luxury hotels that each F1 host city has on offer, giving you an insight into pure elegance, luxury and glamour! Whenever the F1 bandwagon rolls into town, tickets for the race become gold, the city takes centre stage, the elite of society want to be seen rubbing shoulders with the drivers, and glamour takes on a new meaning. One of the glamorous elements of the F1 experience is the hotels and during this period accommodation becomes premium. Those attending each event want to stay in places that enhance their F1 experience and the hotels featured do just that. They offer only the best service, the best rooms, the extra pampering and the highest of standards. Many business individuals use the Formula 1 calendar as a way of getting to meet clients and associates from around the world, closing business deals, creating networks and affiliates, but more importantly getting to taste the F1 experience. During this time, executive boxes are booked, restaurants are filled out but most importantly the finest hotels are quickly snapped up. Ensuring that right accommodation is booked in advance, could be the difference in signing off an important deal or missing out altogether. From the Melbourne Grand Prix to the finale in Sao Paulo, we go through every bend and chicane of exclusive hotels in the host cities to get you in the mood for the fastest show on earth!

48 • GBM • March 2012

The Hotel Windsor Melbourne Australia's only true grand independent hotel Built in 1883 and predating some of the world's leading landmark hotels including the Savoy in london, The Waldorf`Astoria in New york and the Ritz Paris, the 180-room Hotel Windsor offers a range of elegant and luxurious accommodation options for the discerning leisure or business traveler. The Hotel Windsor, Melbourne: An Introduction The Hotel Windsor was acquired by the Halim Family and Melbourne-based Wetherby Capital from the Oberoi Group in November 2005. In 2006 new senior management with extensive experience in global hotel brands and management were appointed to oversee a sensitive refurbishment to the property while maintaining its status as an enduring Melbourne landmark. For more than 126 years, the Hotel Windsor has graced Melbourne with its grand architecture and interiors and hosted many national and international celebrities. Its location opposite Victoria's Parliament House, and in the heart of Melbourne's commercial, theatre and shopping district, has ensured it enjoys an integral role in the city's political and social life. In 1898 the hotel was used as the site for the drafting of the nation's constitution - just one of many highlights in the property's history. Rooms and Suites

The Hotel Windsor has 160 rooms and 20 suites, all reflecting the hotel's grand architecture in their generous proportions and graceful period furnishings and antiques, along with all modern facilities and amenities. Restaurants and Bars 111 Spring Street Restaurant The Hotel Windsor's signature dining facility, 111 Spring Street restaurant is renowned throughout Melbourne as the leading venue for business lunches, and pre-theatre and special occasion dinners. The menu offers contemporary dishes and innovative interpretations of classic European favorites. The restaurant is open for breakfast, lunch, afternoon tea, pre-theatre meals and dinner seven days a week. The Cricketers Bar Melbourne's politicians, business people, sports fans and tourists all gather at the famous Cricketers Bar. Featuring a century of Australian cricketing memorabilia, the bar is warm, relaxed and friendly and serves a wide range of local and imported beers. Patrons can view major sporting events on two largescreen televisions. Traditional Afternoon Tea at The Hotel Windsor The Hotel Windsor has been serving traditional afternoon tea, complete with three-tiered silver stands, since 1883 in its signature dining room, 111 Spring Street restaurant. The afternoon tea is famous with Melbournians and visitors alike, who book

to enjoy the finger sandwiches, home-made scones, delicate pastries and array of fine teas. Check the website for current sitting times and prices. THE HOTEl WINDSOR, 111 Spring Street, Melbourne 3000 Victoria, Australia Ph. (61-3) 9633-6000, Fax. (61-3) 96336001

race 01 – 2012 FormuLa 1 auStraLian Grand Prix (meLBourne) – 16 - 18 mar

Impiana KLCC Hotel Kuala Lumpur Centrally located amidst the cosmopolitan capital of Kuala lumpur, Malaysia, Impiana KlCC Hotel is a chic business hotel with the trendiest address. The hotel is centrally connected via a multi-million ringgit fully air-conditional link-bridge linking Kuala Lumpur Convention Centre to world famous Suria KlCC shopping haven and surrounded by some of the world’s top business organizations. Impiana KlCC Hotel, Kuala lumpur General Manager: Gerard Sta Maria 13 Jalan Pinang 50450 Kuala Lumpur Malaysia Tel : 603 2147 1111 Fax : 603 21471100 Toll Free : 1 800 88 3100

race 02 – 2012 FormuLa 1 PetronaS maLaySia Grand Prix (KuaLa LumPur) – 23 - 25 mar

March 2012 • GBM • 49

Luxury Brand SerieS – FormuLa 1 hoSt city hoteLS

The Ritz-Carlton Shanghai, Pudong The Ritz-Carlton Shanghai, Pudong, opened on 21 June 2010, is the luxury brand’s second hotel in the city, and its seventh in China. located in Shanghai ifc, the prime real estate in lujiazui financial trade zone, the hotel complex is the masterpiece of world famous architect designer, Cesar Pelli. Voted by about 30,000 readers of Conde Nast Traveler U.S. as the No.1 Hotel in the World in 2011, The Ritz-Carlton Shanghai, Pudong is Shanghai’s ultimate destination for uncompromising luxury and style. It occupies the top 18 floors of the Shanghai ifc Tower 1. With interior designs by Richard Farnell, style of the hotel is contemporary with hints or new interpretations of 1930’s Shanghai Art Deco. This gives a great sense of place to the hotel as guest rooms and restaurants embrace magnificent sweeping views over The Bund - the most intact collection of Art Deco architecture in the world. The hotel’s 285 guest rooms and suites range in size from 50 square meters to 410 square

meters, for the palatial Ritz-Carlton Suite and Chairman Suite. There are three floors of Club accommodation and each club room guest enjoys access to the 24-hour Club Lounge on th The hotel also offers a variety of dining options with her four restaurants and a bar Aura lounge and Jazz Bar, Jin Xuan the fine dining Chinese Restaurant designed by Steve leung, Scena Italian Restaurant and Flair Rooftop Restaurant and Bar both designed by Super Potato. Flair is the city’s highest al fresco dining and wining venue and is the unique social center of Pudong and Shanghai. Featuring more than 2,500 square meters of meeting and conference space on the third level including a 1,135-square-metre Grand Ballroom, The Ritz-Carlton Shanghai, Pudong can accommodate large and small meetings and gatherings in sumptuous environment with world-class technology and facilities underscored by The Ritz-Carlton legendary service. All meeting space offers floor-toceiling windows and natural daylight.

level and occupying an area of more than 1,500 square meters, The Ritz-Carlton Spa by ESPA features 10 treatment rooms, including 9 multi-function treatment rooms and a Harmony Suite where two guests may relax and enjoy treatments together. The RitzCarlton Spa by ESPA combines the essence of ancient and modern Chinese, Indian, European and Balinese spa cultures and uses luxury ESPA products that harness the best of nature’s essential oils, botanicals and marine supplements. The exquisite collection of treatments represents complete care, personalization and the ultimate in luxury. 8 Century Avenue, lujiazui, Pudong, Shanghai Telephone: (8621)20201888 Fax: (8621)20201119

Guests can enjoy 24-hour fitness studio, heated swimming pool and vitality pool on the 53rd level. Located on the hotel’s 55th race 03 – 2012 FormuLa 1 uBS chineSe Grand Prix (ShanGhai) – 13 - 15 aPr

50 • GBM • March 2012

The Ritz-Carlton, Bahrain Hotel & Spa Bahrain The Ritz-Carlton, Bahrain Hotel & Spa, situated on the north coast of Bahrain, is located within a 20-acre urban resort complex on the seafront of Manama. It is only 11 kilometers from the airport, 3 kilometers from the Manama City Center and close to the Bahrain International Exhibition Center. The hotel features 245 rooms and suites, each with unparalleled views of the city or sea, and 23 villas. The Sports Club & Spa offers an extensive menu of treatments and facilities such as an indoor and outdoor swimming pool, four tennis courts, an indoor squash court and a magnificent Turkish bath. There are four restaurants, one lounge, one bar, a poolside café, a gourmet shop and 24-hour in-room dining. The exclusive villas at The Ritz-Carlton, Bahrain exude a relaxed elegance throughout. Surrounded by azure waters, each has a distinctive identity and allure and is at least 20 meters from the next. Guests have a measure of privacy and can enjoy the services of a Private Lifestyle Butler who provides a sophisticated blend of

knowledge pertaining to the destination and the resort. The Ritz-Carlton, Bahrain has some of the finest Catering and Conference facilities with a large selection of rooms suitable for every occasion imaginable, hosting up to 1,000 guests at any one time. All function rooms are stunningly appointed and fully equipped with the latest technology. The Conference Centre is integrated with the main hotel. The Al Noor Ballroom has discreet, classical dignity. The banqueting area includes the Grand Foyer which can accommodate a small exhibition or reception. The Al Ghazal Ballroom is a spectacular and stately room which can be subdivided into four halls providing a variety of arrangements from banquets, buffets, conferences and receptions. The Library and two Boardrooms provide elegant wood paneled settings for executive meetings.

The Ritz-Carlton, Bahrain Hotel & Spa P.O. Box 55577 Manama Kingdom of Bahrain Tel: (973) 1758 0000 Fax: (973) 1758 0333

race 04 – 2012 FormuLa 1 GuLF air Bahrain Grand Prix (SaKhir) – 20 - 22 aPr

March 2012 • GBM • 51

Luxury Brand SerieS – FormuLa 1 hoSt city hoteLS

Mandarin Oriental Barcelona Barcelona is an extraordinary city blessed with historic architecture, some of the finest food in Spain, streets of fashion and a sandy beach. Barcelona’s unique attribute has to be its proximity to the sea. It has a lively marina and the beaches are exceptional, dotted with cafés where you can refresh yourself with the sand beneath your toes. On these pages you’ll find our concierge recommendations on things to do and see, and where to shop and dine. We offer some of the most exclusive accommodation in Barcelona, with just 98 rooms and suites at this premiere address. Interiors are by one of Spain’s leading designers, Patricia Urquiola; the results are enduring modern designs which incorporate subtle reflections of our oriental heritage. Finished to a level of luxury synonymous with Mandarin Oriental, we give every guest a supremely comfortable home in the city.

Views are either over Barcelona’s most stylish boulevard, Passeig de Gràcia or our landscaped interior garden. A number of guestrooms have a balcony or terrace, from where you can admire the surrounding modernist façades. Passeig de Gràcia, 38-40 Barcelona 08007, Spain T: +34 93 151 88 88

race 05 – FormuLa 1 Gran Premio de eSPaÑa Santander 2012 (cataLunya) – 11 - 13 may

Hotel De Paris Monaco A simple flight of stairs leads from the Place du Casino to the majestic lobby of the Hôtel de Paris. Low relief sculptures, marble colonnades and cristal chandeliers entice you to absorb the fascinating solemnity of this magical, memorable and sumptuous setting. Situated at the very heart of Monte-Carlo on the famous Place du Casino, the Hôtel de Paris is a real “Address”! The privileged quality of its location, just

a few steps from the legendary Casino de Monte-Carlo, means that guests have front-row seats to watch the sparkling life of Monaco and unforgettable sunsets over the sea. The Hôtel de Paris also offers direct access to les Thermes Marins de Monte-Carlo, its Spa of 6,600 m2. Built in 1864 with the intention of offering the very best that existed at the time.

More than mere loyalty to the grand tradition of prestige hostelry, the service provided each and every day, and the remarkable care lavished on tiny details that mark each visitor’s personalised welcome, must meet the highest of all demands : being worthy of an authentic legend. For more information please visit: http://

The Hôtel de Paris continues to perpetuate the very same excellence in the art of hospitality.

race 06 – FormuLa 1 Grand Prix de monaco 2012 (monte carLo) – 24 - 27 may

52 • GBM • March 2012

InterContinental Montréal The perfect blend of intimate boutique hotel atmosphere and the peerless service of a luxurious Four-Diamond hotel, the InterContinental Montreal offers the best of both worlds. Elegantly overlooking the international business area with its 26-storey turret, the hotel is located above the Montreal World Trade Centre between Old Montreal and the business district. Ideally positioned for a business trip or cultural getaway. InterContinental Montréal 360 St. Antoine Street West Montreal, Quebec H2y 3X4 CANADA +1 800-361-3600

race 07 – FormuLa 1 Grand Prix du canada 2012 (montrÉaL) – 08 - 10 Jun

March 2012 • GBM • 53

Luxury Brand SerieS – FormuLa 1 hoSt city hoteLS

Las Arenas Balneario Resort Valencia, Spain las Arenas Balneario Resort was built on the site of the traditional 19th century balneario and it is the first grand hotel in the Valencia region. The hotel's privilege beachfront location offers impeccable sea views and a state-of-the-art spa with an extensive treatment menu. Just a short distance from Valencia vibrant city center and Ciudad de las Artes y las Ciencias.

bathrooms equipped with bath tub and separate hydro-massage shower cabin las Arenas Convention Center located within the two colonnades offers 11 rooms with capacity for 2000 people and an auditorium for 500people. All rooms benefit from natural light and unobstructed sea views, excellent for hosting meetings, social occasions, and incentives.

Rooms and suites have private balcony or terrace, spectacular garden and sea views, complimentary mini-bar and Wi-Fi, CD players, plasma TVs, in-room safes, and race 08 – 2012 FormuLa 1 Grand Prix oF euroPe (vaLencia) – 22 - 24 Jun

The Savoy United Kingdom The Savoy, A Fairmont Managed Hotel is now accepting reservations. Following the most ambitious hotel restoration in British history, The Savoy once again takes its place at the heart of London. To make a reservation at The Savoy and experience the true character of london, please call +44 (0)207 420 2300 or email savoy.reservations@ A British icon since 1889, The Savoy has once again taken its place on the world stage after over a £100 million restoration. The hotel seamlessly blends elements of the original and the new while the stunning English Edwardian and Art Deco interiors sparkle with timeless elegance and glamour.

The 268 guestrooms and suites are the last word in style, luxury and discreet technology with stunning views of London and the River Thames. Nine ‘personality suites’ have been styled after some of The Savoy’s most high profile guests while a newly created 2-bedroom Royal Suite is truly a suite fit for a King. The Savoy continues the tradition of culinary excellence started by Auguste Escoffier with the return of Gordon Ramsay to the Savoy Grill and the reopening of the beloved River Restaurant.

restored Banqueting and Private Rooms will once again see the great and the good return to The Savoy. With an enviable location on the River Thames, the London hotel is literally steps away from some of the world’s finest theatres, museums and opera houses. Its proximity to the City means The Savoy is ideally placed whether you are coming to London for business or pleasure.

legendary bartender Harry Craddock’s classic cocktails are still served in the newly renovated American Bar and the new Beaufort Bar offers one of the finest selections of Champagne in the city. The Savoy has played host to many historic events and the

race 09 – 2012 FormuLa 1 Santander BritiSh Grand Prix (SiLverStone) – 06 - 08 JuL

54 • GBM • March 2012

Excelsior Hotel Ernst Germany This 5-star hotel is located opposite the famous Dom cathedral in Cologne. It offers elegant rooms with a free minibar, free use of the fitness facilities, and award-winning cuisine. The Excelsior Hotel Ernst am Dom offers a range of spacious rooms and suites. All feature high-quality fabrics, satellite TV and a choice of pillows. Excelsior’s fitness facilities include a gym, a sauna and a steam room. There is also a quiet relaxation area. Headphones, a TV, fresh fruit and mineral water are provided. The Ernst am Dom's Hanse Stube restaurant serves French cuisine with local influences. Guests can also enjoy a wide range of Far Eastern food in the taku restaurant.

Tel +49 (0) 221 270 1

race 10 – FormuLa 1 GroSSer PreiS Santander von deutSchLand 2012 (hocKenheim) – 20 - 22 JuL

March 2012 • GBM • 55

Luxury Brand SerieS – FormuLa 1 hoSt city hoteLS

Ramada Resort - Aquaworld Budapest Hungary Ramada Resort - Aquaworld Budapest is a four-star superior wellness and family friendly hotel offering services unique in Budapest. It has 309 rooms - the main building has standard rooms, junior suites, family rooms and apartments - unlimited Internet access (WiFi) throughout the entire property, and guaranteed space in our free parking in a 1,000 car capacity outdoor lot for our visitors. The complex houses a wellness-fitness centre for those longing for relaxation, an entertainment centre, one of Europe’s grandest indoor water theme parks, Aquaworld, for the adventurous and on dry land, Bongo Kids Club for the youngest visitors. The hotel is situated in a park-like setting yet close to the city centre. It is within 25 minutes driving distance to the airport. The Aquaworld is directly accessible from the hotel. The water amusement park offers unforgettable entertainment for every age group all year round. The suspension bridges, towers and pools surrounding the replica of Angkor Wat temple provide a breathtaking sight. Visitors are transformed into explorers and can feel as if they’ve fallen into a new world with a tropical atmosphere, Angkor Wat temple, suspension bridges, palm trees, whirlpool, mountain stream, 17 indoor and outdoor kiddie and amusement pools. Adventure and adrenalin rushes are guaranteed with 11 different slides, surf pool, floating balls, volleyball court and amusement park. In the hotel there is also a three-levelled Oriental Spa wellness and fitness centre offering a wide selection of treatments for those who would like to relax or have a beauty treatment in an oriental atmosphere. The Spa offers fans of active recreation, as well as

wellness devotees, undisturbed rest and complete relaxation including exotic baths, spa and relaxation pools, steam baths, unique sauna world, cosmetics, facial and body treatments, massage, resting beds, hairdressing, solarium, manicure-pedicure, tennis, squash and fitness room serve to renew the body and soul. Hungary, 1044 Budapest, Íves Street 16. T: +36 1 2313 601 F: +36 1 2313 629 E: W:;

race 11 – FormuLa 1 eni maGyar naGydÍJ 2012 (BudaPeSt) – 27 - 29 JuL

56 • GBM • March 2012

Manoir de Lébioles Location: Belguim

the-art comfort and classical lines could be satisfied without obscuring the soul of the almost 100 year old house.

The inscription on the crest of Manoir de lébioles perfectly reflects the philosophy of the house.

The basis of the renovations was the vision to create a place of quiet and remoteness, where recreation and relaxation of our guests is the ultimate aim. A key component of this concept are the individually furnished and luxurious rooms and suites. Another outstanding aspect is the excellent cuisine of our chef, Olivier Tucki, which is honoured with a Gault-Millau score of 15. Moreover, our spa area offers various possibilities of relaxation and recreation.

Nestling majestically between the woods of the Ardennes, Manoir de lébioles welcomes its guests with pristine nature, discreet luxury, private atmosphere, and first-class service. After extensive renovations the "small Versailles of the Ardennes" shines in new splendour since 2006. The aspirations of the team of international architects for state-of-

our guests. Our claim for our guests to feel comfortable – lean back, leave the rest to us. Whatever your wishes – please let us know, we are happy to fulfil them. Tel: +32 (0) 87 79 19 00 Email:

Special emphasis, however, is put in the familiar hospitality with which we indulge

race 12 – 2012 FormuLa 1 SheLL BeLGian Grand Prix (SPa-FrancorchamPS) – 31 auG - 02 SeP

Four Seasons Hotel Milano Milan, Italy From one of Italy’s most sleek and fashionable shopping districts comes a 15thcentury convent, transformed into an urban sanctuary of luxury and comfort. Get caught in Milan’s excitement and attractions by day, fall asleep to open window breezes and quiet serenity at night. A quiet escape from Milan’s neighborhood bustle, luxury hotel rooms and suites at Four Seasons Hotel Milano offer a selection of chic and inviting interiors interspersed with original 15th-century architectural details. As always, Four Seasons signature service is a quiet presence as you relax, dine and celebrate among Milan’s most beautiful and historic spaces.

Plush down pillows, soft Frette linens, and thick terry robes come standard in every guest room and suite. Perfect for a mid-day nap or retiring after a long day of sightseeing. Located in a neighborhood that’s bustling by day and peaceful at night, Four Seasons Hotel Milan holds on to its history while providing world-class accommodations. For more information please visit:

race 13 – FormuLa 1 Gran Premio Santander d’itaLia 2012 (monZa) – 07 - 09 SeP

March 2012 • GBM • 57

The Residence at Singapore Recreation Club Singapore Luxury Brand SerieS – FormuLa 1 hoSt city hoteLS

Prominently situated on Singapore’s historic Padang, The Residence is an exclusive accommodation consisting of 26 rooms, nestled at the third floor of Singapore Recreation Club. It has been awarded a TripAdvisor Certificate of Excellence 2011 and Travellers’ Choice Award 2012 for Top 25 hotels in Singapore. The Residence is located on Turn 9 of the famed Singapore Grand Prix circuit with a bird’s eye view of the Formula 1 night race. It is located minutes away from the Singapore’s Central Business District, Civic District and is in the heart of the city’s City Hall and Marina Bay shopping district. With its "Business Class in the City" slogan and first-class customer service, The Residence experience is distinctive as guests are granted a visiting member status when they check in; allowing them to participate in the Club’s many recreational activities such as social dancing, billiards, bowling and tennis. It is the only accommodation in Singapore to feature an indoor heated pool, a bowling alley and a jackpot room. With a superb team of customer-centric staff and idyllic location, The Residence is the definitive mix of cosy accommodation with top notch amenities. The Residence at Singapore Recreation Club B Connaught Drive Singapore 179682 Tel: (65) 6595 0555 Fax: (65) 6884 5336 Email:

race 14 – 2012 FormuLa 1 SinGteL SinGaPore Grand Prix (SinGaPore) – 21 - 23 SeP

Hilton Nagoya, Japan Hilton Nagoya. At the centre of it all. Centrally located with easy accessibility to all entertainment and business hubs, Hilton Nagoya has 450 rooms with the latest entertainment equipment and high-speed Internet access. Complete with an extensive world-class banquet facilities, an indoor swimming pool, sauna, a tennis court and a 24/7 gym. With 6 restaurants and bars to serve an exclusive selection of international cuisine, you will certainly be spoilt for choice. Enjoy a complimentary shuttle to JR Nagoya Station and close-by attractions such as Nagoya Castle and the Aichi Arts Centre. Complimentary bicycle rental service is also available for eco-conscious travellers. 460-0008, Nagoya, Naka-ku, Japan Telephone: 52 212 1111

race 15 – 2012 FormuLa 1 JaPaneSe Grand Prix (SuZuKa) – 05 - 07 oct

58 • GBM • March 2012

Banyan Tree Club & Spa Seoul, Korea Overlooking Seoul’s picturesque Mt. Namsan, Banyan Tree Club & Spa Seoul is Banyan Tree’s first combination of urban resort and membership club. Located an hour’s drive from Incheon International Airport, and just 10 minutes from the lively beat of downtown Seoul, the hotel offers guests a welcome chance to escape the city’s hustle and fast pace, and to simply relax with family and friends amidst the serenity, greenery and natural beauty of Mt. Namsan. Rising 21 storeys, Banyan Tree Club & Spa Seoul occupies the former Tower Hotel building, one of Seoul’s most enduring cultural landmarks designed in 1967 by architect Kim Swoo Geun to commemorate the Korean War. The rooms and suites, each featuring a relaxation pool, and 16 dedicated Club Rooms and Suites especially for club members, are equipped with state-of-the-art technology. Meanwhile, the private members club offers an unparalleled degree of attention, activities and pampering for every kind of social and business occasion. With wraparound views of Seoul, the limpid Han River and the lush greenery of Namsan Park, this urban oasis offers a sanctuary for the senses in the heart of one of the world’s most exciting cities. Effortlessly, it combines Banyan Tree’s signature warmth and traditional Korean hospitality with a tempting mix of Banyan Tree Spa, the first in Seoul, a myriad of outdoor facilities including golf driving range, tennis, futsal and outdoor swimming pool, and round the clock sophisticated cuisine and refreshments in any one of the resort’s 12 restaurants and bars.

race 16 – 2012 FormuLa 1 Korean Grand Prix (yeonGam) – 12 - 14 oct

March 2012 • GBM • 59

Luxury Brand SerieS – FormuLa 1 hoSt city hoteLS

Pit Stop A* Horizon Club Room Single/Double - INR 18,000 (plus applicable taxes) Complimentary pick and drop facility to F1 venue on race day Complimentary buffet breakfast at our 24hour Cafe Uno or Horizon Club on 19th Floor Complimentary cocktails at Horizon Club lounge from 1800-2000 hrs Complimentary high tea at Horizon club lounge from 1500-1700 hrs Complimentary broadband Internet access throughout the stay Complimentary four piece of laundry per day Complimentary 45-minute massage once during stay 20% discount on spa facilities 20% discount on food and soft beverages. Complimentary access to Health Club and usage of steam, sauna & jacuzzi Complimentary two bottles of mineral water per day Complimentary tea coffee maker in the room

Shangri-La’s Eros Hotel, New Delhi One of the city’s well recognised luxury hotels, Shangri-la’s Eros Hotel, New Delhi offers the international traveller a retreat in the heart of New Delhi, where one can rest, recharge and conduct their affairs in total privacy. The hotel’s 320 guest rooms and suites, inspired by India’s rich history and culture, are tastefully furnished in a contemporary style. State of the art facilities and complimentary Wi-Fi connectivity in all rooms as well as a well equipped business

60 • GBM • March 2012

centre and private meeting rooms are an option for those who like to keep work away from home. The hotel’s Horizon Club rooms on the 19th floor offer a panoramic view of Delhi and 24-hour access to the exclusive Horizon Club. Every morning a continental breakfast buffet is served and The Horizon Club hosts a complimentary high tea and evening cocktail hours for guests. The preferred pouring brand is VeuveCliquot. The perfect venue to unwind or start the day, the Horizon Club offers high levels of privacy and round the clock anticipatory service. The hotel is a self-contained environment

that caters to our guests’ every need. The award winning 19, Oriental Avenue, boasts of authentic Chinese, Japanese and Thai cuisine and has a one of a kind Oriental Trail Saturday Brunch.The Island Bar is a ‘go to’ destination for the reveller looking for an elegant evening and plays host to a fun retro night and unique theme concepts every month. The hotel’s ‘The Spa’ offers signature massage and rejuvenation therapies like the deep tissue Balinese massage and select Ayurvedic massages,which are popular favourites. Step into a world of relaxation with one of the signature spa treatments, get a great work out, or relax by the pool after

Pit Stop B* Deluxe Room Single/Double - INR 15,000 (plus applicable taxes) Complimentary buffet breakfast at Cafe Uno Complimentary cocktails at Island Bar from 1900-2000 hrs Complimentary broadband Internet access Complimentary two-pieces of laundry per day Complimentary 30-minute massage once during stay 10% discount on food and soft beverages Complimentary access to Health Club and usage of steam, sauna &jacuzzi Complimentary two bottles of mineral water per day Complimentary tea coffee maker in the room *Terms and conditions Rooms will be subject to availability All applicable taxes would be charged extra Bookings need to be guaranteed against credit card at the time of booking Minimum stay required of two nights to avail of this offer Cancellation, if made 14-days prior to arrival will be charged full retention as per the options available

a long day at the tracks. Enjoy the comforts of our spacious wet area, with steam, jacuzzi and sauna as well as our salon, with skilled facialists and stylists available by appointment. The manicure and pedicure cocoons replete with state of the art massage chairs are the perfect antidotes to a busy day. Centrally located in the historic government district, Shangri-la’s Eros hotel, New Delhi is very close to the New Delhi railway station and a 45-minute drive from Indira Gandhi International Airport, as well a 20-minutes from the Noida Toll Road. If you prefer to use the facilities of New Delhi’s well connected metro station and give the road commute a miss, the Patel Nagar Metro

station is a five minute walk from the hotel. The hotel overlooks Connaught Place and other major shopping and business centres. Plan a city tour with our concierge where you get a chance to select the best ride from our fleet of luxury cars inclusive of the immaculate Rolls Royce Phantom on offer for each of our esteemed guests. The ShangriLa’s location helps you experience the capital at its natural best.

For the hotel room reservation department call +91 11 41191919 or send an email to We look forward to welcoming you to the Shangri-la’s Eros Hotel, New Delhi. Shangri-la's - Eros Hotel, New Delhi Email: Telephone number: (91 11) 4119 1919

To welcome visitors to New Delhi for the second edition of the Indian Grand Prix, we are pleased to offer ‘Pit Stop’ - our preferred packages for F1 visitors.

race 17 – 2012 FormuLa 1 airteL indian Grand Prix (new deLhi) – 26 - 28 oct

March 2012 • GBM • 61

Luxury Brand SerieS – FormuLa 1 hoSt city hoteLS

InterContinental Abu Dhabi InterContinental Abu Dhabi offers 390 spacious, modern and stylish guest rooms and suites. Well appointed and tastefully furnished deluxe, executive rooms and suites, feature breathtaking panoramic views over the city skyline, corniche and coastline. Dedicated Club InterContinental floors offer guests first class levels of personalised service and hospitality, as well as access to the exclusive Club lounge. Blending perennial favorites with original new dining concepts, InterContinental Abu Dhabi is the most vibrant and exciting entertainment destination in the city. The award winning Chamas is our lively Brazilian Churrascaria, serving endless skewers of freshly barbecued meat and chicken. The Fishmarket offers the freshest seafood, cooked Thai-style and served in a relaxed setting right on the beach. The yacht Club is the hottest spot in town with its Asian cuisine and monthly special appearances by internationally renowned DJ’s. The Belgian Café Abu Dhabi offers a little piece of old Brussels right in the heart of Abu Dhabi, serving steaming mussel pots, chunky frites and creamy mayonnaise. Located on the Marina level, Boccaccio is a light and airy Italian restaurant famed for its fine pasta and pizza. Our all-day-dining restaurant, Selections, offers one of the most extended buffets in town. Open 24 hours, Piano lounge is perfect for a coffee and cake in a relaxed environment. With 285 metres of private white sandy beaches and its own marina, InterContinental Abu Dhabi is an exceptional location and a destination like no other. Health Zone offers the weary fast rejuvenation. Simply choose from massage, jacuzzi, steam room, sauna or cold plunge pool treatments for instant revitalization. A wellequipped gymnasium also allows guests to work out whenever they wish with inspiring views over the marina and coastline. InterContinental Abu Dhabi is the place to meet where the hotel offers the finest selection of meeting and conference facilities designed to host any type or size of event in the perfect style. Fully equipped state of the art technology, ranging from luxurious and spacious ballrooms to rooms that can be configured for intimate soirees of the largest gatherings. Star rating: 5 stars InterContinental Abu Dhabi Bainouna Street, Po Box 4171 Abu Dhabi, UAE Phone: +971 2 666 6888, Fax: +971 2 666 9153 Email: Web:

race 18 – 2012 FormuLa 1 etihad airwayS aBu dhaBi Grand Prix (yaS marina) – 02 - 04 nov

62 • GBM • March 2012

Four Seasons Hotel Austin, Texas Relax and rejuvenate in a welcoming, luxurious space. Four Seasons Hotel Austin offers 291 contemporary and spacious guest rooms and suites, each with an impressive view of lady Bird lake or the Austin cityscape. The hotel's outdoor saltwater pool has a resort-like feel, with plush chaises overlooking Lady Bird Lake and the surrounding parkland. Four Seasons Hotel Austin's e-Centre can assist you with business, entertainment or travel arrangements through the resourceful and multilingual Concierge. Our fitness centre features up-to-date cardio equipment and eucalyptus steam rooms for relaxation. Open for breakfast, lunch and dinner, TRIO pairs Texas grill favourites with delicious wines and a beautiful outdoor terrace. Austin is the heart and soul of Texas, with a dazzling array of live talent from blues and jazz to folk and alternative rock. Historic landmarks dotting the landscape include the State Capitol, University of Texas Tower and the Governor’s Mansion.

South Congress Avenue from Johanna Street to Gibson Street, is home to a quirky collection of boutiques, restaurants, galleries, antique shops and music venues. Four Seasons Hotel Austin 98 San Jacinto Boulevard Austin Texas 78701-4039 Tel. 1 (512) 478-4500

Explore Soco This hip neighbourhood, which runs along race 19 – 2012 FormuLa 1 united StateS Grand Prix (auStin) – 16 - 18 nov

Hilton Sao Paolo Sao Paolo, Brazil The hotel offers excellent and modern accommodations for short or long term stays, great restaurant options, a state-of-the-art fitness center, roof top pool, spa and some of the best meeting and event options in São Paulo. Conveniently located in one of the main business centers of São Paulo, the region of Av. luis Carlos Berrini, the Hilton São Paulo Morumbi is the East Tower of the United Nations Business Center (CENU). The hotel

has underground access to Shopping Nações Unidas and D&D mall. At the margin of Pinheiros river, several accommodations have views to Octavio Frias de Oliveira bridge, also known as Estaiada bridge, the newest São Paulo's postcard. Ibirapuera and Villa lobos parks are a 10-minute drive away, as well as several music halls. It is only 8 km from Congonhas National Airport and 35 km from the Guarulhos International Airport.

Patricio Alvarez +55 11 2845-0241

race 20 – FormuLa 1 Grande PrÊmio do BraSiL 2012 (SÃo PauLo) – 23 - 25 nov

March 2012 • GBM • 63

BuSineSS ServiceS

Business Services Twenty-five years of advocating excellence in outsourcing. That’s what the National Outsourcing Association (NOA) is celebrating this year.

But outsourcing has been around much longer than that, of course. According to the research project recently conducted by the NOA in association with Kingston University, the first recognised outsourcing deal took place in the 1950s. But the concept of increasing value by sending work to specialists goes back thousands of years, as far back as 380 BC. Plato alludes to outsourcing in The Republic when he comments: “Well then, how will our state supply these needs? It will need a farmer, a builder, and a weaver, and also, I think, a shoemaker and one or two others to provide for our bodily needs. So that the minimum state would consist of four or five men....”

National Outsourcing Association

Companies and governments outsource today for much the same reasons. Better, quicker, cheaper. And, crucially, the freedom to train their undivided focus on their organisation’s core activities. Just as Plato’s farmer shouldn’t be making his own shoes, David Cameron shouldn’t be worrying about downloading some anti-virus software for his laptop. This rather flippant example is designed to serve a purpose: Outsourcing is just

64 • GBM • March 2012

sensible. It gets a bad press - although the vast majority of outsourcing deals are successful, when one goes wrong it proliferates into media frenzy, culminating in a flurry of negative headlines suggesting that outsourcing is bad. But, done properly, it is massively beneficial for all concerned. Barrack Obama is not exactly helping either: as a feature of his presidential campaign, his rallying cry to middle America is to denounce ‘outsourcing’, claiming that he will introduce tax measures to incentivise creating American jobs for American people, and penalise those who send work abroad. The business strategy he is talking about here is actually ‘offshoring’. It’s a crying shame that the most powerful man in the World repeatedly uses erroneous terminology. For not all outsourcing is offshoring, and not all offshoring is outsourcing. Confused yet? Outsourcing is more complicated than it seems at first glance. With so many processes, protocols and personal relationships to dovetail, allowing another organisation access to the inner workings of your business can be daunting. Especially if you are a first timer.

Imagine the trepidation in May 1987, during a meeting in the British Telecom Tower, where a radical idea was floated: British Rail (BR) should outsource its telecommunications to British Telecom. John Welsby, BR chairman at the time, agreed. So a board level committee was set up to explore the idea with Nick Kane from British Telecom, and board member David Rayner, as the senior BR representative. BR managers wanted some reassurance that outsourcing worked and a body of evidence had to be built to prove that this ‘new’ idea was possible. This desire for evidence provided the foundation for the NOA as we know it today. The NOA began as a response to a growing need for both outsourcing customers and suppliers to share ideas, review successes and failures, stop re-inventing wheels, and in doing so create a body of ‘expertise and best practice’ that could carry the industry forward. Twenty-five years later, the outsourcing industry is reaching maturity. Although outsourcing as an industry is established, the concept and development of outsourcing as a profession is relatively new. This is an issue of education - not only creating awareness, but creating standards to work towards. Hence the need for the NOA Pathway, a talent programme that reflects the fact that outsourcing is part of everyday business now. It provides a set of accredited qualifications that develops competency and provides much-needed professional recognition in the outsourcing industry. A recognised benchmark of knowledge and ability, accreditation leads to professionalisation, which is the next step for the outsourcing industry. The outsourcing industry is full of next steps - the next function to be outsourced, the next gamechanging technology, i.e. Cloud, the next offshore destination; however, there will always be frontiers. Pioneering organisations outsourcing areas where others fear to tread - this will bring ‘interesting’ problems to those constructing these new relationships. Every organisation will have parts of it that for one reason or another that it thinks it will never outsource. Truly understanding the whys and wherefores of these conundrums will become a key competitive advantage for those that get the make/ buy blend right. As NOA chairman Martyn Hart says: “If you want something done you can only do it three ways; do it yourself (in-sourcing), with a friend (shared service) or get someone else to do it for you (outsource). The only thing distinguishing the first two from the latter is the legal contract, but in the future those first two services will be progressively constructed the same way that outsourcing companies would, as these purveyors of services as the established best practice practitioners.” Over the next 25 years, we expect that outsourcing will be progressively accepted at all levels of business as organisations make decisions on where to place their resources in order to give them the maximum return. As outsourcing is accepted more and more, and standardisation increases, there will be less contractual issues for ‘normal’ outsourcing

services like ITO and BPO. Outsourcing continues to be the only sure-fire way to obtain strategic business step change that simply would not otherwise be possible, either organically or through simple acquisition. As outsourcing to specialists become more and more commonplace, the NOA’s mission is to facilitate and promote successful relationships that bring benefits to end-users, supplier and advisories alike. It aims to do this by creating formal and informal networks to aggregate and share best practice, both at home and abroad. At the start of 2012, it appointed a new board member for international – arvato global BPO director Debra Maxwell. Debra will lead the global direction of the NOA by promoting best practice, service excellence and innovation internationally, and fostering a greater understanding of offshoring. This will include liaising with other trade bodies, interest groups and embassies, developing external links for the NOA with outsourcing activities in the Middle East, China, India and Europe. Upon taking office, Debra said: “It’s a real honour to be appointed to the NOA board and I’m excited about helping to position the UK as a key hub in international outsourcing. Much of the innovation and best practice in international outsourcing is led from the UK, so we should be at forefront of the debate.” The debate around outsourcing will continue to fire in 2012 with the NOA-backed campaign ‘Outsourcing Works’. ‘Outsourcing Works’ is the biggest, collective industry movement undertaken to date. It is set to educate the full business community about the benefits of outsourcing and prove that outsourcing really works: through both research and real life examples, it will prove and promote the true value of outsourcing, not only by making explicitly clear the multiple benefits on offer, but by amplifying them by spreading messages of best practice. The time is right for this campaign. The outsourcing industry is now mature, and according to research from Oxford Economics, the second largest contributor to UK GDP (second only to the UK’s financial services industry). All workers within it know that outsourcing is a dynamic and varied profession, which touches all aspects of business life. However, it is largely the unsung hero. And rather than entering a period where we can show our true worth, we are likely to enter a difficult time, where others may try and tarnish our reputation. At the NOA, we believe the time is right to come out and stand up for our industry and really show its true colours. Now we can all do this in isolation, but we all know that has minimal impact. As such, we believe coming together and pooling our strengths and ideas will have significantly more impact and could really change the perception of outsourcing among government, buyers, press and employees, as well as the public. This in turn will deliver growth and stability to the sector, a legacy that we hope will last for another 25 years! March 2012 • GBM • 65

NATiONAl OUTsOUrciNg AssOciATiON The CenTRe of exCellenCe in oUTsoURCing The NOA’s vision is to be the pre‑eminent organisation in the UK that enables and promotes successful outsourcing for the benefit of end‑users, suppliers and supporting intermediary organisations by:

• Creating formal and informal networks to aggregate and share good practice in the outsourcing industry • Promoting the benefits of outsourcing to organisations who operate in the UK and globally • Representing the UK outsourcing community’s interests and influencing decision makers and business leaders • Collaborating with other industry bodies within the UK and globally for the benefit of the UK outsourcing community

To find out more visit or call our membership department on +44 (0) 20 7292 8686

Belgium Outsourcing: Spotlight on renegotiation, termination, exit and re-tendering

Linklaters LLP Tanguy Van Overstraeten Partner, technology, media & telecommunications, Brussels Tel: (32 2) 501 94 05 Bastiaan Bruyndonckx Counsel, technology, media & telecommunications, Brussels Tel: (32 2) 501 91 99

As the European sovereign debt crisis turns into a full-scale global economic downturn, putting profit margins under pressure, many customers with existing outsourcing arrangements are reviewing them closely to assess whether they still represent value for money and whether there is any scope to drive down costs and take out non-essential services. A number of these customers may even decide to early terminate their existing outsourcing agreement and, where needed, re-tender to identify less expensive supply sources. Renegotiation From a customer viewpoint, the success of any renegotiation exercise will largely depend upon the flexibility built into the existing agreement and the strength of the relevant provisions, ie, the customer’s BATNA (best alternative to a negotiated agreement). Customers whose outsourcing agreement contains flexible terms in relation to downsizing or upsizing services, those with robust value for money provisions (eg, benchmarking) and those with flexible termination provisions will fare best. Conversely, those with early termination penalties, minimum volume or revenue commitments or whose services would be difficult and time-consuming to transition to another provider or to re-insource may lack the necessary commercial leverage to drive out more additional value from their existing relationships. Termination Termination may be considered by a number of customers, either as an alternative to an unsuccessful renegotiation of their existing outsourcing agreement or as a deliberate choice to enable re-tendering. If early termination for convenience is foreseen in the agreement, it usually comes at a certain cost for the customer. Indeed, in addition to a (lengthy) notice period, most outsourcing agreements provide for ‘termination compensation’ due by the customer against the right to terminate. Often, the amount of such ‘termination compensation’ is linked to the remaining duration of the outsourcing agreement, the cost of termination for convenience being highest in the early years of the contract and lower towards the end of the normal term. Prohibitive termination penalties may force customers to look for alternative ways to terminate their outsourcing agreement with the effect that an increased number of outsourcing arrangements may become contentious. Customers who are trapped in long-term outsourcing arrangements that no longer meet their business needs, and are not sufficiently flexible to be adapted, and who are unable to negotiate acceptable exit terms, may decide to go for termination for breach instead. Companies are generally more likely to litigate over failed outsourcing arrangements in a downturn, where every penny counts, than in stable economic conditions where settlements are more common. Exit Whether contentious or not, any exit from an existing outsourcing arrangement is difficult

and triggers a number of substantial risks. Customers are well-advised to ensure that their outsourcing agreements impose upon the supplier an obligation to provide ‘termination assistance’ to enable an orderly and timely transition of the services from the incumbent supplier to the new supplier (or the customer, in the event of re-internalisation) and to minimise any disruption to the customer’s business. The importance of an efficient exit from an outsourced relationship is greatly increased if the services are being supplied from offshore. The reality is, however, often far more complex, as customers find out that exit plans have not been drawn up and/or updated regularly and such has remained unnoticed due to lack of appropriate contract management. In addition, because of the difficulty to plan any exit in detail in advance, termination assistance provisions often remain vague, leaving much to be decided and agreed at the time of termination or expiry. Undefined costs of termination assistance are a wellknown example. Exiting an outsourcing arrangement is also likely to trigger a transfer of staff under the European Acquired Rights Directive (ARD), as implemented in national law. Where the incumbent supplier is being replaced by a competitor, the customer may find itself in a difficult position, having to negotiate the terms of transfer-out with the incumbent supplier and the terms of transfer-in with the new supplier. In the event of offshoring, the customer is usually faced with the prospect of either bringing the function back onshore without the staff in place to support it, or transitioning it to another offshore supplier with no guarantees that key staff will transfer to the new supplier. Another area of risk in case of termination or expiry is the transfer of subcontracts. Some outsourcing agreements indeed provide for the right for the supplier to transfer (or the obligation of customer to accept the transfer) of such subcontracts in case of termination or expiry, especially if it concerns contracts that originally resided with the customer and were transferred to the supplier at the start of the outsourcing relationship. Depending upon the scope of what has been subcontracted and the terms thereof, such transfer-back may considerably limit the ability of a new supplier to realise savings upon re-tendering. Re-tendering At the end of the outsourcing relationship, many customers find themselves unable to provide the necessary information that is necessary to draw up a meaningful request for proposal for a re-tendering. Conversely, suppliers are reluctant to co-operate and provide full details, citing intellectual property and trade secrets concerns. Hence, the need for customers to contractually impose upon the supplier a clear obligation to co-operate and provide information to assist in the re-tendering exercise by the customer. March 2012 • GBM • 67

business services

global Taking the offshoring challenge

It is surprising how often outsourcing and offshoring are confused with each other, or used as interchangeable terms. The two are, of course, not the same: it is perfectly possible to outsource something without offshoring it. Offshoring is a form of outsourcing that involves the supplier moving the outsourced activities from the country in which they are currently being performed, to another country. Put another way, not all outsourcings are offshorings, but most offshorings are outsourcings. Why does this distinction matter? Because when entering into an outsourcing transaction that has an offshoring element, there are additional issues over and above the usual complexities of an outsourcing that the customer would need to be aware of and deal with. In this article, we will highlight just a few of the issues that customers should be mindful of when they offshore any activities. Long-distance vendor management

Clifford Chance LLP André Duminy Partner Tel: +44 207 006 8121 Richard Jones Director Tel: +44 207 006 8238

In any contract where the supplier is located in a different jurisdiction, or where activities are carried out from a distant location, just how will the customer enforce the contractual rights it has? Take audit rights as an example; something most customers insist on having. It is one thing to have the right to audit, but if you cannot in practice make use of it because the suppliers is thousands of miles away or (even worse) you do not even know where the activities are being carried out, what is the point of fighting tooth and nail for those rights? Another example concerns exit: just where can all of the data be found that should be transferred back to the customer? For financial services organisations such as banks and insurers, which are generally required by their regulators not only to have stringent provisions in their outsourcing contracts to deal with issues, but also to enforce them, it can prove to be much more than just an inconvenience and may even lead to regulatory censure. Disputes If something goes wrong and things end up in dispute or there are damages to be claimed, it is all well and good to have agreed that the courts in the customer’s country have jurisdiction (this is something most outsource customers insist upon). But once you have won the day and have that judgment in your hand, just how do you enforce it against a supplier that has no presence in your country? There are many countries that do not recognise foreign judgments, so is it the right decision to insist on local governing law and local courts? Or would it be better to insist on an alternative form of dispute resolution or choose a neutral governing law and courts whose judgments will be enforced in the supplier’s home country? Cross-border data transfers Offshoring will typically involve the movement of data from one country to

68 • GBM • March 2012

another, or to several other countries. Attention needs to be paid to data privacy restrictions on the international transfer of personal data (for example, employee or retail customer data), which may require particular forms of contract to be put in place between the customer and the supplier, local regulatory approvals to be obtained or other compliance steps to be taken. This is particularly an issue for customers based in the EU looking to offshore to countries, such as India or the US, which do not have such stringent data privacy laws, but similar issues arise in some other countries. Account may also need to be taken of the risk that foreign prosecuting and regulatory authorities could demand access to data held within their jurisdictions; and in a few cases offshoring arrangements may run up against absolute requirements to keep records of particular kinds, for example, tax records, within the customer’s jurisdiction to ensure easy access by its own regulators, or at least to allow swift online access where records are held abroad. Employee-related issues Sometimes customers are unconcerned about the ‘TUPE risk’ at the end of the contract (ie, the automatic transfer of employees from the supplier to the customer or a new supplier), because the services are being offshored to a country that does not have laws to that effect. But what happens if the customer has no control over the location from which the services are being provided and the supplier moves the delivery team to a ‘transfer’ jurisdiction? If this were to happen, the customer could face a very substantial additional cost at the end of the contract that it had not envisaged at the time it entered into the relationship. These issues can only really be considered, and the contract adapted to deal with them, if the customer realises there will be an element of offshoring in the outsourcing. For the most part, it should be quite clear when something is being offshored, but sometimes a supplier’s solution includes an element of offshoring that the customer may not be aware of, and equally as often the customer may be unconcerned by this, as long as it receives the services at the levels that have been contracted for, at the new (reduced) price. Customers risk not thinking through these issues, and not giving sufficient thought to their suppliers’ solutions, at their own peril.

Estonia and partly the Baltics Business outsourcing in the Baltics

Law firm SORAINEN Urmas Volens Specialist counsel Tel: +372 6 400 900

Estonia, Latvia and Lithuania are often looked at as the ‘ex-Soviet countries’, where business practices cannot possibly be free of political and economic uncertainty. The aim of this article is to show that contrary to such notion, the Baltic States are on the rise to becoming the so-called ‘Bordic countries’ with a valuable borderline location and implementation of Nordic business culture. Despite the three countries sharing the same goal, their means for achieving them are different. Each Baltic State has its own legislative system and therefore uniform guidelines for doing business cannot be provided. Due to space limitation only recent developments of the Estonian legislation are discussed and other Baltic States are on the waiting list for future articles. The Estonian legal system adheres to the continental-European civil law tradition. Legal principles are organised into a number of codes, whereas the basic structure of Estonian civil law is similar to that of German Civil code providing legally certain, cost-efficient and flexible opportunities for doing business. Furthermore, the Estonian Law of Obligations Act is considered a great achievement even in the European legislative landscape due to its well-formulated rules and efficient regulation. It has influenced the drafting of the Draft Common Frame of Reference as well as the Common European Sales Law. Companies in Estonia are governed by the Commercial Code, which lately has been modified in order to meet the modern requirements and also to adapt to the European legislation. A limited liability company can now be registered within a day (within 12 minutes the fastest). Moreover, it can be conveniently done electronically without even having to leave home. To promote entrepreneurship, natural persons as founders can register a company without making contributions to the share capital. Additionally, only one management board member is required (no supervisory boards, councils or secretaries need to be appointed) and citizenship or residency requirements are abolished. Information regarding the existing companies can easily be accessed through the Commercial Register, which provides a quick and convenient public search engine. Even the annual reports of companies are publicly accessible making it convenient to carry out background checks on business partners. Fair business practice is additionally ensured by the Land Register, which is a title-based electronic register. Entries made in the Land Register are presumed correct. Digital structured data exchange with other basic registers like Land cadastre, Commercial Register, Population register and the notarial information system, reduces the occurring of mistakes rendering the system trustworthy and reliable. To guarantee efficient and speedy workflows for businesses all communications with the

Commercial Register and Land Register take place electronically. They can be accessed via ID card, mobile ID or through online banking. This project is one of a kind in Europe and its efficiency is proven by the fact that several other countries strive to emulate it. In 2009, Estonia reformed its formerly rigid labour law and implemented a new modern approach to labour market. The aim is to ensure flexibility and security in employment relations. The new Employment Act is based on the principle of freedom of contract, providing for less formal requirements for contractual relations and substantial reduction in the bureaucracy. The conclusion of fixed-term contracts is now allowed in all cases and the deadlines for giving notice and the amounts payable by the employers as compensation upon cancellation have been reduced. Dismissal procedures are made easier and the employer is entitled to decrease salary unilaterally where it is necessary due to economic circumstances. To ease the financial burden of redundancies for the employer, the payment of redundancy benefits is shared by the employer and the Estonian Unemployment Insurance Fund. Rules for protection of confidential information and non-competition have also been set in place safeguarding the interests of employers. Further positive developments can be pointed out in several other areas. For example, concerning the ease of transaction, intra-group demergers and mergers can be executed in as little as two and a half to three months. Additionally, the Estonian tax regulation provides companies with an opportunity for an indefinite deferral of corporate income tax, unlimited loss carryforward machinery and tax neutral dividend pass-through system. As a result of all the aforementioned developments and achievements Estonia has arisen to 24th place in the World Bank Doing Business 2012 ease of doing business rank becoming an attractive destination for investors and businesses all over the world. Foreign entrepreneurs are often sceptical about the impartiality and efficiency of the court system in countries they are unfamiliar with. Concerning Estonia, such scepticism is overrated. Estonia’s judiciary is insulated from government influence. The rule of law is strongly enforced by an independent and efficient judicial system. Property rights and contracts are well enforced and secure, effective anti-corruption measures are in place and speedy proceedings help to save both time and money. Finally, SORAINEN being a leading regional business law firm with fully integrated offices in Estonia, Latvia, Lithuania and Belarus can guarantee that foreign businesses have access to highly qualified legal experts who professionally support and guide their clients throughout the process of outsourcing. March 2012 • GBM • 69

business services

USA Responsible sourcing: A business imperative Baker & McKenzie LLP Michael Mensik; Peter George Partners Tel: 312-861-8941; 312-861-6587

The transfer of responsibility for performance of any material task to a service provider can be a complex undertaking. Frequently such tasks are subject to regulation or touch upon the integrity of financial records, and even when performance is delegated to a service provider, the customer remains legally responsible for the performance of the task. In today’s heated political climate, the negative press that may come from poorly considered sourcing activities may illicit presidential attention. Customers need to ensure, through an appropriate methodology, that any such delegation of tasks is done responsibly. Our responsible sourcing methodology is one process that customers may consider using to address legal and regulatory risks associated with sourcing events. There are three components to our responsible sourcing methodology. First, identify the internal controls related to the functions being sourced and map those controls against the proposed solution. Second, inventory the laws, regulations and internal policies and procedures that govern the functions being sourced and assess how the sourcing solution ensures compliance with these conditions. Third, identify the assets that will be impacted by the outsourcing and confirm that these assets will be treated appropriately with respect to the proposed sourcing. Internal controls Most companies have well documented internal controls. Where a function is to be sourced, the responsible sourcing methodology helps the customer determine how the objectives behind these internal controls are achieved through the proposed sourcing event. Simple tools can often be used to cross-reference between the internal control objectives of the customer and various proposed solutions. Once such control objectives have been identified and mapped against proposed solutions, the parties can generate rules to ensure that the customer’s control objectives will be achieved on a going forward basis. The business value derived from this component of the responsible sourcing methodology is both a well coordinated approach to achieving internal control objectives and a 70 • GBM • March 2012

clear understanding from both the customer and the service provider as to how those objectives will be met. Legal and regulatory compliance The legal and regulatory compliance issues applicable to the function being sourced will depend on the customer’s industry, the function being sourced and the architecture of the proposed solution. The responsible sourcing methodology helps parties: identify the legal and regulatory compliance requirements applicable to a particular activity; differentiate between those legal and regulatory obligations that the client should retain and the service provider should accept; and, structure the relationship to satisfy those requirements. Responsible sourcers must consider legal and regulatory issues by function, by industry and by jurisdiction, since compliance obligations differ greatly both by the nature of the function being sourced, the customer’s industry and jurisdiction. The responsible sourcing methodology helps parties identify and distinguish the legal and regulatory obligations applicable to the particular functions and solutions being sourced. Once the legal and regulatory compliance obligations are identified, the responsibility for compliance with those obligations should be clearly allocated between the customer and the service provider. In many cases, compliance obligations will go hand-inhand with policies and decisions over which the customer will elect to retain control. In those instances, responsible sourcers accept accountability for their policies and decisions. In other cases, the compliance obligation will be so closely linked to the function being sourced that the compliance obligation must become the service provider’s responsibility. Responsible sourcing providers accept the responsibility that comes with the delivery of those services. Sophisticated sourcing providers or niche providers for particular market segments may allocate legal and regulatory compliance responsibility in their recommended solutions. Customers who have followed a responsible sourcing process will be

prepared to compare their legal compliance requirements against those solutions and have a comfortable basis for evaluating the solution and identifying any compliance gaps. Identifying those gaps early in the sourcing process provides sufficient leadtime to address such gaps in a responsible manner. Asset identification A third prong of the responsible sourcing methodology addresses assets and the impact that a sourcing event may have on such assets. Identifying what people, facilities, equipment, software, third party contracts and other assets will be impacted by a sourcing event is critical. Responsible sourcing requires knowing what the impacted assets are and where they are located. A responsible sourcing methodology starts with internal due diligence in order to ensure an accurate assessment of what is being impacted. From that starting point, parties can then determine what obligations the customer and the service provider will have with respect to those assets and what laws affect the transfer of such assets. Those obligations become necessary conditions that must be satisfied by the sourcing solution. Only by identifying those conditions early in the process can the parties ensure that the sourcing solution is responsible. In summary Responsible sourcing is not a luxury, it is a business imperative. A responsible sourcing methodology can help mitigate sourcing risks and the time required to conclude sourcing transactions. The three components of a responsible sourcing methodology that we recommend clients address early on are: identifying the internal controls related to the functions being sourced; assessing the laws and regulations applicable to the functions being sourced; and, diligencing the assets that will be impacted by the sourcing solution. We recommend all persons invested in the success of the sourcing transaction consider as early as possible how to ensure that the sourcing event is conducted responsibly. It is not just good citizenship, it is good business.

Global vision and local expertise for the sustainable growth of your business in Brazil.

The fifth largest country in the world is an emerging market, investment graded and giant in natural resources that offers to your business a fast growing economy combined with legal and regulatory safe environment. The corporate world talks about that and Baker Tilly Brasil can transform it into competitive advantage to your business with innovation and expertise. Our more than 400 professionals in eight strategically located offices are ready to assist you to succeed in an increasingly competitive and attractive business scenario. Visit us:



Ta x


São Paulo • Belo Horizonte • Fortaleza • Manaus • Porto Alegre • Recife • Rio de Janeiro • Vitória

March 2012 • GBM • 71

comPany FormationS


company Formations

Business entry Strategy 2012 72 • GBM • March 2012

AUSTRIA Andrea Zacherl Attorney at law at rechtsanwaelte.tusch. rechtsanwaelte.tusch.flatz.dejaco. Muehletorplatz 12

6800 Feldkirch Phone: +43 (0)5522 – 39 100 Facsimile: + 43 (0)5522 39 100 1

Business start-ups in Austria Profound consultation is advisable when starting up a company in Austria. Capital requirements and liability risks, tax and social security laws, legal obligations to submit annual accounts and to disclose personal shareholders’ information to the competent commercial court should be assessed thoroughly by legal and tax experts in order to enable clients to choose the legal form of company most suitable for their specific needs. Whether the start up is intended by an individual or a group of partners is one of the major factors in the decision making process. Individual enterprises Setting up an individual enterprise in Austria is easy to handle, fast and cost effective. There are no formal and legal requirements to draft articles of incorporation and to submit them to the competent commercial court for further evaluation. Individual enterprises are not subject to specific accounting regulations; therefore their accounts are not reviewed by the commercial court. However, registration of the individual enterprise’s company name, domicile, mailing address, nature and purpose of the business, as well as personal data concerning the sole proprietor in the commercial register is possible, yet not obligatory. No initial capital needs to be raised by the sole proprietor, who is responsible for business-related decisions and is liable with all private assets for business-related debts. Limited liability companies Limited liability companies are one of the most popular legal forms of companies in Austria. They can be set up by an individual or a company alone or by a group of partners/companies. If the company is formed by means of cash

contribution the original shareholder(s) is/are obliged to raise an initial capital amounting to at least €35,000.00, of which at least €17,500.00 must be paid into the limited liability’s Austrian bank account. If the company is formed by more than one shareholder, each shareholder must subscribe a capital contribution of at least €70.00. The initial capital endowment can also be contributed by means of a combination of cash contribution and contribution in kind. As long as the contribution in kind does not exceed the cash contribution by more than 50 % no further requirements need to be fulfilled; otherwise the company is subject to an evaluation of assets, the shareholder contributing the assets, and the nominal amount of the initial contribution granted to the shareholder. This process of evaluation can result in significant delays and is not advisable for clients who wish to start up a business within a short period of time. Registration of limited liability companies in the commercial register is obligatory and has a constitutive effect; this necessarily implies that the limited liability company gets into existence as a legal entity the day of its registration in the commercial register. Being a legal entity, the company itself is liable for all business related debts with company’s assets. Shareholders are directly liable only in exceptional cases, eg in case of significant undercapitalisation. There are, however, stringent liability rules for CEOs who are liable with personal assets for leading the company with the diligence of a prudent businessman, liable to the fiscal authorities and the social insurance agency for payment of the company’s dues and taxes, liable to creditors for filing a bankruptcy petition as soon as possible and criminally liable for company related misdemeanours.

Limited liability companies need at least one CEO, who does not have to be a shareholder. If the company has more than one CEO the form of the power of representation (individual power of representation or joint power of representation) is determined according to the shareholders’ decision. CEOs are not obliged to be Austrian citizens and do not have to have a domicile in Austria. Due to stringent formal and legal requirements - in particular the requirement to draft articles of incorporation in the form of a notarial deed and to get the application for registration in the commercial register as well as other documents needed for incorporation notarised - setting up limited liability companies is cost intensive. However, an application for a remission of several dues and taxes (eg, the company tax of 1% of the subscribed capital) can be filed by entrepreneurs who were not active in comparable fields of business in Austria over the past 15 years. All documents needed for the incorporation as well as all annual accounts are subject to review by the commercial court. Annual accounts need to consist of at least a balance sheet, the profit and loss statement and an appendix; larger companies are also expected to disclose an annual report. Company profits are subject to 25% corporate income tax; profit distribution is subject to taxation of 25% capital gains tax. In case all company profits are distributed the total tax burden amounts to 43.75%. If a limited liability company is a shareholder of another limited liability company in Austria or the EEA and gains profit from this participation this profit is not subject to taxation until the profit is distributed to an individual; in the latter case the capital gains amounts to 25%.

March 2012 • GBM • 73

comPany FormationS

NEW ZEAlAND Helmores Wealth Limited Peter Wyllie Director Tel: +64 3 366 5086

MAURITIUS CK (CORPORATE SERVICES) 5th Floor, Chancery House, lislet Geoffroy St., Port louis, Mauritius Camille Desvaux de Marigny – Chief Executive Officer Telephone: (230) 212 22 15 | Telefax: (230) 208 2986 |

New Zealand ‘look through companies’ A new company regime in New Zealand took effect from 1 April 2011. The amended Income Tax Act 2007 (NZ) provides for ‘look through companies’ (the description ‘look through companies’ simply refers to their fiscal transparency). New Zealand provides tax neutral legal architecture through the use of New Zealand ‘foreign’ trusts and limited partnerships and now ‘look through companies’. Basic features of ‘look through companies’ They are available for use by both residents and non-residents, and are an orthodox New Zealand limited liability company. The company: has five or fewer shareholders; is a New Zealand resident for tax purposes; shares have the same voting and participation rights; and, has only natural persons or trustees (which may be companies) as shareholders. Income, expenses, tax credits, rebates, gains and losses of a ‘look though company’ will be passed on to its shareholders pro rata with their shareholdings in the company. This creates a fiscally transparent vehicle identical in its tax treatment to the New Zealand limited partnership. like a limited partnership, a ‘look through company’ retains its benefits of separate legal personality. There are no inheritance or land taxes or any estate or stamp duty in New Zealand. Uses for international wealth structuring A foreign shareholder of a ‘look through company’ that only receives foreign sourced income will not be subject to tax in New Zealand. Such companies can be used in conjunction with other vehicles. For example: the share capital of a ‘look through company’ may be owned by a New Zealand ‘foreign’ trust (or another offshore trust) and if income is non- New Zealand sourced it will be tax neutral in New Zealand. A New Zealand ‘look through company’ could be the limited partner of a limited partnership. Provided the limited partnership does not derive New Zealand sourced income and the ‘look through company’ as limited partner does not have any New Zealand resident shareholders or other New Zealand sourced income, then there will be no withholding for tax in New Zealand. A New Zealand ‘look through company’ likely uses might be: trading, investment holding, or closely held, closed ended collective investment funds. If structured correctly, they do not require audit nor do they need to file accounts. Helmores Wealth Limited can assist you with the provision of trust company, registered office, directorship and limited partnership services. We would be happy to discuss the above further with you on a no-obligation basis. 74 • GBM • March 2012

Over the years, Mauritius has proved to be a reputable and internationally recognised, competitive and dedicated global financial centre that attracts investors not only for its tax incentives and its numerous and advantageous OECD model double tax treaties, but also for the high level of services provided by qualified and bilingual professionals at affordable costs, the political and economical stability of the country, the progressive regulatory framework of the global financial sector and its integrity (Mauritius has never been listed on the OECD black list and gray list). Mauritius is seen as a low tax jurisdiction of substance. Mauritius is broadly used to invest in Africa and Asia and remains the favourite platform for investments in India. Structures available in Mauritius include company limited by shares; company limited by guarantee; company limited by both shares and guarantee; limited life company; unlimited company; and, limited partnerships. In order to make use of the fiscal incentives and take advantage of the various tax treaties offered by Mauritius, we recommend investors to set up category one global business companies (GBC1). GBC1 are tax resident in Mauritius and are taxed at an effective maximum rate of 3% after application of deemed foreign tax credits. Applications for GBC1 are processed within four to ten business days. Who we are CK (Corporate Services) is the first firm in the country to have obtained an offshore certificate for international legal services and management of companies issued by the Mauritian Financial Services Commission and is the international arm of De Comarmond & Koenig, which is the oldest law firm in Mauritius, dating back to 1828. Services offered by CK (Corporate Services) include but are not limited to: legal advice on the project and the legal structure to be adopted and securing the appropriate legal structure; drafting of constituting documents of the company to be incorporated and related agreements; application for licensing; management of GBC1 including provision of support services such as resident directors, company secretary, registered office etc; securing work and residence permit; registration of ship and aircraft (ie, tax clearance, coordination with the relevant authorities); and, trust creation and administration.

GIBRAlTAR Gonzalez and Partners

CHIlE Tax Compliance & Accounting Chile ltda. José luis Benítez Partner Tel: 562 9523393 Mobile: 569 99199389

Ms Jennifer Monaghan GIBRAlTAR, Suite 6, Watergardens 4, Gibraltar | 00350 200 71851 SOTOGRANDE, Plaza Del Agua E11, Puerto Deportivo de Sotogrande, E11310 Sotogrande, Spain | 0034 956 790 013 MARBEllA | Avenida Ricardo Soriano 20, 7 D, E29601 Marbella, Malaga, Spain | 0034 952 901 622

Trusts, companies and residency: 2012 - the year to invest in Gibraltar? Accounting and tax rules in Chile: A prominent country to invest in Chile is the best evaluated emerging economies of latin America and one of the most highlighted worldwide. Its political stability, serious and responsible macroeconomic management and austerity in the management of their fiscal policies has allowed it to become an attractive destination for foreign investment, which has come from all over the world. Fiscal discipline is one of the strongest pillars of Chile’s strong image abroad. Even though constant growth was interrupted by the global economic crisis of 2009, fiscal balance in 2010 showed significant progress in deficit reduction, bringing the country back to its historical trend. This situation was reinforced in 2011. In terms of accounting, Chile beginning in 2009 the adoption of IFRS standards, standards that are globally applicable and focused to standardise accounting practices across countries. These rules establish the requirements for recognition, measurement, presentation and disclosure relating to the transactions and events that are important in the financial statements presentation. This change has positioned Chile on accounting recognition rules of the globalisation of markets international as Europe, Australia, Canada, among others. In terms of taxation, Chile has a tax system, autonomous and efficient. IRS has achieved a simplification of the enrolment of taxpayers, reducing significantly the time taken to obtain TAX ID numbers (RUT) to the new domestic and foreign taxpayers that begin its business activities in Chile. In Chile there is to date, among other taxes, a corporate tax rate of 18.5% for the business year 2012, plus an additional tax levied on the remittance of profits abroad with a 35% rate when the funds out of our country using as a tax credit corporate taxes paid annually for such profits. In the same sense there exist municipal taxes on capital determined for tax purposes, which may range from a rate of 0% to 0.5%. It is important to define from the beginning the VAT treatment on sales or services that take place in Chile. The applicable rate of VAT is fixed to 19%. Finally, it is necessary to warn of the indications that the government of Chile has been made on making tax system reform. It is possible that corporate tax increase, the creation of additional taxes on non-renewable resource extraction and possible low taxes rates for dependent workers among others. This is an important issue to consider in the agenda of the Chilean taxation for this year 2012.

“Its time for investors to seek new pastures. There are always safe havens if you look hard enough” ( overseasproperty/8898858/Top-10-property-safe-havens-abroad.html) The financial crisis has thus far left Gibraltar largely unscathed. The property market is buoyant, with a number of projects under construction or in the early planning stages. Together with the fact that Gibraltar has undergone a complete image overall, now being considered to be one of the leading centres within the EU, complying with best practices, and adhering to all EU regulators and directives, means it has become a leading offshore financial centre with characteristics that set it above par with its competitors. From individuals seeking to establish high net worth residency, business looking to relocate, personal tax restructuring and estate planning, Gibraltar could be the perfect solution; particularly for British. investors because of the common language and currency. Gibraltar is a British overseas territory offering a Mediterranean climate. It is only two and a half hours from the UK with a number of flights daily to and from various UK airports. It boasts stunning beaches, and has the benefit of geographical proximity to Spain, lending itself perfectly to a diverse range of leisure pursuits; from skiing, (two hours drive from the Sierra Nevada mountain range), to golf, (20 minutes from Valdarrama and a number of other fabulous golf courses) to windsurfing (30 minutes from the windsurfing paradise of Tarifa) to name but a few. This, together with political stability, a solid economy and legal system based on UK common law, and an exemplary commercial and professional infrastructure, this jurisdiction really offers the whole package. Gibraltar also affords compelling tax benefits further to the implementation of a new tax regime last year; firstly in relation to wealthy individuals, under that Category 2 Tax system, wherein individuals have their tax capped at a maximum of approximately 30,000pa, based on the total income of approximately 80,000. This together with, no capital gains tax, inheritance tax, wealth tax, or gift tax lends more of a rose tinted lens to the jurisdiction; the cherry on the ‘rock’ being that neither interest income nor dividend income from quoted companies are taxed. As for companies, Gibraltar now implements a competitive yet internationally acceptable tax regime whereby all companies pay a flat rate of 10% taxation, and there is of course no VAT. Gonzalez and Partners are licensed by the Financial Services Commission and have 20 years experience in creating companies, Trusts and offshore structures tailored to the needs of every client. We offer a bespoke service to assist our clients in every aspect of relocating to, doing business in or operating from Gibraltar, at competitive prices. Contact our professional advisors for a confidential consultation in our offices in Gibraltar, Marbella or Sotogrande. March 2012 • GBM • 75

comPany FormationS



Michael Reason Senior partner, New Zealand barrister and English solicitor and director of limited Tel: + 44 207 489 2048 | + 64(0)9 309 5191 |

Pragna Thakkar And Co. (law Firm) Mr Deepak Thakkar | Partner | Tel: +912222630399 +912232907875 Mob: +919322232990 |

New Zealand: A first rate financial centre

Foreign direct investment in India

New Zealanders have a reputation for their honesty and their country as an easy place to do business. It has as English legal system, following its origins as a colony and Imperial Dominion, and a first rate judiciary. Its currency and economy have been buoyant during the Asian lead Australasian commodities boom. Even the earthquakeaffected city of Christchurch enjoys an insurance financed building spree and the adventure tourist attraction known as the ‘aftershock’.

India has rapidly changed from a restrictive regime to a liberal one. Foreign direct investment (FDI) is encouraged in almost all the economic activities under the automatic route. FDI into India went up by an impressive 56% indicating the sentiments of investors, reported Times of India 10 January 2012. The Economic Times of 13 February 2012 reported: “The European Union, India's leading partner in terms of trade and investment, is hopeful of higher foreign direct investment in India in the coming years. Europe is India's largest source of foreign direct investment with a stock of 34.4 billion euros and India's investments in Europe is also fast reaching 7 billion euros. There is scope to grow much more.”

The government, aiming to establish a financial centre; has legislated for a look-through company regime which commenced in April 2011 that permits regular New Zealand resident companies to have the status of a tax-transparent corporate body. It has adopted the Portfolio Investment Entity (PIE) regime - a set of collective investment entity tax rules that permit zero-rate income tax (looking through to non-resident members) on foreign income. The recently adopted limited partnership (LP) is a registered partnership useful for private equity investment structuring with legal person as opposed to body corporate status. A New Zealand trust settled by a non-resident with foreign income may have tax-free status in New Zealand. Amendments made to the foreign trust regime under the previous government encourage the use of qualifying trustees of foreign trustees and non-intrusive trust registration. A foreign trust is able to act as a holding vehicle of a look-through company (lTC) or a lP, enabling income of the lTC or lP to pass through the trust to the beneficiaries. The government has recently enacted a number of nontax measures following the collapse of a number of non-bank finance companies, including: establishment of a Financial Markets Authority to regulate investment business; licensing of financial service providers; training and licensing of financial advisers who are required to join a complaint resolution and adjudication scheme; anti-moneylaundering legislation; and, the forthcoming obligation for New Zealand companies to appoint either a New Zealand resident director or a registered agent. Although the foreign investment zero-rate PIE came into effect on 29 August 2011, the foreign investment variable-rate PIE will take effect on 1 April 2012, allowing a PIE with both New Zealand and non-New Zealand investors and investments. New Zealand has transformed its tax and finance legislative landscape over the past few years and will shortly have the elements in place to develop into a first rate financial centre. Research suggests that a high proportion of New Zealand expats intend to invest in New Zealand (‘Foreign Investment from Kiwis: The potential for New Zealand’s diaspora to invest in our productive economy’: October 2011). A challenge for its image-makers will be how to preserve it’s ‘100% pure’ and honest brand while shaking off some of its Wild West image and being seen as a first rate but hard-nosed financial centre. 76 • GBM • March 2012

The result of the global survey shows India in a list of first five best countries as the most favourable destination on the basis of different business locations. Retail business is the pillar of Indian Economy. Until 2011, the Indian government did not consider FDI in retail sector. On 10 January 2012, the government of India, Ministry of Commerce & Industry, Department of Industry, Policy & Promotion, issued a press note reviewing the policy on FDI in retail sector. The revised position is that FDI, up to 100% under the government approval route, would be permitted in single-brand product retail trading, subject to specified conditions laid in that behalf. FDI in India is permitted under: automatic route and Foreign Investment Promotion Board (FIPB). The business establishments permissible: sole proprietary concern; partnership firm including limited liability partnership (llP); private limited company; and, public limited company. In addition to the above, the following establishment is also permissible for foreign investors: liaison office; representative office; branch office; project office; and, joint venture. PTC law firm is known for its ability to develop successful strategies for business transactions through in-depth legal skills and consideration of commercial concerns. legal services provided by PTC law Firm cover advisory, consultation and solution for starting up ventures, opening bank accounts and identifying appropriate routes for FDI. It covers drafting of various types of contract, guiding offshore clientele on formation of Indian company, acquisitions of real estate, and portfolio investments. It also covers obtaining of DIN, DSC, obtaining company name approval, drawing memorandums of association, articles of association, and getting the appropriate person to sign memorandum of association in systematic manner. The team of associated chartered accountants provides tax & regulatory services that meet the clients’ expectation.

TUNISIA Dr Samir Abdelly Abdelly & Associes North Africa Tunisia: Eagle Building BP 342; les Berges du lac, Cité les Pins ,lots 356,1053 Tunis, Tunisia

Tel: +216 71 967 808 Fax: +216 71 967 788

Company formations and business entry strategy Tunisia is situated in North Africa, bordering the Mediterranean Sea and close to Europe. The strategic geographic position of Tunisia made it a crossroad of civilizations throughout history, and makes it nowadays a new business opportunities country. The Investment Incentives Code promulgated by the law n° 93-120 of December 1993, sets forth a business entry strategy in favour of either local or foreign investments by stating a wide range of incentives mainly to fully exporting companies, companies operating in regional development zones in addition to general incentives that benefit all companies (eg, collected dividends are income tax exempted). Investing in Tunisia can be by creating new entities in Tunisia, mainly under the form of a joint stock company or a limited liability company. A joint stock company requires at least seven shareholders, who can be natural persons or legal entities with a minimum capital of TND 5,000,00 if it does not call publicly for savings and TND 50,000,00 if it calls publicly for savings according to law n° 2009-16 of 16 March 2009 amending the Companies Code. A limited liability company requires at least two shareholders whose liabilities are limited to their contributions, no capital minimum is required for such company according to the same Law. Investing can be also by creating branches or representation offices in Tunisia of the parent companies, and the related establishment procedures are relatively simple.

Abdelly & Associes North Africa, is well built-in in the Tunisian investments environment. Our law firm, established in Tunisia as a continuity of a long standing family legal tradition from 1923, has grown considerably, presided over by Dr Samir Abdelly since the 90s, who is regarded as a practitioner in many pertinent fields such as energy. Abdelly & Associes is the largest law firm in the area to be accredited with the internationally recognised quality standard. The firm represents the majority of the biggest projects in North Africa and the Middle East. Abdelly & Associes teams are acknowledged to be among the best in Tunisia, Algeria, libya, Mauritania and Dubai. Abdelly & Associes advises a wide range of commercial clients on the structuring, negotiation and documenting of commercial transactions. The firm also advises on: public offerings and private placements; public ventures; privatisations; bank mergers & acquisitions; mutual funds; corporate reorganisations; M&A; full package due diligence and closing deals services; project financing; tax; corporate restricting; corporate governance; agency& distributorship; securities; financial products; capital market law; financial leasing law; bankruptcy & insolvency; business law; commercial law; trade regulations; international transactions; equity & finance; competition law; consumer law; computer law; and, and takeovers. The firms handless issuer bids, proxy contests and preparation, director’s circulars and annual meetings reports.

March 2012 • GBM • 77

Bout ique boutique law firms

Law Firms

78 • GBM • March 2012

An Overview OF the OFFshOre investment FUnds indUstrY ‘Investment fund’ (IF) is a broad generic term encompassing all types of collective funds and schemes, including mutual funds, hedge funds, real estate funds and private equity/venture capital funds. An IF is an arrangement whereby a group of investors pool the ownership of respective property into a collective scheme losing day-to-day control and direct ownership of the assets concerned and the property is then collectively managed by the operator of the scheme. If the fund vehicle is open-ended, the investors have a right to demand redemption of their shares at regular and specified intervals should they would like to exit the fund. Redemption proceeds are then calculated as a share of the fund’s net asset value at the relevant redemption day - increases and decreases in the value of the fund’s assets are directly reflected in the amount an investor can withdraw. Closed-ended funds are those where investors do not have this right. They are generally utilised for real estate projects or for investment ventures where the partners are few and know each other. The fund industry worldwide is a hugely important part of the financial system, with fund vehicles of various types, strategies and sizes holding in excess of €13trn according to some researches and over US$24.7m according to others. It is quite common to refer to a European merchant as the person who established the first mutual fund ever in the Netherlands in 1774. The first fund outside the

Netherlands was the Foreign & Colonial Government Trust created in the UK in 1868. Mutual funds were introduced into the US at the end of the XIX century with the first open-end mutual fund with redeemable shares being established in 1924. After the crash of 1929, the investment fund industry did not grow substantially until the 1950s, stopping only for a small period of time during the 2008/9 sub-prime crisis. In 2010, the industry started to grow again both in terms of assets under management and in terms of number of active funds. An offshore fund is a collective investment scheme established in an offshore financial centre such as the British Virgin Islands (BVI), the Cayman Islands, Bermuda, Luxembourg, etc. They offer eligible investors significant tax benefits compared to many high tax jurisdictions. Investment managers have found other advantages in choosing offshore over onshore domiciles for setting up their funds including: flexibility to set out investment strategies and objectives without restrictions generally imposed by onshore regulators in the name of consumer protection and the consequent absence of expensive reporting requirements; there may be regulatory advantages; offshore centres tend to have governments that recognise the importance of working closely with the private sector to provide legislation that meets market needs; offshore centres are home to a concentrated level of fund expertise; and, many are considered investor-friendly

and internationally regarded as financially secure. The regulatory framework in force and effect in most of the offshore jurisdictions typically take a two-tier approach, making a distinction between funds offered to members of the public, which require a high degree of regulation because of the nature of potential investors, and funds either offered to sophisticated investors or only marketed among a small and selected group of investors somehow connected with the investment manager. Offshore jurisdictions allow different structures to be used for investment funds and a combination of structures may also be permitted. In most cases funds can be set up as companies, partnership or unit trusts. The prospective investors the investment manager targets will be one of the key factors in determining the selection of the appropriate form of investment vehicle. Finally, limited partnerships are commonly utilised when there is a rather high minimum investment requirement and fund interests are mainly offered to institutions. They are also common for private equity types of investment. While regulatory and marketing considerations are important in selecting whether the corporate, unit trust or limited partnership form is used, the fiscal implications for investors will generally be the determining factor. The objective here is for the investment fund to achieve tax neutrality so that an investor

will be in the same tax position whether he makes his investment directly in the underlying assets or through the fund. Another important consideration would be whether there is any interest for the fund to be listed on a stock exchange, in which case a company would be the best choice. Master-feeder structures are also frequently used as they enable both onshore and offshore investors to participate in the same investment structure. Using the US as an example, the above is normally achieved by having the US taxable investors investing directly in a limited partnership or another type of entity domiciled in the US and having the offshore investors, together with the US tax exempt investors, investing in an offshore company. Each feeder will then invest all of its assets in the master fund; the investment manager will then manage the portfolio at the master fund level. One of the advantages of the structure is administrative ease, since the investment manager will only need to maintain one set of books for the investments at master fund level. Based in Montevideo, Uruguay, Litwak & Partners is an award winning boutique law firm specialising in advising Latin American fund managers, fund administrators and local law firms in connection with the establishment of offshore funds irrespectively of the jurisdiction of choice. The firm acts as general counsel for funds domiciled in the BVI, the Cayman Islands and other jurisdictions such as Canada, Luxembourg, Guernsey, etc.

Litwak & Partners Martin Litwak – managing partner

March 2012 • GBM • 79

Boutique Law FirmS

SPreadinG the KnOwledGe GlOBallY Globalisation and relocation of the skilled working force are spreading knowledge faster than ever before. The phenomena created the need for a uniform global legislation in the field. This is a short review of the draft proposal for a global corporate relocation treaty – GCRT. As a derivative of globalisation, the volume of the experts’ relocation has increased dramatically over the past two decades, and industry leaders estimate it globally at 1.5 million experts per year. These experts facilitate the transfer of all kinds of knowledge and know-how in multinational corporations, and throughout the business sector, while at the same time promote foreign investment, encouraging GDP growth, and facilitating the expansion of education, etc. To date, each country has its own laws and regulations over the issuance of work permits to foreign experts and managers. The proposed GCRT has few goals, as follows: to establish a legal right for any private business entity to relocate experts as they need; to set global legal principles and guidelines for the regulation and procedures involve in the process of experts relocation; and, to facilitate specific arrangements between any group of countries, on any issue concerning experts relocation. The principals set forth in the GCRT and in its proposed protocols can also be implied through the use of additional

protocols to bilateral or multilateral agreements, such as free trade agreements, between any number of countries. CUrrent sitUatiOn In the absence of a treaty, or a legal right for corporate relocation, any company that wishes to relocate experts may face difficulties and unknowns. Due to a general immigration policy that usually only tries to prevent worker immigration, some countries did not fully acknowledge the huge differences between experts and workers and the benefits experts bring to the country and to the society. The GCRT will minimise that risk, thereby encouraging companies to do business, and transfer new and state of the art knowledge to countries. It will also enable the signatory countries to ensure the protection of their core legitimate interests, such as security related, the prevention of terrorist activity, the prevention of crime and public health issues, such as defending against contagious diseases and epidemics. AdvantaGes tO all cOUntries Global corporate relocation became a routine way that enabled all kinds of experts and essential professionals to be relocated from their countries of residence to another country (the ‘target country’) for a limited period of time, in the course of their work. Corporate relocation enables the realisation of commercial

and business opportunities that develop and exist in the target country It is presumed that if an expert’s posting in the target country is prevented, the business enterprise or the business project will suffer significant damage, or will not happened. Corporate relocation brings significant gains to all the relevant parties, such as: the creation of many new jobs in both the target country and in the country of origin; economic benefits arise from the transfer of knowledge to the target country; social benefits stemming from the new education, new skills, and new jobs; an improvement in the level of both technological education and wages; and, contribution to the technological and practical abilities of the target country. Due to the following, corporate relocation does not involve the economic and social costs that characterise the employment of unskilled or quasi-professional foreign workers: foreign expert cost much more local experts, thus reducing the volume to what is necessary; foreign experts are usually about 1% of the entire foreign population, which grants the target country a disproportionate amount of benefits more than any other group of foreigners; and, the experts, as a group, do not tend to stay in the target country for a long period of time, and leave the target country by the end of their assignments. According to accepted estimates on professionals in global

80 • GBM • March 2012

corporate relocation, the relocation phenomenon has grown at an average annual rate of over 10% to current level of 1.5 M in 2011. The cUrrent deFiciencies in GlOBal COrPOrate RelOcatiOn The absence of legal right, transparency and the uncertainty regarding the applicable regulation and procedures, for corporate relocation in the various countries, has a negative impact on the commercial certainty and on the stability of the international business environment. Experts, investors, HR managers or business people cannot know in advance what will be the criteria for their work permit applications. The solution proposed by the GCRT is to establish both legal base for the right of experts relocation, as well as suggested standards and protocols for regulations and procedures, through a multilateral GCRT, which will be open to signature by any interested country and will enable each country to add additional undertakings beyond the base level. Final remark The draft of the GCRT was prepared by Tsvi Adv Kan-Tor ( and Amit Acco ( in several international forums such as the Global Immigration Conference of the International Bar Association (IBA) and the IPBA. Comments, questions or insights are welcome.

The ‘America Invents Act’: Patent law in America re-invented The America Invents Act (AIA) was enacted into law on 16 September 2011. From administrative procedural changes to substantive law changes, the AIA is a set of laws that changes significantly patent practice in the US. In view of these changes, approaches to how US patents and patent filings should be managed, viewed strategically and challenged should be reviewed. Because of different enactment provisions, presently, only a minor portion of the AIA is in effect with the most significant changes yet to be enacted. The focus here will be on some of the major provisions of the AIA to come. The US currently uses a ‘first to invent’ system, which is

distinguishable from the ‘first to file’ system used throughout the rest of the world. With a ‘first to file’ system, superior rights in an invention are obtained by the first entity to file a patent application to the invention. In contrast, with a ‘first to invent’ system, superior rights are awarded to the entity who can prove earliest inventorship separate from any patent filing dates. Effective 16 March 2013, under the AIA, the US will adopt the ‘first to file’ system. In anticipation of this change, consideration should be given to how patent filings are managed in the US. Timeliness will become a more significant factor, with reliance on records, laboratory notebooks and the like to prove inventorship — presently a common practice —

becoming less significant. The AIA also provides for some new procedures for allowing a third party to challenge the validity of a granted patent. Presently, the US Patent Office offers re-examination, both ex parte and inter partes, for a third party to challenge validity of a patent. Under the AIA, ex parte re-examination remains, but inter partes re-examination is transformed into inter partes review (IPR). The most significant difference in this change being that IPR’s shall be conducted before a board of administrative patent judges, not an examiner as is done with inter partes re-examinations. The AIA also provides for post grant review (PGR), a procedure similar to opposition

Lou A Budzyn Partner Hoffmann & Baron, LLP 6 Campus Drive Parsippany, NJ 07054

proceedings offered in many foreign jurisdictions. A PGR can be based on any basis of invalidity (eg, inventorship), in contrast to IPRs, which must be based only patents or printed publications. IPRs and PGRs are due to come into effect on 16 September 2012. The full breadth of the AIA is beyond the scope of this article. The US Patent Office maintains an AIA microsite at http://www. index.jsp on which updates are posted. The attorneys at Hoffmann & Baron, LLP are reviewing the updates as issued. If you have any questions on the AIA, please contact Lou A Budzyn by telephone at (973) 331 1700 or by email at

Tel: (973) 331-1700 Fax: (973) 331-1717

Bout ique

Law Firms March 2012 • GBM • 81

SPotLiGht on hunGary

SPotLiGht on

hungary The largest British investors are Tesco (one of the leading retail companies in the country) and Vodafone, Hungary’s third largest mobile phone service operator. Other major British investors include CP Holdings, Shell, Unilever, BAT, Associated Newspapers and Intercontinental Hotels.

Hungary for success When it comes to doing business in Europe, Hungary is set to remain an attractive business market for UK companies. Its open and increasingly transparent economy, which has attracted more foreign direct investment (FDI) per capita than any other country in the region, is home to cutting-edge firms seeking innovative, cost effective products and solutions. Hungary is already one of the UK’s most significant EU trading partners. In 2010, combined trade between the countries exceeded £4.5bn - an increase of 30% from the previous year. Many UK-based firms enjoy a strong presence in Hungary with direct British investment currently at some £3.5bn. There is also a thriving local British Chamber of Commerce with some 180 members.

82 • GBM • March 2012

In fact, virtually every approach to investing in Hungary is open to British firms. There are more than 100 industrial parks, many with attractive incentives to new ‘greenfield’ investors. These high-quality, industrial parks, office premises and warehouse facilities can be found all over the country and each region and major municipality has developed its own incentive programme to attract foreign business.

British brands Hungary is a market of 10 million increasingly affluent consumers and a large number of Hungarians are prepared to pay a premium for durability, reliability and quality, which many associate with British products. Indeed, an invaluable advantage most UK companies will enjoy by default is that the UK and UK companies have a good reputation and are viewed positively in Hungary.

Well connected Located in the strategic heartland of Europe, Hungary provides good, constantly

improving, logistics infrastructure, linking it with seven neighbouring markets whose combined population numbers well in excess of 100 million. English is accepted as a business language in Hungary and investing in an existing company or establishing a joint venture with a Hungarian or foreign-owned company is relatively straightforward. Despite fierce competition in most sectors, there are a broad range of opportunities. These range from openings in healthcare, renewable energy, the aerospace and automotive industry, information and communications technology (ICT) through to urban regeneration.

Open for business Take infrastructure, for example. Substantial development work is underway at Hungary’s ‘liszt Ferenc’ International Airport, which is being upgraded over a three-year period. Key investments include new air cargo facilities, a 4-star hotel and business park with new offices, known as ‘Airport City’. There are business openings for different design works and supply and are open through tenders. There are openings for UK companies in the environment and water sector, with expertise being sought in innovative liquid and solid waste technologies, waste to energy solutions and cost effective package wastewater plants. With the UK rapidly becoming a global hub for leading low carbon solutions, British companies can offer Hungarian businesses a broad spectrum of bespoke, cost effective and innovative low-carbon technologies that can be tailored to local legislation and fiscal drivers.

Green future There is an increasing trend in Hungary towards establishing renewable energy plants, using biomass and wind resources. Most of the old generating plants are being refurbished or converted to biomass and gas-fired burners. Further investment will also be needed in upgrading the old coal and oil-fired blocks. The UK, with its extensive knowledge and experience in renewable energy, is well placed to benefit these changes. There are also opportunities for UK companies in the construction products side and in the emerging regeneration, green buildings and property development segments where expertise can be shared in designing and developing world leading energy efficient building processes to help Hungary meet its targets.

Soaring opportunities Aerospace is a growing sector in Hungary

and provides good opportunities for UK companies in areas like research, joint product development, training, consulting, subcontracting and technology transfer. With the UK home to some of the world’s most technologically sophisticated composite manufacturers - from the largest, complete new generation engines to the smallest precision components - its businesses are well placed to contribute to Hungary’s supply chain. Given Hungary’s well-advanced automotive industry, there are outstanding opportunities for joint production with Hungarian automotive firms. Specific expertise is being sought in leading edge technology, knowhow transfer and research and development (R&D).

Tech savvy The Hungarian ICT sector is well established, developed and competitive. Private business and consumer sales, especially multimedia and software, are driving the IT market. UK technologies, specific components and manufacturing support products and services are widely used in the electronics segment and expertise is in demand. There are opportunities in other sectors too. The Hungarian healthcare market, for example, has openings in the provision of medical equipment supplies, management consultancy, investment projects and healthcare and hospital management. And in the education sector, while the language training market in Hungary is competitive, there is always room for new and innovative methods to be introduced. English is also the first choice foreign language for many Hungarians.

Game plan Finally, in the world of sport, while the strategic and cohesive planning of London 2012 is setting a precedent for future hosts, the UK can share its knowledge and experience of preparing and delivering the Olympic and Paralympic Games with Hungary. Hungary has bid to host the 2020 Olympic Games and the U20 World Football Championship in 2013 - unlocking significant potential for mutual working.

A helping hand So how do UK companies go about doing business in Hungary? One way is through UK Trade & Investment (UKTI) - the government department that helps UK firms do business overseas and supports overseas firms to set up or expand in the UK.

Because every enterprise is unique, UKTI tailors its services to suit specific needs - from export training and networking opportunities to providing overseas contacts and bespoke market reports. UKTI’s team in Hungary has an in-depth knowledge of the market and can provide a range of services to UK-based firms looking to grow their business in the Hungarian market. Its Overseas Market Introduction Service, for example, has already helped some 800 UK firms over the past ten years from a range of sectors export to Hungary. Even if a company is not sure whether it is ready to trade overseas, UKTI’s Passport to Export programme will assess its readiness for international business, develop its export potential and help it start trading internationally. It offers new and inexperienced exporters capability assessments, support in visiting potential markets, mentoring from a local export professional and ongoing support once up and running. Once the initial homework has been done, UKTI can help with the business of starting afresh in a new country through its range of market visits and overseas missions, sectorspecific and networking events in-country. Various trade shows and exhibitions take place in Hungary throughout the year and can be an excellent way to meet potential customers face-to-face.

Key considerations From time to time, UK companies can encounter certain difficulties, including lack of clarity and transparency, bureaucracy, and language difficulties (especially with smaller companies and outside Budapest). The UKTI team in Hungary, working with the Hungarian authorities, local business organisations, legal and business professionals, and supported by a powerful home network in the UK, can provide support and advice to ensure a positive outcome. With Hungary’s highly open approach to foreign direct investment, coupled with the UK’s strong reputation across a range of sectors, now is the time for British companies to explore the ever-growing opportunities that are emerging in this dynamic and ambitious market, sharing technology, skills and expertise.

If you would like to find out more about doing business in Hungary, please take a look at the UKTI pages on or email March 2012 • GBM • 83

SPotLiGht on hunGary

A bridgehead between Eastern and Western Europe Hungary is a dynamic and evolving country located in central Europe with around 10 million inhabitants with the official language being Hungarian, and a common second language of German. With Budapest (‘Queen of the Danube’), its capital and biggest city, one of the most beautiful cities in Central Europe. Despite its geographical beauty and rich history, it is currently facing major political challenges as it tries to balance itself between its own identity and EU legislation. It is by far one of the most advanced countries in Central Europe in terms of making changes to a system or organisation to improve its competitiveness, one of the main reasons why their financial system is so well developed. Furthermore, the country has a high quality of the infrastructure, reliable work force (well trained and diligent) and a good framework of its regulations. Although the country is landlocked, it has the largest lake ‘Balaton’ in Western Europe. Tourism bolsters the economy of Hungary, however it relies heavily on foreign direct investment (FDI) because of their lack of natural resources, e.g. raw materials. Hungary is a member of the Organization for Economic Co-operation and Development (OECD) and the World Trade Organization.

As a result of the recent world economic crisis, Hungary is still encountering problems in its own recovery. In 2011, Hungary asked the International Monetary Fund (IMF) for support in the form of a loan. The main goal was to bring the budget deficit to below 3% by the end of 2011. Structural reforms were an essential measure for the government, especially to increase the country’s competitiveness and the credibility. These reforms include a reduction of the budgetary spending and a growth of revenue. After implementing fiscal measures, the country grew again in 2010 (with a growth of 1.2% of the country’s GDP). The growth was mainly due to an increasing consumption and growing exports of industrial production. The growth rate continued to 1.8% of the GDP in 2011. Predictions for the GDP in 2012 will be an increase of 1.7% and in 2013, an increase of 2.9%. Nevertheless, the Hungarian economy is currently considered unpredictable because of new policies the government implemented and therefore they asked the IMF for a line of credit in 2012 for the second time, and a similar request has been made to the European Commission. Hungary was part of the Bloc countries, which refer to the former communist states in Eastern and Central Europe. During the revolution in 1956, prime minister Imre Nagy promised free elections, wiped out the one party system, after negotiating with the Union of Soviet Socialist Republics (USSR) to withdraw the Soviet troops and ended the state security police. After Imre Nagy announced that Hungary would be neutral and had withdrawn itself from the Warsaw Pact, the Soviet Union attacked Hungary. In November 1956, Janos Kadar (party first secretary) announced the formation of a new communist government. Nagy was arrested and in the early sixties Hungary was reformed under Janos Kadar, who defected from this cabinet. Kadar introduced a more liberal economic and cultural course because of the animosity towards him and his party back in 1956. Slowly but surely Hungary moved to a Western parliamentary democracy and became one in 1988. Hungary had a long way to go to finally become a member of the EU. When they entered the EU in 2004, only 46% of its electorate took part. This low turnout is understandable, and lies in its history and relationship with the EU. In 1994, Hungary was one of the first former-communist

84 • GBM • March 2012

countries of Eastern Europe that applied to the EU, but it wasn’t until ten years later they finally became a member and as a result their enthusiasm had understandably faded. Despite this feeling of despondency, the country has today become an integral part of the EU and its economy. In April 2010, Viktor Orban, leader of the centre-right Fidesz party, won two-thirds majority votes in the parliament of Hungary. Europe’s economics commissioner Olli Rehn stated in January 2012 that Hungary will not get financial aid until the country changes laws to reduce the financial dependency on the Hungarian Central Bank and judiciary. In that same month, opposition protests took place because Hungarians saw Orban’s proposed changes to economic policy as a way to consolidate his power and to undermine the democracy. Hungary’s prime minister Viktor Orban recently stated that he is prepared to change the controversial laws. European legislators are also afraid that Viktor Orban will push the country back into authoritarianism because of Orban’s centralised views. He could do this simply by giving government full control, and place them above institutions that are protected by EU treaties with regard to their independency. If Hungary does not change its laws in accordance with the EU standards, the Court of Justice has the power to impose a fine or even suspend Hungary’s voting rights in Brussels. Hungary’s rate of unemployment rose over 11% in 2011, which does not seem exceptionally high compared with the average unemployment rate in Europe (9.9% in December 2011). Nevertheless, Hungary’s rate can’t be compared with the well-developed countries in Europe. The unemployment rate is caused by the recession, and isn’t structuralunemployment caused because there is a mismatch between skills needed and required skills for the workforce. It is seemingly hard for the unemployed to find work in new fields, because new sectors are not yet fully developed. Furthermore, the biggest problem is the drop in production, the main cause for the unemployment postworld economic crisis in 2008-2009. Hungary is also going through a major shift in regards to its main sectors of industry. The agricultural sector has been the prime sector of the country’s GDP rate for many years, but in 2012 it only represents 4.3% of the GDP. The main products in this sector are fruits, vegetables, cereals and wine. The sector of

services has now substantially taken over and currently employs 64.2% of the population, and is therefore the current most important sector. It focuses mainly on FDI in the fields of finance, retail and telecommunications, making up 66.2% of added value to the GDP. The industrial industry on the other hand, including automobiles and electronics, represents 15% of the GDP and has an export rate of 30%. This is partly due to the country’s openness to FDI in the industrial sector. As a result of the open economy model, foreign trade is 160% of the GDP. Due to the recent world financial crisis, the drop of imports became superior to the rise of exports, and the country’s trade balance became positive again. In 2009, the total import of goods and services increased by 10.7% and the total export of goods and services increased by 12.4%. Hungary’s largest trade partners are Germany and Russia, followed by the rest of EU members. Germany has an export rate of 25.2%. Above that, China is also a significant partner when it comes to foreign trade. In 2010, FDI increased with 16.23% compared with the preceding year. The main investing countries are Germany, The Netherlands and Austria. Hungary’s tax system is very favourable for foreign investment, which makes it even more attractive to invest in. Hungary has three national taxes: value added tax (VAT), corporate income tax and the local business tax. Hungary’s VAT rate is now the highest in Europe. It increased from 25% to 27% in 2011. In 2010, the Hungarian parliament approved a bill that reduced the corporate income tax from 19% to 10%, one of the lowest corporate income tax rates of Europe. Hungary’s absence of tax is usually levied on interest, royalties or dividends, which is made to foreign entities, makes it a very attractive destination for foreign companies to outsource their business operations to Hungary. After 1989, Hungary liberalised their trade regime and opened up their market for FDI. The FDI sector in Hungary and the country’s stocks per capita are one of the biggest in Central and Eastern Europe. The attraction of FDI in 2010 was US$2.3bn, whereas in 2011 it decreased to US$1.2bn. The main sectors of FDI were the food industry and low value textiles, but they have been changed to products of luxury vehicles, luxury tourism, modernised energy systems and information technologies.

Hungary’s state debt is still at a high level and public finances are declining. Because of their open economy, Hungary could be considered as being reliant on their main EU trading partners, such as Germany, and, in order to become financially healthy again, Hungary is partly relying on rises in EU capital. Furthermore, since their acceptance into the EU, many mortgage loans (two thirds are denominated in Swiss francs) were taken out by Hungarians. However the Forint, Hungary’s currency, lost a significantly high value since the financial crisis and therefore they are to this day struggling to pay off their debts. Thanks to the world financial crisis in 20082009, it has become very difficult to maintain the country’s investment appeal. As a result, the Hungarian government implemented new fiscal measures, and the new constitution came into effect on 1 January 2012. These included special loans created for banks, the improvement of bureaucracy red tape and also the reduction and facilitation of administration regulations. A lot of international companies have maintained their investment in Hungary, and even outsourced some departments, for example, call centres and accounting firms, because of their high productivity and currency exchange rate. This rate has made Hungary less expensive for foreign investors. Although Hungary has come a long way, and went through a significant transformation from a communist regime to a democracy in the later part of the 20th century, the country still has to prove that they are a fully recognised voice within the EU. Furthermore, they still need to prove to their fellow EU states that they are willing to implement measures based on EU legislation. For more on Hungary, head over to the Hungary portal on you can find articles and qualified service providers listed on the Hungary page where you’ll find all you need for your business operations in Hungary. We offer a Directory of International Trade Service Providers, with over 40,000 trading companies, agents and service providers listed in over 185 countries. Our knowledge resource also contains more than 18,000 market analyses and business tips on all countries and industries.

lauren Stephenson | Content & marketing manager | | +33 1 55 27 25 25 | Sanne Rouhl | Content & marketing assistant |

March 2012 • GBM • 85

SPotLiGht on hunGary

Sár and Partners Attorneys-at-law H-1051 Budapest, 16. Bajcsy-Zsilinszky út József Tálas Managing partner Tel: +36-1-457-0550 |

The need for accuracy and in-depth legal expertise in the IP field A decade of patent battle has reached a milestone recently at the Metropolitan Appeal Court in Budapest. The dispute between to Hungarian companies went back to the early 1990s when two foreign pharmaceutical companies bought a business branch of a Hungarian state-owned pharmaceutical company and invested in a joint venture company to continue a particular business. Unfortunately, there were contradicting transactions implied in the founding documents making it disputable whether certain IP rights were provided to the joint venture as in-kind contribution or just licensed against a licence fee. For years the joint venture company acted as owner of the IP rights, maintained or abandoned protection depending on its own interest, although the official records contained the founder as owner of the rights. In 2000, the Hungarian founder began to demand a high amount of licence fee based on the ill-defined old licence agreement. A long, complicated legal battle followed - in the absence of well-documented IP terms and conditions in the founding documents, the joint venture was not able to prove that the founders’ genuine intention was to transfer the ownership of all IP rights from the Hungarian founder into the new company in exchange of the investment of the foreign founders and the courts ruled that the former Hungarian state owned company, which has been privatised since then, was entitled to the licence fee. yet the joint venture company’s representatives

86 • GBM • March 2012

posed many objections against the claim as it suffered from many legal deficiencies in their view, raising know-how issues, whether a licence fee is due if patent protection was terminated before expiry, and whether the plaintiff is entitled to a licence fee for patents that it co-owned and failed to represent the co-owners consent to the licence. The court also appointed a technical expert to determine whether and how long the joint venture realised the claims of the patent. In 2012, the Court of Appeal rendered a final judgment regarding the plaintiff’s claim, awarding only 1/3 of the claimed amount with respect to some of the above objections made by the defendant. Only a detailed account could reveal the true complexity of this case, yet even this short summary allows the conclusion that during IP related investment it is crucial to clarify via documentation the status of IP rights, whether they are transferred or licensed. Status is advised to be recorded in the registry. It is advised to turn to those who have special knowledge in the field as beside general civil and commercial law knowledge, IP expertise is required when it comes to either investing in IP or litigating them (acknowledgements to Danubia Patent and law Office with which Sár and Partners represented the joint venture in this case).

March 2012 • GBM • 87

deaL directory

deal directory

european Goldfields completes acquisition of eGU Eldorado Gold Corporation (Eldorado or the Company) and European Goldfields limited (European Goldfields) announced on 24 February 2012 that they had completed the previously announced plan of arrangement whereby Eldorado acquired all the issued and outstanding securities of European Goldfields. Under the terms of the arrangement, former European Goldfields shareholders received 0.85 of an Eldorado common share and C$0.0001 in cash for each European Goldfields share. Eldorado issued 157,959,316 common shares pursuant to the arrangement. Upon completion of the arrangement, Paul N Wright, president and CEO of Eldorado Gold, commented: “We are pleased to have concluded this transaction, which will further enhance Eldorado’s position as a low cost, high growth, gold producer. We look forward to the successful integration of Eldorado’s new assets in Greece and Romania with our existing mines and projects in the region. We intend to provide detailed information on the Company’s plans for the new assets in April.” The transaction creates the premier high growth, low cost intermediate gold producer with a combined market capitalisation of approximately C$10.5bn; leading growth profile with expected annualised production growth of 30% over the next four years, reaching over 1.5 million ounces of gold production by 2015; strongly enhances Eldorado’s project pipeline with high quality near-term producing projects; provides the ability to finance planned growth opportunities with current balance sheet and strong cashflows from existing production; Eldorado’s dividend will remain unchanged with enhanced ability for growth as European Goldfields’ development projects are built; and is an exceptional re-valuation opportunity driven by compelling valuation, growth potential, transaction rationale and

88 • GBM • March 2012

management track record The European Goldfields shares were suspended from trading on AIM as of 7:30 am (GMT) on 24 February 2012, with cancellation and de-listing from AIM expected to occur on 27 February 2012. The last trading day of the European Goldfields shares on the TSX is expected to be on or about 28 February 2012. Eldorado is a gold producing, exploration and development company actively growing businesses in Turkey, China, Brazil, Greece and Romania. With their international expertise in mining, finance and project development, together with highly skilled and dedicated staff, they believe that their company is well positioned to grow in value as we create and pursue new opportunities.

“We are delighted to welcome the Chubb Emergency Response team to G4S, where they will enhance our existing monitoring and response service provision and offer a platform for future expansion in the marketplace.” G4S is the world’s leading security solutions group, which specialises in outsourcing of business processes in sectors where security and safety risks are considered a strategic threat. G4S is the largest employer quoted on the london Stock Exchange and has a secondary stock exchange listing in Copenhagen. G4S has operations in over 125 countries and more than 635,000 employees. For more information on G4S, visit

G4s PlC: Acquisition

Judges scientific PlC: Acquisition of Ke Developments limited

G4S, the world’s leading international security solutions provider, announced on 23 February 2012 the acquisition by G4S Secure Solutions (UK) limited of Chubb Emergency Response, one of the UK’s leading key holding and response services, from UTC Fire & Security, a unit of United Technologies Corp.

On 22 February 2012, Judges Scientific, the parent company of a group engaged in the design, manufacture and sale of scientific instruments, announced that Deben UK Limited (Deben), in which Judges holds a 51% indirect interest, has conditionally agreed to purchase the assets and trade of KE Developments limited (KED).

G4S will pay a maximum consideration of £17m in cash for the business; £14.3m of which was paid on completion.

KED is based in Toft, Cambridgeshire and, like Deben, designs and manufactures accessories for electron microscopy. Management intends to transfer KED’s business operations to Deben’s premises in Woolpit, Suffolk, and all of KED’s employees will be offered the opportunity to continue their employment at Deben.

Chubb Emergency Response is a key holding and mobile patrol business providing coverage throughout the UK to over 7,000 customers across 22,000 locations via a network of 28 dedicated offices and 247 employees. The acquisition will significantly strengthen the strategic development plans of G4S’s existing monitoring and response capability, allowing it to grow its patrol and response operations across the UK. Doug Hewitson, group managing director G4S Secure Solutions (UK), commented:

Deben will purchase KED’s fixed assets for £40,000 and will make a contingent goodwill payment capped at £300,000. The payment, spread over a period of five years, will be determined by the sales of the business post completion. In the year to 30 June 2011, KED’s sales totalled £975,000 and normalised profit was around break-even. Completion is expected to take place on or around 6 March

2012 and it is anticipated that the relocation exercise will be concluded within three months of completion. The board believes that this bolt-on acquisition will prove to be an advantageous addition to Deben’s electron microscopy business and will be earnings enhancing once the move to Woolpit has been completed. Gary Edwards, managing director of Deben, commented: “KED’s product range represents an excellent fit with Deben’s operations. Although the scale of KED’s output has lessened in recent years we are confident that the core business, supported by excellent technology, will thrive within Deben and offer distinct benefits to our customer base.” David Cicurel, chief executive of Judges Scientific, added: “We are pleased to be able to expand Deben’s growing microscopy business. This first acquisition for Deben demonstrates the ongoing value of our partnership with Gary.”

MedicX Fund limited: Acquisition MedicX Fund, the specialist primary care infrastructure investor in modern, purposebuilt, primary healthcare properties in the UK, announced on 23 February 2012 that it had completed the acquisition of five completed and fully let primary care medical centres in Grimsby, Ilkeston, Middlesbrough, Saltburn-by-the-Sea and Skelton. The purchase is by way of a corporate acquisition and the total consideration for the properties is £20m, less debts owed by the acquired company. The Fund intends to refinance the debt shortly from its existing facilities.

said: “We are very pleased to have completed this acquisition of five modern purposebuilt primary healthcare properties which meet with the Fund’s long term investment strategy.”

one Media Publishing Group PlC: Acquisition of new music catalogues On 23 February 2012, One Media, the PlUS quoted consolidators and acquirers of music and video rights, was pleased to announce that it had acquired the rights to several diverse audio only catalogues. The first catalogue originally traded for many years as the ‘Dressed to Kill’ catalogue of rights and comprises of over 100 albums of popular easy listening and off beat punk music tributes and original artists such as Tina Charles and Gloria Gaynor. The second catalogue of rights is a ‘Rap Hop’ collection of over 200 recordings with artists such as, 50 Cent, Mase, G-Unit, lil Wayne, lloyd Banks, Prodigy, Snoopy Blu, Spider loc, lil Vic, 40 Glocc, The Team, young Buck, Ras Kass, Seven, Chamillionaire, lil Scrappy, Mike Jones, Mobb Deep and Bobby Greek. The third catalogue is a collection of over 100 traditional yiddish Homeland Folk songs, which should prove a successful addition to their ‘World-Music’ collections. Further, a Spoken Word version of ‘Peter Pan’ has been acquired to add to the growing audio books collection. The above deals were concluded for an initial consideration of USD$12,500 (twelve thousand five hundred dollars) plus an ongoing royalty on future sales.

The MedicX Fund’s total property portfolio now comprises 70 properties throughout the UK of which 61 are complete and nine are under construction. The annualised rent roll for all properties is now £17.1m.

Michael Infante CEO/chairman said: “It really doesn’t get more varied than these collections but that is the way One Media works. We do not follow any particular trend and will acquire music to suit all tastes from all varieties of vendors so long as we are able to monitise it.”

David Staples, chairman of MedicX Fund,

One Media is a provider of music and video

rights to the music industry, with a strong focus on ‘nostalgia’ performances. Nostalgia is a very fast-growing market, particularly among the affluent baby boomer generation. Strategically, One Media’s mission is to be a consolidator of music rights, and through a steady stream of acquisitions since joining Plus in September 2006, it has built a rights library including music by Ike and Tina Turner, George McCrae, Edwin Starr, Marmalade The Royal Philharmonic Orchestra and Brian Poole & the Tremeloes, The Sex Pistols, T.Rex, lou Reed, Katrina, Mica Paris, Blink 182, Ashanti, Matt Monro Jnr, Tony Christie, Anita Harris, Space, Rick Wakeman, Fat Boy Slim, Pavarotti and over 1200 hours of classical music, to name but a very few. It enjoys sales in the fast-growing digital music and video market, as well as the traditional music industry. During 2009 One Media signed strategic deals with EMI Music Publishing, Sony ATV, and Universal Music Publishing in music catalogue representation deals. One Media is now an eligible company for the enterprise investment scheme (EIS) and the venture capital trust (VCT). Highlights for year ending October 2010 were as follows: an increased turnover 53% to GBP 1,217,901; pre-tax profits up 279% to GBP 249,732; share buy-back of 52% of the Company’s shares and consolidated back to shareholders to enhance shareholder value; at the half year (April 2011) Turnover increased by 9.4% to GBP635,713 (2010: GBP580,949); pre-tax profits increased by 44.5% to GBP151,123, (2010: GBP104, 556); and a maiden interim dividend of 0.0345p per share was announced. Post-period end highlights were as follows: 12 May, Michael Infante was awarded the PlUS SX CEO/chairman of the year award; 1 June, the acquisition of the Bible and the Quran in spoken word form; 2 June, an agreed digital exploitation of its catalogue via the ‘Amazon Create a Disc’ system; and, a second interim dividend of 0.0345p per share announced November 2011.

March 2012 • GBM • 89

deaL directory

Waterlogic PlC: Acquisition of Aqua service As Waterlogic Plc (AIM: WTl.l), a leading manufacturer and global distributor of pointof-use (POU) drinking water purification and dispensing systems, was pleased to announce on 20 February 2012 that it had conditionally agreed to acquire the share capital of Aqua Service AS (Aqua Service), a leading vendor of water dispensers and coffee machines based in Sweden and Norway for a cash consideration of NOK 37m (approximately US$6.35m), subject to working capital adjustments. The vendors of Aqua Service are Botts and Company ltd., which has a majority shareholding, and several other smaller shareholders. Completion is conditional on approval of the Norwegian Competition Authority and is expected to take place during March 2012. Aqua Service has 10,885 machines installed in the field in Norway and Sweden, with POU water dispensers, its fastest growing segment, currently representing 16% of its installed base. The board of Waterlogic believes that the growth in conversion from bottled water dispensers to POU water dispensers represents an excellent opportunity for the company as customers look for more convenient, cost effective and environmental solutions. Waterlogic expects to accelerate this process of converting customers to POU. Unaudited revenues, adjusted EBITDA and net loss (the latter two adjusted to add back non-recurring payments made to board members) for Aqua Service for the year ending 31 December 2011 were NOK 60.97m (approximately US$10.46m), NOK 7.17m (approximately US$1.23m) and NOK 3.20m (approximately US$0.55m) respectively. Jeremy Ben-David, Waterlogic, Group CEO, commented: “We are pleased to announce

90 • GBM • March 2012

Waterlogic’s third acquisition of 2012. “Aqua Service is an established business with an excellent customer base and a growing POU water dispenser segment. Waterlogic expects to accelerate this growth through the introduction of Waterlogic’s point-of-use water purification technology and associated products into Aqua Service’s customer base. This will help to replace bottled water in these markets and make sure that Waterlogic provides the existing customers of Aqua Service with the best possible water solutions in the future. Additionally, the expected cost savings and other synergies from the combined group represent an excellent opportunity to further grow our presence in the Scandinavian markets. We look forward to working more closely with the Aqua Service team going forward.” Waterlogic Plc (AIM: WTl.l) is a leading manufacturer and global distributor of mains attached point-of-use drinking water purification and dispensing systems designed for environments such as offices, factories, hospitals, hotels, schools, restaurants and other workplaces. Waterlogic is a Jersey registered company. Waterlogic was one of the first companies to introduce POU systems to Europe and has been a leader in the POU market in terms of product design and quality, the application of new technologies and in sales and service. Waterlogic has an extensive and expanding independent global distribution network in place, reaching 50 countries across five continents. Waterlogic products are currently being sold in North and South America, Europe, Asia, Australia and South Africa. Waterlogic’s leading markets are the US and Western Europe in particular, Germany, France, Norway, Sweden and the UK. Of the 1.5 million new installations in the business-

to-business market between 2005 and 2010, approximately 73% incorporated POU technology of which Waterlogic had a 26% market share. The directors believe that the movement away from bottled water coolers (BWC) to POU water dispensers is set to continue its current trend as a result of cost, convenience, health benefits and environmental considerations. Waterlogic’s Firewall™ ultra-violet (UV) technology is one of the most effective water purification technologies for POU water dispenser applications currently on the market and is the only technology certified as being able to guarantee 99.9999% pure water 100% of the time, a fact which has been confirmed by over 5,000 physical tests in independent laboratories. The innovative Firewall™ technology incorporates a highly-specialised, compact UV system in the faucet/tap, which ensures that water passes through the UV system immediately before it is dispensed into a cup. This point of differentiation for Firewall™ is unique in the POU market. For the financial year ended 31 December 2010, the Group generated revenues and adjusted EBITDA of US$68.3m and US$11.4m, respectively, and had approximately 500,000 machines installed as at 31 December 2010. As part of Waterlogic’s ongoing commitment to providing safe water, the Group has pledged to donate US$225,000 over the next three years to WaterAid. WaterAid is a renowned international non-profit organisation that transforms lives by improving access to safe water, hygiene and sanitation in the world’s poorest countries. Since 1981 WaterAid has reached 15.9 million people globally with safe water. Website:

© luca kleve-ruud/save the children

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.

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.



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

March 2012 • GBM • 91

Deutsche Bank

Looking for a global custodian in the Channel Islands? Deutsche Bank has the solution. Deutsche Bank in the Channel Islands provides a complete global custody solution for open and closed-end funds worldwide, complemented by banking, treasury and credit facilities. For more information please contact: Keith Johnson Head of Custody Solutions Tel: +44 1481 702206 Email:

Euromoney Awards for Excellence: Best Global Bank 2011

Adam Buxton Relationship Manager, Financial Intermediaries Tel: +44 1534 889223 Email:

Deutsche Bank International Limited is regulated by the Jersey Financial Services Commission and licensed by the Guernsey Financial Services Commission to conduct Banking and Investment Business 92 • GBM • March 2012

Global Business Magazine - March 2012  

Covering: Women in Law Oil & Gas Sector Report Germany Report Business Services Financial Process Outsourcing Company Formations Boutique La...

Read more
Read more
Similar to
Popular now
Just for you