HSBC OFFER on INR Remittances* is extended till 31st March 2010!

HSBC Mauritius are extending their current offer on INR remittances to India - for another 3 months.

HSBC Mauritius provides a unique advantage to Global Business clients who need to remit funds into India:

SAME DAY VALUE** - HSBC Mauritius can remit Indian Rupees into India on the SAME DAY**.
Exciting offer - TT remittance charges and FIRC costs waived
Competitive INR rates - HSBC Mauritius offers competitive INR rates for your FEX conversion from major convertible currencies.

* Please note that terms and conditions apply.
- Offer is valid for Telegraphic Transfers (TT), provided the respective currency conversions into INR are effected with HSBC Mauritius.
- Charges, other than HSBC Mauritius TT remittance charges and FIRC fees, are excluded from the offer.
** Instructions must be received by HSBC Mauritius' standard cut-off time.

Guernsey : GFSC issues a simplified overview of its AML/CFT framework

The Guernsey Financial Services Commission ("GFSC") is currently consulting on proposed changes to its AML/CFT legislation. The changes will require postage stamp dealers, bullion dealers, firms of accountants which are currently not registered with the Commission and firms (including sole practitioners) of insolvency practitioners, auditors and tax advisers to register with the Commission and to comply with the AML/CFT regulations and with the rules in the Commission’s handbooks.

The Commission is conscious that the requirements of the regulations and the rules will appear to be rather complex and onerous, especially to firms which have not previously been subject to any form of AML/CFT regulation or supervision. In order to assist such firms, the Commission has drafted a guidance paper which provides a simplified overview of the requirements of the regulations and the rules in the Handbooks. However, whilst this information and guidance paper has been prepared to provide an overview, it is not intended to provide detailed guidance on the requirements of all the regulations and the rules.

Click here for a copy of the guidance paper.

Double Taxation Avoidance Agreement between Bangladesh and Mauritius

A Double Taxation Avoidance Agreement (DTAA) between the People's Republic of Bangladesh and the Republic of Mauritius was signed on December 21, in Port Louis, by the Vice-Prime Minister, Minister of Finance and Economic Empowerment, Dr Rama Sithanen and Dr Dipu Moni, Foreign Minister of the People's Republic of Bangladesh.

The DTAA which will give a further spur to the positive evolution of economic ties between the two countries will provide greater tax certainty for businessmen while making clear the taxing rights of Mauritius and Bangladesh on all forms of income arising from cross-border economic activities between the two countries. It will also give a boost to cross-border investment by protecting investors from direct or indirect double taxation and enhance the commercial and economic relations between the two countries and broaden investment opportunities for the business community.

Salient features of the DTAA are namely; interest and royalties have been exempted in the country of source; as regards dividends it may be taxed in the country of source at the rate of 10 percent. A Protocol has, however, been included in the Agreement providing that a lower rate than that of 10 percent would apply if Bangladesh, agrees to such lower rate in any other treaty with a third country in the future; capital gains follow the OECD Model, that is each country retains taxing rights on capital gains that may be derived by sale of shares and securities; and Double taxation will be eliminated in both countries through the credit mechanism together with a “tax sparring clause” to provide for additional incentives to investors.

It will be recalled that trade between Bangladesh and Mauritius has been growing at an encouragingly fast pace. Over the period 2004 to 2008 imports from Bangladesh have increased by more than ten-fold and exports have more than doubled. The main items exported are manufactured goods and Mauritius imports mostly cotton yarn, woven fabrics and pharmaceuticals. In the near future, the two countries are also looking forward to concluding an Investment Promotion and Protection Agreement.

In recent years economic interactions between the two nations have also evolved beyond trade. There are presently some 6,000 Bangladeshi workers employed in the following different sectors of the Mauritian economy: agriculture, construction, health, tourism, ICT and manufacturing.

MFSA : Guidelines to Redomiciliation of Offshore Funds to Malta

Guidelines for Redomiciliation of Offshore Funds to Malta

British ex-pats lose £2 million in sham investment scheme

Five men have been jailed after using overseas independent financial advisors to attract investments in a supposed commercial property loans business.

Operating under the name Prudential Commercial Investments ("PCI") the scheme was a fraud from inception. Around £1.93 million was defrauded from 56 investors.

The investors were predominantly British ex-pats retired or living abroad. They believed on the basis of advice from their independent financial advisors ("IFAs") that their funds would be channelled into a lending scheme for commercial property buyers in the UK secured by mortgages and would reap high returns. Instead the fraudsters diverted investors' funds to offshore accounts for their personal benefit.

Two of the defendants pleaded guilty. Verdicts on the other three were returned at Worcester Crown Court yesterday and HHJ McCreath, Recorder of Worcester, passed sentenced on all five. [See Proceedings below]

The PCI operation

The PCI group of companies has no connection with the well known Prudential Assurance Company, although a number of the victims thought that the companies were linked. PCI Ltd was incorporated in Belize, PCI Inc in the Seychelles and PCI Admin in the UK.

The Seychelles company was the one used for marketing and its bank account received the investors' monies. No promotion was undertaken by PCI directly with investors; instead PCI approached IFAs operating in the ex-pat investment sector. Many of the IFAs had their own established client base and PCI relied on the IFAs to pull in the business.

The PCI website, its business and sales literature were produced to a high standard, intended to impress IFAs and investors alike that PCI and its commercial loans business was a safe and attractive investment opportunity. PCI offered the IFAs a commission incentive of between 4%-6% and relied substantially on the trust that investors had in their IFAs to advise them on their financial affairs. The IFAs were told by PCI that it had a five-year trading track record, that it worked with well-known and reputable service providers and that it had a portfolio of some US$20 million.

Those IFAs who agreed to promote the PCI scheme were unwitting pawns in this designed fraud. Not all IFAs approached were persuaded by the PCI sales pitch but some were taken in and ultimately some were brought down when the fraud was discovered and lost the trust of their clients.

During the course of the investigation the SFO and West Mercia Police saw witnesses from around the world. The SFO sent out over 50 letters of request to different jurisdictions and received considerable assistance from a number of countries, particularly the Czech, Malaysian and Australian authorities. Witnesses travelled from Pakistan, Brazil and the Far East to give evidence at the trial in Worcester. An unusual feature of this case, for a fraud investigation, was the use of aliases by the Roope twins and Matthews. This led to the West Mercia Police Identification Team travelling to Kuala Lumpur to undertake identification procedures in accordance with the provisions of the Police and Criminal Evidence Act.

The defendants

Two pleaded guilty to conspiracy to defraud;

Peter Roope (d.o.b 14/04/57), and Gareth Matthews (d.o.b 19/06/57)

Both men were resident in Prague and had been extradited in order to stand trial. Roope used the alias Paul Reid and Mathews used the alias James Williams in order to disguise their true identities. They were respectively the number one and two in the fraud and played a key role in persuading the IFAs that this was a genuine investment product. Both Roope and Matthews had previously worked in the financial service industry and used their experience and knowledge to help them dupe the IFAs into believing that this was a legitimate scheme.

Three found guilty of conspiracy to defraud

Charles Frisby (d.o.b 12/03/44), Douglas Miller (d.o.b 07/08/59) and John Roope (d.o.b 14/04/57).

The jury were unable to reach a verdict in relation to a sixth defendant, David Usher (d.o.b 02/05/57), and were therefore discharged.

Frisby, based in Yorkshire, helped to set up the PCI business, drafting its business documents and marketing literature. Miller of Nottinghamshire worked with Frisby and produced the PCI website and literature. John Roope (twin of Peter and who used the alias John Rogers), lived in Australia and, along with Gareth Matthews, promoted PCI in South East Asia. He too was extradited to face trial. Usher ran the administration office in Ludlow and looked after the bank accounts.

Four other persons were named on the indictment but not proceeded against (either deceased, not extraditable or played a junior role).

Investigation and Proceedings

The scheme operated between March 2003 and March 2004 and came to an end when West Mercia Police received a tip off, via the Metropolitan Police, from an IFA based in the Far East who believed the scheme was too good to be true. The scale of the damage could have been much greater had the operation not been interrupted by the prompt intervention of West Mercia Police's Economic Crime Unit.

The investigation commenced in March 2004 and the defendants were charged in June 2008. The trial opened on 5 October 2009, with Peter Roope and Matthews pleading guilty on 28 September 2009.

The five were sentenced to prison terms as follows:

Peter Roope to seven years reduced to four years and eight months due to his early plea
Gareth Matthews to six years reduced to four years due to his early plea
Charles Frisby to four years and six months
Douglas Miller to three years and six months
John Roope to two years

Confiscation of assets is to be sought. The SFO will ask the Court to compensate the victims of the PCI investment scheme from any assets that are recovered from the convicted.

Mauritius : FSC Annual Report 2009 - Global Business

Management Companies

Management Companies ("MCs") are licensed under Section 77 of the Financial Services Act and are also regulated under Part IV of the Act. Applications for global business licences are channelled through MCs.

The Financial Services Commission ("FSC") has reviewed the application process relating to Management Licences to ensure enhanced assessment of the capacity of the proposed company to deliver quality services.

The FSC has licensed 18 MCs during the period 2008/2009 as compared to 12 MCs in the previous financial year. Although there was a downturn in the economic situation as a consequence of the financial crisis, this has not adversely affected the number of applications received during the current financial year.

Category 1 Global Business Licences

For the period 2008/2009, 1,277 Category 1 Global Business Licences were issued by the FSC. There was a record number of new incorporations in 2008. However, immediately after the financial crisis hit developed markets, there was a decline in the number of applications for new licences.

Collective Investment Schemes (CIS)

The FSC authorised 112 CIS for the period under review. The number of new CIS hit a record high during the calendar year 2008 but fell down in the aftermath of the financial crisis. This resulted in a net decrease of around 28.2% in the number of CIS authorised during the year under review as compared to the previous reporting period.

Category 2 Global Business Licences

For the period under review, 1,550 Category 2 Global Business Licences were issued by the FSC. The level of new incorporations peaked during the calendar year 2007 but dropped as the financial crisis unfolded.

Market Trends

The reported turnover from MCs grew by 30.1% over the previous year, amounting to a total of USD 118,183,149. During the period under review, the total reported Profit Before Tax (PBT) generated by MCs recorded a 25.2% increase over the previous year, to reach USD 48,166,667. The 10 leading MCs accounted for 64.9% of the total turnover.

Annual Report

Conyers Dill & Pearman : Listing of BVI Companies on the HKSE

On 15 December 2009, The Stock Exchange of Hong Kong Limited (“Hong Kong Exchange”) announced that the British Virgin Islands has been accepted as an acceptable jurisdiction for an issuer’s place of incorporation under Chapter 19 of the Listing Rules, paving the way (subject to applicants satisfying the criteria set out below) for the listing of companies incorporated in the British Virgin Islands on the Hong Kong Exchange.

In light of this, British Virgin Islands companies wishing to list on the Hong Kong Exchange may follow the streamlined process for listings set out in the guidance letter issued by the Hong Kong Exchange, and need not complete a detailed, line by line comparison with the Hong Kong Exchange’s joint policy statement regarding the listing of overseas companies issued in March 2007.

In addition to provision of requisite confirmations of the sponsor and legal counsel as to the adequacy of the shareholder protection offered in the British Virgin Islands and the ability of the applicant, under its memorandum and articles, to comply with relevant securities legislation in Hong Kong, an applicant must satisfy the following criteria:

* amend its memorandum and articles to address certain issues of shareholder protection where the protection afforded to shareholders is considered less stringent than in Hong Kong; and

* demonstrate a reasonable nexus between its place of incorporation and its place of business operations.

The key advantage for British Virgin Islands companies in being able to list directly on the Hong Kong Exchange means there should be no need for an applicant to undertake either (i) a restructuring of its business and operations through the establishment of a new Bermuda or Cayman Islands holding company or (ii) a redomicile of its place of incorporation by way of merger or continuation, prior to listing. This would be of particular benefit for companies incorporated in the British Virgin Islands:

* with a listing on another exchange who wish to have a secondary listing in Hong Kong and avoid the time, cost and expense of such a restructuring or redomicile; or

* used as a private equity investment vehicle with complicated convertible preferred share type structures, where a restructuring of the sort described above may not be readily achievable, or only achievable with difficulty, due to the need to obtain multiple preferred shareholder and other approvals.

In light of the popularity of British Virgin Islands companies as special purpose vehicles for investments in Asia, and particularly the People’s Republic of China, the Hong Kong Exchange’s decision provides investors in such companies with a further route to exit investments through a listing on a highly regarded, Asian focused, stock exchange. In addition, for those entities incorporated in the British Virgin Islands with operations in Asia but a primary listing on another stock exchange (i.e. AIM, NASDAQ), a secondary listing on a more market appropriate exchange is now easily within reach.

In the year to date, Conyers Dill & Pearman has been engaged as Cayman Islands or Bermuda counsel on over 40 successful listings on the Hong Kong Exchange, representing approximately 80% of all such listings, and has already been approached in relating to acting on the listing of British Virgin Islands companies on the Hong Kong Exchange. Subject to companies being able to satisfy the criteria outlined above, we anticipate this being a popular route to listing in the future.

UK : Director fined £75,000 and banned from the industry for lying to FSA

The Financial Services Authority (FSA) has fined the director of a West Midlands financial adviser firm £75,000 for lying repeatedly to the regulator, and banned him from the industry.

Simon Kuun ran MFP Group Plc (MFP), a financial planning firm in Bromsgrove, but an FSA investigation in 2008 found that he lacked the honesty and integrity expected of an approved person. He was fined £50,000.

The case was then referred to the Financial Services and Markets Tribunal (Tribunal), who upheld the FSA's original findings, but increased the fine to £75,000 as Kuun also lied to the Tribunal when giving evidence.

Kuun first came to the FSA's attention during a supervisory visit to MFP in 2005. He told the FSA that his business had stopped using unapproved and unqualified staff to visit customers. In fact, the opposite was true. He had simply transferred their contracts to a company called Membership Services Limited (MSL), which was registered in the West Indies.

Kuun denied any involvement with the firm, maintaining that MSL was owned and run in Switzerland by an acquaintance called John Graham.

However, an investigation found that Kuun himself was the subscriber who paid for MSL's mailbox address in Switzerland, and that any post addressed to MSL was forwarded back to MFP's office in Bromsgrove.

The Tribunal agreed with the FSA that there was no credible evidence to suggest that John Graham actually existed, and that Kuun had invented him to mislead both the FSA and the Tribunal in their investigations using his own middle names.

The Tribunal found that Kuun had demonstrated a lack of honesty and integrity contrary to Principle 1 of the Statement of Principles for Approved Persons, and had also failed to be open, candid and truthful with the FSA contrary to statements in Principle 4. It was also found that he is not a fit and proper person to perform any function in relation to any regulated activity.

As Kuun was the sole shareholder of MFP and is therefore MFP's sole controller for the purposes of the FSA's rules, the business will cease to operate.

Margaret Cole, FSA director of enforcement and financial crime division, said:

"We could not allow this dishonesty by Kuun to go unpunished. It was a premeditated and sustained attempt to deceive the FSA and prevent effective regulation.

"This and other recently published cases, such as Pak Property Centre and Aston Sterling Insurance Services Limited, show our determination to exclude dishonest people from the industry, including those who believe it is acceptable to lie to regulatory authorities in order to conceal their criminality and other wrong doing."

Notes

1. The Final Notices for Simon Kuun and MFP Group plc.
2. Key finding from the Tribunal - effective regulation of authorised firms and approved persons requires the proactive cooperation of persons dealing with the FSA. To be able to achieve its statutory objectives, the FSA needs to acquire an understanding of the business. The regulatory system is dependent upon persons cooperating with the FSA. The FSA has 17,000 other small firms to supervise and the system of regulation would break down if each firm or its directors acted in the manner in which Kuun and MFP have acted in this case.
3. The Tribunal decision can be found here.
4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.

Seychelles : SIBA marks 15 years with call for diversity

Seychelles NATION (14.12.2009)

Seychelles as an offshore jurisdiction will have to revamp itself or be left behind, the chief executive of the Seychelles International Business Authority (SIBA) Steve Fanny said on Thursday.

Speaking in a ceremony to mark the 15th anniversary of SIBA, Mr Fanny said diversification our products’ portfolio is key to the industry’s progress and said we should for example “get more offshore banks to Seychelles to ensure that we are the favourable jurisdiction.

“Some claimed if we allow foreign lawyers to practice in the industry, we will lose business. My question is how you can lose something that we do not have. We have to be truthful in recognising that we do not have the expertise to serve the blue chip companies, nor the portfolio of client that an international law firm will bring to Seychelles,” he said at event which was held at Le Meridien Barbarons hotel.

“We need to start thinking about the future of the financial services industry when low taxation, secrecy and selling cheap International Business Companies are no longer the motives for going offshore.”

Mr Fanny recalled that 15 years ago the government made a decision to venture into the offshore industry with the aim of diversifying our economic base and create a new pillar to the economy.

“The journey has been challenging and there had been time when we have been black listed, grey listed but we have stayed focus in our quest of propelling the jurisdiction forward and gaining recognition as a serious offshore jurisdiction.

“The realities of the contemporary international business and investment place the demand on effective money management, wealth preservation, and tax and estate planning.

“While continuing to address legitimate issues such as political risk, asset protection, forced heirship, and the efficient international transfer of capital,” he said.

During the ceremony, SIBA presented awards to those who have contributed towards the successful achievement of the Seychelles financial services industry.

They included President James Michel whose award was collected by the secretary of state Jean-Paul Adam, the outgoing chairman of Siba Conrad Benoiton who was the authority’s first managing director of Siba, principal secretary for finance Ahmed Afif, a former MD of SIBA, Phillipe Boulle and Simon Mitchel.

Also to get awards were ACT Offshore Limited, which was the first corporate service provider to incorporate an international business company with SIBA and OCRA (Seychelles) Limited, the first international service provider to incorporate a batch of international business companies.

Walkers Sees Significant Opportunity for Offshore Services in Asia - Offshore Structures Offer Opportunities for Restructuring as well as Investment

The worldwide financial market’s performance over the last twelve months has made some financial institutions and investors wary. However, leading global offshore law firm Walkers sees opportunities for offshore finance and private equity structures in Asia. While there have certainly been shifts in focus by the market, the right offshore strategies can help achieve onshore solutions for investors and institutions, says Walkers.

Over the past five years, there has been significant growth in foreign direct investment in Asia, and particularly in the Peoples’ Republic of China. In that time, thousands of companies have been incorporated in the British Virgin Islands (BVI) and the Cayman Islands to facilitate such investments. However, due to differences in legal frameworks and financial markets around the world, achieving success for shareholders, investors and creditors can sometimes prove challenging. The dependability of the legal systems in the BVI and the Cayman Islands is often a key factor in the decision to use incorporated companies in one or both of those jurisdictions in Asian corporate structures.

“Arguably, the enforcement of domestic security in Europe and North America is more dependable than domestic security in developing markets,” said John Rogers, head of the Finance and Corporate team for Walkers’ Singapore office. “However, where there is some uncertainty about the enforceability of domestic security, which is sometimes the case in developing Asian markets, offshore security and structuring are integral.”

The recent economic downturn has systemically changed financial centres around the world and materially impacted Asian finance. These changes will likely result in changes to financial agreements moving forward.

“Only a few years ago, borrowers had enormous power. Wielding this power to hamstring banks, borrowers were left to essentially structure deals by their own terms. We now have a Brave New World, where power is back in the hands of the lenders who have renewed leverage to increase their collateral and security positions,” said Andy Randall, head of the Finance and Corporate team for Walkers’ Hong Kong office. “As creditors and shareholders continue to fight for their rights in financial agreements, this trend could be a game-changer in Asia and around the world.”

In the developing Asian markets, Walkers has seen increased utilization of offshore security packaging, restructuring and the use of offshore insolvency-related remedies as a means to achieving onshore solutions.

“The financial crisis has forced a shift in the offshore markets to focus on rights, remedies and enforcement options for creditors and shareholders, financial and corporate restructuring, and the resolution of shareholder and investor disputes,” said Randall “In addition, many hedge funds have been looking at restructuring to survive lower returns, liquidity concerns and other market challenges. This shift has created opportunities for implementing solutions that combine onshore and offshore elements.”

Achieving the right outcome involves working together with the onshore lawyers in the relevant market from the outset. The offshore enforcement strategy for an Indonesian asset, for example, may be different than the strategy for a Chinese asset or an Indian asset.

“Offshore-onshore interaction has become a necessity to favorably resolve restructuring and insolvency issues, particularly in the Asian markets. When it comes to pre-emptive enforcement of offshore security, the Cayman Islands and the British Virgin Islands are seen as creditor friendly jurisdictions,” said Antonia Hardy, head of Walkers' Global Finance & Corporate Group. “Offshore services often provide part of the solution. However, the strategic analysis prior to the enforcement is absolutely crucial.”

This is a view shared by Fraser Hern, the head of the Walkers’ Hong Kong Restructuring and Insolvency team. “Strategic analysis prior to an enforcement or restructuring is critical, and should involve both onshore and offshore counsel. There is a wide range of differing options available as a matter of BVI or Cayman Islands law which can assist stakeholders involved in distressed scenarios onshore. Determining which is appropriate in any given scenario requires a thorough analysis of key issues at an early stage, including the location of the underlying assets, identity of key creditors, attitudes of local courts, future liquidity issues, and identifying the client's ultimate objectives. Strategies differ widely depending on the specific details of the matter in hand."

Bar Association of Seychelles : Secretary's Address on Launch of Website

December 10, 2009

Ladies & Gentlemen,

Welcome to the website of the Bar Association of Seychelles!

The idea for a website was hatched several years ago, but for a myriad of reasons, the idea never materialized. However, recent advancements in information technology and the advent of younger and more IT savvy members of the bar brought momentum to the realization of this website.

The present Management Committee of the Bar Association was elected in February 2009, from the very start it was a key aspiration of the committee to set up a website before the end of the year. In mid 2009 the committee resolved to delegate the task of setting up the website to Mr Jude Bonte and myself. Through hard work and dedication, we managed to get the website online and running before the end of October 2009.

The website aims to deliver to the public information on the Seychelles legal profession and on the Seychelles legal system. Under the website's heading of Legal Practitioners you will find information of the various legal officers that may be encountered within the legal profession. You will also find a complete list of Attorneys, Notaries, State Counsel and Public Prosecutors of Seychelles. For budding lawyers, you will also find information on how to qualify as a Seychelles attorney.

Under the heading of Seychelles Legal System you will find a brief round-up on the unique mixed jurisdiction legal system that we have inherited, a melange of legal principles emanating from our past colonial masters - the French and the British.

Perhaps the most significant section on this website is that of the Law Journal. The Bar Association of Seychelles wishes to promote and encourage legal thought, analysis and argument, presently, there is no forum for this except through the courts, even then, the legal issues in question are limited to the disputes that litigants have brought before the courts. This website shall have no such restrictions. Anyone may contribute legal articles to this website, be it legal professionals, members of the bench, budding lawyers or the man on the bus to Clapham.

We hope that the public finds this website an invaluable online legal resource.

Divino Sabino

Secretary

Bar Association of Seychelles

Nishith Desai Associates : Transfer Restrictions – Would They Hold Up in Court

Negotiating a private equity investment in India, particularly the complex ones tend to raise doubts on enforceability. Ultimately, such doubts are cast aside when deal terms are recorded in writing in a formal agreement. But it doesn’t end with having a written contract alone. However exhaustive it may be!

Many who are accustomed to such transactions may be aware of the next step to take to ensure enforceability – inserting such rights in the charter documents of the company. Such is the practice that is widely followed globally.

We don’t mean to alarm you, but in the Indian context, certain rights (even if documented in water tight agreements and reflected in the company’s charter documents) ultimately may not be enforceable.

Deal Destination thus starts a series on ‘Enforceability of Shareholder Rights’, which discusses hotly negotiated rights and protections granted to private equity investors and the enforceability of such rights under Indian law. We start off with 'Transfer Restrictions - Would They Hold Up in Court' which discusses the various restrictions on share transfers that are typically sought (lock-in conditions, tag alongs, ROFRs, etc.) and the degree of their enforceability in India.

To read more, please click on the link here

UK : Memorandum of Understanding between the OFT and the FSA

The Memorandum of Understanding (MoU) establishes a framework for cooperation between the Office of Fair Trading (the OFT) and the Financial Services Authority (the FSA)for financial services. It sets out the role of each authority, and explains how they work together.

Its aim is to lay out procedures for discussing matters of common interest, to regularise joint meetings, generally facilitate contact and discussion and to prevent duplication of work. It is intended also to provide terms of reference for a rolling Joint Working Framework, an operational document that will set out specific joint initiatives within a given time period.

UK Financial Services contributes £61.4bn in tax during 2008/09

Despite the effects of the global economic downturn, the UK’s financial services sector continued to make a very significant contribution to the public finances during the financial year to March 2009, during a period which included the collapse of Lehman Brothers, according to a new report by PricewaterhouseCoopers LLP (PwC) for the City of London Corporation.

The industry contributed an estimated £61.4bn to UK government taxes in the 2008/09 financial year, which accounts for 12.1% of the total UK tax take.

This total has fallen by £6.4bn (9.4%) from the last benchmark comparison made in the financial year to 31 March 2007 due to reduced levels of corporation tax. Nonetheless, the sector as a whole provided 17.7% of total government corporation tax receipts in the financial year.

Financial services also remains a major employer in the UK, and the study estimates that employment taxes to end March 2009 were £26.4bn, an increase of 2.6% from 2007 showing the importance of financial sector jobs to the wider economy.

Stuart Fraser, Chairman of the Policy and Resources Committee at the City of London Corporation, said: "Ahead of the Pre-Budget Report, this report highlights the crucial role that the financial services industry continues to play in generating income for the government despite the ongoing effects of the financial crisis.

"The industry contributes a significant amount to the exchequer, and the imminent 50 per cent tax rate and other proposed changes may provide a minor boost in the very short term. However, there is always a tipping point where changes in the business environment – both in terms of regulation or taxation – begin to affect a country's competitiveness and damage the ability to attract top talent, which may choose to move to rival financial centres instead.

"We cannot afford to damage the competitiveness of an industry that contributes over 12 per cent of total tax revenues – especially with the government eager to reduce the budget deficit. Losing the internationally mobile parts of the financial services sector as a result of the cumulative effect of tax increases would be disastrous for both levels of employment and the public finances."

The research uses the PwC Total Tax Contribution Framework. The data provided by 34 UK financial services companies, across the range of sub-sectors, has been extrapolated to estimate the total tax take for the financial services sector as a whole.

Download Total Tax Contribution - 2nd edition

“In Praise of Unlevel Playing Fields” Regulatory Commission Recommends New Slant on Solving Financial Instability

In a pathbreaking report on reforming the international financial system in the wake of the global crisis, an international commission makes five key recommendations that they believe will enhance financial stability.

Parting company with the traditional view that regulation should be even handed for all institutions and countries, the Report of the Warwick Commission, an international body of leading academics and market practitioners, argues that there is a need for an ‘unlevel playing field’ in order to offset the tendency towards unstable behaviour in the global financial system.

A key recommendation is that in times of economic and financial boom, banks and financial institutions need to have their ability to create loans reined in, in order to avoid fuelling asset market bubbles.

Second, the Commissioners argue that financial regulators need to curtail institutions’ ability to heighten risk by mismatching the maturity of their assets and liabilities and in particular their tendency to borrow short-term against highly illiquid collateral during asset market booms.

Third, regulators must have the flexibility to apply tight regulatory requirements on institutions that threaten the stability of the whole financial system.

Fourth, going against the tide of increasing global financial regulation, the Commission argues for increased powers for national regulators in a bid to prevent banks from establishing overseas branches and regulating them from their home base. Under the host country rules recommended by the Commission, banks would have to establish an overseas subsidiary that is regulated by the local regulator.

Fifth, the Commission argues that host regulation would lead to a ‘right-sizing’ of the financial sector, so that the finance industry is not allowed to excessively dominate a country’s economy or harm national welfare systems, and the Commission suggests a system of regulatory measures to help achieve this.

The Commission was chaired by financier Avinash Persaud and was an initiative of the University of Warwick, one of the UK’s top universities. It comprised twelve commissioners drawn from universities and research institutions across Europe, North America and Asia, who met in Warwick, Berlin and Ottawa over eight months in 2009 in order to develop its recommendations, taking oral and written evidence from financiers, civil servants and academics in London, Paris, Brussels, New York and Washington.

The Report has been welcomed by a number of key policy makers.

Commenting on the Report, Adair Turner, Chair of the UK Financial Services Authority, said:

“On all the issues it addresses, [the Warwick Commission] is able to challenge conventional wisdoms, free from the constraints which inevitably influence the thinking of official authorities involved in complex international discussions... Its focus on the credit cycle as the key driver of financial and macro-economic instability is correct and crucial...”

Andrew Sheng, Chief Advisor to the China Banking Regulatory Commission, commented:

“ The Warwick Commission is to be congratulated on taking a fresh look at the challenges facing international financial reform. The current global financial crisis demonstrated unequivocally that the world is unbalanced and will always be in a state of constant change. For this reason, the Warwick Commission tries to challenge the orthodoxy and should be congratulated for its recommendations and
suggestions for understanding that there is no self-equilibrating stability, but a dynamic evolution where we need to encourage diversity of thinking to get more balanced markets than uniform thinking that herds into one direction.”

Mark Carney, Governor of the Bank of Canada, writes:

“Refusing to treat the recent crisis as a special case, it examines the
causes of financial crises in general. With its sophisticated grasp of how the credit cycle operates, innovative reform proposals, and considered treatment of the political economy of regulation, the Report should prove invaluable to policy-makers at this critical juncture.”

The Warwick Commission on International Financial Reform: In Praise of Unlevel Playing Fields

Executive Summary and Recommendations

This is not the first international financial crisis the world has seen. This tells us two things. First, in trying to prevent or dampen future crises, we must not focus too heavily on the specific character of the present crisis. We must focus on those factors that are common across financial crises. There will be a different financial innovation or product at the centre of the next crisis. Second, it is unhelpful to think in terms of increasing or decreasing the quantity of regulation. There is good and bad regulation. If elements of the current approach to regulation incentivised systemically dangerous behaviour, doubling up on existing regulation or spreading it more widely may make matters worse. While we doubt that financial crises can be prevented, we do believe strongly that policymakers, regulators and supervisors have the power to make them less frequent, shallower and with less spill over onto the welfare of ordinary households. The purpose of this report is to set out the regulatory approach that will help them do so across a variety of countries.

Large international banks have promoted the idea of a level playing field in regulation between countries (home country regulation) and within countries (unitary regulators and an end to ‘Glass-Steagall’ type segmentation of financial sectors). It seems heretical to argue against ‘level playing fields’, but in certain areas of finance, an unlevel playing field has merit. We need an unlevel playing field between countries as a result of the policy responses to economic cycles that are often less synchronised than they appear. We need to tilt the playing field within countries to reflect the unlevel capacity of financial institutions for different types of risk and to help risks flow to where they are best matched by risk capacity. We need a financial system that is robust to shocks, and that requires diversity, not homogenous behaviour derived from the blanket application of the same rules and standards on valuation, risk and trading. An unlevel playing field between countries is also desirable so as to best take into account different national political priorities, financial structures and institutional capacities.

The Commission recommends the following five key policy reforms in the Report:

1. Regulation needs to be formally more countercyclical, to offset the endogeneity of risk that arises from the credit cycle. Capital requirements, leverage ratios, maximum loan-to-value ratios must be tightened in the boom and loosened in the crash within a rule-based framework.
2. Risk-taking must be matched to risk capacity for the financial system to be resilient. One way to achieve this is through capital requirements for maturity mismatches (administered in a manner to avoid procyclicality).
3. Regulators must have the flexibility to apply tighter regulatory requirements on systemic institutions, instruments and markets. Regular system-wide stress tests should help to identify what is systemic.
4. Greater emphasis must be placed on host country regulation within a more legitimate system of international cooperation. Host country regulators must be able to require foreign and domestic banks alike to keep local capital against local risks. Accountable global institutions should coordinate host country regulations, share information and lessons in order to improve regulatory effectiveness and limit regulatory arbitrage, and regulate market infrastructure for global markets such as single clearing and settlement houses. They should also be engaged in capacity building for countries with less developed financial systems.
5. Incentives for the financial sector and for financial firms to grow in size and influence, and to concentrate on short-term activity, must be offset, perhaps through additional capital requirements for large institutions.

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India : Directions Under Sections 11(1), 11(4) and 11B Of The SEBI Act 1992 to Barclays Bank Plc

WTM/KMA/IMD/ 184 /12/2009

SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER

DIRECTIONS UNDER SECTIONS 11(1), 11(4) AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 TO BARCLAYS BANK PLC .

1. Barclays Bank PLC (hereinafter referred to as ‘Barclays’) registered as a
Foreign Institutional Investor (hereinafter referred to as ‘FII’) with Securities and
Exchange Board of India (hereinafter referred to as ‘SEBI’) having registration
No.IN-UK-FD-0693-01, under the Securities and Exchange Board of India
(Foreign Institutional Investors) Regulations 1995 (hereinafter referred to as FII
Regulations). Regulations 20A of the FII Regulations casts responsibility on
registered FIIs to provide information about Offshore Derivative Instruments
(ODIs)/ Participatory Notes (PN) to SEBI in the manner and in the format as
prescribed by SEBI. Regulation 20A of FII Regulations provides as under:
“20A. Foreign Institutional Investors shall fully disclose information concerning
the terms of and parties to off-shore derivative instruments such as
Participatory Notes, Equity Linked Notes or any other such instruments, by
whatever names they are called, entered into by it or its sub-accounts or
affiliates relating to any securities listed or proposed to be listed in any stock
exchange in India, as and when and in such form as the Board may require.”

2. SEBI had also issued circulars under Section 11 of the Securities and
Exchange Board of India Act, 1992 (hereinafter referred to as SEBI Act)
specifying the format for the periodical submission of the information by all
registered entities about their ODI activity. From the reports submitted by
Barclays during the period between January 2006 and January 2008, SEBI
observed that Barclays had issued four ODIs dated December 15, 2006 with
maturity upto May 4, 2011 to UBS AG, with Reliance Communications Limited
as the underlying. On perusal and scrutiny of the said reports, SEBI vide
electronic mail dated September 24, 2009 had sought the following specific
information with respect to the above mentioned four ODIs:-

a. Date of Redemption
b. Full or Part of ODI issued (In case redemption has taken place in parts,
the details for each part redemption separately).
c. Quantity Redeemed
d. Value (in USD)
e. Value (in INR)
f. Details of Underlying trades in Indian market with respect to each
instrument – in cases of both issuance and redemption of ODI:

I. Date
II. Sale/Purchase
III. Quantity
IV. Value

3. In reply, Barclays vide e-mail September 25, 2009 had stated that there
were other ODIs which were issued during the two year period January 2006 to
January 2008 with the same underlying scrip to the same counterparty for
which SEBI was seeking information. Thereafter, Barclays was advised to
submit the said information, vide SEBI e-mail dated September 26, 2009.
Pursuant to the same, Barclays vide e-mail dated September 28, 2009,
submitted the information about fourteen other trades with the same
counterparty. It was observed that the said trades were not part of the periodical
filings made by Barclays. As the information provided by Barclays was not
complete, SEBI vide e-mail dated November 13, 2009, advised it to furnish
information on all ODIs issued to counterparty UBS AG with Reliance
Communications Limited as the underlying for the period beginning November
2003 upto October 2009. Further, SEBI had also sought evidential documents
in support of the ODIs which were issued to UBS AG with Reliance
Communications Limited as underlying. Barclays was advised to submit the
said information on or before November 17, 2009. In response, Barclays vide email
dated November 17, 2009 stated that in reviewing the documentation with
respect to those ODIs, they have identified some discrepancies which were
being reviewed by it. Subsequently Barclays, vide e-mail dated November 18,
2009 submitted that upon review, the counterparty of the transactions was not
UBS AG as earlier reported by it but was Hythe Securities Limited (hereinafter
referred to as Hythe), an entirely new entity which did not form part of any of the
earlier periodical submissions made by Barclays to SEBI either in its monthly
reports or in the specific information submitted in response to the query with
reference to Reliance Communications Limited. Barclays claimed that they
were undertaking a review of the reporting and sought confirmation from SEBI
whether SEBI still required the evidentiary documents in support of those
trades.

4. Thereafter, SEBI vide e-mail dated November 19, 2009 advised Barclays
to provide all evidentiary documents in support of those specific trades. Further,
Barclays was also advised, vide e-mail dated November 20, 2009 to explain its
stand on the wrong information in respect of the ODIs which had been issued,
and was further advised to explain, why appropriate action should not be taken
against it for the alleged contravention of the code of conduct specified in
Regulation 7A of the FII Regulations, which prohibits an FII to make any untrue
statement or suppress any material fact in any documents, reports or
information furnished to the SEBI.

5. Barclays in its e-mail dated November 23, 2009 requested extension of
time to submit the information as required by SEBI. Accordingly, it was granted
time up to December 8, 2009. SEBI further clarified in its e-mail dated
November 26, 2009 that information sought by it vide e-mail dated November
19, 2009 was required only in respect of Reliance Communications Limited as
the underlying. It was further advised to reconcile records for the beneficial
owners of all the ODIs reported to SEBI and confirm to SEBI that there are no
further re-statements required in the matter. Barclays submitted the information,
vide e-mail dated December 2, 2009. As regards the information about the
ODIs issued with Reliance Communications Limited as the underlying scrip,
Barclays mentioned that it had issued such ODIs only during the period August
2006 to November 2008 and that it had not issued any ODI with the said
underlying before August 2006. Further, it furnished information for the
specified period for the underlying Reliance Communications Limited. It was
observed from the information submitted by Barclays that the ODIs under
reference were issued to Hythe and that they were onward issued to another
entity Pluri Emerging Companies PCC Cell E Emerging Markets Growth Fund
(hereinafter referred to as ‘Pluri’). As per the requirement stipulated for PN
reporting, all FIIs were mandated to provide the following information on
investors to which ODIs are issued :-

Columns A B B1 C

A Name and Location of the person to whom the Offshore Derivative Instruments are issued.

B Name and Location of other person in case back to back Offshore Derivative Instruments has been issued against the instrument mentioned in A

B1 Name and jurisdiction of the Regulator by whom the person holding the Offshore Derivatives Instruments, is regulated in terms of Regulation 15 A of SEBI (FII) Regulations, 1995

C Type of the investor (e.g. hedge funds , corporate, individual, pension fund, trust etc) This information should be given for column 'B', in case column 'B' information is Nil furnish information for column 'A'

The Report requires FIIs to specify the name and location of the entity to whom
ODI is issued in column A. The name and the location of the entity in case the
ODI is onward issued back to back to another entity was to be reported under
Column B. Column B1 requires the FIIs to provide the information about the
regulated status of the entity to whom the ODIs have been issued including the
jurisdiction, the regulator with whom the entity is regulated.

6. From the above, it is evident that FIIs are required to provide the name of
the investor in case the ODI issued by it is onward issued by the subscriber to
any other entity as a back to back instrument. From the monthly reports
submitted by Barclays since 2006 with respect to Reliance Communications
Limited as the underlying, it was observed that the name of the subscriber was
UBS AG which has now been restated as Hythe Securities Limited. Further it
was also observed that there has been no back to back issuance of the ODI to
any other entity as the column B in the monthly reports are “N/A” (not
applicable) meaning thereby that there was no onward issuance of the ODI to
any other entity other than what was represented in the reports. However, on
perusal of the information submitted by Barclays on December 2, 2009, it was
observed that those ODIs were issued back to back to another entity Pluri. In
this regard, Barclays has submitted that the Hythe Securities Limited is a
regulated entity with the Financial Services Authority, United Kingdom and thus
complies with the definition of an appropriate foreign regulatory authority in
terms of Regulation 15A(1)(a) of the FII Regulations.

The said provision as on February 3, 2004 states as under:-
“15A. (1) A Foreign Institutional Investor or sub account may issue, deal in or
hold, off-shore derivative instruments such as Participatory Notes, Equity Linked Notes or any other similar instruments against underlying securities,
listed or proposed to be listed on any stock exchange in India, only in favour of
those entities which are regulated by any relevant regulatory authority in the
countries of their incorporation or establishment, subject to compliance of "know
your client" requirement:
Provided that if any such instrument has already been issued, prior to 3rd
February 2004, to a person other than a regulated entity, contract for such
transaction shall expire on maturity of the instrument or within a period of five
years from 3rd February, 2004, whichever is earlier.
(2) A Foreign Institutional Investor or sub account shall ensure that no further
down stream issue or transfer of any instrument referred to in sub-regulation (1)
is made to any person other than a regulated entity."

The said provision as amended with effect from May 22, 2008 is as under:

(1) No foreign institutional investor may issue, or otherwise deal in offshore
derivative instruments, directly or indirectly, unless the following conditions are
satisfied:
(a) such offshore derivative instruments are issued only to persons who are
regulated by an appropriate foreign regulatory authority;
(b) such offshore derivative instruments are issued after compliance with ‘know
your client’ norms:
…………………
(2) A foreign institutional investor shall ensure that no further issue or transfer is made of any offshore derivative instruments issued by or on behalf of it to any
person other than a person regulated by an appropriate foreign regulatory
authority.

7. It was provided in the FII Regulations that those ODIs which were issued
to persons not satisfying the criteria as on 2004, would be liquidated over a
period of five years ending 2009, and fresh ODIs could not be issued except in
compliance with the said regulations. Thus the underlying principle in the
regulations was that the ODIs could not be issued or subscribed by any entity
that is not regulated by an appropriate foreign regulatory authority after
February 2004. From the information provided by Barclays, it is evident that the
ODIs which were issued by it to Hythe Securities Limited (originally stated to be
issued to UBS AG) were subsequently issued to Pluri, prima facie in
contravention of Regulation 15A(2) of the FII Regulations. It is also pertinent to
note that the ODIs were issued afresh after the amendment to the regulations
inserting regulation 15A in February 2004. FII Regulations casts responsibility
on an FII to ensure that any downstream issuance of ODIs is in strict
compliance with the FII Regulations. As mentioned above, it is evident that
Barclays was aware that the ODIs issued by it to Hythe Securities Limited were
onward issued to Pluri. However, Barclays has continued to misrepresent to
SEBI that the ODIs were not issued ”back to back” to any other entity, by
providing monthly reports with column B1 (as mentioned in the table above)
“not applicable”. This shows the blatant disregard by Barclays in complying with
the provisions of the FII Regulations. Barclays, vide e-mail dated December 2,
2009 acknowledged that the details of the ODIs were wrongly reported to SEBI
due to manual compilation of the ODI reports in December 2006 and error in
data entry level. Barclays further submitted that after improvements in its
systems for ODI reporting in 2008 and 2009, the errors in reporting continued
to be carried forward in the new system. It is also observed that Barclays
acknowledged that even in November 2009, when further information was
requisitioned by SEBI, it failed to identify the true counterparty for those trades.
Barclays has also submitted that it would ensure that necessary resources are
allocated to ensure that the reports submitted to SEBI are adequately reexamined
prior to its submission.

8. It is also brought to my attention that in the past too, there were a few
occasions which should have prompted Barclays to have a relook at their
reports submitted to SEBI through their reporting platform. These were after the
supposed implementation of the new reporting platform claimed to have been
put in place by Barclays. At least on two occasions in the not so distant past,
SEBI vide e-mails dated January 16, 2008 and again on July 3, 2008 had
required Barclays to provide certain basic information which was critical for the
assessment of the ODI activity undertaken by it. These prompts would have
cautioned Barclays to review the ODI reports submitted to SEBI. However,
Barclays did not do so and continued to provide false and incorrect information
to SEBI. As regards the issuance of ODIs downstream to Pluri, Barclays has
stated that the Memorandum of Understanding (MoU) signed by it with Hythe
dated November 7, 2006 provided an ability for Barclays to seek information on
the end beneficiary owner of the ODI so issued. However, given that Barclays
was aware that the ODIs were onward/ downstream issued to an unregulated
entity, it failed to comply with the regulations governing ODIs and provide
correct and true picture of the ODIs issued by it.

9. I am therefore of the opinion that Barclays has not only failed to provide
true, fair and complete details of the ODI activity undertaken by it but also prima
facie violated the provisions of FII Regulations by furnishing false and incorrect
information to SEBI. Full and fair disclosure forms the cornerstone of FII
regulation by SEBI. As the source of funds available with an FII comes from
Offshore, by its very nature SEBI has no direct access to verifying the nature of
the funds or whether the funds will be misused for the purpose of market
manipulation or for perpetrating any type of fraud in the market. The very
essence of the amendments to the FII regulations in Regulations 15A and 20A
reflects this pressing regulatory concern on the part of SEBI. In other words,
SEBI places almost absolute faith and unqualified reliance on the ability of an
FII to carry out the basic regulatory and prudential oversight. Once this faith is
violated and the integrity of the process vitiated, then FII inflows can potentially
become conduits for large scale manipulation and fraud in the market.
Therefore, SEBI as a regulator requires fair, true and correct information for
assessing and monitoring FII activity in the securities market. When a
registration is granted to an FII, SEBI presupposes that the FII has the capacity
to exercise the necessary oversight and ensure the integrity and accuracy of
the data it provides to SEBI under the regulations applicable. It appears that,
from the facts discussed above, Barclays has been non compliant with the
provisions of the regulations and is not capable of providing such information.
As a regulator therefore, SEBI cannot allow such an entity to continue with any
activity with regard to ODIs. After due consideration of the facts and
circumstances of this case, I am of the view that Barclays needs to be
restrained in its activity in dealing with ODIs till such time as SEBI is satisfied
that Barclays can provide true, accurate and complete picture of its ODI
transactions as envisaged by the FII regulations and the reporting requirements
therein. Therefore, I find it necessary, in order to protect the interest of the
investors and for the orderly development of the securities market to take
preventive measures and issue urgent directions in this regard to ensure that
such kind of violations do not continue or get repeated to the detriment of the
investors.

10. Accordingly, in exercise of the powers conferred upon me under
Sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India
Act, 1992, I hereby direct Barclays Bank PLC not to issue/subscribe or
otherwise transact in any fresh/new Offshore Derivative Instrument till such time
as Barclays satisfies SEBI that it has put adequate systems, processes and controls in place to ensure true and correct reporting of its ODI transactions to SEBI. Barclays shall furnish a certificate from an auditor of international standing to this end.

11. This order may be treated as a Show Cause Notice and Barclays may, if it so desires, submit its reply on or before December 18, 2009 and may also avail an opportunity of personal hearing in the matter at 3.00 p.m. on Wednesday, December 23, 2009 at SEBI Bhavan, Bandra Kurla Complex, Mumbai 400051.

12. This order shall come into force with immediate effect.

DR. K. M. ABRAHAM
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
PLACE: MUMBAI
DATE : DECEMBER 9, 2009

Knowledge@Wharton : Could Dubai World's Debt Default Spark a Crisis in the Middle East and Beyond?

When Dubai World announced late in November that it wanted a six-month delay on payments on $26 billion in debt, the financial markets were thrown for a loop. The Dow Jones Industrial Average fell 155 points, or 1.5%, European stocks dropped and oil prices plunged. The Dubai story is still unfolding -- the emirate's stock exchange fell for the third consecutive day on December 9 after Moody's downgraded the ratings of six government-linked companies. Though some investors believe Dubai does not provoke as much fear as other corporate collapses over the past couple of years, Wharton professors point out that the world economy could face serious problems if similar financial troubles spread to European economies such as Greece.

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Launch of the International Financial Centres (IFC) Forum – A new voice for IFCs

The IFC Forum was formally launched in London this week (1st December 2009) with a formal discussion in London between key organisations and individuals who are recognised as thought leaders in the field of international finance.

The Forum was established to provide authoritative and balanced information to contribute to the public conversation on the role of IFCs in the global economy.

The Forum has launched a website with a “Key Issues” section and “Knowledge Centre” as a publicly available resource. The IFC Forum will be constantly adding policy papers to these sections.

Richard Hay of Stikeman Elliott (Advisor to the IFC Forum) said "current economic orthodoxy confirms that tax neutral platforms play an essential and constructive role in the world economy. The IFC Forum's objective is to contribute to global policy through identifying existing empirical evidence, commissioning reasoned research and addressing common misconceptions about IFCs ".

The founding members of the IFC Forum are law firms in several of the leading small international financial centres. Member firms include representatives from Appleby, Conyers Dill & Pearman, Mourant, Ogier and Walkers, advised by Stikeman Elliott, LLP.

Key Issues Surrounding IFCs

Economic Liquidity, Efficiency and Jobs International Financial Centres: Boon or Bane for the Global Economy?

The Global Financial Crisis Did IFCs cause it?

Tax Competition Helpful or Harmful?

Transparency, Regulation and Information Exchange

Developing Countries and IFCs Does IFC facilitation of global trade and investment benefit developing countries?

The City's role in meeting the climate change challenge

The financial services industry can play a vital role in providing long-term, sustainable solutions to the climate change problem, according to a new research paper published by the City of London Corporation.

'Delivering Copenhagen' calls for policy makers to establish a clear, consistent and certain regulatory framework so that the City can provide the innovative financing techniques needed to meet this pressing environmental issue.

The proposals considered in the report include index-linked carbon bonds, forest-backed bonds, weather derivatives and lower government enforced cap-and-trade limits.

Simon Mills, Environmental Co-ordinator at the City of London Corporation, said:

“Climate change is one of the most important issues facing the world today and needs to be addressed by all stakeholders – governments, industry and individuals. The scale of the problem demands a globally coordinated response from both the public and private sectors. Investment in clean technology and low-carbon alternatives is required now if we are not to store up greater problems for future generations.

"There is no doubt in my mind that the financial services industry can help offer the capital and expertise needed to meet this challenge. Firstly, however, businesses must have confidence that the regulatory system will remain clearly defined and stable over the course of any investment."

'Delivering Copenhagen', which is published ahead of the United Nation's climate change conference in Copenhagen from December 7-18, builds on the City of London's pioneering work in helping to launch the London Accord in 2007.

The London Accord, which is the City’s largest collaborative research project, is designed to put London at the cutting edge of investment research into climate change technologies.

Download the Delivering Copenhagen paper

Seychelles rejects financial piracy allegations

The Seychelles Government rejects the allegations posted by PR NEWSWIRE on behalf of Mr. George Xiao and his company LXE Solar Incorporated under the headline “Lawsuit Charges Seychelles Government With Financial Piracy.”

The funds were not ‘seized’ by the Government but frozen, and the article’s accusations are unfounded, defamatory and incorrect, and no part should be considered as credible information. No attempt was made to contact the Seychelles Government or the Financial Intelligence Unit for clarification.

The Seychelles Government has taken a powerful stance against international money laundering and has started implementing new laws to stop the flow of money from the hands of criminals into legitimate businesses and bank accounts, and therefore ensuring the continued success of the Seychelles jurisdiction as a clean offshore financial center.

The Seychelles Government established the Financial Intelligence Unit to meet its international responsibilities in relation to Anti-Money Laundering laws and the Financing of Terrorism.

This year Seychelles’ legislation was amended to give the FIU the power to investigate suspected money laundering through Seychelles’ jurisdiction and apply to the courts for lawful orders to freeze funds reasonably suspected of being the proceeds of crime.

The FIU is currently conducting a number of investigations with equivalent agencies and the law enforcement agencies of other countries, including the United States.

Seychelles is a jurisdiction which is serious about ensuring a strong framework of financial security and is ready to investigate suspicious transactions.

The FIU in collaboration with international law enforcement partners is currently investigating an account held by LXE Solar Incorporated. The funds held in its account have been frozen on the basis of evidence presented to the Supreme Court in Seychelles.

The Government is currently reviewing the complaint lodged against it in the US District Court and will provide a more detailed response in the near future.

OECD sets out framework for overhaul of financial regulation

The OECD has established a set of key principles to guide financial policy makers as they look to fundamental reform that will achieve strong, resilient financial systems that play their part in driving economic growth. Among the issues they address are the need for increased transparency, more effective surveillance and greater accountability to the public.

Welcoming the agreement of member countries on the principles, OECD Secretary-General Angel Gurría underlined the importance of well-thought out reform for sustainable economic growth: “The systemic importance of the financial system was clearly demonstrated by the huge human and social impact of the crisis.

To prevent its recurrence, we need to correct a number of failures, including of regulation, supervision, corporate governance and risk management. This is a major task and to accomplish it, we cannot rely only on incremental, piecemeal reform” said Mr Gurría. “We must get the whole system right so that the financial sector can effectively resume its vital role in the functioning of the global economy,” he added.

Increasing transparency is key. The complexity and opaqueness of products made risk assessment difficult for firms and investors and hindered market transparency, a major cause of the crisis. The principles call for domestic and international efforts to ensure that comprehensive, relevant, up-to-date and internationally comparable statistics and indicators are available. Governmental authorities should have the legal powers to compel the collection and dissemination of data.

Surveillance and analysis of the financial system should be strengthened, involving close cooperation among governments. Market failure analysis should be carried out to assess the efficiency of the system and understand evolving problems.

The principles also underline the need for greater accountability of governments. Governmental authorities, including regulators, should publish annual reports that give an overview of developments in the financial system, identify key risks and explain how they are addressing them.

Ongoing review and reform are critical to ensure that governmental authorities stay on top of innovation, develop a comprehensive view, coordinate their actions, and are held to account.

This work has led to the elaboration of ten key principles for financial regulation and is already providing the basis for more targeted OECD analysis, for example, of ways to address the specific challenges of designing a proper regulatory approach to financial innovation.

Malaysia: SC To Host IOSCO's Regional Meeting On Cross-Border Securities Offences

The Securities Commission Malaysia (SC) will host the International Organisation of Securities Commission (IOSCO)'s Asia-Pacific Regional Committee (APRC) Enforcement Directors' meeting on Friday, December 4.

The meeting is aimed at sharing regulatory experiences and enforcement practices on a broad range of topics such as market manipulation and insider trading, investigating cross-border transactions associated with financial statement fraud and enforcement issues arising from foreign listings.

"It will also serve as a platform to enhance cooperation among securities regulators in the region to enable more effective detection and enforcement of securities offences across borders," the SC said in a statement on Thursday.

The meeting will be chaired by SC managing director, Datuk Dr Nik Ramlah Mahmood.

It will also be attended by senior regulators from Australia, Chinese Taipei, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Singapore, Sri Lanka and Thailand.

IOSCO is recognised as the leading international policy forum for securities regulators.

The organisation's membership regulates more than 95 per cent of the world's securities markets in over 100 jurisdictions.

As the leading international policy forum for securities regulators, IOSCO plays a key role in setting the international standards for securities regulation, identifying issues affecting global markets, and making recommendations in meeting those challenges.

OECD Investment Policy Reviews: India

India has made tremendous progress in building a policy environment to encourage investment. As a result, the country’s economy is growing more rapidly and FDI inflows have accelerated impressively. However, investment remains insufficient to meet India’s needs, particularly in infrastructure. Current efforts to strengthen and liberalise the regulatory framework for investment need to be intensified. India’s well-developed economic legislation should be implemented at an accelerated pace both at national level and right across India’s States and Union Territories.

The OECD Investment Policy Review of India charts India's progress in developing an effective policy framework to promote investment for development, especially since the acceleration of economic reform from 1991 onward. It focuses on policies towards investment, trade, competition and other elements of the business environment. Finally, it outlines some of the challenges of implementing national-level reforms at state level.

Table of contents

• Executive Summary
• India’s Evolving Position in the Global Economy
• Investment Policy
• Investment Promotion and Facilitation
• Trade Policy
• Competition Policy
• Other Aspects of the Policy Framework for Investment
• Progress and Challenges at State Level

Mauritius Institute of Directors : Challenging Opportunity

The Mauritius Institute of Directors (MIoD) was set up by the National Committee on Corporate Governance under the Financial Reporting Act 2004

CHALLENGING OPPORTUNITY

The MIoD, responsible for promoting the highest standards of corporate governance, and of business and ethical conduct of directors, is currently recruiting for a:

CHIEF EXECUTIVE OFFICER

KEY RESPONSIBILITIES:

• Be the main link between the MIoD Board and the members/stakeholders
• Develop policies, objectives and strategies in conjunction with the Board and Committees and understand the role of the MIoD in the corporate governance landscape
• Manage, plan and monitor daily operations including training programmes
• Display leadership, motivation and vision to develop and enhance the profile of the MIoD
• Recruit, motivate and manage staff and develop their skills
• Ensure the establishment and maintenance of communication systems and support facilities
• Represent the MIoD locally and internationally
• Relate effectively with potential members (directors and senior management) and grow the membership

CRITERIA FOR APPOINTMENT:

• Degree or Professional qualification
• At least 10 years’ work experience at senior management level and good knowledge of corporate governance
• Dynamic, high level of initiative
• High degree of integrity
• Proven, negotiating skills as well as excellent verbal and written communication skills.
• Capacity and Commitment to market the MIoD at the highest business level

RENUMERATION

An attractive package will be offered to the right candidate

MODE OF APPLICATION:

Interested candidates should submit their CV and covering letter in an envelope marked ‘confidential’ not later than Friday 11 December 2009 to:

The Chairman of the Nomination Committee
Mauritius Institute of Directors
3rd Floor Plantation house
Place D’Armes
Port Louis
Mauritius

India - IRS officers deputed to Mauritius & Singapore

Indian Revenue Service (IRS) Official Communique : Order No. 174 of 2009

Order - ORDER
Category - Deputation
Rank - ADDL / JCIT
Issuing Authority - AD.VI

Order No. 174 of 2009

HSBC Securities Services in Guernsey secures $1.5bn fund

HSBC Securities Services in Guernsey (HSSG) has brought a major, high profile fund worth $1.5bn to the Island.

HSSG has been chosen to provide administration services for the award-winning Tufton Oceanic Hedge Fund, managed by Oceanic Investment Management Limited.

Oceanic Investment Management is a subsidiary of Tufton Oceanic, a leading shipping investment house renowned for innovation in investment funds focused on the Shipping and Oil services industries.

Oceanic Hedge Fund was named ‘Best Energy Hedge Fund on a Risk Adjusted Basis’ at the Annual Hedge Fund Review’s European Performance Awards in 2008, meeting its challenging target of a 20% annual return for six years.

Paul Keltie, Head of Fund Administration for HSSG, said: “This is great news, not only for HSSG, but for Guernsey as a whole. This deal brings new investment to the island, which can only be of benefit to our economy and community. It clearly demonstrates that we have the capability and talent in Guernsey to provide leading and innovative service solutions to support such truly alternative funds.”

A spokesman from Tufton Oceanic said, “We transferred the administration of the Fund to HSSG because of their ability to provide leading offshore administration services. We are confident that the Group will deliver us the best administrative support, to compliment our continuing growth strategy.”

HSBC Securities Services in Guernsey is a market leader when it comes to administering truly alternative funds. They continue to specialise in distressed debt funds, emerging market funds, funds of hedge funds and private equity funds as well as hybrids on those themes.

Mourant Has Signed an Agreement to Sell Mourant International Finance Administration (MIFA) to State Street

Mourant, one of the leading providers of offshore legal and administration services, has signed an agreement to sell Mourant International Finance Administration (MIFA) to State Street. MIFA is the division of Mourant which handles fund and company administration. Completion of the transaction remains subject to regulatory approval but is expected to close early next year.

Jonathan Rigby, Managing Partner of Mourant du Feu & Jeune, the Mourant legal practice, comments:

"This is an exciting development for MIFA. It should enable the administration business to reach its full potential. The partners of Mourant du Feu & Jeune will now be focusing exclusively on developing the Mourant legal practice, building on our position as one of the world's leading law firms offshore.

He added:

"Mourant du Feu & Jeune and MIFA enjoy an extremely strong relationship, built over many years. We envisage that we will continue to build on this strong relationship after the sale of MIFA and that clients who work with both MIFA and Mourant du Feu & Jeune will continue to enjoy the benefits of that relationship in the future."