Mauritius and Singapore Must Move for Closer Economic Ties

Mauritius and Singapore must really move for closer economic ties, the Prime Minister, Dr Navinchandra Ramgoolam, GCSK, FRCP, told his Singaporean counterpart M. Lee Hsien Loong during a working meeting yesterday in Singapore, where he is on an official visit at the invitation of the Singaporean government. The two leaders discussed on how to reinforce bilateral relations, especially economic ones, between the two countries.

A Memorandum of Understanding with the Singapore Corporation Enterprise already exists and we can see the benefits of this agreement, underlined Prime Minister Ramgoolam. The tête-à-tête between Dr Navin Ramgoolam and M. Lee Hsien Loong was preceded by the signature of an Air Services Agreement between Mauritius and Singapore. This Agreement makes provision for up to 14 passenger flights per week between Mauritius and Singapore whereas presently there are only two flights weekly.

Prime Minister Ramgoolam also met the Singaporean President, M. Sellapen Ramanathan with whom he discussed about trade, tourism and bilateral cooperation amongst other issues.

Dr Ramgoolam had a working session with M. Clarence Yeo, Commissioner of Immigration and Checkpoints Authority (ICA) and its representatives. The discussions focused mainly on the new Mauritian identity card, immigration control and customs.

If Mauritius wants to send a delegation to Singapore for more details, we are ready to conduct training and host the delegation. We can be of assistance to Mauritius, we have similar challenges and problems, said Commissioner Yeo after presenting the equipment that the ICA uses for the production of identity cards.

Prime Minister Ramgoolam requested for Singaporean expertise regarding security in prisons and in the context of the construction of a new prison during a working session with the personnel in charge of the Changli prison. The Singaporean party responded favorably to the request. Dr Ramgoolam was also received by the Minister of State, Ministry of Law and Ministry of Home Affairs, Mr. Ho Peng Kee.

On Monday the Prime Minister had working sessions with members of the Singapore Mass Rapid Transit Corporation, with the President of the Nanyang Technological University and with members of the Singapore Public Utilities Board.

STEP Asia Conference – Tax & Trusts in Asia Back to Our Future

STEP Asia Conference – Tax & Trusts in Asia Back to Our Future

8-10 November 2010

Register here

Programme

08/11/2010

18:00 Welcome cocktail reception

The Lounge, JW Marriott Hotel, Pacific Place

Kindly sponsored by Azure Tax

20:00 Speaker's Dinner

The Fish Bar, JW Marriott Hotel, Pacific Place

Kindly Sponsored by Jersey Finance

09/11/2010

08:00 Continental breakfast & registration

Exhibits open

08:50 Welcome from STEP Hong Kong

Mimi Hutton TEP, Chair, STEP Hong Kong Branch

08:55 Welcome from STEP Worldwide

Nick Jacob TEP, Deputy Chairman, STEP Worldwide

09:00 G20 and International Financial Centres

Richard Hay TEP, Stikeman Elliott, UK

•G20’s transparency program has led to more TIEA’s and DTA’s being signed in the last year than the previous decade. What does this mean for you and your clients?

•Automatic or spontaneous exchange of tax information looms large in the plans of the large developed economies. How likely is it that automatic exchange will replace exchange on request and how would this change affect our industry?

•What G20 needs to know about international financial centres

Kindly sponsored by Southpac Group

09:45 Legal Professional privilege / banking secrecy and implications under AML and MLAT rules and exchange of information agreements

John Hart TEP, J W Hart Ltd, New Zealand

Craig Murphy TEP, Amicorp Hong Kong Limited, HK

• Where does legal professional privilege now stand in the light of the new standards for tax information exchange, recent AML laws and modern mutual legal assistance treaties?

• What are the practical implications for lawyers and their clients?

Kindly sponsored by Global Pensions Group

10:30 Networking and Refreshments

11:00 Trust Law Update - Update on recent cases

Richard Pease TEP, Lenz & Staehelin, Geneva, Switzerland

• Recent landmark trust cases from around the world and what they mean for the administration of trusts

Kindly sponsored by Labuan IBFC

11:30 Planning for PRC and India - inbound and outbound issues

Moderator - John Riches TEP, Chairman, Public Policy Committee, STEP Worldwide

PRC

Yongjun Peter Ni, White & Case, Shanghai, China

India

Cyril Shroff, Amarchand & Mangaldas & Suresh A Shroff & Co, Mumbai, India

• Changes abound in the attitudes of the two growth engines of the world – the PRC and India - in how they tax their taxpayers on foreign investment and trade and how they tax foreign investors on inbound investments. Speakers examine the main changes and what is necessary to adjust to the new landscapes.

Kindly sponsored by Offshore Incorporations Group

12:30 Keynote Address

Professor K C Chan, Hong Kong Secretary for Financial Services & the Treasury

13:00 Lunch

Kindly sponsored by Guernsey

14:00 Afternoon sessions - In-depth Country Updates

(Choose 1 from 6 concurrent options as stated below)

These sessions examine in detail recent developments in trust and tax law and practice in each jurisdiction and focus on the practical implications for you and your clients.

14:00 Option 1 - UK update

Nick Jacob TEP, Lawrence Graham LLP, UK

14:00 Option 2 - US update

James Tsang, Squire Sanders & Dempsey, HK

14:00 Option 3 - Canadian update

Patrice Marceau TEP, DLA Piper, HK

Steven Sieker TEP, Baker & McKenzie, HK

14:00 Option 4 - Australia / New Zealand update

John Hart TEP, J W Hart Ltd, New Zealand

David Russell QC TEP, Wentworth Chambers, Sydney, Australia

14:00 Option 5 - Taiwan update

Wellington Liu, Tsar & Tsai, Taiwan

14:00 Option 6 - PRC update - a more in-depth presentation following from the morning presentation

Yongjun Peter Ni, White & Case, Shanghai, China

Kindly sponsored by ILS Fiduciaries

14:45 Change of room - Afternoon sessions repeated

15:00 Afternoon sessions - In-depth Country Updates

(Choose 1 from the 6 concurrent options as stated below)

These sessions examine in detail recent developments in trust and tax law and practice in each jurisdiction and focus on the practical implications for you and your clients.

15:00 Option 1 - UK update

Nick Jacob TEP, Lawrence Graham LLP, UK

15:00 Option 2 - US update

James Tsang, Squire Sanders & Dempsey, HK

15:00 Option 3 - Canadian update

Patrice Marceau TEP, DLA Piper, HK

Steven Sieker TEP, Baker & McKenzie, HK

15:00 Option 4 - Australia / New Zealand update

John Hart TEP, J W Hart Ltd, New Zealand

David Russell QC, TEP, Wentworth Chambers, Sydney, Australia

15:00 Option 5 - Taiwan update

Wellington Liu, Tsar & Tsai, Taiwan

15:00 Option 6 - PRC Update - a more in-depth presentation following from the morning presentation

Youngjun Peter Ni, White & Case, Shanghai, China

Kindly sponsored by ILS Fiduciaries

15:45 Networking and Refreshments

16:15 Divorce and Trusts

Russell Coleman SC, Chairman, Hong King Bar Association

• Divorce court attitudes to trusts in general – the changing landscape

• When are trust assets a financial resource of a spouse?

• Court’s powers to make orders with respect to trust assets

• How to protect trusts against attack in divorce cases

17:00 Day 1 Close

18:00 Cocktail reception and gala dinner

The Square, 4/FL Exchange Square II, Central

Kindly sponsored by Business Bermuda

10/11/2010

08:15 Continental breakfast

Exhibits open

09:00 KEYNOTE ADDRESS

The Paradox of Privacy

Michael Mansfield Q.C., London

• What “rights” exist to privacy of financial information and what is their source?

• What are the exceptions to these rights and who has the benefit of them?

• How meaningful are privacy “rights” in the internet age?

Kindly sponsored by Guernsey

09:45 Speaking from Experience

Richard Pease TEP, Lenz & Staehelin, Geneva, Switzerland

Mark Lea, Lea & White International Advisers Ltd, HK

• Drawing on the vast experience of this panel of “senior” practitioners, this session transfers to you that body of experience in how to avoid mistakes and to fix them when they happen.

10:15 Case study on cross-border succession issues

Nick Jacob TEP, Lawrence Graham LLP, UK

Panel of speakers tbc

• The best way to draw out practical issues and problems with cross-border estates is by example. Your panel uses a case study to highlight common complexities and provide simple solutions

Kindly sponsored by Butterfield Trust

11:00 Networking and Refreshments

11:30 Private Client Panel – in which actual clients tell us what they want

Moderated by - Bill Ahern TEP, Family Capital Conservation, HK

Vicky Wong TEP, Goldman Sachs (Asia) LLC, HK

Roy Chen, Grace Financial Limited, HK

• Our normal focus is on us and how we can satisfy our clients’ expectations. In this session we hear from a panel of “buyers” of our services as to what they do and do not want from us.

12:15 STEP Education Update

Rob Rowe, Central Law Training, UK, Singapore and Middle East

12:30 Lunch

Kindly sponsored by ILS Fiduciaries

13:45 Afternoon sessions – Speciality Topics

(Choose 1 from 6 concurrent options as stated below)

These sessions provide a detailed examination of specific topics.

13:45 Option 1 - Working through an actual post-grantor trust planning situation

Mimi Hutton TEP, Withers, HK

Todd Beutler TEP, Withers, HK

13:45 Option 2 - Holding Family Business - Practical Aspects

Kenny Foo, JP Morgan, HK

13:45 Option 3 - Singapore, Hong Kong and Labuan Trust Law updates

Angelo Venardos TEP, Heritage Fiduciary Services PTE Ltd, Singapore

Mark Lea, Lea & White International Advisers Ltd, HK

13:45 Option 4 – Case study – a meeting with the Settlor, and a meeting with the family after the Settlor dies

Thelma Kwan TEP, Barclays Wealth, HK

Vicky Wong, TEP, Goldman Sachs (Asia) LLC

Christian Stewart, TEP, Family Legacy Asia (HK) Ltd

The panalists will share their broad range of experience in dealing with trust beneficiaries after the Settlor's death, and they will discuss what could have been done differently during the Settlor's lifetime with the benefit of hindsight.

13:45 Option 5 – Presentation on Succession and Governance Issues - Working with the Unruly Family: Aligning Multiple Generations of a Family and their Advisors

Dennis Jaffe, Professor of Oganizational Systems and Psychology, Saybrook University, USA

• Gaining Family Commitment to the Work of Governance

• How Family Dynamics and Conflict Influence Multi-Generational Family Enterprises

• Developing Human, Family and Social Capital

• Developing Governance Structures - Family Assembly, Council, Boards and Constitution

13:45 Option 6 - Practical trust administration case studies

Jonathan Hubbard TEP, KCS Services ltd, HK

Miles Le Cornu TEP, BNP Paribas Jersey Trust Corporation Limited, Jersey, Channel Islands

• How to use external suppliers/advisors

• Obtaining tax advice for beneficiaries

• Monitoring investment performance

• Evidencing trustee decisions

• Provision of information to beneficiaries

• Stock exchange reporting

14:30 Change of room - Afternoon sessions repeated

14:45 Afternoon sessions - Speciality Topics

(Choose 1 from 6 concurrent options as stated below)

These sessions provide a detailed examination of specific topics.

14:45 Option 1 - Working through an actual post-grantor trust planning situation

Mimi Hutton TEP, Withers, HK

Todd Beutler TEP, Withers, HK

14:45 Option 2 - Holding Family Business - Practical Aspects

Kenny Foo, JP Morgan, HK

14:45 Option 3 - Singapore, Hong Kong and Labuan Trust Law updates

Angelo Venardos TEP, Heritage Fiduciary Services PTE Ltd, Singapore

Mark Lea, Lea & White International Advisers Ltd, HK

14:45 Option 4 – Case study – a meeting with the Settlor, and a meeting with the family after the Settlor dies

Thelma Kwan TEP, Barclays Wealth, HK

Vicky Wong TEP, Goldman Sachs (Asia) LLC

Christian Stewart TEP, Family Legacy Asia (HK) Ltd

The Panalists will share their broad range of experience in dealing with trust beneficiaries after the Settlor's death, and they will discuss what could have been done differently during the Settlor's lifetime with the benefit of hindsight.

14:45 Option 5 – Presentation on Succession and Governance Issues - Working with the Unruly Family: Aligning Multiple Generations of a Family and their Advisors

Dennis Jaffe, Professor of Oganizational Systems and Psychology, Saybrook University, USA

• Gaining Family Commitment to the Work of Governance

• How Family Dynamics and Conflict Influence Multi-Generational Family Enterprises

• Developing Human, Family and Social Capital

• Developing Governance Structures - Family Assembly, Council, Boards and Constitution

14:45 Option 6 – Practical trust administration case studies

Jonathan Hubbard TEP, KCS Services ltd, HK

Miles Le Cornu TEP, BNP Paribas Jersey Trust Corporation Limited, Jersey, Channel Islands

• How to use external suppliers/advisors

• Obtaining tax advice for beneficiaries

• Monitoring investment performance

• Evidencing trustee decisions

• Provision of information to beneficiaries

• Stock exchange reporting

15:30 Networking and Refreshments

16:00 The Effect of IFC’s on Developing Nations

Professor Jason Sharman, Centre for Governance & Public Policy, Griffith University, Queensland, Australia

• Are IFC’s a force for good or evil?

• What you should know about Professor Sharman’s research paper into this controversial issue and what his conclusions might mean for the future of the jurisdictions in which you operate.

16:45 Debate. Thesis – Secrecy is dead, and so is confidentiality

Michael Mansfield QC, UK

Richard Hay TEP, Stikeman Elliott, UK

John Hart, TEP, J W Hart Ltd, New Zealand

Bill Ahern TEP, Family Capital Conservation, HK

FOR: Richard Hay, Bill Ahern

AGAINST: Michael Mansfield, John Hart

17:30 Mimi Hutton TEP, Chair, STEP, HK Branch

18:30 Farewell cocktails and dinner

Watermark, Central Ferry Pier No. 7, Central

India’s CapVeda launches market neutral fund

CapVeda India Advisory, a Mumbai-based hedge fund advisory company, has launched its first Emerging India Fund earlier this year, using what it describes as more sophisticated strategies to attract global investors.

Independent Commission on Banking: publication of Issues Paper

The Independent Commission on Banking publishes an Issues Paper today. The Commission has been asked to consider structural and related non-structural reforms to the UK banking sector to promote financial stability and competition, and to make recommendations to the Government by the end of September 2011.

The purposes of the Issues Paper are to indicate how the Commission is approaching its task, to set out the issues on which the Commission will be focused, and to serve as a Call for Evidence inviting submissions from all interested parties.

The Issues Paper describes the Commission’s initial approach to considering financial stability, competition and the other issues to which it must have regard under its Terms of Reference. The Paper then outlines a number of options for reform in broad terms, but emphasises that the list is not intended to be exhaustive and that the Commission has not moved towards any particular options at this stage. The options set out in the paper are:

Reform options related to the structure of banks

• Separation of retail and investment banking
• Narrow banking and limited purpose banking
• Limits on proprietary trading and investing
• Structural separability, including living wills and resolution schemes
• Contingent capital
• Structure-related surcharges

Reform options related to the structure of markets

• Measures to reduce market concentration
• Market infrastructure reform

The Commission invites views and evidence on a number of questions raised in the Issues Paper, including the benefits, costs and feasibility of the options above and whether there are other options the Commission should examine.

Commission Chair Sir John Vickers said:

“Experience shows that the risks from not asking hard questions about financial stability and competition are far greater than from doing so. Questions about the structure of banking need to be debated in an open, rational way, and we would like to invite anyone with an interest to provide us with views and evidence.”

Planning for Indian Clients or Clients Looking to Make Indian Investments

"Planning for Indian Clients or Clients Looking to Make Indian Investments" (14 October 2010, 12-2pm, FTSE Room - Capital Tower)

STEP Singapore is pleased to present a lunchtime talk on "Planning for Indian Clients or Clients Looking to Make Indian Investments". The presentation will cover the following:

• The emergence of the Indian economy
• Common themes when advising wealthy Indian clients
• Summary of the current Indian tax system including highlighting some of major changes proposed to the Indian Direct Taxes Code to take effect from 1 April 2012
• Overview of the structures that may be relevant for clients wishing to invest into India
• Indian residents making investments abroad e.g. restrictions due to Indian exchange controls
• Tax planning opportunities for cross-border Indian families - case study of Indian family with members living in UK, US and Africa
• Tax planning opportunities for Indians returning home
• UK inheritance tax planning for Indians
• The future

Register early to secure your place by completing and faxing the registration form (CLICK HERE) to 63299699 by 7 October 2010!

Securities (Authorization of Foreign Investment Dealers) Rules 2010

FSC Rules made by the Financial Services Commission under Section 93 of the Financial Services Act 2007 and Sections 29(3) and 155 of the Securities Act 2005.

These Rules shall apply to the authorization of foreign investment dealers whose activities shall be restricted to trading on a securities exchange.

Application for authorization

1. No foreign investment dealer shall deal on a securities exchange unless authorized by the Commission.
2. A foreign investment dealer may carry out the functions and activities of an investment dealer if authorized by the Commission in accordance with these Rules.
3. The Commission may authorize the applicant to act as an investment dealer if the Commission is satisfied that the applicant is exercising the functions of an investment dealer in a jurisdiction where there is a regulatory or supervisory framework consistent with international best practice.
4. An application for authorization shall be accompanied by:

(a) a statement from the relevant securities exchange that the foreign investment dealer will be admitted to deal on the securities exchange if authorized by the Commission;

(b) a certified true copy of the agreement entered between the foreign investment dealer and the foreign investment dealer agent;

(c) a certified true copy of the business licence of the applicant;

(d) either a certificate of good standing from the relevant foreign regulatory body, if the applicant is licensed or a statement from a lawyer authorized to practise law in the foreign jurisdiction certifying that the applicant is legally entitled to carry out the functions of an investment dealer in that jurisdiction, if the applicant is not licensed;

(e) a certified true copy of the certificate of incorporation of the applicant;

(f) a list of the documents submitted by the applicant to the relevant securities exchange; and

(g) any other information that the Commission may deem necessary.

India: SEBI Order in the matter of MCX Stock Exchange Limited

In the light of the discussion above on the role and position of a Stock Exchange as the first line regulator in the Securities market, classified, pari passu with other public bodies, as “State” under Article 12 of the Constitution, and based on all relevant material before me, I am not satisfied that it will be in the interest of trade and in public interest to allow the Application, for the reasons summarised below:

a. The concentration of economic interest in a recognised stock exchange in the hands of two promoters is not in the interest of a well-regulated securities market.

b. The Applicant is not fully compliant with the MIMPS Regulations as substitution of shares by warrants is an attempt to work around the requirements of Regulation 8 of the same and the same is not a mode recognised as falling within the scope of the said Regulations.

c. The Applicant has been dishonest in withholding material information on arrangements regarding the ownership of shares of its shareholders and therefore has not adhered to fair and reasonable standards of honesty that should be expected of a recognised Stock Exchange.

d. The Applicant has failed to ensure compliance with Regulation 8 of the MIMPS Regulations as its two promoters (FTIL and MCX) are persons acting in concert and cannot hold more than 5% in the equity shares of a recognised stock exchange.

e. The Applicant is instrumental to buyback transactions that are illegal under the SCR Act and cannot be considered to have adhered to fair and reasonable standards of integrity that should be expected of a recognised Stock Exchange.

On the basis of the aforesaid findings, I, in exercise of the powers conferred under Section 4 of the Securities Contracts (Regulation) Act, 1956 read with Sections 11(1) and 19 of the Securities and Exchange Board of India, 1992 hereby reject the Application of MCX Stock Exchange Limited dated April 7, 2010.

DR. K. M. ABRAHAM

WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

PLACE: MUMBAI

DATE: SEPTEMBER 23, 2010

Order in the matter of MCX Stock Exchange Limited

Starjobs Learning Centre

Sunil Banymandhub : «On n’est pas équipé pour se battre»

«Starjobs Learning Centre». Ou la proposition de Sunil Banymandhub pour élargir les compétences du management mauricien. Il lance ce centre de formation demain, vendredi 24 septembre. Fort de 35 ans passés à la direction de diverses sociétés, il nous parle de cette entreprise personnelle.

A new regulatory landscape

Remarks of Nout Wellink

Chairman, Basel Committee on Banking Supervision

President, De Nederlandsche Bank

at the 16th International Conference of Banking Supervisors

Singapore, 22 September 2010

PwC: See the future

The old economic order is shifting. As the global economy recovers some emerging markets are likely to grow faster than traditional economic powers. At the industry level, these shifts are even more apparent with accelerating capital flows, fundamental demographic changes, and the rise of state capitalism reshaping the world map for many sectors. PwC's Macro Consulting team has developed a tool to map future clusters across the world. This report uses this tool to highlight the geographical locations that will host the largest clusters in five industries:

• pharmaceuticals
• automobile assembly
• asset management
• filmed entertainment and
• tertiary education

The expected top locations in 2025 and 2040 are disclosed for each of these sectors highlighting key trends for the industry and how the new economic order will influence future geographical winners.

India: Requirement of encrypted PAN on DSC for non-resident signatories of foreign companies has been relaxed

Requirement of encrypted Permanent Account Number (PAN) on Digital Signature Certificate (DSC) for non-resident signatories of foreign companies has been relaxed. The signatory may register with a non-PAN based DSC from the Controller of Certifying Authorities (CCA), India and use the same DSC while uploading the return. This facility is available ONLY for all foreign companies under the jurisdiction of respective International Taxation wards or circles of the Income Tax Department.

Revolutionary fund structure promises to accelerate growth in Jersey funds sector

A revolutionary new fund structure for Jersey has been devised by Jersey-based law firm Crill Canavan and fund administrator Herald Fund Services Limited, and is set to accelerate growth in the island’s fund sector.

The Standard Form Expert Fund (SFEF), the first fund of which has been approved by the Jersey Financial Services Commission (JFSC), is already proving extremely popular because it cuts the time and cost involved in setting up funds domiciled in Jersey by about 70%, whilst complying fully with the island’s regulatory regime for expert funds.

The new structure makes use of Jersey’s innovative Incorporated Cell Company (ICC) legislation and works in a similar way to an umbrella fund. Individual investment funds are established as separate incorporated cells and an investment manager is appointed to each fund. Crucially, different investment managers can be appointed to each of the separate cells within the ICC.

Having one structure encompassing a number of funds makes it possible to create standard documentation for all the funds and appoint standard functionaries (legal advisor, administrator, custodian, banker and auditor), thereby saving further on costs. Importantly, the standardisation of documents makes it easier for fund service providers to develop a strong familiarity with all the funds held by the ICC.

“The key advantage of standard documentation is that it has the potential to reduce the cost and time involved in setting up a Jersey regulated or unregulated fund by approximately 70% when compared to more orthodox or bespoke fund structures,” says Adrian Odell, Head of Funds at Crill Canavan. “This provides an incentive to investment managers to incur the initial cost of fund formation and take new investment strategies to market, and reduces the upfront risk associated with establishing a fund and assessing investor appetite. By offering a standard form product, Jersey can compete with and beat any offshore jurisdiction with reference to the full bouquet of factors considered in choosing a fund domicile.”

The funds themselves may have differing aims and strategies, and operational terms, which cannot be standardised. However, standard documentation copes with this by placing the variable elements of the funds into an appendix, enabling each fund to retain its individuality.

“The beauty of this new fund structure is that it maintains the regulatory oversight which clients are looking for in the current market but at the same time makes it extremely cost-effective,“ says Mike Capraro, Managing Director of Herald Fund Services Limited (which is regulated by the JFSC). “Perhaps the primary detractor to the Jersey funds market has been the costs associated with establishing funds here which can be higher than other jurisdictions. By working with Crill Canavan, we’ve found a solution that has attracted a positive response from London fund lawyers and is already bringing new energy to the marketplace.”

BIS: Offshore markets for the domestic currency - monetary and financial stability issues (Working Paper No 320)

Abstract

We show in this paper that offshore markets intermediate a large chunk of financial transactions in major reserve currencies such as the US dollar. We argue that, for emerging market economies that are interested in seeing some international use of their currencies, offshore markets can help to increase the recognition and acceptance of the currency while still allowing the authorities to retain a measure of control over the pace of capital account liberalisation. The development of offshore markets could pose risks to monetary and financial stability in the home economy which need to be prudently managed. The experience of the Federal Reserve and of the authorities of the other major reserve currency economies in dealing with the euromarkets shows that policy options are available for managing such risks.

To view the full working paper click here

Mauritius: FSC Awarded at the 2010 Africa Investor Summit

The Financial Services Commission (FSC) Mauritius, received the Most Innovative Capital Markets Regulator of the Year Award, on 17 September, at the 2010 Africa investor Index Series Awards, during the Africa Investor Summit held in New York in association with the New York Stock Exchange (NYSE) Euronext.

The Africa investor Index Series Awards are the only international, pan-African awards which profile African capital market success stories while recognising and rewarding Africa's institutional investors, stock exchanges, best-performing listed companies, stockbrokers and capital markets regulators. The Investor Award assessed Africa's capital markets performance between April 2009 and April 2010 in the African continent, highlighting the potential and opportunities offered by the markets.

The award was given on the basis of commitment to increasing transparency and efficiency, support for innovative technologies, employment of best regulatory practice, openness to foreign investors and investor protection, participation in industry associations such as the International Organisation of Securities Commission, and efforts towards creating an enabling environment for the capital markets industry.

The Awards ceremony was attended by over 200 senior executives from across Africa and other parts of the world, namely from best performing stock exchanges, listed companies, investment banks, research teams, regulators, socially responsible companies and fund management entities.

Among the other nominees in the category of Most Innovative Capital Markets Regulator were the Capital Markets Authority of Kenya, the Capital Market Authority of Morocco, the Capital Market Authority of Egypt, the Financial Services Board of South Africa, the Securities and Exchange Commission of Ghana and the Securities and Exchange Commission of Nigeria.

It will be recalled that the Africa Investor Summit brought together international investors, African CEOs, pension funds and capital market professionals to explore investment partnerships in African listed equities. It also served as a platform for the international investors and African capital market leaders to explore investment partnerships at the New York Stock Exchange.

Global Financial Centres Index 8

Today the Z/Yen Group publishes the eighth Global Financial Centres Index (GFCI 8) covering 75 financial centres. The big change from GFCI 7 in March 2010 is that Hong Kong has clearly joined London and New York as one of the 'Big Three' Global Financial Centres. Key points from the six monthly index include:

• Hong Kong (760) has steadily closed the gap with London and New York over three years - now just 10 points behind New York compared with 76 in March 2007;
• there has been no significant difference between London (772) and New York (770) in the GFCI ratings since GFCI was first published in 2007;
• Singapore (728) is the most likely contender for the fourth global financial centre;
• confidence in the future of financial centres has fallen since GFCI 7, as shown by lower overall ratings - 53 centres having lower ratings in GFCI 8 compared with just 17 centres having higher ratings (five have the same ratings as in GFCI 7);
• Asia continues to rise, with Shanghai now into the top ten and Seoul into the top 25;
• financial centres tipped to become more significant in the next few years are all Asian - Singapore, Shanghai, Shenzhen, Beijing and Seoul;
• since the financial crises began, all offshore centres show larger falls than average.

Professor Michael Mainelli, Executive Chairman of the Z/Yen Group, said:

"London and New York have long been considered the two top global financial centres. The top Asian centres have been catching up for a while, but financial services professionals around the globe have been consistent in saying that Hong Kong now joins the top two."

GFCI 8 uses 33,023 financial centre assessments completed by 1,876 financial services professionals. Since 2007, over 60,000 assessments from over 3,500 respondents have built the index. GFCI is updated regularly and ratings change as assessments and instrumental factors change.

Singapore: MAS Hosts the 16th International Conference of Banking Supervisor

The 16th International Conference of Banking Supervisors (ICBS) will be held in Singapore from 20 to 23 September 2010.

Hosted by MAS and jointly organised with the Basel Committee on Banking Supervision (BCBS), the 16th ICBS will see senior officials from central banks and supervisory agencies from more than 100 countries in Singapore. They will discuss key supervisory issues and foster continuing cooperation in international banking oversight.

The themes of discussion for the 16th ICBS will be “Towards a More Resilient Banking Sector” and “A Stable Financial Environment for Sustained Economic Growth”. Heng Swee Keat, Managing Director of MAS, will deliver a welcome speech on 22 September 2010. Nout Wellink, President of the Netherlands Bank and Chairman of the Basel Committee on Banking Supervision, will open the conference. Liu Mingkang, Chairman of the China Banking Regulatory Commission, will deliver a keynote speech on 23 September 2010. There will be panel discussions and workshops on the two themes, chaired by various banking supervisors.

Details on the 16th ICBS and the conference programme are available at

http://www.icbs2010.org/index.php

International Arbitrations and Mediations in UK Top 5,000 in 2009, up 59 per cent from 2007

• International arbitration & mediation disputes rose by 59% from 3,339 in 2007 to 5,297 in 2009
• Total UK arbitration & mediation disputes up 78% to 34,541 over 2 years
• Surge in referrals prompted by economic recession and financial crisis
• Opening of new business, property and commercial court in London in 2011 will reinforce UK's position as key international centre for litigation
• UK offering enhanced by new legal framework for arbitration in Scotland

The total number of disputes resolved through arbitration and mediation in the UK reached 34,541 in 2009, up over three quarters from 19,384 in 2007. Disputes mainly involving international parties increased by 59% from 3,339 in 2007 to 5,297 in 2009. These findings are drawn from the report Dispute Resolution in London and the UK 2010 released today by TheCityUK: the new independent membership body promoting the UK financial and related professional services industry.

Duncan McKenzie, Senior Manager Economic Research at TheCityUK, said "The main dispute resolution organisations have experienced a surge in referrals in recent years due to the economic recession and financial crisis. Other initiatives are contributing to growth in use of mediation in the UK."

The CityUK report notes that the resolution of many disputes is administered by a few organisations. The Royal Institute of Chartered Surveyors handled the most referrals, with 8,845 in 2009. It was followed by The Chartered Institute of Arbitrators at 4,659 and the London Maritime Arbitrators' Association with 4,445: both were up around two thirds from 2007. Disputes referred to the London Court of International Arbitration recorded the biggest increase, more than doubling from 137 to 285.

The Centre for Effective Dispute Resolution's (CEDR) two-yearly audit found that a total of 6,000 mediations were conducted in the UK in 2009, also up two-thirds from 3,600 in 2007. CEDR has mediated over 650 disputes a year in recent years, with PIM Senior Mediators undertaking 732 mediations in 2009. Over 9,000 claims were conducted through the Small Claims Mediation Service in 2008/09, a new facility set up in the past two years by Her Majesty's Court Service.

Khawar Qureshi QC, chairman of TheCityUK's Legal Services and Dispute Resolution Group said: "The CityUK report provides a valuable insight into the UK's Dispute Resolution sector, and confirms London's pre-eminent position for international business disputes. The data in the report shows that the ADR sector has grown significantly in the aftermath of the financial crisis. In addition, the new state of the art Business, Property and Commercial Court to be housed in the Rolls Building in London, scheduled to become operative in early summer 2011, will greatly enhance the UK's attraction as an international centre for litigation."

Mauritius: FSC wins Africa Investor’s Most Innovative Capital Market Regulator of the Year Award

The Financial Services Commission Mauritius has been awarded the “Most Innovative Capital Market Regulator of The Year Award” by Africa Investor at a summit organised by Africa Investor, in collaboration with New York Stock Exchange (NYSE) Euronext. The Award was presented to the Chief Executive of the FSC, Mr Milan Meetarbhan during a ceremony at the New York Stock Exchange.

The objective of the summit was to promote investment opportunities in Africa mostly for fund managers and US pension funds.

During his intervention as member of a panel on « CEO’s Success Stories » Mr Milan Meetarbhan invited American fund managers to structure investments in Africa from the Mauritius International Financial Centre which is the first financial centre on the African continent. Mauritius, he said, is well positioned to be the financial hub for Africa.

On the Most Innovative Capital Market Regulator Of The Year Award” being conferred to the FSC, the Chief Executive de la Commission said:

«This award comes as recognition for the measures taken by the Commission to promote development of Financial Services in Mauritius and adoption of a business friendly approach to regulation. After the SEM official market and the Development and Enterprise market, the country will now have another securities market, with the coming into operation next month of the Global Board of Trade which will launch a Pan African Commodities Exchange and a Currency Derivatives market. The operation of two Securities Markets in the country will reinforce our reputation as an International Financial Centre. We must now encourage the listing on the Mauritius Stock Exchange of investment funds in the Global Business Sector»

The other nominees in the “Most Innovative Capital Markets Regulator” category were the Capital Markets Authority of Kenya, the Capital Market Authority of Morocco, the Capital Market Authority of Egypt, the Financial Services Board of South Africa, the Securities and Exchange Commission of Ghana and the Securities and Exchange Commission of Nigeria.

The award was given on the basis of commitment to increasing transparency and efficiency, support for innovative technologies, employment of best regulatory practice, openness to foreign investors and investor protection, participation in industry associations such as IOSCO and finally, efforts to create an enabling environment for the capital markets industry.

Mauritius as a Hedge Fund Domicile

There is no dedicated hedge fund regulatory regime in Mauritius, hedge funds are structured and licensed as a Collective Investment Scheme or a Closed-end Fund.

A Collective Investment Scheme (“CIS”) is defined under the Securities Act 2005 (“SA 2005”) as a scheme approved by the Financial Services Commission (FSC) in Mauritius:

• whose sole purpose is the collective investment of funds in a portfolio of securities, or other financial assets, real property or non-financial assets as may be approved by the FSC ;
  


• whose operation is based on the principle of diversification of risk;
  


• that has the obligation, on request of the holder of the securities, to redeem them at their net asset value, less commission or fees; and
  


• where the participants do not have day to day control over the management of the property, whether or not they have the right to be consulted or to give directions in respect of such management.

• includes closed-end funds whose shares or units are listed on a securities exchange; but
  


• excludes such schemes as are specified in Part II of the Schedule SA 2005.

A Closed-end Fund means an arrangement or a scheme, other than a CIS, whose object is to invest funds, collected from investors through an offer or from sophisticated investors, in a portfolio of securities, or in other financial or non-financial assets, or real property.

A "Global scheme" is defined under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 (“Regulations”) as a company or any other legal entity approved by the FSC, holding a Category 1 Global Business Licence (GBL 1) and authorized to carry out activities falling within the definition of a Collective Investment Scheme.

Conditions applicable to Global schemes

The FSC may grant an authorisation for a Global scheme provided that:

1. information relating to the CIS Manager and the custodian as prescribed in the Regulations is submitted with the application for authorisation;
   


2. a CIS administrator [e.g. OCRA (Mauritius) Limited] with a place of business in Mauritius is appointed;
   


3. the accounting and reporting services are carried out by the CIS Manager, or the CIS Administrator of the scheme, having a place of business in Mauritius.
   


4. The prospectus or other offering document contains the following statements in a prominent position:
   
   "Investors in [name of the Global scheme] are not protected by any statutory compensation arrangements in Mauritius in the event of the fund's failure."
   
   "The Mauritius Financial Services Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it."
   


5. a certified copy of the prospectus or other offering document filed in a jurisdiction where the collective investment scheme is regulated or exempted from regulation is filed with the FSC;
   


6. information is provided on the CIS Manager and the custodian, including name and registered addresses and where regulated, if applicable;
   


7. information is given on whether the collective investment scheme is regulated, or shall be subject to regulation, in any jurisdiction and if so, a copy of the authorisation or similar consent of the regulator and if not, indication on what basis it is exempted from securities regulation in other jurisdictions;
   


8. adequate measures are taken to prevent money laundering and financing of terrorism and provided that the FSC is satisfied that these measures meet legislative requirements.

An authorisation under section 97(5) SA 2005 may be granted subject to such terms and conditions the FSC considers necessary or desirable for the protection of participants.

Subject to FSC approval, a Global scheme may appoint and retain a CIS Manager and/or a custodian established in a foreign jurisdiction.

An “Expert Fund” is defined as a fund which is only available to expert investors. A Collective Investment Scheme (“CIS”) may apply to the Financial Services Commission (“FSC”) under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 (“Regulations”) for authorisation as an expert fund.

Such application must include the following documents / information:

• constitutive document of the scheme;
  
• measures taken to prevent money laundering and financing of terrorism;
  
• latest audited financial statements;
  
• a copy of the offering document given to potential investors; and
  
• if applicable, information on the CIS manager as requested in regulation 6.

Conditions applicable to an Expert Fund

1. An expert fund shall only be available to expert investors.
   
2. An expert fund may appoint a manager who, where appointed, shall be the holder of:
   
   (a) a CIS manager licence; or
   
   (b) a licence issued by a regulatory body in a jurisdiction having comparable regulation as Mauritius for investor protection (e.g. FSA in UK or SEC in US)
   
   
3. The CIS manager of an expert fund need not be resident in Mauritius.
   
4. The Board of the fund or the CIS manager where appointed must satisfy itself that the fund is and continues to be managed in accordance with the fund’s constitutive documents.
   
5. The Board of the fund, or the CIS manager where appointed, shall be responsible for ensuring that the provisions of these Regulations applicable to expert funds are complied with.
   
6. The expert fund shall accept as investors in the fund, only such persons as the Board or CIS manager where appointed is satisfied are expert investors.
   
7. The offering document or any other similar document of an expert fund shall:
   
   (a) contain a statement to the effect that the expert fund shall be available only to expert investors,
   
   (b) contain in a prominent position, the definition of an expert investor; and
   
   (c) shall have the following statements in a prominent position -
   
   "Investors in [name of the expert fund] are not protected by any statutory compensation arrangements in Mauritius in the event of the fund's failure."
   
   "The Mauritius Financial Services Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it."
   
   
8. In accordance with section 30 of the Financial Services Act 2007 the audited accounts of the expert fund shall be filed by the scheme, the CIS manager or the CIS Administrator as appropriate.

Expert Investor

An “expert investor” means-

(i) an investor who makes an initial investment, for his own account, of no less than US$ 100 000; or

(ii) a sophisticated investor as defined in the Securities Act 2005 or any similarly defined investor in any other securities legislation (e.g. an accredited investor under US federal securities laws)

Exemptions for an Expert Fund

An expert fund, subject to authorisation from the FSC, shall be exempt from the provisions of the Regulations except for regulations 78 to 81 and Part I and XII.

BVI IFC: A New Era in Funds Domiciliation

The BVI International Finance Center in collaboration with the BVI Investment Funds Association is proud to present “A New Era in Funds Domiciliation” Conference to be held at the Grand Hyatt Hotel in New York, 5:00pm, Thursday, 23rd September, 2010.

We are currently offering the opportunity for leading edge organizations to become involved with this prestigious event by becoming a delegate, and/or a sponsor.

The conference promises to provide a quality program of discussions and keynote speakers. The structure of the conference will be 15 minute presentations followed by a Q & A period which will provide a unique platform for an exchange of views, sharing of best practices and formulation of strategies to best deal with opportunities in 2010 and 2011.

The conference will focus on topics that are of interest to all fund jurisdictions in the BVI and examine issues facing professionals worldwide. The presentations are tailor-made to bring together leading fund practitioners, lawyers and senior in-house legal counsel from New York, multinationals and foreign invested enterprises.

The reception following the conference will give attendees an opportunity to address and interact with some of the most influential corporate counsel and business leaders in the region today.

The conference will increase visibility and facilitate networking with a highly motivated and professional association that is continuing to grow in the region.

The Vodafone decision: insights, perspectives and disconnects

Expert View | Nishith Desai

The Bombay high court decision accepts the principle that income earned by a non-resident from an offshore transaction cannot be taxed in India unless the assets transferred have sufficient nexus with the territory of India

Click here for full article

Africa investor Index Series Awards Winners announced on the NYSE trading Floor

Africa investor (Ai), a leading international investment research and communications group, tonight announced the winners of the 2010 Africa investor Index Series Awards, which were held at an exclusive, invitation-only gala ceremony on the trading floor of the New York Stock Exchange.

The Africa investor Index Series Awards are the only international, pan-African awards that recognise and reward Africa’s institutional investors, stock exchanges, best-performing listed companies, stockbrokers and capital market regulators.

This year’s winners were a mixed but uniformly respected and high-achieving group of leaders in their respective fields. CEOs from all of the Africa investor-tracked indices were recognised, including Othman Bejelloun from Banque Marocaine du Commerce Exterieur as Africa investor 100 CEO of the Year; Africa investor 40 CEO of the Year saw Arnold Ekpe, CEO of Ecobank Transnational, take the award; Africa investor SRI 50 CEO of the Year went to Linus Gitghi of Nation Media Group; while Martin Oduor-Otieno of Kenya Commercial Bank was recognised as Africa investor SRI 30 CEO of the Year.

Africa’s leading listed companies from the Africa investor-tracked indices were also hailed as Best Performing Africa investor 100 Company went to Ghana Commercial Bank; Best Performing Africa investor 40 Company was awarded to Equity Bank Kenya; and Best Performing Africa investor Sri30 Company was given to another Kenyan company, Safaricom. Zambia Sugar walked away with Best Performing Africa investor SRI 50 Company.

Africa’s stock exchanges were not to be outdone as Most Innovative African Stock Exchange went to the Ghana Stock Exchange (GSE) and Most Innovative Capital Markets Regulator was awarded to the Financial Services Commission of Mauritius. Other categories saw Coronation Africa Fund recognised as Best Africa Fund Manager; Best Africa Investment Bank went to Renaissance Investment Bank; Standard Bank was honoured for the Best Africa Research Team and Best African IPO was given to Juhayna Food Industries Egypt. Auerbach Grayson took Best Performing Broker in Africa and, finally, Best Risk Adjusted Performance by an African/South African Hedge Fund was given to Scipion Capital.

For a full list of winners, please see below.

Commenting on the awards Hubert Danso, Vice Chairman and Managing Director, Africa investor said, “Profiling African capital market success stories through the Africa investor Index Series Awards is vital to raising awareness about the activities and developments of Africa’s capital markets and listed companies, and the increasing quality and quantity of entries received this year goes far in proving that Africa’s growing appeal to the global investment community is at a tipping point.”

The Ai Index Series Awards ceremony coincides with the annual Africa investor Index Series Summit held in association with NYSE Euronext. The Summit brings together international investors, African CEOs, pension funds and capital market professionals to explore investment partnerships in African listed equities.

Both the Africa investor Index Series Summit and Awards represent an unprecedented opportunity for international investors and African capital market leaders to explore investment partnerships at the New York Stock Exchange. Africa investor would like to thank its sponsors and partners, including: Summit partners and sponsors include: Ecobank, NYSE Euronext, Thomson Reuters, Standard Bank, CNBC, the African Development Bank, CI Capital, Label Vie, the African Securities Exchanges Association (ASEA), the United Nations Office for Partnerships and the NEPAD Business Group.

Africa investor Index Series Awards Winners 2010:

Africa investor 100 CEO of the Year

Othman Bejelloun – Banque Marocaine du Commerce Exterieur

Africa investor 40 CEO of the Year

Arnold Ekpe – Ecobank Transnational

Africa investor SRI 50 CEO of the Year

Linus Gitghi – Nation Media Group

Africa investor SRI 30 CEO of the Year

Martin Oduor - Otieno - Kenya Commercial Bank

Best Africa Fund Manager

Coronation Africa Fund

Best Africa Investment Bank

Renaissance Bank Investment Bank

Best Africa Research Team

Standard Bank

Best African IPO

Juhayna Food Industries Egypt

Best Performing Broker in Africa

Auerbach Grayson

Best Performing Africa investor 100 Company

Ghana Commercial Bank

Best Performing Africa investor 40 Company

Equity Bank Kenya

Best Performing Africa investor Sri30 Company

Safaricom

Best Performing Africa investor Sri50 Company

Zambia Sugar

Most Innovative African Stock Exchange

Ghana Stock Exchange (GSE)

Most Innovative Capital Markets Regulator

Financial Services Commission Mauritius

Best Risk Adjusted Performance by an African/South African Hedge Fund

RMB Asset Management (Pty) Ltd

Vodafone decision: Lessons for Cross-border Mergers & Acquisitions

Nishith Desai Associates held a teleconference on 14 September 2010 to discuss the impact of the Vodafone decision on cross-border mergers and acquisitions. The discussion was led by Mr. Nishith Desai, Founder & Managing Partner and Ms. Bijal Ajinkya, Head, International Tax.

Audio playback of the teleconference

Presentation deck and materials referred to during the teleconference

Survey Shows Financial Access Growing Despite Effects of the Financial Crisis

Despite an environment dominated by tight credit markets and slowing economies, more people in developing countries gained access to financial services in 2009. An estimated 2.7 billion people around the world have no access to formal financial services, which are both safer and less expensive than the informal alternatives. But new technologies are introducing more cost-effective retail infrastructure, and the picture of financial inclusion is shifting.

Still regulators will need to ensure that the capacity to implement sound regulations keeps pace with the introduction of new laws, so that increased outreach maximizes the benefits for poor people.

This is the emerging picture of global financial inclusion contained in Financial Access 2010, the second annual survey of financial regulators in more than 140 countries by CGAP and the World Bank Group. The survey found that the number of bank accounts around the world was growing even as the volume of loan and deposit accounts dropped. Sixty-five deposit accounts were added per 1,000 adults in 2009, representing 4.3% average growth in the number of deposit accounts. The impact of the financial crisis could be more clearly seen in the use of credit services, with the number of loans per 1,000 adults broadly unchanged between 2008 and 2009.

Addressing a need for data

The majority of the world’s poor resort to informal services to manage their family’s financial lives--saving under the mattress, borrowing from family and friends, or moneylenders. But around the world policy makers are committing to an agenda that supports financial inclusion and offers greater access to safe, formal financial services. Financial Access 2010 is one piece of a broader worldwide effort to improve the measurement of financial access by providing key data on policies promoting financial inclusion. And with a global push to improve the measurement of SME finance led by the Group of 20, the report also presents the first comparable global data on lending to SMEs, estimated at US$10 trillion in 2009.

“As there are increasing calls for more and better data around financial inclusion, including from the G20, the annual Financial Access survey will provide key data and help monitor progress over time,” said Alexia Latortue, CGAP’s Deputy Chief Executive Officer.

Data for 2009 showed that the largest median increase in new accounts was seen in the poorest one-fifth of countries, showing that access is improving more rapidly in less-developed countries.

“Access to simple savings and payments accounts is a basic need,” said Nataliya Mylenko, lead author of Financial Access 2010. “The fact that people are using deposit services more, even as world financial markets were experiencing high volatility, confirms how essential these services are to help families manage through risky and uncertain periods.”

Policy reform

The data also confirm the need for lawmakers and regulators to pay even closer attention to consumer protection and financial sector regulation as the number of users grows.

The painful lessons of the lengthy global financial crisis appear to be sinking in with regulators worldwide. Two thirds of the regulators included in Financial Access 2010 reported that reforms were underway targeting consumer protection.

While this trend is good news for future savers and borrowers, Financial Access 2010 shows that regulators are often hampered by a lack of resources to implement the policies or, in the case of consumer protection legislation, lack of enforcement powers.

New technologies

Despite the numerous hurdles to implementing sound policies, there are promising trends in financial inclusion, including the expansion of retail infrastructure and use of new technologies to deliver financial services cost effectively. Globally, one bank branch, five ATMs, and 167 point-of-sale (POS) terminals were added per 100,000 adults in 2009.

For the first time, the number of ATMs exceeded the number of bank branches in low-income countries last year. But low- and middle-income countries still lag behind high-income countries in terms of physical outreach. Burundi doubled its number of ATMs, but still only has a total of four ATMs in the entire country.

“The growing adoption of new technologies, such as mobile payments and Internet banking, are likely to sustain and hopefully accelerate the pace of financial inclusion,” said Oya Pinar Ardic, an author of the report.

A promising direction

Whether it is countries’ commitment to policy change or the numbers of people gaining services who were previously “unbanked,” Financial Access 2010 suggests a promising direction for financial inclusion.

“The fact that financial access grew modestly in a crisis year is a sign of the commitment many policymakers around the world have made to ensuring that their citizens get better access to better financial services,” said Janamitra Devan, World Bank Group’s Vice President of Financial and Private Sector Development. “We hope that policymakers around the world will use this data to inform their approach as they work to close the financial access gap.”

CDP: A Plethora of Case Law

The offshore hedge fund industry has typically suffered from a lack of relevant offshore case law. This has changed. While many offshore hedge funds have collapsed in the recent financial crisis, the positive result has been a plethora of offshore hedge fund cases in each of the British Virgin Islands, the Cayman Islands and Bermuda. Each case turns on the specific facts, constitutional documents and statutory framework of the fund in question. However, this article examines some of the general principles that can be derived from these cases as they relate to British Virgin Islands law.

Click here to view this article

EFAMA / KPMG European Investment Management Practice UCITS IV Report

An industry research report published jointly today by the European Fund and Asset Management Association (EFAMA) and KPMG’s European Investment Management practice shows that there are significant tax complications in the new Undertakings for Collective Investment in Transferable Securities (UCITS IV) Directive that prevent the achievement of a harmonised European funds industry. The report identifies critical tax issues and numerous examples of unequal treatment (“discrimination”) and inefficiencies across the 27 European Union (EU) Member States.

The report, entitled Analysis of the tax implications of UCITS IV, recognises that the UCITS IV Directive to be implemented by Member States by July 2011 offers considerable scope for re-structuring fund management operations in the EU. The directive introduces six efficiency measures, which could make the European fund industry more competitive and attractive to investors. However, the directive does not deal with critical tax reforms required to enable effective use of the efficiency measures of the directive.

EFAMA and KPMG’s European Investment Management practice make a number of recommendations to resolve the tax barriers preventing an efficient single market:

Fund Mergers: Under UCITS IV it will be possible to carry out cross-border mergers of UCITS funds. Certain Member States currently tax fund mergers at the investor level, which leads to a situation where investors would pay taxes on unrealised gains. In order to make UCITS IV a success, the report recommends that fund mergers should be carried out in a tax-neutral manner at the fund and investor level.

Management Company Passport: UCITS IV will make it possible to establish a UCITS fund in one Member State which could be managed from another Member State. In this respect, the main issue is that in certain Member States, the management of a fund cross border could lead to a fund becoming tax resident (and therefore liable for tax) in the Management Company’s state of residence. The report recommends that the fund should only be taxable in the country where the fund is established or registered, even if its Management Company is resident elsewhere.

Master-Feeder Fund Structure: under UCITS IV, a Feeder fund will be allowed to invest its assets in another fund, a Master Fund. As it currently stands, certain Member States levy withholding taxes on cross-border dividend distributions to foreign Feeders, or impose tax on redemptions in the country where the Master Fund is located. The report recommends that there should not be tax leakage between the Master and Feeder fund in order for the Master–Feeder structures to become a reality and offer investors a cost effective product. EFAMA and KPMG’s European Investment Management practice recommend the adoption of a tax Directive at EU level that would remove the tax barriers of UCITS IV being fully effective. In particular, it should provide for:

• Tax neutrality of fund mergers.
• Uniform rules governing the tax residency of funds and the place of incorporation and registration.
• Tax neutrality on the flow of cash between Master and Feeder funds.

In the meantime, in the absence of a directive, EFAMA and KPMG’s European Investment Management practice encourage each Member State to take the appropriate measures at national level in order to resolve the remaining tax obstacles.

Peter De Proft, Director General of EFAMA, said, “UCITS IV offers great opportunities to the funds industry and is another important step towards a single European market. EFAMA welcomes the six efficiency measures, but in the interests of the funds industry, and particularly its investors, it urges individual Member States to resolve these important tax issues. Otherwise, there is a risk that the objectives of UCITS IV will not be achieved and that the funds industry will not be able to make full use of all the efficiency measures.”

Georges Bock, Global Chairman of KPMG’s Funds Tax Network, said, “If the EU member states want to achieve their single market ambitions, they need to press at least for a merger directive for investment funds based on the principle of a tax deferral so that investors would only pay tax on mergers of funds once money truly hits their pockets. A deferral would not lead to an ultimate loss of tax revenues for the various EU Member States. It is therefore hopefully possible to reach the required unanimity for the adoption of such a measure.”