Spring 2009 The business newsletter of World Link for Law, an international association of law firms

News Link

World Link for Law launches new international business matchmaking service World Link for Law has launched a new international business matchmaking service called World Trade Link, with its own dedicated web site: www.worldtradelinks.net.

The concept arose out of the realization that World Link for Law member law firms have thousands of clients operating in a wide range of market and business sectors - many are involved in cross border trade and business development. Initially a database was created comprising over 600 records of member firm’s main clients – categorized by market sector (e.g. retailing); and then by a more specific description of the type of business and the location and the email address of the World Link for Law member firm. For client confidentiality reasons, clients are (and always will be) un-named on the web site and in databases.

The new concept enables businesses to make enquiries to World Link for Law member firms around the world for business development or joint venture opportunities with their clients in specific market sectors. An additional advantage is that each business may be represented by a World Link for Law member law firm, who are independent law firms but they know each other; they regularly work together in cross border transactions and

they abide by the World Link for Law Quality Code. Therefore, they are able to work together effectively and efficiently for the benefit of both clients if legal assistance is required.

The new web site enables two types of matchmaking searches to be made. Firstly, to interrogate the existing database of member firms’ clients and secondly to request specific matchmaking possibilities (as the database currently only lists the main clients of World Link for Law member law firms, so there are undoubtedly further matchmaking possibilities with other clients).

The new web site also contains free cross-border legal information and World Link for Law are investigating promoting the concept to commercial consular staff at embassies and to cross border chambers of commerce.

For further information contact: Tony Firth, Executive Consultant, World Link for Law, United Kingdom Email: info@worldlink-law.com Tel: + 44 1326 568 810

Other articles in this issue (Click on each to open):

Warning about US trademark

scam artists (Page 2)

Germany - update of inheritance and gift tax laws (Page 2)

Germany - reform of the ‘GmbH’ (Page 3)

Arbitration and the German - US double taxation treaty (Page 3)

Distribution agreement considerations (Page 5)

UK - pre litigation action conduct protocols (Page 6)

Netherlands - dealing with the bankruptcy of a Dutch debtor (Page 8)

Romania - debt recovery procedures (Page 9)

Ukraine - starting a business (Page 10)

Romania - enforcing judgments (Page 12)

Substance requirements for overseas subsidiaries (Page 13)

Italy - certified electronic mail delivery systems (Page 14)

The British Virgin Islands Business Company (Page 15)

Ukraine - real estate for foreigners (Page 16)

The UK - Companies Act 2006: key provisions (Page 17)

Arbitrating EC Competition Law (Page 18)

World Link for Law Member News (Page 19)

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Germany: reform of inheritance and gift tax law comes into force On 1st January 2009 the reform of the new inheritance and gift tax laws came into force. This article updates an earlier World Link for Law newsletter article (Spring 2008), and provides information on the general situation.

The reform allows increased tax allowances for close relatives: for the spouse/the registered partner (in same sex relationships), €500,000 (previously €307,000); for each child €400,000 (previously €205,000); for each grandchild €200,000 (previously €51,200) which becomes €400,000 if the parents of the grandchild have already died. For transfers to parents or grandparents because of the death of a child or grandchild, there is an inheritance tax allowance of €100,000. Other relatives (e.g. siblings) or third parties will benefit from a tax allowance of €20,000 (previously €10,300). The tax bands have been changed which will benefit close relatives. Conversely, other heirs and donors will face higher inheritance and donation tax rates: 30% up to €6m: 50% over €6m.

Additionally, however, a substantial reduction of the inheritance and gift tax burden is allowed for the transfer of business assets. There are two options: a) 85% of the value is tax free if the heirs carry on the business for 7 years and keep the salaries level up to 650% in the 7 year period (therefore 93% every year); b) 100% of the value is tax free if the heirs carry on the business for 10 years and keep the employment salaries level up to 1,000% in the 10 year period (therefore 100% every year). In case the business is sold or closed before the deadlines, the tax benefit will be reduced proportionately. Furthermore, for business assets there is a general tax allowance of €150,000.

The inheritance of a family house by a spouse or registered partner will be inheritance tax free, if the heir lives there for the next 10 years. The same rules apply if a child is the heir, however limited to a surface area of 200 square meters. Additionally, the valuation rules have been changed, so that the taxation has to refer to the effective market value. This creates the risk of substantial increases of taxation for inheritance or donation of immoveable properties.

The “winners” are therefore the close relatives, the registered partners and the heirs of business people that successfully manage to continue the employment levels in the subsequent seven/ten years.

For further information contact: Dr. André Castelli, Dolce Lauda, Frankfurt-am-Main, Germany Email: info@dolce.de ; Tel: + 49 69 920 7150 ; www.dolcelauda.com

Foreign owners of US-registered trademarks are warned about trademark scam artists

Frequently, businesses outside the United States may find it useful to register trademarks in the United States. The process is relatively easy and can be done electronically and inexpensively. For these reasons, foreigners frequently choose not to use American lawyers to accomplish the registration, or they may lose contact with counsel once registration has been obtained.

It is common for trademark owners outside the United States to receive unsolicited letters and email communications from companies requesting fees for trademark related services, such as monitoring and document filing. Solicitations from these companies frequently display specific information, including the name and address of the owner, serial numbers and registration numbers issued by the United States Patent and Trademark Office. These solicitations often appear to be on “official” looking forms with the name of the United States Patent and Trademark Office (USPTO) prominently displayed. The USPTO does not perform any such services, and companies who offer these services obtain the information by “mining” information freely obtainable via the USPTO database for no charge.

Companies typically charge a service fee in addition to applicable USPTO fees. They will ask for payment via a credit card. Applicants and registrants can mistakenly believe that the USPTO has issued these communications or that these companies are affiliated with the USPTO. Some of these so-called “services” actually do the work, and some do not, in which case registrations can be cancelled or expire without the knowledge of the owner.

If you or a client receive such communications, you would be well advised to ask a qualified U.S. attorney about them or consult the USPTO directly on the USPTO website (www.uspto.gov). It is possible to file documents electronically directly with the USPTO using forms available through the Trademark Electronic Application System (TEAS) and there are no service fees, only the official filing fees. Any person can monitor a trademark directly for free through Trademark Application Registration Retrieval (TARR) on the USPTO website.

For further information contact: James N. Dawe, Dawe & Christopherson LLP, San Francisco, California, USA Email: jnd@calaw.com ; Tel: +1-415-986-0340 ; www.calaw.com

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Germany - The reform of the ‘GmbH’ company type Recently the legal rules concerning the GmbH (Gesellschaft mit beschränkter Haftung – German limited liability company) have been drastically modernized. The purpose of this article is to briefly introduce the principle amendments which took place after the new legal act came into force on the 1st of November 2008.

Formation of the company by standardized examples The German legislator provides an example of the articles of association (Gesellschaftsvertrag), presenting the decision on the executives’ appointment (Geschäftsführerbestellungsbeschluss) and the list of shareholders (Gesellschafterliste) that can be used for the formation of the company with up to three original shareholders (Gründungsgesellschafter).

10,000 Euro registered capital The minimum registered capital for an ordinary GmbH has been cut from 25,000 to 10,000 Euro.

The 1 Euro company A new company type has been introduced, the Unternehmensgesellschaft - a special kind of business company which can be formed with a registered capital of only 1 Euro. In this case it is foreseen that the capital will increase up to 10,000 Euro.

Additional provisions The provision of capital by contribution in kind has been prevented; a company share can be acquired bona fide. As already granted to the corporation in the GmbH, the increase of the capital can be “a credit in advance”. It is no longer necessary that the State approves the activity of the GmbH. Of course, this does not imply that the GmbH can operate without authorization, it is only designed to accelerate the registration procedure. The eligibility requirements of the executive persons have been limited. For example, an executive who has committed an offence abroad based on those situations foreseen in the German GmbH Act, the Corporation Act or other German laws will be excluded. The shareholders are considered liable for the company if inappropriate executives are appointed.

Even though German law does not recognize the free movement of the GmbH and of companies, the registered office of the GmbH can now be transferred abroad. However, in the current legal situation the GmbH should be formally closed in Germany before the registration abroad. It is, in the opinion of the authors, desirable that the German legislator finds a future different solution to this situation.

For further information contact: Rodolfo Dolce and Marilena Bacci, Dolce Lauda, Frankfurt-am-Main, Germany Email: rodolfo@dolce.de Tel: + 49 69 920 7150 www.dolcelauda.com

Mandatory arbitration under the Germany-US double taxation treaty In 2006, Germany and the United States signed a Protocol amending the Germany-USA Double Taxation Convention (the DTC). One important aspect introduced by the 2006 Protocol is the requirement that double taxation conflicts between the Contracting States be subjected to mandatory arbitration to the extent that certain requirements are fulfilled. This change was introduced by the reformulation of Article 25(5) of the DTC and the addition of a new paragraph 6 which sets forth certain rules and definitions for the arbitration process.

Additionally, in order to further define and clarify the new provisions, the Contracting States concluded a Memorandum of Understanding Between the Competent Authorities of the Federal Republic of Germany and the United Sates of America’ (the MOU). The following article will briefly look at some aspects of these new provisions.

Disputes eligible for arbitration The 2006 Protocol replaced Article 25 (5), which provided for voluntary arbitration, with the following, so that the DTC provision now reads:

‘Where, pursuant to a mutual agreement procedure under this Article [25], the competent authorities have endeavored but are unable to reach a complete agreement in a case, the case shall be resolved through arbitration conducted in the manner prescribed by, and subject to, the requirements of paragraph 6 and any rules or procedures agreed upon by the Contracting States. ...’ (Emphasis added). 3

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While, on its face, this paragraph would seem to require mandatory arbitration, the mandatory nature is limited by the following:

tax returns must have been filed in at least one of the States with respect to the taxable years at issue in the case;

the case must either involve certain specified issues, such as the determination of residency of natural persons, permanent establishment questions, or issues involving business profits, associated enterprises or royalties; or must be an issue which the competent authorities specifically agree is suitable for arbitration.

furthermore, all concerned persons, including the affected taxpayer and all other persons whose tax liability may be directly affected, must agree, prior to commencement, not to disclose any information received during the course of the arbitration proceeding other than the actual board determination.

The MOU further specifies that competent authority requests involving advance pricing agreements (APAs) are generally entitled to arbitration and that neither competent authority may unilaterally cease to consider a case once it has been accepted into the mutual agreement procedure, except under specified circumstances. The MOU also, however, specifies the cases which will generally be considered ineligible for arbitration and breaks these cases down into the following two categories:

cases which a competent authority has not accepted or in which a competent authority ceases to provide assistance; and

cases which have been accepted for competent authority consideration but in which the competent authorities agree that the case is not suitable for arbitration determination.

The MOU points out that the latter will particularly occur if a taxpayer makes “inordinate or repeated” delays in regard to requests for information or if the taxpayer submits the case for litigation and the relevant court does not allow for a suspension of proceedings pending a competent authority resolution.

Arbitration Board The provisions introduced by the 2006 Protocol specify general rules regarding the appointment and constitution of the arbitration board, the non-disclosure of information by involved parties, and procedural rules for the conduct of the arbitration. The MOU adds further clarification of some of the DTC provisions and makes reference to “Arbitration Board Operating Guidelines” which were agreed to by the US and Germany simultaneously with the MOU.

Board determination The DTC Protocol provides that the determination of the arbitration board will constitute a resolution by mutual agreement and be binding on both Contracting States unless it is not accepted by any concerned party. It also provides that the decision must be limited to the determination of amounts of income, expenses and taxes and does not have any precedent value for future cases. Furthermore, each concerned person has thirty days from receipt of the arbitration determination to inform the competent authority whether he will accept the determination. To the extent that a concerned person fails to provide such notification within such time, the determination will be deemed to have been rejected.

Summary While the amended Article 25 (5) of the DTC requires mandatory arbitration in cases of dispute with the arbitration decision binding on both Contracting States, to what extent this provision will actually be applied in practice remains to be seen for a number of reasons. First, mandatory arbitration is limited to cases regarding the application of only certain specified articles of the DTC. Second, both Contracting States must consider the case suitable for arbitration and must agree to its commencement. Third, the concerned parties, including the taxpayer, must actively accept the arbitration board’s decision in a case for it to actually become binding.

For further information contact: Peter Dehnen, Dehnen Rechtsanwälte, Düsseldorf, Germany Email: peter.dehnen@dehnen.de Tel: (+49) 211 44 97 07 www.dehnen.de 4

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Your distribution agreement - is it worth the paper it's written on? This article is written by Bartier Perry, Sydney, based on New South Wales - Australia laws, but the comments and content are useful for any distribution agreement. You have a good relationship with your biggest reseller customer. You sign a 1 page Distribution Agreement which seems to cover all the major issues. But have you considered the impact of the Trade Practices Act (TPA)? Severe penalties can be imposed for breaching the Act. And what if the relationship becomes rocky and you can’t "work through" an issue which wasn’t dealt with properly - or at all - in the 1 page agreement?

Unfortunately this happens often. Having a thorough and well written distribution agreement is important. It can protect your good relationship and avoid costly misunderstandings and disputes. It can keep you out of court.

Principal or agency? A key question should be whether the arrangement will be structured as a transaction between principals or whether the distributor will be an agent of the supplier. This is often overlooked. A true "agency" occurs where the distributor never actually buys the goods from the supplier, but is paid a commission for finding buyers – the contract of sale is between the supplier and the end user. The agent is merely a conduit. Commission agencies were much more common 30 years ago than they are now, and for good reason, defining the scope of agency is difficult and a principal is liable (vicariously) for the actions and defaults of its agents. The message here is don’t use the words "agency" or "agent" unless that is exactly what you mean!

In this article we consider only arrangements between principals – where the distributor actually purchases, then resells, the goods.

Is it a franchise? Another question is whether the distribution arrangement is in fact a franchise agreement. The Franchising Code in the TPA contains an extremely wide definition of "franchise agreement". It catches a range of transactions that may not traditionally have been considered to be franchises. If your distribution agreement contains a marketing plan or system of business and gives the distributor a right to operate its business using the supplier’s trade mark,on its face it is a franchise agreement. Failure to comply with the requirements of the Franchising Code is a breach of the TPA and will make the agreement unenforceable.

Exclusive dealings If you are considering exclusivity of any kind – territory, customer type or product range – you should get legal advice. These types of "exclusive dealings" are illegal under the TPA if they cause a substantial lessening of competition in the relevant market and severe penalties can be imposed.

Performance targets A long term, exclusive Distribution Agreement may sound good but what if the distributor doesn’t achieve the expected results? Without performance targets, a supplier may be "stuck" with an under-performing distributor and unable to appoint a replacement or alternative.

Clearly defining the performance targets is essential. There are many options. What is required of the distributor – a minimum dollar value of sales or a minimum number of units sold – or is it a minimum dollar value of product purchased from the supplier? And what are the consequences if the distributor fails to make its targets? This is equally important. If a right of termination sounds too harsh, there are alternatives. For example, termination might only apply if targets are not met in, say, 3 consecutive periods or there may be various target levels, only the lowest of which triggers termination if not reached. Alternatively exclusivity itself could lapse.

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Adjustment of the targets is also important, especially over a long term agreement. Distributors might be fairly entitled to reduced targets early in the term (or even a target ‘holiday’ while it gets established), but as time goes on, arguably targets should be increased.

Sales and marketing plans These plans are often incorporated into distribution agreements in which case the distributor may be obliged to comply with them. But don’t forget that marketing plans need to be fluid and responsive to changing market conditions - so appropriate mechanisms for collaboration and variation of the plan are needed.

Care is also needed if the distributor is given the right to use the supplier’s trade mark in promotional material (which is often the case). The Distributor’s use of your valuable trade marks should be subject to compliance with guidelines and appropriate approvals by you.

Post-termination procedures Addressing post-termination procedures can help you in the transition to a new distributor with minimal disruption to sales or customer relations. The distribution agreement should at least address issues including:

whether the distributor is able to sell down stock on hand or must cease to sell the product immediately? whether the supplier has the option – or is it required – to buy back stock held by the distributor? And in either

case, at what price? who is responsible and liable for sales commitments (if any) made by the distributor for the period after

termination?

Is there a standard agreement? The next time you start negotiating a distribution agreement, there will be many other issues, but at least consider the foregoing. Think carefully about the threshold issues of agency and franchise, and about exclusivity, term and termination rights. Above all, don’t simply copy someone else’s distribution agreement. There really is no such thing as a "standard" document and every trader’s products, markets and, consequently, needs are different!

For further information contact: Matthew Crouch, Executive Lawyer in the Commercial Team, Bartier Perry, Sydney, NSW, Australia. Email: mcrouch@bartier.com.au Tel: + 612 8281 7835

UK- Pre-action conduct: is more help really needed? The new regime In April 2009, a UK practice direction for pre-action conduct (“PDPAC”) will be introduced to supplement Civil Procedure Rules (“CPR") Part 3. It describes the conduct that the courts will normally expect parties to a dispute to have followed before proceedings are started and will replace the current Practice Direction on Protocols (“PDP”). It is intended to have greater prominence in the CPR with clearer language and structure.

Since 2006, there has been extensive consultation on proposed changes to the PDP. The author of this article compiled the response of the London Solicitors Litigation Association ("LSLA") to the most recent consultation. Several of our concerns have been addressed in the current draft, but many others remain.

The current draft PDPAC (dated 17 December 2008) is divided into four Sections with Annexes covering general matters, debt claims, and experts. Some parts will only apply where no other protocol applies, but the rest will apply in all cases, including those to which the 10 subject specific protocols apply. It will not apply to applications for: consent orders; orders where there is no defendant or respondent; directions by a trustee or other fiduciary; urgent “without notice” orders (e.g. freezing or search orders).

Aims The stated aims of the PDPAC are to: give guidance on pre-action procedure, but not to impose any significant new requirements; encourage the exchange of information about the issues; enable parties to settles disputes without issuing proceedings; give guidance on instructing experts, and information to be provided in a debt claim; provide clearer and more accessible information to litigants in person and less experienced practitioners.

Guidance, but no new requirements? Much of the PDPAC reorganises the PDP, and to a large extent this is helpful. But the PDPAC provisions will contain more than that mere guidance, including several changes which may well result in a change of interpretation. The courts seem likely to exercise their case management powers more actively if the guidelines are not followed. Claimants will be required to certify compliance with the PDPAC (or other relevant protocol) in the claim form 6

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or particulars of claim. And if following completion of the PDPAC procedures the matter has not been resolved, the parties will be required to undertake a further review of their respective positions to see if proceedings can still be avoided. It is unclear how a party could demonstrate that it has complied with this. Will a party be put under pressure to waive privilege in its legal advice in order to do so?

Information exchange While early exchange of information is to be encouraged, the new guidance on identifying and asking for copies of further relevant documents could potentially be used oppressively, either as a fishing expedition, or to attempt to require the claimant to obtain documents which it does not possess. This could result in increased time and cost.

Settlement discussions: ADR The PDPAC will provide that proceedings should not normally be started while the parties are actively exploring settlement: proceedings should usually be a step of last resort. ADR procedures are a useful tool in achieving settlement, but time and money can be wasted if parties are pressurised into ADR (rather than risk a punitive costs sanction) before they are ready to take an objective view of the dispute and to consider a solution which offers benefits to both sides. An ADR attempt which fails in such circumstances can delay or even prevent subsequent settlement attempts. Despite strong support for retaining the words "It has been expressly recognised that no party can or should be forced to mediate or enter into any form of ADR", these will be omitted.

Debt claims The guidance on information to be provided in a debt claim, where the claimant is an individual and the defendant is a business, seems unlikely to be contentious. While the new guidance may be clearer, it is questionable whether it is more accessible.

Experts In addition to the extensive and detailed provisions which are set out the CPR, Annex C of the PDPAP will now add further guidance, despite concerns that some of the guidance was neither necessary nor helpful. In particular, the guidance could be read as putting pressure on parties to instruct a single joint expert or an agreed expert (which may not be the best or most appropriate option in every case) and to exchange correspondence on alternative experts, which may add to (rather than reduce) the costs involved.

Accessibility The PDP and the subject-specific protocols all currently appear in Section C of Part 1 of the White Book. Neither the title to CPR Part 3 nor the PDPAP gives any clue that guidance on debt claims is also to be found here. Will an inexperienced practitioner or a litigant in person find it any easier to locate guidance on the steps to be taken before commencing proceedings or in debt claims here, rather than in the current location?

There may be further changes before the PDPAC is introduced, so there is still an opportunity for some or all of these concerns to be addressed.

For further information contact: Patrick Wheeler, Head of Dispute Resolution, Collyer Bristow LLP Email: patrick.wheeler@collyerbristow.com ; Tel: +44 (0) 20 7470 4432 ; www.collyerbristow.com

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Netherlands - The bankruptcy of a Dutch debtor Due to the recent economic crisis the number of bankruptcies in The Netherlands has increased considerably. As a creditor of a Dutch enterprise you could be faced with a bankruptcy or even file a petition in bankruptcy against the debtor. This article deals with the position of a creditor before a bankruptcy; and the position of a creditor after a bankruptcy order has been issued in The Netherlands.

The creditor’s position before bankruptcy A creditor can file a bankruptcy petition with the District Court, where the debtor has his registered office. The bankruptcy petition may work as a final means of coercion in order to recover the claim.

In this petition you must prove, summarily, that the debtor has ceased to pay other creditors as well. In order to file a bankruptcy petition, you need a Dutch lawyer. The costs involved with a bankruptcy petition can amount to approximately €1,000.

The creditor’s position after bankruptcy When a debtor is declared bankrupt by a District Court, a trustee in bankruptcy is appointed by the court. This is usually a lawyer. A bankruptcy judge is also appointed. The bankruptcy judge supervises the trustee in bankruptcy and gives him advice. A trustee in bankruptcy is entrusted with the administration of the bankrupt enterprise and the settlement of the bankrupt’s estate.

The trustee in bankruptcy has the following general responsibilities: custody of the bankrupt’s estate; drawing an inventory of the estate; drawing a statement of assets and debts; research whether the company can be continued; taking care of the alienation of the active property.

The creditor’s position during bankruptcy When a debtor is declared bankrupt, the creditors can send in their claims to the bankruptcy trustee. This has to be done in writing, stating the level of the claim together with items of evidence. The bankruptcy trustee is obligated to confirm to the creditor, that the claim has been received and that it has been placed on the list of temporarily acknowledged (ordinary) creditors.

In addition to this, the creditor can secure his rights by making an appeal for the right of recovery or the retention of title. In both cases the creditor may retain his property. The right of recovery or retention of title is a more powerful right than the right of a pledge to a bank (in most cases). However, the retention of title is not stronger than the sequestration by the tax authorities.

Managing directors’ liability In case of a bankruptcy of a legal entity the managing directors (and possibly the supervisory directors) may be held personally responsible for the deficit in the bankruptcy, if there has been improper administration. The bankruptcy trustee may submit such a claim. Examples of improper administration occur when a manager director has acted incompetently, irresponsibly, unthinkingly, or differently than may be expected of a rational thinking managing director. A managing director is responsible for a period of three years preceding the bankruptcy. In addition to the managing director, the executive staff may also be held accountable for improper administration.

In two circumstances the bankruptcy trustee is supported by the law. If it is assumed that there is a case of improper administration, this improper administration is presumed as the cause of the bankruptcy. This is also the case when the insolvent entity did not have proper administration and the annual accounts were not deposited in time.

The winding up of the bankruptcy During the winding up of the bankruptcy the following debts have to be taken into account: estate debts; preferential debts; ordinary debts.

Estate debts are debts which originate during the bankruptcy and through the agency of the bankruptcy trustee. These debts also include the salary of the bankruptcy trustee and the claim of the social security administrative agency (UWV). Not until the estate debts have been settled and there is the existence of some active property, can the preferential and the ordinary debts be considered. 8

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Romanian debt recovery procedures This article focuses on commercial debt recovery procedures in Romania and emphasizes the procedural tools available by a company for recovering a debt, including related proceedings (i.e. interim measures).

Assuming that a debt results from a contractual relationship which is governed by Romanian law, and where the Romanian jurisdiction is involved, Romanian law provides for two types of proceedings: (a) a common one, regulated by the Romanian Commercial Code and the Romanian Procedural Code and (b) a special one, governed by different regulations.

The common procedure The common procedure supposes both substantial requirements and procedural ones. Firstly, it is necessary to have an outstanding debt resulting from a legal relationship between the debtor and the claimant, within the status of limitation period (which is 3 years).

Then, it is necessary to follow a conciliation procedure and only afterwards is it possible start a legal claim for recovery of the debt in front of the ordinary instance courts. The conciliation procedure is mandatory and it is governed by formalities concerning delays and the regimes of evidence.

The competent court is usually the ordinary court local to the premises of the defendant and it is a lower court. Nevertheless, the claimant could also apply to the court closest to the place where the payment should be made or from the place where the obligation was created.

The decision of the first court is enforceable and can be appealed in front of higher instance courts. In case of a claim less than RON 100.000 (around EUR 25.000), there are only two degrees of jurisdiction.

Any ordinary court procedures can take 5-6 months initially and another 3-4 months for appeals. As regards the costs which might be incurred by such a claim, there is stamp tax (calculated on the value of the claim; more than 1%) and trial expenses (evidences, experts and lawyers fees).

In case of common procedures, the claimant could ask for interim measures, upon fulfillment of special procedural requirements (e.g. a payment of guarantee); and if court action is proceeding speedily.

Order for payment procedure An order for payment procedure is seen by Romanian law as a legal means to obtain the payment of a debt by

First the preferential debts are paid. These are creditors which have a right of precedence according to the law. In The Netherlands these preferential creditors are the tax authorities and the social security administration agency (UWV); and the petitioner of the bankruptcy, as far as the costs are connected to the bankruptcy petition. The ordinary debts are paid last, proportionate to the levels of those claims. Those creditors are mostly trade creditors.

Should there not be enough money to pay the estate debts, the bankruptcy is closed for lack of assets. Should there be enough money to pay the estate debts as well as the preferential debts, but not the ordinary debts, there will be a simplified winding up of the bankruptcy. If there is enough money to pay the ordinary creditors, a creditors’ meeting for the verification of claims will be held. The bankrupt can also offer a deed of arrangement to all creditors on which a vote can be taken.

In the case of a natural person, when the bankruptcy has been concluded, any unresolved debts can still exist. In the case of a legal person, the debts will not revive after a bankruptcy and there will be no possibility to collect the debts!

For further information contact: Cynthia Grondsma, Rotshuizen Geense Advocaten, Leeuwarden, The Netherlands. Email: c.grondsma@rotshuizengeense.nl Tel: + 31 582 122 444 www.rotshuizengeense.nl

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Starting a business in the Ukraine Foreign investors to Ukraine frequently ask about issues such as:

The most acceptable type of a legal entity for starting a business in Ukraine

Governing the foreign capital company Employment agreement requirements Work permit for foreign citizens Checking a business partner in Ukraine

To meet the interests of investors, this article focuses on some short comments about these issues.

"What is the most acceptable type of a legal entity for starting business in Ukraine?" The most important point is that all company types are equal in conducting business and taxation in Ukraine. The types of legal entities which can conduct some specific type of activities (for example, banking and securities activity) is strictly limited by Ukrainian legislation. The difference between the types lies in the management, responsibility of owners, and the share capital. The most popular types of company in Ukraine are a Private Limited Company (PLC) and Limited Liability Company (LLC). It is important to highlight the fact that the LLC can be funded with 100 per cent of foreign investments and can be owned either by one or several people. Following our research we have concluded that the most popular type of legal entity with foreign investment is the LLC. This form solves many typical assignments of the foreign owner such as: conducting business in Ukraine through the company under control, repatriation of income and limitation of responsibility, etc. It should also be noted that the Ukrainian legislation on foreign investments provides protection of foreign investments independent from the type of the legal entity. All business entities with the status of a legal entity must be officially registered by the Registrar at the place of residence of a business entity. The following documents, in particular, should be produced for registration: the statute; registration card, serving as an application for official registration; a copy of the owner's decision to create a legal entity; and a document attesting to the payment of the official registration fees. If an owner is a foreign legal entity, an extract from the trade, bank or court register must be produced to certify registration of an investor in the country of origin. Also a company statute (articles of association) and a power of attorney (proxy) demonstrating the individual who will represent a company in Ukraine with reference to the establishment of a legal entity is recommended. These documents must be duly approved according to the legislation of the country of issue, translated into Ukrainian and legalized abroad. If the owner of the LLC is a foreign national, they must obtain a Ukrainian identification code as a taxpayer. This procedure can take about 10 days. The LLC share capital is equal to 100 minimal wages - based on 2007 calculations, this is about 9000 USD. The LLC share capital can be formed either with property or with cash. The Ukrainian legislation prescribes that 50% of the share capital must be paid up before the official registration process is started. The LLC owners who have more than 60% of the share capital have formal management power of the company. The capital must be fully formed during one year after the official registration. It should be noted that the PLC share capital doesn't have such 10

following less complicated procedures. Thus, there is no need for conciliation procedures, or higher courts’ jurisdiction to obtain an enforceable judgment. The entire procedure is simplified and it is debated as an urgent case. The decision of the ordinary court is enforceable and can be challenged only by cancellation action which does not suspend the enforcement of the order for payment.

If part of the debt is acknowledged, the claimant could pursue the rest by using the common procedure.

Moreover, the order for payment does not prohibit any judgment issued in the common procedure, i.e. the claimant can start a new trial (ordinary proceedings) and the judge shall not be held by the decision of the order for payment procedure.

Nevertheless, in order to ask for an order for payment, it is necessary to have a determined, liquid and outstanding debt (in French, “creance certe, liquide et exigible”) concerning the payment of an amount of money, proven by a contract or deed.

For further information contact: Anca L. Caraiola, Stoica & Asociatii, Bucharest, Romania Email: acaraiola@stoica-asociatii.ro Tel: +40 21 40 20 930 www.stoica-asociatii.ro

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legislative prescriptions. So, there are no legally binding obligations for the PLC to amount the share capital or the period of its contributions. As the practice shows the share capital shall not be less than the amount necessary to cover all the company's expenses (director's salary, office rent, telephones etc.) for a few months until the company becomes self-supporting.

"How do you govern a foreign capital company in Ukraine?" Ukrainian legislation prescribes a mixed management system for the LLC. The management system can include a board of directors, a sole director, and the Revision Commission. Based on our experience we can conclude that cases when a director in Ukraine is dismissed, it can cause serious problems for the company. Your Ukrainian director is classified as an employee under the local legislation and is protected by relevant labor laws in Ukraine. Additionally, a director who doesn't agree with the owner's decision on dismissal holds the seal and original documents of the company, which can cause difficulties for the company's work and the process of appointing a new director. Sometimes a director enjoying rights uses the company's funds against the owner (for example, paying for his own legal services, advisers, etc.). In rare cases an unscrupulous director uses such methods of "corporate blackmail" involving clients and partners of the company in the conflict. Sometimes a director addresses mass media with the purpose of extending the facts about "injustice and arbitrariness" from the owner's side.

In every case, various measures from the owner's side may be created, which aims at saving the work of the company. It is better to work up such preventative measures beforehand and fix them among the clauses of the employment contract concluded with the director, and in clauses of the statute and other internal documents of the company in Ukraine. It is recommended that owners organize and ensure access to the key papers of the company from the very beginning and to agree the location of these materials to provide control for the main aspects of the company's activity. It is important to develop methods to maximize the protection of the owner's interests and assets of the company in every situation. Therefore, it is always better to create a bespoke company rather than to buy an existing vehicle.

“Is an employment agreement obligatory in Ukraine?" Employment relations in Ukraine, between an employee and an employer, are regulated by an Employment Agreement (Contract) providing that an Employee has to perform work stipulated by the agreement and to adhere to the internal organization order; and an owner has to pay salary to the employee and provide good working conditions. Normally the Employment Agreement is executed in writing. However, this is not essential. It is considered to be executed from the moment the employee commences work. An Employment Contract is a version of an Employment Agreement that is executed for a certain term and applicable for certain kind of employees. The Employment Contract is always executed in writing. Pursuant to Article 40 of the Labor Code, an employer may terminate an Employment Agreement before its expiration only in a limited number of situations, including, but not limited to: staff redundancy; the employee's systematic failure to fulfill his or her employment duties; the employee's insufficient qualifications or deteriorating health condition; the employee's unjustified absence from the workplace for more than three consecutive hours during one working day; and a number of other factors. Article 36 of the Labor Code provides, however, that an Employment Contract (as opposed to an Employment Agreement) may also be terminated for any grounds specified in the contract. An employment Contract executed properly and in time will help to avoid possible hardships in corporate relations.

"Is it necessary for foreigners to receive work permits?" Under Ukrainian rules any foreign national intending to be employed in Ukraine must, before his or her commencement of such employment, apply for and obtain a work permit. Work permits are issued to foreign nationals by the relevant Ukrainian employment center, provided that: there are no qualified Ukrainian nationals in the relevant sphere who are suitable for the position in question; or there are significant grounds for the employment of foreign nationals as specialists. It should be noted that the applicable Ukrainian legislation does not provide a definition of the term “significant grounds”. At the same time, a document outlining such grounds should be filed, together with other required documents, with the relevant employment center. Presumably, the education and expertise of the foreign national in the relevant area will be taken into account in evaluating whether to issue a work permit to such foreign national employee. It is important to know that the right to work is valid for one year.

"How to choose a business partner in Ukraine?" If you want to be secure and provide proper obligation performance, it is reasonable to pay attention to the preparatory stage of negotiations. Formal due diligence is a very useful method, but it is not always absolutely necessary. At minimum try to find out some ordinary data about your possible Ukrainian partner that will assist you to make a decision. The State Registrars in Ukraine provide some guidelines such as obtaining details of:

Full name and registration address. Share capital amount, details of shareholders and year of incorporation. Officially registered moveable property and real estate. The number of employees. 11

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Romania - enforcing overseas judgments This article focuses on the different legal regimes applicable to court decisions rendered by overseas courts of law, on civil and commercial matters only.

Enforcing European court of law judgments In case of a decision issued by European state court of law, Regulation EC no. 44/2001 is applicable. According article 33, the judgment rendered in a State member is recognized in another State member without any special procedure, except cases explicitly prohibited under article 34 (i.e. the recognition is manifestly contrary to the public policy in the State Member).

As per the enforceability of the judgments, the same Regulation (above) prescribes that the interested party shall apply for a declaration of enforceability, in compliance with the local law. Romanian law is able to deal with the enforceability of foreign judgments, through special local laws.

In order to enforce any foreign judgment, the Romanian law requires that the decision is recognized by Romanian courts, where the subject matter is accepted. In addition, the judgment should be enforceable, according to the law of the state where it was issued; and the right to ask for the enforcement has not expired, according to Romanian law.

Enforcing foreign court of law judgments In case of a judgment rendered by any other foreign state, the Romanian Law no. 105/1992 stipulates the following requirements: that the judgment is definitive, according to the law of the state where it was issued; the foreign court had jurisdiction to settle the case; there is reciprocity between Romania and the foreign state as per the effects of the judgments; the Romanian court recognises the decision; the judgment is enforceable, according to the state where it is was issued. A certificate should be released by the foreign court; the right to ask for the enforcement is not prevented, according to Romanian law (the general term for the status of limitation is 3 years). Thereafter, a recognized judgment has full effects in Romanian territory and it is enforceable.

The recognition of the foreign decision can be accepted subject to the following requirements: the decision is not the result of a fraud within the procedure followed abroad; the decision complies with the public policy of Romanian private law (i.e. the case was settled by a foreign jurisdiction even though it was exclusive of Romanian jurisdiction); the case has not previously been settled between the same parties by a Romanian court, through a non definitive decision, or it was pending in front of Romanian court as of the application made in front of foreign forum.

From a procedural perspective, the ordinary courts are competent to settle this recognition and enforcement application, upon the procedures utilising the jurisdiction of the range of courts available from first instance to appeal courts. The competent court is the tribunal located at the place where the enforcement should be made. Any ordinary procedure, with a full scale of jurisdiction can last 1-2 years.

For further information contact: Anca L. Caraiola, Stoica & Asociatii, Bucharest, Romania Email: acaraiola@stoica-asociatii.ro Tel: + 40 21 40 20 930 www.stoica-asociatii.ro

Working capital. Officials of the entity who have powers to act on its behalf. It is recommended to entrust your contractual objectives to professionals. An experienced lawyer or auditor will help to get all necessary information about your partner and to secure proper contractual fulfillment. Note that in Ukraine an arbitration clause that does not contain all the necessary information may be considered invalid, and you may lose the opportunity to protect your interests. Finally, try to ensure compliance with the law to the best extent possible while setting up and operating your business in Ukraine. Have good business in Ukraine!

For further information contact: Olena Losevska or Anna Hodakovska, International Law Offices, Odessa, Ukraine E-Mail: losevska@interlegal.com.ua Tel. +38 (048) 715-58-55 www.interlegal.com.ua

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Substance requirements for overseas subsidiaries Many tax authorities are beginning to demand specific criteria to illustrate real substance in foreign jurisdictions, in terms of both presence and activity. This is in light of the European Court of Justice’s ruling in the Cadbury Schweppes case, its application in the Vodafone tax judgement and the commitment of the US Government through the Ways and Means Committee, to deter offshore tax evasion.

Subsidiaries and controlled foreign companies A growing number of international companies are establishing subsidiaries in other countries for fiscal and commercial reasons. The rationale behind the establishment of these companies is increasingly coming under scrutiny and it is becoming a requirement to show that the management, control and day to day decisions of the subsidiary company, are taken in the jurisdiction in which the company is located. The subsidiary company itself therefore needs to operate in a way which demonstrates a real presence in that location.

“Genuine Economic Activity” A US bill designed to halt the movement of activities abroad for fiscal purposes, will eventually codify “economic substance”. Demonstrating genuine economic activity is the key for subsidiaries to continue to enjoy legitimately available tax efficiencies in low tax jurisdictions. This affects enterprises controlled from within the European Union and from outside.

A change in direction away from the traditional approach of a brass plaque, company address and nominated directors is needed. Companies will have to invest in the jurisdiction in which they are establishing a presence. This investment is likely to be more costly than the traditional approach but has to be balanced against the benefits of being able to clearly demonstrate genuine economic activity in a court of law, if the taxable activities of the entity within the parent group are ever challenged.

Key areas to focus on when seeking to establish genuine economic activity include:

Management, control and decision making processes to be substantially taken in that location by local directors and management

A company that has local employees and pays personal taxes and social security contributions The physical presence of an office Individual telephone and email communication arrangements for each company Options when considering the “Start-Up” of a subsidiary Setting up an overseas subsidiary operation requires extensive research and investigation, to help establish working relationships. In addition numerous visits to the potential start-up jurisdiction are required. This can commit key fee earning staff for long periods of time and also significantly delay commencement of income generating activities.

Working with a trusted partner in your jurisdiction of choice can be a sensible choice but may not always be practical.

Use of a managed business centre during the start-up phase of a subsidiary can demonstrate a real presence and management organisation. Such an approach can also offer the added advantage of speed and ease. Additional services such as administration, book-keeping, accounting and payroll support can be wrapped around traditional office space facilities within a business centre. Most business centres offer as standard, shared reception facilities, board rooms, meeting rooms and sophisticated communication systems, which combined together act to provide real economic substance to a company.

The changing emphasis in the treatment of overseas subsidiaries and controlled foreign companies and the movement towards greater scrutiny, cannot be ignored by Finance Directors. Time must be taken to ensure that overseas and offshore activities have sufficient substance to unequivocally demonstrate genuine economic activity. This is not just an exercise in prudence but an essential element of an organisation’s tax planning strategy.

Dixcart Management (Madeira) Lda has made the necessary investment in the form of the Dixcart Business Centre to provide foreign companies operating out of Madeira the facilities to control and demonstrate their genuine economic activity. Please follow the link below for further information regarding the Dixcart Business Centre:http://madeira.dixcart.pt/dnet/Dixcart%20Business%20Centre_Madeira.pdf

For further information contact: João Saltão de Almeida, Dixcart Management (Madeira) Lda, Funchal, Madeira Email: joao.almeida@dixcart.pt Tel: + 351 (291) 225 019 www.dixcart.com Article written by: Simon Kelly & Bruce Watterson, Dixcart Management (IOM) Limited, Douglas, Isle of Man, UK Tel: +44 (0) 1624 615598 Email: bruce.watterson@dixcart.co.im or simon.kelly@dixcart.co.im

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Italy - certified electronic mail delivery systems This article relates to the use of electronic delivery systems by certified mail for prescribed users.

The law No. 59/1997 (art. 15) stated that electronic delivery systems are legally usable, and the later DPR (Decree of the President of the Republic) No. 445/2000 (art. 14) stated the principles for the use of electronic delivery systems and the legal value of the electronic address.

After two years of technical tests, in 2005 the DPR No. 68 defined the characteristics of an official electronic delivery service, named Certified Electronic Mail (It.: Posta Elettronica Certificata, PEC) giving legal value to it.

The DPR No. 68/2005 states that an e-mail is considered sent when the sender’s provider, after several checks, accepts the e-mail and returns an acknowledgment of receipt to the sender; it is considered received when stored in the e-mail account of the receiver. Then, the receiver’s provider sends a receipt of the delivery to the sender.

The DPR No. 68 established a public register of PEC providers giving CNIPA (National Center for Information in Public Administrations) selective enrolment and monitoring duties.

PEC, compared to traditional e-mail, ensures recognition of the sender, integrity of the sent message, no delivery refusal, matching between the delivery receipt and the message sent by the user. Providers are required to have a logging system, which tracks and stores all system events for 30 months, except for the e-mails written by the sender.

The Italian legislator specifies in art. 16, paragraph 6, Decreto Legge (DL, enabling act) No. 185/2008 that all companies have to communicate the address of their own certified electronic mail at the moment in which they request registration in the Commercial Register. Within three years after the effect of the above-named DL, all existing companies have to communicate the address of their certified electronic mail. There are no additional costs.

The above-mentioned DL No. 185 came into effect on 29th November 2008, and has been implemented in the law No. 2/2009.

Addresses and mail-boxes can be acquired on-line, but only by subjects authorized by the above-named CNIPA.

Freelancers registered in professional associations, such as lawyers, are also obliged to communicate the address of their certified electronic mail within one year after the law has been enacted. Professional associations must publish on their respective ‘home pages’ the lists with the addresses of the certified electronic mails of their members.

Presumably, certified electronic mail will replace the registered letter with return receipt. This will mean a saving of time (in particular the queue time at the post office and the delivery time) as well as of the costs of the registered letter. Therefore Certified Electronic Mail has also been defined as an Electronic Registered Letter (It.: raccomandata elettronica).

Contrary to the sender of a traditional registered letter with return receipt, the sender of a certified electronic mail does not receive - needless to say - an advice of receipt signed by the addressee. The sender of a certified electronic mail only receives the communication that his certified mail has been deposited in the addressee’s mailbox. However, if the addressee has an e-mail address, it may be assumed that he checks his mail with a certain frequency. Against this background, the statutory presumption of the knowledge of the message sent by a certified electronic mail is fully justifiable.

Using the certified electronic mail the sender is certain that the message dispatched has been received. But the receiver has no certainty about the authorship of the message he has received. There is only one way to have the certainty of both the authorship of a message sent by electronic mail and the evidence of the communication of a message effected between one subject and another: the combination of the certified electronic mail with the digital signature or the advanced (or qualified) electronic signature.

It should be noted that the introduction of the obligation of the companies and the freelancers registered in professional associations to dispose of a certified electronic mail, does not at this moment affect either serving proceedings nor creating binding contracts in relation to other businesses or transactions.

For further information contact: Susanne Andergassen, Burchia & Eccher, Bolzano, Italy Email: susanne.andergassen@lex.bz.it Tel: + 39 0471 300534 www.burchiaeccher.com

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The British Virgin Islands (BVI) Business Company A BVI Company is governed by the Business Companies Act 2004 (The “BC Act”). The BC Act came into effect in 2005. It replaced the International Business Companies Act which had existed since 1984. Under the BC Act, a Company may be incorporated or continued as a Company:

limited by shares; limited by guarantee that is or is not authorized to issue shares; or unlimited that is or is not authorized to issue shares. Restricted Purpose Company

One of the new types of Company introduced by the BC Act has been the Restricted Purpose Company (“RPC”). A RPC’s memorandum must state that it is an RPC and that it’s restricted in its activity to the purposes stated in its memorandum. This type of company may be especially useful in joint venture type business activity.

Segregated Portfolio Companies The Segregated Portfolio Company (“SPC”) is a new type of company that was introduced by the BC Act. An SPC is a company limited by shares. It may create one or more segregated portfolios for the purpose of segregating assets and liabilities which are held in or on behalf of a segregated portfolio from the assets and liabilities of the SPC or from the assets or liabilities of any other segregated portfolio. This restricts the claims of a creditor or interested party, on the assets the assets of the SPC, to the specific segregated portfolio with which creditor or interested party contracted, thus insulating the other segregated portfolios.

Only mutual fund companies and insurance companies may be segregated as SPC’s. The use of an SPC is readily apparent in the mutual funds industry where a fund manager wishes to establish a master-feeder fund structure with multiple classes of shares, or indeed any structure where the statutory segregation of assets is required.

Constitutional documents The constitutional documents of a company are its memorandum and articles of association. Unless the memorandum of association limits the activities of the company, it is free to engage in any business activity, and may perform any act or enter into any transaction not contrary to BVI law.

Directors The board of directors of a company will consist of one or more persons who can be individuals or companies. There is no requirement for any director to be resident in the BVI. The board of directors may hold meetings in any part of the world. Directors may attend the meeting either physically or participate by electronic means. In addition, the Articles of the company may provide for resolutions consented to in writing by the directors as an alternative to convening a physical meeting. There is no express requirement to appoint officers. However, where required, they may be appointed by a resolution of the directors.

Register of charges A company is required to maintain a register of charges in respect of any of its assets that have been pledged or mortgaged. The mortgagee, under the BC Act, may file the register of charges with the Registrar of Corporate Affairs. 15

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Public records Under the BC Act, a company is not required to file accounts with the Registrar of Corporate Affairs. The documents which are filed and available for public inspection are the memorandum and articles of association and the certificate of incorporation. A company may, at its own option, elect to file with the Registrar of Corporate Affairs its share register and register of directors.

Continuation to the BVI The BC Act allows for a company incorporated in a foreign jurisdiction to continue to the BVI. The Registrar will only permit continuation where: (a) there is satisfactory evidence that the application to continue has been approved by a majority of the directors; and (b) satisfactory evidence that the company is not disqualified from continuing in the BVI.

A foreign company will not be permitted to continue in the BVI if it: (a) is in liquidation; (b) subject to insolvency proceedings; (c) if a receiver or manager has been appointed; (d) if it has entered into an arrangement with its creditors; or (e) if an application has been made to a court for the liquidation of the company.

Discontinuation form the BVI A BVI company may continue as a company incorporated under the laws of a jurisdiction outside the BVI in accordance with the laws of that jurisdiction. The company’s memorandum and articles of association must not restrict such a continuation and the company must be in good standing with the Registry of Corporate Affairs.

The company continues to be liable for any claims, judgments and proceedings against it. In this regard service of process may be effected against the company by serving its registered agent in the BVI.

Taxation No corporation tax, capital gains tax, wealth tax, or any other tax is applicable to the BVI company. The Income Tax Act exempts BVI companies from income tax, the provisions of the Stamp Act and the Registration and Records Act in respect of all instruments or deeds relating to the business of the company. This applies to the transfer of all property to or by the company any transactions involving securities.

Annual Government fees Upon incorporation a BVI company is required to pay a fee to the Registrar. Thereafter, fees are paid once a year, either on May 31 or November30, depending on whether the company was incorporated in the first or last six months of the year. The fee for companies authorized to issue up to 50,000 shares is US$350. For companies authorized to issue more than 50,000 shares is US$1,100.

For further information contact: Anthony Lynton, Lyntons, Tortola, British Virgin Islands Email: Anthony.lynton@lyntonslaw.com Tel: + 284 494 6210 www.lyntonslaw.com

Real estate for foreigners in Ukraine Ukrainian real estate continues to attract foreign investors due to its great potential for development. Over the past few years real estate prices have rapidly risen, which provides good opportunities for high returns on investment in this sector.

The ownership of non-land real estate by foreigners is not limited in Ukraine. However, the Land Code of Ukraine envisages certain restrictions on ownership of land plots.

Foreign citizens and legal entities are prohibited from ownership of agricultural lands. With respect to non-agricultural land, foreign individuals may acquire property rights (i) to land plots within the settlements, and (ii) to land plots outside settlements, on which real estate objects already owned by such individuals are located.

Foreign legal entities and joint ventures founded with foreign participation may acquire ownership title (i) to land plots within settlements in case of a purchase or construction of real estate objects on such plots connected with business activity in Ukraine; and (ii) to land plots outside settlements in case of a purchase of real estate objects located on such plots.

Need for a representative office in Ukraine It is important to note that under the Law, prior to purchasing a land of state or communal ownership, a foreign legal entity must open a representative office in Ukraine. The procedure of purchasing state and communal lands itself is quite complicated and may take much time as the law doesn’t settle the time limits of taking the relative decisions by state bodies. In this respect many foreign legal entities prefer to acquire the shares of Ukrainian companies that already own the land. Thereby a foreign company indirectly obtains a right to the

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The United Kingdom - The Companies Act 2006: key provisions recently implemented Various provisions of the Companies Act 2006 have come into force in the UK during 2007 and 2008. In a brief article, it is impossible to cover all of the provisions in detail. This article indicates the main areas of change.

A company must display its registered name at its registered office, any location where company records are available for inspection, and any location at which it conducts business. The following information must also be disclosed on business letters, emails, order forms and the company website(s): registered name, registered number, the part of the UK in which the company is registered and the address of the company’s registered office.

From April 2008, private companies have no longer been required to have a company secretary. A company which does not have a company secretary is not subject to any lower administrative burden.

Provisions relating to directors’ duties came into force in October 2007 and October 2008. A company must have at least one director who is a natural person (limited exceptions apply until 1st October 2010). A person may not be appointed a director of a company unless he has attained the age of 16.

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land. There is also a certain tool that allows a foreigner to avoid the above mentioned limitations, including prohibition to acquire agricultural land, and this is by creating a holding company in the territory of Ukraine.

All real estate transactions, including lease agreements, for a term exceeding three calendar years, are subject to notarisation and state registration. The state registration of real estate deals is performed by a notary, who submits the necessary information to the State Register of transactions. The ownership title to real estate must also be registered in the State Register.

There exist two different State Registers: (i) of lands and (ii) of ownership titles to real estate. The Register of titles to real estate is held by the local Bureau of Technical Inventory and the Register of titles and usage rights to land are held by local branches of the State Land Cadastre. But the access to these registers is not, in fact, public as only a limited number of persons are entitled to obtain the respective information (owners, notaries, state officials etc).

Rights of ownership Another important issue concerns the right of ownership. Under the Law the ownership right to property (e.g. apartment, house) arises only after the state registration of a real estate transaction. However, a person can dispose of the owned property only after the state registration of the ownership right (title). So, a person is considered to be the owner after the state registration of the transaction by a notary, but he/she can, for example, sell it only after the state registration of the title by the local Bureau of Technical Inventory.

As for the land, the Land Code clearly envisages that the ownership right to the land arises after the state registration of the title in the State Register of lands and obtaining the document confirming the title to the land, which is called the State Act of ownership of land. Thus, property rights to land that have not been duly registered do not become effective.

Leases for land, although a purely contractual right, also depend on the state registration of the lease agreement and arises after its completion.

Requirement for a taxpayer identification number In the Ukraine any legal act cannot be performed by an individual without a taxpayer identification number. This rule applies to foreign individuals as well. That’s why prior to purchasing or selling a property a foreign citizen has to obtain a personal taxpayer identification number at the regional Tax Administration.

Before buying real estate a buyer should also consult a number of state registers to verify the ‘purity’ of title to a real estate object, these being the State Register of mortgages, the Unified State Register of real estate disposition bans and the State Register of transactions. These registers are publicly accessible.

The Ukrainian real estate market is definitely worthy of consideration for international property investors seeking investment assets. Ukraine is going through a period of rapid growth, development and expansion. Its economic fortunes are flourishing and inward investment is strong. It is highly likely that well thought-out and well located property investments made today will reap an investor strong returns over the medium to long term. At the same time it is evident for every Ukrainian lawyer that much work is still to be done before the Ukrainian real estate market becomes less risky and more transparent for foreign investors.

For further information contact: Arthur Nitsevych, International Law Offices, Odessa, Ukraine E-Mail: nitsevych@interlegal.com.ua Tel. +38 (048) 715-58-55 www.interlegal.com.ua

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Arbitrating EC Competition Law In the Eco Swiss/Benneton-judgment of 1999 the European Court of Justice (ECJ) ruled that an arbitral award upholding an agreement being contrary to Article 81 of the EC Treaty was not enforceable, provided that relevant national law stated that arbitral awards being contrary to ordre public were invalid. This judgment has given rise to a considerable legal debate over the years on how arbitral tribunals are to deal with and assess competition law aspects in individual cases for securing enforcement of the award.

In a current case in Sweden, the Supreme Court in February 2008 ruled on the validity of such an arbitration clause in a contract. The dispute concerned an action by a Danish ferry operator (BornholmsTrafikken AS) for alleged excessive port charges in violation of Article 82 EC against a Swedish port (Ystad Hamn Logistik AB), for which the writer acted as counsel. The port, in one of several objections to the claim, invoked that a part of the claim was covered by a separate agreement relating to certain investments in the port, which included an arbitration clause. The Swedish Arbitration Act explicitly provides that courts are not competent to hear disputes being subject to arbitration on the objection by the defendant (Article 4). The Act also explicitly states that arbitrators are competent to hear disputes on competition law sanctions between the parties, i.e. damages, invalidity of infringing clauses etc (Article 1 3rd para.). The District Court (in 2003), however, based on sections 32-36 of the Eco Swiss/Benneton-judgment, found that national procedural law such as this provision of the Arbitration Act, in view of the importance of EC Competion law, as stated by the ECJ, and as arbitrators cannot request preliminary rulings from the ECJ, could not validly be invoked. Hence, the Arbitration Act in this respect could not be upheld and the court should be competent to hear this part of the case.

The Court of Appeal for Southern Sweden (in 2005) overruled this judgment. This court found, with reference to the principal autonomy of procedural rules of the Member States and the jurisprudence by the ECJ that the reasoning by the ECJ in the Eco Swiss/Benneton-judgment is in line with such procedural autonomy. In view of this and as the ECJ in fact referred aspects of arbitration, there could be no reason under the national law of the Member States not to allow EC competition law disputes covered by an arbitration agreement, to be heard in arbitration. The Court also noted that the Arbitration Act lays down that an award is invalid if being in violation of Swedish ordre public (Article 33). In view of the the Eco Swiss/Benneton-judgment, the Appeal Court stated that there should be no doubt that this provision of invalidity is applicable on arbitral awards which violate EC Competition law.

The Supreme Court, confirming the Appeal Court’s judgment and with reference to the Eco Swiss/Benneton-judgment, stated that national courts have the possibility to invalidate an award being contrary to Article 81 EC and that therefore this pre-supposes that it is acceptable in EC law that arbitrators may hear competition law aspects.

The case illustrates the difficulties for national courts to deal with EC competition law issues.

For further information contact: Karl J. Dhunér, Dhunér Järvengren, Stockholm, Sweden Email: kjd@djlaw.se ; Tel: + 46 8 667 62 80 ; www.djlaw.se 18

Directors must act within the powers as detailed in the constitution, promote the success of the company, exercise independent judgement and reasonable care, skill and diligence. Additional duties include avoiding conflicts of interest, a duty not to accept benefits from third parties and the declaration of any interest in existing or proposed transactions or arrangements. In addition there are a number of transactions which if they involve directors require shareholder approval.

On a more positive note, companies can now send documents and information to shareholders in an electronic format and via their website, subject to compliance with the requirements of the Act.

Private companies can pass shareholders resolutions by way of a written resolution and such resolutions no longer require unanimous consent. Copies of resolutions, minutes and decisions of sole shareholders must be kept for at least 10 years from the date of the resolution, meeting or decision.

A company may not register a transfer of shares in the company, unless a proper instrument of transfer has been delivered to the company. If the company refuses to register the transfer, it must provide the transferee with reasons for the refusal, if requested by the transferee.

The prohibition on the giving of financial assistance has been repealed since 1st October 2008 in relation to private companies.

From 6th April 2008 English Companies have been able to execute deeds by the signature, on behalf of the company, of a director of the company, in the presence of a witness who must attest the signature.

For further information contact: Paul Morgan, Head of the Commercial Law Department, Morgan Russell, Surrey, UK Email: paul.morgan@morganrussell.co.uk ; Tel: + 44 (0) 1372 461411 ; www.morganrussell.co.uk

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Bartier Perry, Sydney, acts for Aborigine community

In temperatures hovering around 45 degrees Celsius in the shade, a simple signing ceremony was conducted on the verandah of the school at the Jarlmadangah Burru Aboriginal Community in north western Australia. At the ceremony a licence was granted by the Aboriginal Community and Griffith University granting the right to a Brisbane biotechnology company, Avexis Pty Ltd, to commercialise intellectual property based on a local plant traditionally used for therapeutic purposes.

William Watson (left) and Mark Allen (right) at the signing ceremony

Attending the ceremony was Sydney lawyer, Mark Allen of Bartier Perry who has been working with the Aboriginal Community since 2003 providing pro bono advice on the structure of the deal, the terms of the licence and the establishment of a special purpose vehicle to hold the Community’s interest in the project.

Mark said: “As far as we are aware this is the first time an Aboriginal community has been party to a licensing arrangement of this nature. Whilst there have been other instances of commercialising plant extracts, generally Aboriginal communities have not benefited from the profits made by the commercialising company”.

The ceremony realized a long held dream of Community Elder, John Watson, who had discovered medicinal pain healing properties in a local plant after being bitten by a crocodile, which were investigated further by Griffith University.

For further information, contact: Mark Allen, Partner, Bartier Perry, Sydney, NSW, Australia Email: mallen@bartier.com.au Tel: + 612 8281 7828 www.bartier.com.au

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Stoica & Asociatii, Bucharest, appoints new partners

Stoica & Asociatii Bucharest has increased the size of its partnership. The law firm, founded in 1995 by Valeriu and Cristiana Stoica, now has 10 partners - C. Dicu (litigation and arbitration, real estate, commercial); M. Avram (banking and regulatory); R.Raducanu (litigation, public procurement, competition law); R. Rizoiu (banking, financing, energy law); R. Dinca (competition law and intellectual property); D. Traila (litigation, insolvency); A. Caraiola (litigation, labor law, competition law); and L. Radu (litigation, real estate, financing). The law firm now has a total of 35 lawyers, recruiting from among the best students of Bucharest law universities and is positioned among the first five law firms in Romania. Recently, the law firm achieved success in conducting litigation against the Competition Authority of Romania acting for a major Romanian telecoms company.

www.worldlink-law.com World Link for Law is one of the largest facilitators of international legal services, bringing together the combined strengths of 60 commercial legal practices to create an international team of powerful advisors. World Link for Law member firms collectively have over 300 partners, approximately 900 lawyers and 68 offices worldwide in 42 countries.

Administration Service: Firth Associates Higher Bojorrow Garras Helston TR12 6TQ United Kingdom Tel/fax: + 44 1326 568810 info@worldlink-law.com Registered Office: Bahnhofstrasse 46 8021 Zurich Switzerland

This newsletter is not a substitute for professional advice which will take account of your specific circumstances. No responsibility can be accepted by World Link for Law or member firms for any loss occasioned by a person or organisation acting or refraining from acting on the basis of this newsletter. World Link for Law is registered as an association in Switzerland at Bahnhofstrasse 46, 8021 Zurich, Switzerland. It is a membership association that does not itself provide legal advice or other professional services. It provides no assurances or warranties in respect of its members, alliance partners, officers, consultants or employees past, present and future and disclaims any liability or responsibility for anything done or admitted to be done by anyone in reliance wholly or partly on advice or other services from such persons.

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New World Link for Law Board of Directors elected The World for Law Board of Directors was elected for a 3 year term at the annual World Link for Law conference held in Bucharest in October 2008.

The new Board are pictured here in Bucharest with Judge Camelia Toader of the European Court of Justice (second from right) and Cristiana Stoica and Valeriu Stoica of World Link for Law member firm of Stoica & Asociatii, Bu-charest (outside front row). Also seated (second from left) is Jim Dawe, President of World Link for Law. Newly elected directors (back row from left to right) are:

Philippe Bedard (France); Lars Espersen (Denmark); André Castelli (Germany); Wolfgang Burchia (Italy); Ricardo Thomazinho da Cunha (Brazil); Peter Dehnen (Germany); Ivo Hungerbühler (Switzerland); Michael Raschenforfer (Germany); Paul Sillis (UK); and Paul Morgan (UK).

Also elected but not pictured are: Evert-Jan Rotshuizen (The Netherlands); and John Rourke, (Missouri, USA).

The photograph was taken for 'The Diplomat - Bucharest' business magazine.

Key appointments for partners of KBRC Juriteam, Paris

Philippe Bedard a partner of KBRC Juriteam, Paris, has been appointed as an Expert for Corporate Law by the Delegation of the French Bars to the CCBE (Conseil des Barreaux Curopéens – Council of Bars and Laws societies of Europe).

Jean-Louis Cocusse, also a partner of KBRC Juriteam has been elected as member of the Executive Board of the CNB (Conseil National des Barreaux i.e. the “super Bar” for France, representing all the approximate 50,000 “avocats” in France).