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Natalia KoshelevaDirector+7 (495) 787 06 00 ext. 3206nkosheleva@deloitte.ru

Legal Services

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Elena BostanDirector+7 (495) 787 06 00 ext. 5109ebostan@deloitte.ru

More information on Deloitte Cash Pooling services

Cash Pooling Intercompany Financing Transactions

September 2013

2

Providing comprehensive cash pooliand documentation for interco

Product description

Overview• Modern cash management instrument which allows

to centralize liquidity and optimize interest income for a group of companies and / or various accounts. The nature of the mechanism is similar to the intra-group loans

• Cash pooling allows companies to combine their credit and debit positions in various accounts into one account. There are two types of cash pools: – Notional cash pooling – virtual cash transfers (set-off of balances of companies within the group: the bank accrues interest in the group’s net cash balance) – Cash concentration – physical cash transfers

• Cash pooling can help the company to avoid a number of bank fees, as well as help to reduce the possibility of damaging the reputation of the corporation because of negative balances with bank accounts

• In effect, cash pooling helps to make the most of the resources available, improves liquidity management

Cash Management Overview

Methods of Cash Management• No cash concentration, entities retain and invest

liquidity locally – Could lead to higher overall cost of capital

• Manual concentration of cash through manual and occasional transfers between entities – Each transaction may need to be analyzed and priced at arm’s length

• Cash Pools – Special structure to facilitate cash management

Increasing complexity

Why Deloitte?

Core distinctions: • Market leaders in fi nancial transactions• Cost effective, standardized, globally consistent

approach to deliver forward thinking transfer pricing guidance, planning, and documentation

• Scalable approach for varying levels of risk• Extensive global network of experienced specialists

End-to-end services from planning through audit defense

Audit defense

Planning

Documentation

Cash Pooling Intercompany Financing Transactions 3

Deloitte Services

• Analysis of implications and overall possibility of implementation of notional or cash concentration cash pooling structures from the tax and legal perspectives aiming on identifi cation of optimal structure depending on Client’s specifi c targets

• Drafting agreements and other required documents• Analysis of zero balancing and fl exible balancing for a

combined account in the cash concentration option

ng guidance, planning, risk analysis ompany fi nancing transactions

y

Service highlights

Client profi leAny group of companies:• Requiring effective intra-group cash management• Considering implementing or reevaluating its

intercompany treasury policy• Implementing or intending to implement a working

capital fi nancing arrangement

Parent Company

Bank managing accounts

Subsidiary Subsidiary

Product Overview

• The off-setting of credit and debit balances• Avoiding overdraft charges and short-term loans

with high interest rates• Can provide a natural hedge against FX fl uctuations• Can improve key fi nancial ratios• Can create “core” cash that can be invested in

longer-term, higher yielding investment instruments• Allows for more visible, larger, and professionally

managed investment programs

• Management of regulatory and legislative restrictions and limitations

• Development / review of accounting methodology

• Transfer pricing implications and effi ciency for the transactions under cash pooling structures

• Analysis of currency control regulations and possibility of their application for specifi c cross-border structures

• Recommendations on mitigation of identifi ed risks