Doing Business in Europe: A JD Supra Legal Reader

For your convenience, here’s a roundup of recent legal advisories on the broad topic of doing business in the European Union and its member countries:

Rewards and Penalties in Bond Covenant Consent Solicitations Under English Law (Skadden, Arps, Slate, Meagher & Flom LLP):

“Two recent cases decided in the English High Court provide contrasting views about rewards offered to holders who vote in favor of amendments to the terms of bonds or loan notes and penalties imposed on those who vote against… Both of these cases arose in the context of corporate restructurings and are of some importance in this context. In both cases a central issue is what rewards can be given to, or penalties inflicted on, noteholders who do not support a resolution proposed in relation to the restructuring or exchange of loan notes.” Read on>>

The German Implementing Act for the AIFM Directive: A Critical Survey of the Draft Bill (Dechert LLP):

“The German Ministry of Finance (BMF) on 20 July 2012 published the draft of a bill (Draft AIFM-Act) to implement the Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD) into German law. Within the framework of implementing the AIFMD, the Draft AIFM Act provides, in particular, for the repeal of the German Investment Act (Investmentgesetz – InvA), which implemented the UCITS Directive 2009/65/EC (UCITSD) among other things. In addition, 26 other acts and regulations have also been amended and/or adjusted.” Read on>>

Spain: Labor Reform Update (Fisher & Phillips LLP):

“In February of 2012, the Spanish government introduced drastic labor reforms known as Royal Decree Law 3/ 2012 (“Reform Law”) in the hopes of improving an ailing economy and reducing Spain’s sky-high unemployment rate which has reached a staggering 23%. The reforms specifically focused on promoting employment for the youth, providing employers with more flexibility in managing its workforce and cutting the cost of terminating workers. On July 9, 2012, the Spanish Parliament ratified the labor reforms resulting in the Reform Law being enacted despite heavy opposition by the public, unions and numerous political parties.” Read on>>

Germany Toughens its Take on AIFMD (Orrick):

“On July 20, the Federal Ministry of Finance and the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) published its draft for the implementation of the Alternative Investment Fund Managers Directive (AIFMD).” Read on>>

ECJ Enhances Employee Entitlement (Bryan Cave):

“The European Court of Justice (‘ECJ’) rendered a much criticized decision on June 21, 2012, related to European employees’ rights to annual vacation… As a result of this new ECJ case law, employers may legitimately fear potential misuse by certain employees of their sick leave entitlements. Previously, the French Civil Supreme Court has held (since 1996) that where an employee became sick when s/he was on annual paid vacation, the latter was not entitled, as a principle and in the absence of contrary collective labor agreements, to require the postponement or the payment of his/her vacation days.” Read on>>

Reducing the Burden on Business – Changes to Employment Law in the UK? (Morgan Lewis):

“The UK labour market is one of the least regulated labour markets among developed countries, with only the US and Canada having lighter overall regulation. Nevertheless, the UK government is concerned to do more to encourage firms to take on staff and to have a labour market that is ‘flexible, effective and fair’ amidst fears that the economic downturn and an inability to compete globally have been exacerbated by debilitating regulation.” Read on>>

OFT Fines Payday Lender for Breach of Money Laundering Regulations (Orrick):

“On August 9, the OFT published a press release stating that it had imposed a £544,505 fine on MCO Capital Ltd (MCO), an online payday lender, for breaching the Money Laundering Regulations 2007 (MLRs) and had also revoked MCO’s consumer credit licence. MCO had failed to adequately verify the identities of loan applicants, which led to it being targeted by fraudsters who used the details of over 7,000 individuals to apply for loans.” Read on>>

EADS and Tales of Whistleblowers. A Compliance Nightmare (Thomas Fox):

“What is a compliance professional’s worst nightmare? Last week … Howard Sklar and I speculated on why the UK Serious Fraud Office would announce it was opening an investigation into the activities of the UK defense contractor, EADS. On Tuesday, in a FinancialTimes article, entitled “Emails tell of fears over EADS payments”, reporter Carola Hoyos identified some of the reasons that EADS may be under investigation.” Read on>>

Tracey McDermott Appointed as FSA’s Permanent Director of Enforcement (Orrick):

“The FSA has confirmed that Tracey McDermott, the FSA’s acting head of enforcement, will become the permanent director of enforcement and financial crime. McDermott joined the FSA as an associate in enforcement 2001, and has been acting as director since April 2011.” Read on>>

The LIBOR Scandal and LIBOR Explained (McDermott Will & Emery):

“The London Interbank Offered Rate (LIBOR) is considered one of the most important interest rates in the financial world. It underpins approximately £225 trillion of financial products ranging from interest rate swaps and corporate loans to credit cards, mortgages and savings accounts. It is a benchmark reference rate fundamental to the operation of both UK and international financial markets.” Read on>>

Tax Managers and Shareholders Can Be Held Liable for the Debts of Croatian Companies (Karanovic & Nikolic Law Office):

“Due to recent amendments made to the General Tax Act, managers and shareholders of Croatian limited liability and joint-stock companies alike can be held jointly liable for the payment of tax and other debts associated with their companies. If the tax authorities or regular courts establish that the actions of company directors or other employees , as well as the actions or instructions given by shareholders or silent partners, result in a situation where the tax receivables or other receivables cannot be effectively collected from such companies, this would be deemed to be an instance of joint liability.” Read on>>

Russia Ratifies WTO Accession Protocol (King & Spalding):

“On July 21, 2012, Russian president Vladimir Putin signed Russia’s protocol of accession to the WTO… Russia finalized its WTO accession protocol last December. Under that protocol, Russia agreed to reductions in its tariffs on imports of manufactured goods and agricultural products, as well as technical barriers to trade.” Read on>>

Serbia/Changes to the Taxation System Announced (Karanovic & Nikolic Law Office):

“In the face of a significant budget deficit, the Serbian Government is making plans to overhaul the Serbian tax system by the beginning of the autumn. Even though all of the details have not been made public yet – corporate income tax (CIT), value added tax (VAT), personal income taxes and excises will certainly be increased. Officials from the Ministry of Finance and Commerce announced that, starting from 1 October 2012, the CIT rate will be increased from its current 10% to 15%, whilst the 18% VAT rate will probably see an increase up to 20%.” Read on>>

UK Employers: Sponsor Licence Renewals to Begin (Morgan Lewis):

“With the four-year anniversary of the launch of Tier 2 of the UK’s Points-Based System approaching, employers that sponsor non-EU workers under Tier 2 may start to receive email notifications from the UK Border Agency (the UKBA) that they can soon apply to renew their Tier 2 sponsor licence. Notifications are issued by email 120 days before expiration. A large amount of current Tier 2 sponsor licences will expire the day before the four-year anniversary, on 27 November 2012.” Read on>>

Doing Business in the United Kingdom 2012 (Bryan Cave):

“Any overseas business intending to do business in the UK will need to consider the manner in which it will effect its business in the UK. It may decide to establish a separate UK business entity… If it decides not to create a legal entity in the UK through which to carry on its UK business, it may still be subject to certain requirements under English law; overseas entities selling goods or providing services to customers in the UK (or contemplating such activity) need to consider whether their activities establish a ‘presence’ in the UK giving rise to a liability for UK taxes and or to an obligation to make public filings.” Read on>>

EU Customs Practice Group – June/July 2012 (White & Case LLP):

“On 11 July 2012, the Commission submitted a proposal for a Directive on the fight against fraud to the Union’s financial interests by means of criminal law. The proposal could be considered relevant for customs cases as customs duties form part of the EU budget and failure to pay the correct amount of customs duties affects the EU’s financial interests.” Read on>>

Doing Business in France 2012 (Bryan Cave):

“The mere fact that an overseas entity is conducting business in France does not necessarily mean that it will have to comply with French company law requirements. A company having its headquarters in France will be governed by French law and must be registered in the Commercial Trade Registry in order to have legal capacity. Therefore, an enterprise having its headquarters in France is deemed to be a French company, even if it was incorporated elsewhere.” Read on>>

Treasury Consultation on Financial Sector Resolution Proposals (Katten Muchin Rosenman LLP):

“On August 1, HM Treasury published a consultation paper Financial Sector Resolution: Broadening the Regime setting out proposals and questions for consultation on enhancing the mechanisms available for dealing with the failure of systemically important non-bank financial sector entities.” Read on>>

Ukrainian Labor and Employment Law Basics (Fisher & Phillips LLP):

“The Labor Code of Ukraine is based on the idea that workers, as opposed to employers, are the presumed ‘weaker party’ and are therefore in need of greater protection by the state. The Labor Code, which is based on the former Soviet Labor Code and was adopted in 1971, provides many employee protections not common in the United States. The Labor Code governs wages, leave, the right to collective bargaining, and termination of employment, among other topics.” Read on>>

An End to the Never-ending Collective Bargaining Agreements in Croatia (Karanovic & Nikolic Law Office):

“In July 2012 the Croatian Parliament abolished the rule that had enabled employees to receive salaries and other benefits as agreed in collective bargaining agreements (CBAs), years after the CBAs had ceased to be in force. For decades companies with a large number of employees, through the CBAs, were establishing a minimum level of employees’ rights, such as vacation bonuses, Christmas bonuses and loyalty bonuses.” Read on>>

EU Competition Law: EU General Court Slashes E.ON and GDF Antitrust Fines (King & Spalding):

“The European Commission (Commission) fined E.ON and GDF Suez over EUR 1 billion for an alleged market sharing agreement dating back to the 1970s. On 29 June 2012, the EU’s second-highest court, the General Court, gave judgment in appeals brought by the two natural gas companies. The General Court largely upheld the Commission’s decision but reduced the fines by around 40 percent from EUR 553 million to EUR 320 million, in particular because the Commission had incorrectly assessed the duration of the infringement.” Read on>>

SFO Confirms Criminal Offences are Capable of Covering LIBOR Conduct (Orrick):

“On July 30, the Serious Fraud Office (‘SFO’) published a press release stating that the Director of the Serious Fraud Office, David Green QC, is satisfied that existing criminal offences are capable of covering conduct relating to the alleged manipulation of LIBOR and related interest rates.” Read on>>

Terms of Reference for Wheatley Review of LIBOR Published (Orrick):

“On July 30, HM Treasury published a press release setting out the terms of reference for the independent review of LIBOR to be carried out by Martin Wheatley, Chief Executive-designate of the Financial Conduct Authority.” Read on>>

Recent Changes in OHIM Practice (Ladas & Parry LLP):

“The Office for Harmonization in the Internal Market (OHIM), also known as the European Community Trademark Office, has recently changed its practice regarding the use of class headings in the lists of goods and services for CTM applications and registrations following a decision by the European Court of Justice on June 19, 2012.” Read on>>

German Legislation to Regulate Algorithmic Traders and Trading Strategies on German Trading Venues (Orrick):

“On July 30, the German Ministry of Finance presented new draft legislation in the form of an ‘Act for the Prevention of Risks and the Abuse of High Frequency Trading’ (Entwurf eines Gesetzes zur Vermeidung von Gefahren und Missbräuchen im Hochfrequenzhandel).” Read on>>

Russian Law Update — August 2012 (Morgan Lewis):

“The ongoing process of Russian corporate reform continues in an effort to streamline the operations of companies and bolster protections for investors. Russia is currently considering important changes to the Civil Code that will affect the types and forms of legal entities available for business activity.” Read on>>

Q&As Published on FSA’s Transition to the FCA (Orrick):

“On July 31, the FSA published a set of questions and answers on the transition to the new Financial Conduct Authority. The Q&As confirmed that… [f]irms will not need to reapply for authorisation under the new regime.” Read on>>

Looking Around the Corporate Veil (King & Spalding):

“International energy agreements frequently incorporate UK law in choice-of-law clauses. Legal principles developed by British courts thus have the potential to affect wide-ranging operations of energy-related companies, whether or not they are incorporated in the UK. From time to time, we present salient developments in jurisprudence involving UK law that might be incorporated into such agreements.” Read on>>

UCITS IV: The Completion Of The Implementation Process In Italy (Orrick, Herrington & Sutcliffe LLP):

“On 16 May 2012, Italy completed the implementation process for Directive 2009/65/EC on undertakings for collective investments in transferable securities (the UCITS IV Directive) (Directive), almost one year after the expected date it would come into force.” Read on>>

The East Mediterranean: Evolving Legislation for a New Energy Hub (King & Spalding):

“Historically the Levant Basin, a deep marine basin in the east Mediterranean between Cyprus, Israel, Lebanon and the Palestinian Territories, has not been considered a promising region for hydrocarbons. However, as a result of huge gas discoveries offshore Israel and Cyprus, the region is now perceived as a promising new frontier for natural gas.” Read on>>

Energy/Newsletter/August 2012 (Karanovic & Nikolic Law Office):

“In December of last year, the Serbian Transmission System Operator amended the Grid Code. These amendments did not substantially change the code, but did introduce changes in: technical conditions for connecting to the grid, including specific conditions for connecting generating units, and access to the grid.” Read on>>

ESMA Publishes Guidelines on ETFs and Other UCITS Issues and a Consultation Paper on Repurchase Agreements (Katten Muchin Rosenman LLP):

“On July 25, the European Securities Markets Authority (ESMA) released ESMA/2012/475, a Report and Consultation Paper comprising guidelines on Exchange Traded Funds (ETFs) and other issues relating to UCITS funds (Undertakings for Collective Investment in Transferable Securities) and a Consultation Paper on repurchase and reverse repurchase agreements.” Read on>>

Threats to Investment Protection in the EU Energy Sector (King & Spalding):

“This article examines threats to the investment protections afforded by bilateral investment treaties (‘BITs’) between EU Member States (‘intra-EU BITs’) in the energy sector and suggests ways in which these threats may be managed to reduce the resulting risks… BITs are treaties between two states that protect investments made by investors from one state (i.e., the home State) in another state (i.e., the host State).” Read on>>

Italian and Spanish Regulators Introduce Short Selling Bans (Katten Muchin Rosenman LLP):

“On July 23, the Spanish regulator (CNMV) and the Italian regulator announced short selling bans with immediate effect. The Spanish ban applies to any transaction the effect of which is to initiate or increase a net short position in any stock admitted to trading on a Spanish regulated market for which the CNMV is the competent authority.” Read on>>

FSA Consults on Further Client Money Proposals (Katten Muchin Rosenman LLP):

“On July 25, the UK Financial Services Authority (FSA) published a Consultation Paper Client Assets, Firm Classification, Oversight, Reporting and the Mandate Rules (CP12/15) in relation to two areas of client assets (CASS) policy – CASS oversight and reporting; and the mandate rules.” Read on>>


See also:

Follow @EULaws on Twitter>>