Corporate and Commercial Law - global update - Winter 2017/Spring 2018 - EY
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Corporate and Commercial Law — global update Winter 2017/Spring 2018
Law — passion for excellence
Law — passion for excellence
Dear reader,
Editorial We are pleased to present the Winter 2017/Spring 2018 edition of our Corporate
and Commercial Law global update. In this issue, we have articles from a total of
30 jurisdictions on current legal affairs around the globe.
To help clients understand the increasingly complex tax, regulatory and
commercial laws of this global economy, the Law teams of EY member firms
provide broad guidance around strategic business decisions, reducing the gap
between business advisors and legal counsel, and offering support services that
increase efficiency and reduce the costs of legal activities.
In the network of EY today there are 2,100 qualified legal professionals
providing legal advice within 80 jurisdictions. Apart from offering specific
tailor-made legal advice for a number of business needs, we also cover a wide
range of sectors: automotive and transportation, banking and capital markets,
consumer products and retail, government and public sector, health, insurance,
life sciences, media and entertainment, oil and gas, power and utilities, private
equity, real estate and hospitality, technology, and telecommunications. Our
lawyers work closely alongside professionals in Assurance, Tax, Transactions
and Advisory. Serving you across borders, our sector-focused, multidisciplinary
approach means EY member firms offer integrated and broad pertinent advice
across the globe.
The articles in this Corporate and Commercial Law global update reflect the
global reach of Law at EY as well as the diversity of our legal services. If you
wish to receive more detailed information on Law in the global EY network or
on the topics discussed in this issue, please feel free to reach out to us. You will
find contact details for each of the countries where EY member firms offer Law
services at the back of this publication.
Kind regards,
Rutger Lambriex
EY Global Corporate Law Leader
rutger.lambriex@hvglaw.nl
+31 88 40 70425
Stephen d’Errico
Ernst & Young Tax Advisory Services S.à r.l.
Corporate Leader & Editor
stephen.derrico@lu.ey.com
+352 42 124 7188
Corporate and Commercial Law — global update 1
In this issue … Editorial 1 Argentina 4 • Become a Simplified Shares Company in Argentina in 24 hours Belgium 5 • Are you ready for the new Belgian Companies’ Code? Brazil 6 • Brazilian Patent Office modifies rules on registration of contracts related to use of intellectual property, transfer of know-how and franchise agreements Canada 7 • Amendments to Canada’s foreign investment rules aim to encourage investment China 8 • China further opens up Colombia 9 • Legislative changes for the implementation of the Final Agreement to End the Armed Conflict and Build a Stable and Lasting Peace Croatia 10 • Special legislation enacted for the restructuring of Croatia’s biggest private company Denmark 11 • Registration of beneficial owners Ecuador 12 • Possible Amendments to the Ecuadorian Corporate Law El Salvador 13 • Government launches Virtual Platform for the Incorporation of Companies Finland 14 • Updated legislation will facilitate contractual arrangements related to extensive real estate projects France 15 • New compliance obligations with the beneficial ownership register Georgia 16 • Mandatory tender offer under the Law of the Republic of Georgia on Entrepreneurs Germany 17 • Capital market-oriented companies must comply with the new amendments to the German Corporate Governance Code (GCGC) Guatemala 18 • Apostille India 19 • De minimis thresholds for the regulation of combinations
Law — passion for excellence Lithuania 20 • The requirement for registration of shares in private limited liability companies (UAB) with the depository has been abolished This bi-annual Luxembourg 21 publication highlights a • The reserved alternative investment fund: a Luxembourg innovation range of international in the alternative investment fund landscape corporate law matters Mexico 22 and covers recent • Major foreign investment in Mexico’s air transportation sector law developments in Netherlands 23 specific countries. • Mandatory digital litigation introduced New Zealand 24 • New Zealand: competition law reform Norway 25 • Foreign creditors with security in accounts receivables belonging to Norwegian entities must comply with the Norwegian Securities Act to have a valid and legally protected security Poland 26 • Dematerialization of shares Romania 27 • Stock options plans now permitted to all types of entities Russia 28 • New Regulation of Financial Transactions • Companies disclose beneficiaries upon requests of tax and financial crimes authorities • Amendments to shareholders’ rights on access to company’s documents Serbia 29 • Mediation in commercial disputes Slovakia 30 • Amendment to the Slovak Commercial Code – the end of “tunneling” in Slovakia? Spain 31 • New EU privacy regulations and particularities in Spain UK 32 • The UK’s new corporate criminal offense of facilitating tax evasion Venezuela 33 • Foreign Exchange agreement Recent publications 35 Contacts 36
Law — passion for excellence
Argentina
Become a Simplified Shares The law also provides for electronic means
of notification of observations made by
Company in Argentina in
the enforcement authority, the obtaining
24 hours of the SAS tax ID within 24 hours (by filing
Law No. 27,349 created the option for on the Argentine Tax Authority’s website),
a Simplified Shares Company (Sociedad and subsequently the expedient opening
por Acciones Simplificada, or SAS), a of bank accounts by financial entities by
new Argentine corporate type that would giving proof of registration and the tax ID
appeal to foreign and local investors due to of the relevant company.
Jorge L. Garnier
its flexibility and simplicity. Other interesting advantages associated jorge.garnier@ar.ey.com
The law sets forth that the SAS “may be with an SAS vis-à-vis other current
incorporated by one or more human or legal companies in Argentina are, among others,
persons,” anticipating the incorporation of (i) low minimum capital stock (i.e., as
the company by a sole shareholder. of today, about USD950); (ii) electronic
The SAS is subject to a regime of corporate books; (iii) only one resident
incorporation and registration that is faster director required; (iv) teleconference
and more efficient than those provided meetings.
for other types of companies. In this SASs will be adopted by many companies of
respect, the law foresees the possibility of all sizes. This new legislation is in line with
incorporating the company by electronic the current government goals of making
means and digital signature, as well as Argentina an attractive scenario for new
the possibility of obtaining registration investments. Pablo Bisogno
pablo.bisogno@ar.ey.com
within 24 business hours, if incorporated
by adopting the template of the articles
of association provided in the General
Resolution No. 6/2017, recently issued by
the enforcement authority.
4 Corporate and Commercial Law — global update
Law — passion for excellence
Belgium
Are you ready for the new and widely held companies, (iii) the
cooperative company to be reserved for
Belgian Companies’ Code?
those companies that are truly inspired
In order to modernize and simplify Belgian by the cooperative spirit and (iv) the
company and association law and to improve public limited liability company (NV/SA),
its competitive nature in a European and which should be reserved for the largest
international context, an extensive legislative companies and listed companies only.
reform was launched in 2014 by the Belgian Several other types will disappear.
Center of Company Law.
• Introduction of new civil penalties, Peter Suykens
The new legislative texts are currently replacing ineffective criminal penalties. peter.suykens@hvglaw.be
being discussed in Parliament. The
• More flexibility and default rules for the
adoption of this new legislation is expected
BV. The concept of “share capital” will
by June 2018, although the exact timing
be abolished. Unrestricted transferability
has not yet been confirmed.
of shares will be introduced as well as
The legislator’s approach is to realize an a more flexible legal framework with
all-encompassing reform of the current default rules for the BV.
Companies’ Code in part so that nonprofit
• Revision of management of the NV.
legislation will be structurally integrated.
Besides a board of directors, the
The draft reform aims at modernizing
appointment of a single director will
the current Companies’ Code based on
become possible. Besides the one-tier
three key objectives: (1) a large-scale
system, a two-tier system (consisting of
simplification of the current legislation,
a management board and a supervisory
(2) opting for more supplementary
board) will be an option.
(“default”) rules and flexibility, and
(3) introducing new rules to help Belgian • The modernization and simplification
companies face European evolutions and in view of European evolutions and
new tendencies, such as company mobility. new tendencies. The introduction of a
more attractive establishment regime
What are the key modifications?
by adhering to the “statutory seat
• A reduction of different company theory” (instead of the current “real seat
types. The following main types will theory”) and new rules on cross-border
be retained: (i) the partnership, (ii) the conversions to transfer the statutory seat.
private company (BV/SRL), which should
become the default company for closely
Corporate and Commercial Law — global update 5
Law — passion for excellence
Brazil
Brazilian Patent Office modifies Before NI 70/2017, the INPI reviewed principles and Brazilian Central Bank
contract terms, taking into consideration regulations, on the remuneration to be
rules on registration of contracts
the legal protection of the underlying paid under the contracts to foreign parties,
related to use of intellectual intellectual property and other legal even though the deductibility limits
property, transfer of know-how aspects. It also imposed limitations on the remain unaltered.
and franchise agreements payment of royalties abroad, based on the Based on this development, taxpayers
deductibility thresholds set forth by the tax may want to revisit current IP agreements
On 11 April 2017, the Brazilian Institute
law. Therefore, in practice, the INPI capped registered in Brazil to verify if it is possible
of Intellectual Property (INPI), an
the ability to make payments under these and/or beneficial to change the royalty
agency equivalent to the US Patent and
contracts pursuant to the corresponding percentage to increase potential royalty
Trademark Office, introduced Normative
limitation outlined in the tax rules. payments out of Brazil. The corresponding
Instruction (NI) 70/2017, establishing
new administrative procedures for the Beginning 1 July 2017, the analysis tax treatment and transfer pricing
registration of agreements for licensing or performed by the INPI when registering implications should likewise be studied.
transfer of intellectual property, transfer of these agreements will only encompass
know-how and franchise agreements with the formal requirements set forth in
non-Brazilian companies. The NI is effective the legislation pertaining to intellectual
starting 1 July 2017. property protection and will ensure the
agreements are effective with respect
From a regulatory perspective, the
to third parties. The NI also contains a
registration is a requirement to allow the
provision that states that the certificate
remittance of any remuneration for the
of registration of the contract to be issued
use of registrable intellectual property and
by the INPI should contain a note with the
to guarantee the contract’s enforceability
following wording: “INPI did not examine
against third parties. Under the current tax
the contract in light of fiscal, tax and
rules, the registration with the INPI is also
Central Bank regulations.”
required for royalties to be tax deductible
in Brazil. To a large extent, the deductibility Because the INPI will no longer take the tax Graziela G. Baffa
of royalties and payments connected to rules into consideration when registering graziela.g.baffa@br.ey.com
technical assistance agreements made to IP contracts, it is debatable whether the 1%
related parties is limited. The deduction is to 5% limitation has been lifted for payment
limited to 1% to 5% of the corresponding purposes. Our preliminary understanding
net revenue, depending on the nature of is that this would allow parties to freely
the contract. agree, respecting the arm’s-length
6 Corporate and Commercial Law — global update
Law — passion for excellence
Canada
Amendments to Canada’s notification under the act but are subject
to the national security review along with
foreign investment rules aim to
investments requiring an application or
encourage investment notification to the Canadian government.
Subject to limited exceptions, the The threshold is different when the target
Investment Canada Act provides the is a “cultural” business, or if the investor is
Canadian government with the power to not part of the World Trade Organization
review significant investments in Canada or a state-owned enterprise. In these
by non-Canadians (including foreign- instances, the investments remain subject
Marcus Hinkley
controlled companies) and review all to the book value test.
marcus.hinkley@ca.ey.com
investments in Canada by non-Canadians The Canadian Government announced
that could be injurious to national security. in December 2016 that the foreign
Investments resulting in a foreign investment review threshold would
entity acquiring control of a Canadian be increasing at some point in 2017
business will be reviewable if they (two years earlier than scheduled) from its
exceed C$600 million in enterprise current enterprise value of C$600 million
value threshold, and they may not be to C$1 billion. The updated threshold
completed until the minister communicates took effect on 22 June 2017. In addition,
satisfaction that the investment is of a “net under the provisional implementation of
benefit to Canada” (which may include the foreign investment review provision
giving enforceable undertakings involving contained in the Comprehensive Economic
employment levels, economic activity, and Trade Agreement (CETA) between
innovation, global competitiveness and the Canada and the EU, the threshold for
participation of Canadians in management reviewable investments will increase
or on the board of directors). For all other further to C$1.5 billion for all European
acquisitions of control of a Canadian Union investors and investors from other
business or the establishment of a new free-trade-agreement partners as a result
Canadian business, the investor must of most-favored nation commitments,
submit notice of the investment prior to including the US, Mexico, Chile, Colombia,
closing or within 30 days thereof. Non- Panama, Peru, Honduras and South Korea.
controlling investments do not require
Corporate and Commercial Law — global update 7
Law — passion for excellence
China
China further opens up encouraged items have been increased
to further encourage foreign investment
Since the introduction of the “opening up”
in areas such as high-end manufacturing,
policy as part of its economic reform, China
high-tech, energy-saving technologies and
has attracted foreign direct investment to a
environmental protection technologies.
wide range of industries. A recent series of
new policies and regulations made it much In addition, pre-establishment national
easier for foreign investors to have access treatment management plus a negative
to the ever-growing Chinese market. list laid an institutional foundation for
the implementation of record-filing for Zhong Lin
On 28 June 2017, the National
foreign M&As in China. On 30 July 2017, zhong.lin@cn.ey.com
Development and Reform Commission
the MOFCOM promulgated the Decision
(NDRC) and the Ministry of Commerce
on Revising the Interim Administrative
(MOFCOM) jointly issued the Catalogue
Measures for the Record-filing of the
for the Guidance of Foreign Investment
Incorporation and Change of Foreign-
Industries (2017 version), the seventh
invested Enterprises, bringing foreign M&A
revision of the catalogue since its
under the record-filing system if special
implementation in 1995.
administrative measures and related-party
The 2017 catalogue divides industries into M&A are not involved in the following
two categories: “encouraged,” without situations: merger and acquisition of non-
foreign shareholding requirements, and foreign-invested enterprises in China, or
Special Administrative Measures for the strategic investments in listed companies
Entry of Foreign Investment (also known by foreign investors. This is a further
as the “negative list”). The negative list step forward since the rollout in China
is further divided into three categories: of the record-filing for foreign invested
encouraged with foreign shareholding enterprises not subject to the Special
requirements, restricted and prohibited. Administration Measures since last October.
According to the 2017 catalogue, As more industries welcome foreign
restricted investments are further reduced investments and the record-filing further
to 63 items, down from 93 in the 2015 simplifies procedural requirements and
catalogue. Those opened sectors mostly improves efficiency, we can expect a swift
belong to the manufacturing, service rise in the number and volume of foreign
and mining industries. Furthermore, investment in China.
8 Corporate and Commercial Law — global updateLaw — passion for excellence
Colombia
Legislative changes for the granted with tax benefits; limitations to the
extension of property up to one family-run
implementation of the Final
agricultural unit (UAF); and development
Agreement to End the Armed programs with a territorial-based
Conflict and Build a Stable and focus (PDET).
Lasting Peace Within the next several months, more
To implement efficiently the Final changes will come. They mainly relate to
Agreement signed on 24 November 2016 participation mechanisms, such as prior
by the Colombian Government with the consultations to communities for the Lorena Garnica de la Espriella
Revolutionary Armed Forces of Colombia development of certain projects, labor law lorena.garnica.de.la.espriella@co.ey.com
(FARC), about 80 legislative changes have for rural workers, a multipurpose general
been highlighted through the ordinary cadastral information system and the
legislative process and the abbreviated creation of a rural jurisdiction.
legislative process, the so-called All these changes create a new legal
“fast track.” framework and a new way for doing
Changes that have a significant impact business in Colombia, which require
concern rural real state property, as detailed an in-depth analysis of new business
in chapter one of the Final Agreement. opportunities and potential risks as
The latter contains a comprehensive rural well as further involvement of the
reform to create a structural transformation business community.
of the countryside with a proper balance
Ximena Zuluaga
between existing forms of production and
ximena.zuluaga@co.ey.com
new ones in order to promote an equitable
relationship between rural and urban areas.
Such changes target, among others, new
processes for land recovery in favor of
the nation in cases of occupied public land
(baldíos in Spanish) and legal ownership
cessation due to non-exploitation of land;
the creation of a plan for land assignment
and identifying special zones more affected
by the armed conflict (known as ZOMAC),
Corporate and Commercial Law — global update 9Law — passion for excellence
Croatia
Special legislation enacted for Some of the most important features of the
act, as applied to Agrokor, are as follows:
the restructuring of Croatia’s
biggest private company • Agrokor’s affiliated companies outside of
Croatia (e.g., in Slovenia and Serbia) are
After years of rapid expansion fueled by not subject to EMP.
excessive loans, the food producer and
retail giant Agrokor Group has encountered • During the EMP, no one is allowed to
substantial difficulties to meet its financial initiate any bankruptcy, pre-bankruptcy,
obligations and maintain its liquidity. Banks liquidation proceedings nor any litigation,
enforcement proceedings, or out-of- Joško Perica
have denied further crediting, leading the
court settlement with Agrokor with josko.perica@hr.ey.com
largest private company in Croatia and its
largest employer to practically become respect to relevant debts.
insolvent. This situation has created a • Creditors may still continue doing
threat to the overall Croatian economy. business with Agrokor during the EMP.
To prevent Agrokor from entering into • Ante Ramljak has been appointed to
an ordinary bankruptcy procedure, the represent and manage Agrokor as the
Croatian Parliament passed the Act on the Extraordinary Trustee. Ramljak has hired
Compulsory Administration Procedure in reputable international firms to aid him
Companies of Systemic Importance for the in the overall restructuring process.
Republic of Croatia, also known colloquially • Final settlement with Agrokor’s
as Lex Agrokor, which entered into force on creditors should be reached within a
7 April 2017. 15-month period.
Filip Kraljičković
filip.kraljickovic@hr.ey.com
The act provides for a special bankruptcy- The act has been prepared and adopted
like procedure, which aims at giving the in a very short notice, containing many
Government control over the restructuring unclear provisions and raising concern
process of systemically important among legal experts on its constitutionality
companies (primarily Agrokor) and to and conformity with EU laws (particularly,
preserve the company’s business. Agrokor regarding state aid). Therefore, it remains
(and all its Croatian subsidiaries) entered to be seen how the act will be applied and
into the Extraordinary Management interpreted in practice.
Procedure (EMP) on 10 April 2017.
10 Corporate and Commercial Law — global updateLaw — passion for excellence
Denmark
Registration of beneficial The company is responsible for completing
the registration. For existing companies,
owners
the registration deadline is 1 December
As of 23 May 2017, most companies are 2017. For newly established companies,
obligated to register their beneficial owners the beneficial owner(s) must be registered
with the Danish Business Authority. in connection with the incorporation.
Due to a new regulation, most companies Furthermore, companies have a duty to,
are now obligated to register information continuously, maintain the registered
regarding their beneficial owner(s) with information and update it as such, as
Henrik Kany
the Danish Business Authority. Such soon as a beneficial owner has become
henrik.kany@dk.ey.com
information is available to the public. known to the company. If the company
fails to comply with these obligations, the
A beneficial owner shall be understood
company’s members of management can
as the physical person(s), who, directly or
be sanctioned by a fine.
indirectly, ultimately holds or controls 25%
or more of the shares and/or voting rights in The following Danish company types are
a company. However, control of a company among others subject to the registration
also can be achieved through agreement, duty:
e.g., a shareholders agreement or authority • Public limited company
to appoint members of management —
• Private limited company
therefore, the company must regularly
assess who shall be registered as the • Limited partnership company
company’s beneficial owner(s). • Partnerships
If the beneficial owner(s) cannot be • Limited partnerships
identified, or if a company does not
• Cooperatives (cooperative societies)
have any beneficial owners, due to no
and other companies and societies with
one holding or controlling 25% or more
limited liability
of the share capital or voting rights,
the company’s registered members of • SE company
management will be registered as the
beneficial owners.
Corporate and Commercial Law — global update 11Law — passion for excellence
Ecuador
It is important to emphasize that the
Possible Amendments to the registration in the Mercantile Register in
a single act. aforementioned amendments are in the
Ecuadorian Corporate Law early phase of the approval procedure, but
• The figure of the commissary in the
The Superintendence of Companies filed if ratified, they will constitute an important
corporations is eliminated.
a proposal before the Ecuadorian National and expeditious improvement for corporate
Assembly whose objective is to reform • Announcements published by the press procedures in accordance with the global
the Companies Law — allowing for more for ordinary and extraordinary meetings trends in this regards.
dynamic and modern corporate procedures are removed; they must be summoned
and obtaining nimbleness with the inclusion five days in advance by email to the
of new technologies and simpler processes. shareholders, duly communicated by the
legal representative.
The main amendments proposed are the
following: • The attendance at meetings is allowed
by telecommunication means, and a
• An establishment of differences between
recording (digital file) must be added to
dissolution types:
the company’s file.
a) Full right dissolution
• For the annual information briefing to
b) By the will of the partners foreign shareholders, in the case that Fernanda Checa
c) By decision of the Superintendence of the list of partners or shareholders shall fernanda.checa@ec.ey.com
Companies include legal persons, the company must
provide details about its members, up to
d) By enforceable judgment
the level of the individual shareholder. If
These distinctions would allow in some in the following years the information has
cases that the legal representative can not changed, a sworn statement signed by
proceed with the liquidation without the the legal representative will be enough.
necessity of a formal appointment as
• For the powers granted by foreign
liquidator, which represents celerity in
companies to their legal representative,
the procedures.
the parent company shall declare
• An abbreviated procedure of dissolution, that the head office must respond to
liquidation and direct cancellation is the obligations that its general agent
suggested. It will allow users whose contracts, noting assets that they own or
Santiago Andrade
companies do not have liabilities to santiago.andrade@ec.ey.com
will have in Ecuador and abroad.
dissolve, liquidate and cancel their
12 Corporate and Commercial Law — global updateLaw — passion for excellence
El Salvador
Government launches Virtual of the Grand Duchy of Luxembourg and
the Bureau of International Narcotics and
Platform for the Incorporation
Law Enforcement Affairs (INL) of the US
of Companies Department of State.
Through the Executive Decree No. 90, With this modern tool, users may request
in force since November 11, 2015, the services for registration of corporations,
Government of El Salvador created the applications for Tax Identification Numbers
Regulatory Improvement Body (OMR), as a (NIT) and obtaining and renewing
part of Fomilenio II, a program that executes operating permits for companies, among Jose Quintanilla Cerrato
the donation of the US entity Millennium others. The OMR is also in the process of Jose.Quintanilla@sv.ey.com
Challenge Corporation (MCC). The OMR is presenting a bill of reforms to the Code
in charge of executing a strategy associated of Commerce before Congress, including
with improving the country’s investment among said reforms the elimination of
climate through inter-institutional the requirement to present a public deed
work with certain government entities for the incorporation of a company, and
providing support so that these entities instead, fill out a form that would replace
can adopt principles, ensure transparency this notarial formality.
and implement improvements to their
procedures, with the purpose of reducing
costs and times for users, and increasing the
quality of the services provided by certain
government offices.
Irene Arrieta
With this purpose, on August 16 of Irene.Arrieta@sv.ey.com
the current year, the virtual platform
www.MiEmpresa.gob.sv (which stands for
“MyCompany” in Spanish) was launched
as the single channel to create companies
in El Salvador thanks to the OMR, working
together with the Commercial Registry
of El Salvador, under the technical and
financial supervision, assisted by the
United Nations Conference on Trade and
Development (UNCTAD), the Government
Corporate and Commercial Law — global update 13Law — passion for excellence
Finland
Updated legislation will facilitate rights, would be made possible. A 3-D
property would be an independent and
contractual arrangements
permanent piece of property, whereby
related to extensive real estate general rules on real estate would apply.
projects Therefore, regulations concerning the
The drafting of legislative changes to sale of real estate, property transfer tax
enable the formation of “3-D” real estate or repossession would not be changed,
in Finland is soon in its final stages. The but they would now also apply to 3-D
objective is to present the proposal to the real estate.
Taina Pellonmaa
Government this autumn and to have the At present, complicated agreements and taina.pellonmaa@fi.ey.com
proposal adopted as legislation in the near encumbrances are required in order to
future of Parliament. divide an area between joint owners and
The new provisions would enable the other stakeholders into extensive real
formation of new 3-D real estate — areas estate projects. The expected amendments
below ground level and in the air — covered would simplify such arrangements,
by a town plan. The property formation although agreements and encumbrance
would be effected in accordance with the arrangements will still be required to some
current procedure through parceling out extent. A 3-D property would be especially
or partitioning a new property from the useful in extensive projects with several
base property, which exists at ground stakeholders. Such projects could include,
level. A 3-D property could be a plot of for example, building complexes in which
land, a common area or a redemption unit, there is underground parking below a
depending on the purpose allocated to the commercial or residential building. As
area in the town plan. another example, a shopping mall built
above a highway would be far easier to
According to the proposal, the required
execute with 3-D property ownership,
changes can be implemented through
rather than with traditional contractual
amendments to existing provisions. In the
arrangements.
current real estate system, real estate is
only defined two-dimensionally. After the
amendments, registration of titles to areas
above and below ground level, as well as
the establishment of 3-D encumbrance
14 Corporate and Commercial Law — global updateLaw — passion for excellence
France
New compliance obligations a document identifying the beneficial
owner, duly signed and dated by the
with the beneficial ownership
legal representative of the company
register and containing the nature of the control
As part of its anti-money-laundering and exercised by the beneficial owner(s) over
counterterrorism financing rules, article the company.
L561-46 of the French Financial and For entities already registered in France as
Monetary Code (FMC) henceforth requires of 1 August 2017, the filing requirement
legal entities registered with the Trade and must be fulfilled by 1 April 2018 at the Frédérique Desprez
Companies Registry (TCR) to declare their latest. Also, an updated document will have frederique.desprez@ey-avocats.com
“beneficial owners.” to be filed with the Office of the Clerk of the
All companies or economic interest groups Commercial Court within 30 days of any
that have their registered office in France, new fact or event requiring the amendment
French branches of foreign companies, or filing of additional information regarding
and any legal entity whose registration is the initial filing.
provided for in the legislative or regulatory Noncompliant entities could be ordered
provisions are concerned. to file information on its beneficial owner
According to article R561-1 of the FMC, with the TCR. Failure to file the document
the beneficial owner is defined as the on beneficial owner(s) or filing a document
individual(s) who (i) holds, directly or containing inaccurate or incomplete
indirectly, over 25% of the company’s information may be prosecuted for a criminal
capital or voting rights (ii) or exercises offense punishable by up to six months’ Céline Chevillon
by any other means a power of control imprisonment and/or a EUR 7,500 fine. celine.chevillon@ey-avocats.com
over the management, administration or Besides the entity itself, certain authorities
executive bodies of the company or over as referred to in articles L561-46 and
the shareholders’ meeting. R561-47 of the FMC, and any person
All entities registered with the TCR must who can show a legitimate interest and is
obtain and keep accurate and up-to- authorized by a judge, can have access to
date information on their beneficial this information.
owners. These entities must also file
with the Clerk of the Commercial Court
Corporate and Commercial Law — global update 15Law — passion for excellence
Georgia
Mandatory tender offer under Article 53 does not refer to the tender offer
for reporting companies only; it states
the Law of the Republic of
that this obligation is for JSCs generally.
Georgia on Entrepreneurs Accordingly, there may be some legal
Pursuant to Article 53 of the Law of the queries as to whether the mandatory offer
Republic of Georgia on Entrepreneurs, if indeed applies to the acquisition of non-
a shareholder purchases a lot of shares reporting companies. Such queries include:
that results in taking control of more than what are the procedures of the mandatory
half of the voting shares of a joint stock tender offer, since it is not covered by the
Mariam Makishvili
company (JSC), the shareholder is obliged law? What is the purpose of such offer if the
mariam.makishvili@ge.ey.com
to make a tender offer under the Law of shares are not able to be publicly traded?
Georgia on Securities Market. This means Moreover, the law on entrepreneurs does
they must offer to buy the outstanding not clearly stipulate what the consequence
shares no later than 45 days after the is for breaching this obligation. Due
above fact, or they must bring down the to the law’s ambiguity, a number of
share quantity to less than half of the misunderstandings could occur if the
voting shares. tender offer applies to all JSCs, possibly
Pursuant to the law, the tender offer is causing unreasonable legal outcomes.
applied only when there is an acquisition Therefore, one hopes that the issue of
of securities of a reporting or accountable a mandatory tender offer will be well-
company — a company that has issued considered and limited to reporting and
publicly held securities. The crucial accountable JSCs.
question, however, is whether the
George Svanadze
george.svanadze@ge.ey.com
mandatory tender offer applies to JSCs if
they are not reporting companies.
16 Corporate and Commercial Law — global updateLaw — passion for excellence
Germany
Capital market-oriented Appointment of supervisory board
members
companies must comply with
The supervisory board shall prepare
the new amendments to the a profile of skills and expertise for the
German Corporate Governance supervisory board as a whole with regard
Code (GCGC) to the required knowledge, skills and
professional experience, and take this into
The substantive amendments to the Code
consideration in its proposed candidates to
in 2017 are characterized by five core
the annual general meeting. Daniela Mattheus
themes:
In the Corporate Governance report, the daniela.mattheus@de.ey.com
Shareholder communication
supervisory board shall not only report
For the first time, the GCGC suggested
on the number of independent members
that the chairman of the supervisory
representing shareholders which it deems
board should be prepared to discuss topics
appropriate; it shall also publish the names
relevant to the supervisory board with
of these persons.
investors in an appropriate framework.
Accommodating changes to legislation
Compliance management
and practical consequences
The management board must ensure
The GCGC Commission recommends that
appropriate measures (CMS), which are
companies should inform shareholders about
aligned to the risk profile of the company,
business developments in an appropriate
to set out its basic principles and establish
form during the course of the year.
an anonymous whistleblower system. Dr. Anja Pissarczyk
The extended obligations of the audit anja.pissarczyk@de.ey.com
Management board compensation
committee as a result of the EU audit
The assessment basis for variable reform were adopted into the GCGC.
remuneration components shall generally be
based on a multi-year assessment, and shall There is no obligation to adapt the
be materially related to the future. The multi- declaration of compliance to the
year, variable remuneration components adjustments during the year. However,
should not be paid out prematurely. they must be taken into account in the next
regular update.
Corporate and Commercial Law — global update 17Law — passion for excellence
Guatemala
Apostille procedure, as stated by the Bureau of
Consular Affairs of the U.S. Department of
As of 18 September, the globally known
State, serves to “authenticate the seals and
validation certificate commonly referred
signatures of officials on public documents
to as the apostille is effective for use
such as birth certificates, notarials, court
in Guatemalan territory. Guatemala’s
orders, or other document issued by a
participation in the Apostille Convention,
public authority, in order for them to be
signed at the Hague on 5 October 1961,
recognized in foreign countries that are
represents an important step toward
parties to the Convention.” The apostille
the efficiency of legal procedures that Ariana Callejas
was approved in Guatemala by Congress in
involve multiple jurisdictions. The Apostille ariana.callejas.aquino@gt.ey.com
2016 and contained in Decree 1-2016.
Convention removes the necessity of
having to certify and legalize documents
through consulates and embassies, thus
cutting costs, reducing time spent and
ultimately ensuring the celerity of the
various legal-sector processes that, lacking
the approval of the apostille, required a
series of steps prior to recognizing the
document in Guatemalan territory. This
18 Corporate and Commercial Law — global updateLaw — passion for excellence
India
De minimis thresholds for the shares, voting rights or assets of an
enterprise. Other forms of combinations,
regulation of combinations
such as mergers and amalgamations,
The Competition Act of 2002 provides that were excluded from the ambit of the
combinations, which include acquisitions, 2016 notification.
mergers and amalgamations, are required
Furthermore, the 2017 notification
to be presented to the Competition
provides that where a combination
Commission of India (CCI) for prior
transaction is only for a portion of an
approval. The Indian Ministry of Corporate
Affairs (MCA), through notification dated
enterprise, the value of assets or turnover Nishant Arora
of such portion and/or attributable to nishant.arora@pdslegal.com
4 March 2011, exempted certain target
such portion, shall be considered for the
enterprises from obtaining prior approval.
purpose of computation of the revised de
These enterprises (whose shares, assets,
minimis thresholds. It has facilitated the
voting rights or control were being
ease of doing business by (i) extending
acquired) were ones that had (i) assets
the applicability of the revised de minimis
amounting to INR 2.5 billion or less in India
thresholds to all kinds of combinations; and
or (ii) a turnover of INR 7.5 billion or less in
(ii) eliminating the requirement of large
India (“de minimis thresholds”).
companies undertaking a combination
Through a notification dated 3 March 2016, transaction, in respect to only a portion of
MCA enhanced the de minimis thresholds their enterprise, to notify and seek prior
to the asset value of INR 3.5 billion or less, approval from the CCI.
and turnover value of INR 10 billion or less
(“revised de minimis thresholds”).
Under another notification, dated 27
March 2017, the MCA enhanced the scope
of the revised de minimis thresholds to
include structured transactions, such
as mergers and amalgamations. Prior
to the 2017 notification, the revised de
minimis thresholds were interpreted to
be applicable only to those combinations
that involved the acquisition of control,
Corporate and Commercial Law — global update 19Law — passion for excellence
Lithuania
The requirement for registration The new requirements laid down in the
Law on Companies
of shares in private limited
On 13 July 2017, the following
liability companies (UAB) amendments to the Law on Companies
with the depository has been came into effect:
abolished i) The minimum share capital of a public
The new version of the Accounting limited liability (AB) has been reduced
Rules for Financial Instruments and from EUR40,000 to EUR25,000.
Their Circulation came into effect as of Julija Lisovskaja
ii) The restriction on the maximum number
18 September 2017. The amendment julija.lisovskaja@lt.ey.com
of shareholders (250) in a private
is relevant for transfers of shares that limited liability (UAB) has been removed.
previously required:
iii) More information about a sole
i) Transferring the management of shareholder shall be submitted to the
shareholders’ personal securities Legal Entities Information System
accounts to the licensed account (JADIS).
manager
Granting an additional right for minority
ii) Registering shares of a UAB with Nasdaq shareholders
CSD SE (formerly the Central Securities
Beginning 1 January 2018, the Law on
Depository of Lithuania).
Companies of the Republic of Lithuania
Upon adoption of the rules, the procedure would allow for minority shareholders
has become more simplified. No of a private or public limited-liability
registration of UAB shares with Nasdaq company to have access to the company’s
CSD SE is required. commercial (industrial) secrets and other
In light of the above, the transfer of confidential information.
UAB shares also would be simplified, Current legislation allows this kind of
applying only one mandatory requirement access only for shareholders who hold or
(transferring the management of possess one-half or more shares.
shareholders’ personal securities
accounts).
20 Corporate and Commercial Law — global updateLaw — passion for excellence
Luxembourg
The reserved alternative during the life of the fund. It is only of the same type issued by the same
indirectly supervised through its AIFM. issuer. However, should the RAIF invest
investment fund: a Luxembourg
• Legal form: the RAIF may opt for a solely in risk capital, it is not subject
innovation in the alternative to the diversification requirements set
variable capital structure and may be
investment fund landscape created in various legal forms (corporate out above.
Reserved alternative investment funds, or partnerships and contractual legal forms). • Marketing: being managed by an
RAIFs, have succeeded in the Luxembourg authorized AIFM, the RAIF will also
• Corporate governance: since the RAIF
alternative investment fund market since benefit from all EU AIFM’s passporting
qualifies as an alternative investment
their entry on 1 August 2016 as a result of advantages for the distribution of its units
fund (AIF), it shall only be managed by an
the law on Reserved Alternative Investment across Europe to professional investors.
authorized alternative investment funds
Funds passing 23 July 2016. They are a
manager (AIFM).
specific type of unregulated alternative
investment funds similar in characteristics • Segregation of assets: the RAIF may
to the well-known Luxembourg regulated constitute multiple compartments (or
specialized investment funds (the SIFs) sub-funds), with each compartment
and risk capital investment companies corresponding to a distinct part of
(the SICARs); the main difference is that a the assets and liabilities of the RAIF.
RAIF is not subject to any authorization or The rights of investors and creditors
direct supervision from the Luxembourg concerning a compartment or issues
financial supervisory authority (known as related to the creation, operation or
the Commission de Surveillance du Secteur liquidation of a compartment are limited
Financier, or CSSF). to the assets of that compartment, Elisa Faraldo Talmon
unless a clause included in the elisa.faraldo-talmon@lu.ey.com
The main features of RAIFs are the
constitutive documents of the RAIF
following:
provides otherwise.
• Eligible investors: the RAIF is reserved
• Flexibility with respect to the eligible
for well-informed investors.
assets: the RAIF law does not provide
• No CSSF supervision: the RAIF for specific investment rules or
benefits from an exemption from restrictions. In accordance with the risk
CSSF’s authorization for its setup and spreading principle, a RAIF may not
for supervisions regarding ongoing invest more than 30% of its assets or
amendments to offering documents commitments to subscribe to securities
Corporate and Commercial Law — global update 21Law — passion for excellence
Mexico
Major foreign investment in • International alliances will be increased,
and a bigger participation of national
Mexico’s air transportation
suppliers in this sector is also
sector expected, which will strengthen market
Aiming to stimulate investments and competition, provide more routes and
competency in the aeronautical sector in more timely flights, and offer operative
Mexico, a reform to the Foreign Investment cost reductions.
Law came into full force on 27 June 2017. • This change will benefit users by creating
The core of the reform stipulates that better service; major penalties will Marisol Altamirano
direct foreign investment may acquire up to be imposed on companies in case of marisol.altamirano@mx.ey.com
49% in capital stock of Mexican companies delayed flights.
that provide regular and non-regular
domestic air transportation, non-regular • Regulatory barriers inhibiting
international air transportation in air-taxi investments or hampering sector
mode, and specialized air transportation. development will be reduced.
The President of the Economy Commission As part of this initiative, the plenary of the
of the Chamber of Deputies pointed out Chamber of Deputies also approved other
that this reform was driven mainly due to amendments to the Civil Aviation Law
the fact that air transportation is the most and to the Federal Consumer Protection
restricted economic activity in Mexico for Law, intended to extend the rights of
attracting resources and foreign capital. airline users.
The openness of the aeronautical sector to
direct foreign investment offers some of
the following benefits:
• A greater participation of foreign
investment will improve the aeronautical
sector from an operational and
financial perspective. It offers a higher
margin of financing to strengthen air
transportation and create conditions
for the integration of alliances with
investors, and users may benefit through
cheaper tariffs and better services.
22 Corporate and Commercial Law — global updateLaw — passion for excellence
Netherlands
Mandatory digital litigation • Judges are more closely involved from
the moment a digital case file is created
introduced
and are able to provide instructions
A nationwide overhaul of the judiciary is to the parties and request additional
being implemented in the Netherlands. information prior to the hearing.
Dubbed the Quality and Innovation in the
• Audio and/or video recording will be
Legal System Program (abbreviated to KEI
used as official reports, in addition to
in Dutch), the initiative aims to simplify and
written reports.
digitalize court procedures.
Besides increasing the total capacity of the Simon Nienhuis
With KEI, digital litigation will become simon.nienhuis@hvglaw.nl
courts, it is expected that these measures
mandatory, except in the case of informal
will allow for a more tailored handling of
associations and natural persons without
complex cases.
professional legal representation.
Digital litigation under KEI had been optional
Changes to court procedures include:
in a number of district courts from late
• Courts will use a uniform “procedure 2016 and has become mandatory in those
initiation” document, eliminating the same courts from September 2017. The
current distinction between summons Supreme Court adopted KEI for civil cases
and petitions. in early 2017. Full implementation across all
• Parties upload their procedure initiations districts is expected within the coming two
and supporting documents to the to three years.
judiciary’s web portal rather than faxing
and/or delivering hard copies, as is still
common today.
• The intervention of a bailiff in order to
serve a writ of summons is no longer
mandatory.
• As a general rule, court cases will
consist of one written round and a
single hearing.
Corporate and Commercial Law — global update 23Law — passion for excellence
New Zealand
New Zealand: competition cooperation with other carriers. This
form of cooperation will improve services
law reform
supplied to owners or consignors of goods
The Commerce (Cartels and Other Matters) carried at sea.
Amendment Bill came into effect in August
The Commerce Commission also gains new
2017, making fundamental changes to
powers to deal with overseas mergers that
the cartel prohibitions in New Zealand’s
are considered likely to have the effect of
Commerce Act 1986.
lessening competition in a New Zealand
The bill extends the existing prohibition market. This includes rights to seek a court Greg France
on price fixing to cover any agreement order requiring a New Zealand corporate greg.france@nz.ey.com
containing “cartel provisions” — that is, body to cease carrying on business in
provisions with the purpose, effect, or likely New Zealand, or to dispose of shares
effect, of fixing prices, restricting output or assets following an acquisition by an
or allocating markets. This aligns the overseas person.
New Zealand legislation more closely with
The act provides a nine-month grace
the equivalent legislation in Australia.
period for existing agreements, meaning
The bill introduces new exceptions for that now is a good time for clients with
collaborative activities, vertical supply business interests in New Zealand to
agreements, and joint buying and promotion review their compliance with New Zealand
agreements. The act also introduces a competition law.
clearance regime that allows parties to
apply to the Commerce Commission to test Luke Balmforth
whether a proposed collaborative activity luke.balmforth@nz.ey.com
falls within the exceptions to the cartel
prohibitions before proceeding.
Agreements relating to international
shipping will be brought within the scope
of the Commerce Act after a two-year
transition period. However, the act
provides a targeted exception, which
will permit carriers to provide specified
international liner shipping services in
24 Corporate and Commercial Law — global updateLaw — passion for excellence
Norway
Foreign creditors with security Norwegian courts due to the exception for
bankruptcies in the Lugano Convention, cf.
in accounts receivables
article 1, section 2 (b). Furthermore, the
belonging to Norwegian court decided that the question of validity
entities must comply with also was covered by this exemption when
the Norwegian Securities Act bankruptcy proceedings were opened
in Norway. This fulfilled the necessary
to have a valid and legally
connection to Norway and judicial powers
protected security to Norwegian courts, even if the creditor
Arild Gjelsvik
The Norwegian Supreme Court has in was incorporated abroad.
arild.gjelsvik@no.ey.com
a ruling of 28 June 2017 assessed the Regarding the choice of jurisdiction, the
questions of judicial powers and the choice court concluded that the questions of
of jurisdiction regarding a bankruptcy whether the lien was valid and if it had legal
estate of a Norwegian company claiming protection were governed by Norwegian
that the foreign creditor’s lien (security) in law, because Norway is the mortgagor’s
accounts receivable i) was invalid, ii) did not domicile. In spite of that, the parties had
have legal protection and iii) that the lien agreed upon English law.
and payments made should be set aside.
The ruling took only these two questions
The creditor answered that i) the into consideration. The material questions
Norwegian courts did not have judicial on whether the bankruptcy estates claims
power, as the creditor was incorporated will succeed will likely be tried before the
in Holland, hence the claim should be Oslo District Court, nevertheless according
dismissed, and ii) since the parties had to Norwegian law.
agreed upon the English law as jurisdiction,
this law also had to apply for the questions
of validity and legal protection for the lien.
The Supreme Court discussed the
question of judicial power for Norwegian
courts based on the Lugano Convention
of 16 September 1988. It was agreed
between the parties that the question of
the lien and payments made was subject to
Corporate and Commercial Law — global update 25Law — passion for excellence
Poland
Dematerialization of shares keeping a shareholders’ register with an
entity entitled to hold securities accounts
At the beginning of 2017, the Ministry
(brokerage houses, banks, etc.).
of Justice launched a draft act on
amending the Commercial Companies The act increases operation costs for
Code, introducing fundamental changes affected companies by introducing an
regarding joint-stock companies and obligation to use a third party to maintain
limited joint-stock partnerships. The act is a shareholders’ register. Also, all entries
currently in the initial legislative phase and into a shareholders register will be made
should come into force as of 1 July 2018. by a registry keeper based on provided Jakub Organ
Its main goals shall remain unchanged. documents. It is assumed, however, that jakub.organ@pl.ey.com
the keeper will not be obliged to verify the
The act introduces a compulsory, non-
veracity of documents unless it identifies
documentary form for shares of joint-
reasonable doubts. Such solutions
stock companies and limited joint-stock
empower the registry keepers who will de
partnerships. In other words, shares
facto decide about effectiveness of share
existing in documentary form will expire
transfers, entries of new shareholders,
on 1 July 2018 and will be replaced
establishment of pledges over shares, etc.
by entries to a company shareholders’
They also will be responsible for payment
register. Currently, the non-documentary
of dividends.
form applies only to company shares that
are listed on the stock exchange. Once the final version of the act is known, Justyna Olszowy
joint-stock companies and limited joint-stock justyna.olszowy@pl.ey.com
The amendment is mainly to ensure
partnerships need to take necessary steps
that tax authorities receive information
to comply. They also need to assess risks
about shareholders and to counter
and costs connected with the new legislation
money laundering and other frauds often
and consider if a transformation into, for
associated with the holding of such shares.
example, a limited liability company, is not a
Several obligations are imposed, such solution to minimize the costs.
as asking shareholders to deposit their
share certificates, possessing or creating
a website for notification purposes,
or having a concluding agreement on
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