►ALLENDE & BREA Advises CRH in acquisition of Losa Ladrillos Olavarría SAIC ►ARIAS & MUNOZ El Salvador advises IDB in US$ 25 million loan to La Hipotecaria

►CAREY Acts Carey Acts for Scotiabank Chile in US$230 Million Credit Facility to Canadian Mining Company Golder Associates  ►CLAYTON UTZ Advises Tox Free Solutions on $85 million Wanless Acquisition

►DENTONS Europe’s London Assists Hilco with Purchase of HMV Group

►GIDE LOYRETTE NOUEL Advises MD Medical Group in Acquisition of IDK Medical Company Clinics' Network in the Region of Samara (Russia)

►HOGAN LOVELLS Successfully Defends ERISA Plans' Rights to Full Reimbursement on Behalf of Client US Airways

►KING & WOOD MALLESONS Advises Nissan Motor to Successfully Sign Agreement with Dongfeng Motor Group

►NAUTADUTILH Advises Randstad Holding in Acquisition of General Staffing Activities in Six European Jurisdictions ►RODYK Advises GDS Global Limited Lists on Catalist Bourse of SGZ-ST

►SyCipLaw Advises Coca-Cola FEMSA in Acquisition of Controlling Interest in Coca-Cola Bottlers Philippines, Inc. ►TOZZINI FREIRE Acted in the issuance of Agribusiness Credit Rights Certificate (Certificado de Direitos Creditórios do Agronegócio – "CDCA") by ETH Bio Participações S.A, a company of Odebrecht Agroindustrial S.A. group.

►WERKSMANS ATTORNEYS Comrades Winner Cleared to Run Again

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►Major Lateral Hires at BAKER BOTTS ►Two New Partner Appointments CAREY ►New Complex Litigation Group DAVIS WRIGHT ►New Partner in Shanghai GIDE LOYRETTE NOUEL ►Leading Litigation & Arbitration Practice in Hong Kong Bolstered HOGAN LOVELLS ►Former NY State Senator Expands Capital Practice McKENNA LONG & ALDRIDGE ►Competition Team Expands NAUTADUTILH ►Sports, Venues, Events, Entertainment Expert Joins SIMPSON GRIERSON ►AUSTRALIA Tradable Water Rights Excluded From Derivatives Regulation CLAYTON UTZ ►BRAZIL Supreme Court Decides Partially on Taxation on Foreign Profits TOZZINI FREIRE ►CANADA New Bill Heightens Potential for More Investment Canada Reviews of State-Owned Enterprises DENTONS CANADA LLP ►CHINA How U.S. Listed Chinese Companies Should Respond to Accounting Fraud Allegations KING & WOOD MALLESONS ►COLOMBIA New Resident Visa for Mercosur Countries BRIGARD & URRUTIA ►COSTA RICA New Antitrust Law: Mergers & Acquisitions Must be Approved by COPROCOM ARIAS & MUNOZ ►FRANCE Cœur Défense: Rights of Creditor Recognized GIDE LOYRETTE NOUEL ►INDONESIA Regulation on Bank Transparency and Publication of Bank Reports ABNR ►LUXEMBOURG .lu Domain Name Registry Introduces Domain Name Freezing Procedure NAUTADUTILH ►MEXICO System to Voluntarily Report Safety & Health Conditions at Work Centers SANTAMARINA Y STETA ►NEW ZEALAND Don’t Get Your Trademark Stuck Between a Diamond and a Hard Place SIMPSON GRIERSON ►SOUTH AFRICA Is Your Community Trademark Vulnerable to Cancellation for Non-Use? WERKSMANS ►TAIWAN Amendments to Template of Standardized Contract for Personal Online Banking LEE & LI ►THAILAND Supreme Court Judgment Offers Insight Into Concurrent Use Trademark Registration TILLEKE ►UNITED ARAB EMIRATES Abu Dhabi Establishes Abu Dhabi World Financial Market BAKER BOTTS UNITED STATES ►FCC Releases Rules Requiring Accessibility of Borrowers DAVIS WRIGHT TREMAINE ►HHS-OIG Updates Special Advisory Bulletin on Effects of Exclusion from Federal Healthcare Programs HOGAN LOVELLS ►SBA Removes Limitations on Dollar Amount for Women-Owned Small Business Set-Asides McKENNA LONG & ALDRIDGE

P R A C T O O L S T O U S E

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MEMBER NEWS

Upcoming Events— Details at www.prac.org/events

September 28 - October 1 - 54th International PRAC Conference Washington, D.C. -Hosted by Hogan Lovells

October 7 - PRAC Members Gathering @ IBA Boston

COUNTRY ALERTS

M E M B E R D E A L S M A K I N G N E W S

HOUSTON, May 9, 2013 -- In a move designed to enhance the tax and corporate practices at Baker Botts L.L.P., two ma-jor lateral hires were announced by firm management today -- international tax lawyer Don J. Lonczak and capital markets lawyer Bonnie A. Barsamian. This is the third lateral hire announced by Baker Botts this week: Jay Ryan, an electric power lawyer joined the firm May 6.

Lonczak has a broad-based, transaction-oriented practice that includes structuring and negotiating the tax aspects of domestic and international mergers and acquisitions, joint ventures and corporate spin-offs, as well as of public and private financings and derivatives financial products. He has substantial experience counseling clients on tax matters associated with cross border transactions. Barsamian’s background crosses a range of industries, including REITs, financial and specialty finance services, media and entertainment and industrial/consumer products. She represents issuers and underwriters in the full range of public and private securities offerings and other corporate finance transactions including IPOs, secondary offerings, rights offerings, convertible high-yield and other debt offerings. Ryan represents transmission developers on legal issues associated with Federal Energy Regulatory Commission (FERC) ratemaking policies, U.S. Army Corps and U.S. Department of Energy permits, National Environmental Policy Act reviews, and transmission service agreements; market participants before FERC’s Office of Enforcement; and hydroelectric operators on licensing and compliance matters.

For more information, please visit www.bakerbotts.com

Santiago, May 01, 2013 Francisco Carey and Ricardo Reveco were promoted as partners in Carey, the largest law firm in Chile.

Francisco Carey focuses his practice on IP litigation, licensing, distribution and franchise agreements, trademarks and patents prosecution.

Ricardo Reveco focuses principally on civil and commercial litigation, arbitration, administrative and environmental regulatory litigtion; bankruptcy and insolvency.

For additional information visit www.carey.cl

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M A J O R L A T E R A L H I R E S E N H A N C E T A X , C O R P O R A T E A N D E N E R G Y P R A C T I C E S A T B A K E R B O T T S L . L . P .

C A R E Y A P P O I N T S T W O N E W P A R T N E R S

APRIL 18, 2013 –Four litigators at Davis Wright Tremaine LLC, led by Henry J. Tashman, have formed a new group within the firm to handle virtually all forms of complex litigation. The firm has named Tashman chair of the Group.

Since becoming a partner in 1989, Tashman has built an impressive track record in complex civil litigation in the Los Angeles area. Not only has he consistently won cases and trials for his clients, he typically has done so by applying novel substantive and procedural arguments based on his decades of experience litigating in virtually every area of complex civil litigation.

For example, Tashman recently spearheaded the evidentiary argument—that the jury’s disbelief of a defense witness does not establish the contrary facts—that in February 2013 was a key reason for the complete reversal of a multimillion-dollar jury verdict on appeal of a high-profile whistleblower/wrongful termination suit brought by a senior executive against two major financial institutions. (This was the first time this argument was made in a California wrongful termination case.)

All cases accepted by the Group will be handled by Tashman, together with one or more members of his team—a team which includes three DWT partners whom he has mentored and who obtained these extraordinary results with him: Jennifer Brockett, Andrew Hall, and Eric Stahl.

Guided by the view that “losing is never cost-effective,” the DWT Los Angeles Complex Litigation Group will build on the outstanding track record Tashman and his team have established assisting clients with their most difficult cases.

“Our philosophy is that legal craftsmanship, meticulous preparation, attention to detail, creativity, and leadership win cases,” said Tashman. “The Group will not take on any new matters that would require a departure from these values.”

During his career at DWT, Tashman’s clients won each of his six lawsuits tried as the lead attorney. These trials lasted from two days to three months. He had similar success during his eight years in-house at a major motion picture studio, where he ran and controlled hundreds of cases throughout the U.S. in conjunction with outside counsel.

Jared Jussim, formerly EVP Intellectual Property for Sony Pictures Entertainment, and EVP Studio Legal Affairs for Columbia Pictures, Columbia Pictures TV & and Home Video, said on Tashman’s appointment:

Henry always keeps his cool, never loses his focus, always carefully and meticulously prepares his case and client, and always remains in total control. It is a pleasure to work with him, or have him work for you. There is none better.

The Group’s lawyers have litigated both at the trial and appellate levels in virtually every area of civil litigation including: non-compete agreements; antitrust; breach of fiduciary duty; business torts; contracts (actual and implied); copyright; employee raiding; involuntary dissolution of closely held corporations; right of publicity and privacy, sales and use taxes; trademarks; trade secrets; patents; will contests; worldwide ownership and transfer of intellectual property; and unfair competition.

The Group was formed to handle large, important disputes that require lawyering outside standard templates—especially disputes involving multiple legal areas or where the applicable legal theories may not be entirely clear at the outset. In an age of hyper-specialization, the Group’s broad background and creativity will allow it to identify and develop arguments that other lawyers whose practices are more narrowly focused may miss, including novel legal theories that can be applied to developments occurring as a case proceeds.

While the Group has handled cases in many different areas of complex civil litigation, Tashman observed that the Group does have a focus: winning cases.

This press release or any testimonial or endorsement contained herein does not constitute any guarantee, warranty, or prediction of any matters handled by the Group or Davis Wright Tremaine, LLP.

For additional information visit www.dwt.com

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D A V I S W R I G H T T R E M A I N E A P P O I N T S L I T I G A T O R W I T H E X T R A O R D I N A R Y T R A C K R E C O R D C H A I R O F I T S N E W L O S A N G E L E S C O M P L E X L I T I G A T I O N G R O U P

Shanghai - Gide Loyrette Nouel (GLN) is pleased to announce that Paul-Emmanuel Benachi has joined the firm's Shanghai office as partner.

Paul-Emmanuel brings with him considerable expertise developed notably during his 9 years of practicing law in China. He has extensive experience advising foreign companies investing in China, and his practice focuses predominantly on corporate law and merger and acquisition matters, cross-border transactions and restructuring. He also regularly advises clients on retail, real estate and labour law matters.

Paul-Emmanuel commented: "I am delighted to be joining GLN’s China team during its 20th anniversary year in the country. I am looking forward to working closely with the team and to help grow the firm's already excellent client base even further."

Antoine de la Gatinais, head of GLN Shanghai office commented: "Paul-Emmanuel’s decision to join GLN is a major boost to the Shanghai office, and we are excited by his arrival. His appointment reflects the continuing commitment of the firm to its strong China practice. Paul-Emmanuel’s experience of working in China and the depth and breadth of his expertise will be a major asset to the firm. We are confident that our clients will benefit considerably from his arrival."

For additional information visit www.gide.com

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G I D E L O Y R E T T E N O U E L S T R E N G T H E N S I T S C H I N A P R A C T I C E W I T H T H E A P P O I N T M E N T O F A N E W P A R T N E R I N S H A N G H A I

Full Details Member On line Registration

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HONG KONG, 9 May 2013 – Hogan Lovells' new Regional Managing Partner for Asia and the Middle East, Patrick Sherrington, has relocated to Hong Kong to bolster the firm's leading Litigation and Arbitration practice across Asia.

Patrick Sherrington was instrumental in developing the firm's Hong Kong office following its establishment, leading the Litigation and Arbitration practice in Hong Kong from 1987 until 1996. For the past decade Patrick has been the Co-Head of Hogan Lovells' global Litigation and Arbitration practice. With effect from 1 May 2013, he became the firm's Regional Managing Partner for Asia and the Middle East.

Patrick will maintain an active practice in the region joining one of the most prominent Litigation and Arbitration practices in Hong Kong, led by partners Allan Leung, Timothy Hill, Mark Lin, Damon So and Chris Dobby. Hogan Lovells now has 11 Litigation and Arbitration partners and over 25 lawyers in Asia across the firms' offices in Hong Kong, Shanghai, Singapore and Tokyo.

Patrick is admitted in Hong Kong and is a Former Vice President of the Law Society of Hong Kong. He has a High Court advocacy license in England and, as well as his appearances in Hong Kong and England, has appeared before the European Court of Justice (ECJ) in Luxembourg. A Fellow of the Chartered Institute of Arbitrators, Patrick is accredited as a mediator by both the Centre for Effective Dispute Resolution (CEDR), on whose Board he sits as a non-executive director, and the ADR group in England. Across the broader Asia-Pacific region, Patrick is a past Chairman of the Pacific Rim Advisory Council (PRAC) and a former Officer of the Inter-Pacific Bar Association.

With extensive experience of all forms of injunctions and pre-emptive remedies, much of Patrick's work has an international dimension with the result that he is particularly adept at dealing with jurisdictional issues and conflicts of laws. His practice covers complex financial disputes, contractual and joint venture claims, partnership and shareholder disputes, banking including in particular fraud and asset tracing, insurance claims, energy, product liability and professional negligence. Patrick is named as a leader in the field of commercial litigation in the Chambers and Legal 500 directories. He is also noted for his mediation skills.

Commenting on Patrick's relocation, Hong Kong Office Managing Partner and Head of the firm's Litigation and Arbitration practice in Asia, Allan Leung, said:

"Patrick is regarded as one of the heavyweights of global litigation, with an impressive track-record in Hong Kong and a strong reputation across the Asia-Pacific region. He will form an integral part of our litigation practice in Asia, his move to Hong Kong being a critical part of our plan to further develop what is widely recognised as one of the leading litigation practices in the city."

Patrick Sherrington added:

"I am delighted to be returning to Hong Kong in this new capacity. Asia is an extremely important part of our firm and we would like to see further development in the region. As far as litigation is concerned, it is an area we are looking to continue to develop, particularly in Hong Kong, and I hope to play a very active role in that development." For additional information visit www.hoganlovells.com

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H O G A N L O V E L L S B O O S T L E A D I N G L I T I G A T I O N A N D A R B I T R A T I O N P R A C T I C E I N H O N G K O N G

Craig M. Johnson Joins McKenna Long & Aldridge’s New York Practice NEW YORK (May 2, 2013) - McKenna Long & Aldridge LLP (MLA) today announced that Craig M. Johnson, former New York State Senator, has joined its national Government Affairs practice as Managing Director effective May 20, 2013. He will operate out of the firm's New York, New York and Albany, New York offices.

Johnson will work on national, federal, state and local public policy and government relations, focusing in such industries as education and charter schools, health care and insurance. Additionally, he will support MLA’s Municipal Reform and In-novation practice.

Johnson served as a member of the New York State Senate from 2007 through 2010, representing the 7th Senate District (Northwest Nassau County). When he was elected to the State Senate in a February 2007 special election, Senator John-son became the first Democrat to represent that area in more than a century.

During his tenure in the New York legislature, Johnson held such prestigious leadership roles as Chairman of the Senate Committee on Investigations and Government Operations; the Ranking Member of the Senate Environmental Conservation Committee; Member, on the Education, Health, Local Government, Insurance and Racing, Gaming and Wagering Commit-tees.

“We’re excited to have Craig join the firm,” said Gordon Giffin, former U.S. Ambassador to Canada who oversees the New York practice. “Craig brings extraordinary government, legal and public policy experience that will be invaluable to our New York and national practices.”

Johnson joins MLA from Bloomberg Law, a division of Bloomberg LP. Most recently, he was responsible for the develop-ment of integrated market strategies for key segments of the American legal market and had previously spearheaded the creation of Bloomberg Law's business development platform.

“I’m thrilled to join MLA's New York team, especially at such an exciting time of growth for the firm. MLA is an outstanding firm with amazing talent and a reputation for excellence in public policy,” said Craig Johnson. “I want to thank my friends at Bloomberg and Bloomberg Law for an incredible experience.”

Johnson’s previous positions include serving as Chairman of the Nassau County Legislature, where he was a member for nearly seven years. As chairman of the Finance Committee, Johnson was responsible for oversight and legislative imple-mentation of the County’s $2.2 Billion budget. He was part of the team that brought Nassau County’s finances back from the verge of municipal bankruptcy.

Prior to entering public service, Johnson spent 15 years in private legal practice focusing on bankruptcy and business reor-ganization.

MLA’s Government Affairs practice works with federal, state, and municipal governments and executive branch agencies and offers strategic counseling and advocacy support to expand government markets, as well as shape public policy. Our bipartisan team is comprised of professionals who have held public office, including former governors, mayors, members of Congress and an ambassador, as well as those who have previously served as staff and advisors to U.S. presidents, gover-nors, members of Congress, and mayors. For additional information visit www.mckennalong.com

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F O R M E R S T A T E S E N A T O R J O I N S C A P I T A L P R A C T I C E A T M C K E N N A L O N G & A L D R I D G E L L P

Barbara Nijs joins NautaDutilh Competition Team at NautaDutilh

Amsterdam, 1 May 2012 - Barbara Nijs has joined NautaDutilh’s competition team as counsel. She is a lawyer special-ised in European and Dutch competition law. She has extensive experience of cartels and reporting mergers and acquisi-tions to the Netherlands Competition Authority (NMa) and the European Commission. Previously, Nijs worked for Clifford Chance in Amsterdam and London, from where she was also seconded to Shell. Before that, she worked for the NMa and then the European Commission, where she was national expert in competition law. Nijs publishes regularly in professional journals and is editor of the journal Tijdschrift Mededingingsrecht in de Praktijk. She is also a regular speaker and teaches on courses such as the Advanced Training Course for Young Lawyers on Competition Law for the Dutch Practice. NautaDutilh is delighted with this new impetus for its competition team.

For additional information visit www.nautadutilh.com

Please join us in welcoming Ashton Welsh to the team to replace Gwen Keel (and Sarah Chapman). We searched and searched and have finally found the one. Ashton is our new Senior Associate and brings with him over 20 years multi-disciplinary experience in various legal, commercial and consulting roles. Ashton has returned to New Zealand after 15 years overseas and we are delighted to have him join the team.

Ashton has provided professional legal services to a wide range of clients including international sports federations, nation-al sports organisations, sports marketing agencies, television broadcasters, media companies, event promoters in various countries around the world. Aside from having a general commercial legal background, Ashton specialises in major event bid processes, host city/venue procurement, commercial rights exploitation/management and licensing matters.

Ashton's experience includes:

Acting as external legal counsel for the America's Cup Event Authority in respect of the 34th America's Cup

Managing the Volvo Ocean Race's bid process for the 12th and 12th editions of the race

Managing the International Equestrian Federation's bid process for the World Equestrian Games 2018

Managing the International Swimming Federation's bid process for the FINA World Championships

Acting as General Counsel for a Swiss sports agency responsible for the launch of a pan-European ice hockey league

Acting as Venue / TV Production Manager for various games

Heading up the legal team for a UK media company exploiting the commercial rights for the world's most successful game show, "Who Wants To Be A Millionaire"

Acting as the Sponsor & Broadcast Relations Manager in respect of the 32nd America's Cup

Heading up the legal team involved in the rebrand, launch and commercialisation of the ATP Tennis Masters Series (now known as the ATP World Tour Masters 1000)

Negotiating numerous sponsorship/marketing, media and licensing deals around the world.

For any legal matters involving sports, events, venues, commercial rights exploitation, sponsorship and broadcasting please call Ashton direct on (09) 977 5349 or email him at ashton.welsh@simpsongrierson.com. For additional information visit www.simpsongrierson.com

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N A U T A D U T I L H E X P A N D S C O M P E T I T O N T E A M

S P O R T S , V E N U E S , E V E N T S , E N T E R T A I N M E N T E X P E R T J O I N S S I M P S O N G R I E R S O N

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A R I A S & M U N O Z E L S A L V A D O R A D V I S E S I D B I N U S $ 2 5 M I L L I O N L O A N T O L A H I P O T E C A R I A

April 24, 2013 Arias & Munoz acted as local advisors of Banco La Hipotecaria, SA (Panama) in connection with the issuance of certain notes by the Issuer Trust constituted by La Hipotecaria (Holding), Inc., as settlor, and Banco La Hipotecaria, S.A. as trustee, and the establishment of a Collateral Trust to hold and administer the collateral trust assets, such collateral trust was constituted between Banco La Hipotecaria in its capacity of Issuer Trustee, and BG Trust, Inc., as collateral trustee.

The amount of the issuance was of up to US$ 45 million, which was placed through the Panama Stock Exchange. This issue was guaranteed by the mortgage loans granted by La Hipotecaria, SA de CV (a Salvadoran company) which was transferred by La Hipotecaria, SA de CV for the Collateral Trust.

Our role was to participate as Escrow Agents of the mortgage loans that would be transferred to the Guarantee Trust and preparing documents under Salvadoran law formalizing the transfer of the loan portfolio. Arias & Muñoz lawyers working on the deal include Armando Arias, Partner, Ana Mercedes López, Partner, Mario Lozano, Associate and Rafael Burgos, Paralegal. For additional information visit www.ariaslaw.com

Carey acted as local counsel to Scotiabank Chile in a US$230 million credit facility to Canadian mining company Golder Associates and its Chilean unit, granted by Scotiabank Chile and a multinational syndicate of banks. The transaction was executed under the laws of the Canadian province of Ontario.

Carey advised Scotiabank Chile through a team led by partner Felipe Moro and associates Fernando Noriega and Agustín Fracchia.

For additional information visit www.carey.cl

A L L E N D E & B R E A A D V I S E S C R H I N A C Q U I S I T I O N O F L O S L A D R O I L L O S O L A V A R R I O A S A I C

May, 2013 - Allende & Brea has advised a local subsidiary of CRH, an international leader in construction materials, in the acquisition of Losa Ladrillos Olavarría SAIC, a company of the Techint Group engaged in the manufacture of construction materials with a strong position in the market of roofs and rustic flooring.

The Allende & Brea team included Partners Santiago Sturla, Valeriano Guevara Lynch, Julián Peña; and Associates Marcos Patron Costas and Federico Rossi Rodríguez.

For additional information visit www.allendebrea.com.ar

Perth, 30 April 2013: Clayton Utz is acting as legal counsel to ASX-listed integrated waste management and industrial service company Tox Free Solutions Ltd ("Tox Free") in respect of its acquisition of the assets and business of Wanless Enviro Services Pty Ltd, Smart Skip Pty Ltd and Jones Enviro Services Pty Ltd, and certain of the assets of Wanless Enviro Asset Management Pty Ltd.

The acquisition, which was announced today, is for a total cash consideration of $85 million.

Clayton Utz is also advising Tox Free in relation to its $43 million institutional placement and share purchase plan, to partly fund the acquisition.

Clayton Utz Perth Corporate partner Mark Paganin is leading the firm's team, which includes partner Matthew Johnson and lawyers Tracy Chew and Rebekah Winsor.

In 2012, Clayton Utz acted for Tox Free on its acquisition of the operations of international waste management company DoloMatrix International Ltd, for a total cash consideration of $58 million. For additional information visit www.claytonutz.com

C A R E Y A C T S F O R S C O T I A B A N K C H I L E I N U S $ 2 3 0 M I L L I O N C R E D I T F A C I L I T Y T O C A N A D I A N M I N I N G C O M P A N Y G O L D E R A S S O C I A T E S

C L A Y T O N U T Z A D V I S E S T O X F R E E S O L U T I O N S O N $ 8 5 M I L L I O N W A N L E S S A C Q U I S I T I O N

April 5, 2013 Dentons Europe’s London office has completed the purchase of the business of the HMV Group by its client, Hilco. Hilco is a retail structuring specialist and HMV is the largest British entertainment company and last surviving national music retailer. The deal is estimated to save 2,500 jobs across the UK and involves at least 140 stores.

HMV went into administration in January 2013 after the company’s suppliers declined to provide financing to pay off bank debts. HMV had been struggling as a result of competition from online rivals, supermarkets and illegal downloads.

Hilco bought the secured syndicated debt in HMV Group in January 2013 (with the assistance of the Dentons Europe London office) after the company had fallen into administration.

Hilco, which bought HMV Canada in 2011 in a deal on which the Dentons Europe London office also advised, is hoping to replicate its Canadian success in the UK.

The Dentons Europe team was led by Corporate Partner, Jonathan Polin. He was supported by Banking & Finance Consult-ant, Alison Gaines; IPT&C Partner, Tatiana Kruse; Employment Partner, Michael Bronstein; Real Estate Associate, Donna Attar; Banking & Finance Associate, Adam Jones; Corporate Associate, Christopher Winn; and Corporate Trainee, Jane Altschuler. Real Estate Associate, Richard Benson; RRI Trainee, Kathrine Chase; and RRI Senior Associate, Helen Anderson also provided support.

For additional information visit www.dentons.com

21 March 2013 - Gide Loyrette Nouel Moscow acted as legal advisor to MD Medical Group, the group of companies oper-ating the Mother and Child chain of clinics, the leading provider of healthcare services in Russia, in the acquisition of the IDK Medical Company network of women’s and children’s health clinics in the Russian region of Samara.

MD Medical Group has a leading position in high-quality women’s health and pediatrics on the Russian private healthcare service market. The company manages two hospitals and eight outpatient clinics in Moscow, St. Petersburg, Ufa and Perm. Last year MD Medical Group successfully completed an IPO, which has become the first Russian IPO in the industry.

The GLN Moscow team led by partner Boris Arkhipov, Head of M&A / Corporate, and including Alexander Akhmetbekov, a senior lawyer, assisted the client in structuring the transaction and drafting and negotiating the transaction documents.

Boris Arkhipov, partner in the Moscow office and head of the team of lawyers who acted on this project, said: "Development of high-quality healthcare services is extremely important in Russia, especially in Russian regions, and we are delighted to assist MD Medical group in its major acquisition.

For additional information visit www.gide.com

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D E N T O N S E U R O P E A S S I S T S H I L C O W I T H P U R C H A S E O F H M V G R O U P

G I D E L O Y R E T T E N O U E L A D V I S E S M D M E D I C A L G R O U P I N A C Q U I S I T I O N O F I D K M E D I C A L C O M P A N Y C L I N I C S ’ N E T W O R K I N T H E R E G I O N O F S A M A R A ( R U S S I A )

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H O G A N L O V E L L S S U C C E S S F U L L Y D E F E N D S E R I S A P L A N S ’ R I G H T S T O F U L L R E I M B U R S E M E N T O N B E H A L F O F C L I E N T U S A I R W A Y S

WASHINGTON D.C., 17 April 2013 – Hogan Lovells secured a victory yesterday in the Supreme Court on behalf of its client, US Airways, in US Airways, Inc. v. McCutchen. The decision provides clear guidance to employer sponsors that reimbursement provisions will be enforced by the courts as written. Neal Katyal, former Acting Solicitor General of the United States, argued the case (his 17th oral argument at the Court, with 15 of those arguments taking place in the last four years).

All nine justices agreed with the argument made by Hogan Lovells that an employee who receives medical payments for an injury pursuant to an employer-sponsored health-benefits plan may not avoid the reimbursement requirements of that plan by arguing that such reimbursement is “inequitable.”

“We are very pleased with the decision,” said Katyal, Co-Director of Hogan Lovells’ Appellate practice. “It is a victory not only for US Airways, but for all ERISA employee benefit plans, because it prevents individual judges from rewriting plan terms according to their own notions of equity.”

The case arose from a car accident in which James McCutchen, a US Airways employee and health-benefits plan participant, was injured. US Airways paid McCutchen’s medical expenses in full, and according to the plan terms. But when McCutchen later recovered money in settlement with third parties for the accident, he did not comply with the terms of the plan—he refused to reimburse US Airways out of the third-party recovery. US Airways pursued relief in federal court under Section 502(a)(3) of ERISA, seeking an “equitable lien by agreement”—an equitable remedy that enforces the terms of an agreement between two parties.

The Supreme Court decision reverses a ruling of the Third Circuit Court and holds that “enforcing the lien” under Section 502(a)(3) “means holding the parties to their mutual promises” and “declining to apply rules—even if they would be ‘equitable’ in a contract’s absence—at odds with the parties’ expressed commitments.” This means that employer sponsors of health-benefits plans may now rely on courts to enforce the plain language of those plans, which greatly increases predictability for plan sponsors and participants alike,

Neal Katyal argued the case before the Court. He was joined on the briefs by a team of Hogan Lovells lawyers from the Washington, D.C. office, including Appellate practice Co-Director Cate Stetson, and associates Dominic Perella, Mary Helen Wimberly, and Sean Marotta.

For more information, see www.hoganlovells.com

N A U T A D U T I L H A D V I S E S R A N D S T A D H O L D I N G I N A C Q U I S I T I O N O F G E N E R A L S T A F F I N G A C T I V I T I E S I N S I X E U R O P E A N J U R I S D I C T I O N S

10 April 2013 - NautaDutilh assisted Randstad Holding as lead counsel in its acquisition of the general staffing activities of USG People in Spain, Italy, Switzerland, Austria, Luxembourg and Poland. In our position as lead counsel we instructed law firms in each of the afore-mentioned jurisdictions. We are currently working towards the satisfaction of various conditions precedent in particular obtaining the clearance of the European Commission in connection with this transaction.

The acquired activities will generate up to EUR 435 million in revenue and are expected to benefit both clients and em-ployees of Randstad on the said jurisdictions.

The NautaDutilh team consisted of Rogier Stevens, Helmer Klingenberg and Olaf Baks (all corporate), Barbara Nijs, Geneviève Borremans, Thomas Verstraeten and Vincent Wellens (all competition), Chris Warner and Pedro Paraguay (both tax), Diederik Vriesendorp (treasury) and Greet Wilkenhuysen and Louisa Silcox (all Luxembourg). The NautaDutilh team was headed by Leo Groothuis and Gerard Carrière who coordinated matters. For additional information visit www.nautadutilh.com

Thank you to all PRAC @ INTA Delegates who attended our event in Dallas - a great turnout! We look forward to seeing you at next year’s event - watch for updates and mark your calendars. PRAC @ INTA Hong Kong 2014 Saturday May 10 Details at www.prac.org/events

K I N G & W O O D M A L L E S O N S A D V I S E S N I S S A N M O T O R T O S U C C E S S F U L L Y S I G N A G R E E M E N T W I T H D O N G F E N T M O T O R F O R I T S C V B U S I N E S S

Page 11 P R A C M E M B E R N E W S

26 January 2013—King & Wood Mallesons represented Nissan Motor Co., Ltd. ("Nissan") and Nissan (China) Investment Co., Ltd. to successfully sign the Framework Agreement with Dongfeng Motor Group Co., Ltd. ("DFG") and Dongfeng Motor Co., Ltd. ("DFL"), for DFL’s medium-duty commercial vehicle business and the heavy-duty commercial vehicle business. The total investment is RMB 11.71 billion which includes the restructure and transfer of equity interest, assets, contracts, debt and personnel. The relevant Equity Transfer Agreements and Assets Transfer Agreement were also signed on the same day.

DFL is a joint venture established by Nissan and DFG in 2003 with each holding 50% equity interest. It is the largest sino-foreign joint venture in the auto industry in China. It has approximately 70,000 employees and has comprehensive products covering commercial vehicles, light-duty commercial vehicles, passenger vehicles, parts and components to motor tools with registered capital of RMB 16.7 billion. DFL achieved sales of 1.36 million vehicles in 2012. Through this transaction, DFL will focus on its business development of the light-duty vehicles and passenger vehicles.

DFG is a leading auto manufacturer of medium and heavy trucks in both of the world’s and the Chinese market and is the largest listing motor company in China. The majority of the business and assets which bought by DFG, is expected to inject into the commercial vehicle joint venture company between DFG and AB Volvo and its strategic alliance agreement was also signed on the same day in Beijing.

As a legal counsel of Nissan, this one and a half year project was led by Xu Ping and Liu Cheng. King & Wood Mallesons was fully engaged in all aspects of this transaction including transaction structure design, negotiation and execution of transaction documents. According to Ms. Xu Ping, the lead partner in the Beijing office, “The transaction involves complex assets and business restructuring. The deal structure is complicated which requires transfer of equity interest, assets, contracts and personnel. The King & Wood Mallesons team is honored to be a part of this deal and to urge the restructuring completion the.” This successfully signed agreement is an important milestone for the project. Since then, the King & Wood Mallesons team will continue to participate in the transaction to procure a speedy and successful closing.

King & Wood Mallesons, with the wealth of experience in the auto industry and a thorough understanding of the auto supervision policy in China, has represented many prestigious auto companies both foreign and domestic in various of merger and acquisition or joint venture transactions. For additional information visit www.kingandwood.com

Rodyk acted for GDS Global Limited in its listing on the Catalist bourse of the SGX-ST. GDS Global Limited is a leading specialist provider of commercial and industrial door and shutter solutions in Singapore and the South East Asia region.

Corporate partner Chan Wan Hong led, and was supported by associates Low Zhi Ni, Nigel Chia and Goh Chaoqin. For additional information visit www.rodyk.com

R O D Y K A D V I S E S G D S G L O B A L L I M I T E D L I S T I N G O N C A T A L Y S T B O U R S E O F S G Z - S T

S Y C I P L A W A D V I S E S C O C A - C O L A F E M S A I N I T S A C Q U I S I T I O N O F C O N T R O L L I N G I N T E R E S T I N C O C A - C O L A B O T T L E R S P H I L I P P I N E S , I N C .

Page 12 P R A C M E M B E R N E W S

SyCipLaw advises Coca-Cola FEMSA in its acquisition of controlling interest in Coca-Cola Bottlers Philippines, Inc.

April 1, 2013 SyCipLaw acted as Philippine counsel to Coca-Cola FEMSA, S.A.B. de C.V. (“KOF”) in its acquisition of 51% of Coca-Cola Bottlers Philippines, Inc. (“CCBPI”) from The Coca-Cola Company for US$688.5 million in cash.

The transaction, which closed on January 25, 2013, also provides Coca-Cola with an option to acquire the remaining 49% of CCBPI within seven years. The acquisition provides KOF with a major foothold in the Philippine beverage industry and marks its first venture in Asia.

Mexico-based KOF is currently the largest franchise bottler of Coca-Cola products in the world. It produced and distributes Coca-Cola products in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil and Argentina.

The SyCipLaw team was led by partners Imelda A. Manguiat and Carina C. Laforteza. Other members include partners Lozano A. Tan, Carlos Roberto Z. Lopez and Maria Teresa D. Mercado-Ferrer, senior associates Russel L. Rodriguez and Jan Celine C. Abaño-Ranada, and associates May Ann R. Rosales, Leah C. Abutan, Yvette T. Yaneza, Katrina May O. Sy, Rosalyn S. Co and Benjamin C. Yan.

The firm continues to advise KOF and CCBPI on certain corporate, securities and tax matters and in developing its labor and personnel policies post-acquisition. For additional information visit www.syciplaw.com

TozziniFreire acted in the issuance of Agribusiness Credit Rights Certificate (Certificado de Direitos Creditórios do Agronegócio – "CDCA") by ETH Bio Participações S.A, a company of Odebrecht Agroindustrial S.A. group.

CDCA was acquired by Banco Itaú BBA S.A. TozziniFreire was responsible for assisting BNY Mellon Serviços Financeiros Distribuidora de Títulos e Valores Mobiliários S.A, that acted as the account, payment, register and guarantee agent and the custodian of CDCA.

Approximately US$ 117 million were invested in the deal. Alexei Bonamin, partner in TozziniFreire’s Capital Markets and Banking & Finance practice groups, was in charge of the transaction with the assistance of associate Debora Cristina Seripierri. For additional information visit www.tozzinifreire.com.br

T O Z Z I N I F R E I R E A C T E D I N I S S U A N C E O F A G R I B U S I N E S S C R E D I T R I G H T S C E R T I F I C A T E B Y E T H B I O P A R T I C I P A C O E S S A .

W E R K S M A N S C O M R A D E S W I N N E R C L E A R E D T O R U N A G A I N

Page 13 P R A C M E M B E R N E W S

May 01, 2013 - A disciplinary committee of the South African Institute for Drug Free Sports (SAIDS) has found 2012 Comrades winner Ludwick Mamabolo not guilty of doping charges, clearing the way for him to run competitively again.

He retains his title as winner of the Comrades last year and will defend his title in June 2013.

Commenting after hearing the news, Mamabolo said: “I am delighted that I now have my good name and livelihood back. I rely on running to support my family. I do not have enough words to thank the team at Werksmans Attorneys who assisted me from the start.”

Mamabolo was advised that he had tested positive for methylhexaneamine (MHA) after winning his gold medal at the 2012 Comrades. The athlete was placed under provisional suspension while disciplinary hearings were underway.

This week the Committee appointed by the South African Institute for Drug Free Sport declared the test results void and found Mr Mamabolo not guilty of all the charges against him.

They said in the ruling: “The departures from the international standards and/or other anti-doping rules that took place at Comrades 2012 could reasonably have caused the adverse analytical finding in respect of Mr Mamabolo.”

David Hertz, Director at Werksmans Attorneys that assisted the athlete in the matter on a pro bono basis said, “We are very pleased with the ruling. An innocent athlete has his livelihood back and is free to compete again.

“There were far too many irregularities in the testing process and we are certain this is the right result for him and for sport.”

Mamabolo brought an application to the SAIDS disciplinary committee in early February this year and successfully obtained a temporary lifting of his suspension which allowed him to participate until sentence was handed down.

He subsequently won a half-marathon in Limpopo in February, came second in a 21km race held in Mokopane (Potgietersrus) soon thereafter and finished among the top athletes in this year’s Two Oceans ultra-marathon on Easter Sunday.

Mamabolo now retains all titles won in 2013.

For additional information visit www.werksmans.co.za

Page 14 P R A C M E M B E R N E W S

H O G A N L O V E L L S T O H O S T P R A C 5 4 T H I N T E R N A T I O N A L C O N F E R E N C E I N W A S H I N G T O N , D . C .

Full Details Member On line Registration

www.prac.org/events.php

U P C O M I N G P R A C E V E N T S

PRAC Washington, D.C. Conference 2013 September 28 - October 1

Hosted by HoganLovells

PRAC @ IBA Boston October 7 2013 PRAC Members Gathering

PRAC @ PDAC Toronto

March 4, 2014

PRAC 55th International Conference Taipei 2014

Hosted by Lee and Li April 26-29

PRAC @ INTA Hong Kong 2014 May 10

PRAC 56th International Conference

Santiago 2014 Hosted by Carey/ November 8-11

Visit www.prac.org/events.php for details and to register for these and other events

PRAC e-Bulletin is published monthly.

Member Firms are encouraged to contribute

articles for future consideration.

Send to editor@prac.org.

Page 15 P R A C M E M B E R N E W S

www.prac.org

.

The Pacific Rim Advisory Council is an international law firm association with a unique strategic alliance within the global legal community providing for the exchange of professional information among its 32 top tier independent member law firms.

Since 1984, Pacific Rim Advisory Council (PRAC) member firms have provided their respective clients with the resources of our organization and their individual unparalleled expertise on the legal and business issues facing not only Asia but the broader Pacific Rim region.

With over 12,000 lawyers practicing in key business centers around the world, including Latin America, Middle East, Europe, Asia and North America, these prominent member firms provide independent legal representation and local market knowledge.

10 May 2013

Tradeable water rights excluded from "derivatives" regulationTradeable water rights and arrangements in relation to tradeable water rights will be excluded from the definition of a "derivative" in Chapter 7 of the Corporations Act 2001 (Cth), if the proposal in the exposure draft Corporations Amendment (Water Trading Exemptions) Regulation 2013 is accepted, giving greater certainty to the regulatory regime applicable to trading water rights.

A "derivative" is an arrangement under which a party to the arrangement may be required to provide consideration at a future time, and the amount of the consideration may change by reference to something else.

The effect of a water right being a derivative is that it would be regulated under the Corporations Act as a "financial product", and regulation of services (such as carrying on a business of advising, broking, dealing, making a market or operating a market) provided in relation to the water rights as "financial services".

The tradeable water rights which the amendments will cover include:

• water access licences: a right or permission granted by the Crown to withdraw a unit of water which isavailable in circumstances where the withdrawal or harvesting of the water would otherwise be prohibited;and

• water allocations: a volume of water credited to a water access licence allocation account for a particularyear.

Currently, careful analysis is needed to determine if the trading of a water allocation or the water licence to which it relates is a derivative.

Excluding tradeable water rights, and arrangements in relation to them, from the definition of a "derivative" will remove any uncertainty about whether a water right is subject to regulation under the Corporations Act.

Treasury has asked for submissions in relation to the proposed amendments to be lodged by Friday, 7 June 2103.

In addition to the issue as to whether a tradeable water right may be a derivative, it is usually also necessary to consider whether a tradeable water right constitutes an interest in a "managed investment scheme", particularly where the water allocations are managed by a third party for the benefit of the holder of the tradeable water right.

Clayton Utz will be making a submission to Treasury that the proposed amendment go further, to exclude tradeable water rights from the regulation of managed investment schemes. This would require the making of a further regulation providing, for the purposes of paragraph (n) of the definition of "managed investment scheme" in section 9 of the Corporations Act, that a scheme is not a "managed investment scheme" by reason of paragraph (a) of its definition in section 9 of the Corporations Act where the rights acquired to benefits of the scheme are "tradeable water rights" or arrangements in relation to them.

If you would like help in drafting a submission, or more information on water rights and derivatives, please contact a member of our team.

You might also be interested in...

• Australian OTC derivatives reforms passed - with some changes to meet electricity market concerns

Page 1 of 2

• APRA's welcome transitional relief to Basel III counterparty credit risk measures implementation• Regulators support industry-led move to OTC central clearing for now, and broad mandatory reporting

• Derivatives Developments - A New World Order

DisclaimerClayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states or territories.

Page 2 of 2

BRAZILIAN SUPREME COURT ("STF") DECIDES PARTIALLY ABOUT TAXATION ON FOREIGN PROFITS

After many years of discussions, the STF concluded a leading case (docket number 2588) dealing with whether automatic taxation should occur in Brazil in relation to profits obtained by Brazilian companies through controlled or related companies incorporated outside Brazil (“foreign profits”).

The STF decided that, with regards to foreign affiliates (i.e., foreign companies in which a Brazilian company holds a relevant, but not controlling stake), automatic taxation on foreign profits is only constitutional when the affiliate is located in a tax haven jurisdiction. Otherwise, the Brazilian company can only be taxed upon the actual distribution of dividends by its affiliate.

However, the issue is still not settled with regards to foreign companies CONTROLLED by a Brazilian company. On a separate case (docket number RE 611.586), the STF decided that, since the controlled company was located in a tax haven jurisdiction, automatic taxation on foreign profits could occur in Brazil. And on another case (docket RE 541.090), the STF decided that automatic taxation on foreign profits was constitutional in relation to a controlled company. But this issue will be revisited by the STF on a future case under the system of “general repercussion”, meaning that the decision on that case will be binding on all companies for future cases.

Also, there is still no a definition about the effects of double taxation treaties over the automatic taxation of profits.

With the position adopted by the STF, Brazil starts to align its income taxation on related companies with that of other countries, in which automatic taxation only applies when the invested company is located in a tax haven jurisdiction, under the so-called “Controlled Foreign Corporation” regime.

May 10, 2013

Last week the Canadian Government introduced amendments to the Investment Canada Act (ICA) to

implement its revised policy towards state-owned enterprises (SOEs) which it announced in December

last year. At that time, while it approved the acquisition by Chinese SOE, CNOOC, of Canadian oil and

gas company, Nexen, the Government announced its intention to prohibit acquisitions of control of

Canadian oil sands businesses by SOEs except on an exceptional basis.  It also stated that joint

ventures and minority investments were welcome. In addition, the government indicated it would closely

monitor SOE acquisitions in other sectors of the economy and would distinguish between SOE and

non-SOE investments when setting the ICA review threshold. (See Focus on Foreign Investment

Review, December 2012)

As expected, the proposed amendments would retain for SOEs the current review threshold which is

based on the target Canadian business’ book value of assets ($344 million in 2013) while non-SOEs would

be subject to a higher review threshold based on enterprise value (to be set at $600 million when

implemented, rising to $800,000 in two years and then to $1 billion four years later). The result is that,

relative to non-SOE investments, SOE investments will be more often subject to Ministerial approval on

the basis of the "net benefit to Canada" test, enabling closer scrutiny of SOE investments in Canada.

What may be surprising about the proposed amendments is that they give the Government very broad

latitude to ignore the general ICA rules in making a number of critical determinations that affect whether a

proposed transaction is subject to review under the ICA. If reviewable, a transaction will be subject to a

time-consuming process, potential delays to closing (and in rare cases, rejection) and almost always

significant commitments to the Canadian Government on a broad range of issues. The uncertainty

generated by the Government’s discretion under the amendments is exacerbated by the potentially very

broad scope of the term "SOE".

Potential for Increased Government Scrutiny ofSOE InvestmentsThe proposed amendments could significantly increase the number of SOE investments requiring

Ministerial approval by permitting the responsible Minister (the Minister of Industry except where the

target industry is cultural) to avoid the general ICA rules and presumptions:

defining when an acquisition of control occurs. The ICA general rules establish presumptions regarding

when control is acquired. For example, they state that the acquisition of less than one-third of the voting

shares of a corporation or of less than a majority of the economic interests of a partnership is deemed

not to be an acquisition of control. If there is no acquisition of control, there is no requirement for a "net

benefit" review under the ICA. For an SOE, these rules need not be applied if the Minister concludes

based on "any information and evidence" made available to him that the SOE will acquire control in fact.

determining whether one entity is controlled by another. The ICA general rules set out rules and

presumptions regarding when control exists. However, the proposed amendment would permit the Minister

to go beyond those rules in assessing whether an SOE controls another entity in fact.

whether an investor is Canadian or not. The ICA establishes rules to determine the Canadian status of an

investor. Pursuant to the proposed amendment, an entity that would otherwise be considered Canadian-

controlled may be judged to be an SOE if the Minister concludes that it is controlled in fact by an SOE.

Sandy WalkerPartner, TorontoD +1 416 863 4517

sandy.walker@dentons.com

Key contact

New Bill Heightens Potential for MoreInvestment Canada Reviews of SOEAcquisitions

All of the above decisions may be retroactive to April 29, 2013.

As noted above, the repercussions of bypassing the normal presumptions and rules on these points

could be serious for an SOE investor. A decision by the Minister that the investor is controlled in fact,

directly or indirectly, by a foreign state means that the transaction will be subject to a lower review

threshold. In addition, a transaction that would not otherwise be subject to the ICA "net benefit" review

and notification regime - such as a minority investment, including a 50% interest in a partnership or joint

venture - because it did not constitute an acquisition of control, could be reviewed because of the

Government’s determination that control in fact was acquired. As an assessment of "control in fact" can

be relatively subjective and depend on a detailed analysis of the terms of the investment, it may be

unclear, especially early on the deal process, whether the SOE investment is an acquisition of control in

fact under the ICA and therefore potentially reviewable.

Uncertainty regarding the Scope of an SOEThe uncertainty described above may be exacerbated by the vague definition of an "SOE". As

contemplated in the Government’s statements on its new SOE policy in December last year, the

definition of an SOE now includes not only the government of a foreign state or agency of such

government and an entity that is controlled, directly or indirectly, by such a government, but also an

entity that is influenced, directly or indirectly, by a foreign government. There is no guidance as to what

constitutes "influence" which raises the spectre of foreign corporations being deemed to be SOEs

because of the presence of foreign government representation on boards or because of senior

management links to government officials (e.g., Huawei whose founder was a senior officer in China’s

People’s Liberation Army) or to political parties (e.g., would the presence of party officials in key

positions in major Chinese corporations make them "influenced" by a foreign government?).

Significantly, the definition of an SOE has also been expanded to capture individuals acting under the

direction of a foreign government or under the direct or indirect influence of a foreign government.

As a result of the proposed amendments, private companies or individuals could be subject, at the

Government’s discretion, to the lower SOE review threshold and to the potentially more stringent review

process applicable to an SOE .

Longer Timelines for National SecurityFinally, the proposed amendments would extend timelines for the national security review of

transactions. There are numerous prescribed time periods in the review process and these are to be

lengthened from five days to 30 days or as agreed to between the foreign investor and the Government.

ConclusionThe Government’s message in the proposed ICA amendments is clear but also muddied. What is clear is

that the Government will be watching out for SOE investments and will scrutinize such transactions more

closely. What is muddied is the reviewability of investments by SOE investors (especially minority

investments) as well as the potential application of the lower SOE review threshold to investments by

individuals and private companies that are not owned, directly or indirectly, by foreign governments, but

somehow subject to foreign government influence. While investors may request a Ministerial opinion to

clarify whether a given investment is subject to review, there is no requirement under the ICA for the

Minister to provide such an opinion, unless the request relates to a determination about the Canadian

status of the investor (and even this exception is to be limited under the proposed amendments to

transactions in which the target Canadian business is in a cultural industry).

In short, as a result of the proposed amendments, SOEs and foreign investors that might possibly be

viewed as SOEs may, depending on the type of investment planned, face a higher risk that their

investments will require Ministerial approval in order to close compared to non-SOEs investing in Canada.

If you would like further information, please contact Sandy Walker at Dentons Canada LLP.

© 2013 Dentons. All rights reserved.

1  

How U.S. Listed Chinese Companies Should Respond to Accounting Fraud Allegations By Harry Liu * China Bulletin April 2013 In the past few years, a reverse merger has been a popular way for China-based companies to

access U.S. capital markets. Since the end of 2010, a number of companies that have engaged in

such mergers were accused of committing accounting fraud, resulting in a suspension in trading

or even delisting. They have also been under investigation by U.S. authorities for violating

securities laws or found themselves targeted by class action lawsuits represented by U.S. plaintiffs’

lawyers. Most of these besieged companies were found to be lacking robust corporate

governance and internal controls. The purpose of this article is to introduce our experience in

conducting internal investigations as an effective response to head off claims of improper conduct.

The author will outline several commonly-seen irregularities revealed during the course of these

investigations, highlighting the need of U.S.-listed Chinese companies to enhance their compliance

mechanisms.

I. Audit Committee Initiating Internal Investigations

When a company is facing U.S. government inquiries, or brought into class action lawsuits, or if such

a possibility is looming ahead, the company should investigate as soon as practical to determine

whether the claims and allegations are true. Launching an internal investigation demonstrates to the

outside world that the company is managing the crisis in a responsible and proactive way. If the

outcome of a properly conducted investigation is positive, it affords the company the best evidence

to convince regulators to suspend inquiries, and seek relisting.

Internal investigations are initiated typically as a result of the following events:

a. Short-selling investment research firms usually look for and identify discrepancies between the company’s U.S. disclosure and its corporate annual filings maintained at Chinese Administration of Industry and Commence (AIC), and then issue research reports based on these findings, accusing the company of fraudulent accounting practices;

b. The company’s external auditor has suspicion of accounting fraud during its

annual auditing, but cannot obtain satisfactory explanations by the company, or is even obstructed from continuing audit work. The auditor resigns, resulting in delayed submission of the company’s audited quarterly or annual filings, in turn triggering a halt in trading or delisting;

c. The company’s business competitors or disgruntled employees make anonymous

complaints to the Securities Enforcement Commission (SEC) and the stock exchange where the company’s shares are bought and sold;

d. Occasionally, the SEC may initiate investigations without first being tipped off. For instance, in July of 2012, SEC started its probe into New Oriental Education’s VIE structure, and the day after the SEC’s announcement of its investigation, U.S.-based short-selling firm Muddy Water issued its research report questioning New Oriental Education’s accounting practices.

Most U.S.-listed Chinese companies are accused of fictitious revenue records, fabricating cash balance and account receivables, undisclosed related party transactions, and unlawful lending and borrowing practices.

2  

For listed companies, an internal investigation is normally launched by an audit committee created by the board of directors. The audit committee first hires a U.S. law firm to lead the investigation. Because the majority of the investigation work is expected to be carried out in China, the U.S. law firm would engage a Chinese law firm, and typically, a reputable international accounting firm’s China-based affiliate. Because members of the audit committee are mostly comprised of independent directors, and due to the high level of professional ethics expected for legal counsels’ accountants, final findings made by them have a high likelihood of being accepted by U.S. authorities. Their findings become the factual foundation to convince the government to drop charges.

A successful internal investigation is critical for a troubled company to maintain its listing status. To minimize negative impacts brought about by the internal investigation, the audit committee should first formulate a well thought-out plan. The goal is to carry out a thorough probe while at the same time avoiding intrusive obstruction over the company’s daily business operations. The remainder of this article will briefly discuss an internal investigation’s general procedure, and some tips.

II. Walking Through the Internal Investigations Process

A. Initiating Internal Investigations

After forming an investigation team comprising an army of counsels and accountants, the first task

is identifying issues. They are chiefly based on the allegations and suspicions raised by the

short-selling firms, government authorities, public media, or former auditors. With these issues in

mind, the investigation team formulates a road map.

The whole process typically takes four months or even more to conclude. Since the stock exchange

staff members would not suspend their delisting proceedings simply because of the company’s

initiation of an internal probe, the investigation team must prioritize its work and focus on the

most serious allegations, such as the veracity of the company’s trading records and balance

sheet. It is well advised to aim at delivering an interim report within the first two months of the

internal investigation, with an attempt to produce preliminary yet substantiated findings on

those most damaging accusations. If the investigation team can successfully demonstrate that it

has been working diligently and vigorously, but still could not unearth any serious accounting

fraud, the stock exchange staff members may be persuaded to suspend their delisting

proceedings awaiting the team’s final report.

The investigation road map should also take into account the pace of the SEC inquiries. If the SEC

has issued subpoenas ordering the company to deliver commercial and accounting records for its

review, the internal investigation team is in a better position than the company’s management to

collect documentation required for submission.

B. Document Review

The first step of any internal investigation is to collect the company’s documents including

electronic files saved on computers used by executives and key employees, including the

president, general manager, finance director, production manager, sales manager, and

administrative director, etc. Electronic document retrieval is generally performed by the

accountants as they possess the electronic discovery software to accomplish this job. If one of

the key issues to be investigated is related to verification of sales records, the accountants will

also retrieve data from computers used by employees from the sales and finance departments.

The degree of cooperation demonstrated by the company reflects whether the company is trying

to cover up any evidence of accounting fraud.

The amount of data collected from dozens of computer hard drives is quite significant, typically

amounting to several million copies of electronic files and e-mails. Junior members of the

investigation team would spend a week or so performing preliminary document review, with

3  

the aim of eliminating irrelevant files. Documents potentially relevant to the issues are

tagged and categorized into different “issue folders”. The contents of key documents are

also summarized. Even after the initial screening, the number of files left would still be in the

range of 10,000. If the company under investigation is a production enterprise, most of the

documents collected would be related to raw material purchase, product manufacturing and

sales records. It is the accountants’ job to pull out the company’s physical books and records,

and make verification against the original sales and revenue data saved on the computers.

While the accountants are retrieving and screening electronic files, the lawyers’ job is to request

and review corporate files such as contracts and transactional documentation. It is very unlikely

that the company could hand over all the requested document in one batch, we recommend using

excel forms to track which documents have been provided, and which are still outstanding. This

also makes it easier to add new document requests to the list as the investigation reveals more

sub-issues to be followed up.

C. Interviews with Employees and Third Parties

At the same time the document reviewing process is underway, the investigation team should

conduct a first round of interviews with the company’s senior executives. It is not recommended

to directly delve into the issues. The purpose is rather to understand the corporate structure,

management hierarchy, manufacturing process, transaction patterns, sources of financing, so that

the investigation team can understand the documents they are reviewing.

Following the completion of document review and the first round of employee interviews, the

investigation enters its key stage – external interviews with the company’s financiers, guarantors,

related parties, suppliers and customers. Taking manufacturing companies as an example, the

focal point of US short-sellers’ accusations is on the company’s sales revenue disclosures. To

verify the veracity of sales transaction records, the investigation team must conduct interviews

with the company’s customers, asking questions about the previous transactions. Aside from

interviewing these customer companies’ supply managers, the accountants should also

conduct sampling by reviewing selected accounting records kept by the customers, as a way to

confirm whether they match with the records obtained from the company. Pertinent records

normally include transportation vouchers, inventory entries, invoices, payment receipts, etc.

During this process, the investigation team should try to avoid causing too much disruption

to the company’s business relations with its customers and bankers. If the questions asked are

considered improper or even offensive, it would not only impede the effectiveness of the

investigation process, it may also end up jeopardizing the company’s source of revenues. Some

U.S. attorneys are skeptical about the independence of external interviews arranged by the

company’s management. In our experience, however, appearing at a third party’s business

premises without prior announcement actually increases the chance of obtaining either

valueless or untruthful information. The interviewees are not mentally prepared to answer

intrusive questions about their business and accounting practices. As many domestic companies

more or less have accounting irregularities, when encountered with unscheduled meetings,

some interviewees’ first defensive mechanism is to hide or even to lie about the business

transactions between them and the company. This causes serious issues on the accuracy of

the information obtained.

Having the company’s management arrange third party interviews does not mean the

investigation team will accept the arrangement made without any reservation. During the

document review stage, we have collected the company’s key customers’ business

addresses. Sometimes, it is advisable to hire a professional investigator to verify these

addresses. The investigation team should not take information received from the company at

4  

face value. As we have learned from past experience, some Chinese companies do create

fictitious customers and their legal addresses as a way to defraud external auditors. That said,

not every discrepancy between the customers’ real operating address and its AIC-recorded

addresses mean it is a fraud. It is not uncommon for some Chinese companies to have their

actual business operation premises located at a different place than their registered legal

addresses, in order to receive local government incentives from places where they register their

legal addresses. Sometimes a company also finds it difficult to move its original registered

legal address because the local authorities want to retain its tax contribution. As a result, many

Chinese companies have to separate their actual business addresses from their registered

addresses.

D. Verifying Sales Records

Not all apparent discrepancies can be easily explained by the investigation team. In one case,

one of a company’s top-five customers suddenly stopped buying products at the beginning of

2011. Because the timing was quite close to the FY10 annual audit, the former external auditor

decided to conduct a thorough review of that customer (“Customer A”). Unfortunately, because

most of the previous transactions were concluded by telephone or fax, and the company’s

responsible sales person had left, no one at the company knew much about Customer A.

When the former external auditor visited Customer A’s business address recorded on the

company’s transaction documents, it turned out that it was not a business address, and phone

calls made to Customer A’s regular contact person always went unanswered. The company

could not provide a satisfactory explanation, and eventually the external auditor resigned.

Following the former auditor’s resignation, the company’s audit committee swiftly engaged our

firm and initiated an internal investigation. During our external interview with one of the company’s

other customers situated in Southern China (“Customer B”), we realized that the missing

contact person of Customer A was actually Customer B’s employee. That employee

purchased products from the company under the cover of Customer A, and then re-sold the

same products to his employer Customer B and cut decent profits in between. When Customer

B realized it had been defrauded by its own employee, that person resigned and closed down

Customer A’s business. Unfortunately, Customer B did not communicate its findings to the

company. We pulled the sales records between Customer A and Customer B, and it turned out that

they match the sales records between the company and Customer A.

Based on our experience, very few companies dare fabricate their sales figures. It is more likely they

exaggerated the company’s growth potential and business model, or concealed misconduct

falling in so-called “grey areas”, for example, mischaracterizing trading customers as

production customers, or failing to disclose indirectly-controlled related parties. A large portion

of such non-disclosure was not done purposely but rather due to ignorance of rules imposed on

U.S. listed companies.

E. Concluding Investigation

After concluding external interviews, the investigation team will conduct a final round of internal

interviews with the company’s management personnel, major shareholders, and financial advisors

who assisted the company in the listing. They will be questioned on the issues and problems

identified during document review and external interviews, and given a chance to provide

explanations and clarifications. The whole process normally takes one or two weeks. After

wrapping up these interviews, the investigation team will prepare a final investigation report and

submit it to the audit committee.

In our experience, many Chinese companies accused of committing accounting fraud did not

fabricate sales revenues or profit margins. However, almost all of them are not in strict compliance

5  

with legal and accounting rules, such as setting up off-the-book accounts, using the same

underlying transaction or project to obtain multiple bank loans, evading of China’s foreign

exchange control regime, and borrowing from “shadow banks”.

III. Comments

A. Enhance Internal Control, Foster Corporate Governance

We have noticed that many investment banks and financial advisors that helped a

company gain listing in the U.S. have failed to build a strong internal control and

compliance infrastructure for the company. Many China-based companies’ executives know

very little about rules and regulations that need to be strictly followed. Although they hire U.S.-

trained Chinese financial advisors as CFOs, many of the CFOs reside in the U.S. for most of the

year, and mainly focus on raising capital in the U.S. securities market. As a result, they have to

rely on second-hand information passed from the company’s sometimes less competent and

trustworthy local accounting managers.

B. Crisis Management

When a company becomes a short-sellers’ target or is under investigation by U.S.

regulators, the company must stand firm against these short-selling institutions, make timely

announcements rebuking unfounded accusations, and if necessary, file defamation lawsuits

against slanderers. When Evergrande Real Estate was hit by short-sellers in June 2012, its

crisis management is an excellent example of how a company should react when faced with

adversity. At that time, U.S. short-selling firm Citron made serious accusations that

Evergrande committed accounting fraud and had already been insolvent. Evergrande swiftly made

public statement rebuking Citron’s allegations, followed by a more detailed and thorough

clarification the next day. Within the next few days, Evergrande also garnered support from

Citibank, Deutsche Bank, Bank of America Merrill Lynch, JP Morgan Chase, Credit Suisse,

UBS, Macquarie Securities and DBS Bank. They unanimously gave Evergrande shares a “buy”

or even higher rating. Evergrande’s shares then rebounded.

Even if a company is gaining positive references in the media, an internal investigation is still very

necessary in order to provide to the outside world substantiated evidence that the company is

clean. The company’s full cooperation is the key. In many internal investigations we have

conducted, we find that Chinese companies are still lagging behind their Western peers in

terms of transparency. For example, in one case, we obtained incomplete records showing

that the company maintained an off-the-book account. When we questioned the responsible

accounting manager, his admission of wrongdoing was initially limited to the records we had

found, and he denied there have been any other transactions relating to that account. However,

we later discovered the full extent of the records through electronic discovery process. Although

most of the incomeand expenses relating to the account are legitimate, the stock exchange

where the company’s shares were traded eventually refused to allow the company to resume

trading, and based its decision mainly on the company’s intentional withholding of information

from the internal investigation team.

6  

IV. Conclusion

The crisis that hit so many US-listed Chinese companies in 2011 may be gone, but the

compliance risks remain. New Oriental Education became the latest victim of U.S. short-sellers in July

2012. After the SEC announced it commenced investigations into the company’s variable interest

entity structure, it had been named in seven class action lawsuits in less than two months. Strengthening

internal controls is the best way to root out improper conduct that will attract short-sellers’ attacks, and

when the company becomes a target of U.S. regulatory inquiries or plaintiff’s law firms, a properly

conducted internal investigation coupled with a successful public relations campaign is the best

proactive approach to bring the company out of the legal morass.

(This article was originally written in Chinese, the English version is a translation.)

* Harry Liu is a partner in King & Wood Mallesons’ Dispute Resolution Group, Shanghai Office. 

New Colombian Visa for Mercosur Countries

Immigration

News Flash Numer: 184

New Colombian Visa for Mercosur Countries

A new Colombian immigration instrument now allows citizens from certain Mercosur countriesto obtain resident visas for Colombia. The instrument- Resolution 7183- issued by theColombian Ministry of Foreign Affairs in December 2012 was conditioned to a reciprocityapplication. This means its provisions would come only into effect when Mercosur countriesgranted resident visa for Colombian citizens as well.

So far it is confirmed Brazil, Argentina, Bolivia and Peru have been issuing resident visas forColombia and so, under the principle of reciprocity, Colombia will enable Argentinian andBrazilian citizens to obtain a resident visa.

When other Mercosur countries allow this for Colombian nationals, the Colombian governmentwill allow them likewise to obtain this visa. It is so stated in the quoted instrument.

The main features of this visa are:

Allows the foreigner residence in Colombia

Granted for up to two years

Foreigner is allowed to work as an employee or as independent and student activities

May be obtained at a Colombian consulate or in-country application

Government fee of 350 USD

The instrument requires the foreigner some additional documents to be eligible for this visa:

Criminal/police records dully apostilled or legalized and translated from the country wherethe foreigner has lived for the last three years

Migratory records certificate issued by the Colombian immigration office “UAE MigracionColombia.” This certificate must have a validity of less than three months

Government Form “Compromise to inform occupation/activity changes” signed andnotarized.

In the case of underage applicants as dependents the following are required:

Birth certificate dully apostilled or legalized and translated.

Authorization from both parents. In case custody is held by only one of the parents thedocument so demonstrating this must be presented dully legalized or apostilled andtranslated.

The legal provisions related to those professions, which its exercise is considered to beregulated, are still in effect. Therefore foreign nationals that will be employed or work in thoseactivities regulated in Colombia must comply with current rules. For instance Brazilian andArgentinian engineers must obtain temporary permits, engineers licence and/or initiatevalidation of their university degree.

Passports, Visas, Legalization and Apostille Services to be suspended for oneweek

Due to a national holiday, the Ministry of Foreign Affairs has announced its offices are to beclosed during the week of March 25th to March 29th inclusive. Services will be normalized onApril 1st. This means no Colombian passports, visas, legalization or apostille services will beprovided during those dates and the Ministry will remain closed.

Offices, government entities and business in general (including Brigard & Urrutia) will be closedon March 25th, 28th and 29th in observance of a national holiday.

Para mayor información, favor contactar a:Luis Gabriel Pérez lperez@bu.com.co

Connie Núñez Vélez cnunez@bu.com.co

Omar Hernández Hussein ohernandez@bu.com.co

Santiago Uribe Saenz suribe@bu.com.co

Calle 70A No. 4 - 41Bogotá - ColombiaTel: (571) 346 20 11Fax: (571) 310 06 09 - (571) 310 05 86servicioalcliente@bu.com.co

Brigard & Urrutia. Copyright © 2010

Costa RicaMergers and Acquisitions must be approved by the Costa Rican Antitrust Authority

Costa Rican Congress has passed an antitrust law to safeguard public wellbeing and promote fair competition.

As of April 5th, 2013, the Costa Rican Antitrust Authority (known by its Spanish acronym COPROCOM) must be notified of mergers and acquisitions prior to their execution, or within a maximum of five business days following signature of the merger or acquisition agreement. Regulations to this law are still pending final approval by COPROCOM and will likely enter into effect in early May 2013.

The Merger & Acquisitions Department at Arias & Muñoz is prepared to effectively manage risk associated with mergers and acquisitions and has developed special preventive services to provide our clients with a detailed understanding of compliance obligations and requirements applicable in Costa Rica.

Arias & Muñoz has identified relevant issues that may arise in this area and developed effective strategies for negotiating with COPROCOM.

Our services include: • Advice on all aspects of the antitrust law and regulatory compliance.• Practical and strategic advice on responding to and dealing with potential investigations byregulatory agents.• Representation including preparation and submission of applications for authorization andnotification.• Development and implementation of compliance programs.• Guidance on the antitrust law aspects of mergers and acquisitions.• Advise on the application of the antitrust law to contracts and other commercial agreements suchas distribution, marketing, and supply agreements.

Contact usFor legal advice on the antitrust law or regulatory compliance matters related to mergers and acquisitions in Costa Rica, send an email to jmunoz@ariaslaw.co.cr or call (506) 2503-9800.

Marketing Costa Ricanews@ariaslaw.co.cr

Guatemala El Salvador Honduras Nicaragua Costa Rica Panamá

COPYRIGHT (C) 2011 Central America Lawyers, Lawyers in Central America, Law Firm in Central America

 

 

 

Cœur Défense: the rights of the creditor recognized 

1 March 2013 ‐ The Court of appeal of Versailles, as the court of dismissal designated by the French Supreme Court 

(Cour de cassation), rendered on 28 February two major decisions in the "Cœur Défense" case which recognize the 

rights of the French securitization fund.  

As a reminder, the Cœur Défense building (the second largest business center in Europe with 180,000 sq.m.) was 

acquired in June 2007 by HOLD (acronym of Heart Of La Défense) for 2.1 billion euros. This purchase price was 

funded through equity funds and shareholder loans up to 500 million euros, the balance being financed through a 

mortgage loan of 1.6 billion euros. HOLD is held by a Luxembourg company, Dame Luxembourg, which itself is held 

by real estate funds initially controlled by Lehman Brothers.  

The mortgage loan was securitized in August 2007 to a French securitization fund, Windermere XII FCT, the bonds 

of which are held by major French and international institutional investors. The French securitization fund is legally 

managed and represented by the management company EuroTitrisation.  

In September 2008, following the bankruptcy of Lehman Brothers, also the hedging counterpart of an interest rate 

cap, HOLD was under the contractual obligation to subscribe to a new cap with a new eligible hedging counterpart. 

Considering that it was not in a situation to subscribe to such a new cap given the financial crisis of 2008, HOLD 

decided to apply for safeguard proceedings (the French equivalent of the US Chapter 11) in November 2008. Dame 

Luxembourg, although a Luxembourg incorporated company, also applied for safeguard proceedings in November 

2008. By applying for safeguard, HOLD and Dame Luxembourg were neutralizing several guarantees and securing 

the position of the French securitization fund. Such French securitization fund was under the obligation to defend 

itself in order to protect the interest of its investors.  

After over four years of legal proceedings and 16 judicial decisions handed down successively by the Commercial 

Court of Paris, the Court of Appeal of Paris and the French Supreme Court, the Court of Appeal of Versailles as 

court of dismissal designated by the French Supreme Court, rendered on 28 February two major decisions in the 

"Cœur Défense" case, which recognize the rights of the French securitization fund.  

First, the Court of Appeal of Versailles confirms the judgment rendered by the Commercial Court of Paris on 19 

October 2009, which recognized that the Dailly assignments of the future rents held by the French securitization 

fund were fully valid and enforceable against the safeguard proceedings opened to the benefit of HOLD and its 

parent, Dame Luxembourg.  

Second, the Court of Appeal of Versailles recognizes the admissibility of the voluntary intervention of the French 

securitization fund against the judgment rendered by the Commercial Court of Paris on 9 September 2009, which 

imposed a safeguard plan on the French securitization fund violating several legal mandatory provisions protecting 

the rights of the creditors. The Court also invalidates such judgment rendered by the Commercial Court of Paris on 

9 September 2009 and fixes new terms for the safeguard plan.  

The conditions for exiting this transaction, regarding the rights of the creditors, have been significantly improved 

by the two decisions of the Court of Appeal of Versailles.  

EuroTitrisation was advised by French law firm Gide Loyrette Nouel (Gilles Saint Marc, partner). For additional 

information visit www.gide.com  

05/03/2013REGULATION ON BANK'S TRANSPARANCY AND PUBLICATION OF BANK'S REPORTSWith the current development of banking products and activities in Indonesia, the demand for transparency of the financial condition and performance of a bank is increasing. Banks are expected to disclose their risk exposures as well as their risk management practices, so that the public and the relevant market can better assess their products and performance. Bank Indonesia addresses the demand by issuing, on 18 October 2012, Regulation No. 14/14/PBI/2012 of 2012 regarding Bank Transparency and Report Publication (“Regulation No. 14/14/2012”).Generally, Regulation No. 14/14/2012 requires a Bank to:

• issue its financial reports, consisting of: - Annual Report; - Quarterly Financial Report; - Monthly Financial Report; - Consolidated Financial Report; and - Other Reports. • make its reports available for public access. If the Bank has a subsidiary or if the Bank is a part of a group, its consolidated financial report must also be made public.Annual ReportThe Annual Report, other than to the shareholders, must also be submitted to at least: a. Bank Indonesia; b. Indonesia Consumer Agency Foundation (Yayasan Lembaga Konsumen Indonesia or “YLKI”); c. Rating Agencies in Indonesia; d. Banking Associations in Indonesia; e. Indonesia Banking Development Agency (Lembaga Pengembangan Perbankan Indonesia or “LPPI”); f. 2 (two) research agencies in the field of economy and finance;g. 2 (two) economy and finance magazines.The submissions must have been completed at the latest 5 (five) months after the end of the fiscal year.In addition to the above, a Bank is also required to publish its Annual Report on its website and must do so at the latest 1 working day as of the date of the above mentioned submission. The publication of the Annual Report in the website must be maintained for at least 2 respective periods of reporting. Quarterly Financial ReportBanks are required to publish Quarterly Financial Reports as at the end of each March, June, September and December. In addition, Bank Indonesia can require a Bank to also publish: a. financial reports for periods other than the above; and/or b. other information as determined by Bank Indonesia.The Quarterly Financial Report must be signed by at least 2 Directors of the Bank. For the end of December quarterly report, the Bank must state the name of the public accountant office which audited the Annual Financial Report as well as the name of the accountant who is responsible for the audit and the opinion provided.The Quarterly Financial Report must be published at least in an Indonesian language daily newspaper which has a wide circulation at the domicile of the Bank. The publication must be made at the latest on:

a. the 15th of the second month after the end of the reporting month, for the the end of March, June and September reports; b. the 15th of April of the following year, for the end of December report.Bank Indonesia will announce the Quarterly Published Financial Reports submitted by Banks on Bank Indonesia’s website.The Quarterly Financial Report must also be published on the website of the Bank concerned. This publication must be done at the latest 1 working day as of the date of the publication of the Quarterly Financial Report in the newspaper, and be maintained on the website for at least 2 respective periods of reporting. Monthly Financial ReportThe Monthly Financial Report must be prepared based on the data of the Commercial Bank Monthly Report (Laporan Bulanan Bank Umum or “LBU”) which has been reclassified by Bank Indonesia based on the Standard Financial Accounting Statement (Pernyataan Standar Akuntansi Keuangan) and Bank Indonesia’s rules. Prior to the publication, BI will send online the reclassified LBU to the Bank through the Headquarters Commercial Bank Monthly Report for examination of the accuracy and for necessary adjustment and information addition for the purpose of the monthly publication.Bank Indonesia will announce the publication of the Monthly Financial Report which has been sent by the Bank to Bank Indonesia’s website. The announcement by Bank Indonesia will be made at the latest 60 days after the reporting month.Consolidated Financial ReportA Bank which has a subsidiary or which is a part of a business group must present its Consolidated Financial Report in its Annual Financial Report and Quarterly Financial Report. Bank’s temporary share participations which cause the Bank to become a controlling shareholder are exempted from the Consolidated Financial Report.Other ReportsThe “Other Reports” to be published as meant under this Regulation No. 14/14/2012 consist of:a. Report on the Credit Base Interest Rate (Suku Bunga Dasar Kredit or “SBDK”); and b. Other to be published reports.The above “other to be published reports” must be made periodically. Bank Indonesia is entitled to request Banks to submit other to be published reports as needed. As for SBDK, the publication must be made in a newspaper having a wide circulation at the latest 7 working days after the end of March, June, September and December.Sanctions for non compliance of the requirements under this regulation range from monetary sanctions and announcement of the names of the non complying bank to written warnings, administrative sanctions and downgrading of the bank’s health rating.Upon the enactment of this Regulation No. 14/14/2012, articles 1 to 15 and articles 24 to 38 as well as articles 40 to 41 of Bank Indonesia Regulation No. 3/22/PBI/2001 regarding Transparency of Bank’s Financial Condition (“Regulation No.3/22”) are revoked and become invalid. However, its implementing regulations remain to be applicable for as long as they do not contradict the provisions of Regulation No. 14/14/2012. (by: Ammalia Prama Putri)

© ABNR 2008 - 2013

Page 2 of 2

The .lu domain name registry introduces a domain name freezing procedure 13 May 2013 This newsletter is sent by NautaDutilh

As from 11 June 2013, DNS-LU (Restena) will allow claimants to introduce a request to "freeze" a given .lu domain name, meaning that the domain name cannot be traded to someone else for an initial period of 1 year. This freezing period must allow the claimant and the holder of the domain name to resolve their dispute.

Upon formal request, the freezing period can be extended for an additional period of 6 months.

In order to obtain a .lu domain name freezing order, claimants must:

• present a credible case via a specific form that will be made available on www.dns.lu, wherebythey have to provide sufficient evidence (documents written or translated in French, German orEnglish) that they have rights pertaining to the contested domain name and/or that their rightshave been infringed;

• have instigated "formal measures" vis-à-vis the present domain name holder, whereby a formalnotice letter would already be sufficient.

When the dispute is resolved in the favour of the claimant, the latter must submit on its own initiative a formal request to have the domain name transfer completed. The transfer request will be checked and validated by DNS-LU on the basis of documents that duly evidence the resolution of the dispute in favour of the claimant.

When the contested domain name is cancelled during the freezing period and no dispute resolution has taken place, the domain name becomes available again for any interested party, without the claimant having a preferential registration right.

This new procedure is an important change to the traditional position of DNS-LU not to intervene in .lu domain name disputes. It remains to be seen how strict DNS-LU will be in assessing the merits of the case presented by the claimants, knowing that, under Luxembourg law, it is rather difficult to contest .lu domain name registrations, especially with respect to domain names that have not been activated yet. Furthermore, it is not clear yet whether the freezing procedure will also include a prohibition for the domain name holder to grant further licenses on the domain names.

The rules on the freezing procedure will be introduced in the new version of the DNS-LU Terms and conditions, which can be downloaded on the website www.dns.lu as from 11 June 2013.

Contact

For more information please contact:

For Luxembourg: Vincent Wellens T: +352 26 12 29 34 For the Netherlands: Anne-Marie Verschuur T: +31 20 7171 821 For Belgium: Philippe Péters T: +32 2 566 84 44

L E G A L U P D A T E

May 3, 2013

SYSTEM TO VOLUNTARILY REPORT ON SAFETY AND HEALTH CONDITIONS AT WORK CENTERS

On April 30, 2013, the “Resolution by which the system to report on health and safety prevailing at work centers” (the “Resolutio n”) was published in the O cial Gazette of the Federation, same that became enforceable as from May 1, 2013. The main purpose of the Resolution is to contribute to a major coverage of work inspection services, apportioning the available resources, creating alternative schemes for employers to be able to comply with its obligations established in the Federal Labor Law (“FLL”) and receiving incentives to rectify possible omissions, all this in bene t of work centers and employees. The System will allow employers, under oath to tell the truth, to inform the Ministry of Labor and Social Welfare (“STPS”) the safety and health conditions prevailing at their work centers. Such System will be managed and operated by the STPS, through its several administrative units, and the access to the same shall be through its web page http://www.stps.gob.mx, in accordance with the requirements determined in the System’s Guidelines of operation and functioning which the STPS shall issue within 60 calendar days following the date in which the Resolution became effective. Modules of the System will be structured taking as reference the economic activity and the scale and risk factors in safety and health matters at work related with processes and characteristics of work centers. Based on the statement submitted by the employers, the STPS will presume the level of compliance with applicable provisions in safety and health matters at work, which will be confirmed by an inspection visit. The following rules will be applicable to those companies that voluntarily register themselves in the System:

a) At those work centers which processes or activities are classified within groups I and II of the Regulations of Social Security Law in Affiliation, Classification of Companies, Collection and Auditing Matters (“Regulations of the SSL”), and that obtain the overall result that is set by the Guidelines, inspection visits to provide technical assistance and advice will be carried out, which due to their nature, in case of a first non-compliance, would not result in an administrative proceeding that may impose fines. To the extent the non-compliance of the acquired commitments continues, a new inspection visit will be carried out, and in case the violation to the labor legislation persists, an administrative proceeding to impose fines will be initiated.

2

The voluntary declaration in the System made by employers will be taken into account as a mitigating circumstance in the imposition of fines. For such purposes, the authority may up to 75% of the total fine that may be imposed on the non-complier.

b) At those work centers which processes or activities are classified within groups III, IV and V of the Regulations of the SSL, and that obtain the overall result that is set by the Guidelines, inspection visits to immediately establish preventive and/or corrective measures targeting elimination of the possible identified risks and the deadline for their execution will be carried out and, in case such measures are not complied with by the company, a new inspection visit will be immediately scheduled, during which, as a protective measure in favor of the workers, access to the work center or to a certain area may be restricted or the operations of those processes which relate to the risk tried to be avoided may be delimited. Under such circumstances an administrative proceeding to impose fines will be initiated with all its legal consequences. The voluntary declaration that employers could have done in the System will be taken into account as mitigating circumstance in the individualization of the sanction. For such purposes, the authority may reduce up to 50% of the total fine that may be imposed on the non-complier.

Should STPS identify that the information provided by employers is false or that they acted with willful misconduct or in bad faith when submitting the statement, the SPTS will order extraordinary inspection visits at the work center. In case the falsehood of the information provided by employers is evidenced, it would be deemed as an intentional behavior which will be considered when determining the amount of the applicable fine. The foregoing is regardless of the fact that the STPS might share such misconduct with the corresponding District Attorney’s office. Should you require additional information please contact your leading partner or any of the lawyers in the following list: Mexico Office: Mr. Pedro Velasco A. pvelasco@s-s.mx (Partner) Mr. Andrés Rodríguez R. arodriguez@s-s.mx (Partner) Tel. (+52 55) 5279-5400 Fax: (+52 55) 5280-7614 / 5280-3214 / 5280-7866

Monterrey Office: Mr. Juan Carlos de la Vega G. jdelavega@s-s.mx (Partner) Tel: (+52 81) 8133-6000 Fax: (+52 81) 8368-0111

Tijuana Office: Mr. Fernando González fgonzalez@s-s.mx (Associate) Tel: (+52 664) 633-7075 Fax: (+52 664) 634-2978

Don't get your trade mark stuck between a diamond and a hard place

• Using the ® or ™ symbol next to their registered trade marks (the ® symbol cannotbe used for unregistered trade marks - use ™ instead for them);• Asserting rights in their registered trade marks in footers of advertisements andmedia, such as "TRADE MARK X is a registered New Zealand trade mark of XYZ Company Ltd";• Avoiding use of their trade marks as verbs or for describing characteristics of goodsor services; and• Taking enforcement measures against unauthorised use of their trade marks by thirdparties.

10 Apr 2013

Leading up to Valentine's Day this year, it was claimed that Costco in the United States of America had been selling diamond rings labelled as "Tiffany". Upset by the use of the Tiffany name as a "carat" to attract consumers, Tiffany & Co. issued trade mark infringement proceedings against Costco. Costco has reportedly counterclaimed against Tiffany & Co., alleging that "Tiffany" is a generic term used to describe a type of diamond ring setting.

The Tiffany & Co. and Costco saga serves as a reminder that businesses should take steps to attempt to maintain distinctiveness in their registered trade marks and to prevent their trade marks from becoming generic (known as genericism). The issue of revocation of trade marks based on genericism was addressed in a 2011 decision (http://www.nzlii.org/nz/cases/NZIPOTM/2011/19.html)

of the Intellectual Property Office of New Zealand. In that case, Simpson Grierson acted for DB Breweries in successfully defending a revocation action against its registered RADLER trade mark.

Businesses can take a number of steps to maintain distinctiveness in their registered trade marks. These include:

If you believe that your trade mark is in danger of becoming generic, we can advise you on more specific steps that you can take.

So, diamonds are forever, but trade marks need a little more care to make them last. For advice on how to maintain distinctiveness in your trade marks, give us a call.

Earl Gray (http://www.simpsongrierson.com/earl-gray) and Raymond Scott

As a consequence of the territorial nature of intellectual property (IP) rights, a trade mark registered in South Africa is not automatically available for use or registration in foreign countries. It is therefore essential to fi rst ascertain by searching the relevant registers as to whether the proposed trade mark is available in the relevant market and that the use thereof will not infringe an existing local trade mark.

Hence it is important for concerned parties

such as exporters to obtain protection of

their trade marks in the jurisdiction into

which they intend exporting their products.

In some instances it is possible to fi le a single

application to register a trade mark covering

a number of countries, one such system being

the Community Trade Mark (CTM) which

enables applicants to fi le a single trade mark

application with the CTM offi ce.

Such an application, once registered, affords

trade mark protection in the following twenty

seven member countries of the European

Union: Austria, Belgium, Bulgaria, Denmark,

Finland, France, Germany, Greece, Ireland,

Italy, Luxembourg, Netherlands, Portugal,

Romania, Spain, Sweden and the United

Kingdom, Cyprus, the Czech Republic, Estonia,

Hungary, Latvia, Lithuania, Malta, Poland,

Slovakia and Slovenia

A CTM is benefi cial in that it is unitary in

nature and co-exists with national marks,

affording a CTM proprietor the same rights as

trade mark owners of national marks in the

territory concerned.

Following the 19 December 2012 ruling of

the Court of Justice of the European Union

(“CJEU”) in Leno Merken BV vs Hagelkruis

Beheer BV C 149/11 (“LENO judgment”),

CTM owners are however advised to pay

close attention to their existing CTMs

possibly reinforcing their CTM with national

registrations in core countries.

The Leno Judgement which is in line with

Advocate General (“AG”) Sharpston’s opinion

of 5 July 2012, held that territorial borders

should be disregarded in determining whether

a CTM has been put to “genuine use”.

On the premise that the essential function of

a trade mark is to guarantee the identity of

the origin of the goods or services for which

it is registered, the Leno Judgment regards

territorial reach as only one factor of a number

is your Community Trade mark vulnerable to cancellation for non-use? ByDonvayWegierski,director

LEGAL BRIEF | APRIL 2013

of factors to be taken into account when

determining “genuine use”, instead requiring

an overall assessment on a case-by-case basis.

Use versus non-use

As mentioned, trade marks are both territory

and class specific with the result that a trade

mark registration affords the proprietor or

licensee the exclusive right to use a trade mark

in respect of the goods and/or services for

which it is registered.

It is therefore also necessary to avoid

exploitation of a mark. For this reason trade

mark laws in most territories make provision

for interested third parties to seek removal - or

partial removal in respect of specified goods

or services- of a trade mark registration if the

mark is not used.

The non-use term depends on the territory

concerned with most territories, including

South Africa and the European Union (covered

by a CTM) being five years while in some

territories, for example China and Australia,

the non-use term is only three years. The

relevant non-use period usually commences

from the date of registration.

Article 15 of the CTM regulation 207/2009

(“CTM regulation”) provides as follows:

Ifwithinaperiodoffiveyearsfollowing

registrationtheproprietorhasnotput

theCommunityTradeMarktogenuine

useinthecommunityinconnectionwith

thegoodsorservicesinrespectofwhich

itisregistered,orifsuchusehasbeen

suspendedduringanuninterruptedperiod

offiveyears,theCommunityTradeMark

shallbesubjecttothesanctionsprovided

forinthisregulation,unlessthereare

properreasonsfornon-use.

Thefollowingshallalsoconstitute

usewithinthemeaningofthefirst

subparagraph:

useoftheCommunityTradeMarkin

aformdifferinginelementswhichdo

notalterthedistinctivecharacterof

themarkintheforminwhichitwas

registered;

affixingoftheCommunityTradeMark

togoodsortothepackagingthereof

intheCommunitysolelyforexport

purposes.

UseoftheCommunityTradeMarkwiththe

consentoftheproprietorshallbedeemed

toconstituteusebytheproprietor.”

Recital 9 in the Preamble to this Directive

states that it is essential for a CTM to be used

and if not that the CTM registration should

be subject to removal from the register for

non-use in order to reduce the total number of

CTM registrations and the number of conflicts

that arise between them.

Until the Leno Judgment the evidence of use

of a CTM in a single member country of the

EU would sufficiently have demonstrated

“genuine use” under Article 15.

The Leno Judgment

In July 2009 Hagelkruis Beheer BV

(“Hagelkruis”) filed a trade mark application

at the Benelux trade mark office for a national

trade mark for OMEL in respect of three

service classes which Leno Merken (“Leno”),

the proprietor of a CTM registration for ONEL

subsequently opposed in the Benelux trade

mark office.

As the CTM registration ONEL was registered

on 3 October 2003 the five year non-

use period commenced 3 October 2008.

Hagelkruis responded to the opposition by

requiring Leno to provide evidence of use

of its CTM registration. This is practice in

oppositions in this jurisdiction and shifts the

onus back to the opposing party. Leno in turn

provided proof of use of its ONEL mark limited

to the Netherlands.

In January 2010 the Benelux trade mark office

rejected the opposition on the grounds that

Leno had not shown that it had put its CTM

registration ONEL trade mark to genuine use.

The parties at this stage agreed that the marks

and respective goods and services to which

they were applied were similar and as such

were likely to give rise to confusion.

The issue disputed and referred to the CJEU

was the interpretation of “genuine use” in

terms of Article 15 of the CTM regulation and

whether use in one EU member state, in this

instance the Netherlands, is sufficient. The

CJEU ruled that territorial scope alone cannot

be used in the assessment instead requiring an

overall view on a case-by-case basis.

The AG’s opinion provides some guidance as to

how “genuine use” might be assessed requiring

further consideration of:

Characteristics of the market and nature

of the goods or services concerned such

as supply and demand, language barriers,

consumer preferences, transport and

investment costs and whether use of

a mark is particularly concentrated is

necessary;

Territorial extent and scale of use,

frequency and regularity of use indicating

that where a trade mark is used in an

area where the market is particularly

concentrated this may play a more

significant role than use of the same mark

in a part of the market where there are

little or no sources of supply and demand.

To further illustrate, referring to the Leno

Judgement, the AG’s opinion says that the

court cannot decide solely on use of ONEL in

the Netherlands instead that the court should

consider all instances of use in the internal

market giving weight to each instance of use

taking into account characteristics of the

market and market share. Thus if the court

finds that the internal market and relevant

market for ONEL is the Netherlands only ,

use of the mark in the Netherlands should be

given particular weight.

So too the national court should further consider

forms of use that may not be relevant in

assessing genuine use of a Netherlands national

mark, for example marketing the CTM in such

a manner that it is commercially meaningful to

potential customers outside the Netherlands.

Furthermore the AG records that the national

court should recognise that these relevant facts

could change of overtime and indeed during the

five year period from date of registration.

To conclude the AG’s interpretation of

“genuine use“ in terms of Article 15 of the

CTM regulation is that use of a CTM in single

member state may not necessarily suffice

however that it is possible that when all

relevant facts are considered, use of a CTM

in a single territory of the EU will constitute

genuine use in the Community.

CTM conversion

In instances where a CTM has been refused for

registration or is to be removed due to non-use

it is possible to convert the CTM into national

registrations albeit only in the member states

where the CTM has been put to genuine use

under the relevant national laws.

The advantages of converting a CTM into

national marks is that the filing date, priority

and seniority dates (if relevant) of the CTM are

maintained in respect of the national mark.

A conversion fee is payable to the Office of

Harmonisation (“OHIM” or CTM office) and if

the conversion is approved it is directed to the

national office who may also require a fee for

the national application.

Recommendations and conclusion

Due to the wide protection afforded to a

proprietor of a CTM the system is by its nature

attractive to trade mark owners worldwide

hence increasing the likelihood of an

interested third party challenging the validity

of a registered CTM.

Proprietors of CTM’s that have been registered

for five years or longer and where “genuine use”

may be difficult to show might therefore pre-

empt an invalidity action and consider either

filing a fresh CTM or filing national applications

in the commercially relevant territories.

TLG_JN5614

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The CorporaTe & CommerCial law Firm

JOHANNESBURG +27 (0)11 535 8000 CAPE TOwN +27 (0)21 405 5100www.werksmans.com

Nothinginthispublicationshouldbeconstruedaslegaladvicefromanylawyerorthisfirm.Werksmans’legalbriefsshouldbeseenasgeneralsummariesofdevelopmentsorprinciplesofinterestthatmaynotapplydirectlytospecificcircumstances.Professionaladviceshouldthereforebesoughtbeforeanyactionistaken.

Established in the early 1900s, werksmans Attorneys is a leading South African corporate and commercial law firm serving multinationals, listed companies, financial institutions, entrepreneurs and government.

werksmans operates in Gauteng and the western Cape and is connected to an extensive African network through LEXAfrica*.

with a formidable track record in mergers and acquisitions, banking and finance, and commercial litigation and dispute resolution, the firm is distinguished by the people, clients and work that it attracts and retains.

with more than 180 lawyers, werksmans is a powerful team of independent-minded individuals who share a common service ethos. The firm’s success is built on a solid foundation of insightful and innovative deal structuring and legal advice; a keen ability to understand business and economic imperatives; and a strong focus on achieving the best legal outcome for clients.

Go to www.werksmans.com for more information.

Follow us on Twitter (www.twitter.com/werksmans) and on Facebook (www.facebook.com/werksmans).

*In1993,Werksmansco-foundedtheLEXAfricalegalnetwork,whichnowhasmemberfirmsin29Africancountries.

about werksmans attorneys

about the author

Donvay Wegierski

Title: DirectorOffice: StellenboschDirect line: +27 (0)21 809 6009 Fax: +27 (0)86 510 6732 Switchboard: +27 (0)21 809 6000Email: dwegierski@werksmans.com

Donvay wegierski is a director of werksmans Attorneys and member of the firm’s Intellectual Property (IP) Practice in Stellenbosch. She specialises in all aspects of IP law and related matters, including trade mark screening and registration, trade mark infringement and passing off, domain and company names, and counterfeit goods. Donvay’s particular area of focus is on IP law and related matters outside of South Africa. She is a member of the South African Institute of Intellectual Property Law (SAIIPL) and has a B SocSc LLB from the University of KwaZulu-Natal.

Introduction to Amendments to Template of Standardized Contract for Personal Online Banking Services◎Frances Hsieh/Jacqueline Wang

To protect consumers' rights and for relevant business operators to comply, the Financial Supervisory Commission ("FSC") announced the amendment to "Template of Standardized Contract for Personal Online Banking Services" on June 15, 2006. Subsequently, the FSC issued the "Provisions to Be and not to Be Included in Standardized Contract for Personal Online Banking Services" on October 8, 2012 and as such, the template has been amended accordingly. The major amendments to the template are as follows:

1. Prescribe additional information that a bank is required to disclose, including thebank's name, customer complaint and service hotline, the bank's website address, etc.(Article 1).

2. Specify that the provisions of the contract should be interpreted in a way in favor of theconsumers when there is any controversy (Article 2).

3. Specify that a bank should specify in the contract the services it offered andshould beliable for any inaccurate information posted on its online banking website (Article 5).

4. Specify that a bank should provide a mechanism for clients to reconfirm theaccuratecy of important information set forth in trading electronic documents (Article7).

5. Specify that a bank should not charge fees for items not set forth in the contract(Article 10).

6. Specify that if a bank raises fees, it should provide options for client to expresshis/her/its agreement/disagreement thereto on its webpage; and that the effective dateof any fee increase should not be earlier than the start day of the following year sincethe announcement and notice (Article 10).

7. Conditions were added to Paragraph 3 of Article 15 on the circumstances where abank's liability for indemnity will be relieved in case a client's password is misused byothers or stolen based on the legal principle of risk sharing and to urge the client topay attention to any unusual changes in his/her/its account. For example,circumstances under which a bank could prove a client was wilful or negligent, or, after

Page 1 of 2

a certain period has elapsed since the bank duly sent transaction statements to the client by the method agreed by the parties, etc. (Article 15).

8. The current provision stipulates that a bank should bear the burden of proof where itsIT system is hacked by a third party, but the scope of burden of proof is not specified.The provision now is amended to reframe the scope of burden of proof on the bankwith its internet banking system security measures (Article 16).

9. In considering that the client should be given a time period to express his/her/itsobjection when there is any amendment to a contract, a provision is newly added thatclients should be given a seven-day period to express his/her/its objection in the casea contract is amended; and for amenemnt to specific matters, notification in writing orby any method agreed by the parties sixty days prior to the amendment is required(Article 23).

Lee and Li Bulletin

Copyright © Lee and Li, Attorneys-at-Law, All rights reserved.

Page 2 of 2

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Informed Counsel

Concurrent-Use Trademark Regis-trationTwo judgments from the Supreme Court provide �������� ���� ��� �� ��� �� ����� ��� �� ���concept of concurrent use.

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c o n t e n t s

Analysis of Recent Legal Developments in Thailand and Vietnam

Vol. 4 No. 2 May 2013

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Customs Arbitration���%������3� ������1�����1� ��1����������������� ����� ���1���������� ���1������� ����������������=��������� ����������!

Commercial Building Rules+ �� �� �� �4����� ��� �� ����� ������ �� 1 �� �� ���� >������ ���� ���� ��� ��� �1�������� ������������ 0� �4 �� �����1�?������������������/ ��00!

isputes about the registrability of similar marks are on the rise in Thailand. When a brand owner’s attempts at trademark registration are thwarted by a prior-registered similar mark, one option is to seek registration under the theory

of “concurrent use.” Concurrent-use registrations are allowed under Section 27 of the Thai Trademark Act, which provides room for two similar marks to be registered if a trademark has been honestly and concurrently used by the trademark applicant or if there are other special circumstances. But to obtain a successful registration under this provision, the party claiming to be the rightful owner of the mark needs to meet a specific burden of proof. Two recent Supreme Court judgments provide new insight into how brand owners can achieve registration under Section 27. In one matter, the Court allowed the concurrent-use registration; in the other, the trademark was rejected. Both cases can help brand owners decide whether their trademark may be eligible for registration under this provision.

Anna Sui Corp. v. Department of Intellectual Property(Supreme Court Case 11439/2554)

In this first case, Anna Sui Corp. applied for registration of the word mark ANNA SUI for products in several classifications of goods. After reviewing these applications, both the Registrar and the Board of Trademarks held that the trademark applications for ANNA SUI in Classes 20 and 24 were confusingly similar to the trademark ANNA in Designed Square, which had been previously registered for goods in Class 20. The authorities further decided that the application for ANNA SUI in Class 25 was confus-ingly similar to the prior-registered mark ANNA IS, which had been previously regis-tered in the same Class 25. Anna Sui Corp., as the plaintiff, filed a complaint with the Central Intellectual Prop-erty and International Trade (IP&IT) Court, claiming that the ANNA SUI mark had been widely used for a long period of time and was well known. In addition, the plaintiff stated that it had applied for registration of the mark in good faith. The IP&IT Court disagreed with these arguments and confirmed the earlier decisions by the Registrar and the Board that the mark ANNA SUI was not registrable. Continued on page 2

D

Supreme Court Judgments Offer Insight into Concurrent-Use Trademark Registration

Srila Thongklang srila.t@tilleke.com | Nandana Indananda nandana.i@tilleke.com Parichart Monaiyakul parichart.m@tilleke.com | Nuttaphol Arammuang nuttaphol.a@tilleke.com

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Anna Sui Corp. appealed the first-instance court’s judgment to the Supreme Court. After reviewing the appeal, case background, and all evidence, the Supreme Court first found that the trademark applications for ANNA SUI were confusingly similar to the prior-registered trademarks ANNA IS and ANNA in Designed Square because these marks contained the substantial part “ANNA” and the appli-cations were filed for the same types of goods. Nevertheless, the Supreme Court recognized that the mark ANNA SUI was registered in the United States in 1983, and that products under the mark ANNA SUI had been widely distributed and promoted in many countries, including Thailand, for a long period of time. In addition, “Anna Sui” is the name of an American fashion designer. The Supreme Court was therefore convinced that the mark ANNA SUI was created without copying the marks of any other party, and that the mark was used in good faith before the prior trademark application was filed in Thailand. The Supreme Court thus concluded that the three disputed trademark applications for ANNA SUI were regis-trable; however, their registration would be subject to any conditions and limitations that the Registrar may deem proper to impose.

Matsuda & Co. v. Department of Intellectual Property and Valentino S.P.A.(Supreme Court Case 7158-7159/2555)

In the second case, on March 7, 1997, Matsuda & Co. (Matsuda), the plaintiff, filed a trademark application for VALENTINO RUDY & V Device for goods in Class 21. After reviewing the application, the Registrar approved the mark for publication. Valentino S.P.A. (Valentino) believed that this trademark was confusingly similar to its mark VALEN-TINO & V Device registered since 1986 in the same class of goods. Valentino lodged an oppo-sition against the mark VAL-ENTINO RUDY & V Device, but the Registrar dismissed the opposition. Valentino filed an appeal with the Board of Trade-

marks, which then overturned the Registrar’s earlier decision and rejected Matsuda’s trademark application. In response, Matsuda filed a complaint with the IP&IT Court against the Department of Intellectual Property (DIP), which oversees the work of both the Registrar and the Board, alleging that the DIP’s decision was unlawful. Valentino, as an interested party, was granted a motion to join the DIP as a co-defendant in order to protect its interest. In the complaint, Matsuda raised the following key arguments: ◆ The prior-registered mark belonging to Valentino

contained only one word, “Valentino.” This word was nondistinctive and was disclaimed in the registered mark, and thus Valentino had no exclusive right to the word.

◆ Matsuda’s mark, on the contrary, contained two words, “Valentino” and “Rudy,” and these two words were not disclaimed.

◆ Both parties’ marks were different and so were the goods covered under each mark, despite falling in the same classification. Matsuda’s goods included drinking glasses, spoons, forks, and knives, while Valentino’s goods included soap dishes and towel racks made of metal and boxes of metal for dispensing paper towels.

◆ Matsuda filed its trademark application in good faith, as Valentino is a name and the letter “V” refers to Valentino, and its mark had been widely used for a long period of time.

In response, Valentino argued that the marks were confusingly similar and that the evidence submitted by Matsuda showed no use of the mark with the goods in Class 21. Thus, Valentino contended that Matsuda’s mark VAL-ENTINO RUDY & V Device was unregistrable. The IP&IT Court agreed with Matsuda and decided that the mark VALENTINO RUDY & V Device was eligible for registration, with or without conditions, depending upon the Registrar’s discretion. The DIP and Valentino filed an appeal with the Supreme Court. The Supreme Court first held that both parties’ marks were similar in appearance and pronunciation because they contained the same word “Valentino” and letter “V” and the position of the letter “V” was similar, although the styliza-tion of the word and the letter were somewhat different. Also, the goods of both parties were in the same class and were related. These factors may cause confusion to the

Supreme Court Judgments (from page 1)

Trademark Act, Section 27, Paragraph 1

When there is an application for registration of a trademark that is identical or similar to one already registered by a different owner in accordance with Section 13, or when there are applications for registration of trademarks that are identical or similar to each other under Section 20 in respect of goods of the same or different classes, but in the Registrar’s opinion are of the same character, and the Registrar deems that the trademark has been honestly and concurrently used by each proprietor, or there are other special circumstances which are deemed proper by the Registrar to allow registration, the Registrar may permit the registration of the same trademark or of nearly identical ones for more than one proprietor, subject to such conditions and limitations as to the method and place of use or other conditions and limitations as the Registrar may deem proper to impose. The Registrar shall without delay notify in writing the applicants or the proprietors of trademarks who have been granted registration of his decision and reasons therefor.

Plaintiff’s Trademark

Prior-Registered Trademarks

Continued on page 3

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public as to the source of the goods. The Supreme Court further mentioned that the word “Valentino” comprised part of Valentino’s mark, even though it had been disclaimed. Therefore, the whole trademark must be taken into consideration for the similarity issue. For the next step in its reasoning, the Supreme Court further considered whether these two similar marks could be allowed for registration under Section 27. The Supreme Court elaborated that in granting a registration based on concurrent use in good faith or special circumstances under Section 27, the applicant must prove their use of the mark with the applied-for goods in Thailand before the application for the mark had been filed in Thailand. The Supreme Court found that “Valentino Rudy” was the name of an Italian designer, and Matsuda submitted evidence of use of the mark with clothing. There was no evidence showing the use of the mark with the goods covered by the trademark application in Class 21 before March 7, 1997. Based on this, it could not be proven that the mark VALENTINO RUDY & V Device had been honestly and concurrently used with the goods in Class 21 or that special circumstances existed. The Supreme Court disagreed with the IP&IT Court’s ruling and held that the Board’s decision to reject the mark was correct (although the Court relied on different reasoning than the Board). Therefore, Matsuda’s mark was deemed unregistrable and was rejected.

Lessons for Brand Owners Based on these Supreme Court decisions, it is clear that use of a trademark in Thailand is very important when seeking registration under the concurrent use or special circumstances provisions of Section 27. The Matsuda case, in particular, shows that the applicant must present clear evidence of use not just for the mark in general, but also for the specific goods covered by the application. And this use must be shown in Thailand prior to the application date of the mark. Of course, it is also necessary for the applicant to demonstrate its good faith in applying for the mark. Taken together, this evidentiary burden would be difficult to overcome for some applicants. Yet the Supreme Court’s decision to allow registration in the Anna Sui case should be viewed as an important develop-ment for brand owners who have struggled to register their marks in Thailand due to a confusingly similar prior registration. This decision shows that, with the right evidence in hand, it is indeed possible to overturn a rejection by the Registrar, the Board, and the IP&IT Court.

Supreme Court Judgments (from page 2)

Plaintiff’s Trademark

Prior-Registered Trademark

MIDDLE EAST UPDATE - MAY 5, 2013

Abu Dhabi Establishes Abu Dhabi WorldFinancial MarketThe Federal Government of the United Arab Emirates recently issued Federal Decree No. 15 of 2013establishing a new financial free zone which is expected to be called the “Abu Dhabi World Financial Market.”1The Decree was issued pursuant to a 2004 federal law which allows financial free zones to be formed byfederal decree.

According to Cabinet Resolution No. 4 of 2013, the Abu Dhabi World Financial Market will be located on AlMaryah Island (previously called Sowwah Island), off the coast of Abu Dhabi city, which is the home of SowwahSquare and the new Central Business District. Sowwah Square is already home to numerous international andlocal companies as well as a Rosewood Hotel, and it is also the intended future location of the Abu DhabiSecurities Exchange. According to a May 1 statement from the Abu Dhabi Executive Council, the new free zonewill have a register of companies, a new regulator called the Financial Services Regulations Bureau, and itsown court system. This law also makes the Abu Dhabi World Financial Market tax-free for 50 years andexpressly permits full foreign ownership of companies.

This Update looks at the legal framework in which the Abu Dhabi World Financial Market would be expected tooperate by highlighting (for illustrative purposes) certain relevant features of the Dubai International FinancialCentre (DIFC), the well-established and only other financial free zone in the UAE. We have also highlighted afew issues relating to the companies already operating on Al Maryah Island that the Abu Dhabi authorities mayhave to consider.

While there have been several significant developments relating to the free zone in recent days, there are still anumber of issues that the Abu Dhabi authorities will need to address in the months ahead. Baker Botts willcontinue to monitor developments relating to the free zone and issue additional Updates as further legislation isissued or details otherwise emerge.

A "financial" free zone

In general, the principal advantage of a UAE free zone is that entities formed in free zones are exempt from theapplication of the UAE Companies Law (Federal Law No. 8 of 1984). This means that foreign entities do nothave to comply with the 51% - 49% rule regarding local/foreign ownership contained in the Companies Law,and may therefore establish wholly-owned subsidiaries in a free zone with no requirement for a local sponsoror agent. This also means that entities in a free zone may be incorporated in the free zone itself independentlyfrom the otherwise applicable federal and local licensing requirements.

A financial free zone is different from the other types of free zones in the UAE. Unlike other free zone entities,those formed in a financial free zone are also exempt from the federal civil and commercial laws of the UAE.2In the DIFC, these laws are generally replaced by the DIFC’s own laws, which include a law of contract as wellas other legislation applicable only in the DIFC. We expect that the Abu Dhabi World Financial Market willeventually adopt its own legislation regarding similar matters and it will be interesting to see if such legislation isas broad as the legislation applicable in the DIFC, which offers an English common law regime supported byspecific laws having application only within the DIFC.

Another important feature of the DIFC is that financial institutions operating in that zone are primarily subject toregulation by a separate regulatory body, the Dubai Financial Services Authority (DFSA), and so long as theyrestrict their activities to the financial free zone, not by the UAE Central Bank or the Emirates Securities &Commodities Authority, which regulate banks and other financial institutions operating “onshore” in the UAE.

Similarly, the Executive Council has announced that the Abu Dhabi World Financial Market will establish aFinancial Services Regulations Bureau which presumably will regulate banks and other financial institutions. Thenew free zone will also have its own court system that includes both a court of first instance and a court ofappeal. The Abu Dhabi authorities have not indicated what law would be applied by such courts.

If the Abu Dhabi World Financial Market is intended to operate as a fully independent financial free zone thatcompetes with the rival emerging business centers throughout the Gulf, then we would expect the new freezone authority to adopt laws and regulations modeled upon the highest international standards and for the newregulatory bodies to operate according to best international practices. The failure to do so could place the AbuDhabi World Financial Market at a competitive disadvantage in the region.

Existing licensees on Al Maryah Island

Numerous companies already operate on Al Maryah Island and have entered into long-term leases withMubadala Development Company, the owner of the land on Al Maryah Island and the developer of SowwahSquare. These companies are presently operating pursuant to onshore licenses issued by the local relevant AbuDhabi Government authorities. This onshore licensing allows these companies to conduct business anywherewithin the Emirate of Abu Dhabi.

With the island now being given free zone status, these companies are now operating in a free zone but withonshore licenses. This situation may not continue, however, because of certain rules that are generallyapplicable to free zones in the UAE. In general, only entities licensed by a free zone authority may havepremises in, and operate from, that particular free zone. Further, a free zone entity may not conduct businessoutside the geographical location of the free zone.

If the companies currently operating on Al Maryah Island wish to remain there, we would expect that they willbe required to obtain free zone licensing. If a company wishes to do business only onshore in Abu Dhabi andnot in the free zone, then such a company would normally be required to relocate outside of the free zone. If acompany wishes to conduct business in both the free zone and onshore in Abu Dhabi, then the company wouldnormally be expected to obtain both a free zone license and an onshore license. This potential dual-licensingrequirement could increase the costs of doing business in Abu Dhabi for those companies. As these licensingissues raise concerns for the current and future tenants of Sowwah Square, we anticipate that the Abu DhabiGovernment will address these matters in the months ahead.

Real estate and Al Maryah Island as an investment zone

Interestingly, Al Maryah Island already has been granted “investment zone” status by a decision of the AbuDhabi Executive Council in 2009. As such, like the DIFC, Al Maryah Island is now both an “investment zone”and a “financial free zone.” The main significance of investment zone status is that foreign entities in aninvestment zone are generally allowed to have long term, in rem rights in real property. This is attractive tointernational real estate companies looking to undertake projects in the investment zone. With the additional freezone status, these international real estate companies may now form wholly-owned subsidiaries to carry outthese projects. To date, real estate projects on Al Maryah Island have been undertaken in the form of jointventures between the foreign entity and Mubadala, with Mubadala being the majority owner.3 It remains to beseen whether, with the free zone status, foreign entities will be permitted to carry out wholly-owned real estateprojects on the island, especially if the new free zone, like the DIFC, enacts its own land registry and landlord-tenant legislation.

A new Abu Dhabi court system

It will be interesting to see how closely the new court system in the Abu Dhabi World Financial Market mirrorsthe existing DIFC court system. If the new courts follow a structure similar to the DIFC courts, then companiescan expect some or all of the following features:

Proceedings in the English languageCommon law frameworkBinding judicial precedentsRules of procedure mainly drawn from England & Wales and adapted to best international standards Internationally recognized judgesProfessional code of conduct for lawyers practicing before the courtsRegulations governing the registration of lawyers before the courts

If parties can consent to have their disputes adjudicated by the Abu Dhabi World Financial Market courts,irrespective of whether or not they have any connection to the Abu Dhabi World Financial Market, then this willgive them greater freedom of choice in determining the forum for resolving their disputes, and perhapsencourage foreign partners to take on greater risks with regard to their commercial arrangements in Abu Dhabi.

Health regulation

The prominent place that the Cleveland Clinic - Abu Dhabi (CCAD) occupies on Al Maryah Island raises

potential regulatory issues. It is an open question whether the hospital will be subject to the regulation of thecurrent local and federal government health authorities, or whether a new healthcare regulator will beestablished in the free zone. The May 1 statement of the Executive Council that describes the activities of thefree zone does not list healthcare as one of the licensed activities in the free zone. However, future legislationconcerning the Abu Dhabi World Financial Market could clarify the regulatory regime applicable to CCAD.

The road ahead

The establishment of the Abu Dhabi World Financial Market is beneficial to the UAE because the developmentof capital markets and financial institutions is of great importance to the broader goals of economic developmentand diversification of its economy. Further, the establishment of a new, specialized court system in Abu Dhabiwill be welcome by foreign companies, particularly if the courts are open to parties outside of the free zone (asis the case with the DIFC). Nevertheless, the Abu Dhabi World Financial Market still has its work cut out for itas the zone will need to enact state-of-the-art legislation and a regulatory framework, establish a new courtsystem, and address the concerns of the current companies operating on Al Maryah Island. How well the AbuDhabi authorities tackle these challenges will determine whether the Abu Dhabi Financial Market will able toattract the right types of entities to the zone and, ultimately, whether it will be able to compete with the otherfinancial centers in the region, such as those in Doha, Riyadh, and neighboring Dubai.

1 A literal English translation of the Arabic contained in the decree is “Abu Dhabi International Market.” However, the English translation “AbuDhabi World Financial Market” is currently being widely used locally and in the media. The English name may change in the future so as toreflect the Arabic name.2 This includes primarily the UAE Civil Code (Federal Law No. 5 of 1985) and the UAE Commercial Code (Federal Law No. 18 of 1993).3 For example, in December, Mubadala reported that it sold four plots on Al Maryah Island to the retail specialist Gulf Related, a joint venturewith a U.S. counterparty.

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FCC Releases Rules Requiring Accessibility of Browsers

05.01.13By Maria T. Browne and Bradley W. Guyton

The Federal Communications Commission (FCC) released a Report and Order on April 29, 2013, reversing an earlier interpretation in its October 2011 rulemaking, and clarifying that Internet browsers used for advanced communications services (ACS) that are installed by ACS equipment manufacturers or provided by ACS service providers are considered software subject to the ACS accessibility requirements of Section 716 of the Communications Act of 1934, as amended (the “Act”). The Order also adopted regulations requiring that Internet browsers on mobile phones be accessible to users who are blind or visually impaired pursuant to Section 718 of the Act. In practical terms, this means that Internet browsers used for ACS must make existing functionality, such as inputting URLs into the address bar, utilizing toolbar buttons (home, back, forward, refresh, etc.), and activating zooming features, accessible to individuals with disabilities, including vision, hearing, physical and cognitive. For mobile browsers, this generally means providing audio prompts and inputs for browsing commands for blind or visually impaired users.

Significantly, the FCC reversed its prior conclusion that Section 718, the statutory section that requires mobile browsers to be accessible to the blind and visually impaired for any purpose, was an exception to the ACS browser requirements found under Section 716, a section that requires manufacturers of equipment used for ACS, including end userequipment, network equipment, and software, to ensure that such equipment and software is accessible to individuals with disabilities generally. The FCC concluded instead that the requirements overlap. That is, Section 716 applies to all Internet browsers that comprise a component of an ACS—which, in practice, means browsers that are used for email or text messaging services—while Section 718 applies only to browsers installed on mobile devices (but for any purpose, not just for using email or text messaging services).

As a result of this reversal, the FCC concluded that there would be no special phase-in for mobile browsers; rather, any service or equipment introduced after Oct. 8, 2013 must meet the requisite accessibility performance objectives and must be usable (i.e., information necessary to enjoy the full functionality of the product must also be accessible). The FCC extended its Part 14 rules applicable to ACS to Section 718 mobilebrowsers, but with three exceptions:

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There is no requirement to pass-through accessibility information, because browsersdon’t pass through any information but rather find, display and retrieve web pages;

There is no compatibility requirement, meaning that mobile phone browsers need notbe compatible with existing peripheral devices or specialized customer premisesequipment commonly used by persons with disabilities to achieve access; and

There is no exemption for customized equipment or services not offered to the public.

Among the rules that do apply, accessibility performance objectives for individuals who are blind or visually impaired must be considered by ACS manufacturers and serviceproviders at the design stage as early as possible, and must be implemented in any products or services offered after Oct. 8, 2013, if achievable. As with its earlier ACS rules, the FCC has incorporated industry flexibility provisions that offer service providers and manufacturers flexibility in determining how the accessibility performance objections will be accomplished.

The accessibility requirements include ensuring that any browsers incorporated by mobile service providers and equipment work with the accessibility features of the service or equipment; making information, documentation and support for the service or productsaccessible to blind and visually impaired persons; keeping records detailing efforts to comply with the accessibility rules; and certifying compliance with such rules.

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This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

Health Alert 9 May 2013

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HHS-OIG updates Special Advisory Bulletin on effect of exclusion from federal healthcare programs On May 8, 2013, the Office of Inspector General for the U.S. Department of Health and Human Services (OIG) published an updated Special Advisory Bulletin (SAB) on the scope and effect of federal healthcare program exclusion. OIG is the agency with the authority to exclude from participation in Medicare, Medicaid, and other federal healthcare programs individuals and entities who have engaged in misconduct related to federal healthcare programs. The SAB updates and narrows guidance OIG issued 13 years ago on the practical implications of exclusion. Notably, the new guidance, in apparent conflict with current regulations, asserts that exclusion is limited to federal healthcare programs and does not prohibit excluded individuals and entities from participating in other government programs, including procurement programs. At the same time, however, the SAB details the significant effort the OIG expects of the industry to monitor arrangements and thereby avoid potential Civil Monetary Penalties (CMPs) for violating the exclusion provisions. Scope of exclusion Simply put, exclusion by the OIG prohibits federal healthcare program payment for any item or service furnished by an excluded individual or entity or at the direction or prescription of an excluded individual. This deceptively clear principle has proved difficult to implement at its margins. The updated SAB does little to remedy this difficulty. The SAB confirms prior guidance that the payment prohibition applies to all methods of federal healthcare program payments “whether from itemized claims, cost reports, fee schedules, capitated payments, a prospective payment system or other bundled payment,” and adds that the prohibition applies to “other payment system[ s ] and applies even if the payment is made to a state agency or a person that is not excluded.” Although the updated SAB seemingly focuses on “providers,” the OIG explicitly defines the term to include “providers, suppliers, manufacturers, and any other individual or entity, including a drug plan sponsor or managed care entity, that directly or indirectly furnishes, arranges, or pays for items or services.” The updated SAB emphasizes that exclusion’s payment prohibition extends beyond direct patient care to include all items or services paid for by a federal healthcare program, including management or administrative services that may not be directly reimbursable. The OIG explains that administrative and management services should be broadly understood to include “health information technology services

Contacts Christine BloomquistPartner, Washington, D.C.christie.bloomquist@hoganlovells.com+1 202 637 6414 Thomas Bulleit Partner, Washington, D.C.tom.bulleit@hoganlovells.com+1 202 637 8276 Jonathan Diesenhaus Partner, Washington, D.C.jonathan.diesenhaus@hoganlovells.com+1 202 637 5416 Isabel DunstPartner, Washington, D.C.isabel.dunst@hoganlovells.com+1 202 637 5818 Helen TrillingPartner, Washington, D.C.helen.trilling@hoganlovells.com+1 202 637 8653 Ron WisorPartner, Washington, D.C.ron.wisor@hoganlovells.com

and support, strategic planning, billing and accounting, staff training, and human resources, unless wholly unrelated to federal healthcare programs.” Notably, the OIG explicitly states that “an excluded individual may not serve in an executive or leadership role (e.g., [ CEO, CFO, ] general counsel, director of health information management, director of [ HR ], physician practice office manager, etc.) at a provider that furnishes items or services payable by federal healthcare programs.” Moreover, although the updated SAB acknowledges that an excluded individual or entity is not expressly prohibited from owning a federal healthcare program-participating provider, the OIG emphasizes the risks of such ownership. The updated SAB is similarly expansive in its articulation of which providers are subject to the payment prohibition. For example, the OIG explicitly states that providers may not bill for items or services on the basis of orders or prescriptions from excluded individuals. The OIG recommends that providers such as pharmacies, laboratories, durable medical equipment suppliers, imaging centers and other providers that furnish items or services on the basis of orders or prescription, take steps to ensure at the point of service that the ordering or prescribing physician is not excluded.

+1 202 637 5658 Eliza AndonovaAssociate, Washington, D.C.eliza.andonova@hoganlovells.com+1 202 637 6153 Danielle DrisselAssociate, Washington, D.C.danielle.drissel@hoganlovells.com+1 202 637 8891

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The OIG’s discussion of the recommended procedures for screening excluded individuals or entities, described below, contains a significant change in the OIG’s position regarding the effect of exclusion on participation in other government procurement and nonprocurement transactions. Current regulations provide that excluded entities and individuals are prohibited from participating in all federal government procurement and nonprocurement programs. 2 C.F.R. § 376.147. The updated SAB, however, states that “OIG exclusion does not affect a person’s ability to participate in other government procurement or non-procurement transactions.” The new guidance does not acknowledge the conflicting regulation, and provides no indication whether the OIG will seek to amend the regulation to reflect the apparent change in position. Permissible arrangements with excluded parties OIG also appears to have modified its position concerning the circumstances under which a provider may contract with or employ an excluded party. The updated SAB explains that a provider may contract with or employ an excluded party so long as federal healthcare programs do not pay, either directly or indirectly, for the items or services provided or furnished by the excluded party. Additionally, the provider may employ or contract with an excluded party so long as the excluded party only furnishes items or services to non-federal healthcare program beneficiaries. Clarifying prior guidance which provided that “no Federal program payment may be made to cover an excluded individual’s salary, expenses or fringe benefits,” the updated SAB explains that the provider need not pay the excluded party from a separate account so long as no claims are submitted to federal healthcare programs for items or services furnished by that excluded party. Consequences for exclusion violations The updated SAB devotes significant discussion of the penalties for failing to abide by the payment prohibition. The guidance makes clear that any payment involving an excluded party constitutes an overpayment, irrespective of who receives the payment. The OIG also emphasizes its statutory authority to impose CMPs on an individual or entity that “arranges or contracts (by employment or otherwise) with an individual or entity that the person knows or should know is excluded. . . .” The OIG may impose a penalty of up to $10,000 for each item or service as well as an assessment of up to three times the amount claimed. Moreover, a violation of the payment prohibition is itself a basis for exclusion. Excluded individuals and entities that violate the terms of their exclusion may face criminal, civil, and administrative penalties in addition to being denied reinstatement. The updated SAB reminds providers that they can use the OIG’s recently revised Provider Self-Disclosure Protocol to resolve potential CMP liability for arranging or contracting (by employment or otherwise) with an excluded party. See Health Alert: OIG releases revised and expanded self-disclosure protocol (April 19, 2013). OIG’s screening recommendations

The updated SAB significantly expands on the recommendations for screening individuals and entities, including details regarding when screenings should be performed, who should be screened, and how the screenings should be performed.

When to screen

The OIG includes a specific recommendation regarding the frequency of screenings. While acknowledging that there is no statutory or regulatory screening requirement, the updated SAB advises that a monthly screening protocol “best minimizes potential overpayment and CMP liability.” Previously, the OIG had recommended screening prior to hire and periodically thereafter. There is no indication that OIG has truly contemplated the financial and administrative burden associated with implementing their proposed monthly screenings.

Who to screen

To determine who should be screened, the OIG recommends that providers review its relationships to identify individuals and entities who provide or order any item or service that is directly or indirectly, in whole or in part, payable by a federal healthcare program. The OIG notes that liability could result if a claim includes any item or service furnished by an excluded individual or entity regardless whether the provider paid the excluded party for their services (e.g. “a non-employed excluded physician who is a member of a hospital’s medical staff or an excluded healthcare professional who works at a hospital or nursing home as a volunteer.”) The OIG cautions that providers should determine whether to screen contractors, subcontractors, and the employees of contractors using the same analysis the provider would use in deciding which of its own employees to screen. The OIG gives providers some guidance on how to prioritize screening efforts by noting that the greatest risk of CMP liability is for those integral to the provision of patient care.

How to screen

The OIG’s new recommendations for screening appear more extensive than the current screening practices of many providers. While acknowledging that providers may utilize third parties or contractually obligate their contractors to perform the screening functions, the OIG emphasizes that the ultimate responsibility for preventing prohibited payments rests with the provider. Accordingly, the provider may not only be subject to overpayment liability for any items or services furnished by any excluded individual or entity regardless of whether or by whom screening is done, but may further be subject to CMP liability if the provider does not ensure that the screening was appropriately performed. The updated SAB specifically recommends that when relying on another party to perform a screening function, the provider exercise due diligence to assure that the contractor or third party is actually and properly performing the screening (e.g. “by requesting and maintaining screening documentation from the contractor.”) Finally, the OIG strongly encourages providers to utilize the exclusion information in the List of Excluded Individuals and Entities (LEIE) accessible through the OIG’s website rather than other sources such as the General Services Administration’s System for Award Management (SAM), the National Practitioner Data Bank, or the Healthcare Integrity and Protection Databank. Practical considerations In sum, the updated SAB is a decidedly mixed blessing for those dealing with the implications of federal healthcare program exclusion. On the one hand, providers seeking to utilize excluded parties for activities that do not implicate federal healthcare programs now have a clearer and more flexible framework to maintain those relationships, and excluded parties will have greater freedom to participate in occupations or activities that receive some form of federal funding so long as they do not involve the provision of items or services reimbursed by federal healthcare programs. On the other hand, the updated SAB underscores the OIG’s willingness to pursue overpayments and CMPs against anyone that violates the federal healthcare program payment prohibition as broadly understood. Moreover, the OIG’s new recommendations for screening are likely to be quite administratively burdensome and costly, particularly for health plans, pharmacies, laboratories and other providers and suppliers whose federal healthcare program payments rely on the services or orders of other healthcare providers. As providers revisit their current screening protocols it remains to be seen whether they will conclude that the potential for overpayments and CMP liability warrants adopting the full risk mitigation strategy proposed by the OIG. Taken together with the recent update to the Self-Disclosure Protocol, this updated SAB demonstrates yet again the OIG’s commitment to utilizing and enforcing its exclusion authority.

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Government Contracts AdvisoryMAY 7, 2013

SBA Removes Limitations on Dollar Amount for Women-Owned Small Business Set-Asides

On May 7, 2013, the Small Business Administration (“SBA”) issued an Interim FinalRule which removes the limitations on the dollar amount of a contract that can be setaside for Women-Owned Small Business (“WOSB”) concerns. See 78 Fed. Reg. 26504.The SBA is amending its regulations to implement Section 1697 of the National DefenseAuthorization Act of Fiscal Year 2013. See January 8, 2013 Client Advisory. The WOSBProgram, set forth in section 8(m) of the Small Business Act, 15 U.S.C. 637(m),authorizes contracting officers to restrict competition to eligible WOSBs or EconomicallyDisadvantaged Women-Owned Small Businesses (“EDWOSB”) for federal contracts incertain industries. The SBA issued the Final Rule establishing WOSB set-asides onOctober 12, 2010 seeking to increase the participation of women-owned firms in federalgovernment contracting. See 75 Fed. Reg. 62258; Oct. 12, 2010 Client Advisory. The2010 Final Rule set forth the requirements for qualifying as a WOSB, provided theformula to identify the industries in which WOSBs are underrepresented, and imposedthe statutory limitations on the dollar amount of WOSB set-asides.

In establishing the WOSB Program, section 8(m) of the Small Business Act originally stated that contracting officerscould only set-aside a requirement under the program if the anticipated award price of the contract did not exceed $5million in the case of manufacturing contracts and $3 million in the case of all other contracts. Recently, SBA hadamended its regulations to adjust these thresholds for inflation, increasing the WOSB Program limits to $6.5 million for

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manufacturing contracts and $4 million for all other contracts. See 77 Fed. Reg. 1861.

The SBA’s Interim Final Rule now eliminates these dollar limitations. As a result, these dollar limitations can be removedfrom the Federal Acquisition Regulation (“FAR”). Contracting officers will be able to set-aside contracts under the WOSBProgram at any dollar amount, as is the case for the other small business set-aside programs.

Other than lifting the dollar limitation thresholds, the WOSB Program regulations are unchanged. The Interim Final Ruleis in effect immediately. Comments on this rule are due by June 6, 2013.

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