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Albania

Overview
Including: Types of Business Entity; Sole Proprietorship; Unlimited Partnership; Limited Partnership; Limited Liability; Joint Stock; Branches and Representative Offices; Joint Ventures; Trade Licences; Registration Documentation.

While the Commercial Law provides for the possibility of dissolving joint stock companies through a court decision, it fails to provide any particular grounds as to when a court should be active in this regard. This means that various different grounds may lead any interested party (ie, a state authority, shareholders, administrators) to petition a court for the dissolution of a joint stock company.

The new Corporate Governance Code for unlisted joint stock companies incorporates the Organisation for Economic Cooperation and Development definitions and principles on corporate governance, setting down the structure under which the company's objectives are set and the means of attaining those objectives and monitoring performance are determined. The code is not legally binding; rather, it is considered to be guidance for unlisted companies.

The first quarter of 2012 saw intensive debate on the need to review and amend the Commercial Law. This update examines two of the 33 proposed amendments contained in the final draft of amendments to the Commercial Law, regarding share capital and the dissolution of a company.

New amendments to the Law on Entrepreneurs and Commercial Companies have increased the minimum share capital of privately held joint stock companies from Lek2 million to Lek3.5 million. Failure to comply with this new requirement by the end of a transitional period will trigger the dissolution of the company.

In cases of capital increase through the issuance of new shares, the price of the new shares is often irrelevant to the shareholders because they participate in proportion to their existing shareholdings. This can be problematic if an existing shareholder is unable or unwilling to make a contribution in proportion to its shareholding. In this context, preemption rights can be used to resolve the issue.

Despite recent reforms to the Company Law, some aspects of the law still need to be developed by doctrine and jurisprudence. According to the law, a general meeting of shareholders in limited liability companies is convened by the administrator or, in specific cases listed by the law, by the shareholders. However, the law contains no provisions regarding the case where the administrator can no longer perform his or her duties.

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Algeria

Since 2008 the government has introduced various restrictions on foreign investment in Algeria. Companies cannot engage in foreign trade activities unless 30% or more of their capital is held by resident Algerian nationals, while certain foreign investment is subject to a 51% shareholding requirement.

In recent years Algeria has enjoyed rapid economic growth after a long period of stagnation. In order to support this trend the government has introduced a wide-ranging programme to encourage foreign investment. Additional benefits are available in respect of investments in sectors which qualify for special state aid or are of national economic interest.

Angola

December 6 2004 saw the entry into force of the new Law on Industrial Activities. The legislation sets out the general norms and principles applicable to all industrial activities, as well as the rules for the avoidance of risks to security, public health and the environment inherent to such activities.

Angola is undergoing major economic development, and with the enactment of the new Company Law foreign investors have gained a number of benefits relating to the flexibility of structuring joint venture companies. The new law appears to have provided a suitable response to several issues which are usually raised during the process of setting up a company.

The new Company Law which entered into force earlier this year is a milestone in the ongoing reform of the Angolan legal system. It modernizes the legal framework for corporate structures and ensures a high degree of stability and credibility, expected to be an important factor in attracting private investment.

A recently enacted law approving the statutory regime applicable to agency and commercial concession agreements fills a regulatory gap which has been keenly felt for several years. Parties that decide to structure their transactions on the basis of its provisions will benefit from increased legal certainty, which is expected to translate into an increase in business.

A new law creates greater legal certainty by setting out the rules applicable to three typical business cooperation agreements between companies: the partnership, the consortium and the corporate group. This should provide new incentives for investors to get involved in the Angolan economy and to favour associations with companies already established in Angola.

The Angolan National Assembly has approved a new law which provides for the automatic winding-up of companies which have lost at least half of their share capital. This new provision may prove particularly problematic for companies whose share capital is indexed to a foreign currency.

Anguilla

Anguillian legislation recognizes several types of companies: Anguilla business companies, international business companies, hybrid companies, non-profit associations, public companies, limited liability companies and partnerships. Anguilla business companies, for example, are free of tax and are entitled to do business both within and outside Anguilla.

Argentina

The granting of stock options to top-tier executives in Argentine privately held companies is becoming increasingly frequent, as they offer an excellent instrument for aligning the top executives' interests with those of the company. However, companies intending to implement such options should be aware of the risks and contingencies involved in Argentina due to the lack of specific regulation on the matter.

The Commercial Court of Appeals of the City of Buenos Aires recently passed a ruling regarding the right to exclude shareholders in closely held corporations in the event of 'just cause'. Closely held corporations account for more than 90% of legal entities in Argentina, employ more than 70% of the workforce and account for more than 50% of the economic activity in the country.

Trade secrets or confidential information regimes grant protection to valuable secret commercial information from misappropriation by third parties. Such regimes constitute an adaptive discipline seeking to respond to increasing employee mobility, changing technology and rising entrepreneurial activity. In Argentina, trade secrets are protected by Section 156 of the Penal Code and the Confidentiality Law.

Since the issue of General Resolution 7/2005, legislative activity by the Corporations Inspectorate has decreased. However, the regulations enacted by the inspectorate are now starting to have a real effect on businesses, and the courts have issued rulings in cases challenging decisions of the inspectorate.

Since the issue of General Resolution 7/2005 in August 2005, the Corporations Inspectorate has taken a step back from the need to regulate many matters concerning companies incorporated in Argentina, and specifically in Buenos Aires. The reason behind this move is the fact that all such matters requiring regulation are covered by the provisions of Resolution 7/2005.

The Corporations Inspectorate issued a resolution providing that foreign companies which register their corporate documents according to the provisions of Section 123 of the Business Associations Law must establish a domicile so that all notices sent by the inspectorate will be considered to have been duly sent and received upon delivery to the registered domicile.

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Aruba

In 2006 the Aruban government presented its plan for a form of Aruban limited liability company, known as a vennootschap met beperkte aansprakelijkheid. Parliament has now finally approved legislation on the new corporate entity. Simple and flexible, it promises to be particularly useful for tax planning.

A new form of limited liability company, designed to be simple, multi-purpose and suitable for tax planning, is expected to be introduced at the beginning of 2008. The new form facilitates company restructuring and is designed to improve the investment climate for local and international investors.

Australia

The government has released an exposure draft of the Personal Liability for Corporate Fault Reform Bill 2012, which contains proposed amendments to certain Commonwealth laws governing the derivative liability of directors for offences by their company. The majority of the proposed amendments concern provisions of the Corporations Act 2001, but they also extend to other pieces of federal legislation.

Three recent landmark court decisions on directors' duties have involved consideration of when directors are entitled to rely on the advice of advisers in the context of an allegation of a breach of their duty of care and diligence. Despite their different factual circumstances, these cases demonstrate some common threads that are emerging on the reliance issue, which are worthy of closer scrutiny.

The Australian Securities and Investments Commission (ASIC) has released a long-overdue regulatory guide on the related party provisions. It provides a synthesis of the regulator's views on the few judicial decisions that exist in respect of the provisions and, among other things, sets out new guidance on the criteria that ASIC expects boards to apply in determining whether a related party transaction is on arm's-length terms.

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Austria

The Supreme Court recently considered how a minority shareholder should react if the majority shareholder overrules it on a capital increase resolution that subsequently leads to the dilution of its holding. Under Supreme Court case law, (minority) shareholders are protected against a dilution of their participation following a capital increase if their statutory subscription rights are excluded.

A draft of the new act amending the company laws was recently revealed. The act aims to facilitate the establishment of an Austrian limited liability company by making the process easier and cheaper. Among other things, the minimum share capital, and consequently the minimum corporate income tax and the attendant attorney and notary fees, will be reduced.

When a capital company is in financial crisis, its shareholders often do not agree on the measures, if any, that should be taken to remedy the company's financial situation. The Supreme Court recently examined the question of whether, and to what extent, a shareholder may be obliged to contribute additional capital to a company in order to support the company's financial recovery.

The shift of liability from the officers and directors entitled to represent a company to so-called 'responsible representatives' aims to protect senior executives from liability for breaches of public law provisions at their company. However, if such representatives are not appointed in compliance with the law, supposedly protected senior executives may be shocked to find that they remain liable.

Shareholders of Austrian limited liability companies are subject to general fiduciary duties with respect to the company and their co-shareholders. Considering the consequences of passing shareholders' resolutions in violation of general shareholder duties, the Supreme Court recently confirmed that the arrangements for a general meeting must be determined with due regard to the other shareholders.

Members of the management board of an Austrian stock corporation are appointed for a definite period and may be recalled before the expiration of their tenure only for cause. The Supreme Court recently took the opportunity to confirm and outline a number of criteria in connection with the recall for cause of a board member. The court held that behaviour constituting grave misconduct must be verified on a case-by-case basis.

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Azerbaijan

Following recent legislative amendments concerning the operation of the State Register, it is now possible to conduct the effective equivalent of a company search at the Ministry of Justice. Meanwhile, amendments to the Civil Code set out clearer procedures for the formation and operation of limited liability and joint stock companies.

Belgium

The Pre-contractual Information in the Framework of Commercial Cooperation Agreements Act 2005 protects the economically weaker party in certain commercial partnership agreements. Although this legislation is not unique, it often gives rise to surprise, disbelief and specific questions.

The starter public limited liability company was supposed to be the corporate vehicle for tough economic times - a home-grown alternative to the UK limited company and Germany's 'mini-Gmbh'. However, it is arguable that its limited advantages fail to outweigh its drawbacks. If so, where do the problems lie?

A law has been passed whereby at least one-third of members of boards of directors of listed companies (and certain autonomous state undertakings) must be "of the minority gender" - in the case of most companies, this means women. Companies affected by the law should be aware of their main obligations and the penalties for non-compliance.

Several members of Parliament have proposed legislation that would further restrict the variable remuneration awarded to directors and other senior managers of listed companies and autonomous state enterprises. Although it is far from certain that the proposals will become law, they clearly indicate that the battle over big bonuses is far from over.

A new act transposes the EU Shareholders' Rights Directive into Belgian law. It aims to strengthen shareholders' rights and solve problems relating to cross-border voting. Its provisions remove some of the obstacles that have deterred shareholders from participating in general meetings, such as geographical distance and short notice periods, by encouraging the use of new technologies.

The Unilateral Termination of Exclusive Distribution Agreements of Indefinite Duration Act will soon celebrate its 50th anniversary. The act grants Belgian distributors significant protection against unwanted or early termination of distribution agreements. However, since the act became law, the protection it offers to distributors has gradually been eroded.

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Belize

The International Limited Liability Company (LLC) Act provides a general framework for the establishment and operation of an international LLC. The act introduces numerous asset protection features that make Belize's LLC one of the strongest asset protection tools available.

Bermuda

The Bermuda Corporate Service Provider Business Act 2012 recently came into effect. This legislation establishes a new licensing and supervisory regime for professional corporate service providers, which act as agents for the formation of corporate entities and provide corporate secretarial services. The changes will facilitate the formation of new companies and partnerships.

Among other things, the Companies Amendment (No 2) Act 2011 provides for greater flexibility in corporate administration, simplifies the requirements for the electronic transfer of securities and introduces the previously unavailable concept of mergers as an alternative to other business acquisition models. It is hoped that these changes will enhance Bermuda's edge over rival offshore jurisdictions.

The Senate recently passed the Companies Amendment (Number 2) Act. The act updates and improves Bermuda's company law and provides, among other benefits, the opportunity for simplified management and operation of companies and an enhanced choice of corporate structures for mergers and acquisitions – all of which are aimed at making Bermuda a more attractive and competitive jurisdiction.

The Companies Act sets out specific requirements to which every Bermuda company must adhere, including requirements to have a local registered office address and to keep various statutory books at the registered office. While every Bermuda company must ensure that all requirements of the act are properly complied with, it may prove difficult without the assistance of an experienced corporate services provider.

A general meeting is under the control of the chairman, who must concentrate on the punctilious conduct of the meeting. The company bylaws usually provide for the appointment of a chairman. Generally, the chairman of the board of directors will act as chairman of the general meeting. If that person is absent, another director nominated by the board will normally assume the position.

The House of Assembly recently passed six bills which aim to improve the operations of businesses in Bermuda. It is anticipated that the bills will receive Senate approval within the next few months. The passage of these bills will greatly improve Bermuda's already high standing and increase its competitiveness with other offshore jurisdictions, thereby establishing Bermuda as a premier location in which to do business.

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Bolivia

The Commerce Registry must offer the administration of its main functions to a private entity by way of public bidding in a concession process. However, the registry will maintain the right to impose sanctions upon any person or entity that engages in commercial activities without registration.

This update discusses partially government-owned entities, which are considered to be entities organized under private law. Their formation, incorporation and directorship are reviewed.

The Commerce Registry regulates and guarantees the exercise of commerce under the supervision of the Ministry of Economic Development.

Brazil

In addition to the legal remedies set forth under Brazilian law, piercing the corporate veil is an alternative to the general rule of limited liability. Although the courts have widely applied this doctrine, it has not always been the proper and most effective measure for resolving disputes. A new bill therefore aims to prevent misuse of the doctrine and safeguard certain principles recognised by the Constitution.

In a limited liability company, the liability of each partner is limited to the quota for which he or she has subscribed, but all partners are jointly and severally liable until the social capital has been fully paid up. Once the capital has been paid up, liability is limited to the amount of each partner's ownership interest (ie, the amount of their respective quotas). However, there are exceptions to this general rule.

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British Virgin Islands

Until recently, it was a matter of conjecture as to how the 'usual or regular course of business' exception to Section 175 of the Business Companies Act should be applied with respect to single purpose vehicles which hold a single asset. The BVI courts finally had an opportunity to express their view in on the matter in Ciban Management Corp.

Joint ventures will often involve a degree of commercial risk for the parties involved. In order to mitigate this risk as far as possible, shareholders should endeavour to anticipate and avoid common pitfalls when entering into a joint venture arrangement, and should be aware of the tactical options available to them should this relationship break down.

The British Virgin Islands is the world's most popular offshore corporate domicile. The Business Companies Act has been amended to introduce a number of measures aimed at keeping the British Virgin Islands' keystone corporate legislation up to date and attractive. The amending act represents the first major review of the Business Companies Act since 2006.

New regulations have come into force which govern the use of restricted company names in the British Virgin Islands. The BVI Financial Services Commission recently published an expanded list of restricted company names and introduced a non-refundable fee of $100 payable by persons wishing to apply to use a restricted name.

The ability to issue blank cheque preferred shares can be used for a number of purposes and so has a meaningful role to play in private equity, M&A and capital markets transactions. In using a BVI company where blank cheque preferred shares are employed, it is important to ensure that the mechanism for the issuance of such shares does not place the directors in a situation where their actions cause a variation of class rights.

An important issue for a company being accepted for listing purposes on international stock exchanges is shareholder protection. BVI corporate statutes now place more emphasis on protection of the rights of minority shareholders and, as a result, BVI companies are now accepted on the Hong Kong Stock Exchange.

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Bulgaria

The Bar Act was adopted in response to changes in the legal profession, in particular the demand for more complicated legal services and the gradual movement away from sole practitioners to lawyers working in association. Among other things, the act allows lawyers to incorporate law firms for the first time.

A mandatory regulation introduced into contract law enables parties to a contract with a significant international element to introduce a foreign choice of law provision with regard to the merits of the contract. However, the choice of law cannot repeal the effect of mandatory provisions, either of Bulgarian law or of the law to which the contract is mostly closely related.

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Canada

The Supreme Court of Canada recently rendered judgment on the rules governing false and misleading representations under Quebec's Consumer Protection Act. It held that the test is not what a consumer of average intelligence, scepticism and curiosity would understand from the commercial representation, but rather what a credulous and inexperienced consumer would comprehend.

All searches or seizures must be expressly authorized by an 'authority' - a statute, order or warrant - which may give investigators the right to access premises and records. It is often an offence to refuse authorized access, obstruct an authorized investigation or hide or destroy documents relevant to the inquiry. If a company finds itself under investigation, key objectives should be taken into account in order to manage the situation effectively.

Companies that communicate with the British Columbia provincial government on a regular basis may be affected by the changes to the British Columbia Lobbyists Registration Act which recently came into effect. This update looks at these changes and compares the amended act to the Federal Lobbying Act, which deals only with lobbying the Canadian federal government and Canadian federal public office holders.

Following amendments to the Business Corporation Act, the province of Alberta has moved into the area of unlimited liability corporations (ULCs), previously a bread-and-butter source of revenue for Nova Scotia and its law firms. The new legislation has raised questions as to whether the Alberta ULC will replace its Nova Scotian counterpart.

Regulators in Canada have recognized the effectiveness of a well-considered and properly enforced code of business conduct. Although many companies already have codes in place, new corporate governance regulations will soon require many of those companies to update their codes and others to adopt a code for the first time.

New listing standards would require companies listed on the New York Stock Exchange (other than foreign private issuers) to adopt specified governance practices as a condition of listing. The changes are significant and impose requirements which differ in many respects from those to which Canadian companies listed on the Toronto Stock Exchange are subject.

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Cayman Islands

A recent Grand Court decision provides useful guidance regarding 'loss of substratum', one of the bases which justifies a winding-up on just and equitable grounds. The case demonstrates that the Cayman courts are willing to take a commercial view in relation to substratum arguments in appropriate cases in order to assist investors in Cayman companies.

The Exempted Limited Partnership Law (2007 Revision) has been amended by the Exempted Limited Partnership (Amendment) Law 2009. Many of the changes clarify the existing law and place greater reliance on the expressed provisions set forth in the partnership agreement. The amendments took effect on May 11 2009.

Chile

The new Individual Limited Liability Enterprises Act allows a sole proprietor to create a limited liability enterprise as a free-standing legal entity. Previously, Chilean law required that legal entities be established and run by at least two partners or shareholders.

The Chilean Corporations Act regulates the activities of boards of directors, shareholders meetings and the rights of minority shareholders. The act was amended in December 2000 and key changes are highlighted in this update.

This update discusses the establishment of boards of directors, their duties and their responsibilities towards shareholders. It also covers the differing provisions regarding open and closed corporations.

Including: Structures; Limited Liability Privilege; Open and Closed Corporations; Formation; Capital Requirements; Transferability of Interest; Management Structure; Profit Allocation; Income Tax

The Central Bank of Chile has abrogated the restriction imposed on foreign capital investments that they remain in the country for a 12-month period from the date of investment. It is hoped this will enlarge the foreign exchange market and ease the flow of foreign capital.

China

The Ministry of Commerce has recently decentralized its approval powers with respect to foreign-invested commercial enterprises, delegating the power to approve the establishment of and changes to such enterprises to its provincial counterparts. The provincial governments are eager to attract foreign investment and the change should make it much simpler to establish a foreign-invested commercial enterprise.

Various government departments have jointly issued Implementing Opinions on Certain Questions Concerning the Laws Applicable to the Administration of the Approval and Registration of Foreign Investment Companies. The opinions restate much current law but also aim to clarify certain principles in China's foreign investment regime that overlap or conflict with the revised Company Law and the Company Registration Regulations.

The amendments to the Regulations on the Administration of Company Registration bring the rules into line with the newly amended Company Law and clarify various points related to registration. They also increase the financial penalties for non-compliance which may be imposed on companies and their directors.

A number of local administrations for industry and commerce in China have stopped accepting applications to register liaison offices and will not renew existing registrations. Foreign-invested enterprises that have used liaison offices to minimize tax liability may wish to evaluate the options offered by a branch structure.

As individual members of a corporation's decision-making body, directors do not usually bear personal liability for the actions of the corporation. Nevertheless, in certain circumstances directors can be personally liable for damages to others as well as to the company itself. A director may even bear criminal liability in some situations.

The Ministry of Commerce has issued a notice regarding foreign investment in distribution activities in China. Before the issuance of the notice, there was limited guidance on the procedures for existing foreign-invested enterprises to include distribution in their business scopes.

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Colombia

At the end of 2012, Superintendent of Industry and Commerce José Miguel de la Calle announced his retirement from this role. During his two-year tenure, de la Calle saw several important goals achieved, including issuing the new Consumer Protection Law and dealing with cases relating to false or misleading advertising.

The supervisory agency for corporations has repeatedly held that only those entities that are legally considered as persons can conclude contracts through which a company is incorporated. This has caused problems for the practical development of trust contracts, within which autonomous entities can acquire shares and participate in corporations. However, new laws have clarified the issue.

The Constitutional Court has ruled that the controlling shareholder of a liquidated company is 'temporarily' liable for its affiliate company's mandatory social security and pension fund contributions.

In its new document "Policy Guidelines for Negotiation of International Agreements on Foreign Investments", the Council of Economic and Social Policy approves guidelines for the negotiation of international agreements for foreign investments.

The Colombian government recently sanctioned Law 689 amending the public services law. This update discusses the amendments and the effect that they will have.

The recently enacted Law 677/2001 was sanctioned by the Colombian government and creates Special Economic Zones for Exportation within the borders of the several municipal territories. These zones offer tax incentives for exported goods, thus encouraging foreign investment.

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Costa Rica

This update explains the way in which a company in Costa Rica is to be established and governed, with an emphasis on the requirements and restrictions applicable to foreign owned businesses.

Cyprus

A new law on the regulation of fiduciaries, administration businesses and company directors is expected to be tabled before the House of Representatives before the end of 2012. Among other things, it aims to regulate the provision of administration services to companies and establish licensing procedures and rules on the provision of corporate services, offering security to clients and strengthening confidence in the sector.

The Companies Law provides that each company with subsidiaries must consolidate its financial accounts with those of its subsidiary companies as prescribed by international accounting standards. The basic provisions of the law on consolidated accounts were recently amended to illustrate the circumstances in which companies may be exempt from these obligations.

In July 2010 Cyprus took action to implement the EU Shareholder Rights Directive by transposing it into the Company Law by virtue of Amendment Law 60(I)/2010. The amendment law introduced new rights for shareholders of publicly listed companies to attend and vote at general meetings remotely, gain access to relevant information and raise questions, among other things.

The Company Law recently underwent significant changes. One such change was the deletion and replacement of Sections 114 to 117, which contained anachronistic provisions regarding the maintenance of corporate share registers. The new sections have removed references to Cyprus's old colonial status and modernized the relevant provisions to bring them into line with today's commercial requirements.

It is a long-established rule that a Cypriot company must have a corporate seal, which must be kept at the company's registered office under the custody of the company secretary as directed by the board of directors. Recent amendments to the Company Law have clarified the position on corporate seals.

After some delay, Cyprus has implemented the EU Statutory Audit Directive through its enactment of the Law on the Obligatory Audit of Annual and Consolidated Accounts by Legally Registered Accountants and Audit Firms. The new law introduces statutory requirements for the audit profession and a public oversight system for regulating auditors and audit firms and clarifying their duties in line with the EU directive.

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Czech Republic

An amendment to the Commercial Code has introduced several changes to Czech commercial law. The most significant of these changes is the reworded Article 386(1), which regulates the limitation of liability for damages. This change has been well received by both legal theorists and practising lawyers.

A new amendment to the Commercial Code and the Capital Markets Act recently came into effect. The main purposes of the amendment are to incorporate the EU Shareholder Rights Directive into Czech law and to facilitate the exercise of shareholders' rights in Czech companies in general. The amendment could also speed up the process of convening general meetings of Czech companies.

The field of consumer protection is a crucial area of law because it determines the fundamental boundaries of the consumer-business economic relationship. The legislature has recently stepped into this field and apparently changed the overall balance in favour of the business.

An act due to come into force at the start of 2007 will make the state responsible for damage caused by its employees serving as members of company corporate bodies. The amendments address situations where a state employee is assigned to work as a state representative for a corporate body of a legal entity.

Recent amendments to the Commercial Code and the Act on Accounting impose new publication duties on companies. Joint stock companies with bearer shares must now convene a general meeting by publication of a notice of convocation in the Commercial Gazette.

The Czech government has adopted legislation in the form of three separate laws to introduce the societas Europaea into the legal environment. As of December 14 2004, it is possible to establish a societas Europaea in the Czech Republic and transfer it to or from the Czech Republic.

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Denmark

The Maritime and Commercial Court recently found that a former managing director had violated his duty of loyalty when he stated that he had continued his sold company under a new name. The case centred on the question of whether the former company owner and managing director was entitled to a bonus pursuant to a purchase agreement entered into with the purchaser of his company.

Ecuador

In a case opposing an Ecuadorian corporation and a California winery, a Guayaquil court found that it lacked jurisdiction because both parties had agreed in a distribution contract that any disputes should be heard by a California court. The ruling confirmed that Decree-Law 1038-A/1976, which was repealed in 1997, does not apply to distribution contracts signed before that year.

The Guayaquil Superior Court recently found that in the absence of clear and convincing evidence that a corporation was established to carry out fraudulent activities, the corporate veil will not be pierced. The ruling confirms the traditional view that the doctrine of piercing the corporate veil is an exceptional tool that must be applied only in unique circumstances.

The Law on Transparency and Access to Public Information was passed on May 18 2004 in an attempt to create a climate of legal certainty and security. The new law strengthens principles of transparency and information which, although added to the Constitution in 1998, have largely not been implemented in practice, even in cases before Ecuador's Constitutional Court.

Recent court decisions have indicated the circumstances in which the shareholders, directors or managers of a company can be held personally liable for its actions. In a case where the corporate veil was pierced, the defendant was found to be using a company for private purposes and was ordered to fulfil the obligations of the company.

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El Salvador

A number of mergers and acquisitions in recent years have resulted in more multinational companies conducting business in El Salvador through the companies they have acquired. As a result, the commercial sector has come under pressure to internationalize the corporate governance regulations that apply to local subsidiaries of foreign companies.

Since January 2006 the Integral Business Shop has provided individuals and entities with a simpler and more efficient procedure for incorporating and registering a business. Registration can now be completed at one agency, thereby considerably shortening the timeframe for incorporation.

The Commerce Code requires that all corporations and partnerships hold at least one ordinary general meeting by May 31 of every year. The purpose of the meeting is to inform the shareholders or partners of the financial status of the entity over the preceding tax year, so that they can decide on corrective measures - if necessary - and make the necessary provisions for the next year.

An amendment to Salvadoran commercial legislation, originally introduced in January 2000, set a minimum capital stock requirement for all new and existing companies, to be met within three years. The deadline was deferred by a succession of extension periods, the latest of which expires in April 2006. Non-compliant companies risk losing their legal status and may be subject to voluntary or judicial liquidation.

The Commerce Code establishes different terms for the lapse of legal actions that are the result of various mercantile contracts. Following the approval of amendments to Article 995 of the code, the term for the lapse of legal actions over a credit agreement is five years, commencing from the date of the last acknowledgment of debt granted by the debtor in favour of the borrower.

Once new amendments to the tax laws take effect, a new precondition of fiscal solvency must be satisfied in order to incorporate, transform, merge, dissolve or liquidate a Salvadoran company. Fiscal solvency will be recognized as long as the company does not have tax returns pending to be filed or due taxes unpaid.

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Estonia

According to Estonian law, a party is entitled to claim prearranged interest on payments that have been delayed (interest on late payment). However, certain activity can affect a claim of interest on late payment and may lead to the claim being abolished. Primarily, this happens when the principle of good faith is violated.

In recent years there has been much debate surrounding the liability of management board members, particularly where the board member has caused damage to the company through a null and void transaction. In a recent decision the Supreme Court increased the liability of management board members in such disputes.

Until recently, a business could register several areas of activity in connection with its name in the Commercial Register. However, on January 1 2007 amendments to the Commercial Code came into force that replace the phrase "area(s) of activity" with the phrase "principal activity". This means that a company can notify the Commercial Register of only one area of activity.

The new Commercial Code, which came into force last year, gives companies broader powers to determine the procedure for the payment of dividends. However, these powers are limited by other considerations, such as ensuring that the process of determining how to pay dividends is in line with good practice and the principle of good faith.

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European Union

The European Commission recently presented its proposal for a Council Regulation on the Statute for a European Private Company. With the objective of making the single market more accessible to small and medium-sized enterprises, the proposal offers a uniform yet flexible corporate vehicle which is aimed at enabling these companies to use the same company form across the European Union.

France

France has so far lagged behind efforts to give shareholders a greater say on remuneration for corporate officers. However, the government has indicated that it may propose legislation later in the year, possibly before the summer, to modernise legislation on corporate executive pay. To this end it is consulting stakeholders on the shape that future changes could take.

Management agreements have become a useful tool for the effective organisation of management structures within group companies. However, their implementation is far from risk free. The most sensitive area is the provision by the holding company of core executive management functions, such as general leadership, supervision and strategy, as opposed to more technical or accessory functions, such as finance or IT.

Hot on the heels of the changes introduced by the 2012 finance law, further amendments have now been made to transfer duties due on the transfer of securities. Under the new provisions, share transfers in listed and unlisted companies will be subject to a single rate of 0.1% instead of the previous three-band scale.

The legislature recently introduced a diverse package of measures designed to modernise French company law by introducing simplified procedures and removing constraints across a wide range of areas. Among other things, the rules on the preparation and filing of annual accounts have been simplified; but the Commercial Court has gained more powers to require companies to comply with their filing requirements.

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Germany

Directors of German limited liability companies are not liable for claims against the company. However, it is not always clear whether directors are free from liability if the company is involved in a wrongful act. In recent years there has been a trend to emphasise directors' liability.

German company law has traditionally been hostile to the international mobility of companies. However, Germany now accepts that EU companies may be directed from within Germany, without any negative impact on the companies' recognition. Recently, the Nuremberg Higher Regional Court had to decide on the transfer of a Luxembourg private limited company to Germany.

When preparing a letter of comfort, the parent company must take care to limit its liability as far as possible. However, the more that the parent company reduces its liability, the less that the letter of comfort is suitable to provide comfort and prevent insolvency. As the parent company will be responsible for all uncovered debts, it should check thoroughly its subsidiary's financial position when issuing the letter of comfort.

In a recent resolution, the Munich Upper Regional Court held that the German regime on the registration of company names also applies to the registration of German branches of foreign companies, such as the German branch of an English private limited company.

The company law reform of November 2008 established a new regime of subdivision and attribution of shares in German limited liability companies. All shares must now be numbered, so that each share can be easily identified and it is simple to keep track of any transfers to new shareholders. Shareholders in German limited liability companies should ensure that they are registered on the relevant shareholder list.

In a series of judgments the German courts have subjected directors of UK limited companies with centres of main interest in Germany to German insolvency law. This issue has long been disputed by legal commentators and may well be referred to the European Court of Justice.

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Ghana

In June 2008 the now famous extraordinary general meeting of CAL Bank, a public company listed on the Ghana Stock Exchange, presented a test case for corporate governance in Ghana, in the full glare of the media. The case has set a precedent on the exercise of shareholders' rights in public companies and warns that shareholders' rights must not be taken for granted.

The Millennium Challenge Corporation (MCC) provides grants to developing countries to implement projects that reduce poverty through the promotion of sustainable economic growth. A governance agreement was executed between the government of Ghana and the MCC, along with an authority which ensures participation of key stakeholders and proposed beneficiaries of the compact funds.

In Ghana, non-governmental organizations (NGOs) have traditionally operated in an environment with minimal standards for measuring their transparency and accountability. However, the growing need for accountability has now led the government to propose the Trust Bill, which sets out a legal framework for the operation of NGOs.

Greece

Parliament has voted in a new law aimed at simplifying incorporation procedures. For some time now, this has been a priority of the economy minister and is viewed by her staff as a significant measure towards encouraging new business. It is also envisaged that incorporation costs will by cut by nearly half, as well as effectively facilitating one-day incorporation.

The health minister has announced a controversial plan to limit shareholder participation in companies involved in the provision of primary healthcare (ie, diagnostic services) by implementing a 51% majority rule in favour of doctors. The proposals are already controversial and, if enforced, will constitute a significant deviation from the common principles of company law.

This update looks at the potential personal liability of a chief executive officer towards the company, the government and third parties. Greek law makes no distinction between the person holding the office of managing director and the person who acts as managing director through, for example, power of attorney. Thus, most penalties apply to those holding office and those exercising actual power.

Guatemala

The Commercial Registry's Fast-Track Window provides a unified point of contact for all procedures involved in the registration of companies and other commercial enterprises. The new facility, which involves a single form and a one-off payment, is part of a national initiative to attract foreign investment.

The streamlining of administrative procedures means that a Guatemalan company can obtain provisional registration in eight business days. A provisionally registered company can carry out business, sign contracts, issue invoices, open bank accounts and print shares.

Guernsey

The Commerce and Employment Department has released a consultation document regarding possible changes to the Companies (Guernsey) Law. Many of the proposed changes aim to clarify existing provisions. The consultation generally appears to be a fine-tuning exercise aimed at improving the provisions of a law which is already regarded as taking a modern approach to company law issues.

Although the existing law on limited partnerships in Guernsey functions well, as part of a general review of the jurisdiction's commercial laws, the States of Guernsey has taken the opportunity to propose amendments to the law in order to increase its flexibility and certainty, thereby ensuring that Guernsey remains a frontrunner for those seeking to establish limited partnerships.

A proposal to introduce limited liability partnerships (LLPs) into Guernsey law has been approved by the government. Guernsey's LLP regime will bear some similarities to that of the United Kingdom. Although their use will not be limited in scope, it is expected that the LLPs will mostly appeal to practitioners in professional firms who currently work within a general partnership.

The entry into force of the Companies Law 2008 brought a significant change to the types of company that still require a statutory audit. It also introduced a different process for adopting the extended exemptions from audit now allowed. While the number of companies that can qualify for audit exemption has increased, the potential for missing critical filing deadlines has grown.

The Companies (Guernsey) Law 2008 is new legislation which primarily consolidates existing law but will also incorporate a number of improvements. It was approved by the States of Guernsey (the island's government) on January 30 2008 and is now awaiting royal assent. It is expected to enter into force no later than July 1 2008.

There has long been an awareness of the need for a comprehensive overhaul of company law that would integrate and consolidate all existing amendments as well as ensuring the highest international standards. Proposals have been put forward to revise completely Guernsey's company law. This update lists major and other proposed changes.

Hong Kong

In order for Hong Kong to be a major international centre, its commercial legal infrastructure must keep up to date. The Companies (Amendment) Ordinance 2003 is part of the movement towards the modernization of Hong Kong company law to reflect desirable international practices. The changes should ease the compliance burden on companies and should be generally welcomed in the market.

A new bill aims to amend the Companies Ordinance by implementing a corporate rescue procedure and making individuals personally liable for insolvent trading.

This article highlights the major changes that will affect Hong Kong companies starting on November 11.

Including: Forms of Business Enterprise; Principal Legislation; Legal Issues; Foreign Company Branches; Taxation

Hungary

Under Hungarian corporate law, public companies limited by shares may operate under either a one-tier or two-tier corporate governance system. By introducing a legal basis for the one-tier system in 2006, the Hungarian regime was brought into line with that of other western European countries and with EU regulations.

Based on the Companies Act, shareholders must make decisions regarding the operation of the company and executive officers must allow inspection of the company's books and documents. According to the legal opinion of the Supreme Court, this shareholder right is a fundamental right. Nevertheless, the right is limited.

The main provisions and restrictions on share sale and purchase are set out in the Company Act on Business Associations. The act contains general rules concerning the sale of shares in limited liability companies, private companies limited by shares and public companies limited by shares.

The rules for simplified company registration have been reviewed and amended. The changes were driven by the need to coordinate creditor protection and safety rules with the key interests of small and medium-sized businesses in order to register such companies more quickly. The simplified registration procedure calls for the use of templates and thus provides a speedier alternative to the normal registration procedure.

New business entities may be listed in the Company Register by using either an instrument of construction whose content is freely established by the parties or, in a simpler procedure, the template in the annex of the Act on Public Company Information, Company Registration and Winding-Up. However, the two types of registration are separate, and companies cannot switch between procedures at a later stage.

New legislation that modified the main acts in relation to company law and company registration has recently come into force. Among other things, it amends the involuntary dissolution regime, as well as changing the law in respect of seat services and the appointment of delivery agents.

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India

The affairs of a company administration are subject to the rule of the majority - the shareholders that own the majority of the shares normally control the business. Disagreements and conflicts often arise between shareholders, with minority shareholders generally accepting the decisions of the majority shareholders. A recent dispute between the shareholders of Unitech Wireless is one such case.

Criminal liability presupposes the existence of mens rea (guilty mind) and actus reus (guilty act) - the two essential ingredients of an offence under the Penal Code 1860. Natural persons can be convicted of an offence as they possess mind; companies do not and therefore often escape conviction. Recent court decisions have settled this controversy, holding that corporate bodies can be prosecuted for criminal offences.

Any officer that contravenes its obligations and duties under the Companies Act is said to be an officer in default. The ministry recently clarified its position on the definition of 'officer in default', ruling that no director shall be held liable for any violation by the company or by any other officer of the company, if the violation occurred without his or her knowledge and without his or her consent or connivance, or where he or she has acted diligently.

The Ministry of Corporate Affairs recently issued the Companies (Central Government's) General Rules and Forms (Amendment Rules) 2011. The rules amend Form 5 of the Companies Act, which is used to detail any notice of consolidation, division or increase in share capital. Under the amendment, in the state of Delhi, the payment of stamp duty for an increase of authorised capital is now optional.

The Ministry of Corporate Affairs recently proposed the issuance of guidelines for the conversion of Section 25 companies into ordinary companies under the Companies Act 1956. These guidelines are at the proposal stage and have not yet been notified. As yet, although they provide the conditions under which conversion may occur, the guidelines do not elaborate on the effects and consequences of such conversion.

The Ministry of Corporate Affairs recently introduced its Fast-Track Exit Scheme, a modification of the previous Easy Exit Scheme that adds new guidelines to allow non-defunct companies an easy exit by having their names struck off the Register of Companies. Once implemented, the new guidelines will allow companies that became inoperative or defunct after incorporation to benefit from the scheme.

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Iran

The State Management and Planning Organization has issued new rules which aim to maximize the use of Iran's technical engineering and manufacturing resources in state projects. Iranian companies will be able to bid for contracts either alone or in a civil partnership with foreign companies.

The Guardian Council, Iran's upper legislative house, has rejected a bill that would improve the investment climate in Iran, claiming that it gave foreign investors "unfair advantages". The Parliament's reaction is now awaited.

Iraq

An international non-governmental organisation (NGO) must register to carry on its conceived activities in Iraq. The authority for registering and regulating NGOs has changed a number of times over the years. Although the requirements for registration have not changed significantly, there have been differing interpretations of the requirements and a general desire by the regulatory authority to seek more information.

Iraq and the Kurdistan Region's investment laws provide significant benefits for investors in qualified projects, principally tax and customs fees and duty exemptions. Amendments to this law are before the region's Parliament. While these laws continue to be developed, the roles played by the investment agencies are rapidly becoming more prominent.

Kurdistan today enjoys a surprisingly accessible and secure business investment climate. It is currently an attractive destination for investors and contractors. However, there remains considerable political, legal and security risk associated with working in the region. The security risk associated with operating in Iraq must be considered before contemplating investment or contracting in Kurdistan.

Any company seeking to conduct commercial activities in Iraq must register to do business in the country. While the Companies Regulations provide for the establishment of five different kinds of private company, registration options for a foreign corporation are confined to a limited liability company or a branch of a validly incorporated foreign company.

With the publication of the new Investment Law in the Official Gazette on January 17 2007, the Iraqi government has begun to re-implement the company laws and regulations that existed under Saddam Hussein's regime, replacing many of the changes introduced by the Coalition Provisional Authority.

The National Assembly has passed a new investment law, repealing Coalition Provisional Authority Order 39/2004, which established the basis on which foreign investment in Iraq was to be conducted following the fall of Saddam Hussein's regime. The new law seeks to establish the framework for the conduct of foreign and domestic investment in Iraq.

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Ireland

The larger a company, the greater the number of deaths that are likely to occur should its operational systems fail or safety policies prove inadequate. However, under current legislation it is extremely difficult to identify an individual director or board member with the required degree of control over a large corporate entity to charge with corporate manslaughter.

In response to a number of comments and submissions regarding the Guidance on Compliance Statements to be prepared by certain directors under the Companies (Auditing and Accounting) Act 2003, the director of corporate enforcement has issued a Revised Guidance which he hopes will be more accessible for directors, as it contains a number of helpful new features.

The Office of the Director of Corporate of Enforcement recently published a consultation paper and draft guidance on the new obligations of Irish company directors to prepare a compliance policy and annual compliance statement. While the guidance is welcome, a degree of doubt still remains in relation to the actual practicalities of the provisions.

A major new initiative has been launched to reform, restructure and update company law in Ireland. The government has approved the drafting of a single principal Companies Bill to replace the existing Companies Code.

Ireland's business community has long agreed on the need for a court which handles commercial cases in an efficient and businesslike manner. The establishment of the Commercial Court has now made the court system considerably more business friendly, resulting in savings to businesses as a result of its specialized approach to cases and its use of modern information technology.

Isle of Man

Previously, the approach to the treatment of a defunct company's property passing bona vacantia (ie, ownerless goods) in the Isle of Man did not generally involve the imposition of any financial charge or penalty by or on behalf of the crown, or by the Treasury or any other authority, as a condition of the re-vesting of such property in those claiming to be rightfully entitled to it. However, it seems that the policy has now changed.

The Financial Supervision Commission, which operates principally as the Manx government's regulatory authority for financial services, has issued detailed guidance on the responsibilities and duties of directors under Isle of Man law. The guidance provides a useful summary of the key aspects of the law in this area and goes some way to correcting a number of common misconceptions about the role and status of company directors in the offshore services sector.

It is more than 12 months since the Isle of Man's new statutory disqualification regime came into force and the regime has had an immediate impact on the way in which delinquent directors are dealt with on the island. Among other things, the new regime empowers the Financial Supervision Commission to accept disqualification undertakings in lieu of having to issue court proceedings.

Public companies which are incorporated under the Companies Act 1931 are now permitted to purchase and hold a maximum of 10% of their own shares as treasury shares by virtue of the introduction of new regulations. The new regulations enhance the attractiveness of so-called '1931 act companies' by allowing them to reduce the costs of capital maintenance through their ability to repurchase and hold treasury shares.

A significant new directors' disqualification regime has come into force. The Company Officers (Disqualification) Act 2009 has replaced much of the previous statutory provision, in particular Section 26 of the Companies Act 1992. It will be interesting to see what impact the new law has on the number of judicial disqualification orders that will be made in future.

Israel

The legal and competitive implications of minority shareholdings between competitors are beginning to gain greater attention in Israel. In two recent cases, the court balanced the intentions of an amendment to the Companies Law that grants minority shareholders particular protection against concerns that when a minority shareholder is also a competitor of the company, it could use such power to harm competition.

The interpretation of agreements is a well-established phenomenon in any legal system. The Supreme Court has recently reinstated the policy that whenever parties' intentions are drafted through a written agreement, its literal meaning should prevail; only in cases where there is ambiguity in such meaning should extrinsic evidence be sought in an attempt to determine the parties' intention from potential literal meanings.

Since the enactment of the Israeli Companies Act in 1999, corporate governance principles have developed throughout the world. Recent amendments to the Companies Act are the result of the implementation of principles of corporate governance in Israeli legislation. The amendments contribute to the implementation of customary corporate governance principles in line with the rest of the world.

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Italy

Italian corporate legislation does not stipulate a rule on the share premium for ordinary corporate capital increases when the option right is not excluded. As such, there is a real risk that gaps in legislation may jeopardise the interests of minority shareholders.

The government has approved economic liberalisation measures that make it easier for consumers to bring class actions. The new decree also grants the Competition Authority additional powers in respect of standard business-to-consumer contracts and extends the application of certain consumer protection provisions to microenterprises.

An Italian court has sentenced a company's chief executive officer (CEO) to 16 years' imprisonment for an offence related to the death of seven of the company's workers. This is the first case in Italy in which a CEO has been found guilty of homicide, rather than manslaughter.

Reforms to Italian company law have aimed to facilitate investment in listed companies by allowing for greater participation in shareholders' meetings by minority shareholders and investors residing outside Italy. This makes a minority participation a more attractive opportunity, especially for investors such as investments funds.

The courts are increasingly required to consider disputes under agency agreements between a principal from a non-EU state and an Italian agent operating in Italy. Where agreements include a forum-shopping clause, such disputes raise the question of how and where an Italian agent can claim against the principal.

An Italian joint stock company may issue shares that track the results of a specific line of business or a subsidiary. The value of tracking stocks depends on the return of assets by the division or subsidiary in question, but remains affected by the company's overall performance. Therefore, the company's bylaws and any shareholders’ agreements should provide for adequate regulation.

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Japan

The Tokyo District Court has ruled that a car sale agreement whereby the seller reserved the ownership of the cars until all debt was paid was not an executory contract under the Civil Rehabilitation Law. However, because the agreement on ownership reservation was regarded as a collateral agreement, the seller could execute such collateral under the civil rehabilitation procedure.

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Jersey

The law on limited liability partnerships (LLPs) in Jersey has recently been amended. Under the previous law, onerous financial requirements had proved an insurmountable barrier to the establishment of LLPs in Jersey. The amendments will enhance the flexibility of Jersey LLPs, encourage their use for investment structuring purposes and enable them to be used as an alternative structure to a UK LLP.

The Royal Court recently clarified its approach to applications made under Articles 141 to 143 of the Companies (Jersey) Law 1991. The decision makes clear that if a minority shareholder has grievances that it proposes to advance in litigation, careful thought must be given before choosing which procedural path to take. It also acts as useful guidance as to when the statutory unfair prejudice regime will apply.

The Limited Partnerships (Jersey) Law 1994 provides a comprehensive statutory framework for the establishment and operation of limited partnerships. An appropriate structure for a number of different purposes, a limited partnership is often used to provide an additional form of investment vehicle for mutual funds, in particular for the venture capital industry, and is also an attractive structure for various tax-planning purposes.

Two new types of limited partnership have been introduced in Jersey - the separate limited partnership and the incorporated limited partnership. The new forms differ from a conventional limited partnership in that each has a separate legal personality. The incorporated partnership is further distinguished by being constituted as an independent body corporate and by having perpetual succession.

It is anticipated that the Companies (Amendment No 4) (Jersey) Regulations 2010 will soon come into force. Among other things, the amendments to the rules contained in Part 16 of the Companies (Jersey) Law 1991 relating to accounts and audits effected by the regulations are being made in response to the impact of the EU Statutory Audit Directive on Jersey-based auditors.

Kazakhstan

A new law will shortly come into force to simplify norms in licensing legislation and lighten the burden for entrepreneurs by reducing the number of licences and permits for business activities. Among other things, when registering the termination of a legal entity's activities, it will no longer be necessary to submit an interim liquidation balance sheet and a notification of approval to the judicial authorities.

The concept of a 'corporate dispute' is relatively new to Kazakh law, having been introduced in 2008 by amendments to the Civil Procedural Code. More recently, the definition has been broadened significantly, bringing a wider range of disputes within the competence of the commercial courts.

A number of corporate structures can be used to carry on business in Kazakhstan, but the most common forms are the limited liability partnership and the joint stock company. Officers of these entities must be aware that their actions - or, in some cases, their failure to act - may lead to civil, administrative or criminal liability.

Kenya

Efforts to reform Kenya's key commercial laws have been ongoing for the better part of the past two decades. The Companies Bill 2010, which is currently under consideration, aims to develop a modern company law to support a competitive economy in a comprehensive form, taking into account current trends of globalisation and regional integration.

The attorney general has proposed the Companies Bill 2008. The bill aims to amend the Companies Act (Chapter 486) so as to bring the act into line with emerging trends in the formation and operation of companies and to simplify the formation and operation of such companies. As such, if passed into law the bill will simplify and demystify the formation and operation of companies.

Every financial enterprise operating under the veil of incorporation must undergo audit. Under existing legislation, auditors have no express duties beyond those of professional persons. Since the result of a litigation claim of a technically commercial nature often depends on an auditor's evidence as an expert witness, that auditor's legal liability should reflect his or her ability to influence the outcome of a case.

Although hire-purchase transactions have been beneficial to parties interested in acquiring goods, many of the requirements of such agreements have proven cumbersome. Minimum payment clauses often treat parties unfairly and the requirement for agreements to be registered is superfluous. The situation calls for a review.

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Kosovo

Since September 2011, accounting, financial reporting requirements, audit requirements, qualifications for professional accountants, licensing of individual auditors and audit firms in Kosovo have been governed by new legislation. The new law has also established the Financial Reporting Council – a body that is similar to the Board on Standards for Financial Reporting.

Latvia

The government has given its support to amendments to the Commercial Law which aim to facilitate the registration of new limited liability companies, prevent unsubstantiated freezing of capital in cases of liquidation and alleviate the administrative burden for capital undergoing reorganization and internal audit by removing the requirement for formal approval of the appointed auditor by the Register of Enterprises.

The Saeima (Parliament) has amended the Commercial Law, adding a new chapter on commercial transactions. The new chapter will introduce to the legal system provisions regulating commercial transactions, with the aim of increasing the speed and simplicity of commercial relationships, providing them with greater stability and allowing for higher levels of trust and responsibility between parties.

The absence of regulation on commercial transactions had long been considered one of the most significant drawbacks of the Commercial Law. The Saeima recently supplemented the law with a chapter entitled "Commercial Transactions", containing general provisions on commercial transactions, as well as special provisions on specific types of commercial transaction.

Parliament has approved the draft Law on Amendments to the Law on the Register of Enterprises. Among other things, the draft law will provide that documents may be submitted to the Register of Enterprises electronically and will allow data and documents to be disclosed to the public in electronic format. The draft law must be approved at three readings before it comes into effect.

The Cabinet of Ministers has approved amendments to the Consumer Protection Law. The amendments will incorporate the requirements of the relevant EU directives on equal treatment of consumers and the protection of their rights and interests without distinction of gender, race or ethnic origin.

The Cabinet of Ministers reviewed two draft laws in the field of consumer rights. One of the draft laws is designed to secure the protection of consumers' economic interests by prohibiting sellers and service providers from using unfair and aggressive commercial practices.

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Liechtenstein

A contract may not validly be concluded based on general terms and conditions if these are included after the conclusion of a contract. In cases where each party wishes to conclude the contract based on its respective terms and conditions and such terms and conditions are contradictory, the contract will be validly concluded, excluding all such terms and conditions.

Lithuania

According to the new Lithuanian Law on Companies, which came into force on January 1 2004, all companies registered in Lithuania must submit financial statements, together with a report on the company's activities and auditor's opinion (if applicable), to the Register of Legal Persons every year within 30 days of their annual general meeting.

Lithuania has adopted a Legal Persons Register, bringing the country into line with EU member states. The register will operate from January 1 2004 and will replace the existing system based on separate registers for enterprises, public organizations, associations, budget institutions, credit unions and other entities.

The Ministry of Economy recently proposed amendments to the Law on Companies. The draft contains new requirements for the inclusion of company data in the Companies Register and provides that the legal status of private limited liability companies will no longer be dependent on the number of shareholders.

Recent amendments to the Law on Companies aim to prevent minority shareholders of limited liability companies from abusing their rights. The amendments generally provide higher shareholding thresholds at which minority shareholders can exercise their rights. In addition, the articles of association of Lithuanian companies must be amended to reflect the Law on Companies by July 1 2003.

Macau

The Macau Special Administrative Region has seen economic growth accelerate in recent years, mainly due to the liberalisation of the gaming industry, a mainstay of the local economy. This, together with the fact that the public administration must keep pace with the latest technological advances, led to a demand for the amendment of the Commercial Registry Code.

Nine years after the entry into force of the Macau Commercial Code, the government decided to review and improve it in regard to new business needs arising from the economic development of the Macau Special Administrative Region. Among other things, the amendments promote the use of modern information technology by companies in communications with shareholders and document storage.

Malaysia

In Malaysia, the power to convene an extraordinary general meeting (EGM) ordinarily rests with the company directors. The members themselves do not have a common law right to compel the directors to convene an EGM. However, Sections 144, 145 and 150 of the Companies Act 1965 provide mechanisms for members to convene an EGM, to express their views about the management of the company.

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Malta

The will of the majority or the majority rule is an established general principle of company law that ensures that any decisions taken by the company conform to the will of the majority of the shareholders; the same shareholders who share a common (financial) incentive to see that the company thrives. Though a seemingly obvious and well-adjusted rule, it does have its flaws and is not immune to abuse.

Mauritius

The Mauritius Limited Partnerships Act recently came into effect and introduced a Mauritius legal entity, the limited partnership (LP). The LP structure has many advantages. LPs that have a legal personality are legal persons distinct from their members. This means that they can enter into contracts, own property and sue and be sued in their own names, making them more flexible than a company structure.

Mexico

One of the decisions that an investor must make is to choose the form of company through which it will do business in Mexico. A decisive factor in choosing a form of company is often the liability that its members may incur. Another significant issue is whether the members of the company can compete with the company's business.

Following a common international trend, the Senate has approved a bill that authorises the formation of stock corporations and limited liability companies with a single shareholder or member. The bill indicates some of the advantages for small businesses, which can limit the liability of their members and deal with public entities that are required to contract with companies rather than individuals.

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Morocco

Including: Background; Limited Liability Companies and Joint Stock Companies; Branch and Representative Offices.

Mozambique

Mozambique's most eagerly awaited legislative reform of modern times is finally underway with the enactment and entry into force of the new Commercial Code. After many years of indecision and setbacks, the government has finally approved a statute which replaces most of the country's pre and post-independence company and commercial legislation.

The government recently approved a new set of licensing regulations with the aim of streamlining procedures for the licensing of manufacturing activities. The new regulations govern the requirements and procedures for the licensing of all types of manufacturing activity, irrespective of business sector, and aim to minimize bureaucracy and speed up the procedure.

Netherlands

Parliament has adopted an act on one-tier boards which amends the rules on management and supervision within private companies with limited liability (BVs) and public companies with limited liability (NVs). The act's provisions on the board structure within BVs and NVs include changes to the legal basis for the one-tier board system and an amendment to the conflict of interest rules.

A bill on shareholders' rights recently came into force, aiming to strengthen shareholders' rights in Dutch public companies with limited liability whose shares are admitted to trading on a regulated market in the European Economic Area. The bill includes new rules on the notice for the general meeting and the amendment of a shareholder's right to request inclusion of an item on the agenda of the shareholders' meeting.

The Second Chamber of Parliament recently approved the Bill on Management and Supervision. Among other things, the bill provides a legal basis for a one-tier board of Dutch companies and introduces new rulings regarding conflicts of interest. Within the context of the debate on the bill, the Second Chamber approved an amendment concerning the maximum number of supervisory positions that one person may hold.

As a general rule of Dutch law, only a company is liable for its obligations. However, pursuant to Dutch case law, an (indirect) shareholder may be held liable - in addition to the company - by the company's creditors if the shareholder has acted tortiously towards them. In certain circumstances the Supreme Court has accepted the possibility of piercing the corporate veil in relation to shareholders.

The Financial Markets Authority has established that shareholders of issuing institutions tend to exercise caution when holding mutual consultations with other shareholders, as such consultations can qualify as acting in concert. It has therefore issued guidelines on when shareholders will be deemed to be acting in concert, with the aim of stimulating consultations between shareholders.

Demand for increased competition among limited liability companies and developments in various EU countries have led to a legislative proposal on the simplification and flexibility of the Law on Private Limited Liability Companies. The purpose of the proposal is to create a more flexible and simpler regime for limited liability companies.

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Netherlands Antilles

Converting a limited liability company established in the Netherlands Antilles need have no adverse tax consequences. However, a conversion is possible only if the law of the country of transfer allows it to take place and recognizes that the company is not dissolved as a result.

New Zealand

A major overhaul of New Zealand's consumer law is underway and likely to be passed into law early this year. It will deliver greater enforcement powers to regulators in this area and will potentially lead to major changes in the way that consumer disputes are dealt with. Many businesses and contracts will be affected by these significant changes.

Nicaragua

Private foreign investments enjoy the same rights and guarantees as those afforded to domestic investments. Furthermore, the Foreign Investment Promotion Law provides for special rights and guarantees for foreign investors and investments. In order to benefit from these special rights and guarantees, foreign investors must register their investment with the Ministry of Economy, Industry and Trade.

The National Assembly of Nicaragua has approved the Millennium Challenge Agreement between Nicaragua and the Millennium Challenge Corporation (as representative of the US government). The agreement aims to increase investment and boost the development of rural enterprises through the improvement of property rights, infrastructure and the competitiveness of enterprises.

Nicaraguan commercial legislation recognizes four types of company: general partnerships, limited partnerships, corporations and joint stock associations. Among these, the most common are corporations, followed by general partnerships, which usually limit the liability of partners and are therefore considered as limited liability companies.

Nigeria

As part of the Investment Climate Reform Programme, which aims to reduce the cost of doing business in Nigeria and improve Nigeria's competitiveness rating as a foreign direct investment destination, the Corporate Affairs Commission and the Nigeria Investment Promotion Commission have recently made changes that impact on the registration of business entities in Nigeria.

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Norway

In a recent judgment, the Supreme Court concluded that a payment guarantee was not an on-demand guarantee, but a surety only, under which the guarantor could invoke debtor objections to the payment obligations, despite the fact that the guarantee included language customarily used in on-demand guarantees. The Supreme Court has established stricter requirements to the contents of on-demand guarantees.

The criteria for duty of care have been tightened over the past few years and the courts appear more willing to impose liability on corporate directors. Directors must therefore be careful in how they deal with the company's assets in order to avoid personal liability for damages suffered by third parties, especially when the company is insolvent or threatened with insolvency.

Oman

Oman, despite having a nascent capital markets system, was quick to introduce a corporate governance code for companies listed on the stock market in 2002. Oman was also quick to recognize that a binding code of corporate governance was crucial for modern, efficient and accountable public companies and to safeguard shareholders' interests.

Pursuant to recent amendments to the Commercial Companies Law, the founders or shareholders of a public joint stock company may adopt a nominal share price for the company's issued shares at less than OR1 per share. This change aims to increase market liquidity and facilitate greater capital market activity and growth. The amendments also adjust the caps on directors' remuneration.

Pakistan

The Competition Commission has examined the market practice in Pakistan's paints industry of placing redeemable coupons in paint packaging. The question arose as to whether the practice of inserting coupons into paint packaging without due disclosure constituted a deceptive marketing practice under Section 10 of the Competition Act.

The Competition Commission has passed an order on a show cause notice that was issued to a premium cinema operator for prima facie violation of the rules on abuse of dominant position by tying-in. The findings on the cinema operator's promotion, which required customers to buy a food coupon with their ticket, demonstrate the dangers of unintentional infringement.

Certain key amendments that were brought into effect by the provisions of the Finance Act 2008 continue to affect commercial activity in Pakistan. The main aim of the amendments to the Companies Ordinance 1984 seems to be to enhance the Securities and Exchange Commission's powers and to make companies more accountable to it.

The Corporate Law Review Commission - a body established by the Securities and Exchange Commission of Pakistan to carry out a thorough review of the Companies Ordinance 1984 - has started redrafting the ordinance. The aim is to reassess the objectives of the ordinance in light of the economic environment, and facilitate the creation and maintenance of a liberal, deregulated and efficient corporate sector.

Paraguay

The legal status of corporations and limited liability companies is acquired through registration of their bylaws in the public registries. Registration is ordered by first-instance civil and commercial judges, and the favourable legal opinion of the Treasury Office of the Ministry of Finance is required in advance.

A new legal framework promotes the country's first assembly programmes. The programmes are designed to assist in re-directing investment towards the manufacturing sector and in upgrading existing technology.

Peru

A recent decision of the National Superintendence of Public Registries outlines the documentation necessary for foreign companies wishing to operate in Peru.

An emergency decree has been enacted to help those companies that missed the December 31 2000 deadline to comply with the Companies Law 1997.

New legislation is designed to make the use of open corporations as financial vehicles a more attractive option for companies worried about the traditional conditions that apply. Conversion to the 'open' format will be allowed, (i) without the requirement that shares be registered, and (ii) with the continued application of limitations as to transferability of shares.

Poland

In response to the EU Directive on the Exercise of Certain Rights of Shareholders in Listed Companies, Parliament recently adopted an important amendment to the Commercial Company Code. Its main purpose is to enhance corporate governance in Polish joint stock companies by strengthening and facilitating the exercise of shareholders' rights.

A relatively high minimum share capital requirement has long been considered an effective tool to safeguard the interests of creditors in dealings with capital companies. However, this approach has recently been revised due to pressure from legal and commercial commentators and researchers. Following in the footsteps of recent EU legislation, changes have been made to Polish law in a bid to promote entrepreneurship.

Parliament is working on an amendment to the Commercial Company Code that will provide for the liberalization of regulations regarding commercial partnerships. The draft amendment involves the elimination of restrictions on conducting larger-scale business in the form of a civil law partnership and the limitation of liability of commercial partners that enter into a commercial partnership with a sole proprietor.

The government recently presented to Parliament an important draft amendment to the Commercial Company Code aimed at helping limited liability and joint stock companies in their day-to-day operations. This update looks at the key changes envisaged by the amendment.

Parliament recently issued an important draft amendment to the Polish Civil Code. The amendment provides for the elimination of the currency clause from Polish civil law, which requires all monetary obligations under Polish law to be performed in Polish currency.

EU regulations oblige member states to make the information on limited companies contained in their registers available to the public in digital form by January 1 2007. Therefore, the Central Information Office of the National Court Register is to extend its services to accept and hold company data in digital form.

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Portugal

The Supreme Court was recently asked to decide whether a company may demand that another company with a similar name forfeit the right to use the name, even if such use has been accepted for a number of years. The Court of Appeals had found that the rights relating to a company name are analogous to trademark rights and had applied the same time limit for objections on this basis.

The Companies Code provides that a private limited company is not bound by the signature of only one of its directors if its articles of association provide that the signatures of two directors are required to bind it, unless the company ratifies the action. However, a Supreme Court judgment has cast doubt on the safety of legal transactions by reversing an established view of directors' responsibility.

The signature on a promissory note of a partner in the capacity of manager (where such capacity is not stated in the Commercial Register) is not binding on the company - despite the production of minutes attesting to the fact that the partner was entrusted with the management of the company - if such minutes were not signed by another partner whose managerial capacity is recorded in the register.

An amendment to the rules governing the Court of Auditors extends the scope of the court's financial supervision to include undertakings which hold a concession for public works and services and for the management of undertakings, state-owned companies and semi-public companies.

Significant changes to the Portuguese Companies Act have streamlined the procedure for amending company bylaws by doing away with the requirement for a notarial deed in many cases. The new administrative requirements make it easier for companies to increase or reduce their share capital.

A new system of online incorporation offers an immediate, cheap and convenient way to create and register a company. Even if the applicant chooses not to use one of the pre-approved templates for the articles of association, the process will take no more than two business days.

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Qatar

While other economies continue to be battered by economic crises, Qatar's economy is undergoing a phase of unparalleled development and expansion. As a result, the states of the Gulf Cooperate Council are likely to have an increased appetite for investment in Qatar.

Trade secrets in Qatar are protected under the Law on the Protection of Secrets of Trade. The law provides that legal title to a trade secret belongs to the individual or legal entity. It imposes a duty on the legal owner to exercise reasonable efforts to safeguard the trade secret. A breach of this duty may subject the owner to financial penalties and/or imprisonment.

The 2008 Consumer Protection Law, which was enacted to answer the demands of the victims of unscrupulous merchants, was recently amended. Among other changes, the amendment sets down restrictions on when suppliers can increase the prices of commodities and services, and alters the fines that can be imposed on suppliers that violate the law.

Romania

Joint stock companies and limited liability companies make up the majority of commercial undertakings in Romania and have been most affected by the substantial changes to commercial legislation in recent years. This update examines the managerial structure of these companies and the duties and liabilities of their managing bodies.

In anticipation of Romania's accession to the European Union and in response to the World Bank's reports on the country's legislation, which indicated a number of deficiencies in its corporate governance regulations, the government made major changes to the Company Law at the end of 2006.

The regulatory authorities recently issued new legislation on the incorporation of Romanian companies which has simplified the incorporation procedure. Among other things, a new provision expressly requires the Registry of Commerce to release the certificate of incorporation within three days of the submission of the incorporation application.

The new Capital Market Law contains a number of provisions which affect the corporate governance of joint stock companies in Romania. Among other things, it specifies that listed companies must have a board of directors comprised of at least five members, and introduces a more efficient mechanism for the distribution of dividends.

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Russia

A bill to amend the Civil Code contains important provisions to improve the protection of good-faith legal activity. However, despite these proposed improvements, legal protection under Russian law still has many gaps with regard to commercial transactions. For this reason, an investigation of the rights of contracting parties through thorough due diligence is indispensable in major investment projects.

In considering a particular dispute, the presidium of the Supreme Arbitrazh Court has held that the parties to a paid services contract may specify the obligations of the service provider to be both the fulfilment of certain actions and the provision of particular deliverables connected with those actions (eg, contracts, applications or other documents) to the customer.

A shareholder in a Russian limited liability company (LLC) can ask the courts to exclude another shareholder if the latter is in severe violation of its duties or impedes the LLC's activities. The Supreme Arbitrazh Court is due to give guidance on certain key issues, including whether shareholders can be excluded for causing damage while acting in another capacity, and whether the size of a shareholding affects exclusion.

A new law amends the rights of creditors of limited liability companies in connection with a reduction in the company's charter capital. These rights are significantly restricted and are more consistent with the provisions of the Law on Joint Stock Companies. However, a potential creditor may now, at any time, request information from limited liability companies and joint stock companies on their net asset value.

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Serbia and Montenegro

The new Company Law came into force on November 30 2004 and aims to develop a sound legal environment for investing and doing business in Serbia. However, some inconsistencies and uncertainties will first need to be resolved by the competent authorities.

Slovakia

A 1998 government goal to attract foreign capital by stimulating investment has led to a rapid increase in investment flowing into various sectors of the Slovak economy. Slovakia has now become one of the most attractive countries for investment in Central and Eastern Europe.

Recent changes to the law include the introduction of a system whereby the commercial extracts of companies registered with the commercial courts are available online.

Slovenia

Shortly after Slovenia's accession to the European Union in May 2004, the Parliament voted in favour of amending the Companies Act 1993. The act was last amended in 2001 in order to implement major changes as required by the European Union.

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South Korea

A proxy battle between the management of KT&G Corporation and a group of dissident shareholders has culminated in the first election of a foreigner nominated by a foreign shareholder to the board of directors of a Korean listed company without the support of the company's management.

The government recently published the revised Enforcement Decree to the Foreign Investment Promotion Act, which implements new measures to attract greater foreign investment into Korea. Such measures include more specific regulations concerning the so-called 'cash grant' and 'project manager' policies.

The Seoul High Court's recent decision in Eun Sub Jung v Pyong Sub Jung 2002 represents a significant landmark with respect to the issue of standing in shareholder derivative actions. However, the case is not yet final and is being appealed to the Supreme Court.

A joint task force from financial and other government agencies has submitted its final plan for the reform of accounting practice to Congress. The final plan includes heightened responsibilities for listed companies, as well as restrictions on auditors and the non-audit services they may provide. It also outlines the applicable penalties.

In light of a recent Supreme Court ruling, any party to a joint venture agreement or shareholder agreement with respect to a Korean joint venture company should consider carefully the advantages and disadvantages of having two statutory auditors, and may wish to insist on the company having only one.

The Korean National Assembly has passed the Act on the Designation and Operation of Free Economic Zones, with a view to promoting Korea as a key business hub of Northeast Asia. The act establishes a framework offering incentives for the purpose of attracting foreign investors.

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Spain

The Interdepartmental Working Group on Market Unity, under the supervision of the Ministry of Commerce, is developing a Guaranteed Market Unity Act. The act aims to reduce the regulatory burden faced by businesses and increase legal certainty by eliminating legal contradictions. Ultimately, the goal is to provide businesses with fewer and better laws that facilitate and encourage economic activity.

A Ministry of Justice report on the modernisation of legal language was published in 2011. Recent surveys have revealed that citizens consider existing language to be unduly complicated. The government has introduced various statutes to remedy this, including the draft Law on Transparency, Access to Public Information and Good Governance and a draft bill on the removal of licences for small businesses.

Under Spanish law, vacancies on the board of directors can only be filled by using a cooption mechanism. Through availing of this mechanism, the board of directors can appoint a shareholder to fill the vacancy until the next general shareholders meeting is held. However, problems can arise if the number of members of the board falls below that required for a quorum.

Spanish law establishes the capital increase requirements necessary to deprive shareholders of the right to take out an option on new shares in proportion to their shareholding. For such action to be undertaken, a company interest must be at stake. Mere application of the formal requirements for determining such interest can lead to results which contravene the spirit of the law.

A new bill aims to increase the transparency of corporations and reinforce the rights of shareholders. In other news, the Supreme Court has declared a shareholders resolution invalid because a special public debenture bond was omitted from the financial statement, and the annual accounts thus did not give an accurate picture of the company's financial situation.

A Senate committee has proposed a major reform of the regulations on family companies. Family companies will be allowed to seek new types of financing, including investment through the issue of non-voting shares. They will also be required to draw up and register a family protocol delineating the relationship between the family company and its ownership.

Sri Lanka

The Department of the Registrar of Companies has established a website which contains all the information required by parties wishing to incorporate a company. The necessary statutory forms may also be submitted electronically via the website. The site aims to expedite the incorporation procedure in order to boost foreign investment.

Businesses in Sri Lanka are awaiting the enactment of a new Company Act. The draft act incorporates certain aspects of modern company law that are conspicuously absent from existing legislation. Among other things it includes provisions allowing companies to purchase their own shares and takes into account the need for tougher penalties for offenders who flout the law.

A recent case has highlighted that courts are unsympathetic to companies acting ultra vires, that is beyond the scope of their powers, in order to disclaim liability for their own actions.

In a recent case the Supreme Court clarified the role of the Securities and Exchange Commission of Sri Lanka. This case serves as a warning to companies who mislead their shareholders and then seek refuge in red tape.

New legislation will enable the state to more closely monitor the activities of companies engaged in insurance or leasing. This update outlines some of the changes the new legislation will bring.

In a recent case brought by local residents a US company was found guilty of environmentally unfriendly activities that were affecting local communities.

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Sweden

A recent Supreme Court ruling established the level of due diligence that new board members must exercise when taking office in the event of an inherited capital shortage from the former board of directors. A new board member should still make his or her best efforts to examine the financial situation, but such examination can under most circumstances end retrospectively with the latest audited and approved annual report.

Late payments and long contractual payment periods have been debated in both Sweden and the European Union for some time. A recent government bill contains proposals designed to discourage extended credit times, which increase corporate finance and management costs and promote unfair competition. The new legislation may be a step in the right direction, but its impact remains to be seen.

A recent Court of Appeal case illustrates the risk that parties run when an agreement is governed by a law of a different language from that used in the agreement itself. This dispute was the outcome of imprecise legal drafting, and highlights the importance of avoiding copying and pasting boilerplate clauses whenever possible.

Swedish law allows for a number of principal-agent relationships – one of them being the commission agent. A recent Supreme Court ruling has given some guidance on probably the most important issue when setting up a commission agent agreement: how to secure goods in the event of an agent's bankruptcy.

In a recent ruling the Northern Norrland Court of Appeal had to consider two questions regarding commercial agents. First, what type of commercial relationship falls within the Commercial Agents Act's definition? Second, can the act's mandatory provisions regarding severance compensation be applied by analogy in a case where the act does not directly apply?

A recent case regarding a production line that was unsuitable for industrial production sheds some light on whether a failed service should be regarded as a breach of contract. The case confirms the need for the buyer to specify clearly the object of the agreement. This appears to be the first time that the courts have clearly identified the two major objects of an agreement: the duty to achieve a specific result and the duty of best efforts.

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Switzerland

Overview
Including: Legislative Framework; Contract Law; Forms of Business Association.

Switzerland recently voted in favour of an initiative against excessive salaries for board members and executives. New transparency rules and a rigid regime on a binding say on the pay of board members and executives must be enacted. Once enacted, shareholders must vote annually on the aggregate compensation for the board, advisory board and executive management.

The Federal Court recently considered whether non-incorporated law firms are permitted to adopt the legal form of a company limited by shares. The court held that it is the organisational structure of a law firm which is decisive, not its legal form. A law firm constituted as a company limited by shares is admissible, provided that it is fully controlled by its attorneys, thereby granting it institutional independence.

On January 1 2013 a new accounting and auditing law will enter into force in Switzerland. The new law establishes uniform requirements for all kinds of business, irrespective of their form of incorporation, by introducing the 'same size, same rules' principle. Unlike under certain international reporting standards, consolidated financial statements will usually be required only if the size of a business exceeds certain thresholds.

The Supreme Court recently commented for the first time on the prerequisites under which a board of directors is obliged to place an item requested by a shareholder on the agenda for a general meeting. The court further dealt with the question of whether a company's articles of association may impose certain restrictions on a board's competence to delegate the management of the company's affairs to third parties.

The partial revision of the Federal Act Against Unfair Competition attempts to revive Article 8, particularly by removing the element of deception. Article 8 will clearly influence the drafting and use of general conditions of contract in future, although only to the extent that consumer contracts in the mass-market sector are concerned. Sellers and suppliers should consider reviewing any general contractual conditions in use in this sector.

A creditor which requires access to the annual accounts and auditor's report of a stock corporation must prove both its position as a creditor and a legitimate interest. Recently, the Supreme Court reconfirmed the existing practice in both doctrine and jurisdiction, and took the opportunity to specify in more detail the criteria to find an interest warranting protection pursuant to the Code of Obligations.

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Syria

Pursuant to Legislative Decree 15, all foreign parties intending to conclude contracts with the Syrian public sector must now have a commercial agent or a branch office that is registered with the Department of Foreign Companies and Agencies, part of the Ministry of Economy and Foreign Trade.

Taiwan

In a recent case, the Taipei District Court held that once a commodity barcode has been read through a computer, it is equivalent to a trade name. Further, given that commodity barcodes are symbols which are applied to articles and can serve as proof in business practice or a contract, they are deemed to be quasi-private documents.

Thailand

In recent years there have been a number of changes to the laws applicable to private limited companies. In March 2011 the latest changes to the regulations of the Ministry of Commerce on registration of private limited companies became effective. The regulations detail new requirements for the applications and documents that must be filed with the department in respect of private limited companies.

Foreign companies that send their staff to work in Thailand, open a representative office or branch or establish a subsidiary to operate some categories of business in Thailand may need to obtain a foreign business licence under the Foreign Business Act. Otherwise, the company can be subject to criminal liability. The act allows foreigners to operate such prohibited businesses only if a licence has been obtained.

The government of Thailand has amended the legislation on regional operating headquarters (ROH) to encourage multinational corporations to establish their ROHs in Thailand. The newly established ROHs will provide supporting services - such as R&D, technical support, business planning and HR management - to their subsidiaries and branches both in Thailand and elsewhere.

Turkey

Until recently, under Turkish law interim dividends were allowed for public companies only. The new Commercial Code introduces the concept of interim dividends for both private joint stock corporations and limited liability partnerships. In principle, a company must post a profit in its quarterly interim financial statements (ie, at three, six or nine months) in order to distribute interim dividends.

Under Turkish law, liaison offices are governed by the Foreign Direct Investment Law and the Regulation on the Implementation of the Foreign Direct Investment Law. The regulation was recently amended, introducing major changes in relation to the incorporation, authorisation, extension and operations of liaison offices and clarifying the procedure for establishing such offices.

The Commercial Code (Law 6102) will enter into force next year. Unlike the existing code, the new code includes arrangements for the regulation of corporate groups, with discussion focused on regulation of illegal control within such groups. Illegal control is regulated in the first and second clauses of Article 202 of the code, which involve compensation for losses for both a subsidiary and its shareholders.

In order for a transaction that is carried out by a member of a company's board of directors to breach non-compete obligations, it must relate to the subject of the partnership. The subject of the partnership is interpreted literally to mean the business activities carried out by the partnership, rather than those specified in the partnership agreement.

The Law on Multi-corporate Enterprises aims to protect subsidiary companies and their shareholders in the event of a conflict of interest between the subsidiary company and the group of companies of which it is part. For this purpose, the subsidiary company's control over the management and resolution process has been restricted and certain rights have been granted to its shareholders in the event that control is used illegitimately.

The draft Commercial Code, which has been under discussion in Parliament for several years, introduces significant changes to the structure of joint stock companies. Its main aim is to facilitate the flow of foreign capital. Foreign investors are particularly interested in establishing joint stock companies because they are more flexible and easier to administer.

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Ukraine

Recommendations by the Highest Commercial Court have been welcomed as clarifying corporate relations and acknowledging companies' rights to determine their own affairs. However, Article 6 on the application of foreign law to corporate disputes has been criticized as reactionary - some fear that it will undermine corporate agreements and threaten freedom of enterprise in Ukraine.

Corporate legislation had changed little since the new Civil Code came into force in 2004 until Parliament finally passed the Law on Amendments to the Company Law in June 2007. Its aim was to bring corporate legislation into line with the code, but the amendments have not all had the expected or intended effects.

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United Arab Emirates

A protected cell company is one of the legal forms of company that may be incorporated in the Dubai International Financial Centre (DIFC) consisting of a core and a number of cells, which are legally ring-fenced from each other. Since the number of protected cell companies established in the DIFC is currently very low, the success and feasibility of DIFC protected cell companies in fund structures remains to be determined.

Obligations and liabilities under UAE law arise out of contracts, unilateral acts, acts causing harm (torts), acts conferring benefits and the law itself. Many individuals and corporations frequently use and rely on limitation of liability clauses in all types of contracts in the United Arab Emirates and other jurisdictions without any consideration of the actual validity or enforceability of such clauses.

Corporate governance and the role of directors of publicly listed companies have gained increasing focus in recent times in the United Arab Emirates. Directors of a public company whose securities are traded on the Dubai Financial Market and/or the Abu Dhabi Securities Exchange are subject to additional duties. This update covers the duties of directors of publicly listed companies.

The issue of directors' responsibilities and obligations under UAE law has gained increasing importance for companies incorporated in the United Arab Emirates. This update focuses on the duties of directors under the relevant UAE laws and regulations, and primarily on directors of limited liability companies established in the United Arab Emirates.

The UAE federal government recently published Federal Law 2/2010, which amends certain provisions of the Federal Law Regulating Commercial Agencies. The amending law varies the termination and renewal provisions of the Agencies Law and establishes a committee to hear disputes that arise in respect of commercial agencies.

In 2007 the UAE Securities and Commodities Authority issued a decision concerning a corporate governance code for joint stock companies, thereby introducing a statutory corporate governance regime in the United Arab Emirates. In the past three years the movement towards implementation of a robust corporate governance framework has been gaining momentum.

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United Kingdom

Levi Roots - otherwise known as Keith Graham, and famed for his appearance on the BBC programme Dragon's Den - has won his High Court battle in relation to his Reggae Reggae Sauce, but at the cost of revealing that the sauce is not based on a secret family recipe. The judge dismissed both the claimants' claim for breach of confidence and breach of contract.

Since December 2008 there have been over 100 adjudications before the Companies Names Tribunal, all of which - until now - have been in favour of the applicant. A recent case demonstrates that where a similar name is adopted by a company for genuine reasons, that company's rights can be protected.

The Institute of Chartered Secretaries and Administrators recently published a guidance note on the conduct of voting at general meetings. There are two options available: a show of hands or a poll. A show of hands tends to be quicker, avoiding unnecessary formalities and extra cost, and the result is immediately available. Transparency is the major advantage of voting by poll.

In a recent case the High Court considered the transfer of a financial services business from a partnership to a limited company. Meanwhile, the Commercial Court has ruled on the extent to which a non-executive director can rely on the executive directors and other professionals.

According to the Court of Appeal, commercial sub-agents appointed by the principal's main agent, but who fail to have a direct legal, contractual or quasi-contractual relationship with the principal, cannot benefit from the compensation provisions in Regulation 8 of the Commercial Agents Regulations 1993.

Companies incorporated in England and Wales can generally acquire their own shares. Upon such an acquisition the shares bought by the company must be immediately cancelled. However, under a new proposed regime, once a company with the appropriate shareholder authority purchases its own shares it may choose either to cancel the acquired shares or to hold the shares as treasury shares.

Uruguay

Significant modifications to the Companies Law have recently come into force. The changes affect the financial limits on companies' investment in other companies, revoke the provisions on maximum and minimum capital for corporations and limited liability companies, and introduce the possibility of exemption from certain accounting requirements if all of a local company's assets are located abroad.

USA

In a recent decision the Delaware Chancery Court fashioned an extraordinary remedy by converting the convertible preferred stock issued by Loral Space and Communications Inc to its controlling stockholder into non-voting common stock based upon a court-determined 'fair price' for Loral common stock.

Two recent decisions of the Delaware Court of Chancery, the nation’s pre-eminent business court, concern one of a corporation’s key tools to regulate investor activism: advance notice bylaws, which control the process and timing for shareholder nominations to the board.

Investors acquiring significant equity positions in a company typically try to negotiate agreements which will allow them to protect their investment - the most desirable protection is often thought to be the right to designate a director to the company’s board. Although it may seem that a designated director will benefit the investor, such a designation carries with it considerable risks and uncertainties.

Shareholder proposals continue to be the focus of investor activism, boardroom attention and Securities and Exchange Commission (SEC) reform. Two forces appear to be shaping the 2008 proxy season: the SEC’s rulemaking and the trend towards more meaningful corporate engagement with investor groups.

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Venezuela

Generally there is no minimum capital or equity requirement for companies wishing to do business in Venezuela. The aim of non-regulation is to foster commercial activity in times of domestic economic stability.

A recent Supreme Court decision may affect the commercialization structures of many multinational manufacturing companies. The decision establishes that shareholders and officers of companies that distribute manufacturers' products are deemed to be employees of the manufacturer, rather than owners of independent businesses.

Including: Foreign Investments; Foreign Exchange; Price Controls; Labour Legislation; Privatization; Shareholder Agreements; Doing Business; Domiciliation

The most recent amendment of the Income Tax Law has resulted in a restructuring of investment vehicles in Venezuela. Foreign investors will have to find other corporate structures that will permit the economic feasibility of large infrastructure projects.

The trend in Venezuelan law in the last decade to give companies and individuals the chance to request confidential treatment for the information they give to administrative authorities could change because of a new constitutional provision.

Vietnam

The Ministry of Trade has confirmed that EU and US companies will be treated equally in terms of commercial business transactions, and that EU companies will receive no less favourable terms and conditions than their US counterparts under the US-Vietnam Bilateral Trade Agreement.

Decree 58 on the Control and Use of Seals applies to all Vietnamese and foreign organizations that are permitted to use seals in Vietnam (including foreign invested enterprises and foreign branches).

According to a new instruction, all foreign invested enterprises must submit regular company and financial reports to the Ministry of Planning and Investment.

New regulations concerning the equitization of foreign-invested entities aim to improve the investment climate and make the Vietnamese economy more attractive to foreign investors.