INSERT INTO `tm_wsal_metadata` (`id`, `occurrence_id`, `name`, `value`) VALUES
(259299, 25178, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright  wp-image-8072\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"225\" height=\"415\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
(259300, 25178, 'MetaLink', 'content'),
(259301, 25178, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=7937&amp;action=edit'),
(259302, 25178, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright  wp-image-8072\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"225\" height=\"415\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"210\" height=\"387\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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(259348, 25182, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright  wp-image-8000\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"528\" height=\"415\" />Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>'),
(259349, 25182, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8000 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"438\" height=\"345\" />Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>'),
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(259352, 25182, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8000 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"438\" height=\"345\" />Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright  wp-image-8000\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"528\" height=\"415\" />Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>'),
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(259387, 25185, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"192\" height=\"355\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
(259388, 25185, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"210\" height=\"387\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
(259389, 25185, 'MetaLink', 'content'),
(259390, 25185, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=7937&amp;action=edit'),
(259391, 25185, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"210\" height=\"387\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"192\" height=\"355\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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(259437, 25189, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright wp-image-8000\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"571\" height=\"449\" />Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>'),
(259438, 25189, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright  wp-image-8000\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"528\" height=\"415\" />Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>'),
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(259441, 25189, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright  wp-image-8000\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"528\" height=\"415\" />Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright wp-image-8000\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"571\" height=\"449\" />Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>'),
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(259459, 25191, 'PostTitle', 'UAE continues to lead the way for Foreign Investment'),
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(259487, 25193, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
(259488, 25193, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"192\" height=\"355\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
(259489, 25193, 'MetaLink', 'content'),
(259490, 25193, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=7937&amp;action=edit'),
(259491, 25193, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"192\" height=\"355\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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(259556, 25199, 'PostUrl', 'http://www.tamimi.com/law-update-articles/the-calm-after-the-storm-saudi-arabias-anti-corruption-tornado-and-the-investor-impact/'),
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(259559, 25199, 'MetaValueNew', '<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignleft size-full wp-image-8012\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/DG.jpg\" alt=\"\" width=\"1536\" height=\"417\" /></em></p>\r\nSaudi Arabia is undergoing significant reform but, beyond the maelstrom of political speculation and conjecture, what are the practical and legal implications of the anti-corruption drive for investors?\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia has seen tumultuous reform in the last 12 months as Crown Prince Mohammed bin Salman has sought to propel Saudi Arabia towards Vision 2030. International attention has been riveted to the government’s surging anti-corruption drive since a number of high-profile individuals were detained on corruption charges towards the end of 2017. Much of this attention, however, has been tangential, without providing clear insight into what impact such radical measures will have on the country’s legal framework and business climate.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Favourable Forecast? The Business Outlook on Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The extent and boldness of the recent measures taken in Saudi Arabia are indicative of the government’s resolve to eliminate corruption in the system. The Kingdom has been signatory to the United National Convention Against Corruption (UNCAC) since 2004, though it only ratified the agreement in 2013. The events that have garnered so much international attention are only the latest in a long-term initiative to address corrupt practices in the business sector. Between 2012 and 2017, Saudi Arabia has improved its score on the Transparency International Corruption Perceptions Index (CPI) from 44 to 49. Whilst this score still reflects significant room for improvement, it also charts measurable progress in a region that continues to face drastic change, and provides impetus for the more recent measures that clearly demonstrate the elevated priority of anti-corruption reform.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order for the Kingdom to benefit from its drive for sustainability and prosperity, however, its determination to eradicate corruption must be symbiotic with its ability to assure investor confidence. The zero-tolerance approach that has surfaced over the past year has the potential to greatly improve the integrity of Saudi Arabia’s business market, but lingering concerns surround residual corruption with certain businesses continuing to question the feasibility and longevity of trading in the Kingdom.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The United Nations Conference on Trade and Development (UNCTD) World Investment Report 2018 suggests that, in the short term at least, the anti-corruption drive has done little to improve investor confidence and may even have exacerbated feelings of uncertainty. Inward Foreign Direct Investment (FDI) flows have fallen by more than 80% between 2016 and 2017. Whilst this trend cannot be entirely attributed to the anti-corruption sweep that happened late in the final quarter of the year, it is certainly likely to have been a contributory factor in unsettling investor confidence. From a long-term perspective, however, efforts to level the playing field in Saudi Arabia may bring fairer weather to businesses as the obstacles associated with pervasive corruption are gradually eliminated from the system.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia is far from being alone in its fight against corruption; it is one of the most prevalent and pressing issues facing systems across the globe, and countries with endemic corruption problems face an almost insurmountable challenge to attract foreign investment. At this nascent stage, it would be premature to speculate as to how other Middle Eastern countries will respond to the Kingdom’s efforts, but the most desirable outcome would be for neighbouring countries to become emboldened in their own anti-corruption efforts. The UAE already stands as the regional outlier in anti-corruption efforts, with a CPI 2017 ranking of 21st in the world, comparable to many leading international jurisdictions. The combined efforts of both Saudi Arabia and the UAE could be instrumental in forging a clear path to greater transparency for other afflicted countries in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Staying Dry: Legal Safeguards Against Corruption In The Kingdom</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The primary anti-corruption provisions are provided by the anti-bribery law issued by Royal Decree No. M/36 of 29-Dhu al-Hijjah-1412 (corresponding to 30 June 1996) (the \"Anti-Bribery Law\"). More recently, a decree was issued setting out rules relating to gifts for public officials (Decree No. 60 dated 18 Safar 1437H (corresponding to 1 December 2015) (the \"Rules on Gifts to Officials\" or the \"Rules\").</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Bribery of Public Officials</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law is primarily focused on public servants. In order to maintain maximum protection for its public sector, the definition is intentionally broad, extending to personnel of joint stock companies, along with their board members and directors. It may also capture private sector individuals who are working on government-related projects, such as consultants to government projects, including temporary employees, experts appointed by the government or judiciary, or even employees of private companies contracted to provide public services. Employees of joint stock companies are also subject to the Anti-Bribery Law, as well as employees of companies and sole proprietorships engaged in banking services.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law broadly defines a bribee as any public servant who solicits, accepts or receives for himself or for others, a gift or payment of any sort, or a promise thereof, as consideration for any act that impinges on the integrity of office. Defences against such practices are fortified by the absence of any exemption, caveat or even significant qualifying criteria for the type of act that could invoke bribery provisions. Any act can be considered corrupt, regardless of its legitimacy, whether it is a positive act or an omission, whether it has been done in the absence of a prior agreement, and even where it involves using the influence attached to a public office to gain benefit, rather than the performance of a relevant duty.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given the traditionally prominent role of the government in the national economy, the Anti-Bribery Law does provide relatively wide protection, despite the obvious lack of corresponding safeguards applicable to the private sector. Privatisation targets encapsulated by Vision 2030, however, necessitate more complete protection and new measures that target both the public and private sector are a requirement going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Penalties and Enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the Anti-Bribery Law, penalties for the offences set out above can reach maximum penalties of imprisonment for a term not exceeding ten years and/or a fine not exceeding one million riyals (about USD 275,000).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Along with the specific penalties applicable to public servants who accept a bribe, it should be noted that the Anti-Bribery Law provides for the person offering the bribe (whether it is accepted or not), and any accomplice, to be susceptible to corresponding punishments.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To protect a culture of respect for public officials, conviction on bribery offences also leads to dismissal and a bar from public office for a minimum of five years. In an attempt to prevent perpetrators from benefitting from the proceeds of crime, the Anti Bribery Law provides that any money, benefit or privilege derived from committal of the offence be confiscated wherever possible.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Gifts and Hospitality</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">No exemptions are provided for gifts and hospitality in the Anti-Bribery Law. Any benefit or privilege obtained by the bribee, regardless of its type or designation, whether material or otherwise, shall be considered a (prohibited) gift or promise. This has led to confusion in the past, as conventional business practices that would be widely accepted in other systems appeared to invoke the strict anti-bribery restrictions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This matter was somewhat elucidated with the passing of the Rules on Gifts to Officials. Pursuant to these Rules, an official may accept gifts, given at visits and official occasions or at receptions of official guests, in accordance with custom and the courtesy protocols of such visits and occasions, though they cannot be cash and must be conventional in the context in which it is given. Crucially, businesses must be cognisant that generally, when reviewing the appositeness of a gift, the authorities will consider a number of contextual factors, including the proximity of the gift-giving to any relevant business deal, common courtesy practices of the firm in question, proportionality of the gift to conventional customs, and the appropriateness of the benefit given.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Though further provisions on the permissibility of certain types of gifts are outlined in the Rules, gifts and hospitality continue to be point of concern for business and can prove problematic in a culture where generosity is an ever-present feature of relations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Exposure for Corporate Entities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Significantly, where the manager or any employee of a private company is convicted of any offence under the Anti-Bribery Law, and the offence was committed for the benefit of such company, the law provides for a fine not exceeding ten times the value of the bribe and/or a ban from entering into public procurement or project contracts of at least 5 years. The briber can be exempted from punishment if he informs the authorities prior to the discovery of the offence, and this may provide some means by which corporate entities can limit their exposure upon becoming aware of any apparent offences under the Anti-Bribery Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparing for the Tempest: Bolstering Defences Ahead Of Reform</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a strategic perspective, since bribery is rarely an isolated issue, responses need to be thorough and comprehensive; part of an overarching coordinated national strategy that provides protection across an entire economic system and all branches of government. In order to ensure that such strategies are effective and aligned across institutions and businesses, they require constant monitoring and enforcement by a dedicated and independent authority, Where these institutions also act as the recipient in a sound and efficient reporting mechanism, the presence of a clear and trustworthy process increases the confidence of international investors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Aside from the well-publicised arrests, Saudi Arabia’s corruption reform has extended to measures in other parts of its anti-corruption framework that have more sustainable implications for how it will address corrupt practices in future. These bold new mechanisms also enhance the country’s invigorated anti-corruption culture, which marks an abrupt departure from its previous presumed reticence on corruption matters.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Newly-formed Supreme Committee for Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The formation of the Supreme Committee is indicative of the greater strategic importance of anti-graft efforts to the country’s wider reform programme. Chaired by the Crown Prince and comprised of high-ranking officials from various sectors of governance, including security, finance and existing anti-corruption bodies, the Committee acts as a mechanism that will immediately elevate corruption instances to the remit of the highest echelons of government. In so doing, the Kingdom is sending a strong message that it will no longer turn a blind eye to practices that compromise its financial system or rule of law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new Supreme Committee will have vastly advanced investigative and prosecutorial powers, including the capacity to issue arrest warrants and order interim measures such as issuing travel bans and asset freezing orders. This is a critical limitation of the existing National Anti-Corruption Commission, more commonly known as Nazaha, which was established in 2012 and has limited capacity, despite its function as the primary recipient of reports of corrupt activity. The new committee will not replace Nazaha, which will continue to target the protection of national integrity, investigate instances of graft in government contracts and refer any incidents to the relevant authorities and public prosecution as and when necessary.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">By coordinating the activities of both the Supreme Committee and Nazaha, the efficacy of existing measures will be boosted by covering a wider scope of prosecutorial powers, increased authority with which to pursue perpetrators, and greater scrutiny through public awareness.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Specialised Anti-corruption Units Within the Public Prosecution Department</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As an additional measure, the Saudi government announced as recently as March 2018 that it had established new specialised anti-corruption units within the Public Prosecution. Cases prosecuted by these units would be carried out under the direct oversight of the Attorney General, once again demonstrating the paramount importance of corruption-related cases. Though it is unclear when the dedicated units will become operational, in creating this new advanced capacity the Saudi government has improved its ability to investigate and prosecute corrupt activity and, in so doing, will add an extra deterrent against illicit practices.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Whistleblower Culture</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whistleblower protection is a significant point of departure in many regimes across the globe. Whilst some Western systems, such as the US, actively promote whistleblowing activity through substantial financial incentives, most countries in the Middle East have thus far been slow to introduce formal protection for whistleblowers, preferring instead to rely on a positive reporting duty and conscionable actions by citizens.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this context, Saudi Arabia’s more proactive approach appears as an outlier. Article 17 of the Anti-Bribery Law provides for rewards for information substantiating an offence. Any person who is not a briber, or an accomplice, and who provides incriminating information substantiating any offence set out in Anti-Bribery Law, shall receive a reward not less than five thousand riyals (about USD 1,350) and not more than half of the money confiscated. There may be scope for a higher reward to be approved in appropriate circumstances.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, King Salman’s recent order in May 2018 to provide whistle blower protection is progressive in its outlook and signifies Saudi Arabia’s willingness to accede to international standards of rights and transparency when it comes to prosecuting corruption crimes. If Saudi Arabia is mindful of the risks posed by the potential for spurious claims and introduces adequate measures to prevent abuse of the reporting system, whistle blower protection is yet a further measure that will likely serve to reinforce the culture of zero tolerance that Saudi Arabia is attempting to cultivate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Impending Amendments to the Anti-Bribery Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 2 July 2018, Saudi Arabia’s Shoura (Consultative) Council approved draft amendments to the Anti-Bribery Law. The changes, which are yet to be implemented, are reportedly aimed at providing enhanced protection to public utilities through sound prosecution procedures and severe punishment for offences, as well as further enshrining the principles and commitments contained in the United Nations Convention Against Corruption (UNCAC). At present, the extent and exact nature of the amendments are unknown, but once officially passed into law, they have the potential to radically modernise Saudi Arabia’s anti-bribery legislation. This critical development warrants close attention over the coming months as the process to implementation progresses, and could assist investors in assessing the long-term outlook for Saudi Arabia’s economic integrity.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Weather Eye on the Horizon: Is Further Change an Inevitability?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Anti-corruption measures are an ancillary part of the legal reform process in KSA, but do not represent the totality of the country’s ongoing transition. New money-laundering laws passed in October 2017 are emblematic of the Kingdom’s resolve to eradicate illicit practices from its system. Corruption is symptomatic of countries where there is weak rule of law, but Saudi Arabia’s legal fortifications will go a long way to stamping out the nexus of criminal behaviour that facilitates and drives corruption trends. These are important contributory factors that should be considered by foreign investors when making an assessment of Saudi Arabia’s economic security.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The changes that have already been implemented will only improve the prognosis of anti-corruption in Saudi Arabia. The continued momentum garnered from these initiatives will drive awareness of corruption problems, aided by the combined activity of Nazaha and the newly formed Supreme Committee for Anti-Corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is a pivotal time for Saudi Arabia and the long-term outlook is positive – there is already evidence of widespread reform to protect the Kingdom’s economic stability and integrity and address systemic weaknesses. Simultaneously, the changes that have been gradually introduced by Saudi Arabia’s General Investment Authority (SAGIA) since 2015 to liberalise the national economy and provide space for full foreign ownership in key sectors, are creating new incentive for foreign investors to tap into the largest market in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Equally, investors must strike the appropriate balance between caution and enthusiasm when encountering new opportunities in the market. Corruption challenges are persistent and pervasive and will require sustained redress for the foreseeable future. Though it is yet undetermined what new mechanisms and measures may be deployed in the Kingdom in future, it is likely that subsequent steps taken to quash illicit practices will have considerable consequences for domestic and foreign investors alike. This will require that foreign investors understand the legal framework and secure their interests against inevitable shifts in the Saudi market as reform measures revolutionise the domestic business culture.</p>\r\nOverall, however, Saudi Arabia’s recent multifaceted approach to reform has created the perfect storm for investors and, with an impending multitude of investment projects, businesses have a prime opportunity to invest at the leading edge of FDI, assured that corrupt practices are not operating with impunity.\r\n\r\n<img class=\"wp-image-8011 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/676.jpg\" alt=\"\" width=\"1094\" height=\"475\" />'),
(259560, 25199, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignleft size-full wp-image-8012\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/DG.jpg\" alt=\"\" width=\"1536\" height=\"417\" />Saudi Arabia is undergoing significant reform but, beyond the maelstrom of political speculation and conjecture, what are the practical and legal implications of the anti-corruption drive for investors?</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia has seen tumultuous reform in the last 12 months as Crown Prince Mohammed bin Salman has sought to propel Saudi Arabia towards Vision 2030. International attention has been riveted to the government’s surging anti-corruption drive since a number of high-profile individuals were detained on corruption charges towards the end of 2017. Much of this attention, however, has been tangential, without providing clear insight into what impact such radical measures will have on the country’s legal framework and business climate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Favourable Forecast? The Business Outlook on Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The extent and boldness of the recent measures taken in Saudi Arabia are indicative of the government’s resolve to eliminate corruption in the system. The Kingdom has been signatory to the United National Convention Against Corruption (UNCAC) since 2004, though it only ratified the agreement in 2013. The events that have garnered so much international attention are only the latest in a long-term initiative to address corrupt practices in the business sector. Between 2012 and 2017, Saudi Arabia has improved its score on the Transparency International Corruption Perceptions Index (CPI) from 44 to 49. Whilst this score still reflects significant room for improvement, it also charts measurable progress in a region that continues to face drastic change, and provides impetus for the more recent measures that clearly demonstrate the elevated priority of anti-corruption reform.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order for the Kingdom to benefit from its drive for sustainability and prosperity, however, its determination to eradicate corruption must be symbiotic with its ability to assure investor confidence. The zero-tolerance approach that has surfaced over the past year has the potential to greatly improve the integrity of Saudi Arabia’s business market, but lingering concerns surround residual corruption with certain businesses continuing to question the feasibility and longevity of trading in the Kingdom.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The United Nations Conference on Trade and Development (UNCTD) World Investment Report 2018 suggests that, in the short term at least, the anti-corruption drive has done little to improve investor confidence and may even have exacerbated feelings of uncertainty. Inward Foreign Direct Investment (FDI) flows have fallen by more than 80% between 2016 and 2017. Whilst this trend cannot be entirely attributed to the anti-corruption sweep that happened late in the final quarter of the year, it is certainly likely to have been a contributory factor in unsettling investor confidence. From a long-term perspective, however, efforts to level the playing field in Saudi Arabia may bring fairer weather to businesses as the obstacles associated with pervasive corruption are gradually eliminated from the system.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia is far from being alone in its fight against corruption; it is one of the most prevalent and pressing issues facing systems across the globe, and countries with endemic corruption problems face an almost insurmountable challenge to attract foreign investment. At this nascent stage, it would be premature to speculate as to how other Middle Eastern countries will respond to the Kingdom’s efforts, but the most desirable outcome would be for neighbouring countries to become emboldened in their own anti-corruption efforts. The UAE already stands as the regional outlier in anti-corruption efforts, with a CPI 2017 ranking of 21st in the world, comparable to many leading international jurisdictions. The combined efforts of both Saudi Arabia and the UAE could be instrumental in forging a clear path to greater transparency for other afflicted countries in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Staying Dry: Legal Safeguards Against Corruption In The Kingdom</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The primary anti-corruption provisions are provided by the anti-bribery law issued by Royal Decree No. M/36 of 29-Dhu al-Hijjah-1412 (corresponding to 30 June 1996) (the \"Anti-Bribery Law\"). More recently, a decree was issued setting out rules relating to gifts for public officials (Decree No. 60 dated 18 Safar 1437H (corresponding to 1 December 2015) (the \"Rules on Gifts to Officials\" or the \"Rules\").</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Bribery of Public Officials</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law is primarily focused on public servants. In order to maintain maximum protection for its public sector, the definition is intentionally broad, extending to personnel of joint stock companies, along with their board members and directors. It may also capture private sector individuals who are working on government-related projects, such as consultants to government projects, including temporary employees, experts appointed by the government or judiciary, or even employees of private companies contracted to provide public services. Employees of joint stock companies are also subject to the Anti-Bribery Law, as well as employees of companies and sole proprietorships engaged in banking services.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law broadly defines a bribee as any public servant who solicits, accepts or receives for himself or for others, a gift or payment of any sort, or a promise thereof, as consideration for any act that impinges on the integrity of office. Defences against such practices are fortified by the absence of any exemption, caveat or even significant qualifying criteria for the type of act that could invoke bribery provisions. Any act can be considered corrupt, regardless of its legitimacy, whether it is a positive act or an omission, whether it has been done in the absence of a prior agreement, and even where it involves using the influence attached to a public office to gain benefit, rather than the performance of a relevant duty.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given the traditionally prominent role of the government in the national economy, the Anti-Bribery Law does provide relatively wide protection, despite the obvious lack of corresponding safeguards applicable to the private sector. Privatisation targets encapsulated by Vision 2030, however, necessitate more complete protection and new measures that target both the public and private sector are a requirement going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Penalties and Enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the Anti-Bribery Law, penalties for the offences set out above can reach maximum penalties of imprisonment for a term not exceeding ten years and/or a fine not exceeding one million riyals (about USD 275,000).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Along with the specific penalties applicable to public servants who accept a bribe, it should be noted that the Anti-Bribery Law provides for the person offering the bribe (whether it is accepted or not), and any accomplice, to be susceptible to corresponding punishments.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To protect a culture of respect for public officials, conviction on bribery offences also leads to dismissal and a bar from public office for a minimum of five years. In an attempt to prevent perpetrators from benefitting from the proceeds of crime, the Anti Bribery Law provides that any money, benefit or privilege derived from committal of the offence be confiscated wherever possible.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Gifts and Hospitality</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">No exemptions are provided for gifts and hospitality in the Anti-Bribery Law. Any benefit or privilege obtained by the bribee, regardless of its type or designation, whether material or otherwise, shall be considered a (prohibited) gift or promise. This has led to confusion in the past, as conventional business practices that would be widely accepted in other systems appeared to invoke the strict anti-bribery restrictions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This matter was somewhat elucidated with the passing of the Rules on Gifts to Officials. Pursuant to these Rules, an official may accept gifts, given at visits and official occasions or at receptions of official guests, in accordance with custom and the courtesy protocols of such visits and occasions, though they cannot be cash and must be conventional in the context in which it is given. Crucially, businesses must be cognisant that generally, when reviewing the appositeness of a gift, the authorities will consider a number of contextual factors, including the proximity of the gift-giving to any relevant business deal, common courtesy practices of the firm in question, proportionality of the gift to conventional customs, and the appropriateness of the benefit given.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Though further provisions on the permissibility of certain types of gifts are outlined in the Rules, gifts and hospitality continue to be point of concern for business and can prove problematic in a culture where generosity is an ever-present feature of relations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Exposure for Corporate Entities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Significantly, where the manager or any employee of a private company is convicted of any offence under the Anti-Bribery Law, and the offence was committed for the benefit of such company, the law provides for a fine not exceeding ten times the value of the bribe and/or a ban from entering into public procurement or project contracts of at least 5 years. The briber can be exempted from punishment if he informs the authorities prior to the discovery of the offence, and this may provide some means by which corporate entities can limit their exposure upon becoming aware of any apparent offences under the Anti-Bribery Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparing for the Tempest: Bolstering Defences Ahead Of Reform</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a strategic perspective, since bribery is rarely an isolated issue, responses need to be thorough and comprehensive; part of an overarching coordinated national strategy that provides protection across an entire economic system and all branches of government. In order to ensure that such strategies are effective and aligned across institutions and businesses, they require constant monitoring and enforcement by a dedicated and independent authority, Where these institutions also act as the recipient in a sound and efficient reporting mechanism, the presence of a clear and trustworthy process increases the confidence of international investors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Aside from the well-publicised arrests, Saudi Arabia’s corruption reform has extended to measures in other parts of its anti-corruption framework that have more sustainable implications for how it will address corrupt practices in future. These bold new mechanisms also enhance the country’s invigorated anti-corruption culture, which marks an abrupt departure from its previous presumed reticence on corruption matters.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Newly-formed Supreme Committee for Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The formation of the Supreme Committee is indicative of the greater strategic importance of anti-graft efforts to the country’s wider reform programme. Chaired by the Crown Prince and comprised of high-ranking officials from various sectors of governance, including security, finance and existing anti-corruption bodies, the Committee acts as a mechanism that will immediately elevate corruption instances to the remit of the highest echelons of government. In so doing, the Kingdom is sending a strong message that it will no longer turn a blind eye to practices that compromise its financial system or rule of law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new Supreme Committee will have vastly advanced investigative and prosecutorial powers, including the capacity to issue arrest warrants and order interim measures such as issuing travel bans and asset freezing orders. This is a critical limitation of the existing National Anti-Corruption Commission, more commonly known as Nazaha, which was established in 2012 and has limited capacity, despite its function as the primary recipient of reports of corrupt activity. The new committee will not replace Nazaha, which will continue to target the protection of national integrity, investigate instances of graft in government contracts and refer any incidents to the relevant authorities and public prosecution as and when necessary.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">By coordinating the activities of both the Supreme Committee and Nazaha, the efficacy of existing measures will be boosted by covering a wider scope of prosecutorial powers, increased authority with which to pursue perpetrators, and greater scrutiny through public awareness.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Specialised Anti-corruption Units Within the Public Prosecution Department</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As an additional measure, the Saudi government announced as recently as March 2018 that it had established new specialised anti-corruption units within the Public Prosecution. Cases prosecuted by these units would be carried out under the direct oversight of the Attorney General, once again demonstrating the paramount importance of corruption-related cases. Though it is unclear when the dedicated units will become operational, in creating this new advanced capacity the Saudi government has improved its ability to investigate and prosecute corrupt activity and, in so doing, will add an extra deterrent against illicit practices.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Whistleblower Culture</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whistleblower protection is a significant point of departure in many regimes across the globe. Whilst some Western systems, such as the US, actively promote whistleblowing activity through substantial financial incentives, most countries in the Middle East have thus far been slow to introduce formal protection for whistleblowers, preferring instead to rely on a positive reporting duty and conscionable actions by citizens.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this context, Saudi Arabia’s more proactive approach appears as an outlier. Article 17 of the Anti-Bribery Law provides for rewards for information substantiating an offence. Any person who is not a briber, or an accomplice, and who provides incriminating information substantiating any offence set out in Anti-Bribery Law, shall receive a reward not less than five thousand riyals (about USD 1,350) and not more than half of the money confiscated. There may be scope for a higher reward to be approved in appropriate circumstances.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, King Salman’s recent order in May 2018 to provide whistle blower protection is progressive in its outlook and signifies Saudi Arabia’s willingness to accede to international standards of rights and transparency when it comes to prosecuting corruption crimes. If Saudi Arabia is mindful of the risks posed by the potential for spurious claims and introduces adequate measures to prevent abuse of the reporting system, whistle blower protection is yet a further measure that will likely serve to reinforce the culture of zero tolerance that Saudi Arabia is attempting to cultivate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Impending Amendments to the Anti-Bribery Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 2 July 2018, Saudi Arabia’s Shoura (Consultative) Council approved draft amendments to the Anti-Bribery Law. The changes, which are yet to be implemented, are reportedly aimed at providing enhanced protection to public utilities through sound prosecution procedures and severe punishment for offences, as well as further enshrining the principles and commitments contained in the United Nations Convention Against Corruption (UNCAC). At present, the extent and exact nature of the amendments are unknown, but once officially passed into law, they have the potential to radically modernise Saudi Arabia’s anti-bribery legislation. This critical development warrants close attention over the coming months as the process to implementation progresses, and could assist investors in assessing the long-term outlook for Saudi Arabia’s economic integrity.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Weather Eye on the Horizon: Is Further Change an Inevitability?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Anti-corruption measures are an ancillary part of the legal reform process in KSA, but do not represent the totality of the country’s ongoing transition. New money-laundering laws passed in October 2017 are emblematic of the Kingdom’s resolve to eradicate illicit practices from its system. Corruption is symptomatic of countries where there is weak rule of law, but Saudi Arabia’s legal fortifications will go a long way to stamping out the nexus of criminal behaviour that facilitates and drives corruption trends. These are important contributory factors that should be considered by foreign investors when making an assessment of Saudi Arabia’s economic security.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The changes that have already been implemented will only improve the prognosis of anti-corruption in Saudi Arabia. The continued momentum garnered from these initiatives will drive awareness of corruption problems, aided by the combined activity of Nazaha and the newly formed Supreme Committee for Anti-Corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is a pivotal time for Saudi Arabia and the long-term outlook is positive – there is already evidence of widespread reform to protect the Kingdom’s economic stability and integrity and address systemic weaknesses. Simultaneously, the changes that have been gradually introduced by Saudi Arabia’s General Investment Authority (SAGIA) since 2015 to liberalise the national economy and provide space for full foreign ownership in key sectors, are creating new incentive for foreign investors to tap into the largest market in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Equally, investors must strike the appropriate balance between caution and enthusiasm when encountering new opportunities in the market. Corruption challenges are persistent and pervasive and will require sustained redress for the foreseeable future. Though it is yet undetermined what new mechanisms and measures may be deployed in the Kingdom in future, it is likely that subsequent steps taken to quash illicit practices will have considerable consequences for domestic and foreign investors alike. This will require that foreign investors understand the legal framework and secure their interests against inevitable shifts in the Saudi market as reform measures revolutionise the domestic business culture.</p>\r\nOverall, however, Saudi Arabia’s recent multifaceted approach to reform has created the perfect storm for investors and, with an impending multitude of investment projects, businesses have a prime opportunity to invest at the leading edge of FDI, assured that corrupt practices are not operating with impunity.\r\n\r\n<img class=\"wp-image-8011 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/676.jpg\" alt=\"\" width=\"1094\" height=\"475\" />'),
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(259563, 25199, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignleft size-full wp-image-8012\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/DG.jpg\" alt=\"\" width=\"1536\" height=\"417\" />Saudi Arabia is undergoing significant reform but, beyond the maelstrom of political speculation and conjecture, what are the practical and legal implications of the anti-corruption drive for investors?</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia has seen tumultuous reform in the last 12 months as Crown Prince Mohammed bin Salman has sought to propel Saudi Arabia towards Vision 2030. International attention has been riveted to the government’s surging anti-corruption drive since a number of high-profile individuals were detained on corruption charges towards the end of 2017. Much of this attention, however, has been tangential, without providing clear insight into what impact such radical measures will have on the country’s legal framework and business climate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Favourable Forecast? The Business Outlook on Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The extent and boldness of the recent measures taken in Saudi Arabia are indicative of the government’s resolve to eliminate corruption in the system. The Kingdom has been signatory to the United National Convention Against Corruption (UNCAC) since 2004, though it only ratified the agreement in 2013. The events that have garnered so much international attention are only the latest in a long-term initiative to address corrupt practices in the business sector. Between 2012 and 2017, Saudi Arabia has improved its score on the Transparency International Corruption Perceptions Index (CPI) from 44 to 49. Whilst this score still reflects significant room for improvement, it also charts measurable progress in a region that continues to face drastic change, and provides impetus for the more recent measures that clearly demonstrate the elevated priority of anti-corruption reform.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order for the Kingdom to benefit from its drive for sustainability and prosperity, however, its determination to eradicate corruption must be symbiotic with its ability to assure investor confidence. The zero-tolerance approach that has surfaced over the past year has the potential to greatly improve the integrity of Saudi Arabia’s business market, but lingering concerns surround residual corruption with certain businesses continuing to question the feasibility and longevity of trading in the Kingdom.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The United Nations Conference on Trade and Development (UNCTD) World Investment Report 2018 suggests that, in the short term at least, the anti-corruption drive has done little to improve investor confidence and may even have exacerbated feelings of uncertainty. Inward Foreign Direct Investment (FDI) flows have fallen by more than 80% between 2016 and 2017. Whilst this trend cannot be entirely attributed to the anti-corruption sweep that happened late in the final quarter of the year, it is certainly likely to have been a contributory factor in unsettling investor confidence. From a long-term perspective, however, efforts to level the playing field in Saudi Arabia may bring fairer weather to businesses as the obstacles associated with pervasive corruption are gradually eliminated from the system.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia is far from being alone in its fight against corruption; it is one of the most prevalent and pressing issues facing systems across the globe, and countries with endemic corruption problems face an almost insurmountable challenge to attract foreign investment. At this nascent stage, it would be premature to speculate as to how other Middle Eastern countries will respond to the Kingdom’s efforts, but the most desirable outcome would be for neighbouring countries to become emboldened in their own anti-corruption efforts. The UAE already stands as the regional outlier in anti-corruption efforts, with a CPI 2017 ranking of 21st in the world, comparable to many leading international jurisdictions. The combined efforts of both Saudi Arabia and the UAE could be instrumental in forging a clear path to greater transparency for other afflicted countries in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Staying Dry: Legal Safeguards Against Corruption In The Kingdom</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The primary anti-corruption provisions are provided by the anti-bribery law issued by Royal Decree No. M/36 of 29-Dhu al-Hijjah-1412 (corresponding to 30 June 1996) (the \"Anti-Bribery Law\"). More recently, a decree was issued setting out rules relating to gifts for public officials (Decree No. 60 dated 18 Safar 1437H (corresponding to 1 December 2015) (the \"Rules on Gifts to Officials\" or the \"Rules\").</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Bribery of Public Officials</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law is primarily focused on public servants. In order to maintain maximum protection for its public sector, the definition is intentionally broad, extending to personnel of joint stock companies, along with their board members and directors. It may also capture private sector individuals who are working on government-related projects, such as consultants to government projects, including temporary employees, experts appointed by the government or judiciary, or even employees of private companies contracted to provide public services. Employees of joint stock companies are also subject to the Anti-Bribery Law, as well as employees of companies and sole proprietorships engaged in banking services.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law broadly defines a bribee as any public servant who solicits, accepts or receives for himself or for others, a gift or payment of any sort, or a promise thereof, as consideration for any act that impinges on the integrity of office. Defences against such practices are fortified by the absence of any exemption, caveat or even significant qualifying criteria for the type of act that could invoke bribery provisions. Any act can be considered corrupt, regardless of its legitimacy, whether it is a positive act or an omission, whether it has been done in the absence of a prior agreement, and even where it involves using the influence attached to a public office to gain benefit, rather than the performance of a relevant duty.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given the traditionally prominent role of the government in the national economy, the Anti-Bribery Law does provide relatively wide protection, despite the obvious lack of corresponding safeguards applicable to the private sector. Privatisation targets encapsulated by Vision 2030, however, necessitate more complete protection and new measures that target both the public and private sector are a requirement going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Penalties and Enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the Anti-Bribery Law, penalties for the offences set out above can reach maximum penalties of imprisonment for a term not exceeding ten years and/or a fine not exceeding one million riyals (about USD 275,000).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Along with the specific penalties applicable to public servants who accept a bribe, it should be noted that the Anti-Bribery Law provides for the person offering the bribe (whether it is accepted or not), and any accomplice, to be susceptible to corresponding punishments.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To protect a culture of respect for public officials, conviction on bribery offences also leads to dismissal and a bar from public office for a minimum of five years. In an attempt to prevent perpetrators from benefitting from the proceeds of crime, the Anti Bribery Law provides that any money, benefit or privilege derived from committal of the offence be confiscated wherever possible.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Gifts and Hospitality</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">No exemptions are provided for gifts and hospitality in the Anti-Bribery Law. Any benefit or privilege obtained by the bribee, regardless of its type or designation, whether material or otherwise, shall be considered a (prohibited) gift or promise. This has led to confusion in the past, as conventional business practices that would be widely accepted in other systems appeared to invoke the strict anti-bribery restrictions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This matter was somewhat elucidated with the passing of the Rules on Gifts to Officials. Pursuant to these Rules, an official may accept gifts, given at visits and official occasions or at receptions of official guests, in accordance with custom and the courtesy protocols of such visits and occasions, though they cannot be cash and must be conventional in the context in which it is given. Crucially, businesses must be cognisant that generally, when reviewing the appositeness of a gift, the authorities will consider a number of contextual factors, including the proximity of the gift-giving to any relevant business deal, common courtesy practices of the firm in question, proportionality of the gift to conventional customs, and the appropriateness of the benefit given.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Though further provisions on the permissibility of certain types of gifts are outlined in the Rules, gifts and hospitality continue to be point of concern for business and can prove problematic in a culture where generosity is an ever-present feature of relations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Exposure for Corporate Entities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Significantly, where the manager or any employee of a private company is convicted of any offence under the Anti-Bribery Law, and the offence was committed for the benefit of such company, the law provides for a fine not exceeding ten times the value of the bribe and/or a ban from entering into public procurement or project contracts of at least 5 years. The briber can be exempted from punishment if he informs the authorities prior to the discovery of the offence, and this may provide some means by which corporate entities can limit their exposure upon becoming aware of any apparent offences under the Anti-Bribery Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparing for the Tempest: Bolstering Defences Ahead Of Reform</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a strategic perspective, since bribery is rarely an isolated issue, responses need to be thorough and comprehensive; part of an overarching coordinated national strategy that provides protection across an entire economic system and all branches of government. In order to ensure that such strategies are effective and aligned across institutions and businesses, they require constant monitoring and enforcement by a dedicated and independent authority, Where these institutions also act as the recipient in a sound and efficient reporting mechanism, the presence of a clear and trustworthy process increases the confidence of international investors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Aside from the well-publicised arrests, Saudi Arabia’s corruption reform has extended to measures in other parts of its anti-corruption framework that have more sustainable implications for how it will address corrupt practices in future. These bold new mechanisms also enhance the country’s invigorated anti-corruption culture, which marks an abrupt departure from its previous presumed reticence on corruption matters.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Newly-formed Supreme Committee for Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The formation of the Supreme Committee is indicative of the greater strategic importance of anti-graft efforts to the country’s wider reform programme. Chaired by the Crown Prince and comprised of high-ranking officials from various sectors of governance, including security, finance and existing anti-corruption bodies, the Committee acts as a mechanism that will immediately elevate corruption instances to the remit of the highest echelons of government. In so doing, the Kingdom is sending a strong message that it will no longer turn a blind eye to practices that compromise its financial system or rule of law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new Supreme Committee will have vastly advanced investigative and prosecutorial powers, including the capacity to issue arrest warrants and order interim measures such as issuing travel bans and asset freezing orders. This is a critical limitation of the existing National Anti-Corruption Commission, more commonly known as Nazaha, which was established in 2012 and has limited capacity, despite its function as the primary recipient of reports of corrupt activity. The new committee will not replace Nazaha, which will continue to target the protection of national integrity, investigate instances of graft in government contracts and refer any incidents to the relevant authorities and public prosecution as and when necessary.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">By coordinating the activities of both the Supreme Committee and Nazaha, the efficacy of existing measures will be boosted by covering a wider scope of prosecutorial powers, increased authority with which to pursue perpetrators, and greater scrutiny through public awareness.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Specialised Anti-corruption Units Within the Public Prosecution Department</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As an additional measure, the Saudi government announced as recently as March 2018 that it had established new specialised anti-corruption units within the Public Prosecution. Cases prosecuted by these units would be carried out under the direct oversight of the Attorney General, once again demonstrating the paramount importance of corruption-related cases. Though it is unclear when the dedicated units will become operational, in creating this new advanced capacity the Saudi government has improved its ability to investigate and prosecute corrupt activity and, in so doing, will add an extra deterrent against illicit practices.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Whistleblower Culture</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whistleblower protection is a significant point of departure in many regimes across the globe. Whilst some Western systems, such as the US, actively promote whistleblowing activity through substantial financial incentives, most countries in the Middle East have thus far been slow to introduce formal protection for whistleblowers, preferring instead to rely on a positive reporting duty and conscionable actions by citizens.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this context, Saudi Arabia’s more proactive approach appears as an outlier. Article 17 of the Anti-Bribery Law provides for rewards for information substantiating an offence. Any person who is not a briber, or an accomplice, and who provides incriminating information substantiating any offence set out in Anti-Bribery Law, shall receive a reward not less than five thousand riyals (about USD 1,350) and not more than half of the money confiscated. There may be scope for a higher reward to be approved in appropriate circumstances.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, King Salman’s recent order in May 2018 to provide whistle blower protection is progressive in its outlook and signifies Saudi Arabia’s willingness to accede to international standards of rights and transparency when it comes to prosecuting corruption crimes. If Saudi Arabia is mindful of the risks posed by the potential for spurious claims and introduces adequate measures to prevent abuse of the reporting system, whistle blower protection is yet a further measure that will likely serve to reinforce the culture of zero tolerance that Saudi Arabia is attempting to cultivate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Impending Amendments to the Anti-Bribery Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 2 July 2018, Saudi Arabia’s Shoura (Consultative) Council approved draft amendments to the Anti-Bribery Law. The changes, which are yet to be implemented, are reportedly aimed at providing enhanced protection to public utilities through sound prosecution procedures and severe punishment for offences, as well as further enshrining the principles and commitments contained in the United Nations Convention Against Corruption (UNCAC). At present, the extent and exact nature of the amendments are unknown, but once officially passed into law, they have the potential to radically modernise Saudi Arabia’s anti-bribery legislation. This critical development warrants close attention over the coming months as the process to implementation progresses, and could assist investors in assessing the long-term outlook for Saudi Arabia’s economic integrity.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Weather Eye on the Horizon: Is Further Change an Inevitability?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Anti-corruption measures are an ancillary part of the legal reform process in KSA, but do not represent the totality of the country’s ongoing transition. New money-laundering laws passed in October 2017 are emblematic of the Kingdom’s resolve to eradicate illicit practices from its system. Corruption is symptomatic of countries where there is weak rule of law, but Saudi Arabia’s legal fortifications will go a long way to stamping out the nexus of criminal behaviour that facilitates and drives corruption trends. These are important contributory factors that should be considered by foreign investors when making an assessment of Saudi Arabia’s economic security.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The changes that have already been implemented will only improve the prognosis of anti-corruption in Saudi Arabia. The continued momentum garnered from these initiatives will drive awareness of corruption problems, aided by the combined activity of Nazaha and the newly formed Supreme Committee for Anti-Corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is a pivotal time for Saudi Arabia and the long-term outlook is positive – there is already evidence of widespread reform to protect the Kingdom’s economic stability and integrity and address systemic weaknesses. Simultaneously, the changes that have been gradually introduced by Saudi Arabia’s General Investment Authority (SAGIA) since 2015 to liberalise the national economy and provide space for full foreign ownership in key sectors, are creating new incentive for foreign investors to tap into the largest market in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Equally, investors must strike the appropriate balance between caution and enthusiasm when encountering new opportunities in the market. Corruption challenges are persistent and pervasive and will require sustained redress for the foreseeable future. Though it is yet undetermined what new mechanisms and measures may be deployed in the Kingdom in future, it is likely that subsequent steps taken to quash illicit practices will have considerable consequences for domestic and foreign investors alike. This will require that foreign investors understand the legal framework and secure their interests against inevitable shifts in the Saudi market as reform measures revolutionise the domestic business culture.</p>\r\nOverall, however, Saudi Arabia’s recent multifaceted approach to reform has created the perfect storm for investors and, with an impending multitude of investment projects, businesses have a prime opportunity to invest at the leading edge of FDI, assured that corrupt practices are not operating with impunity.\r\n\r\n<img class=\"wp-image-8011 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/676.jpg\" alt=\"\" width=\"1094\" height=\"475\" />|<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignleft size-full wp-image-8012\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/DG.jpg\" alt=\"\" width=\"1536\" height=\"417\" /></em></p>\r\nSaudi Arabia is undergoing significant reform but, beyond the maelstrom of political speculation and conjecture, what are the practical and legal implications of the anti-corruption drive for investors?\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia has seen tumultuous reform in the last 12 months as Crown Prince Mohammed bin Salman has sought to propel Saudi Arabia towards Vision 2030. International attention has been riveted to the government’s surging anti-corruption drive since a number of high-profile individuals were detained on corruption charges towards the end of 2017. Much of this attention, however, has been tangential, without providing clear insight into what impact such radical measures will have on the country’s legal framework and business climate.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Favourable Forecast? The Business Outlook on Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The extent and boldness of the recent measures taken in Saudi Arabia are indicative of the government’s resolve to eliminate corruption in the system. The Kingdom has been signatory to the United National Convention Against Corruption (UNCAC) since 2004, though it only ratified the agreement in 2013. The events that have garnered so much international attention are only the latest in a long-term initiative to address corrupt practices in the business sector. Between 2012 and 2017, Saudi Arabia has improved its score on the Transparency International Corruption Perceptions Index (CPI) from 44 to 49. Whilst this score still reflects significant room for improvement, it also charts measurable progress in a region that continues to face drastic change, and provides impetus for the more recent measures that clearly demonstrate the elevated priority of anti-corruption reform.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order for the Kingdom to benefit from its drive for sustainability and prosperity, however, its determination to eradicate corruption must be symbiotic with its ability to assure investor confidence. The zero-tolerance approach that has surfaced over the past year has the potential to greatly improve the integrity of Saudi Arabia’s business market, but lingering concerns surround residual corruption with certain businesses continuing to question the feasibility and longevity of trading in the Kingdom.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The United Nations Conference on Trade and Development (UNCTD) World Investment Report 2018 suggests that, in the short term at least, the anti-corruption drive has done little to improve investor confidence and may even have exacerbated feelings of uncertainty. Inward Foreign Direct Investment (FDI) flows have fallen by more than 80% between 2016 and 2017. Whilst this trend cannot be entirely attributed to the anti-corruption sweep that happened late in the final quarter of the year, it is certainly likely to have been a contributory factor in unsettling investor confidence. From a long-term perspective, however, efforts to level the playing field in Saudi Arabia may bring fairer weather to businesses as the obstacles associated with pervasive corruption are gradually eliminated from the system.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia is far from being alone in its fight against corruption; it is one of the most prevalent and pressing issues facing systems across the globe, and countries with endemic corruption problems face an almost insurmountable challenge to attract foreign investment. At this nascent stage, it would be premature to speculate as to how other Middle Eastern countries will respond to the Kingdom’s efforts, but the most desirable outcome would be for neighbouring countries to become emboldened in their own anti-corruption efforts. The UAE already stands as the regional outlier in anti-corruption efforts, with a CPI 2017 ranking of 21st in the world, comparable to many leading international jurisdictions. The combined efforts of both Saudi Arabia and the UAE could be instrumental in forging a clear path to greater transparency for other afflicted countries in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Staying Dry: Legal Safeguards Against Corruption In The Kingdom</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The primary anti-corruption provisions are provided by the anti-bribery law issued by Royal Decree No. M/36 of 29-Dhu al-Hijjah-1412 (corresponding to 30 June 1996) (the \"Anti-Bribery Law\"). More recently, a decree was issued setting out rules relating to gifts for public officials (Decree No. 60 dated 18 Safar 1437H (corresponding to 1 December 2015) (the \"Rules on Gifts to Officials\" or the \"Rules\").</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Bribery of Public Officials</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law is primarily focused on public servants. In order to maintain maximum protection for its public sector, the definition is intentionally broad, extending to personnel of joint stock companies, along with their board members and directors. It may also capture private sector individuals who are working on government-related projects, such as consultants to government projects, including temporary employees, experts appointed by the government or judiciary, or even employees of private companies contracted to provide public services. Employees of joint stock companies are also subject to the Anti-Bribery Law, as well as employees of companies and sole proprietorships engaged in banking services.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law broadly defines a bribee as any public servant who solicits, accepts or receives for himself or for others, a gift or payment of any sort, or a promise thereof, as consideration for any act that impinges on the integrity of office. Defences against such practices are fortified by the absence of any exemption, caveat or even significant qualifying criteria for the type of act that could invoke bribery provisions. Any act can be considered corrupt, regardless of its legitimacy, whether it is a positive act or an omission, whether it has been done in the absence of a prior agreement, and even where it involves using the influence attached to a public office to gain benefit, rather than the performance of a relevant duty.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given the traditionally prominent role of the government in the national economy, the Anti-Bribery Law does provide relatively wide protection, despite the obvious lack of corresponding safeguards applicable to the private sector. Privatisation targets encapsulated by Vision 2030, however, necessitate more complete protection and new measures that target both the public and private sector are a requirement going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Penalties and Enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the Anti-Bribery Law, penalties for the offences set out above can reach maximum penalties of imprisonment for a term not exceeding ten years and/or a fine not exceeding one million riyals (about USD 275,000).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Along with the specific penalties applicable to public servants who accept a bribe, it should be noted that the Anti-Bribery Law provides for the person offering the bribe (whether it is accepted or not), and any accomplice, to be susceptible to corresponding punishments.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To protect a culture of respect for public officials, conviction on bribery offences also leads to dismissal and a bar from public office for a minimum of five years. In an attempt to prevent perpetrators from benefitting from the proceeds of crime, the Anti Bribery Law provides that any money, benefit or privilege derived from committal of the offence be confiscated wherever possible.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Gifts and Hospitality</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">No exemptions are provided for gifts and hospitality in the Anti-Bribery Law. Any benefit or privilege obtained by the bribee, regardless of its type or designation, whether material or otherwise, shall be considered a (prohibited) gift or promise. This has led to confusion in the past, as conventional business practices that would be widely accepted in other systems appeared to invoke the strict anti-bribery restrictions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This matter was somewhat elucidated with the passing of the Rules on Gifts to Officials. Pursuant to these Rules, an official may accept gifts, given at visits and official occasions or at receptions of official guests, in accordance with custom and the courtesy protocols of such visits and occasions, though they cannot be cash and must be conventional in the context in which it is given. Crucially, businesses must be cognisant that generally, when reviewing the appositeness of a gift, the authorities will consider a number of contextual factors, including the proximity of the gift-giving to any relevant business deal, common courtesy practices of the firm in question, proportionality of the gift to conventional customs, and the appropriateness of the benefit given.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Though further provisions on the permissibility of certain types of gifts are outlined in the Rules, gifts and hospitality continue to be point of concern for business and can prove problematic in a culture where generosity is an ever-present feature of relations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Exposure for Corporate Entities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Significantly, where the manager or any employee of a private company is convicted of any offence under the Anti-Bribery Law, and the offence was committed for the benefit of such company, the law provides for a fine not exceeding ten times the value of the bribe and/or a ban from entering into public procurement or project contracts of at least 5 years. The briber can be exempted from punishment if he informs the authorities prior to the discovery of the offence, and this may provide some means by which corporate entities can limit their exposure upon becoming aware of any apparent offences under the Anti-Bribery Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparing for the Tempest: Bolstering Defences Ahead Of Reform</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a strategic perspective, since bribery is rarely an isolated issue, responses need to be thorough and comprehensive; part of an overarching coordinated national strategy that provides protection across an entire economic system and all branches of government. In order to ensure that such strategies are effective and aligned across institutions and businesses, they require constant monitoring and enforcement by a dedicated and independent authority, Where these institutions also act as the recipient in a sound and efficient reporting mechanism, the presence of a clear and trustworthy process increases the confidence of international investors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Aside from the well-publicised arrests, Saudi Arabia’s corruption reform has extended to measures in other parts of its anti-corruption framework that have more sustainable implications for how it will address corrupt practices in future. These bold new mechanisms also enhance the country’s invigorated anti-corruption culture, which marks an abrupt departure from its previous presumed reticence on corruption matters.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Newly-formed Supreme Committee for Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The formation of the Supreme Committee is indicative of the greater strategic importance of anti-graft efforts to the country’s wider reform programme. Chaired by the Crown Prince and comprised of high-ranking officials from various sectors of governance, including security, finance and existing anti-corruption bodies, the Committee acts as a mechanism that will immediately elevate corruption instances to the remit of the highest echelons of government. In so doing, the Kingdom is sending a strong message that it will no longer turn a blind eye to practices that compromise its financial system or rule of law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new Supreme Committee will have vastly advanced investigative and prosecutorial powers, including the capacity to issue arrest warrants and order interim measures such as issuing travel bans and asset freezing orders. This is a critical limitation of the existing National Anti-Corruption Commission, more commonly known as Nazaha, which was established in 2012 and has limited capacity, despite its function as the primary recipient of reports of corrupt activity. The new committee will not replace Nazaha, which will continue to target the protection of national integrity, investigate instances of graft in government contracts and refer any incidents to the relevant authorities and public prosecution as and when necessary.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">By coordinating the activities of both the Supreme Committee and Nazaha, the efficacy of existing measures will be boosted by covering a wider scope of prosecutorial powers, increased authority with which to pursue perpetrators, and greater scrutiny through public awareness.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Specialised Anti-corruption Units Within the Public Prosecution Department</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As an additional measure, the Saudi government announced as recently as March 2018 that it had established new specialised anti-corruption units within the Public Prosecution. Cases prosecuted by these units would be carried out under the direct oversight of the Attorney General, once again demonstrating the paramount importance of corruption-related cases. Though it is unclear when the dedicated units will become operational, in creating this new advanced capacity the Saudi government has improved its ability to investigate and prosecute corrupt activity and, in so doing, will add an extra deterrent against illicit practices.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Whistleblower Culture</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whistleblower protection is a significant point of departure in many regimes across the globe. Whilst some Western systems, such as the US, actively promote whistleblowing activity through substantial financial incentives, most countries in the Middle East have thus far been slow to introduce formal protection for whistleblowers, preferring instead to rely on a positive reporting duty and conscionable actions by citizens.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this context, Saudi Arabia’s more proactive approach appears as an outlier. Article 17 of the Anti-Bribery Law provides for rewards for information substantiating an offence. Any person who is not a briber, or an accomplice, and who provides incriminating information substantiating any offence set out in Anti-Bribery Law, shall receive a reward not less than five thousand riyals (about USD 1,350) and not more than half of the money confiscated. There may be scope for a higher reward to be approved in appropriate circumstances.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, King Salman’s recent order in May 2018 to provide whistle blower protection is progressive in its outlook and signifies Saudi Arabia’s willingness to accede to international standards of rights and transparency when it comes to prosecuting corruption crimes. If Saudi Arabia is mindful of the risks posed by the potential for spurious claims and introduces adequate measures to prevent abuse of the reporting system, whistle blower protection is yet a further measure that will likely serve to reinforce the culture of zero tolerance that Saudi Arabia is attempting to cultivate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Impending Amendments to the Anti-Bribery Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 2 July 2018, Saudi Arabia’s Shoura (Consultative) Council approved draft amendments to the Anti-Bribery Law. The changes, which are yet to be implemented, are reportedly aimed at providing enhanced protection to public utilities through sound prosecution procedures and severe punishment for offences, as well as further enshrining the principles and commitments contained in the United Nations Convention Against Corruption (UNCAC). At present, the extent and exact nature of the amendments are unknown, but once officially passed into law, they have the potential to radically modernise Saudi Arabia’s anti-bribery legislation. This critical development warrants close attention over the coming months as the process to implementation progresses, and could assist investors in assessing the long-term outlook for Saudi Arabia’s economic integrity.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Weather Eye on the Horizon: Is Further Change an Inevitability?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Anti-corruption measures are an ancillary part of the legal reform process in KSA, but do not represent the totality of the country’s ongoing transition. New money-laundering laws passed in October 2017 are emblematic of the Kingdom’s resolve to eradicate illicit practices from its system. Corruption is symptomatic of countries where there is weak rule of law, but Saudi Arabia’s legal fortifications will go a long way to stamping out the nexus of criminal behaviour that facilitates and drives corruption trends. These are important contributory factors that should be considered by foreign investors when making an assessment of Saudi Arabia’s economic security.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The changes that have already been implemented will only improve the prognosis of anti-corruption in Saudi Arabia. The continued momentum garnered from these initiatives will drive awareness of corruption problems, aided by the combined activity of Nazaha and the newly formed Supreme Committee for Anti-Corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is a pivotal time for Saudi Arabia and the long-term outlook is positive – there is already evidence of widespread reform to protect the Kingdom’s economic stability and integrity and address systemic weaknesses. Simultaneously, the changes that have been gradually introduced by Saudi Arabia’s General Investment Authority (SAGIA) since 2015 to liberalise the national economy and provide space for full foreign ownership in key sectors, are creating new incentive for foreign investors to tap into the largest market in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Equally, investors must strike the appropriate balance between caution and enthusiasm when encountering new opportunities in the market. Corruption challenges are persistent and pervasive and will require sustained redress for the foreseeable future. Though it is yet undetermined what new mechanisms and measures may be deployed in the Kingdom in future, it is likely that subsequent steps taken to quash illicit practices will have considerable consequences for domestic and foreign investors alike. This will require that foreign investors understand the legal framework and secure their interests against inevitable shifts in the Saudi market as reform measures revolutionise the domestic business culture.</p>\r\nOverall, however, Saudi Arabia’s recent multifaceted approach to reform has created the perfect storm for investors and, with an impending multitude of investment projects, businesses have a prime opportunity to invest at the leading edge of FDI, assured that corrupt practices are not operating with impunity.\r\n\r\n<img class=\"wp-image-8011 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/676.jpg\" alt=\"\" width=\"1094\" height=\"475\" />'),
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(259613, 25204, 'MetaValueNew', '<img class=\"size-full wp-image-8012 aligncenter\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/DG.jpg\" alt=\"\" width=\"1536\" height=\"417\" />\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\nSaudi Arabia is undergoing significant reform but, beyond the maelstrom of political speculation and conjecture, what are the practical and legal implications of the anti-corruption drive for investors?\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia has seen tumultuous reform in the last 12 months as Crown Prince Mohammed bin Salman has sought to propel Saudi Arabia towards Vision 2030. International attention has been riveted to the government’s surging anti-corruption drive since a number of high-profile individuals were detained on corruption charges towards the end of 2017. Much of this attention, however, has been tangential, without providing clear insight into what impact such radical measures will have on the country’s legal framework and business climate.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Favourable Forecast? The Business Outlook on Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The extent and boldness of the recent measures taken in Saudi Arabia are indicative of the government’s resolve to eliminate corruption in the system. The Kingdom has been signatory to the United National Convention Against Corruption (UNCAC) since 2004, though it only ratified the agreement in 2013. The events that have garnered so much international attention are only the latest in a long-term initiative to address corrupt practices in the business sector. Between 2012 and 2017, Saudi Arabia has improved its score on the Transparency International Corruption Perceptions Index (CPI) from 44 to 49. Whilst this score still reflects significant room for improvement, it also charts measurable progress in a region that continues to face drastic change, and provides impetus for the more recent measures that clearly demonstrate the elevated priority of anti-corruption reform.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order for the Kingdom to benefit from its drive for sustainability and prosperity, however, its determination to eradicate corruption must be symbiotic with its ability to assure investor confidence. The zero-tolerance approach that has surfaced over the past year has the potential to greatly improve the integrity of Saudi Arabia’s business market, but lingering concerns surround residual corruption with certain businesses continuing to question the feasibility and longevity of trading in the Kingdom.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The United Nations Conference on Trade and Development (UNCTD) World Investment Report 2018 suggests that, in the short term at least, the anti-corruption drive has done little to improve investor confidence and may even have exacerbated feelings of uncertainty. Inward Foreign Direct Investment (FDI) flows have fallen by more than 80% between 2016 and 2017. Whilst this trend cannot be entirely attributed to the anti-corruption sweep that happened late in the final quarter of the year, it is certainly likely to have been a contributory factor in unsettling investor confidence. From a long-term perspective, however, efforts to level the playing field in Saudi Arabia may bring fairer weather to businesses as the obstacles associated with pervasive corruption are gradually eliminated from the system.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia is far from being alone in its fight against corruption; it is one of the most prevalent and pressing issues facing systems across the globe, and countries with endemic corruption problems face an almost insurmountable challenge to attract foreign investment. At this nascent stage, it would be premature to speculate as to how other Middle Eastern countries will respond to the Kingdom’s efforts, but the most desirable outcome would be for neighbouring countries to become emboldened in their own anti-corruption efforts. The UAE already stands as the regional outlier in anti-corruption efforts, with a CPI 2017 ranking of 21st in the world, comparable to many leading international jurisdictions. The combined efforts of both Saudi Arabia and the UAE could be instrumental in forging a clear path to greater transparency for other afflicted countries in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Staying Dry: Legal Safeguards Against Corruption In The Kingdom</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The primary anti-corruption provisions are provided by the anti-bribery law issued by Royal Decree No. M/36 of 29-Dhu al-Hijjah-1412 (corresponding to 30 June 1996) (the \"Anti-Bribery Law\"). More recently, a decree was issued setting out rules relating to gifts for public officials (Decree No. 60 dated 18 Safar 1437H (corresponding to 1 December 2015) (the \"Rules on Gifts to Officials\" or the \"Rules\").</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Bribery of Public Officials</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law is primarily focused on public servants. In order to maintain maximum protection for its public sector, the definition is intentionally broad, extending to personnel of joint stock companies, along with their board members and directors. It may also capture private sector individuals who are working on government-related projects, such as consultants to government projects, including temporary employees, experts appointed by the government or judiciary, or even employees of private companies contracted to provide public services. Employees of joint stock companies are also subject to the Anti-Bribery Law, as well as employees of companies and sole proprietorships engaged in banking services.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law broadly defines a bribee as any public servant who solicits, accepts or receives for himself or for others, a gift or payment of any sort, or a promise thereof, as consideration for any act that impinges on the integrity of office. Defences against such practices are fortified by the absence of any exemption, caveat or even significant qualifying criteria for the type of act that could invoke bribery provisions. Any act can be considered corrupt, regardless of its legitimacy, whether it is a positive act or an omission, whether it has been done in the absence of a prior agreement, and even where it involves using the influence attached to a public office to gain benefit, rather than the performance of a relevant duty.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given the traditionally prominent role of the government in the national economy, the Anti-Bribery Law does provide relatively wide protection, despite the obvious lack of corresponding safeguards applicable to the private sector. Privatisation targets encapsulated by Vision 2030, however, necessitate more complete protection and new measures that target both the public and private sector are a requirement going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Penalties and Enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the Anti-Bribery Law, penalties for the offences set out above can reach maximum penalties of imprisonment for a term not exceeding ten years and/or a fine not exceeding one million riyals (about USD 275,000).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Along with the specific penalties applicable to public servants who accept a bribe, it should be noted that the Anti-Bribery Law provides for the person offering the bribe (whether it is accepted or not), and any accomplice, to be susceptible to corresponding punishments.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To protect a culture of respect for public officials, conviction on bribery offences also leads to dismissal and a bar from public office for a minimum of five years. In an attempt to prevent perpetrators from benefitting from the proceeds of crime, the Anti Bribery Law provides that any money, benefit or privilege derived from committal of the offence be confiscated wherever possible.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Gifts and Hospitality</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">No exemptions are provided for gifts and hospitality in the Anti-Bribery Law. Any benefit or privilege obtained by the bribee, regardless of its type or designation, whether material or otherwise, shall be considered a (prohibited) gift or promise. This has led to confusion in the past, as conventional business practices that would be widely accepted in other systems appeared to invoke the strict anti-bribery restrictions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This matter was somewhat elucidated with the passing of the Rules on Gifts to Officials. Pursuant to these Rules, an official may accept gifts, given at visits and official occasions or at receptions of official guests, in accordance with custom and the courtesy protocols of such visits and occasions, though they cannot be cash and must be conventional in the context in which it is given. Crucially, businesses must be cognisant that generally, when reviewing the appositeness of a gift, the authorities will consider a number of contextual factors, including the proximity of the gift-giving to any relevant business deal, common courtesy practices of the firm in question, proportionality of the gift to conventional customs, and the appropriateness of the benefit given.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Though further provisions on the permissibility of certain types of gifts are outlined in the Rules, gifts and hospitality continue to be point of concern for business and can prove problematic in a culture where generosity is an ever-present feature of relations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Exposure for Corporate Entities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Significantly, where the manager or any employee of a private company is convicted of any offence under the Anti-Bribery Law, and the offence was committed for the benefit of such company, the law provides for a fine not exceeding ten times the value of the bribe and/or a ban from entering into public procurement or project contracts of at least 5 years. The briber can be exempted from punishment if he informs the authorities prior to the discovery of the offence, and this may provide some means by which corporate entities can limit their exposure upon becoming aware of any apparent offences under the Anti-Bribery Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparing for the Tempest: Bolstering Defences Ahead Of Reform</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a strategic perspective, since bribery is rarely an isolated issue, responses need to be thorough and comprehensive; part of an overarching coordinated national strategy that provides protection across an entire economic system and all branches of government. In order to ensure that such strategies are effective and aligned across institutions and businesses, they require constant monitoring and enforcement by a dedicated and independent authority, Where these institutions also act as the recipient in a sound and efficient reporting mechanism, the presence of a clear and trustworthy process increases the confidence of international investors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Aside from the well-publicised arrests, Saudi Arabia’s corruption reform has extended to measures in other parts of its anti-corruption framework that have more sustainable implications for how it will address corrupt practices in future. These bold new mechanisms also enhance the country’s invigorated anti-corruption culture, which marks an abrupt departure from its previous presumed reticence on corruption matters.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Newly-formed Supreme Committee for Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The formation of the Supreme Committee is indicative of the greater strategic importance of anti-graft efforts to the country’s wider reform programme. Chaired by the Crown Prince and comprised of high-ranking officials from various sectors of governance, including security, finance and existing anti-corruption bodies, the Committee acts as a mechanism that will immediately elevate corruption instances to the remit of the highest echelons of government. In so doing, the Kingdom is sending a strong message that it will no longer turn a blind eye to practices that compromise its financial system or rule of law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new Supreme Committee will have vastly advanced investigative and prosecutorial powers, including the capacity to issue arrest warrants and order interim measures such as issuing travel bans and asset freezing orders. This is a critical limitation of the existing National Anti-Corruption Commission, more commonly known as Nazaha, which was established in 2012 and has limited capacity, despite its function as the primary recipient of reports of corrupt activity. The new committee will not replace Nazaha, which will continue to target the protection of national integrity, investigate instances of graft in government contracts and refer any incidents to the relevant authorities and public prosecution as and when necessary.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">By coordinating the activities of both the Supreme Committee and Nazaha, the efficacy of existing measures will be boosted by covering a wider scope of prosecutorial powers, increased authority with which to pursue perpetrators, and greater scrutiny through public awareness.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Specialised Anti-corruption Units Within the Public Prosecution Department</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As an additional measure, the Saudi government announced as recently as March 2018 that it had established new specialised anti-corruption units within the Public Prosecution. Cases prosecuted by these units would be carried out under the direct oversight of the Attorney General, once again demonstrating the paramount importance of corruption-related cases. Though it is unclear when the dedicated units will become operational, in creating this new advanced capacity the Saudi government has improved its ability to investigate and prosecute corrupt activity and, in so doing, will add an extra deterrent against illicit practices.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Whistleblower Culture</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whistleblower protection is a significant point of departure in many regimes across the globe. Whilst some Western systems, such as the US, actively promote whistleblowing activity through substantial financial incentives, most countries in the Middle East have thus far been slow to introduce formal protection for whistleblowers, preferring instead to rely on a positive reporting duty and conscionable actions by citizens.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this context, Saudi Arabia’s more proactive approach appears as an outlier. Article 17 of the Anti-Bribery Law provides for rewards for information substantiating an offence. Any person who is not a briber, or an accomplice, and who provides incriminating information substantiating any offence set out in Anti-Bribery Law, shall receive a reward not less than five thousand riyals (about USD 1,350) and not more than half of the money confiscated. There may be scope for a higher reward to be approved in appropriate circumstances.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, King Salman’s recent order in May 2018 to provide whistle blower protection is progressive in its outlook and signifies Saudi Arabia’s willingness to accede to international standards of rights and transparency when it comes to prosecuting corruption crimes. If Saudi Arabia is mindful of the risks posed by the potential for spurious claims and introduces adequate measures to prevent abuse of the reporting system, whistle blower protection is yet a further measure that will likely serve to reinforce the culture of zero tolerance that Saudi Arabia is attempting to cultivate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Impending Amendments to the Anti-Bribery Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 2 July 2018, Saudi Arabia’s Shoura (Consultative) Council approved draft amendments to the Anti-Bribery Law. The changes, which are yet to be implemented, are reportedly aimed at providing enhanced protection to public utilities through sound prosecution procedures and severe punishment for offences, as well as further enshrining the principles and commitments contained in the United Nations Convention Against Corruption (UNCAC). At present, the extent and exact nature of the amendments are unknown, but once officially passed into law, they have the potential to radically modernise Saudi Arabia’s anti-bribery legislation. This critical development warrants close attention over the coming months as the process to implementation progresses, and could assist investors in assessing the long-term outlook for Saudi Arabia’s economic integrity.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Weather Eye on the Horizon: Is Further Change an Inevitability?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Anti-corruption measures are an ancillary part of the legal reform process in KSA, but do not represent the totality of the country’s ongoing transition. New money-laundering laws passed in October 2017 are emblematic of the Kingdom’s resolve to eradicate illicit practices from its system. Corruption is symptomatic of countries where there is weak rule of law, but Saudi Arabia’s legal fortifications will go a long way to stamping out the nexus of criminal behaviour that facilitates and drives corruption trends. These are important contributory factors that should be considered by foreign investors when making an assessment of Saudi Arabia’s economic security.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The changes that have already been implemented will only improve the prognosis of anti-corruption in Saudi Arabia. The continued momentum garnered from these initiatives will drive awareness of corruption problems, aided by the combined activity of Nazaha and the newly formed Supreme Committee for Anti-Corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is a pivotal time for Saudi Arabia and the long-term outlook is positive – there is already evidence of widespread reform to protect the Kingdom’s economic stability and integrity and address systemic weaknesses. Simultaneously, the changes that have been gradually introduced by Saudi Arabia’s General Investment Authority (SAGIA) since 2015 to liberalise the national economy and provide space for full foreign ownership in key sectors, are creating new incentive for foreign investors to tap into the largest market in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Equally, investors must strike the appropriate balance between caution and enthusiasm when encountering new opportunities in the market. Corruption challenges are persistent and pervasive and will require sustained redress for the foreseeable future. Though it is yet undetermined what new mechanisms and measures may be deployed in the Kingdom in future, it is likely that subsequent steps taken to quash illicit practices will have considerable consequences for domestic and foreign investors alike. This will require that foreign investors understand the legal framework and secure their interests against inevitable shifts in the Saudi market as reform measures revolutionise the domestic business culture.</p>\r\nOverall, however, Saudi Arabia’s recent multifaceted approach to reform has created the perfect storm for investors and, with an impending multitude of investment projects, businesses have a prime opportunity to invest at the leading edge of FDI, assured that corrupt practices are not operating with impunity.\r\n\r\n<img class=\"wp-image-8011 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/676.jpg\" alt=\"\" width=\"1094\" height=\"475\" />'),
(259614, 25204, 'MetaValueOld', '<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignleft size-full wp-image-8012\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/DG.jpg\" alt=\"\" width=\"1536\" height=\"417\" /></em></p>\r\nSaudi Arabia is undergoing significant reform but, beyond the maelstrom of political speculation and conjecture, what are the practical and legal implications of the anti-corruption drive for investors?\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia has seen tumultuous reform in the last 12 months as Crown Prince Mohammed bin Salman has sought to propel Saudi Arabia towards Vision 2030. International attention has been riveted to the government’s surging anti-corruption drive since a number of high-profile individuals were detained on corruption charges towards the end of 2017. Much of this attention, however, has been tangential, without providing clear insight into what impact such radical measures will have on the country’s legal framework and business climate.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Favourable Forecast? The Business Outlook on Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The extent and boldness of the recent measures taken in Saudi Arabia are indicative of the government’s resolve to eliminate corruption in the system. The Kingdom has been signatory to the United National Convention Against Corruption (UNCAC) since 2004, though it only ratified the agreement in 2013. The events that have garnered so much international attention are only the latest in a long-term initiative to address corrupt practices in the business sector. Between 2012 and 2017, Saudi Arabia has improved its score on the Transparency International Corruption Perceptions Index (CPI) from 44 to 49. Whilst this score still reflects significant room for improvement, it also charts measurable progress in a region that continues to face drastic change, and provides impetus for the more recent measures that clearly demonstrate the elevated priority of anti-corruption reform.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order for the Kingdom to benefit from its drive for sustainability and prosperity, however, its determination to eradicate corruption must be symbiotic with its ability to assure investor confidence. The zero-tolerance approach that has surfaced over the past year has the potential to greatly improve the integrity of Saudi Arabia’s business market, but lingering concerns surround residual corruption with certain businesses continuing to question the feasibility and longevity of trading in the Kingdom.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The United Nations Conference on Trade and Development (UNCTD) World Investment Report 2018 suggests that, in the short term at least, the anti-corruption drive has done little to improve investor confidence and may even have exacerbated feelings of uncertainty. Inward Foreign Direct Investment (FDI) flows have fallen by more than 80% between 2016 and 2017. Whilst this trend cannot be entirely attributed to the anti-corruption sweep that happened late in the final quarter of the year, it is certainly likely to have been a contributory factor in unsettling investor confidence. From a long-term perspective, however, efforts to level the playing field in Saudi Arabia may bring fairer weather to businesses as the obstacles associated with pervasive corruption are gradually eliminated from the system.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia is far from being alone in its fight against corruption; it is one of the most prevalent and pressing issues facing systems across the globe, and countries with endemic corruption problems face an almost insurmountable challenge to attract foreign investment. At this nascent stage, it would be premature to speculate as to how other Middle Eastern countries will respond to the Kingdom’s efforts, but the most desirable outcome would be for neighbouring countries to become emboldened in their own anti-corruption efforts. The UAE already stands as the regional outlier in anti-corruption efforts, with a CPI 2017 ranking of 21st in the world, comparable to many leading international jurisdictions. The combined efforts of both Saudi Arabia and the UAE could be instrumental in forging a clear path to greater transparency for other afflicted countries in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Staying Dry: Legal Safeguards Against Corruption In The Kingdom</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The primary anti-corruption provisions are provided by the anti-bribery law issued by Royal Decree No. M/36 of 29-Dhu al-Hijjah-1412 (corresponding to 30 June 1996) (the \"Anti-Bribery Law\"). More recently, a decree was issued setting out rules relating to gifts for public officials (Decree No. 60 dated 18 Safar 1437H (corresponding to 1 December 2015) (the \"Rules on Gifts to Officials\" or the \"Rules\").</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Bribery of Public Officials</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law is primarily focused on public servants. In order to maintain maximum protection for its public sector, the definition is intentionally broad, extending to personnel of joint stock companies, along with their board members and directors. It may also capture private sector individuals who are working on government-related projects, such as consultants to government projects, including temporary employees, experts appointed by the government or judiciary, or even employees of private companies contracted to provide public services. Employees of joint stock companies are also subject to the Anti-Bribery Law, as well as employees of companies and sole proprietorships engaged in banking services.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law broadly defines a bribee as any public servant who solicits, accepts or receives for himself or for others, a gift or payment of any sort, or a promise thereof, as consideration for any act that impinges on the integrity of office. Defences against such practices are fortified by the absence of any exemption, caveat or even significant qualifying criteria for the type of act that could invoke bribery provisions. Any act can be considered corrupt, regardless of its legitimacy, whether it is a positive act or an omission, whether it has been done in the absence of a prior agreement, and even where it involves using the influence attached to a public office to gain benefit, rather than the performance of a relevant duty.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given the traditionally prominent role of the government in the national economy, the Anti-Bribery Law does provide relatively wide protection, despite the obvious lack of corresponding safeguards applicable to the private sector. Privatisation targets encapsulated by Vision 2030, however, necessitate more complete protection and new measures that target both the public and private sector are a requirement going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Penalties and Enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the Anti-Bribery Law, penalties for the offences set out above can reach maximum penalties of imprisonment for a term not exceeding ten years and/or a fine not exceeding one million riyals (about USD 275,000).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Along with the specific penalties applicable to public servants who accept a bribe, it should be noted that the Anti-Bribery Law provides for the person offering the bribe (whether it is accepted or not), and any accomplice, to be susceptible to corresponding punishments.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To protect a culture of respect for public officials, conviction on bribery offences also leads to dismissal and a bar from public office for a minimum of five years. In an attempt to prevent perpetrators from benefitting from the proceeds of crime, the Anti Bribery Law provides that any money, benefit or privilege derived from committal of the offence be confiscated wherever possible.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Gifts and Hospitality</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">No exemptions are provided for gifts and hospitality in the Anti-Bribery Law. Any benefit or privilege obtained by the bribee, regardless of its type or designation, whether material or otherwise, shall be considered a (prohibited) gift or promise. This has led to confusion in the past, as conventional business practices that would be widely accepted in other systems appeared to invoke the strict anti-bribery restrictions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This matter was somewhat elucidated with the passing of the Rules on Gifts to Officials. Pursuant to these Rules, an official may accept gifts, given at visits and official occasions or at receptions of official guests, in accordance with custom and the courtesy protocols of such visits and occasions, though they cannot be cash and must be conventional in the context in which it is given. Crucially, businesses must be cognisant that generally, when reviewing the appositeness of a gift, the authorities will consider a number of contextual factors, including the proximity of the gift-giving to any relevant business deal, common courtesy practices of the firm in question, proportionality of the gift to conventional customs, and the appropriateness of the benefit given.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Though further provisions on the permissibility of certain types of gifts are outlined in the Rules, gifts and hospitality continue to be point of concern for business and can prove problematic in a culture where generosity is an ever-present feature of relations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Exposure for Corporate Entities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Significantly, where the manager or any employee of a private company is convicted of any offence under the Anti-Bribery Law, and the offence was committed for the benefit of such company, the law provides for a fine not exceeding ten times the value of the bribe and/or a ban from entering into public procurement or project contracts of at least 5 years. The briber can be exempted from punishment if he informs the authorities prior to the discovery of the offence, and this may provide some means by which corporate entities can limit their exposure upon becoming aware of any apparent offences under the Anti-Bribery Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparing for the Tempest: Bolstering Defences Ahead Of Reform</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a strategic perspective, since bribery is rarely an isolated issue, responses need to be thorough and comprehensive; part of an overarching coordinated national strategy that provides protection across an entire economic system and all branches of government. In order to ensure that such strategies are effective and aligned across institutions and businesses, they require constant monitoring and enforcement by a dedicated and independent authority, Where these institutions also act as the recipient in a sound and efficient reporting mechanism, the presence of a clear and trustworthy process increases the confidence of international investors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Aside from the well-publicised arrests, Saudi Arabia’s corruption reform has extended to measures in other parts of its anti-corruption framework that have more sustainable implications for how it will address corrupt practices in future. These bold new mechanisms also enhance the country’s invigorated anti-corruption culture, which marks an abrupt departure from its previous presumed reticence on corruption matters.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Newly-formed Supreme Committee for Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The formation of the Supreme Committee is indicative of the greater strategic importance of anti-graft efforts to the country’s wider reform programme. Chaired by the Crown Prince and comprised of high-ranking officials from various sectors of governance, including security, finance and existing anti-corruption bodies, the Committee acts as a mechanism that will immediately elevate corruption instances to the remit of the highest echelons of government. In so doing, the Kingdom is sending a strong message that it will no longer turn a blind eye to practices that compromise its financial system or rule of law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new Supreme Committee will have vastly advanced investigative and prosecutorial powers, including the capacity to issue arrest warrants and order interim measures such as issuing travel bans and asset freezing orders. This is a critical limitation of the existing National Anti-Corruption Commission, more commonly known as Nazaha, which was established in 2012 and has limited capacity, despite its function as the primary recipient of reports of corrupt activity. The new committee will not replace Nazaha, which will continue to target the protection of national integrity, investigate instances of graft in government contracts and refer any incidents to the relevant authorities and public prosecution as and when necessary.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">By coordinating the activities of both the Supreme Committee and Nazaha, the efficacy of existing measures will be boosted by covering a wider scope of prosecutorial powers, increased authority with which to pursue perpetrators, and greater scrutiny through public awareness.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Specialised Anti-corruption Units Within the Public Prosecution Department</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As an additional measure, the Saudi government announced as recently as March 2018 that it had established new specialised anti-corruption units within the Public Prosecution. Cases prosecuted by these units would be carried out under the direct oversight of the Attorney General, once again demonstrating the paramount importance of corruption-related cases. Though it is unclear when the dedicated units will become operational, in creating this new advanced capacity the Saudi government has improved its ability to investigate and prosecute corrupt activity and, in so doing, will add an extra deterrent against illicit practices.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Whistleblower Culture</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whistleblower protection is a significant point of departure in many regimes across the globe. Whilst some Western systems, such as the US, actively promote whistleblowing activity through substantial financial incentives, most countries in the Middle East have thus far been slow to introduce formal protection for whistleblowers, preferring instead to rely on a positive reporting duty and conscionable actions by citizens.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this context, Saudi Arabia’s more proactive approach appears as an outlier. Article 17 of the Anti-Bribery Law provides for rewards for information substantiating an offence. Any person who is not a briber, or an accomplice, and who provides incriminating information substantiating any offence set out in Anti-Bribery Law, shall receive a reward not less than five thousand riyals (about USD 1,350) and not more than half of the money confiscated. There may be scope for a higher reward to be approved in appropriate circumstances.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, King Salman’s recent order in May 2018 to provide whistle blower protection is progressive in its outlook and signifies Saudi Arabia’s willingness to accede to international standards of rights and transparency when it comes to prosecuting corruption crimes. If Saudi Arabia is mindful of the risks posed by the potential for spurious claims and introduces adequate measures to prevent abuse of the reporting system, whistle blower protection is yet a further measure that will likely serve to reinforce the culture of zero tolerance that Saudi Arabia is attempting to cultivate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Impending Amendments to the Anti-Bribery Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 2 July 2018, Saudi Arabia’s Shoura (Consultative) Council approved draft amendments to the Anti-Bribery Law. The changes, which are yet to be implemented, are reportedly aimed at providing enhanced protection to public utilities through sound prosecution procedures and severe punishment for offences, as well as further enshrining the principles and commitments contained in the United Nations Convention Against Corruption (UNCAC). At present, the extent and exact nature of the amendments are unknown, but once officially passed into law, they have the potential to radically modernise Saudi Arabia’s anti-bribery legislation. This critical development warrants close attention over the coming months as the process to implementation progresses, and could assist investors in assessing the long-term outlook for Saudi Arabia’s economic integrity.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Weather Eye on the Horizon: Is Further Change an Inevitability?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Anti-corruption measures are an ancillary part of the legal reform process in KSA, but do not represent the totality of the country’s ongoing transition. New money-laundering laws passed in October 2017 are emblematic of the Kingdom’s resolve to eradicate illicit practices from its system. Corruption is symptomatic of countries where there is weak rule of law, but Saudi Arabia’s legal fortifications will go a long way to stamping out the nexus of criminal behaviour that facilitates and drives corruption trends. These are important contributory factors that should be considered by foreign investors when making an assessment of Saudi Arabia’s economic security.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The changes that have already been implemented will only improve the prognosis of anti-corruption in Saudi Arabia. The continued momentum garnered from these initiatives will drive awareness of corruption problems, aided by the combined activity of Nazaha and the newly formed Supreme Committee for Anti-Corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is a pivotal time for Saudi Arabia and the long-term outlook is positive – there is already evidence of widespread reform to protect the Kingdom’s economic stability and integrity and address systemic weaknesses. Simultaneously, the changes that have been gradually introduced by Saudi Arabia’s General Investment Authority (SAGIA) since 2015 to liberalise the national economy and provide space for full foreign ownership in key sectors, are creating new incentive for foreign investors to tap into the largest market in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Equally, investors must strike the appropriate balance between caution and enthusiasm when encountering new opportunities in the market. Corruption challenges are persistent and pervasive and will require sustained redress for the foreseeable future. Though it is yet undetermined what new mechanisms and measures may be deployed in the Kingdom in future, it is likely that subsequent steps taken to quash illicit practices will have considerable consequences for domestic and foreign investors alike. This will require that foreign investors understand the legal framework and secure their interests against inevitable shifts in the Saudi market as reform measures revolutionise the domestic business culture.</p>\r\nOverall, however, Saudi Arabia’s recent multifaceted approach to reform has created the perfect storm for investors and, with an impending multitude of investment projects, businesses have a prime opportunity to invest at the leading edge of FDI, assured that corrupt practices are not operating with impunity.\r\n\r\n<img class=\"wp-image-8011 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/676.jpg\" alt=\"\" width=\"1094\" height=\"475\" />'),
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(259616, 25204, 'EditorLinkPost', 'https://www.tamimi.com/wp-admin/post.php?post=7939&amp;action=edit');
INSERT INTO `tm_wsal_metadata` (`id`, `occurrence_id`, `name`, `value`) VALUES
(259617, 25204, 'ReportText', '<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignleft size-full wp-image-8012\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/DG.jpg\" alt=\"\" width=\"1536\" height=\"417\" /></em></p>\r\nSaudi Arabia is undergoing significant reform but, beyond the maelstrom of political speculation and conjecture, what are the practical and legal implications of the anti-corruption drive for investors?\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia has seen tumultuous reform in the last 12 months as Crown Prince Mohammed bin Salman has sought to propel Saudi Arabia towards Vision 2030. International attention has been riveted to the government’s surging anti-corruption drive since a number of high-profile individuals were detained on corruption charges towards the end of 2017. Much of this attention, however, has been tangential, without providing clear insight into what impact such radical measures will have on the country’s legal framework and business climate.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Favourable Forecast? The Business Outlook on Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The extent and boldness of the recent measures taken in Saudi Arabia are indicative of the government’s resolve to eliminate corruption in the system. The Kingdom has been signatory to the United National Convention Against Corruption (UNCAC) since 2004, though it only ratified the agreement in 2013. The events that have garnered so much international attention are only the latest in a long-term initiative to address corrupt practices in the business sector. Between 2012 and 2017, Saudi Arabia has improved its score on the Transparency International Corruption Perceptions Index (CPI) from 44 to 49. Whilst this score still reflects significant room for improvement, it also charts measurable progress in a region that continues to face drastic change, and provides impetus for the more recent measures that clearly demonstrate the elevated priority of anti-corruption reform.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order for the Kingdom to benefit from its drive for sustainability and prosperity, however, its determination to eradicate corruption must be symbiotic with its ability to assure investor confidence. The zero-tolerance approach that has surfaced over the past year has the potential to greatly improve the integrity of Saudi Arabia’s business market, but lingering concerns surround residual corruption with certain businesses continuing to question the feasibility and longevity of trading in the Kingdom.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The United Nations Conference on Trade and Development (UNCTD) World Investment Report 2018 suggests that, in the short term at least, the anti-corruption drive has done little to improve investor confidence and may even have exacerbated feelings of uncertainty. Inward Foreign Direct Investment (FDI) flows have fallen by more than 80% between 2016 and 2017. Whilst this trend cannot be entirely attributed to the anti-corruption sweep that happened late in the final quarter of the year, it is certainly likely to have been a contributory factor in unsettling investor confidence. From a long-term perspective, however, efforts to level the playing field in Saudi Arabia may bring fairer weather to businesses as the obstacles associated with pervasive corruption are gradually eliminated from the system.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia is far from being alone in its fight against corruption; it is one of the most prevalent and pressing issues facing systems across the globe, and countries with endemic corruption problems face an almost insurmountable challenge to attract foreign investment. At this nascent stage, it would be premature to speculate as to how other Middle Eastern countries will respond to the Kingdom’s efforts, but the most desirable outcome would be for neighbouring countries to become emboldened in their own anti-corruption efforts. The UAE already stands as the regional outlier in anti-corruption efforts, with a CPI 2017 ranking of 21st in the world, comparable to many leading international jurisdictions. The combined efforts of both Saudi Arabia and the UAE could be instrumental in forging a clear path to greater transparency for other afflicted countries in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Staying Dry: Legal Safeguards Against Corruption In The Kingdom</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The primary anti-corruption provisions are provided by the anti-bribery law issued by Royal Decree No. M/36 of 29-Dhu al-Hijjah-1412 (corresponding to 30 June 1996) (the \"Anti-Bribery Law\"). More recently, a decree was issued setting out rules relating to gifts for public officials (Decree No. 60 dated 18 Safar 1437H (corresponding to 1 December 2015) (the \"Rules on Gifts to Officials\" or the \"Rules\").</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Bribery of Public Officials</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law is primarily focused on public servants. In order to maintain maximum protection for its public sector, the definition is intentionally broad, extending to personnel of joint stock companies, along with their board members and directors. It may also capture private sector individuals who are working on government-related projects, such as consultants to government projects, including temporary employees, experts appointed by the government or judiciary, or even employees of private companies contracted to provide public services. Employees of joint stock companies are also subject to the Anti-Bribery Law, as well as employees of companies and sole proprietorships engaged in banking services.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law broadly defines a bribee as any public servant who solicits, accepts or receives for himself or for others, a gift or payment of any sort, or a promise thereof, as consideration for any act that impinges on the integrity of office. Defences against such practices are fortified by the absence of any exemption, caveat or even significant qualifying criteria for the type of act that could invoke bribery provisions. Any act can be considered corrupt, regardless of its legitimacy, whether it is a positive act or an omission, whether it has been done in the absence of a prior agreement, and even where it involves using the influence attached to a public office to gain benefit, rather than the performance of a relevant duty.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given the traditionally prominent role of the government in the national economy, the Anti-Bribery Law does provide relatively wide protection, despite the obvious lack of corresponding safeguards applicable to the private sector. Privatisation targets encapsulated by Vision 2030, however, necessitate more complete protection and new measures that target both the public and private sector are a requirement going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Penalties and Enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the Anti-Bribery Law, penalties for the offences set out above can reach maximum penalties of imprisonment for a term not exceeding ten years and/or a fine not exceeding one million riyals (about USD 275,000).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Along with the specific penalties applicable to public servants who accept a bribe, it should be noted that the Anti-Bribery Law provides for the person offering the bribe (whether it is accepted or not), and any accomplice, to be susceptible to corresponding punishments.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To protect a culture of respect for public officials, conviction on bribery offences also leads to dismissal and a bar from public office for a minimum of five years. In an attempt to prevent perpetrators from benefitting from the proceeds of crime, the Anti Bribery Law provides that any money, benefit or privilege derived from committal of the offence be confiscated wherever possible.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Gifts and Hospitality</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">No exemptions are provided for gifts and hospitality in the Anti-Bribery Law. Any benefit or privilege obtained by the bribee, regardless of its type or designation, whether material or otherwise, shall be considered a (prohibited) gift or promise. This has led to confusion in the past, as conventional business practices that would be widely accepted in other systems appeared to invoke the strict anti-bribery restrictions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This matter was somewhat elucidated with the passing of the Rules on Gifts to Officials. Pursuant to these Rules, an official may accept gifts, given at visits and official occasions or at receptions of official guests, in accordance with custom and the courtesy protocols of such visits and occasions, though they cannot be cash and must be conventional in the context in which it is given. Crucially, businesses must be cognisant that generally, when reviewing the appositeness of a gift, the authorities will consider a number of contextual factors, including the proximity of the gift-giving to any relevant business deal, common courtesy practices of the firm in question, proportionality of the gift to conventional customs, and the appropriateness of the benefit given.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Though further provisions on the permissibility of certain types of gifts are outlined in the Rules, gifts and hospitality continue to be point of concern for business and can prove problematic in a culture where generosity is an ever-present feature of relations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Exposure for Corporate Entities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Significantly, where the manager or any employee of a private company is convicted of any offence under the Anti-Bribery Law, and the offence was committed for the benefit of such company, the law provides for a fine not exceeding ten times the value of the bribe and/or a ban from entering into public procurement or project contracts of at least 5 years. The briber can be exempted from punishment if he informs the authorities prior to the discovery of the offence, and this may provide some means by which corporate entities can limit their exposure upon becoming aware of any apparent offences under the Anti-Bribery Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparing for the Tempest: Bolstering Defences Ahead Of Reform</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a strategic perspective, since bribery is rarely an isolated issue, responses need to be thorough and comprehensive; part of an overarching coordinated national strategy that provides protection across an entire economic system and all branches of government. In order to ensure that such strategies are effective and aligned across institutions and businesses, they require constant monitoring and enforcement by a dedicated and independent authority, Where these institutions also act as the recipient in a sound and efficient reporting mechanism, the presence of a clear and trustworthy process increases the confidence of international investors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Aside from the well-publicised arrests, Saudi Arabia’s corruption reform has extended to measures in other parts of its anti-corruption framework that have more sustainable implications for how it will address corrupt practices in future. These bold new mechanisms also enhance the country’s invigorated anti-corruption culture, which marks an abrupt departure from its previous presumed reticence on corruption matters.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Newly-formed Supreme Committee for Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The formation of the Supreme Committee is indicative of the greater strategic importance of anti-graft efforts to the country’s wider reform programme. Chaired by the Crown Prince and comprised of high-ranking officials from various sectors of governance, including security, finance and existing anti-corruption bodies, the Committee acts as a mechanism that will immediately elevate corruption instances to the remit of the highest echelons of government. In so doing, the Kingdom is sending a strong message that it will no longer turn a blind eye to practices that compromise its financial system or rule of law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new Supreme Committee will have vastly advanced investigative and prosecutorial powers, including the capacity to issue arrest warrants and order interim measures such as issuing travel bans and asset freezing orders. This is a critical limitation of the existing National Anti-Corruption Commission, more commonly known as Nazaha, which was established in 2012 and has limited capacity, despite its function as the primary recipient of reports of corrupt activity. The new committee will not replace Nazaha, which will continue to target the protection of national integrity, investigate instances of graft in government contracts and refer any incidents to the relevant authorities and public prosecution as and when necessary.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">By coordinating the activities of both the Supreme Committee and Nazaha, the efficacy of existing measures will be boosted by covering a wider scope of prosecutorial powers, increased authority with which to pursue perpetrators, and greater scrutiny through public awareness.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Specialised Anti-corruption Units Within the Public Prosecution Department</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As an additional measure, the Saudi government announced as recently as March 2018 that it had established new specialised anti-corruption units within the Public Prosecution. Cases prosecuted by these units would be carried out under the direct oversight of the Attorney General, once again demonstrating the paramount importance of corruption-related cases. Though it is unclear when the dedicated units will become operational, in creating this new advanced capacity the Saudi government has improved its ability to investigate and prosecute corrupt activity and, in so doing, will add an extra deterrent against illicit practices.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Whistleblower Culture</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whistleblower protection is a significant point of departure in many regimes across the globe. Whilst some Western systems, such as the US, actively promote whistleblowing activity through substantial financial incentives, most countries in the Middle East have thus far been slow to introduce formal protection for whistleblowers, preferring instead to rely on a positive reporting duty and conscionable actions by citizens.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this context, Saudi Arabia’s more proactive approach appears as an outlier. Article 17 of the Anti-Bribery Law provides for rewards for information substantiating an offence. Any person who is not a briber, or an accomplice, and who provides incriminating information substantiating any offence set out in Anti-Bribery Law, shall receive a reward not less than five thousand riyals (about USD 1,350) and not more than half of the money confiscated. There may be scope for a higher reward to be approved in appropriate circumstances.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, King Salman’s recent order in May 2018 to provide whistle blower protection is progressive in its outlook and signifies Saudi Arabia’s willingness to accede to international standards of rights and transparency when it comes to prosecuting corruption crimes. If Saudi Arabia is mindful of the risks posed by the potential for spurious claims and introduces adequate measures to prevent abuse of the reporting system, whistle blower protection is yet a further measure that will likely serve to reinforce the culture of zero tolerance that Saudi Arabia is attempting to cultivate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Impending Amendments to the Anti-Bribery Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 2 July 2018, Saudi Arabia’s Shoura (Consultative) Council approved draft amendments to the Anti-Bribery Law. The changes, which are yet to be implemented, are reportedly aimed at providing enhanced protection to public utilities through sound prosecution procedures and severe punishment for offences, as well as further enshrining the principles and commitments contained in the United Nations Convention Against Corruption (UNCAC). At present, the extent and exact nature of the amendments are unknown, but once officially passed into law, they have the potential to radically modernise Saudi Arabia’s anti-bribery legislation. This critical development warrants close attention over the coming months as the process to implementation progresses, and could assist investors in assessing the long-term outlook for Saudi Arabia’s economic integrity.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Weather Eye on the Horizon: Is Further Change an Inevitability?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Anti-corruption measures are an ancillary part of the legal reform process in KSA, but do not represent the totality of the country’s ongoing transition. New money-laundering laws passed in October 2017 are emblematic of the Kingdom’s resolve to eradicate illicit practices from its system. Corruption is symptomatic of countries where there is weak rule of law, but Saudi Arabia’s legal fortifications will go a long way to stamping out the nexus of criminal behaviour that facilitates and drives corruption trends. These are important contributory factors that should be considered by foreign investors when making an assessment of Saudi Arabia’s economic security.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The changes that have already been implemented will only improve the prognosis of anti-corruption in Saudi Arabia. The continued momentum garnered from these initiatives will drive awareness of corruption problems, aided by the combined activity of Nazaha and the newly formed Supreme Committee for Anti-Corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is a pivotal time for Saudi Arabia and the long-term outlook is positive – there is already evidence of widespread reform to protect the Kingdom’s economic stability and integrity and address systemic weaknesses. Simultaneously, the changes that have been gradually introduced by Saudi Arabia’s General Investment Authority (SAGIA) since 2015 to liberalise the national economy and provide space for full foreign ownership in key sectors, are creating new incentive for foreign investors to tap into the largest market in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Equally, investors must strike the appropriate balance between caution and enthusiasm when encountering new opportunities in the market. Corruption challenges are persistent and pervasive and will require sustained redress for the foreseeable future. Though it is yet undetermined what new mechanisms and measures may be deployed in the Kingdom in future, it is likely that subsequent steps taken to quash illicit practices will have considerable consequences for domestic and foreign investors alike. This will require that foreign investors understand the legal framework and secure their interests against inevitable shifts in the Saudi market as reform measures revolutionise the domestic business culture.</p>\r\nOverall, however, Saudi Arabia’s recent multifaceted approach to reform has created the perfect storm for investors and, with an impending multitude of investment projects, businesses have a prime opportunity to invest at the leading edge of FDI, assured that corrupt practices are not operating with impunity.\r\n\r\n<img class=\"wp-image-8011 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/676.jpg\" alt=\"\" width=\"1094\" height=\"475\" />|<img class=\"size-full wp-image-8012 aligncenter\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/DG.jpg\" alt=\"\" width=\"1536\" height=\"417\" />\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\nSaudi Arabia is undergoing significant reform but, beyond the maelstrom of political speculation and conjecture, what are the practical and legal implications of the anti-corruption drive for investors?\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia has seen tumultuous reform in the last 12 months as Crown Prince Mohammed bin Salman has sought to propel Saudi Arabia towards Vision 2030. International attention has been riveted to the government’s surging anti-corruption drive since a number of high-profile individuals were detained on corruption charges towards the end of 2017. Much of this attention, however, has been tangential, without providing clear insight into what impact such radical measures will have on the country’s legal framework and business climate.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Favourable Forecast? The Business Outlook on Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The extent and boldness of the recent measures taken in Saudi Arabia are indicative of the government’s resolve to eliminate corruption in the system. The Kingdom has been signatory to the United National Convention Against Corruption (UNCAC) since 2004, though it only ratified the agreement in 2013. The events that have garnered so much international attention are only the latest in a long-term initiative to address corrupt practices in the business sector. Between 2012 and 2017, Saudi Arabia has improved its score on the Transparency International Corruption Perceptions Index (CPI) from 44 to 49. Whilst this score still reflects significant room for improvement, it also charts measurable progress in a region that continues to face drastic change, and provides impetus for the more recent measures that clearly demonstrate the elevated priority of anti-corruption reform.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In order for the Kingdom to benefit from its drive for sustainability and prosperity, however, its determination to eradicate corruption must be symbiotic with its ability to assure investor confidence. The zero-tolerance approach that has surfaced over the past year has the potential to greatly improve the integrity of Saudi Arabia’s business market, but lingering concerns surround residual corruption with certain businesses continuing to question the feasibility and longevity of trading in the Kingdom.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The United Nations Conference on Trade and Development (UNCTD) World Investment Report 2018 suggests that, in the short term at least, the anti-corruption drive has done little to improve investor confidence and may even have exacerbated feelings of uncertainty. Inward Foreign Direct Investment (FDI) flows have fallen by more than 80% between 2016 and 2017. Whilst this trend cannot be entirely attributed to the anti-corruption sweep that happened late in the final quarter of the year, it is certainly likely to have been a contributory factor in unsettling investor confidence. From a long-term perspective, however, efforts to level the playing field in Saudi Arabia may bring fairer weather to businesses as the obstacles associated with pervasive corruption are gradually eliminated from the system.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Saudi Arabia is far from being alone in its fight against corruption; it is one of the most prevalent and pressing issues facing systems across the globe, and countries with endemic corruption problems face an almost insurmountable challenge to attract foreign investment. At this nascent stage, it would be premature to speculate as to how other Middle Eastern countries will respond to the Kingdom’s efforts, but the most desirable outcome would be for neighbouring countries to become emboldened in their own anti-corruption efforts. The UAE already stands as the regional outlier in anti-corruption efforts, with a CPI 2017 ranking of 21st in the world, comparable to many leading international jurisdictions. The combined efforts of both Saudi Arabia and the UAE could be instrumental in forging a clear path to greater transparency for other afflicted countries in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Staying Dry: Legal Safeguards Against Corruption In The Kingdom</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The primary anti-corruption provisions are provided by the anti-bribery law issued by Royal Decree No. M/36 of 29-Dhu al-Hijjah-1412 (corresponding to 30 June 1996) (the \"Anti-Bribery Law\"). More recently, a decree was issued setting out rules relating to gifts for public officials (Decree No. 60 dated 18 Safar 1437H (corresponding to 1 December 2015) (the \"Rules on Gifts to Officials\" or the \"Rules\").</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Bribery of Public Officials</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law is primarily focused on public servants. In order to maintain maximum protection for its public sector, the definition is intentionally broad, extending to personnel of joint stock companies, along with their board members and directors. It may also capture private sector individuals who are working on government-related projects, such as consultants to government projects, including temporary employees, experts appointed by the government or judiciary, or even employees of private companies contracted to provide public services. Employees of joint stock companies are also subject to the Anti-Bribery Law, as well as employees of companies and sole proprietorships engaged in banking services.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Anti-Bribery Law broadly defines a bribee as any public servant who solicits, accepts or receives for himself or for others, a gift or payment of any sort, or a promise thereof, as consideration for any act that impinges on the integrity of office. Defences against such practices are fortified by the absence of any exemption, caveat or even significant qualifying criteria for the type of act that could invoke bribery provisions. Any act can be considered corrupt, regardless of its legitimacy, whether it is a positive act or an omission, whether it has been done in the absence of a prior agreement, and even where it involves using the influence attached to a public office to gain benefit, rather than the performance of a relevant duty.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given the traditionally prominent role of the government in the national economy, the Anti-Bribery Law does provide relatively wide protection, despite the obvious lack of corresponding safeguards applicable to the private sector. Privatisation targets encapsulated by Vision 2030, however, necessitate more complete protection and new measures that target both the public and private sector are a requirement going forward.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Penalties and Enforcement</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the Anti-Bribery Law, penalties for the offences set out above can reach maximum penalties of imprisonment for a term not exceeding ten years and/or a fine not exceeding one million riyals (about USD 275,000).</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Along with the specific penalties applicable to public servants who accept a bribe, it should be noted that the Anti-Bribery Law provides for the person offering the bribe (whether it is accepted or not), and any accomplice, to be susceptible to corresponding punishments.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">To protect a culture of respect for public officials, conviction on bribery offences also leads to dismissal and a bar from public office for a minimum of five years. In an attempt to prevent perpetrators from benefitting from the proceeds of crime, the Anti Bribery Law provides that any money, benefit or privilege derived from committal of the offence be confiscated wherever possible.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Gifts and Hospitality</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">No exemptions are provided for gifts and hospitality in the Anti-Bribery Law. Any benefit or privilege obtained by the bribee, regardless of its type or designation, whether material or otherwise, shall be considered a (prohibited) gift or promise. This has led to confusion in the past, as conventional business practices that would be widely accepted in other systems appeared to invoke the strict anti-bribery restrictions.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This matter was somewhat elucidated with the passing of the Rules on Gifts to Officials. Pursuant to these Rules, an official may accept gifts, given at visits and official occasions or at receptions of official guests, in accordance with custom and the courtesy protocols of such visits and occasions, though they cannot be cash and must be conventional in the context in which it is given. Crucially, businesses must be cognisant that generally, when reviewing the appositeness of a gift, the authorities will consider a number of contextual factors, including the proximity of the gift-giving to any relevant business deal, common courtesy practices of the firm in question, proportionality of the gift to conventional customs, and the appropriateness of the benefit given.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Though further provisions on the permissibility of certain types of gifts are outlined in the Rules, gifts and hospitality continue to be point of concern for business and can prove problematic in a culture where generosity is an ever-present feature of relations.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Exposure for Corporate Entities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Significantly, where the manager or any employee of a private company is convicted of any offence under the Anti-Bribery Law, and the offence was committed for the benefit of such company, the law provides for a fine not exceeding ten times the value of the bribe and/or a ban from entering into public procurement or project contracts of at least 5 years. The briber can be exempted from punishment if he informs the authorities prior to the discovery of the offence, and this may provide some means by which corporate entities can limit their exposure upon becoming aware of any apparent offences under the Anti-Bribery Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Preparing for the Tempest: Bolstering Defences Ahead Of Reform</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">From a strategic perspective, since bribery is rarely an isolated issue, responses need to be thorough and comprehensive; part of an overarching coordinated national strategy that provides protection across an entire economic system and all branches of government. In order to ensure that such strategies are effective and aligned across institutions and businesses, they require constant monitoring and enforcement by a dedicated and independent authority, Where these institutions also act as the recipient in a sound and efficient reporting mechanism, the presence of a clear and trustworthy process increases the confidence of international investors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Aside from the well-publicised arrests, Saudi Arabia’s corruption reform has extended to measures in other parts of its anti-corruption framework that have more sustainable implications for how it will address corrupt practices in future. These bold new mechanisms also enhance the country’s invigorated anti-corruption culture, which marks an abrupt departure from its previous presumed reticence on corruption matters.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Newly-formed Supreme Committee for Anti-Corruption</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The formation of the Supreme Committee is indicative of the greater strategic importance of anti-graft efforts to the country’s wider reform programme. Chaired by the Crown Prince and comprised of high-ranking officials from various sectors of governance, including security, finance and existing anti-corruption bodies, the Committee acts as a mechanism that will immediately elevate corruption instances to the remit of the highest echelons of government. In so doing, the Kingdom is sending a strong message that it will no longer turn a blind eye to practices that compromise its financial system or rule of law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new Supreme Committee will have vastly advanced investigative and prosecutorial powers, including the capacity to issue arrest warrants and order interim measures such as issuing travel bans and asset freezing orders. This is a critical limitation of the existing National Anti-Corruption Commission, more commonly known as Nazaha, which was established in 2012 and has limited capacity, despite its function as the primary recipient of reports of corrupt activity. The new committee will not replace Nazaha, which will continue to target the protection of national integrity, investigate instances of graft in government contracts and refer any incidents to the relevant authorities and public prosecution as and when necessary.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">By coordinating the activities of both the Supreme Committee and Nazaha, the efficacy of existing measures will be boosted by covering a wider scope of prosecutorial powers, increased authority with which to pursue perpetrators, and greater scrutiny through public awareness.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Specialised Anti-corruption Units Within the Public Prosecution Department</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">As an additional measure, the Saudi government announced as recently as March 2018 that it had established new specialised anti-corruption units within the Public Prosecution. Cases prosecuted by these units would be carried out under the direct oversight of the Attorney General, once again demonstrating the paramount importance of corruption-related cases. Though it is unclear when the dedicated units will become operational, in creating this new advanced capacity the Saudi government has improved its ability to investigate and prosecute corrupt activity and, in so doing, will add an extra deterrent against illicit practices.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Whistleblower Culture</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whistleblower protection is a significant point of departure in many regimes across the globe. Whilst some Western systems, such as the US, actively promote whistleblowing activity through substantial financial incentives, most countries in the Middle East have thus far been slow to introduce formal protection for whistleblowers, preferring instead to rely on a positive reporting duty and conscionable actions by citizens.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In this context, Saudi Arabia’s more proactive approach appears as an outlier. Article 17 of the Anti-Bribery Law provides for rewards for information substantiating an offence. Any person who is not a briber, or an accomplice, and who provides incriminating information substantiating any offence set out in Anti-Bribery Law, shall receive a reward not less than five thousand riyals (about USD 1,350) and not more than half of the money confiscated. There may be scope for a higher reward to be approved in appropriate circumstances.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition, King Salman’s recent order in May 2018 to provide whistle blower protection is progressive in its outlook and signifies Saudi Arabia’s willingness to accede to international standards of rights and transparency when it comes to prosecuting corruption crimes. If Saudi Arabia is mindful of the risks posed by the potential for spurious claims and introduces adequate measures to prevent abuse of the reporting system, whistle blower protection is yet a further measure that will likely serve to reinforce the culture of zero tolerance that Saudi Arabia is attempting to cultivate.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Impending Amendments to the Anti-Bribery Law</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 2 July 2018, Saudi Arabia’s Shoura (Consultative) Council approved draft amendments to the Anti-Bribery Law. The changes, which are yet to be implemented, are reportedly aimed at providing enhanced protection to public utilities through sound prosecution procedures and severe punishment for offences, as well as further enshrining the principles and commitments contained in the United Nations Convention Against Corruption (UNCAC). At present, the extent and exact nature of the amendments are unknown, but once officially passed into law, they have the potential to radically modernise Saudi Arabia’s anti-bribery legislation. This critical development warrants close attention over the coming months as the process to implementation progresses, and could assist investors in assessing the long-term outlook for Saudi Arabia’s economic integrity.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>A Weather Eye on the Horizon: Is Further Change an Inevitability?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Anti-corruption measures are an ancillary part of the legal reform process in KSA, but do not represent the totality of the country’s ongoing transition. New money-laundering laws passed in October 2017 are emblematic of the Kingdom’s resolve to eradicate illicit practices from its system. Corruption is symptomatic of countries where there is weak rule of law, but Saudi Arabia’s legal fortifications will go a long way to stamping out the nexus of criminal behaviour that facilitates and drives corruption trends. These are important contributory factors that should be considered by foreign investors when making an assessment of Saudi Arabia’s economic security.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The changes that have already been implemented will only improve the prognosis of anti-corruption in Saudi Arabia. The continued momentum garnered from these initiatives will drive awareness of corruption problems, aided by the combined activity of Nazaha and the newly formed Supreme Committee for Anti-Corruption.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is a pivotal time for Saudi Arabia and the long-term outlook is positive – there is already evidence of widespread reform to protect the Kingdom’s economic stability and integrity and address systemic weaknesses. Simultaneously, the changes that have been gradually introduced by Saudi Arabia’s General Investment Authority (SAGIA) since 2015 to liberalise the national economy and provide space for full foreign ownership in key sectors, are creating new incentive for foreign investors to tap into the largest market in the Middle East.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Equally, investors must strike the appropriate balance between caution and enthusiasm when encountering new opportunities in the market. Corruption challenges are persistent and pervasive and will require sustained redress for the foreseeable future. Though it is yet undetermined what new mechanisms and measures may be deployed in the Kingdom in future, it is likely that subsequent steps taken to quash illicit practices will have considerable consequences for domestic and foreign investors alike. This will require that foreign investors understand the legal framework and secure their interests against inevitable shifts in the Saudi market as reform measures revolutionise the domestic business culture.</p>\r\nOverall, however, Saudi Arabia’s recent multifaceted approach to reform has created the perfect storm for investors and, with an impending multitude of investment projects, businesses have a prime opportunity to invest at the leading edge of FDI, assured that corrupt practices are not operating with impunity.\r\n\r\n<img class=\"wp-image-8011 alignleft\" src=\"http://www.tamimi.com/wp-content/uploads/2018/07/676.jpg\" alt=\"\" width=\"1094\" height=\"475\" />'),
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