ISSUE 2 SEPTEMBER 2008 www.gibraltarlawyers.com Communiqué Introduction By Christian Rocca Taking a few minutes to read the articles in this, our second and summer edition of the Many challenges lie ahead as the world faces a Communique, has reinforced my belief that the creation of an ISOLAS newsletter was a variety of widely documented and accepted great idea. The content ranges from the socio-economic difficulties... informative pieces on gaming and corporate finance, through to the more social aspects of proves to be a welcome opportunity to Our Litigation lawyers have also had an the firm, particularly the successful foray of spend time with friends and clients in an extremely busy summer. Working on a our first Rugby Sevens sponsored team on informal, fun, yet always competitive, number of different matters they have also the international scene. The newsletter is an environment which helps strengthen our been engaged in the largest Litigation easy and direct forum for keeping our clients relationships. Maintaining and developing dispute ever to be heard by our Courts. A and partners informed about what we’re doing close relationships with clients is a stalwart thank you to them for their enormous and, importantly, all the issues you need to be of the ISOLAS success story and, even effort these past months. aware of regarding Gibraltar, both as an today, it forms a large part of who we are. I would also like to take this opportunity international finance centre and as our home. The launch of our Small Business Unit and to welcome on board Kieron Becerra In this edition of the Communique you’ll the roll-out of our client portal system ACCA. Kieron, who previously worked for read about our visit to Zurich, Lugano and located on our website Fiduciary Fund Administration, will be Geneva earlier this year. The whistle-stop www.gibraltarlawyers.com is a reflection of joining us in September. tour of the Swiss financial capitals proved the exciting times the Firm is currently Finally, I’d like to wish the readers, our tremendously successful and I was enjoying. In addition to that, we are seeing clients and partners, the very best as delighted by the friendly and warm a significant growth in the funds industry business returns to normality after the welcome we received from colleagues in locally, and I’m happy to report that our summer break. the industry with whom I’d had no Funds people are being kept very busy previous contact. Participants at the indeed. Growth, however, is not without its In this issue Seminars found the Gibraltar story and its consequences. For me, though, a happy Page opportunities of significant interest. consequence is that we will shortly be 1. Introduction During our time there we forged close ties welcoming a newly qualified lawyer to the with many new partners and I am looking ranks of the Firm. Christian Caetano, 2. Corporate Lending forward to returning there later this month. younger brother of one of our senior 3. Switzerland Seminars I’ve recently had cause to focus on fine- associates, Steven Caetano, will be joining Small Business Unit tuning my handicap because, in ISOLAS in September to work with Albert Rugby Sevens September, we’ll also be holding our Isola and Joey Garcia to address the annual golf day at La Reserva Golf Club in increasing demand for Gibraltar-based 4. Interview with Elaine Bingham Sotogrande. A truly spectacular location Funds. I look forward to working with him 5. Gaming review provides the backdrop for what every year and wish him every success for the future. ISSUE 2 CORPORATE LENDING by Christian Hernandez insolvency procedures have been commenced against the company. Practice in Gibraltar is for the firm to carry out a review of the public records of the company on file and available for inspection at Companies House to ascertain that no order or resolution has been filed for the winding up of the company as well as making enquiries at the Supreme Court Registry of Gibraltar, to ascertain whether there is any petition on file for the winding up or liquidation of the company. It goes without saying that any decision has to be properly authorised by the company. Board meetings have to be convened in accordance with the In corporate financing transactions, have to be registered at Companies House articles of association of the Company and security is key. Banks invariably choose to within 21 days of the date of creation of remain quorate throughout so that the protect themselves by taking security over the security. Effective registration items can be validly debated. Producing the borrowing company/companies’ assets. subsequent to the payment of the statutory appropriately drafted minutes of a meeting Where the borrower is a Gibraltar fee will render the charge effective against would usually be viewed as satisfying these company, or a Gibraltar company is part of any liquidator or administrator of the requirements. In certain instances and for the group structure offering security for a company and the security holder will rank added comfort, it is sometimes advisable transaction, certain key issues need to be as a secured creditor. that the shareholders also approve any transaction, and in this way confirm, that taken into account which might not In addition to full registration and as a the Directors are acting within their necessarily be relevant in a modern-day result of the ‘Slavenburg’ ruling, security powers. UK context, even though Gibraltar law is, created by an overseas company charging in the main, based on the laws of England property in Gibraltar (e.g. shares in a Tax treatment of companies in Gibraltar & Wales. This is due, in large part, to the Gibraltar company) should be delivered to The way in which companies in Gibraltar fact that Gibraltar’s company law is based Companies House for the particulars of have been taxed has undergone significant on the old UK Companies Act 1929, and the charge to be noted on the ‘Slavenburg’ change in the last few years. Following the that it is therefore not entirely up to date register. Even though the security cannot phasing out of tax exempt companies, the in spite of wholesale amendment and strictly be registered in Gibraltar as the new tax rate is soon to be confirmed after review over the years. These ‘Gibraltar overseas company does not have a place of a long awaited judgment by the European issues’ need to be borne in mind where a business in Gibraltar to which the Act Court of Justice. Gibraltar company is entering into finance would apply, Companies House would For the time being, many companies are documentation, regardless of whether or provide written confirmation that the currently not subject to tax because their not the facility is backed by security. documents have been presented to the income does not “accrue in, derive from or is Can the purchaser of a company secure Registrar for registration. not received in” Gibraltar. The basis for this is borrowing against the assets of the Corporate Benefit, Solvency & written guidance issued by the Commissioner company which is being acquired? Corporate Authority of Income Tax issued at the request of the Under Gibraltar law, there are currently It is a requirement under Gibraltar law Chairman of the Finance Centre Council restrictions on so-called ‘financial that the directors of a company exercise which defines what constitutes income assistance’, the classic situation arising their powers properly for the benefit and “accruing in” Gibraltar. The effect of the when an acquiror purchases a target in the best interests of the company. guidance is to essentially limit tax liability to company using bank financing that is Transactions which are not ostensibly locally-generated income. In addition, for secured and guaranteed by the target beneficial to the company could added comfort, many companies are putting company itself. However, since Gibraltar’s potentially be set aside as void. This could their own circumstances to the financial assistance provisions are still in be viewed as problematic for a company Commissioner of Income Tax and receiving their original state and have not once been wishing to cross-guarantee and cross- individual tax rulings, which on the whole amended since their inception, it would collateralise obligations owed by its have been favourable. seem that, under carefully considered subsidiaries and parent companies. In For any further information, full details circumstances, Gibraltar companies may addition, solvency is of paramount and specific legal advice on any of these be able to provide financial assistance importance where the issue of lending is points, please contact Christian without contravening current legislation. involved and the lender would want to be Hernandez, partner and head of the Creation and perfection of security satisfied that the company is not and will corporate finance team on Section 28 of the Companies Act lists the not become, as a consequence of entering [email protected]. types of security which are required to be into any facility documentation, unable to Alternatively, please contact him on the registered in Gibraltar, particulars of which pay its debts. Equally important is that no office’s general number, +350 200 78363 Switzerland Seminars ISBU by Selwyn Figueras by Selwyn Figueras ISOLAS, in association with the Gibraltar vehicle of choice for a growing number of Early June saw the launch of ISOLAS Small Finance Centre, attended and addressed a investors coming to the Rock. Business Unit (‘the ISBU’) at their offices in series of seminars dealing with Gibraltar as a One of the hot topics of discussion was the Portland House. An informal gathering of a centre for wealth management in Switzerland advantages of Gibraltar’s implementation number of small business owners and during the last week of May 2008.