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The past six months have seen the successful completion of the first rated collateralized fund obligations. Shlomo Twerski, Paul Watterson and David Nissenbaum of Schulte Roth & Zabel explain how to structure this new financial product

On November 29 2002 the Mexican government published new regulations applicable to institutional investment funds (afores) (Consar 15-8). These regulations are a result of new government policies towards promoting the growth of the institutional investment industry.

The nature of the payments abroad to non-residents or non-domiciled foreign entities determines the applicable income and remittance tax withholding in Colombia. This applies at a rate of 7% in the case of dividends, of 10% in the case of technical assistance, technical services and consulting services, and 39.55% in the case of financial earnings, commissions, fees, and royalties.

On July 14 2002 the Turkish Competition Board issued a new communiqué, mainly in line with the European Commission Block Exemption Regulation, on the group exemption of vertical agreements, replacing previous communiqués on group exemptions of exclusive distribution agreements, exclusive purchasing agreements and franchise agreements. Agreements benefiting from the previous group exemption communiqués must now comply with the provisions of the new communiqué by July 14 2003 to be exempted from the application of the relevant article of the Law on Protection of Competition regarding the prohibition of concerted practices resulting in the prevention, restriction or distortion of competition in a market for goods and services.

In connection with the bankruptcy of a regional savings and loan association at the beginning of the 1990s, a whole string of problems under the Swiss law governing the liquidation and capital reconstruction of banks came to light. The Swiss Federal Council has now proposed to parliament a revision of the law that would create a capital reconstruction and liquidation proceeding tailored to individual cases and would also coordinate the areas of capital reconstruction and liquidation with bank supervision. The new law would place all three areas under the exclusive jurisdiction of the Swiss Federal Bank Commission (SFBC).

In recent years and under prevailing conditions on the Swedish stock market, many companies have initiated discussions on adjusting the terms and conditions of various types of option programmes to restore an effective incentive for the participating employees. These discussions involve adjusted strike or subscription prices, extended exercise or subscription periods or other, less comprehensive, adjustments of a purely technical or editorial nature. This will, of course, give rise to a number of considerations.

Spain's new Law 44/2002 on Reform Measures of the Financial System - in which many surprises can be found - has finally been issued. It was published on November 23 in the Spanish Official Gazette (BOE no 281). Except for matters specified in Final Disposition number 3 (Disposición Final 3ª), the bulk of the Law is enforceable from the day after publication.

The Hungarian Supreme Court has issued a second judgement (BH 2002.364) confirming that assignments by way of security do not survive the assignor's insolvency. Although Supreme Court judgements are not binding as precedent, two recent judgements on this issue cast considerable doubt on the effectiveness of existing methods of taking security over rights and claims.

Since 1996, any entity buying shares in a formerly state-owned enterprise as a result of privatization was excluded from the mandatory buyout obligation (the so-called privatization exemption), set out in the Czech Commercial Code. The mandatory buyout provision of the Code said that anyone buying shares above a specified threshold (including a controlling interest) must offer to buy the shares of minority shareholders.

The New Zealand Bankers' Association (NZBA) has recently released the third edition of its Code of Banking Practice. The revised Code, which came into force on December 2 2002, does not make substantial changes to the second edition of the Code. It incorporates most of the material from a Statement of Principles issued by the Bankers' Association in 1999 and, unlike with previous editions, applies equally to business customers. The Code includes new sections about the provision of credit and merchant card services. It has also been reorganized and contains more explanation of each section, possibly at the expense of its accessibility to the public.