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The Cayman Islands has always been responsive to the needs of the international financial community in introducing expedient legislation. Last year saw the creation of the segregated portfolio company (SPC) by way of amendment to the Companies Law of the Cayman Islands, and now revisions in 2003 will make it a more attractive corporate vehicle for mutual funds and multi-issuer structured finance vehicles. Provisions that have caused difficulties in obtaining a rating for structured finance deals will be removed and a mechanism introduced to enable any existing Cayman Islands company to convert into an SPC. The key points are described below.

As part of the reforms of the securities settlement system, a securities clearing institution (Shoken Torihiki Seisan Kikan) has been created under an amendment to the Securities and Exchange Law, which took effect on January 6 2003. A securities clearing institution means a central counterparty with respect to securities transactions, which enables securities transactions between the buyer(s) and seller(s) to be cleared in one block. A primary purpose of the securities clearing institution is to lessen the settlement risk with respect to securities transactions.

Two main principles were set out by the legislator at the time of the recent enactment of Law 130/1999 on securitization: the exclusive object of a securitization vehicle must be to enter into securitization transactions; and the receivables of each transaction must represent assets segregated from the vehicle's own assets and from those of other securitizations which may be entered into by the same vehicle.

To cope with commercial crimes in Hong Kong, the Securities and Futures Commission (SFC) recently published proposed revisions to the existing Guidance Note on Money Laundering for public consultation.

The State Development Commission (SDC) and the Ministry of Finance and State Administration of Foreign Exchange (SAFE) have jointly promulgated Interim Measures on the Administration of Foreign Debts. The new Measures, which were enacted on January 8 will be effective from March 1 2003.

The Irish Finance Bill 2003 was published on February 6 2003 and contains the long-awaited beneficial changes to the existing Irish securitization legislation. The intention behind the changes (which come into force with immediate effect) is to make Ireland the jurisdiction of choice for the location of special purpose vehicles (SPVs) for structured finance transactions.

An increasing number of Canadian issuers have steered away from fixed price bids recently and opted for an auction tender process, or so-called Dutch auction, when completing substantial issuer bids. The Dutch auction issuer bid model has been further modified by issuers and investment dealers as a technique to distribute public offerings of securities and, most recently, has also been used by investors seeking to acquire shares in public issuers.

Proposals in Japan to allow the use of foreign company shares in stock-for-stock deals with domestic entities are likely to fail because the government will not remove prohibitive tax burdens. Philip Quirk, head of legal at Morgan Stanley in Japan, reviews the developments

The recently enacted German Transparency and Disclosure Act has amended section 161 of the German Stock Corporation Act to provide, among other things, that German publicly listed companies must either comply with the German Corporate Governance Code (Deutscher Corporate Governance Kodex), as promulgated by the German Federal Ministry of Justice in November 2002, or explain why they will not be complying with the recommendations of the Code. As stated in its preamble, the purpose of the Code is both to restate existing statutory rules on the management and supervision of German publicly listed companies and to codify international and German best practices. It is intended to provide transparency and accountability to the German corporate governance system and foster the confidence of foreign and domestic investors as well as customers, employees and the general public in the management and supervision of German publicly listed companies.

Dewey Ballantine has advised the Croatian government on the €282 million financing of the Istrian Motorway, the first dual-listed bond in Croatia.