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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.

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.

In a strongly worded January 2003 report, the US Senate Permanent Subcommittee on Investigations stated that, by the end of this year, the SEC and US bank regulators should take action to preclude abusive structured finance transactions. The report applauds the use of structured finance to lower funding costs and diversify risk (true asset securitizations) but virtually demands the termination of false liability securitizations. False securitizations attenuate risk and hide assets and liabilities from investor and regulatory scrutiny.

Portugal will soon have a legal diploma foreseeing and regulating undertakings for collective investments in transferable securities (Ucits) under statute through the form of securities investment companies with variable capital (SICAV) and securities investment companies with fixed capital (SICAF).

The Shoura Council, a highly influential consultative group made up of some of the leading Saudi Arabian nationals, has rejected a proposed 10% income tax on foreign individuals. While, Saudi Arabia levies corporate taxes, it has traditionally not levied an individual income tax on expatriate workers. However, the country was considering levying a tax on expatriates as a means of reducing public debt and reducing the number of foreign workers in the hope that unemployed Saudi Arabian nationals would replace them.

In a recent case, a company domiciled and taxable in France owned the entire share capital of a company domiciled in Geneva. The Swiss subsidiary was solely set up to hold and administer securities and as such benefited from the so-called holding company privilege, a favourable tax status accorded by both the Federal and Cantonal tax laws. However, under the French Tax Code, section 209B (Controlled Foreign Company Rules or CFC rules), a French company's share in the income of a company domiciled abroad, in which the former holds a participation either of 10% or more or with a value of at least €22.8 million ($24.3 million), is added, for tax purposes, to its domestic (French) income, provided that the foreign company enjoys a privileged tax treatment at its domicile.

The understandable haste of Asian governments to create insolvency frameworks to revitalize their post-1997 economies has created as many problems as it has solved. Robert Zafft of the OECD and Lampros Vassiliou of Allens Arthur Robinson explain

In a significant development for Georgian tax legislation, the president of Georgia on April 19 2002 approved instructions outlining detailed procedures for the registration of taxpayers and the maintenance of a tax registry at district, zonal and regional levels (Decree 155). The instructions include forms to be filled out at the time of registration, reorganization or liquidation, and call for the collection of extensive information on taxpayers.