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Underwriters as well as issuers should consider the effects of America's corporate governance clean-up. James Bartos and David Beveridge discuss the implications for banks of recent legislation

The new tax treatment of stock options and long-term incentives in Spain - to be in force from January 1 2003 - represents a commitment to better tax treatment and to a broader spread of benefits. The latest amendments to the Project Law are a partial modification of the Spanish Personal Income Tax (PIT) Law approved by the Spanish Lower House last October 3. They show the Spanish government's commitment to going beyond the situation created during the late 1990s which led to public questions about the practices of some managers of large Spanish companies. And the proposed reforms set out to provide a more reasonable, if still improvable, tax treatment for employees' stock purchase and stock option schemes.

As provided in Article 11 of the 2002 Finance Law, the Italian Ministry of the Economy and Finance has issued Decree No 217 (August 2 2002, coming into force on October 16 2002), introducing amendments to legislative decree No 153 of May 17 1999 on the subject of Italy's banking foundations.

Clients of Czech banks and other financial institutions in the Czech Republic will soon have a new forum for dispute resolution. After January 1 2003, disputes related to payments of up to €50,000 ($48,800) or electronic payment instruments will be decided by a new institution referred to as the Financial Arbitrator. The Arbitrator will be appointed by the lower house of the parliament for a fixed term of five years. The costs associated with the administration of the Arbitrator's office will be paid by the Czech National Bank.

The Thai government has made substantial progress in its liberalization of the power sector, which 10 years ago was still a government monopoly. This process has been guided by Nepo (an independent agency), Egat (a state enterprise under the prime minister's office) and PTT (a state enterprise under the Ministry of Industry). International project financings have been a feature of various key steps in the process.

In one of the most dramatic policy decisions to come out of North Korea, the Pyongyang government announced in late September the adoption of legislation to create a 132-square mile special administrative zone (SAZ). The zone will be in the north-western city of Shinuiju, just across the Yalu River from the Chinese city of Dandong. For a 50-year term, the SAZ will operate its own legislative, judiciary and administrative functions and have its own legal and economic system, relatively free of central government interference, and even issue its own passports. However, the SAZ will not have defence or military and diplomatic functions. Some observers have remarked that the SAZ is modeled on the Shenzen and Suzhou developments in China, and may represent the adoption of an open-door policy in North Korea, signaling an irreversible change in the country.

Market manipulation, which involves deception and dishonesty, has long been regarded as a serious crime in Hong Kong. But despite a maximum penalty of two years' imprisonment, it appears there are no sentencing guidelines relating to it.

The Securities and Exchange Law provides that continuing financial disclosure of companies to the investing public must be reported on a consolidated and non-consolidated basis. In contrast, the Commercial Code provides that financial disclosure to shareholders must be prepared on a non-consolidated basis and the Corporate Tax Law provides that corporate tax must be calculated on a non-consolidated basis.

In September 2002 the government of India relaxed its guidelines for external commercial borrowings (ECBs) allowing companies to raise foreign loans on liberalized terms from any internationally-recognized source.

China is continuing to work towards improving the business and financial health of the commercial banking sector by tightening internal controls. On September 18 the People's Bank of China (PBOC) issued its Guidelines for the Internal Control of Commercial Banks. The Guidelines declare the general goals and requirements of internal control systems and provide specific control functions in respect of credit business, treasury business, deposit and counter business, intermediary business, accounting and computer systems. In addition, the Guidelines impose personal liability for senior managers and internal audit committees and their members who fail in their duties to take measures to rectify breakdowns of internal controls.