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US law firm White & Case has been hired by the Republic of Panama to represent it during the privatization of the state-owned integrated electric utility. The Instituto de Recursos Hidraulicos y de Electrificacion (IRHE) is to be divided into eight companies in a two-phase process. On September 10, the first phase was completed with the sale of 51% stakes in the three distribution companies. Spanish company Union Fenosa acquired 51% of EDE Metro-Oeste SA, which serves Panama City, for US$212 million. As part of this deal, Union Fenosa also received 51% of EDE Chiriqui SA, which serves an area close to the Costa Rica border. US utility firm Constellation Power, a subsidiary of Baltimore Gas & Electric Co, bid approximately US$90 million for a 51% stake in EDE Noreste SA. The deals are expected to complete within 60 days.

The recent US$200 million international placement of 10-year subordinated notes by Komercni Banka, the Czech Republic's largest commercial bank, was in many respects a watershed. The transaction constituted the first international offering by a bank in central and eastern Europe of subordinated debt that qualifies for inclusion in the bank's regulatory capital base. At a time when Komercni Banka, like most other Czech banks, was required to increase its provisions for classified loans, the issue of the notes enabled the bank to shore up its balance sheet and maintain an acceptable risk capital ratio without issuing new equity. From a legal perspective, the transaction presented a number of novel issues requiring innovative solutions. One of the most vexing challenges was structuring a subordination clause that satisfied both the international marketplace and Czech regulators, because neither existing banking regulations nor the Czech Bankruptcy Act recognized a concept of subordination consistent with international practice and standards. This article examines how the lawyers on the transaction managed to fit a square peg into a round hole to accomplish this feat.

Partners from Canadian law firms Fraser & Beatty and Milner Fenerty have voted in favour of a merger. As of October 1, the firms will continue business as Fraser Milner. The new firm, which will have offices in Alberta, Ontario and British Colombia, plans to offer a wider range of specialities. Both firms offer advice on all areas of business law but Milner Fenerty, which has offices in Alberta, has specific expertise in forestry, mining and oil and gas. Jeff Barnes, partner on the board at Fraser & Beatty in Toronto, says: "Milner Fenerty is very specialized and we could not grow this ourselves. The merger will give us presence in these major product markets."

UK firms Denton Hall, Richards Butler and Theodore Goddard are engaged in talks regarding a possible tripartite merger. If successful, the merger would produce the seventh largest law firm by lawyers based in the UK, and would have offices in 17 jurisdictions. Negotiations began in August and remain at an early stage of development. However, a plan for the merger may be put to partners by the end of the year. The new firm would have a significant global presence. Richards Butler has offices in Paris, Brussels, Piraeus, Warsaw, Beijing, Hong Kong, São Paulo, Oman, Islamabad, Qatar and Abu Dhabi. The firm is also considering opening an office in Azerbaijan, where the new oil industry has stimulated foreign investment. Denton Hall has offices in Brussels, Moscow, Beijing, Hong Kong, Tokyo, Singapore and New York. Theodore Goddard has an office in Brussels and associate offices in Paris and Jersey.

The International Bar Association's Council has passed a resolution on multidisciplinary practices (MDPs), its first acknowledgment that the joining of legal and accountancy practices is inevitable. The resolution calls on national regulators, including authorities which promote trade in services, to establish rules on MDPs to protect both practitioners and clients. Such rules should include measures to protect lawyers' independence and to prevent MDPs from representing conflicting interests. Client privilege and confidentiality should also be safeguarded.

Emile du Toit, general manager legal services at Absa, talks to Samantha Swiss about developing a group team after a merger

President Jiang Zemin's recent call for restraint of the People's Liberation Army's widespread business activities is only part of a greater campaign to separate government and business in China. In the areas of tax and finance, two events highlight this tendency:

Additional First Provision of Law 28 of July 13 1998 on Installment Sales, in force as from September 13, has solved some of the traditional legal issues concerning financial leasing transactions. The law's main features are as follows.

Since mid-1997, Hungarian legislation has imposed taxes on money transfers in cash so that cash payments made by companies over a certain sum (about Ft1.2 million (US$5.454 million)) entail various tax disadvantages. In an attempt to curtail cash payments, Hungary intended, on the one hand, to encourage non-cash money transfers common throughout Europe and, on the other hand, to gain greater control over the so-called black market.

In an attempt to attract more investors to join the Cyprus Stock Exchange (CSE), the income tax law has been amended to offer substantial tax incentives. The incentives aim to attract both offshore and local organizations to invest in the CSE as well as private companies.