Legal Updates

ESOP – the latest craze

ESOP (Employee Share Ownership Programme) entities have been springing up like mushrooms in Hungary since last year, and the acronym itself has become something of a buzzword. And this is hardly surprising, as ESOP entities can be a tax efficient vehicle for paying out work incomes. Caution is advised, however: alongside the many advantages, the regulations also conceal a number of pitfalls.

What is an ESOP?

An ESOP is an entity created by an employer to hold securities issued by it or by its parent company, for the benefit of employees. So rather than awarding shares directly to employees, the employer or its owner sets up an ESOP entity, and transfers the shares to that entity instead. The company’s employees each receive a membership share in the ESOP entity, and in this way they gain access to the yield on the securities transferred to the ESOP.

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OCR Pronouncement on Ransomware Breach Notification May Make You “Wanna Cry”

Last week’s “WannaCry” worldwide Ransomware attack was particularly targeted against international health organizations. Though the attack was thwarted not without a little good luck and less financial loss that might have been predicted, it unsurprisingly triggered responses from U.S. government agencies including the Department of Homeland Security (DHS) and, with specific reference to health care providers, the Office of Civil Rights (OCR) of the Department of Health & Human Services (HHS). It also is no surprise that these government agencies took a carrot and stick approach – speaking about cooperation on one hand and enforcement (by OCR) on the other.

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Alitalia (update 3): the call for the collection of non-binding expressions of interest has been published

Alitalia (update 3): the call for the collection of non-binding expressions of interest has been published
Authors: Antonello Corrado, Silvia Viceconte As announced in our newsletter of May 12, the call…
Antonello Corrado
Silvia Viceconte

Here below, the most relevant points of the call:

  • The expressions of interest, submitted on a non-binding basis, are aimed at the definition of the content of the extraordinary administration procedure, given that, according to the received proposals, the Commissioners will elaborate the strategic-industrial program referred to in art. 54 of Legislative Decree no. 270/1999.
  • For this reason, the expressions of interest shall contain, in addition to all the identification data of the subject in question – and appropriate corporate and accounting documentation – the guidelines that the interested subject will follow in the formulation of the subsequent binding proposals, to be elaborated according to the following indications and possible solutions to the crisis:
    • unitary transfer of the business complexes, through continuation of business activity;
    • economic and financial restructuring of the company on the basis of a rebalancing program;
    • transfer of sets of goods and contracts, through continuation of business activity.
  • Individual or corporate enterprises, of any nationality, constituted both singularly and jointly (so-called “Consortiums”) are allowed to submit the relevant expressions of interest, with the exception of companies in liquidation in the twelve months prior to the date of publication of the call, or subject to insolvency proceedings and interdictive sanctions limiting the collaboration with the public administration, or whose managers have been subject of some criminal convictions.
  • The expressions of interest, accompanied by the necessary documents and any other useful documentation attesting the type of activity carried out by the applicant, the experience gained in the sector and/or the compliance with the financial requirements, shall be drafted in Italian (or in another language, with sworn translation attached) and submitted within June 5, 2017.

Consequently to the collection of the expressions of interest, the Commissioners shall send, to the persons they consider to be eligible, a so-called “Procedure letter”, which will provide the interested parties with the terms, modalities and contents of the non-binding proposals to be submitted in order to take part in the call.

The same communication will provide details of the subsequent steps of the procedure (submission of binding proposals), to be concluded – according to the tender – within six months from the issuance of the loan already allocated by the Italian Government for the management of the extraordinary business activity.

Ultimately, the call seems to confirm the expectations and anticipations already issued to the press by the extraordinary Commissioners, who have their mind set on the end of October as the latest deadline for the submission of binding proposals for the acquisition or the restructuring of the Italian airline company.

In the meanwhile, in order to make the company even more attractive, the board of commissioners has already began to make some cuts: from the renegotiation of the aircraft leasing to the new fueling hedging conditions, to the meetings with trade unions for the new employment agreement, expected for the first week of June.

The race has been announced, who will show up at the starting grid?

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11-figure ABN adds up to 7-figure dollar loss as Supreme Court rules on defective PPSR registration

On 2 May 2017, the Supreme Court of New South Wales handed down its decision refusing an application to extend time to register a security interest in Production Printing (Aust) Pty Ltd (in liquidation) [2017] NSWSC 505.

The decision followed shortly after that of OneSteel Manufacturing Pty Ltd (administrators appointed) [2017] NSWSC 21 (OneSteel) in which it was held that registering a security interest on the Personal Property Security Register (PPSR) against a grantor’s Australian Business Number (ABN) rather than its Australian Company Number (ACN) affords no protection and will result in the security interest vesting in the grantor if it becomes insolvent.

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Sex discrimination claim sails on

A 16 year old female sailor, who was excluded from participating with her father in a ‘men’s 49er class’ sailing event at a world sailing regatta held in Melbourne in December 2014, has won the right to pursue a sex discrimination claim against Yachting Victoria.

The Federal Circuit Court recently dismissed an application by Yachting Victoria seeking to have the discrimination claim struck out. In its application to have the claim dismissed, Yachting Victoria argued that the sex discrimination claim was hopeless, bound to fail or had no reasonable prospect of success on the basis that (among other things):

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Rekonstruktionsbehandling uden fortrydelsesret

Højesteret har nu slået fast, at det ikke er muligt at tilbagekalde en begæring om rekonstruktion – heller ikke som led i en efterfølgende konkursbehandling.

Den 1. april 2011 blev der indført regler om rekonstruktion og samtidig ophørte de tidligere kendte regler om betalingsstandsning.

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South Carolina: Lawmakers override veto and pass a gas tax increase

As promised, the South Carolina legislature overrode Gov. Henry McMaster’s veto and passed H3516, the Infrastructure and Economic Development Reform Act, 32 to 12. Thus, effective on July 1, 2017, and then annually on July 1 until 2022, motorists will be subject to a new gas tax of 2 cents per year, for a total of 12 cents by 2022. All of the revenue is to be separated from the general fund, and deposited into either the State Highway Fund, the State Non-Federal Aid Highway Fund, or the Infrastructure Maintenance Trust Fund. The current rate is 16.75 cents per gallon, which puts the Palmetto state’s gas tax at the second lowest, behind only Alaska, whose state gas tax is 12.25 cents.

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H1B Visa’s Impact on IT Firms

The recent overhauling of the H1B visa policy under the Trump Administration, has led to rising concerns and uncertainties on issuance of visas in the Indian IT industry.

For instance, the revised H1B visa guidelines prescribe for certain eligibility criteria like minimum educational qualifications, requirement of establishing that a particular position is a specialty occupation etc. The US Citizenship and Immigration Services had also recently clarified that an entry level computer programmer position would not generally qualify as a position in a “specialty occupation”. A position of “specialty occupation” requires higher education and would typically include scientist, engineers, skilled computer programmers, etc. The impact of these guidelines are, therefore, likely to be felt by entry-level IT recruits the hardest, many of whom travel to and are regularly outsourced to the US, for projects of US companies.

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Time to get your affairs in order now you’ve stopped streaming S Town!

Have you been listening to the latest podcast sensation created by the producers of Serial and This American Life?

Has the intriguing estate planning (or lack thereof) of John B. McLemore got you thinking about ensuring that you have your own house in order?

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Talking Tax – Issue 77

Case law

The Tribunal to confirm an assessment when a taxpayer fails to appear

In Melbourne Home Insulation Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2017] VCAT 654, the Victorian Civil and Administrative Tribunal (VCAT) confirmed the payroll tax reassessments for the relevant tax years issued by the Commissioner of State Revenue (Commissioner) to Melbourne Home Insulation Pty Ltd (Applicant) by reason of the Applicant’s non-appearance at the hearing.

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