Monthly Archives: November 2011

Extension of Due Date for Summary of Benefits Coverage under PPACA

On November 17, 2011, the Departments of Labor, Treasury and Health and Human Services issued a set of Frequently Asked Questions About Affordable Care Act Implementation (Part VII) and Mental Health Parity Implementation.  In FAQ 1, the Departments noted that they received many comments on the proposed regulations concerning the requirement to provide group health plan participants and beneficiaries with a summary of benefits coverage that accurately describes the benefits and coverage available under the plan and a uniform glossary of terms (“SBC”).  The FAQs provide that the Departments intend to issue, as soon as possible, final regulations that address these comments and other feedback on the proposed regulations and requirements.  The Departments stated that until final regulations are issued and applicable, plans and issuers are not required to comply with the SBC requirements.  Although the FAQs do not provide information regarding when the final regulations will be issued, they do state that “it is anticipated that the Departments’ final regulations, once issued, will include an applicability date that gives group health plans and health insurance issuers sufficient time to comply”.  Thus, it appears that there will not be a March 23, 2012 effective date for compliance with the SBC requirements.  However, the issuance of the final regulations and the applicability date will need to be monitored.  It would be advisable to continue preparations for compliance with the SBC requirements under current guidance (i.e., gathering and organizing necessary information) and then make any necessary modifications once the final regulations are issued during a final review prior to implementation.

Read full article

TARK GRUNTE SUTKIENE represents Audi dealers Moller group in receiving the Latvian Competition Council’s merger permit for merger with the leading Volkswagen dealers in Latvia

TARK GRUNTE SUTKIENE attorneys at law Andra Rubene and Linda Štrause represented Moller group in receiving the Latvian Competition Council’s (the Competition Council) merger permit to acquire decisive influence over the target companies SIA „Motors Latvia”, SIA „Venta Motors” and SIA „Miera Auto”. TARK GRUNTE SUTKIENE drafted and filed the merger notification and represented Moller group before the Competition Council during the merger clearance process.

On 11 November the Competition Council took a decision to permit the merger planned as acquisition of control by a Norwegian company Moller Auto Baltic AS over SIA „Motors Latvia” and SIA „Venta Motors”, as well as by a Norwegian company Moller Real Estate Baltic AS over SIA „Miera Auto”.

Read full article

California Court Of Appeal Reverses Trial Court Order Compelling Disclosure Of Trade Secret Source Code

In Sybase, Inc. v. Superior Court of Alameda County, No. A132541, 2011 WL 5117117 (2011), the Court of Appeal of the State of California First Appellate District found, in an unpublished opinion, that the trial court abused its discretion when it ordered the production of a trade secret source code. The court found that the real party in interest did not meet the evidentiary burden imposed by the California Supreme Court in Bridgestone/Firestone, Inc. v. Superior Court, 7 Cal.App. 4th 1384 (1992) (“Bridgestone”) which set forth the standards governing whether a trade secret must be disclosed in litigation.

Plaintiff in the underlying action, Sybase, Inc. (“Sybase”), a developer of data management software, sued ANTs Software, Inc. (“ANTs”) for, among other things, breach of a written contract and unfair competition arising out of the alleged breach of an employee non-solicit provision.

Read full article

The Nuts and Bolts of Determining Shared Savings and Losses for ACOs.

The third article in OMW’s ACO series analyzes the two savings models introduced by CMS in the final rule. ACOs now have the option of choosing between a shared savings only model or a shared savings and losses model.

For more information please visit www.omwhealthlaw.com or click on the headline above.

Read full article
ILN Today Post

FDI Policy clarifies position on Exit Options but PE Investors await RBI’s Verdict

International private equity and venture capital funds and investors (“PE Investors”) have been fairly active in India making innovative investments in growth stage and early stage entrepreneurial ventures. While the Indian growth story coupled with the liberalized foreign direct investment (“FDI”) policy has made India an attractive investment destination, PE Investors usually seek exit options such as buy back of shares and put options to ensure safe exit from the investee company owing to fluctuating capital markets.

Simply stated, put option is an obligation assumed by the promoters to acquire the PE Investor’s shares on exercise of such option at a pre-negotiated price which may be based on an internal rate of return of x%, compounded annually on the value of the aggregate amounts invested by PE Investor or the fair market value of the shares then held by PE Investor, whichever is higher. The divestment consideration payable to a foreign PE Investor however needs to be subject to the Reserve Bank of India’s (“RBI”) transfer pricing methodology.

Of late RBI has shown resistance to foreign PE Investors trying to exit through a pre-agreed put option route as RBI views it as a redeemable instrument and therefore an external commercial borrowing (“ECB”), which is permitted only in certain sectors.

According to the FDI norms, foreign investment is allowed only through equity shares, compulsory convertible preference shares or compulsory convertible debentures. RBI treats such securities as equity instruments with associated risk of capital and the price therefore cannot be pre-determined for the exit, i.e., the exit must take place at the prevailing fair market valuation.

Securities and Exchange Board of India (“SEBI”) treats options contract as a type of derivative contract which gives the buyer/holder of the contract the right (but not the obligation) to buy/sell the underlying asset at a predetermined price within or at the end of a specified period and considers inclusion of such put options under a private shareholders’ agreement in violation of the Securities Contracts (Regulations) Act, 1956.

According to RBI, in terms of the Foreign Exchange Management Act, 1999 (“FEMA”), “only SEBI-registered foreign institutional investors and non-resident Indians are allowed to invest in exchange-traded derivative contracts where the underlying securities are equity shares of an Indian firm and no other class of foreign investor is allowed to enter into any derivative contract where the underlying security is an equity share of an Indian company.”

PE Investors on the other hand consider put option as a spot delivery contract which is an actual delivery of security and payment of a price thereof is either on the same day as the date of the contract or on the next day. It is also argued that a debt is redeemable by the company as opposed to a put option which is exercised by the PE Investors only against the promoters and not against the company. Such arguments have however not cut ice with RBI which has held to its position of treating put options akin to a debt and even issued notices in the past to several companies for violation of the ECB guidelines.

Section 3.3.2.1 of the fourth edition of the consolidated Foreign Direct Investment Policy of India released by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, (“DIPP”) on September 30, 2011 (“New FDI Policy”) has made the matter worse. In terms of section 3.3.2.1 of the New FDI Policy, only equity shares, fully, compulsorily and mandatorily convertible debentures, and fully, compulsorily and mandatorily convertible preference shares, would qualify as eligible instruments for FDI. Any instruments with in-built options of any type would not qualify as an eligible instrument of FDI and such instruments would have to comply with the ECB guidelines. As this would impact a host of options, including call options, put options, tag along and drag along rights, several representations were made especially from the private equity funds to DIPP to revoke section 3.3.2.1 of the New FDI Policy. On October 31, 2011, DIPP issued a press release deleting section 3.3.2.1 of the New FDI Policy.

Deletion of the above section however does not automatically bring relief to the PE Investors. In terms of the New FDI Policy, in case of any conflicting interpretation between the New FDI Policy and any relevant notification issued by RBI under the aegis of FEMA, the latter shall prevail. RBI is yet to clarify its stand on the above deletion in the New FDI Policy and its view on inclusion of put options under investment agreements. In other words, while the status quo existing prior to the New FDI Policy has been restored, it is not clear whether RBI will continue to treat such options in violation of the ECB guidelines. It can therefore be concluded that a substantial degree of uncertainty still remains on the enforceability and validity of these exit options and PE Investors have to carefully assess their reliance on such options as an exit mechanism in light of the risks of enforceability of such options.

Read full article
ILN Today Post

Contract and information disclosure options for retirement villages in Victoria – have your say

On 19 October 2011 the Victorian Consumer Affairs Minister Michael O’Brien released a discussion paper which seeks feedback on ways to promote a better understanding of the rights and obligations of residents who live in retirement villages in Victoria, as well as a better understanding by potential residents of these rights and obligations (Discussion Paper).  read more

Read full article
ILN Today Post

FDI in Retail – Permitted for Multi-Brand and Relaxed for Single-Brand

After years of deliberations, the (Indian) Union Cabinet has on November 24, 2011 resolved to permit foreign direct investment (“FDI”) in multi-brand retail sector in India. The Cabinet has also simultaneously relaxed the FDI limit for single-brand ventures from 51% to 100%.

Following the relaxation, the Parliament of India has witnessed objections by some of the political parties opposing the move. While the relaxation does not need approval of the Parliament, and can be made effective immediately, the Government may wish to take a short breather before formally notifying the policy. The details of policy relaxation discussed below are based on media reports, in absence of any formal notification by the Government in this regard till the time of release of this newsletter.

Read full article

ACO Fraud and Abuse Law Waivers

Part two in the ACO series is an analysis of the Fraud and Abuse Law Waivers (Stark Law, Anti-Kickback Statute, Civil Monetary Penalties) for those ACO’s in the Shared Savings Program.

For more information please visit www.omwhealthlaw.com or click on the headline above.

Read full article
ILN Today Post

THE CONSUMER PROTECTION ACT – Know your rights and enforce them

Have you ever gone into the grocery store, picked up a product and it had no price on it? Well that grocery store is disobeying the law and penalties can arise. Did you know that in the absence of a stated warranty given by a retailer, an implied warranty of six months on parts and labour can be attached to the sale of all used goods and to the repair of all goods? The aforementioned protections, to name only a few, are afforded to the consumer in the Consumer Protection Act, 2006 (the “Act”). This Act is a hidden treasure with vast protections and far reaching consequences and yet its protections are undiscovered by many. It gives the unassuming public the right to demand quality service, to have full and frank disclosure of the price of goods and services, and also protects against false representations made by businesses.

To read the rest of the newsletter, please click here.

Read full article
ILN Today Post

Investing in Australian agribusiness

It is no surprise foreign investment in Australian agribusiness has significantly increased over recent years. Australia has large areas of rich and diverse agricultural production land. With a relatively low population, Australia also produces large, high quality food surpluses, much of which are destined for Asia.

A recent study by Citi Investment Research analyst, Tim Mitchell, estimates that more than $12b worth of direct overseas investment had been made in Australian agricultural businesses and land in the last four years. Asia and the Middle East investors have been particularly active, including sovereign wealth funds and state owned enterprises.

Recent acquisitions include, the A$1.74b acquisition of Gadens’ client, Sucrogen Limited by Singapore’s Wilmar Limited, and the acquisition of a 75% stake in Manassen Foods by China’s Bright Food.

This article discusses some of the common issues to consider when investing in the Australian agribusiness sector.

For the full article, click here.

 

Read full article