In the March update we took an introductory look at the major issues flowing from Australia's adoption of the Personal Property Securities Act 2009 (establishing a national law governing security interests in personal property and is to commence in May 2011). This month, we focus on two of the Act's key concepts: attachment and perfection. Read more.

Lenders and other third parties dealing with companies in distress are often concerned that by exercising legitimate legal rights they can become shadow directors, especially when the directors allege they have no choice but to do what the lender wants, because receivership is the only alternative. In dismissing a claim brought against Apple and one its employees by the liquidator of the failed Buzzle Group, White J in the Supreme Court of New South Wales has now given important guidance as to where the limits really lie (reported as Buzzle Operations Pty Ltd (In Liquidation) v Apple Computer Australia Pty Ltd [2010] NSWSC 233). Read more.

A recent Queensland Supreme Court case clarifies that a financier who is a first registered mortgagee and chargee is able to exercise its power of sale to sell assets to a buyer free of subsequent security interests. Read more.

Bank practice with regard to the validity of charges remains uncertain after the High Court granted an application for special leave to appeal to the High Court from the Queensland Court of Appeal's decision in Re Octaviar Ltd (No 7) [2009] QCA 282. Before Octaviar, market practice had been to only lodge a variation of charge notice with the registrar (ASIC) if the terms of the charge document had been varied. The judge in Octaviar, however, held that a variation notice should be lodged where a charge secures obligations under 'finance documents' (rather than being all moneys) and new documents are designated as finance documents which may increase the amount of the liabilities secured - and this decision will now be considered before the High Court. Read more.

Australia recently successfully closed its first public private partnership (PPP) using Queensland's answer to the UK's credit guarantee finance model – the supported debt model (SDM). It was used for the South East Queensland Schools Project and varies from the traditional PPP model because it is partly debt financed from the public sector. This article looks at this first-of-a-kind funding model, which breaks new ground and caused controversy in both the public and private sectors. Read more.

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The German Federal Court of Justice (BGH) has asserted a tort claim brought by a German investor against a New Jersey brokerage firm for compensation of losses from investments in options at US exchanges that had been arranged by a German broker. The BGH found that the New Jersey broker had frivolously allowed the German broker to use its services to sell the German broker's forward transactions that had not offered any reasonable prospect of success to the investor because of their fee structure (decision dated 9 March 2010 – XI ZR 93/09). Read more.

On 31 March 2010, the German Federal Government adopted basic cornerstones for restructuring banks and regulating financial markets (Cornerstones). The Cornerstones include, among other things, provisions for the introduction of restructuring and reorganisation procedures for systemically relevant banks in case of a crisis, and for a banking levy (Bankenabgabe) which has been extensively discussed recently. The banking levy will provide the funding for a stability fund to cover risks, particularly in connection with the restructuring, liquidation or insolvency of banks. Read more.

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At the end of March 2010, the Financial Services Agency of Japan published its views (in Q&A format with additional commentaries) on the application of the tender offer rules contained in the Financial Instruments and Exchange Law (FIEL) to shares, call options and certain other securities (relevant securities). The views expressed by the FSA apply equally to acquisitions or offers of relevant securities , by or to, non-Japanese entities, as well as Japanese entities. This article sets out the key points from the FSA. Read more.

A bill to amend the Financial Instrument and Exchange Act (FIEA) was submitted to the Japanese Parliament on 9 March 2010. The bill covers a wide range of amendments, but one of the most interesting amendments contained in the bill concerns imposing an obligation on securities companies and banks to clear over-the-counter (OTC) derivatives through a central counterparty. This proposal is examined further here. Read more.

On 1 April 2010, a set of revised tax laws concerning the FY 2010 Tax Reform, including some amendments and additions to the Act on Special Measures Concerning Taxation came into effect. Three new Special Taxation Measures (STMs) relevant to foreign investors in real property securitisations in Japan are of particular interest and the reforms affecting real estate securitisation are outlined here. Read more.

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On 26 March 2010, the Central Bank issued Directive No 2415-U (effective from 26 March 2010) decreasing the refinancing rate. The rate was decreased from 8.5% (which was effective as of 24 February 2010) to 8.25% per annum. The new rate applies from 29 March 2010. The Central Bank sets the refinancing rate for its financing of commercial banks. The rate is also used for calculating interest on commercial loans (if the rate is not specified in an agreement), tax payments and in other cases provided by law.

Solvency II will radically change the supervision of insurers and reinsurers across Europe. The Solvency II Framework Directive, which was adopted by the European Council on 10 November 2009, requires the provisions of the new regime to be in force by the end of October 2012. However, recently published draft minutes of a meeting of the European Insurance and Pensions Committee (made up of the finance ministers of member states) have suggested that the coming into force of the Directive may be delayed until the start of 2013. Read more.

The UK Bribery Act 2010 has significant implications for all industries. The financial services industry, already under attack on a number of fronts, is no exception to this. As a result of the Act, financial institutions should carry out a comprehensive anti-corruption risk assessment. This should form part of, and inform, a robust compliance programme as this will be essential to establish the adequacy of an institution's procedures to avoid potential corporate liability. Failure to do so risks exposing directors to potential civil liability. This article outlines a few of the areas institutions should focus on. Read more.

Financial transactions taxes are under the political and public spotlight because they are perceived as the potential area where the financial sector can make its contribution towards the financing of bailout costs caused by the financial crisis. As the idea increasingly appears to be gaining traction, this article examines the debate. Read more.

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In our September 2009 update, we examined several cases in which courts addressed the question of whether professionals who play a supporting role in preparing an issuer's financial disclosures may be held liable under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder for statements they themselves did not make. In the case of SEC v Tambone, following the First Circuit's initial ruling, the defendants petitioned for, and the Court granted, a rehearing en banc to allow all of the First Circuit judges to address the SEC's theories for extending liability to secondary actors (based on such actors adopting, or making implied statements about, a prospectus through their actions), which was an issue of first impression. On 10 March 2010, the Court issued its en banc ruling, which rejected both theories. Read more.

The Restoring American Financial Stability Act of 2010 (Dodd Bill) was introduced on 15 March 2010 by US Senate Banking Committee Chairman Christopher Dodd and approved by the Senate Banking Committee on 22 March 2010 with certain modifications. The Bill, primarily aimed at financial regulatory reform, also contains several compensation-related reforms that would apply to all US public companies. It incorporates many elements of the Corporate and Financial Institution Compensation Fairness Act of 2009 (Frank Bill) introduced by Representative Barney Frank, Chairman of the House Financial Services Committee, on 17 July 2009 and passed in the House on 31 July 2009. The following is a summary of the compensation provisions in the Dodd Bill. Read more.

The mutual fund industry made a rare appearance before the US Supreme Court in a case alleging "excessive fees" brought against a Chicago fund firm, with claimant Jerry Jones suing Harris Associates LP (Jones v Harris). Although, in a victory for the fund industry, the Supreme Court reaffirmed a long-standing lower court precedent (known as the Gartenberg case) that to violate the relevant fiduciary principles "an investment adviser must charge a fee that is so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product of arm's length bargaining", the decision has, also been described occasionally in the press and by some industry and academic observers as a partial victory for shareholder claimants. This is primarily because a lower court in Jones v Harris had set an even higher bar for claimants than did Gartenberg. Read more.

The Senate Banking Committee Bill, having been approved by the Committee on 22 March 2010 is now headed for the Senate floor for further consideration and full debate. The bill is intended to achieve wide-ranging objectives including addressing the "too big to fail" concern, creating an advance warning system for systemic risks, improving transparency in financial markets, and protecting consumers from unsafe financial products. Although unlikely to emerge from the legislative process in its current form, some components of the Bill could gain approval. This article highlights several of the key reforms included in the Bill. Read more.

Creditors of companies that have cross-border operations should take note of the recent Fifth Circuit Court of Appeals decision in In re Condor Ins. Ltd., No. 09-60193, (5th Cir. 2010). The Court held, in this case of first impression, that a US Bankruptcy Court has jurisdiction to adjudicate avoidance actions under foreign law in chapter 15 bankruptcy proceedings. Read more.

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