Dealing with legal and regulatory risk

Transcription

1 Financial institutions Energy Infrastructure, mining and commodities Transport Technology and innovation Life sciences and healthcare Dealing with legal and regulatory risk Mining

2 Dealing with risk in the right way Mining A global response to complex and changing legal and regulatory risk Businesses face increasingly complex challenges associated with the management of risk worldwide. The rise in cross-border collaboration between regulators means that incidents occurring in one jurisdiction can have global consequences. The speed with which legal and regulatory risks can materialise and spread requires companies to have a firm understanding of their risk exposure and ensure that robust governance, risk and compliance strategies are in place to manage and minimise risk. 75% of the most challenging issues facing companies today relate to legal and regulatory risks (Acritas Sharplegal, Global Elite Brand Index 2015) Increasing disclosure and self-reporting obligations Impact of risk on other risks Globalisation Immediacy of social media scrutiny Increasing exposure of managing risk in silos Digitalisation Increasing vulnerability of individual risk Heightened shareholder activism Collaboration amongst international regulators Expanding oversight of regulators Differing methodologies, cultures and customs

3 Dealing with risk in the right way Mining Full service and interconnected our cross-border risk advisory group Effective risk management requires a holistic approach that runs across practices and transcends jurisdictional boundaries, to ensure that processes to manage and mitigate risk are embedded in the business. Our global risk advisory group leverages Norton Rose Fulbright s extensive industry expertise, drawing on experience from each of our global practice groups to provide in-depth knowledge of the legal and regulatory landscape. Our professionals proactively anticipate issues and deliver creative, commercial solutions tailored to clients risk profiles and needs, wherever they may arise. Representative and class actions Directors and officers responsibilities Whistleblowing Antitrust and competition Investigations Health and safety Sanctions and export controls Anti-corruption Diversity and inclusion Real estate Business and human rights Environmental Employment and labour Digitalisation Supply chain Data protection and privacy Outsourcing Corporate governance Tax Cybersecurity Cross border dealings Financial crime Regulation Intellectual property

4 Dealing with risk in the right way Mining Environmental rights and regulations Businesses operating in the mining sector are increasingly under pressure to ensure they are meeting environmental obligations. The use of social media by activists to rally support and organise protests to challenge projects has made governments more inclined to refuse project approvals and impose tougher penalties on companies which are in breach of their regulatory requirements. Activists are now also accessing significant financing through crowd funding (via specialist websites) to fund strategic litigation against projects, such as coal and uranium mines, and to challenge financial institutions and pension funds in relation to their exposure to carbonbased businesses. Business and human rights Mining companies are expected to identify, prevent, mitigate and account for internal policies to address their HR impacts to regulators. Failure to do so can give rise to significant legal and commercial risks such as regulatory and criminal penalties which may include prison time for employees. Many jurisdictions have mandatory HR reporting requirements which has increased stakeholder scrutiny of the conduct of mining companies. Antitrust and competition Operations of mining companies are often targeted by competition authorities around the world. Non-compliance with competition rules can give rise to huge financial penalties on mining companies and commodity traders; criminal penalties for individuals such as the disqualification of directors; and high value civil damages claims may result in reputational damage. Competition authorities liaise with each other so a targeted approach to competition compliance across the business and to dealings with the competition authorities is required. Employment Employment laws in various countries offer varying degrees of protection to employees. Non-compliance with legal requirements on the split between fixed and variable remuneration may lead to employees claims and administrative penalties in places such as China. It is important to ensure that contractors are genuinely self-employed to avoid unexpected results of employment status. Inadequate whistleblowing processes may not alert the company to issues it needs to know. Mining risk adding value through our industry knowledge Min industr pro Financial crime Compliance Mining companies are at risk of penalties arising from conduct of employees and third parties including clients. Mining companies should assess their exposure to money laundering and terrorist financing, sanctions violations, low and highlevel bribery and fraud, tax compliance failures, market abuse such as insider trading, and cartel offences. Governance Mining companies are at risk of adverse comments and civil actions from shareholders, institutional investor bodies and enforcement by financial regulators where there has been, or where there is a potential for failure of internal systems, processes and controls embedded in the corporate governance structure of an organisation. Cross-border issues Substantial penalties and damages may be levied against a mining company for failing to comply with various regulatory regimes across its global operations, whether in relation to crossborder financing, securing licences, investigation by international regulators, group-wide security issues, issues related to real estate, environment, health and safety or any other activities. Litigation Multinational mining companies face potential litigation as part of dayto-day business, whether arising from cross-border transactions, complex regulatory obligations, contractual disputes and, increasingly, as a result of falling foul of ABC legislation in multiple jurisdictions. Investigations High profile investigations have brought with them an increased risk of collateral litigation across many different jurisdictions. There is an unprecedented level of cooperation and mutual data sharing between regulators and prosecutors. Companies are exposed to the risk of cross-border investigations and should adopt a coordinated, multinational approach to compliance.

5 Dealing with risk in the right way Mining Anti-bribery and corruption Risk of criminal and regulatory penalties across jurisdiction arising from breaches in ABC legislation by third parties that provide services to and/or on behalf of a mining company. Mining companies will typically require adequate procedures to ensure they and any associated persons comply with ABC legislation such as the UK Bribery Act and the US Foreign Corrupt Practices Act. For example, mining companies need to have specific policies to prevent facilitation payments. Technology innovation Many mining companies are using drone technology for inspection, mapping, surveying and maintenance work at their respective mines. Global aviation regulations and standards have not been able to keep up with the advancement in this area. As a consequence a significant proportion of the use of drones by mining companies are in breach of existing regulation not only in the aviation space but also with regulations that deal with the licensing of radiocommunications which control the unmanned equipment. Such breaches not only leaves such companies open to potential prosecution but impacts adversely on insurance cover. Financial services regulatory reform Financial institutions operating in the mining sector risk falling behind evolving regulatory requirements thus exposing themselves to investigations, civil and criminal actions, and potentially large fines. Market abuse rules, thematic reviews by regulators, and consumer credit reform are just a few areas of concern for financial institutions. In particular, there will be an expansion of the European Union financial services regulatory and market abuse regime. This could impact certain commodity contracts traded by mining companies. Indigenous relations Multinational mining companies operating in countries with contentious indigenous rights must be cognisant of their responsibilities in relation to rights which are protected by constitutional or regulatory mechanisms. While first nation interests in natural resources may be well defined in some jurisdictions, in others there is still uncertainty as to traditional ownership and/or the potential for newly discovered archaeological sites to change existing requirements. In jurisdictions where indigenous rights are considered to be well defined, it is an area of law that is continually evolving. Where no set protections in place, indigenous rights issues may be escalated to the United Nations Human Rights Committee or the Supreme Court of the relevant jurisdiction. ing y risk file Our comprehensive risk advisory service Counterparty risk Understanding the risks associated with contractual counterparties is of increasing significance to mining companies. Failing to perform adequate checks to verify the identity of a counterparty potentially creates exposure to sanctions and anti-moneylaundering regulatory risk, but performance risk should also be carefully considered at the outset. In the event of a dispute with a contractual counterparty, or in the event of their insolvency, what remedies would be available? The prospects of successful enforcement of a court judgment or arbitral award should be considered at the contract initiation stage. Cybercrime, data privacy, intellectual property and outsourcing Given the sensitive nature of the industry, there is significant risk of mining companies being targeted by hackers and cybercriminals, resulting in the theft and public disclosure of sensitive information. Data-privacy requirements are also increasingly stringent. Corporates must protect against internal as well as external threats whilst ensuring their own policies and controls manage data-related risk. Protection of IP rights and being aware of IP competitive landscape is critical to mitigating risk. Sanctions Risk of fines, reputational damage and serious criminal charges for violations of international trade controls and sanctions. There is increased risk of sanction violations as a result of enhanced cooperation between regulators. This requires mining companies to take a multinational approach to compliance. Mining companies are encouraged to put in place programmes and policies to manage this risk. Senior managers responsibilities Individual senior executives in mining companies need to understand their obligations and responsibilities and be fully accountable under the relevant regulations. Failures of senior executives may result in a presumption of responsibility and potential criminal liability for companies. Tax Changes in attitudes to aggressive international tax planning and recent developments in the co-ordination of tax systems internationally mean that all businesses involved in the mining sector will be need to aware of the reputational damage that could be caused by their existing investment structures as well as possible need to re-examine existing structures that become vulnerable to changes of law or double tax treaty.

6 Dealing with risk in the right way Mining Our legal and regulatory risk methodology Economic Political Identify risks to business and individuals Values Stress testing and scenario planning Assess and understand likelihood of risk and potential impact Tone from the top Governmental Monitoring and control Risk management framework Determine risk appetite Technological Reflect in systems and processes eg, IT, HR, contracting Embed into business strategy Code of conduct Industry

7 Dealing with risk in the right way Mining A comprehensive risk management service Our risk advisory group comprises professionals across a diverse range of practices with expertise in legal and regulatory risk who work alongside accounting, IT, PR and technical experts to provide holistic support with assessing, managing and mitigating legal and regulatory risk. Our process is simple, practical, effective and comprehensive: We will work with you to help you to identify areas of legal and regulatory business vulnerability and we will consider risk areas identified by you already. We will, in our areas of expertise, devise risk mitigation strategies for your risks, identifying opportunities for improving business practices and compliance systems. We will work with you to enhance your compliance and governance systems and processes and assist with improvement and management of your legal risks. We will prepare your staff for a spectrum of crises and, in the event of an incident, provide post-crisis support to minimize disruption to your business. Anti-bribery and corruption ABC Quick Check ABC Compliance programme review and enhancement Internal Legal Audit Health Check Private Equity acquisition ABC risk management Monitor-ship related services Investigations Global Risk Investigation Planner (GRIP) Global comprehensive investigations advice and representation Litigation Global comprehensive litigation advice and representation Complete information protection Legal privilege guide Sanctions Comprehensive international trade and sanctions advice Sanctions Quickcheck US Sanctions advice Cybercrime, data privacy, intellectual property and outsourcing APAC outsourcing guide Cyber response (advisory and incident response services) Big data and the internet of things Cloud computing: a practical guide to legal risks and issues Employment Complete Executive Risk Assessment ContractorCheck Global Guide to Whistleblowing laws Global audit of restrictive covenants Review of competing jurisdictional requirements on staff surveillance versus employee privacy Business and human rights Business and Human Rights QuickCheck Global audit of compliance in human rights, discrimination and retaliation laws Antitrust and Competition Global competition compliance heat map e-comply online competition compliance training Insights into dawn raids Merger control online planning tool Cross-border issues Jurisdictional services and checklists for crossborder financings Financial Services Regulatory Reform Regulationtomorrow.com Blog on developments in financial services regulation Online technical resources e.g. on MiFID II, MiFIR and EMIR Global comparative analysis on key developments Indigenous relations Business and human rights Quickcheck Advisory services in relation to rules and regulations in numerous jurisdictions surrounding indigenous rights Crossborder risk management Senior managers responsibilities Senior management companion guide Global comparative analysis on senior management responsibilities Gap analysis on senior management frameworks and governance Technology innovation Advisory services on regulatory regimes applicable to the use of drone technology in various regional and local jurisdictions Counterparty risk Global advisory services on international insolvency processes Analysis of default and other transaction provisions Industry-specific restructuring advisory Third-party management process design and pilot implementation Due diligence on JV partners and other significant business relationships Review and assurance of third-party due diligence and management programmes Environmental rights and regulations 24/7 Incident response Advisory services in relation to regeneration, contaminated land, pollution risks, emissions, licensing, permitting, regulatory appeals/judicial review, carbon and energy efficiency and habitat protection/conservation Financial crime compliance Full service financial crime advice and representation White collar crime advice Extradition proceedings advice Financial crime compliance training Governance UK corporate governance checklist UK corporate governance portal Annual report check list AGM guide 2015 Managing transformational M&A Tax Tax reputational risk FATCA: review and risk allocation Tax structuring review

8 Your risk advisory key contacts Nick Merritt Global head of infrastructure, mining and commodities, Singapore Tel Tim Marsden Head of risk advisory, EMEA Tel Jane Caskey Global head of risk advisory, Head of risk advisory, Canada Tel Stella Cramer Head of risk advisory, Asia Tel Peggy Heeg Head of risk advisory, US Tel Andrew Haynes Head of risk advisory, Latin America Tel Cameron Harvey Head of risk advisory, Australia Tel cameron.harvey@nortonrosefulbright.com Marelise van der Westhuizen Head of risk advisory, South Africa Tel marelise.vanderwesthuizen@nortonrosefulbright.com Norton Rose Fulbright Norton Rose Fulbright is a global law firm. We provide the world s preeminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia. Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare. Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact. Norton Rose Fulbright US LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP and Norton Rose Fulbright South Africa Inc are separate legal entities and all of them are members of Norton Rose Fulbright Verein, a Swiss verein. Norton Rose Fulbright Verein helps coordinate the activities of the members but does not itself provide legal services to clients. References to Norton Rose Fulbright, the law firm, and legal practice are to one or more of the Norton Rose Fulbright members or to one of their respective affiliates (together Norton Rose Fulbright entity/entities ). The principal office of Norton Rose Fulbright US LLP in Texas is in Houston. Save that exclusively for the purposes of compliance with US bar rules, where Daryl L. Lansdale will be responsible for the content of this publication, no individual who is a member, partner, shareholder, director, employee or consultant of, in or to any Norton Rose Fulbright entity (whether or not such individual is described as a partner ) accepts or assumes responsibility, or has any liability, to any person in respect of this communication. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of the relevant Norton Rose Fulbright entity. The purpose of this communication is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of any Norton Rose Fulbright entity on the points of law discussed. You must take specific legal advice on any particular matter which concerns you. If you require any advice or further information, please speak to your usual contact at Norton Rose Fulbright. Norton Rose Fulbright LLP NRF /16 (UK) Extracts may be copied provided their source is acknowledged.