INTERNATIONAL M&A SUBCOMMITTEE

INTERNATIONAL M&A SUBCOMMITTEE Open-mike session at Annual Meeting in New York August 2008 The following materials have been kindly provided by our Subcommittee members: Transfer of Funds - Saul Ricardo Feilbogen of Vitale, Manoff & Feilbogen, Argentina Choice of Dispute Resolution Mechanism - Saul Ricardo Feilbogen of Vitale, Manoff & Feilbogen, Argentina Timing issues for non-resident directors and companies - Richard Silberstein of Gómez-Acebo & Pombo, Spain Cross-Border Hybrid Entities - Nicholas Dietrich of Gowlings, Canada Proponed Competition Law Changes Relevant to FDI - Nicholas Dietrich of Gowlings, Canada and relate to the short presentations they made at our recent meeting in New York. Daniel P Rosenberg James R Walther Co-Chairs

Vitale, Manoff & Feilbogen Attorneys at Law Intellectual Property International M&A Subcommittee ABA Annual Meeting August 2008, New York M&A News from Argentina 1. Transfer of Funds: Argentina has exchange controls that were established by the Central Bank (Banco Central de la República Argentina) following the financial and economic crisis in 2002. With the recovery of the country's economy some of these controls have been relaxed. On July 24, 2008, the Central Bank issued Comunicación "A" 4822 which enables corporations resident in Argentina to transfer funds to any foreign country without having to comply with a monthly limit of US$ 2 million. Among other purposes, corporations may use those funds for the acquisition of direct investments. 2. Choice of Dispute Resolution Mechanism: For a number of different reasons, in many M&A transactions it is sometimes not possible to choose an arbitration panel as a method of dispute resolution. On the other hand, arbitration is not a well developed method in all Argentinean Provinces but only in the main cities. For that reason, an increased academic activity is being developed in order to promote the communication and joint analysis of technical issues together with members of the judiciary. The idea behind this movement is to avoid judges from being isolated and to develop a common understanding of complex issues. Supporting this activity should allow the legal community to help improve the quality of the judicial system. Saul Ricardo Feilbogen VITALE, MANOFF & FEILBOGEN Viamonte 1145 10th floor C1053ABW Buenos Aires Argentina 54 11 4371-6100 Fax: 54 11 4371-6365 sfeilbogen@vmf.com.ar http://www.vmf.com.ar Viamonte 1145 10th Floor (C1053ABW) Buenos Aires Argentina Tel (54-11) 4371-6100 Fax: (54-11) 4371-6365 Email: vmf@vmf.com.ar

Avda. Diagonal, 407 bis - 08008 Barcelona Tel.: (34) 93 415 74 00 Fax: (34) 93 415 84 00 abogados.bcn@gomezacebo-pombo.com www.gomezacebo-pombo.com Timing issues for non-resident directors and companies Non-resident directors and companies must now obtain a Spanish Fiscal Identification Number (NIE). Depending on the jurisdiction this may take some time (weeks or months). Therefore if there are plans to make an acquisition through a Spanish investment vehicle they need to be carefully laid out in advance. One way of initially circumventing the requirement is to buy an off the shelf company. This solution does not resolve all timing issues because powers of attorney to purchase the company usually need to be granted, but this route may be quicker than getting the NIE. Rick Silberstein Partner silberstein@gomezacebo-pombo.com Madrid Barcelona Bilbao Las Palmas de Gran Canaria Málaga Sevilla Valencia Vigo Bruselas GÓMEZ-ACEBO & POMBO Abogados, S.L. Domicilio Social: Castellana, 216 28046 Madrid Registro Mercantil de Madrid Tomo 20788 Libro 0 Folio 180 Sección 8 Hoja M 368387 Inscripción 1 N.I.F. B81089328 V.A.T.ES-B81089328

PLEADING THE 5 TH : U.S. DEPARTMENT OF TREASURY DISAPPOINTS ON CROSS-BORDER HYBRIDS Nicholas Dietrich Gowling Lafleur Henderson LLP By way of background, the Fifth Protocol is a protocol to amend the Canada-U.S. Tax Convention (the Treaty ). It was signed by representatives of both countries on September 21, 2007. While Canada has concluded all of its internal steps necessary to ratify the Protocol, the U.S. must still do so. As part of the American process, the U.S. Joint Committee on Taxation furnished the Senate Committee on Foreign Relations with its Explanation (the JC Explanation ) on July 8, 2008 and on July 10, 2008 the U.S. Department of the Treasury released its Technical Explanation of the Fifth Protocol (the Technical Explanation ). Also on July 10, 2008, the Minister of Finance (Canada) indicated Canada s agreement with the Technical Explanation. Both the Technical Explanation and the JC Explanation go into some detail regarding hybrid entities, which will be of concern to those who invest in Canada from or through the U.S. These hybrid entities are treated as fiscally transparent entities pursuant to the tax laws of the payment recipient s country and as separately taxed entities pursuant to the tax laws of the country in which the hybrid entity is resident. For example, currently, U.S. limited liability companies ( LLCs ) are fiscally transparent in America but are treated and taxed as regular corporations in Canada. Similarly, Canadian unlimited liability companies ( ULCs ) are treated The Power of Original Thought Montréal Ottawa Kanata Toronto Hamilton Waterloo Region Calgary Vancouver Moscow

- 2 - as corporations in Canada but recognized as fiscally transparent in America if they check the box to be treated as disregarded entities for purposes of U.S. tax. It was thought that the Protocol would regularize the treatment of LLCs and ULCs under the Treaty. However it ended up creating further anomalies and there was some hope that the Technical Explanation might provide additional clarification. Unfortunately a number of issues which had been raised with respect to the Protocol were not addressed, especially as regards nonabusive cross-border structures. Historically, the Canada Revenue Agency ( CRA ) s position has been that an American LLC, which is a disregarded entity for U.S. tax purposes, cannot therefore be considered as resident in the U.S. and be entitled to the benefits of the Treaty. The Protocol contains a lookthrough rule which will treat Canadian income, dividends and interest as being earned by the members of the LLC. If the members are U.S. residents, they will be entitled to reduced Treaty withholding rates. In trying to apply this aspect of the Protocol, certain commentators had raised concerns about the same treatment test, about S-Corporation withholding tax rates, about the continued tax filing obligations of the LLC (notwithstanding that its members derive the income), about the determination of beneficial ownership regarding interest and dividends, and about the limitation of benefits rules. These commentators have noted that the Technical Explanation did not fully address some of the uncertainty challenges in the Protocol. The Technical Explanation also failed to meet clarification expectations in the area of ULCs. For example, the Technical Explanation confirmed that subparagraph 7(b) of Article IV of the Protocol would apply to deny Treaty protection to dividends, interest payments and Pleading the 5 th : U.S. Department of Treasury Disappoints on Cross-Border Hybrids

- 3 - royalty payments by a ULC to a U.S. shareholder where the ULC is a disregarded entity for U.S. purposes, but did not address the case of interest and royalty payments where a Canadian corporation is considered by U.S. law to be a partnership. Most importantly, the Technical Explanation was silent, notwithstanding that the JC Explanation acknowledged the benign aspect of certain ULCs, on whether the Protocol s anti-hybrid provisions would apply to non-abusive structures involving ULCs where double dipping on tax deductions was not the reason for the cross-border structure. If the Protocol is fully ratified by the U.S. in 2008, it will become effective on January 1, 2010. A number of existing cross-border structures will have to be examined closely before then to avoid the potential for double taxation. For further information, please contact: Nicholas Dietrich Gowling Lafleur Henderson LLP Suite 1600, 1 First Canadian Place 100 King Street West Toronto, Ontario M5X 1G5 T: (416) 369-7288 F: (416) 369-7250 Email: Nicholas.Dietrich@Gowlings.com Pleading the 5 th : U.S. Department of Treasury Disappoints on Cross-Border Hybrids

COMPETITION REVIEW PANEL REPORTS ON PROPOSED CHANGES FOR FOREIGN DIRECT INVESTMENT: GOOD NEWS FOR INVESTORS Nicholas Dietrich Gowling Lafleur Henderson LLP The long anticipated report ( Report ) of the Competition Policy Review Panel (the Panel ) entitled Compete to Win released in mid-summer may well have been sub-titled Send us your money: we re open for business. Indeed the opening paragraph of Industry Canada s News Release was refreshingly candid, articulating that the intention of the series of recommendations was aimed at: making Canada a more attractive destination for talent, investment and innovation, as well as a sweeping national competitiveness agenda based on the proposition that Canada s standard of living and economic performance will be raised through more competition in Canada and from abroad. More than a year in the making after extensive research and consultation, the report focussed on three broad main areas: a) liberalizing investment restrictions; b) modernizing the competition/antitrust regime; and c) creating an internationally competitive business environment. As to liberalizing investment restrictions, the Report advocated amendments to the Investment Canada Act in a number of key areas, including raising the threshold for review to $1 billion (Cdn) enterprise value (from $295 million (Cdn) in 2008) with application to all non- The Power of Original Thought Montréal Ottawa Kanata Toronto Hamilton Waterloo Region Calgary Vancouver Moscow

- 2 - cultural sectors. However, of even greater interest, and somewhat unanticipated, was a recommended reversal in the onus of establishing net benefit to Canada from the foreign investor to the Industry Minister where a matter is reviewable. With respect to specifically regulated sectors, the Panel also exhorted liberalization of investment restrictions by: allowing up to 49% foreign ownership of airline carriers on a reciprocal basis; allowing foreigners to establish and acquire domestic telecom companies with less than 10% market share, and after additional review, further liberalizing investment restrictions in telecom and broadcasting; removing the de facto prohibition on mergers of large financial institutions; and liberalizing the foreign ownership restrictions in the uranium industry. As to modernizing Canada s antitrust regime, the Panel recommended changing the review process to more closely mirror the U.S. model, which will be very welcome from a timing perspective for cross-border M&A transactions. Another change aimed at moving closer to the U.S. antitrust regime would see replacing existing conspiracy provisions relating to hard core cartels with per se offences, such as price fixing. Other practices, such as resale price maintenance and predatory pricing would be decriminalized. Industry-specific rules and penalties would be repealed and a general penalty for abuse of dominance violations would be introduced. Lastly, the Report addressed a number of key public policy priorities for action including: taxation (lowering corporate and personal income taxes, eliminating capital taxes, harmonizing provincial and federal commodity taxes); talent (greater specialization in post-secondary education, reforming immigration processes); corporate governance (putting directors of Canadian public companies on a similar footing with their Delaware counterparts in respect of fiduciary duties in acquisition proposals); Canada-U.S. economic ties (dealing with Canada-U.S. Competition Review Panel Reports on Proposed Changes for Foreign Direct Investment

- 3 - border thickening as a trade imperative); and international trade and investment (establishing a timeline to conclude key bilateral trade and investment agreements with priority jurisdictions. The Panel s recommendation for the creation of an independent Canadian Competitiveness Council with a broad mandate to advocate competition in both the public and private sectors is intended to move the competition agenda forward. Depending upon the outcome of the recently announced federal election, it can be expected that a number of the Panel s recommendations in the Report will receive legislative priority in the next Parliament. For further information, please contact: Nicholas Dietrich Gowling Lafleur Henderson LLP Suite 1600, 1 First Canadian Place 100 King Street West Toronto, Ontario M5X 1G5 T: (416) 369-7288 F: (416) 369-7250 Email: Nicholas.Dietrich@Gowlings.com Competition Review Panel Reports on Proposed Changes for Foreign Direct Investment