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波兰
Poland – Personal liability of the LLC managers for the company’s debts
5 3 月 2019
- 公司法
On February 14, 2019, the European Commission proudly announced in a press release that the night before, the European Parliament, the Council of the European Union and the European Commission reached a political deal on the first-ever rules aimed at creating a fair, transparent and predictable business environment for businesses and traders when using online platforms.
The new Regulation is part of the strategic plan of the European authorities to establish a digital single market and has its origin in the Commission Communication on Online Platforms of May 2016. As a result, in April 2018 the Commission presented the proposal of a new regulation.
The new rules will apply to companies such as Google AdSense, DoubleClick , eBay and Amazon Marketplace, Google and Bing Search , Facebook and YouTube, Google Play and App Store, Facebook Messenger, PayPal, Zalando and Uber.
After having conducted a series of studies, workshops and a large public consultation, the European Commission explained in its 2016 Communication the importance of creating in Europe a favorable environment for the development of new online platforms. Indeed, the statistics are very disappointing: only 4% of the world’s market capitalization is represented by online platforms created in Europe. The champions in the field are the United States and Asia.
On the basis of this observation, the Commission has drawn up a list of challenges for the European lawmaker as follows:
- Ensuring a level playing field for comparable digital services
- Ensuring that online platforms act responsibly
- Fostering trust, transparency and ensuring fairness
- Keeping markets open and non-discriminatory to foster a data-driven economy
- Safeguarding a fair and innovation-friendly business environment
2 years after the Communication of the Commission, the new Regulation was born.
First of all, what are the conditions for the application of the regulation?
- companies using online platforms must have their place of establishment or residence in the European Union and
- goods or services must be offered to consumers in the Union.
(the place of establishment or residence of the providers of these services is not relevant to the application of the Regulation).
A strengthened obligation of transparency
The Regulation makes online platforms subject to transparency by obliging them to ensure that their terms and conditions:
- are drafted in a clear and unambiguous manner;
- are easily available for business users at all stages of their commercial relationship with the provider of online intermediation services, including in the pre-contractual stage;
- set out the objective grounds for decisions to suspend or terminate, in whole or in part, the provision of their online intermediation services to business users.
Ranking
Online platforms will have to indicate in their terms and conditions the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters
Where those main parameters include the possibility to influence ranking against any direct or indirect remuneration paid by business users to the provider of online intermediation services concerned, that online platform shall also include in its terms and conditions a description of those possibilities and of the effects of such remuneration on ranking.
Differentiated treatment of goods or services
The online platform shall also include in their terms and conditions a description of any differential treatment they give on the one hand in relation to goods and services offered to consumers through these online intermediation services, either by the supplier himself or by any user enterprise controlled by that supplier and, secondly, in relation to other business users.
Access to data
The platforms will have to establish a description of the technical and contractual access, or lack of such access for business users, to any personal data or other data, or both, that user companies or the consumers transmit for the use of the online intermediation services concerned or which are generated through the provision of those services.
Prohibition of certain unfair practices
Prohibition of modification of the terms and conditions without notice
Any proposed amendment of terms and conditions shall be notified to users and the notice period shall be at least 15 days from the date on which the online platform notifies the business users concerned about the envisaged modifications.
Prohibition of suspension or termination without cause
Under Article 4 of the Regulation when intermediation service provider decides to suspend or terminate, in whole or in part, providing its services to a given user company, it shall provide the business user without undue delay, with the motivation for such a decision.
New avenues for dispute resolution
Internal complaint-handling system
Providers of online intermediation services will have to provide an internal complaint handling the complaints from user companies.
Mediation
The platforms shall identify in their terms and conditions one or more mediators with which they are willing to engage to attempt to reach an agreement with business users on the settlement, out of court, of any disputes between the provider and the business user arising in relation to the provision of the online intermediation services concerned, including complaints that could not be resolved by means of the internal complaint-handling system.
The Regulation specifies the conditions that mediators shall met in order to be able to carry out their mission.
Judicial proceedings by representative organizations or associations and by public bodies
Organisations and associations which have a legitimate interest in representing user undertakings or entities using a corporate website, as well as public bodies established in the Member States, shall have the right to bring an action before the national courts in the Union, in accordance with the rules of the law of the Member State in which the action is brought, with a view to putting an end to or prohibiting any infringement, by providers of online intermediation services or on-line search engines.
Coming into force
As it is announced by The European Commission, the new rules will apply 12 months after its adoption and publication, and will be subject to review within 18 months thereafter, in order to ensure that they keep pace with the rapidly developing market. The EU has also set up a dedicated Online Platform Observatory to monitor the evolution of the market and the effective implementation of the rules.
Online platforms regardless of your size, start drafting your new terms and conditions!
Put options on a fixed price are all clear: the Italian Supreme Court confirms the legitimacy of the repurchase agreements regarding company shares (i.e. the agreement by which the buyer undertakes to resell the shares at a later time, upon the occurrence of certain conditions, upon simple request of the seller) without any participation in the occurred losses, and admits that such cases may pass the test for the leonina societas (under Italian law a permanent and total exclusion of some partners from participation in profits and losses is prohibited).
Those who intend to invest, instead of opting for a funding, may become part of the company structure through the acquisition of a participation in the share capital and, at the same time, insure oneself a safe way out.
To avoid suffering any negative outcomes, the silent partner may, through a shareholders’ agreement, agree with the founders of the company his exit through the sale of the equity investment at a given time, under certain circumstances and at the price of purchase. Indeed, there could be room for profit too: the put option, in fact, may include interests in the agreed price of repurchase.
Focus on this new corporate instrument is recommended. It could favour numerous strategic alliances between financiers and entrepreneurs looking for capital.
The author of this article is Giovannella Condò.
The parliamentary fraction of Morena (party with majority in Congress) recently filed an initiative to reform the Federal Labor Law (FLL); this modification aims to set forth an obligation for employers to implement an action protocol to prevent gender-based discrimination and to manage violence and sexual harassment cases.
Although this type of conducts are considered in the FLL as a cause for rescission both for the employer and for the employee, with penalties for employers who incur, tolerate or allow them, around $18K pesos (US $1K) to $365K pesos (US $20K) approx., the reform aims to guarantee the existence of a mechanism to effectively protect the worker’s right to decent treatment and equality.
The Ministry of Labor and Social Welfare (MLSW) currently has a model attention protocol for workplace violence in order to promote the implementation by Mexican companies of policies and actions to detect and prevent this type of situations.
The MLSW proposes the creation of a commission incorporated by representatives of the company and the employees, with the main purposes of:
· Implementing the aforementioned protocol;
· Receiving, managing and solving complaints filed by employees related to workplace violence; and,
· Imposing the corresponding penalties to the employees in the work environment, which shall be set forth in the Internal Workplace Regulations effective for the company.
In order for the protocol to be an effective mechanism to counter these types of conducts within the workplace, it is recommended that such protocol sets forth, at least the following:
· Diagnostic processes allowing to determine the risk level of the company to determine the most appropriate preventive measures.
· Awareness and training actions promoting violence free workplaces, allowing workers to clearly identify if they are victims of such types of conducts, the instances to which they can resort and the steps to file a complaint.
· Mechanisms available for the workers to report these type of incidents.
· Processes to investigate the reported incidents.
· Guidelines to determine the penalties applicable to the workers incurring in such types of conducts.
Considering the approval of such reform is imminent and in order to guarantee compliance to it at the date of its publication and effectiveness, it is convenient that companies initiate the implementation of their compliance systems to prevent any penalty that may arise from an inspection visit of the MLSW.
It is worth mentioning that these systems do not only serve a compliance purpose, since them also bright forth multiple benefits for companies regarding prevention of operative, labor and legal risks.
It is known that denigrating practices in the workplace are one of the common causes of absenteeism, staff turnover and drop in performance. These situations have negative economic impact in companies, both in their costs and in their productivity.
The implementation of an effective compliance system allows ensuring a respectful behavior within the organization, creating a healthy workplace environment which helps to reduce such incidents and supports the capabilities of the human capital, enabling companies to meet their commercial and financial goals.
These systems also contribute to reduce the risks of exposure of companies to such claims on behalf of their workers, and also the contingencies and liabilities that may derive from them, whether under labor, civil or criminal law.
As I have already mentioned in my previous article, the most popular type of company set up in Poland is the Limited Liability Company (LLC). Many foreign investors choose this legal structure for its simplicity and low costs, and often – especially in the smaller ones – investors themselves wish to manage (or co-manage) the company, so they become members of the Management Board.
However, many of them do not pay due attention to legal consequences of such a decision and are not aware of the legal liability connected with this position. I am compelled to underline that many foreign clients invest in Poland in a form of an LLC being groundlessly convinced that the limited liability refers to the whole business in Poland and all the people involved in it. They think that, if something goes wrong and the business of a subsidiary fails, they can just close it, leave the debts behind and start somewhere else.
This is not the case: The members of the Management Board, indeed, could be forced to pay a high price for it. Let’s take a look at this topic.
According to the Polish company law the Management Board Members of an LLC are jointly and severally responsible for the debts of the company in case it does not satisfy its creditors.
Basically, in order to pursue a Member of the Management Board a creditor needs to sue the company first and initiate the enforcement proceedings. In case the enforcement proceedings turn out to be totally or partly ineffective for the lack of the company’s assets – this fact will be confirmed by the bailiff. On this basis the creditor is entitled to sue the member of the Management Board and demand all the amounts that the company didn’t pay to him/her as well as the interest and costs of the court proceedings, including the attorney’s fees. As you may imagine, the amount at stake is high.
How can a Member of the Management Board defend from the liability for the company’s debts? By proving one of the following:
- he/she filed for company’s bankruptcy in a due time;
- the court declared the restructuring proceedings towards the company in a due time,
- it is not his/her fault the non-filing for the bankruptcy or restructuring proceedings in a due time;
- the creditor did not incur damage due to the fact that the aforementioned procedures were not initiated in a due time.
The burden of proof shall lie with the Manager. In other words, if he/she needs to prove at least one of those circumstances, while the plaintiff only needs to prove the existence of an unpaid company’s debt.
Establishing the “due time” is a crucial point. It is considered appropriate to file for bankruptcy when:
- the company for 3 consecutive months has problems with invoices paying; or
- the company is indebted above the value of its assets for more than 2 years; or
Often an appalling event proving that the company is in serious trouble arises when the bank refused to continue the financing or worse, terminates the loan and no other bank is wishing to provide the company with the financing. .
By contrast, the restructuring may be initiated when the company is still in a relatively good condition: through an agreement with creditors for the deferment or reduction of some payments together with the implementation of certain business improvements, the restructuring agreement may bring the company back into business. Despite the restructuring being relatively expensive, it allows to maintain the company alive, overcome difficulties and get back into the game.
When it is too late or there is no good recovery plan, the only remaining solution is the liquidation of the company within the insolvency proceedings. However, also these proceedings provoke expenses: the insolvent company needs to have resources to finance the judicial fees, the accountants, the receiver’s fees, the attorney’s fees, the employee’s salaries and all other costs during the insolvency process.
If the company does not have enough assets, the court will not even open the insolvency proceedings and if, during the proceedings a shortage of funds arises, the proceedings will be closed.
If the demand for opening of the insolvency or restructuring proceedings is filed too late, the Manager cannot release himself/herself from the liability for the debts of the company and all the damages incurred by the company’s creditors as a result of a belated opening of the insolvency proceedings. As the damage is often equivalent of the unpaid debt, the creditors have two separate legal bases to sue the Management Board Members and get back from them the money they didn’t get from the company.
In extreme cases, when the negligence of the Management Board is truly gross and the damage caused to creditors due to the belated filing for bankruptcy is very high, the court may impose on the Management Board Members a prohibition of running enterprise and holding positions in enterprises.
My advice is to accept the position of Management Board Members with extreme caution and, when the first signs of corporate difficulty arise, to react immediately and contact a lawyer expert in the matter: not only for the company’s sake, but also to protect their own assets and interest.
多数原则是有限公司的一个关键方面, 当公司的股本平均分配给两个对立的股东(各占50%)时，多数原则就会陷入危机。在这个情况下，只有一致同意才能批准决策，这显然会导致僵局，使公司的管理陷入瘫痪。
股东之间的不可调和的分歧可导致公司解散。为了避免这种情况，公司已经设计了几种策略，其中之一就是所谓的“俄罗斯轮盘条款”。
在僵局情况下，股东可能同意采取俄罗斯轮盘条款，其条款的作用是重新分配股份，从而重新开始经营活动。
该条款规定:在某些触发事件发生时，两个股东之一（或两者，如果同意的话）有权决定其50%的股本价值。因此，他/她将另一位股东置于一个简单的选择之前:以他/她提议的价格购买“发行”股东的股份，或以相同的价格将他/她自己的股份出售给“发行”股东。
内部或外部:激活俄罗斯轮盘赌条款的人来决定价格和涨价是不允许的。价格的单方决定是由失去自己股份的风险来平衡的。其实，最终的选择取决于未确定价格的股东。
In all M&A operations one of the issues that deserves special attention as regards its analysis, ascertainment and negotiation is the tax liabilities. Even though the parties could agree on the amount of such contingencies, to negotiate the possible guarantees that the seller should grant in order to protect the buyer from a possible claim by the tax authorities, the term during which the guarantees should be in force, and to agree on the communication mechanisms between the parties (buyer and seller) and the legal defense strategies if such claim from the tax authorities arises, requires substantial negotiation efforts.
When the acquisition operation is formalized not through the purchase of shares, but through the purchase of the assets that form a business unit, the Spanish General Tax Law (“Ley General Tributaria” or “LGT”) provides a mechanism which implies an exception to the general principle provided by article 42 of the same law. Article 42 of LGT establishes the joint liability of the purchaser of a business unit for the tax liabilities of the selling company (“tax liability derived from company’s succession”). That is, in principle, according to article 42 of the LGT “the persons or entities that continue by any mean in the ownership or exercise of economic activities (the buyers) will be jointly liable with the previous owner for the tax liabilities derived from the exercise of such economic activities incurred by such previous owner”.
However, the joint tax liability of the buyer could be limited through the application before the tax authorities of the tax certificate regulated by article 175.2 of the LGT. This certificate should be applied for by the prospective buyer, with the authorization of the present owner (the seller), and, once issued, the tax liability of the buyer becomes limited to the debts, penalties and liabilities mentioned in the certificate. If the certificate is issued without mentioning any amount, or if the tax authorities do not issue it within a three months term from the application’s date, the applicant (the buyer) will be released from any tax liability derived from company’s succession.
The tax certificate for succession purposes includes the main taxes, as Value Added Tax and Corporate Income Tax, and can include as well debts derived from the withholding taxes on employees’ payroll, which in case of companies with a big number of employees could be of an outstanding amount. However, the buyer’s joint liability for salaries, related payroll amounts and social security contributions cannot be limited by such certificate, and such liability will always be joint with the business unit seller’s liability.
The application for the tax certificate should be filed before the acquisition of the business unit is completed, even if the issuance of the certificate takes place later tan the closing date (but of course, it is wiser to not close the acquisition before having the certificate). The certificate’s validity lasts for one year, as regards periodical tax obligations (for example, Value Added Tax, Corporate Income Tax and withholding taxes on salaries) and for three months as regards non periodical tax obligations.
It is very important to apply for the right tax certificate (“certificate for succession purposes according to article 175.2 of LGT”), and to not make a mistake and apply, for example, for the certificate regarding having fulfilled all tax obligations (“certificado de estar al corriente de las obligaciones fiscales”). Case law is plenty of judgments where a buyer applied for the wrong certificate, which showed no liabilities, and later on such buyer has been sentenced to pay the tax liabilities incurred by the previous owner of the business unit.
The purpose of this post is to provide information about (i) the need of Brazilian companies for providing the Country-by-Country Reporting pursuant to the OECD Rules, Action 13 of the Base Erosion and Profit Shifting Actions (“BEPS Actions”) and (ii) the need to disclose the name of the final beneficial owner of entities with equity participation in Brazilian companies, or owners of assets in Brazil.
Country-by-Country Reporting Regulation
Normative Instruction RFB No. 1681 (“IN 1681/2016”) established the rules for the Brazilian companies to be compliant with the Country-by-Country Reporting Regulation (“CbCR”). The CbCR shall be presented annually considering the financial results of the previous fiscal year, as part of the fiscal declaration (ECF, which includes the information related to the corporate tax income return). Such declaration should be filled in accordingly with the list of mandatory information determined by IN 1681/2016 and pursuant to RFB Normative Instruction No. 1,422, of December 19, 2013.
The CbCR is the result of the BEPS Project (Base Erosion and Profit Shifting) of the OECD’s initiative, contained in Action 13 of the BEPS Actions, aiming the enhancement of transparency while taking into consideration compliance costs.
Multinational groups are obliged to deliver the CbCR if consolidated revenues for the fiscal year preceding the tax year of the declaration are equal to or greater than BRL 2.26 billion (or 750 million Euros, or if the local currency of the final controller of the group is equivalent to the mentioned amounts, as of January 31, 2015).
The Brazilian subsidiary is (or may be considered) a substitute of the final controller and, as such, bound to fulfill the CbCR in the following cases:
- it is the final controller of the multinational group is not obliged to deliver the CbCR in its jurisdiction of residence;
- the jurisdiction where the ultimate controller is located has signed an international agreement with Brazil, however, still not ratified by the competent authorities before the deadline for delivering the CbCR; or
- there has been a systemic failure of the jurisdiction of residence of the final controller of the multinational group that has been notified by the Brazilian Federal Revenue Office to the resident entity for tax purposes in Brazil.
In case the Brazilian subsidiary is exempt from submitting the CbCR, it will still need to provide the identification and the jurisdiction of residence for tax purposes of its parent company.
The deadline for providing the information will be the date for completing the ECF, to expire on 30 July 2018 for the fiscal year 2017. Failure to comply will expose the Brazilian subsidiary to the payment of a penalty of BRL 1,500.00 (USD 410 or EUR 340) per month. Submission of an incomplete CbCR may subject the Brazilian subsidiary a fine of 3% over the value omitted, inaccurate or incomplete.
Need to disclose beneficial ownership and how to do it
Brazilian companies are obliged to provide information on the person authorized to represent them, on the respective chain of equity interest, until the individuals characterized as final beneficial owner.
This information shall be provided when a Non-Brazilian entity present its application to obtain the Federal Corporate Taxpayers’ Registry (“CNPJ”). If the Non-Brazilian entity already has a CNPJ, it must update the CNPJ with the beneficial owner information by 31 December 2018.
Obtaining a CNPJ is mandatory for Non-Brazilian entities that have equity participation in Brazilian companies or other assets – financial investments, real estate, airplanes, ships, among others in Brazil.
This obligation is in force by means of the Brazilian Federal Revenue Office Normative Instruction No. 1634 (“IN 1634/2016“). IN 1634/2016 contains a list of information to be provided and documents to be delivered for that purpose.
On October 25, 2017, the procedure became mandatory also for Brazilian entities after publication of the ADE COCAD (Executive Declaratory Act – Registration Management General Coordination) No. 9/2017.
Fail to comply with the procedure can result in suspension of the CNPJ. This suspension could result in inability to execute bank transactions, financial investments and obtaining loans and, ultimately, prevent the remittance of dividends to other countries or even the receipt of funds by means of a loan or capital injection from the respective parent companies abroad.
Such information is not protected under fiscal secrecy, but the public employees shall not disclose this information pursuant to functional obligation of not disclosing information unless if summoned by court order.
The requirement for presenting the information on the beneficial owner is already familiar for investors in Brazil. The Brazilian financial institutions are responsible for obtaining information of their client up until the beneficial owner, pursuant to Circular Letter No. 3.461/2009 of the Brazilian Central Bank. The information provided to financial institutions are subject to bank secrecy.
These Brazilian financial institutions are severe on the provision and updating on the foreign parent companies. It is usual for companies with foreign shareholders to receive notices and warnings of possible blocking or closing the accounts if the required documents are not presented in full.
The author of this article is Paulo Yamaguchi
Over the last year, the escalation of cryptocurrencies has aroused a number of issues and controversial debates for the lack of regulation in most jurisdictions, including Italy where the only regulation of the cryptocurrency phenomenon is set by the AML legislation. According to the Italian law, cryptocurrencies do not have legal tender status, the regulators have qualified cryptocurrencies as means of exchange different from e-money, which, however, can be converted into Euro for purchasing virtual currency as for selling such currency; moreover, they can be used to buy both virtual and real goods and services. As a matter of fact, the lack of regulation concerning cryptocurrencies as a form of currency and a financial instrument does not prevent the trade and use of cryptocurrencies not only as means of payment but also as contribution to fund the share capital of limited liability companies.
On July, 18th, the Court of Brescia has denied the validity of a resolution increasing the share capital of a limited liability company subscribed for by certain utility tokens because the relevant contribution (equal to Euro 714,000) didn’t comply with Article 2464 of the Civil Code. The Court has not banned the contribution of cryptocurrencies but based on that case it has remarked the criteria governing contributions in kind which were not met for the subscription of the increase of share capital as resolved by the company; giving that, and starting from this assumption, it is possible to highlight criteria requested by the Italian law to contribute cryptocurrencies into share capital.
Any (tangible and intangible) asset can be contributed into the share capital of joint-stock companies (S.p.A.) and limited liability companies (S.r.l.) to the extent that they have an indisputable economic value (as proved by a sworn appraisal from an expert who issues the relevant report) and a potential market where they can be exchanged and/or converted into cash. The report must be focused on the description of the contributed assets, the reference of the adopted criteria of evaluation, and the certification that their value is, at least, equal to the one assigned at the moment of the subscription of the capital and of the premium, if any. As a matter of fact, the function of the share capital is to guarantee the creditors in relation to the company liabilities, as a consequence it is mandatory that the economic value of the share capital must be indisputable and in compliance with the law, especially when including cryptocurrencies or digital assets.
Moving on the case, the cryptocurrencies contributed were issued by a company based in Bulgaria, they were utility tokens used as mean of payment for buying goods and services on a web platform, owned by the issuers of these digital assets. Hence these tokens were not traded in any exchange platform where it is possible to fix an indisputable exchange rate and then the relevant economic value. Indeed, the Court has reasoned the direct proportion between the value of the contribution into the equity and the existence of exchanges where the value of the cryptocurrency would have been set. Moreover, the Court has stated the lack of enforceability of the tokens contributed. Under the practical side, the contribution of cryptocurrencies has to be made by reporting the private key from the contributor to the company, giving that the enforceability of cryptocurrencies by a pledge can be done subject to the collaboration and the consent of the contributor who has to disclose the private key; should the contributor refuse to disclose the private key, the enforceability of the pledge on the tokens would be undermined.
To sum up, in theory the contribution of cryptocurrencies into equity is not forbidden under the Italian law, however giving its questionable nature, it is still controversial how to guarantee the compliance with the mandatory requirements for the contribution in kind.
This case history and the order of the Court of Brescia give us the opportunity to provide the Italian picture on cryptocurrencies.
The Italian crypto-scenario is quite effervescent since the beginning of 2017; indeed, Italy was the first European country to define the virtual currency and the exchanger according to the new AML legislation. This is not strange considering that the anonymity surrounding cryptocurrencies, which varies from complete anonymity to pseudo-anonymity, prevents cryptocurrency transactions from being adequately monitored, allowing shady transactions to occur outside of the regulatory perimeter and criminal organisations to use cryptocurrencies to obtain easy access to “clean cash”. Anonymity is also the major issue when it comes to tax evasion.
The AML Law
Legislative Decree no. 90 of May 25th 2017, which reformed legislative decree no. 231/2007, introduced definitions of exchanges and virtual currencies and provided a set of rules for the exchanges to comply with the anti-money laundering rules.
Virtual currency means “a digital representation of value that is neither issued by a central bank or a public authority, nor attached to a legally established fiat currency, which can be used as a means of exchange for the purchase of goods and services and transferred, stored and traded electronically.” Virtual currencies within the scope of AMLD5 and of the Italian AML Law are those that can be transferred, stored and traded electronically. Until now, other virtual currency schemes are not in scope, including virtual currencies used to attain goods and services without requiring exchange into legal tender or similar instruments, or the use of a custodian wallet provider.
Exchanges are defined as virtual service providers: “any natural or legal person providing professional services to third parties for the use, the exchange, the related storage of virtual currencies and for the conversion from or in currencies having legal tender [.]” Given this scope, they are subject to anti-money laundering regulations and, therefore, they have to obtain a sort of licence and be listed in a special register to operate in Italy. Considering this definition, it seems that a material number of key players are not included in AML law, for example miners and pure cryptocurrency exchanges that are not custodian wallet providers, hardware and software wallet providers, trading platforms and coin offerors. This choice of the legislator leaves blind spots in the fight against money laundering, terrorist financing and tax evasion. However, a decree of the Ministry of Economy and Finance (MEF) is under discussion, which seeks to extend the monitoring not only to exchanges but also to those subjects that accept cryptocurrencies for the sale of services and goods.
As said, apart from the AML Law, there is a lack of regulation which undermines the grade of protection of users and investors.
The protection of users/investors
One of the issues which prevents or undermines the grade of the protection is that crypto markets and crypto players can be located in jurisdictions that do not have effective money laundering and terrorist financing controls in place or do not have any regulation for their offering to the investors. Moreover, against the risk of default of the platform or the exchanges there is very little to do to protect investors especially at a cross-border level.
The protection of users/investors depends on several factors, the first one being the nature of the cryptocurrencies in question and the crypto-platforms (i.e. what they are, where they are based and whether they are compliant with the Italian law).
The nature of the cryptocurrencies has to be identified on a case-by-case basis. If qualified as securities (standard financial products which are transferable and generate profits), the prospectus rules should apply, this meaning that a prospectus is required under the Consolidated Financial Law (“Testo Unico Finanza” or “TUF”) to disclose significant financial risks to investors. If they are a hybrid made up of a means of payment and an investment component, the application of the TUF provisions is controversial.
From a criminal perspective, users/investors can be protected in case of fraud irrespective of the above factors. The general remedies under the criminal law apply.
The landmarks for investors’ protection are:
- The AML Law defining the subjects obliged to declare their activities in the cryptocurrencies world (e. the custodian wallet providers and the virtual currency exchanges);
- The TUF rules, inter alia, the prospectus regulation; and
- The Consumers’ Code rules the mandatory provisions on the “form and pre-contractual information”.
The common ground of civil actions is the disclosure of pre-contractual information to investors and the compliance of crypto-platforms and exchanges with the Italian law.
Civil actions might be brought against platforms:
- Pursuant to Articles 50 and 67 of the Consumers’ Code, according to which any contract must provide consumers with mandatory “pre-contractual information”.
- Pursuant to Article 23 of the TUF, according to which any contract providing investment services must be in writing and “failure to comply with the prescribed form shall render the contract null and void”.
In 2017, the Court of Verona declared a contract null and void because of its breach of the mandatory provisions on the “form and pre-contractual information” and ordered the refund of the money to the consumer. From the consumers’ perspective, all the information about the nature, the risks and the features of any cryptocurrency must be provided in advance to individuals in a transparent manner. As a matter of fact, the Court of Verona has reasoned that any online agreement between parties, implying the exchange of real money for virtual money, represents a financial service or rather “a paid service.” The Court judged that the contract between the exchange and the Italian consumer was null and void, as the IT service firm breached the obligations set forth by Articles 50 on “distance contracts” and 67 of the Consumers’ Code, which provide as mandatory the “form and pre-contractual information” to be provided to consumers. Lastly, the Court ordered to return to the Italian plaintiff the amount invested in cryptocurrencies.
For the sake of completeness, the consumers’ protection has been achieved also by the Italian Antitrust Authority (i.e. the non-governmental organization focused on consumer protection), which stopped the operations of several affiliates of OneCoin, the digital currency investment scheme widely accused of fraud.
In 2017, Consob (National Authority for the Stock Exchange) banned the advertisement and then the offer of investment portfolios containing cryptocurrencies, made in breach of the prospectus regulation.
Pursuant to Article 101, Par. 4, Part c) of the TUF, Consob has prohibited the advertising – via the website www.coinspace1.com – of the public offer for ‘cryptocurrency extraction packages’ launched by Coinspace Ltd (Resolution no. 19968 of April 20th 2017). The offer had already been the subject of a precautionary 90-day suspension. Moreover, on December 6th, 2017, pursuant to resolution no. 20207, under Article 99, paragraph 1, letter d) of the TUF, Consob banned the offer to the Italian public of “investment portfolios” carried out without the required authorizations by Cryp Trade Capital through the website https://cryp.trade. A few months later, in March 2018, the website https://cryp.trade was subjected to precautionary seizure by the Criminal Court of Rome pursuant to Article 166 of the TUF (a criminal provision which punishes those who carry out financial services and activities without Consob’s authorization). The common ground of these resolutions issued by Consob is the absolute lack of the mandatory information and prospectus set forth by the TUF for entities providing financial services to Italian investors trading in cryptocurrencies and cryptocurrency-related products. Given the application of the TUF, pursuant to Article 23, any contracts for the provision of investment services must be in writing and “failure to comply with the prescribed form shall render the contract null and void”.
Both resolutions have remarked how the Italian versions of the websites were the evidence that those offers were targeted to the Italian market, therefore Consob has set the criteria to identify the territoriality of the crypto-platforms subject to the Italian law which is: “where the cryptocurrencies are intended to be offered to the public”.
To complete this overview, some highlights follow on ICOs and the tax regime of cryptocurrencies in Italy.
ICOs
Initial Coin Offerings (ICOs) are not regulated by the Italian law. In ICOs the funding collected by a start-up could also be exchanged for an equity token (very similar to securities and then embodying an interest in the issuing start-up) or a utility token, which entitles the holder to exchange it for goods or services provided by the same start-up.
ICOs are very controversial (even if not yet officially banned by Consob), as they issue equity tokens that, due to their similarity to securities, can be offered to the public of investors only by entities duly authorized by the regulators, according to the TUF. As far as utility tokens, in theory their issuance might be allowed subject to a strict set of contractual rules, in order to protect investors as much as possible. However, the ICOs market has not taken off, yet.
The tax regime
For Italian tax purposes, the taxation of cryptocurrencies is not regulated by Law. Nonetheless, the Italian Revenue Agency issued a Ruling in May 2018 providing that gains on virtual currency for individuals trading outside a business activity are treated as gains arising from the disposal of traditional foreign currency. Consequently, gains relating to forward sale are always taxable, rather gains relating to forward sale are taxable only to the extent that, during the tax period, the average amount of the overall virtual currency maintained by the taxpayer exceeds the equivalent of EUR 51,645.69 for seven days in a row (the exchange rate to use is the one given by the website where the individual carried out the transaction). Any gain is therefore subject to 26% withholding tax. Additionally, the taxpayer must comply with the tax monitoring duties in the Individual Tax Return though he is not exempted from wealth tax (IVAFE), to the extent that virtual currency is not held through institutions or other authorized intermediaries by the Bank of Italy.
The same regulatory uncertainty put on the taxation of corporations trading in virtual currency. In a Ruling issued in September 2018, the authorities submitted that exchanges of bitcoins for legal currency constitute, for income tax purposes, a taxable event subject to Ires (24%) and Irap (3.9%).
For indirect tax purposes, the authorities confirmed that trading in bitcoins and other virtual currencies is similar to the activity of an intermediary negotiating in financial instruments, and, as a consequence, it is exempt from VAT under the Italian provision implementing article 135(1)(e) of the VAT Directive (2006/112). Therefore, when bitcoins are exchanged for real currencies, no VAT is due on the value of the bitcoins themselves.
The author of this post is Milena Prisco.
越南 
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写信给 Agata
俄罗斯轮盘条款-僵局情况的解决方案
24 1 月 2019
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意大利
- 公司法
On February 14, 2019, the European Commission proudly announced in a press release that the night before, the European Parliament, the Council of the European Union and the European Commission reached a political deal on the first-ever rules aimed at creating a fair, transparent and predictable business environment for businesses and traders when using online platforms.
The new Regulation is part of the strategic plan of the European authorities to establish a digital single market and has its origin in the Commission Communication on Online Platforms of May 2016. As a result, in April 2018 the Commission presented the proposal of a new regulation.
The new rules will apply to companies such as Google AdSense, DoubleClick , eBay and Amazon Marketplace, Google and Bing Search , Facebook and YouTube, Google Play and App Store, Facebook Messenger, PayPal, Zalando and Uber.
After having conducted a series of studies, workshops and a large public consultation, the European Commission explained in its 2016 Communication the importance of creating in Europe a favorable environment for the development of new online platforms. Indeed, the statistics are very disappointing: only 4% of the world’s market capitalization is represented by online platforms created in Europe. The champions in the field are the United States and Asia.
On the basis of this observation, the Commission has drawn up a list of challenges for the European lawmaker as follows:
- Ensuring a level playing field for comparable digital services
- Ensuring that online platforms act responsibly
- Fostering trust, transparency and ensuring fairness
- Keeping markets open and non-discriminatory to foster a data-driven economy
- Safeguarding a fair and innovation-friendly business environment
2 years after the Communication of the Commission, the new Regulation was born.
First of all, what are the conditions for the application of the regulation?
- companies using online platforms must have their place of establishment or residence in the European Union and
- goods or services must be offered to consumers in the Union.
(the place of establishment or residence of the providers of these services is not relevant to the application of the Regulation).
A strengthened obligation of transparency
The Regulation makes online platforms subject to transparency by obliging them to ensure that their terms and conditions:
- are drafted in a clear and unambiguous manner;
- are easily available for business users at all stages of their commercial relationship with the provider of online intermediation services, including in the pre-contractual stage;
- set out the objective grounds for decisions to suspend or terminate, in whole or in part, the provision of their online intermediation services to business users.
Ranking
Online platforms will have to indicate in their terms and conditions the main parameters determining ranking and the reasons for the relative importance of those main parameters as opposed to other parameters
Where those main parameters include the possibility to influence ranking against any direct or indirect remuneration paid by business users to the provider of online intermediation services concerned, that online platform shall also include in its terms and conditions a description of those possibilities and of the effects of such remuneration on ranking.
Differentiated treatment of goods or services
The online platform shall also include in their terms and conditions a description of any differential treatment they give on the one hand in relation to goods and services offered to consumers through these online intermediation services, either by the supplier himself or by any user enterprise controlled by that supplier and, secondly, in relation to other business users.
Access to data
The platforms will have to establish a description of the technical and contractual access, or lack of such access for business users, to any personal data or other data, or both, that user companies or the consumers transmit for the use of the online intermediation services concerned or which are generated through the provision of those services.
Prohibition of certain unfair practices
Prohibition of modification of the terms and conditions without notice
Any proposed amendment of terms and conditions shall be notified to users and the notice period shall be at least 15 days from the date on which the online platform notifies the business users concerned about the envisaged modifications.
Prohibition of suspension or termination without cause
Under Article 4 of the Regulation when intermediation service provider decides to suspend or terminate, in whole or in part, providing its services to a given user company, it shall provide the business user without undue delay, with the motivation for such a decision.
New avenues for dispute resolution
Internal complaint-handling system
Providers of online intermediation services will have to provide an internal complaint handling the complaints from user companies.
Mediation
The platforms shall identify in their terms and conditions one or more mediators with which they are willing to engage to attempt to reach an agreement with business users on the settlement, out of court, of any disputes between the provider and the business user arising in relation to the provision of the online intermediation services concerned, including complaints that could not be resolved by means of the internal complaint-handling system.
The Regulation specifies the conditions that mediators shall met in order to be able to carry out their mission.
Judicial proceedings by representative organizations or associations and by public bodies
Organisations and associations which have a legitimate interest in representing user undertakings or entities using a corporate website, as well as public bodies established in the Member States, shall have the right to bring an action before the national courts in the Union, in accordance with the rules of the law of the Member State in which the action is brought, with a view to putting an end to or prohibiting any infringement, by providers of online intermediation services or on-line search engines.
Coming into force
As it is announced by The European Commission, the new rules will apply 12 months after its adoption and publication, and will be subject to review within 18 months thereafter, in order to ensure that they keep pace with the rapidly developing market. The EU has also set up a dedicated Online Platform Observatory to monitor the evolution of the market and the effective implementation of the rules.
Online platforms regardless of your size, start drafting your new terms and conditions!
Put options on a fixed price are all clear: the Italian Supreme Court confirms the legitimacy of the repurchase agreements regarding company shares (i.e. the agreement by which the buyer undertakes to resell the shares at a later time, upon the occurrence of certain conditions, upon simple request of the seller) without any participation in the occurred losses, and admits that such cases may pass the test for the leonina societas (under Italian law a permanent and total exclusion of some partners from participation in profits and losses is prohibited).
Those who intend to invest, instead of opting for a funding, may become part of the company structure through the acquisition of a participation in the share capital and, at the same time, insure oneself a safe way out.
To avoid suffering any negative outcomes, the silent partner may, through a shareholders’ agreement, agree with the founders of the company his exit through the sale of the equity investment at a given time, under certain circumstances and at the price of purchase. Indeed, there could be room for profit too: the put option, in fact, may include interests in the agreed price of repurchase.
Focus on this new corporate instrument is recommended. It could favour numerous strategic alliances between financiers and entrepreneurs looking for capital.
The author of this article is Giovannella Condò.
The parliamentary fraction of Morena (party with majority in Congress) recently filed an initiative to reform the Federal Labor Law (FLL); this modification aims to set forth an obligation for employers to implement an action protocol to prevent gender-based discrimination and to manage violence and sexual harassment cases.
Although this type of conducts are considered in the FLL as a cause for rescission both for the employer and for the employee, with penalties for employers who incur, tolerate or allow them, around $18K pesos (US $1K) to $365K pesos (US $20K) approx., the reform aims to guarantee the existence of a mechanism to effectively protect the worker’s right to decent treatment and equality.
The Ministry of Labor and Social Welfare (MLSW) currently has a model attention protocol for workplace violence in order to promote the implementation by Mexican companies of policies and actions to detect and prevent this type of situations.
The MLSW proposes the creation of a commission incorporated by representatives of the company and the employees, with the main purposes of:
· Implementing the aforementioned protocol;
· Receiving, managing and solving complaints filed by employees related to workplace violence; and,
· Imposing the corresponding penalties to the employees in the work environment, which shall be set forth in the Internal Workplace Regulations effective for the company.
In order for the protocol to be an effective mechanism to counter these types of conducts within the workplace, it is recommended that such protocol sets forth, at least the following:
· Diagnostic processes allowing to determine the risk level of the company to determine the most appropriate preventive measures.
· Awareness and training actions promoting violence free workplaces, allowing workers to clearly identify if they are victims of such types of conducts, the instances to which they can resort and the steps to file a complaint.
· Mechanisms available for the workers to report these type of incidents.
· Processes to investigate the reported incidents.
· Guidelines to determine the penalties applicable to the workers incurring in such types of conducts.
Considering the approval of such reform is imminent and in order to guarantee compliance to it at the date of its publication and effectiveness, it is convenient that companies initiate the implementation of their compliance systems to prevent any penalty that may arise from an inspection visit of the MLSW.
It is worth mentioning that these systems do not only serve a compliance purpose, since them also bright forth multiple benefits for companies regarding prevention of operative, labor and legal risks.
It is known that denigrating practices in the workplace are one of the common causes of absenteeism, staff turnover and drop in performance. These situations have negative economic impact in companies, both in their costs and in their productivity.
The implementation of an effective compliance system allows ensuring a respectful behavior within the organization, creating a healthy workplace environment which helps to reduce such incidents and supports the capabilities of the human capital, enabling companies to meet their commercial and financial goals.
These systems also contribute to reduce the risks of exposure of companies to such claims on behalf of their workers, and also the contingencies and liabilities that may derive from them, whether under labor, civil or criminal law.
As I have already mentioned in my previous article, the most popular type of company set up in Poland is the Limited Liability Company (LLC). Many foreign investors choose this legal structure for its simplicity and low costs, and often – especially in the smaller ones – investors themselves wish to manage (or co-manage) the company, so they become members of the Management Board.
However, many of them do not pay due attention to legal consequences of such a decision and are not aware of the legal liability connected with this position. I am compelled to underline that many foreign clients invest in Poland in a form of an LLC being groundlessly convinced that the limited liability refers to the whole business in Poland and all the people involved in it. They think that, if something goes wrong and the business of a subsidiary fails, they can just close it, leave the debts behind and start somewhere else.
This is not the case: The members of the Management Board, indeed, could be forced to pay a high price for it. Let’s take a look at this topic.
According to the Polish company law the Management Board Members of an LLC are jointly and severally responsible for the debts of the company in case it does not satisfy its creditors.
Basically, in order to pursue a Member of the Management Board a creditor needs to sue the company first and initiate the enforcement proceedings. In case the enforcement proceedings turn out to be totally or partly ineffective for the lack of the company’s assets – this fact will be confirmed by the bailiff. On this basis the creditor is entitled to sue the member of the Management Board and demand all the amounts that the company didn’t pay to him/her as well as the interest and costs of the court proceedings, including the attorney’s fees. As you may imagine, the amount at stake is high.
How can a Member of the Management Board defend from the liability for the company’s debts? By proving one of the following:
- he/she filed for company’s bankruptcy in a due time;
- the court declared the restructuring proceedings towards the company in a due time,
- it is not his/her fault the non-filing for the bankruptcy or restructuring proceedings in a due time;
- the creditor did not incur damage due to the fact that the aforementioned procedures were not initiated in a due time.
The burden of proof shall lie with the Manager. In other words, if he/she needs to prove at least one of those circumstances, while the plaintiff only needs to prove the existence of an unpaid company’s debt.
Establishing the “due time” is a crucial point. It is considered appropriate to file for bankruptcy when:
- the company for 3 consecutive months has problems with invoices paying; or
- the company is indebted above the value of its assets for more than 2 years; or
Often an appalling event proving that the company is in serious trouble arises when the bank refused to continue the financing or worse, terminates the loan and no other bank is wishing to provide the company with the financing. .
By contrast, the restructuring may be initiated when the company is still in a relatively good condition: through an agreement with creditors for the deferment or reduction of some payments together with the implementation of certain business improvements, the restructuring agreement may bring the company back into business. Despite the restructuring being relatively expensive, it allows to maintain the company alive, overcome difficulties and get back into the game.
When it is too late or there is no good recovery plan, the only remaining solution is the liquidation of the company within the insolvency proceedings. However, also these proceedings provoke expenses: the insolvent company needs to have resources to finance the judicial fees, the accountants, the receiver’s fees, the attorney’s fees, the employee’s salaries and all other costs during the insolvency process.
If the company does not have enough assets, the court will not even open the insolvency proceedings and if, during the proceedings a shortage of funds arises, the proceedings will be closed.
If the demand for opening of the insolvency or restructuring proceedings is filed too late, the Manager cannot release himself/herself from the liability for the debts of the company and all the damages incurred by the company’s creditors as a result of a belated opening of the insolvency proceedings. As the damage is often equivalent of the unpaid debt, the creditors have two separate legal bases to sue the Management Board Members and get back from them the money they didn’t get from the company.
In extreme cases, when the negligence of the Management Board is truly gross and the damage caused to creditors due to the belated filing for bankruptcy is very high, the court may impose on the Management Board Members a prohibition of running enterprise and holding positions in enterprises.
My advice is to accept the position of Management Board Members with extreme caution and, when the first signs of corporate difficulty arise, to react immediately and contact a lawyer expert in the matter: not only for the company’s sake, but also to protect their own assets and interest.
多数原则是有限公司的一个关键方面, 当公司的股本平均分配给两个对立的股东(各占50%)时，多数原则就会陷入危机。在这个情况下，只有一致同意才能批准决策，这显然会导致僵局，使公司的管理陷入瘫痪。
股东之间的不可调和的分歧可导致公司解散。为了避免这种情况，公司已经设计了几种策略，其中之一就是所谓的“俄罗斯轮盘条款”。
在僵局情况下，股东可能同意采取俄罗斯轮盘条款，其条款的作用是重新分配股份，从而重新开始经营活动。
该条款规定:在某些触发事件发生时，两个股东之一（或两者，如果同意的话）有权决定其50%的股本价值。因此，他/她将另一位股东置于一个简单的选择之前:以他/她提议的价格购买“发行”股东的股份，或以相同的价格将他/她自己的股份出售给“发行”股东。
内部或外部:激活俄罗斯轮盘赌条款的人来决定价格和涨价是不允许的。价格的单方决定是由失去自己股份的风险来平衡的。其实，最终的选择取决于未确定价格的股东。
In all M&A operations one of the issues that deserves special attention as regards its analysis, ascertainment and negotiation is the tax liabilities. Even though the parties could agree on the amount of such contingencies, to negotiate the possible guarantees that the seller should grant in order to protect the buyer from a possible claim by the tax authorities, the term during which the guarantees should be in force, and to agree on the communication mechanisms between the parties (buyer and seller) and the legal defense strategies if such claim from the tax authorities arises, requires substantial negotiation efforts.
When the acquisition operation is formalized not through the purchase of shares, but through the purchase of the assets that form a business unit, the Spanish General Tax Law (“Ley General Tributaria” or “LGT”) provides a mechanism which implies an exception to the general principle provided by article 42 of the same law. Article 42 of LGT establishes the joint liability of the purchaser of a business unit for the tax liabilities of the selling company (“tax liability derived from company’s succession”). That is, in principle, according to article 42 of the LGT “the persons or entities that continue by any mean in the ownership or exercise of economic activities (the buyers) will be jointly liable with the previous owner for the tax liabilities derived from the exercise of such economic activities incurred by such previous owner”.
However, the joint tax liability of the buyer could be limited through the application before the tax authorities of the tax certificate regulated by article 175.2 of the LGT. This certificate should be applied for by the prospective buyer, with the authorization of the present owner (the seller), and, once issued, the tax liability of the buyer becomes limited to the debts, penalties and liabilities mentioned in the certificate. If the certificate is issued without mentioning any amount, or if the tax authorities do not issue it within a three months term from the application’s date, the applicant (the buyer) will be released from any tax liability derived from company’s succession.
The tax certificate for succession purposes includes the main taxes, as Value Added Tax and Corporate Income Tax, and can include as well debts derived from the withholding taxes on employees’ payroll, which in case of companies with a big number of employees could be of an outstanding amount. However, the buyer’s joint liability for salaries, related payroll amounts and social security contributions cannot be limited by such certificate, and such liability will always be joint with the business unit seller’s liability.
The application for the tax certificate should be filed before the acquisition of the business unit is completed, even if the issuance of the certificate takes place later tan the closing date (but of course, it is wiser to not close the acquisition before having the certificate). The certificate’s validity lasts for one year, as regards periodical tax obligations (for example, Value Added Tax, Corporate Income Tax and withholding taxes on salaries) and for three months as regards non periodical tax obligations.
It is very important to apply for the right tax certificate (“certificate for succession purposes according to article 175.2 of LGT”), and to not make a mistake and apply, for example, for the certificate regarding having fulfilled all tax obligations (“certificado de estar al corriente de las obligaciones fiscales”). Case law is plenty of judgments where a buyer applied for the wrong certificate, which showed no liabilities, and later on such buyer has been sentenced to pay the tax liabilities incurred by the previous owner of the business unit.
The purpose of this post is to provide information about (i) the need of Brazilian companies for providing the Country-by-Country Reporting pursuant to the OECD Rules, Action 13 of the Base Erosion and Profit Shifting Actions (“BEPS Actions”) and (ii) the need to disclose the name of the final beneficial owner of entities with equity participation in Brazilian companies, or owners of assets in Brazil.
Country-by-Country Reporting Regulation
Normative Instruction RFB No. 1681 (“IN 1681/2016”) established the rules for the Brazilian companies to be compliant with the Country-by-Country Reporting Regulation (“CbCR”). The CbCR shall be presented annually considering the financial results of the previous fiscal year, as part of the fiscal declaration (ECF, which includes the information related to the corporate tax income return). Such declaration should be filled in accordingly with the list of mandatory information determined by IN 1681/2016 and pursuant to RFB Normative Instruction No. 1,422, of December 19, 2013.
The CbCR is the result of the BEPS Project (Base Erosion and Profit Shifting) of the OECD’s initiative, contained in Action 13 of the BEPS Actions, aiming the enhancement of transparency while taking into consideration compliance costs.
Multinational groups are obliged to deliver the CbCR if consolidated revenues for the fiscal year preceding the tax year of the declaration are equal to or greater than BRL 2.26 billion (or 750 million Euros, or if the local currency of the final controller of the group is equivalent to the mentioned amounts, as of January 31, 2015).
The Brazilian subsidiary is (or may be considered) a substitute of the final controller and, as such, bound to fulfill the CbCR in the following cases:
- it is the final controller of the multinational group is not obliged to deliver the CbCR in its jurisdiction of residence;
- the jurisdiction where the ultimate controller is located has signed an international agreement with Brazil, however, still not ratified by the competent authorities before the deadline for delivering the CbCR; or
- there has been a systemic failure of the jurisdiction of residence of the final controller of the multinational group that has been notified by the Brazilian Federal Revenue Office to the resident entity for tax purposes in Brazil.
In case the Brazilian subsidiary is exempt from submitting the CbCR, it will still need to provide the identification and the jurisdiction of residence for tax purposes of its parent company.
The deadline for providing the information will be the date for completing the ECF, to expire on 30 July 2018 for the fiscal year 2017. Failure to comply will expose the Brazilian subsidiary to the payment of a penalty of BRL 1,500.00 (USD 410 or EUR 340) per month. Submission of an incomplete CbCR may subject the Brazilian subsidiary a fine of 3% over the value omitted, inaccurate or incomplete.
Need to disclose beneficial ownership and how to do it
Brazilian companies are obliged to provide information on the person authorized to represent them, on the respective chain of equity interest, until the individuals characterized as final beneficial owner.
This information shall be provided when a Non-Brazilian entity present its application to obtain the Federal Corporate Taxpayers’ Registry (“CNPJ”). If the Non-Brazilian entity already has a CNPJ, it must update the CNPJ with the beneficial owner information by 31 December 2018.
Obtaining a CNPJ is mandatory for Non-Brazilian entities that have equity participation in Brazilian companies or other assets – financial investments, real estate, airplanes, ships, among others in Brazil.
This obligation is in force by means of the Brazilian Federal Revenue Office Normative Instruction No. 1634 (“IN 1634/2016“). IN 1634/2016 contains a list of information to be provided and documents to be delivered for that purpose.
On October 25, 2017, the procedure became mandatory also for Brazilian entities after publication of the ADE COCAD (Executive Declaratory Act – Registration Management General Coordination) No. 9/2017.
Fail to comply with the procedure can result in suspension of the CNPJ. This suspension could result in inability to execute bank transactions, financial investments and obtaining loans and, ultimately, prevent the remittance of dividends to other countries or even the receipt of funds by means of a loan or capital injection from the respective parent companies abroad.
Such information is not protected under fiscal secrecy, but the public employees shall not disclose this information pursuant to functional obligation of not disclosing information unless if summoned by court order.
The requirement for presenting the information on the beneficial owner is already familiar for investors in Brazil. The Brazilian financial institutions are responsible for obtaining information of their client up until the beneficial owner, pursuant to Circular Letter No. 3.461/2009 of the Brazilian Central Bank. The information provided to financial institutions are subject to bank secrecy.
These Brazilian financial institutions are severe on the provision and updating on the foreign parent companies. It is usual for companies with foreign shareholders to receive notices and warnings of possible blocking or closing the accounts if the required documents are not presented in full.
The author of this article is Paulo Yamaguchi
Over the last year, the escalation of cryptocurrencies has aroused a number of issues and controversial debates for the lack of regulation in most jurisdictions, including Italy where the only regulation of the cryptocurrency phenomenon is set by the AML legislation. According to the Italian law, cryptocurrencies do not have legal tender status, the regulators have qualified cryptocurrencies as means of exchange different from e-money, which, however, can be converted into Euro for purchasing virtual currency as for selling such currency; moreover, they can be used to buy both virtual and real goods and services. As a matter of fact, the lack of regulation concerning cryptocurrencies as a form of currency and a financial instrument does not prevent the trade and use of cryptocurrencies not only as means of payment but also as contribution to fund the share capital of limited liability companies.
On July, 18th, the Court of Brescia has denied the validity of a resolution increasing the share capital of a limited liability company subscribed for by certain utility tokens because the relevant contribution (equal to Euro 714,000) didn’t comply with Article 2464 of the Civil Code. The Court has not banned the contribution of cryptocurrencies but based on that case it has remarked the criteria governing contributions in kind which were not met for the subscription of the increase of share capital as resolved by the company; giving that, and starting from this assumption, it is possible to highlight criteria requested by the Italian law to contribute cryptocurrencies into share capital.
Any (tangible and intangible) asset can be contributed into the share capital of joint-stock companies (S.p.A.) and limited liability companies (S.r.l.) to the extent that they have an indisputable economic value (as proved by a sworn appraisal from an expert who issues the relevant report) and a potential market where they can be exchanged and/or converted into cash. The report must be focused on the description of the contributed assets, the reference of the adopted criteria of evaluation, and the certification that their value is, at least, equal to the one assigned at the moment of the subscription of the capital and of the premium, if any. As a matter of fact, the function of the share capital is to guarantee the creditors in relation to the company liabilities, as a consequence it is mandatory that the economic value of the share capital must be indisputable and in compliance with the law, especially when including cryptocurrencies or digital assets.
Moving on the case, the cryptocurrencies contributed were issued by a company based in Bulgaria, they were utility tokens used as mean of payment for buying goods and services on a web platform, owned by the issuers of these digital assets. Hence these tokens were not traded in any exchange platform where it is possible to fix an indisputable exchange rate and then the relevant economic value. Indeed, the Court has reasoned the direct proportion between the value of the contribution into the equity and the existence of exchanges where the value of the cryptocurrency would have been set. Moreover, the Court has stated the lack of enforceability of the tokens contributed. Under the practical side, the contribution of cryptocurrencies has to be made by reporting the private key from the contributor to the company, giving that the enforceability of cryptocurrencies by a pledge can be done subject to the collaboration and the consent of the contributor who has to disclose the private key; should the contributor refuse to disclose the private key, the enforceability of the pledge on the tokens would be undermined.
To sum up, in theory the contribution of cryptocurrencies into equity is not forbidden under the Italian law, however giving its questionable nature, it is still controversial how to guarantee the compliance with the mandatory requirements for the contribution in kind.
This case history and the order of the Court of Brescia give us the opportunity to provide the Italian picture on cryptocurrencies.
The Italian crypto-scenario is quite effervescent since the beginning of 2017; indeed, Italy was the first European country to define the virtual currency and the exchanger according to the new AML legislation. This is not strange considering that the anonymity surrounding cryptocurrencies, which varies from complete anonymity to pseudo-anonymity, prevents cryptocurrency transactions from being adequately monitored, allowing shady transactions to occur outside of the regulatory perimeter and criminal organisations to use cryptocurrencies to obtain easy access to “clean cash”. Anonymity is also the major issue when it comes to tax evasion.
The AML Law
Legislative Decree no. 90 of May 25th 2017, which reformed legislative decree no. 231/2007, introduced definitions of exchanges and virtual currencies and provided a set of rules for the exchanges to comply with the anti-money laundering rules.
Virtual currency means “a digital representation of value that is neither issued by a central bank or a public authority, nor attached to a legally established fiat currency, which can be used as a means of exchange for the purchase of goods and services and transferred, stored and traded electronically.” Virtual currencies within the scope of AMLD5 and of the Italian AML Law are those that can be transferred, stored and traded electronically. Until now, other virtual currency schemes are not in scope, including virtual currencies used to attain goods and services without requiring exchange into legal tender or similar instruments, or the use of a custodian wallet provider.
Exchanges are defined as virtual service providers: “any natural or legal person providing professional services to third parties for the use, the exchange, the related storage of virtual currencies and for the conversion from or in currencies having legal tender [.]” Given this scope, they are subject to anti-money laundering regulations and, therefore, they have to obtain a sort of licence and be listed in a special register to operate in Italy. Considering this definition, it seems that a material number of key players are not included in AML law, for example miners and pure cryptocurrency exchanges that are not custodian wallet providers, hardware and software wallet providers, trading platforms and coin offerors. This choice of the legislator leaves blind spots in the fight against money laundering, terrorist financing and tax evasion. However, a decree of the Ministry of Economy and Finance (MEF) is under discussion, which seeks to extend the monitoring not only to exchanges but also to those subjects that accept cryptocurrencies for the sale of services and goods.
As said, apart from the AML Law, there is a lack of regulation which undermines the grade of protection of users and investors.
The protection of users/investors
One of the issues which prevents or undermines the grade of the protection is that crypto markets and crypto players can be located in jurisdictions that do not have effective money laundering and terrorist financing controls in place or do not have any regulation for their offering to the investors. Moreover, against the risk of default of the platform or the exchanges there is very little to do to protect investors especially at a cross-border level.
The protection of users/investors depends on several factors, the first one being the nature of the cryptocurrencies in question and the crypto-platforms (i.e. what they are, where they are based and whether they are compliant with the Italian law).
The nature of the cryptocurrencies has to be identified on a case-by-case basis. If qualified as securities (standard financial products which are transferable and generate profits), the prospectus rules should apply, this meaning that a prospectus is required under the Consolidated Financial Law (“Testo Unico Finanza” or “TUF”) to disclose significant financial risks to investors. If they are a hybrid made up of a means of payment and an investment component, the application of the TUF provisions is controversial.
From a criminal perspective, users/investors can be protected in case of fraud irrespective of the above factors. The general remedies under the criminal law apply.
The landmarks for investors’ protection are:
- The AML Law defining the subjects obliged to declare their activities in the cryptocurrencies world (e. the custodian wallet providers and the virtual currency exchanges);
- The TUF rules, inter alia, the prospectus regulation; and
- The Consumers’ Code rules the mandatory provisions on the “form and pre-contractual information”.
The common ground of civil actions is the disclosure of pre-contractual information to investors and the compliance of crypto-platforms and exchanges with the Italian law.
Civil actions might be brought against platforms:
- Pursuant to Articles 50 and 67 of the Consumers’ Code, according to which any contract must provide consumers with mandatory “pre-contractual information”.
- Pursuant to Article 23 of the TUF, according to which any contract providing investment services must be in writing and “failure to comply with the prescribed form shall render the contract null and void”.
In 2017, the Court of Verona declared a contract null and void because of its breach of the mandatory provisions on the “form and pre-contractual information” and ordered the refund of the money to the consumer. From the consumers’ perspective, all the information about the nature, the risks and the features of any cryptocurrency must be provided in advance to individuals in a transparent manner. As a matter of fact, the Court of Verona has reasoned that any online agreement between parties, implying the exchange of real money for virtual money, represents a financial service or rather “a paid service.” The Court judged that the contract between the exchange and the Italian consumer was null and void, as the IT service firm breached the obligations set forth by Articles 50 on “distance contracts” and 67 of the Consumers’ Code, which provide as mandatory the “form and pre-contractual information” to be provided to consumers. Lastly, the Court ordered to return to the Italian plaintiff the amount invested in cryptocurrencies.
For the sake of completeness, the consumers’ protection has been achieved also by the Italian Antitrust Authority (i.e. the non-governmental organization focused on consumer protection), which stopped the operations of several affiliates of OneCoin, the digital currency investment scheme widely accused of fraud.
In 2017, Consob (National Authority for the Stock Exchange) banned the advertisement and then the offer of investment portfolios containing cryptocurrencies, made in breach of the prospectus regulation.
Pursuant to Article 101, Par. 4, Part c) of the TUF, Consob has prohibited the advertising – via the website www.coinspace1.com – of the public offer for ‘cryptocurrency extraction packages’ launched by Coinspace Ltd (Resolution no. 19968 of April 20th 2017). The offer had already been the subject of a precautionary 90-day suspension. Moreover, on December 6th, 2017, pursuant to resolution no. 20207, under Article 99, paragraph 1, letter d) of the TUF, Consob banned the offer to the Italian public of “investment portfolios” carried out without the required authorizations by Cryp Trade Capital through the website https://cryp.trade. A few months later, in March 2018, the website https://cryp.trade was subjected to precautionary seizure by the Criminal Court of Rome pursuant to Article 166 of the TUF (a criminal provision which punishes those who carry out financial services and activities without Consob’s authorization). The common ground of these resolutions issued by Consob is the absolute lack of the mandatory information and prospectus set forth by the TUF for entities providing financial services to Italian investors trading in cryptocurrencies and cryptocurrency-related products. Given the application of the TUF, pursuant to Article 23, any contracts for the provision of investment services must be in writing and “failure to comply with the prescribed form shall render the contract null and void”.
Both resolutions have remarked how the Italian versions of the websites were the evidence that those offers were targeted to the Italian market, therefore Consob has set the criteria to identify the territoriality of the crypto-platforms subject to the Italian law which is: “where the cryptocurrencies are intended to be offered to the public”.
To complete this overview, some highlights follow on ICOs and the tax regime of cryptocurrencies in Italy.
ICOs
Initial Coin Offerings (ICOs) are not regulated by the Italian law. In ICOs the funding collected by a start-up could also be exchanged for an equity token (very similar to securities and then embodying an interest in the issuing start-up) or a utility token, which entitles the holder to exchange it for goods or services provided by the same start-up.
ICOs are very controversial (even if not yet officially banned by Consob), as they issue equity tokens that, due to their similarity to securities, can be offered to the public of investors only by entities duly authorized by the regulators, according to the TUF. As far as utility tokens, in theory their issuance might be allowed subject to a strict set of contractual rules, in order to protect investors as much as possible. However, the ICOs market has not taken off, yet.
The tax regime
For Italian tax purposes, the taxation of cryptocurrencies is not regulated by Law. Nonetheless, the Italian Revenue Agency issued a Ruling in May 2018 providing that gains on virtual currency for individuals trading outside a business activity are treated as gains arising from the disposal of traditional foreign currency. Consequently, gains relating to forward sale are always taxable, rather gains relating to forward sale are taxable only to the extent that, during the tax period, the average amount of the overall virtual currency maintained by the taxpayer exceeds the equivalent of EUR 51,645.69 for seven days in a row (the exchange rate to use is the one given by the website where the individual carried out the transaction). Any gain is therefore subject to 26% withholding tax. Additionally, the taxpayer must comply with the tax monitoring duties in the Individual Tax Return though he is not exempted from wealth tax (IVAFE), to the extent that virtual currency is not held through institutions or other authorized intermediaries by the Bank of Italy.
The same regulatory uncertainty put on the taxation of corporations trading in virtual currency. In a Ruling issued in September 2018, the authorities submitted that exchanges of bitcoins for legal currency constitute, for income tax purposes, a taxable event subject to Ires (24%) and Irap (3.9%).
For indirect tax purposes, the authorities confirmed that trading in bitcoins and other virtual currencies is similar to the activity of an intermediary negotiating in financial instruments, and, as a consequence, it is exempt from VAT under the Italian provision implementing article 135(1)(e) of the VAT Directive (2006/112). Therefore, when bitcoins are exchanged for real currencies, no VAT is due on the value of the bitcoins themselves.
The author of this post is Milena Prisco.