G u n P i e r o C i g i i ' i i f i C o u n s e l j at the E u r o p e a n Bank for ReconsEruction a n d D e v e l o p m e n t ,
E m a i h cignagi^ebrd.com
major ^hortcomfngs in [he Legislation - 5 «
stockeKchangeinrhecounttyr Some stare
chart 1 0 - i s 4 k c k of provisions concerning
investment funds we re created to accumulate
has attained good quality standards, while in
theprotection of mjnorjiy shareholders,
and reinvest hard currency for the state
Central A s i a a n d i n the Balkans much work
the d isclo&u re of qual i hed share lioldi ng a n d
strategic s e c t o r s - o i l a n d g a s industry and
needs to he done.
collective iJivestmenr schemes. W h i l e there
mineral resources - but these funds are
appear lo be no professional accouncingftrms
not permitted to issue securities for public
enough. Ihe legal foundationsof sound
in the couHEryn there are Lws regulating
distribution, I h e E B R D assessment revealed
financial systems require good laws supported
accounting ajid bookkeeping activiiiea,
a framework in urgent need of reform in all
by institutions able to ensure their etffclivene^.
akhough accounting standatH^ lack specifjciiy
sections under consideration - see chart 11
Several transition countries have refotmedj or
and there is no owrseeing body.
below - the only exception being 'Accounting
are considering reforming, the Scope of their
and Auditing' where the country achieved
market regulators. It is too early toaases^
T h e regulation of collective investment
scheiises is not yet contemplated by lawr
medium compliance, having provided for some
Siniilarlyn anti-money Ijimderiiig legislation
regulation in the 1996 Law'on Accounting in
and rules addtessing Financial instruments
legislation in Central a n d Eastetn Europe
But drafting good legislation isju^t not
whether this trend is heading in the right
direction but it is likely t o he here wh^re the
future challenges of securities markets lie.
and investment service providers arc almost
Tiblt 2 loiiinued ifi^r the page
T h e situation Is similar in TurbiftfnubJH,
A s an international iinancial institution
where the Ministry of Economy a n d Finance
with a m a n d a t e to assist the countries of
In order ro elintinare rhe probJein of
iinenferccability of derivarive&caiirtact&
i s m charge ol securities issuance and olFering,
C e n t r a ! and Eastern Europe a n d the C.iS
under Ru&&ian Law bed^use of the'gambling
change of control transactions^ securities
in their transition to market economies,
provtsiom' ineludcd rnclie Russian CLVU
niarketand brokerage and dealing activities.
t h e EBRLJ attaches great importance to the
C^ade, on 26Janiijry 2007 the federal law'On
Tlje 1993 Law on Securities and Stock
modernisation of the financial instirutionS
jmendment [u Jc( 1062of Pdrr II
Hxchangesoutlines the main principles of
and markets in the region. Liquid capital
ot'rhe Civil Code of the Russijn Fcderjcion'
privatesecuriries issuance and circulation
matkels foslet savings and investment which,
WAK enacted. However, Jtvhis moment in time,
j n d a d d r e s s e s basic provisions on stock
in t u r n , drives development a n d g t o w t h of the
thcliw does not seem to H>[veih< ptobJrm
ejtchangcoperations, but this is true only on
private sectors-
complciely ^nd it isdijhcult to predict how it
papet as there appears to be no functioning
The E B R D assessment shows that
will be Implemented.
Hague v Nam Tai Elettfonks Inc and others [2006] All ER (0) 280 (Nov) (Privy Council)
W h e t h e r a c o m p a n y w h i c h is t h e subject of share security could
power to redeem any of its shares held by j u d g m e n t debtt>rs ^ f t h e
a m e n d a n d exercise powers u n d e r its a t t i c l e s to prohibit a b a n k
company, N T E gave T A notice of a resolution ro r e d e e m N T E
from perfecting its security.
s h a r e s r e g i s r e r e d i n T A ' s n a m e to satisfy t h e d e b t - N T E p u r p o r t e d
ro cancel t h e r e d e e m e d s h a r e s a n d t o treat t h e r e d e m p t i o n price as
set oEt against the debt.
I A charged its s h a t e s i n N T S to a b a n k Jti s u p p o r t of a g u a r a n t e e
TA h a d given to cbe b a n k in relation ro the r e p a y m e n t of
advances m a d e by t h e b a n k t o TAL* a s u b s i d i a r y of N T E . O n t h e
R e d e m p t i o n h a d been m a d e for the p u r p o s e s of a set-offagainsc
s a m e d d y , a g o v e r n m e n t agency o b t a i n e d a.Judgment against T A
a j u d g m e n t debt. Since s u c h a r e d e m p t i o n a g a i n s t an insolvent
in t h e B V ! H i g h C o u r t ,
c o m p a n y was impossible, t h e articles could n o t b e used in t h i s
T A L subsequently def^uhcd on its p a y m e n t s t o the bank. "ITie
b a n k called T A on its g u a r a n t e e . N T K then took an a s s i g n m e n t
Alteration t o t h e atticles was etfective only against a solvent
of t h e j u d g m e n t debt. Thereafter N T E presented a w i n d i n g u p
s h a r e b o l d e r - a t l e a s t i f t h e a h a r e s w e r e n o t subject t o a p r i o r
petition against T A . Both t h e b a n k a n d N T K were therefore
charge which left no equity against which set-off could o p e r a t e .
creditots of T A , T h e bank held security over TA's shares in N T E .
N T E was u n s e c u t e d .
N T E a l c e r e d i t s articles ofassociation t o create a special
February 2007
Rectification was che natural remedy - the shares had been
wrongfully cancelled a n d should be given back, fhe b a n k was
entitled to perfect its security^
Butleiwofths Jaufnal of internalfanai Banking and Financial law