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M & A Regulatory and Tax Changes

Regulatory and tax changes worldwide are increasingly affecting M&A opportunities and the ability of companies to get deals done. More and more the various tax changes are affecting cross-border deals.

CROSS-BORDER DEALS: Brazil and other emerging market countries have made tax changes to attract more foreign direct investment. However, China is imposing more restrictions on M&A with a new, inflexible anti-trust law. The US is under growing political pressure to keep Chinese and other foreign countries out of certain industries, such as telecommunications and energy.

TAX CONSIDERATIONS: Corporate boards are examining the tax implications of proposed mergers more carefully. Deals are more frequently needing to include special provisions that take into account the specific circumstances of each deal.

HARMONIZATION: The European Union's Takeover Directive was designed to create a pan-European takeover code patterned on the UK system. Still, more progress is needed in areas such as takeover defenses and mandatory bids. The European Commission is seeking comment on a proposal to simplify administrative procedures in M&A. The European system remains fragmented and is quite different from the US disclosure-based system.

FINANCIAL SERVICES: In the wake of the global financial crisis, the financial services industry faces a host of new regulations. The need to meet new capital requirements has reduced large-scale mergers. More spinoffs and sales of non-core businesses are likely. Volcker rule restrictions are forcing banks to dispose of proprietary trading and hedge-fund operations.

Increasingly companies are asking us to help them to recruit compliance and tax experts to stay on top of these subjects. If you need further help and advice please send us an email at info@asianetconsultants.com

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