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The Financial Services Reform Act 2001 (FSR Act) and consequential legislation was passed by the Federal Parliament, and received Royal Assent on September 27 2001. The start date for the FSR Act has been pushed back from October 1 2001 to March 11 2002 following consultation with key companies and industry associations from the financial services sector. A two-year transitional period will apply to licensing and disclosure provisions for existing participants.

In order to meet the objectives of the Financial Services Action Plan, on March 27 2001 the European Commission introduced a proposal for a Directive on financial collateral arrangements. The Belgian presidency wishes the definitive text to be put on paper by the end of 2001.

A recent study (October 2001) of takeover bids for Canadian targets has produced some interesting results. The survey looked at 75 announced bids since Justice Blair gave judicial approval for the use of breakup fees (also known as break fees) as bid inducements in the contest for WIC Western International Communications in early 1998.

In a significant liberalization of the currency laws, Russia has abolished the licensing requirement for foreign currency loans with terms of over 180 days. This dramatic new change appeared in Central Bank Regulation No.1030-U, dated September 10 2001, and became effective on October 1. The new regime substantially simplifies the ability of Russian corporate borrowers to attract and repay hard currency loans from non-resident banks and companies for terms of over 180 days (long-term currency loans). Previously, such loans required individual licences from the Central Bank, and this requirement often delayed cross-border financings.

The Product Liability Act (PLA) is expected to come into force in July 2002. However, a recent court ruling should alert consumer product manufacturers and distributors in Korea about product liability risks even before the PLA comes into force. The case concerned a tort claim for injuries from a sudden acceleration incident involving an automatic transmission automobile. The burden of proof on the alleged defect of the automobile in this case was shifted to the manufacturer, for the reason that the manufacturer has more detailed technical knowledge while the consumer is not expected to have the high level technology to test such product and would purely rely on the manufacturer. Until last year, in several similar reported cases, courts had ruled that the burden is on the claimants to prove alleged defects on the products.

The Australian Stock Exchange (ASX) is proposing to amend the provisions in its listing rules related to foreign exempt companies. The advantage of foreign exempt status is that companies that satisfy the requirements are not subject to most of the ASX's listing rules. The proposed changes will dramatically raise the threshold for admission into the foreign exempt category. This will have serious consequences for a number of New Zealand companies that are already listed on the ASX as foreign exempt.

The most recent developments at SAir Group and Switzerland's flag carrier SAirLines (Swissair) merit a short outline of the formal proceedings regarding moratorium and composition agreement under Swiss Debt Collection and Insolvency Law. The following three steps are to be distinguished:

On October 3 2001 Standard & Poor's raised the Republic of Ireland's long term sovereign credit rating from AA+ to AAA. Ireland is now one of only six EU countries to have a AAA rating, the others being Austria, France, Germany, Luxembourg and The Netherlands. Although, in comparison with other EU countries, Ireland has a small economy, the diversity and stability of the economy is reflected in this new rating.

A new Financial Markets Control Act (Finanzmarktaufsichtsgesetz) establishes a financial regulator with comprehensive competence, supervising all types of banks, insurance companies, and other financial services companies. The idea of having the concentration within one authority is primarily motivated by the international trend towards all-finance groups. It also looks to the potential synergies to be realized by consolidating separate supervisory authorities for the various branches of financial services in Austria. The new authority will have the status of an independent agency.

Davis Polk puts JP Morgan loan in the picture