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New Monaco Law includes Restrictions on Solicitation for Financial Products

Financial entities not licensed in Monaco that are currently servicing Monaco clients are recommended to conduct a review of how they service and approach their Monaco client base.

Monaco law on financial activities has recently been modified by Law 1.515 dated 23 December 2021 which was published in the Monaco legal gazette on 7 January 2022. One of the main changes is the introduction of a general prohibition for entities not duly licensed in Monaco to conduct solicitation for financial services and products even on a cross-border basis.

Initially, the draft bill contained restrictions on cross-border solicitation from non-licensed entities that were limited to natural persons acting outside the scope of their financial activities.

At a late stage in the legislative process, this reference to “natural persons acting outside the scope of their financial activities” was deleted and the prohibition to solicit now applies irrespective of the category of investors.

Such prohibition is supplemented with criminal sanctions (potential fines and jail sentences).

The broad scope of this new prohibition and the absence of any of the habitual exemptions (e.g. private placement, offer reserved to institutional and professional investors, etc.) carries its load of legal uncertainty. This situation is detrimental to the local private banking sector which rely on offshore issuers of financial products to service their local client base.

We have received a significant number of queries from global financial institutions servicing Monaco players of the private banking and asset management sectors, including external asset managers to ascertain the risk level in relation to this new unfavourable legal framework.

For entities not licensed in Monaco that are currently servicing Monaco clients, we recommend to conduct a review of how they service and approach their Monaco client base to ascertain whether any adjustments are necessary.

Our Firm has a strong expertise in providing legal and regulatory assistance in relation to financial activities and is regularly involved in structuring cross-border and local activities in compliance with Monaco law.

Incompetence of The French Judicial Tribunal

This article establishes a new derogatory scheme creating a possibility to challenge the competence of the judicial tribunal. The judicial tribunal was recently created with the merger of the TGI and the TI, such jurisdictions dealing with civil matters. Due to the coronavirus Covid-19 sanitary crisis, legal practitioners did not really have the time to test this new regime.

As a general rule, an incompetence exception has to be raised in limine litis, that is to say, at the first hearing, before any discussions on the ground of the case, and by way of principle, before the same judge ruling on the case. On the contrary, and by way of derogation, the new scheme sets up a possibility to raise an incompetence exception, before the first hearing, either the parties or the judge raising it. If trigged, the parties or their lawyers are informed right away by any means giving fixed date. In this perspective, the file is transmitted to the registry of the judicial tribunal, which in turn, transfers the case to a designated judge.

The competence of this newly appointed judge may also be challenged, by him or the parties, during a period of 3 months, by the transfer of the case to the President of the judicial tribunal. According to the new regulation, the President of the judicial tribunal has to transfer the case to a new appointed judge, and such a decision cannot be challenged. However, the competence of this new appointed judge may be challenged before this new judge by the parties, and the decision ruling on the competence may be appealed within a period of 15 days, as of the date of the notification of the decision.

The President of the judicial tribunal appears to be the keystone of the scheme, which is in line with the role usually attributed to him, as already in charge for example of summary proceedings. The fixed date and the 3 months timeframe appear to be crucial, and purport to avoid endless discussions on the competence.

However, and surprisingly, this new scheme creates a very sophisticated legal architecture, not to mention the potential right to call the case before the French Cour de cassation. In such a context, these new rules may unfortunately be used to artificially challenge a procedure and lengthen it. An author has recently described this mechanism as a potential Trojan Horse, allowing dilatory procedures.

This remains true to a certain extent, as this new Article 82-1 has been introduced in a context where, on the contrary, a lot of other procedural rules are aimed at streamlining the procedure e.g. concentration of the legal means, estoppel or prohibition of dilatory procedures.

In a constant movement, the French Cour de cassation draws the outlines of the concentration of the legal means principle. The French Cour de cassation, recently stated that the plaintiff, before any ruling on the case, has to expose all the legal means considered as the ground for the claim. This means that, in a same instance, an overruled legal claim cannot be raised again in connection with another ground based on the same object, as the one on which the tribunal has already definitely stated. According to this case law, the rule of the concentration of the legal means, uses the same underpinned concept as the fin de non-recevoir, but is not an exception procedure as rather deals with the ground of the case.

It remains to be seen however how this case law and all the case law hereof, will be used by legal practitioners to limit the import of this new Article 82-1. In this perspective, it is reasonable to think that they may wish to use the concentration of the legal means principle, also in connection with procedure exceptions, such as incompetence.

In addition, the estoppel theorie, albeit originally English law concept, is now part of the French legal system. In a considerably important decision, the French Cour de cassation, recognised and introduced into French law, this Anglo-Saxon concept and considers it as a fin de non-recevoir. In this respect, the French Cour de cassation has stated that actions of the same nature based on the same conventions, opposing the same parties may give rise to a sanction, provided that a party kept contradicting itself, at the expenses of others. More specifically, the French Cour de cassation, Civ. 2, dated 15 March 2018 reiterated this position, ruling that « the principle according to which no one may contradict itself at the expenses of others, sanctions the procedural attitude consisting, for a party, during a same instance, to adopt contrary or incompatible positions leading the adversary in error as to its intentions ». Thus, it is reasonable to think that legal practitioners will use, inter alia, the estoppel theory to limit the possibility to use incompetence exceptions. In addition, even if the contradiction may occur in the same instance, it cannot be excluded that a judge may wish to streamline the procedure and prevent a party from utilising incompetence exceptions several times, in a same context.

A judge would also have the possibility to use article 32-1 of the French Code de procédure civile, which states that a person acting in justice in a dilatory manner may be convicted to a civil fine up to 3.000 euros, without prejudice of damages that would be claimed. In that event, the amount related to the civil fine is paid to the French Trésor Public.

To remain in the real trend of the procedure regulation, i.e. constant equilibrium between defence rights and efficiency of the legal system, judges and legal practitioners are in the position to put forward a strict construction of Article 82-1 of the French Code de procédure civile. Constructions rules are clear in this respect: exceptions or derogations have to be interpreted strictly, and the scheme created is created by way of exception.

This means that each time a lawyer would invoke a competence exception on the basis of this new Article 82-1, the judge would have to conduct a teleological construction, in the view of maintaining a sufficient level of efficiency of the procedure, especially in a context where ECHR already imposes an effective recourse in every steps of the procedure and numerous litigations deal with international matters, allowing the parties to raise incompetence exceptions, also on the ground of judicial international private law.

New Laws Introduced in Dubai to Support Business

New laws mean any law which becomes operative or effective subsequent to the Effective Date and shall include any City laws, ordinances, resolutions, rules or regulations. This is a key event set to take place in Dubai and will be a major focal point of the agenda of most corporations doing business in the emirate or looking to do business in it.

The emirate remains a main attraction for foreign investments especially the ones looking to benefit from its location, business, and legal environment and world-class infrastructure, to access the region. This was further validated by the United Arab Emirates’ ranking in the ease of doing business, where it was positioned 11th, according to the World Bank annual ratings in 2019.

This accomplishment is a reflection of the government’s ongoing work to promote a business environment that is diverse and sustainable.

A number of efforts have been made to diversify away from dependence on oil, creating a very strong services sector – one that fosters a competitive business environment. A major aspect of such an environment is a supportive and effective legal framework for businesses, on par with international standards, hence the recent changes and additions in UAE’s regulatory and corporate sector.

Among major changes that are expected to push the growth and progress of the local economy in Dubai are the implementation of UAE Federal Law No 19 of 2018 on foreign direct investment and the subsequent positive list of activities issued by the UAE Cabinet.

The FDI Law now allows up to 100% foreign ownership in more than 122 economic activities across 13 sectors including, transport and storage, agriculture, space, manufacturing industry, renewable energy, hospitality and food services, among others.

These sectors will offer new economic opportunities for international investors to explore in the UAE, particularly for projects involving e-commerce logistics, research laboratories, advancement in biotechnology, logistics and supply chain, production of solar panels, hybrid powerplants and green technology.

The refreshed list of privileges for companies established under the new FDI Law are extensive and includes treatment as local companies, as well as the removal of restrictions on repatriation of profits and any proceeds from liquidation or sale of a business.

Employees of FDI companies can now transfer their salaries, indemnities and entitlements outside the UAE. In addition, FDI companies are guaranteed the confidentiality of technical, economic, financial information, including investment initiatives. There are now no restrictions on the sale of a business, admission of new shareholders or change of legal form and structure.

In addition to the FDI Law, the UAE published two major laws in 2016 that will have a direct impact on the creation of a comprehensive legal and regulatory regime for the operations of corporations. These include the UAE Federal Law No. 9 of 2016 on bankruptcy and UAE Federal Law No. 20 of 2016 on the pledge of movable assets as a guarantee for debts.

The Bankruptcy Law deals mainly with the various structures for bankruptcy and liquidation of assets for distressed corporations, including restructuring and composition procedures.

Meanwhile, the Law on Pledge of Movable Assets allows the pledge of certain movable assets by corporations and the establishment of a special register to handle the registration of such pledges in favour of third parties. This law, in particular, is of extreme importance as it gives a lot of flexibility to corporations and allows them to secure proper funds while guaranteeing the financing parties’ rights.

Further and in November 2019, the UAE Cabinet passed a new Federal law No 19 of 2019 on Insolvency of Natural Persons that applies to debtors that are not subject to the Bankruptcy Law.

This new law applies to individuals who are in default of payment or facing difficulties in meeting their financial obligations. it is expected that the Insolvency Law will increase transparency in the dealings between financial institutions and individuals and address situations of defaults in a way that will enable all parties to safeguard their rights.

All of the above laws combined have created an overall framework to regulate the environment under which companies in the United Arab Emirates are operating and have considerably elevated the maturity and complexity of commercial transactions, as well as prospects of new and innovative investments.

This will also complement the efforts that are being pursued on other fronts, such as the development of world-class regulations for the protection of intellectual property rights, fighting cybercrime, promoting fintech initiatives and reinforcing the partnership between free zones and local authorities.

New Dubai RERA Law Issued

His Highness Sheikh Mohammed bin Rashid Al Maktoum, in his capacity as the Ruler of Dubai, earlier this week issued the Dubai law No. of 2019 pertaining to the Real Estate Regulatory Agency initially established by law No. of 2007 as predominantly the regulatory arm of the Dubai Land Department.

The New Law provides for a reorganisation of RERA’s legal capabilities and capacities and defines a set of important objectives for RERA, including the contribution to the advancement of the real estate sector through an integrated system of regulatory and control measures which shall enhance its role in the overall economic development of Dubai, provide an assuring and supportive environment for the real estate development projects to safeguard the rights of both real estate developers and investors, keep pace with the steady growth of the real estate sector and all related activities, enhance the role of United Arab Emirates nationals in this sector and implement programs that will enable them to participate in real estate activities, as well as to develop the codes of principles and ethics required for practicing real estate activities.

The New Law confirms that RERA will continue to exercise certain powers established under the previous law, including the organisation and supervision of real estate development escrow accounts, approving qualified banking and financial institutions to manage these accounts, and the adoption of rules governing practitioners of the real estate development activity, the sale and rental of real estate, real estate brokers, real estate assessment and joint ownership of real estate property.

The New Law came with a number of key modifications and additions to RERA’s functions and specialties broadening thereby its scope of authority over real estate activities in the Emirate. The newly introduced powers include that RERA shall now be responsible for organising and licensing real estate activities and supervising the practitioners of these activities in order to ensure their compliance with the laws and regulation governing the real estate sector.

RERA will also be responsible for the supervision and inspection of the management, operation and maintenance of joint real estate properties, proposing the necessary legislations to regulate the work of real estate practitioners, and issuing the necessary regulations for the training and qualification of employees in the organisations licensed to practice real estate activities through the Dubai Real Estate Institute, in addition to the registration and issuance of identification cards to practitioners of real estate industry.

More Than 30 New Tennessee Laws Set to Take Effect

New Law means any law which becomes operative or effective subsequent to the Effective Date and shall include any City laws, ordinances, resolutions, rules or regulations.

More than 30 new laws in Tennessee are set to go into effect next year with most beginning on New Year’s Day.

Tennessee is a landlocked state in the United States South. Its capital, centrally located Nashville, is the heart of the country-music scene, with the long-running Grand Ole Opry, the Country Music Hall of Fame and Museum and a legendary stretch of honky-tonks and dance halls. 

One of the laws talks about immigration, specifically sanctuary policies. Starting January 1, state and local governments will not be allowed to adopt sanctuary policies or any similar measures.

Another new law deals with abortions. At the start of the year, ultrasounds will be required prior to getting an abortion. The person giving the ultrasound will also offer opportunities to learn the results.

That will be required if a heartbeat was detected.

Next year will also see an increase to the minimum property damage threshold for motor vehicle accidents to require a written report with the department of safety.

The threshold increased $400 to a $1500. It’s a hundred dollars more if cases include local or state government property.

A new law will connect Tennessee to the Interstate Medical License Compact, a nationwide streamlined process for physician licensing. This will help give people more access to patient care.

The compact makes it easier to license across state lines without federal regulations. Over 20 states are part of the compact.