2 International Hot Topics New Laws and Opportunities Around the World Janet Cooper Partner Linklaters & Alliance San Francisco, CA 5/6 November 2001

3 Going Global - Mission Impossible

4 Going Global - Mission Impossible Plan your launch Planning the launch Preparing for the launch Hot topics latest news countries to watch

5 Planning the launch Who are you going to go with - get your crew together HR, Company Secretarial, Legal, Treasury Legal advisers, software and administration, communication designers, benefit consultants

6 Planning the launch What vehicle will you use: Options Free Shares Share Purchases Cash awards Derivative based incentives Other? Depends on objectives budget What’s permitted }

7 Preparing for the launch Need to know: timeframe cost what decisions need to be made what information is needed what internal consents/checks what external consents/checks

8 Preparing for the launch Get the instruction manual!

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11 Preparing for the launch Any instruction manual - check it out useful manageable correct readily available covers your countries good value

12 Preparing for the launch Get the Health check

13 Preparing for the launch Financially and Legally Undeveloped Countries No prohibitions on share offerings General prohibition on public offers General exemptions Specific exemption

14 Legal Risk Legal requirements Comply Risk Analysis likelihood of enforcement penalties

15 Hot Topics Latest news Countries to watch

16 Hot Topics - Latest News India - trying to encourage Liberalisation Exchange controls - employees can remit up to $20,000 (to rise to $100,000) Favourable tax - exempt gains made on exercise and sale of options/shares BUT limited to options granted to employees of issuing companies

17 Hot Topics - Latest News Korea - the good and the worrisome The good - no filings options not securities no numerical limit on participants The worrisome - tax enforcement International revenue cooperation Amnesty Ensure compliance!

18 Hot Topics - Latest News South Africa - no employee exemption Old Regime no filings for offers to employees New Regime exemption only for South African incorporated companies or external companies registered in South Africa No penalties business as usual

19 Hot Topics - Latest News Russia - opening up Russian residents can remit up to $75,000 to acquire foreign securities have foreign bank accounts in OECD countries stock options

20 Hot Topics - Latest News Poland - employee offers of foreign shares Old Regime more than 300 participants - filings New Regime No public offer - no filings for employees of Polish companies controlled by foreign quoted companies

21 Hot Topics - Latest News Hungary - making things easy Old Regime shares in non-Hungarian company approval from National Bank of Hungary use of broker to offer shares New Regime no constraints

22 Hot Topics - Latest News Spain - relaxing the regime Old Regime offer to more than 50 participants - filings New Regime clearer definition of “non public” - no filings 1000 employees presumption Favourable tax regime for employees shares valued PTS500,000/US$2,700 tax free - hold for 3 years 33% tax discount each year on shares up to PTS2,600,000/US$15,000 option plans - 2 years before exercise

23 Hot Topics - Latest News Italy - unfortunate developments Old Regime minor filings for all offers - achievable New Regime - numbers less than no prospectus more than full prospectus New Regime - other exemptions: too low - aggregate value €40,000/US$36,800 too high - at least €250,000/US$230,000 individual investment

24 Hot Topics - Latest News Ireland - new incentive scheme Finance Act 2001 Approved Option Schemes beneficial taxation 15 February % of total options to all employees on similar terms 3 year retention before sell shares no individual limit

25 Hot Topics - Latest News UK - national insurance Social security cost of unapproved options Uncapped liability for employer transfer liability to employees crystal ball-gazing: capp and prepay NI based on share price on 7 November 2000

26 Hot Topics - Latest News Netherlands - taxable moment Grant Exercisable unconditional right to acquire shares Exercise when have money maximise tax complexity Don’t miss your chance to choose!

27 Hot Topics - Latest News Brazil - exchange control and employees Employees can acquire securities and shares in offshore investment funds up to US$20,000 a year no prior Central Bank permission needed Wider choice of offshore investment Must repatriate funds if sell securities if leaving employment

28 Countries to watch

29 Hot Topics - Countries to watch France - back to base … Tax approved stock option plans when was plan adopted stockholders to approve new plans every 38 months pre May 2001 plans - every 5 years Tax consequences income tax and social security on exercise Electronic communications internet website offer - filings

30 Hot Topics - Countries to watch UK/Europe - IASB proposals Are options a company cost? International IASB - consultation to December 2001 Exposure Draft - Mid 2002

31 Hot Topics - Countries to watch Belgium - complications Securities filings are directors also employees? Odd one out - tax on grant of options Translations

32 Hot Topics - Countries to watch China - the offshore offer Ideological barriers Undeveloped legal and financial system Strong bureaucracy and harsh penalties General prohibition on share offers No procedures No exemptions So what do you do? the offshore offer the internet replacing powers of attorney

33 Hot Topics - Countries to watch Argentina/Chile/Brazil - the social security trap Substitute for wages? “Regular operation of the plan” Part of employment contract Social security payments South American trend?

34 Happy and safe launch - mission accomplished!