1. Investment banks: where do you fit into the REACH equation? Breakfast seminar - 17 September 2008 CO-#8771105-v1-Banking_briefing.PPT

2. This morning…  The REACH revolution and its vocabulary  Are your commodities likely to be caught by the definition of ‘substance’ in REACH?  How are traders caught by REACH - registration obligations  Only Representatives - how do they fit in?  Allocation of REACH risk - contractual issues  Next steps:  Pre-registration  SIEFs and Consortia

3. Contact Matt Townsend Partner Environment Tel: +44 (0)20 3088 3174 matthew.townsend@allenovery.com

4. I am a commodity trader - does REACH affect me?

5. The REACH revolution  Putting the burden on industry  Registration  Evaluation  Authorisation  Restriction  … of Chemicals  Pre-registration

6. Timeline

7. The REACH vocabulary  ECHA  No data, no market  SIEF = Substance Information Exchange Forum  Consortia  Lead Registrant  SVHC = Substance of Very High Concern  Candidate List

8. REACH - key things to remember  REACH is about…  Substances not “products”  The EU  The one tonne per year per registrant threshold  Registration per legal entity  Generating information through registration  Sharing information to enable joint submission  Controlling risks to human health and the environment  Substitution

9. What are you thinking???  I am a commodity trader - does REACH affect me?  They’re just bothered about chemicals, right?  Someone else will be registering so I don’t have to bother, right?  I don’t know much about these substances so I don’t have to do anything, right?  My products aren’t nasty, REACH doesn’t affect me, right?  This is all a bit of a headache, I can deal with it next year, right?  If I don’t have a registration obligation, there’s nothing I need to bother about, right?

10. Townsend Trading Bank - a case study  Townsend Trading Bank has two subsidiaries involved in commodity trading:  Townsend SARL - established in Switzerland  Townsend UK - established in the United Kingdom  They trade in commodities such as:  Wheat  Coffee  Aluminium  Gold  Natural gas  LPG

11. What is being traded? Why does it make a difference?  Substance = 1 registration  Preparation = 2 or more registrations  Article = No registration UNLESS a substance is “intentionally released in normal and foreseeable conditions of use”  = Possible notification IF substance on Candidate List is present in the article above a concentration of 0.1% weight for weight  Specific exemption = 0 registrations

12. What is being traded?  Substance which occurs in nature means a naturally occurring substance as such, unprocessed or processed only by manual, mechanical or gravitational means, by dissolution in water, by flotation, by extraction with water, by steam distillation or by heating solely to remove water, or which is extracted from air by any means  Not chemically modified substance means a substance whose chemical structure remains unchanged, even if it has undergone a chemical process or treatment, or a physical mineralogical transformation, for instance to remove impurities

13. How am I caught - will I have registration obligations?  Manufacturer, Importer or Downstream User?  Importer most likely role  Natural or Legal Person established in the EU who is responsible for physical introduction into the customs territory of the Community  Factors relevant to physical introduction  Payment  Ownership  Customs  Transport/Insurance  Significance of Incoterms  Who is not an importer – sales agencies/carriers?

14. EU manufacturer to EU customer manufacturer Destination of Goods

15. Non-EU manufacturer – Non-EU trader – EU customer manufacturer Destination of Goods

16. Non-EU manufacturer – EU trader – EU customer manufacturer Destination of Goods

17. Lightening the load - the role of an Only Representative  Check further up supply chain if goods sourced from non-EU Manufacturer  Article 8 of REACH allows non-EU Manufacturers/Formulators to appoint an Only Representative to be responsible for REACH registration  Only Representative legally becomes the Importer  Importers becomes downstream-users - reduced obligations

18. Only Representative manufacturer Destination of Goods OR

19. Contracts - Allocating the REACH risk  Consider contractual implications of your role in the supply chain  Forward contracts - what are the REACH consequences?  Consider REACH effect on compliance with laws, warranties, liability and termination  How do I ensure the commodities I am sourcing and trading within the EU are REACH registered?

20. Examples of basic contract wording - Seller is an EU Manufacturer/Importer or Only Representative  “The Seller warrants that every delivery of Product will comply with the requirements of REACH”  “Seller shall comply with the Registration obligations of the REACH Regulation and shall Pre-register and Register the Products within the timeframes required by the REACH Regulation”  “The Seller warrants that it will pre-register or has pre-registered each Substance before 1st December 2008”

21. Pre-registration - what do I need to do?  Sign up in REACH-IT  Gather information  Identify substance  EINECS number  Submit the information  IUCLID  And all before the pre-registration window ends! 1 DECEMBER 2008

22. What else do I need to be thinking about now?  Resourcing REACH - time and people  Data gathering  Communicating with suppliers and customers  Attending SIEFs or appointing representatives to attend  Joining a consortium?  Due Diligence defence  Document your decision making

23. Contact Rebecca Lawson Associate Environment Tel: +44 (0)20 3088 4618 rebecca.lawson@allenovery.com

24. Contact Catherine Weller Associate Environment Tel: +44 (0)20 3088 2559 catherine.weller@allenovery.com

25. Q&A session

26. These are presentation slides only. The information within these slides does not constitute definitive advice and should not be used as the basis for giving definitive advice without checking the primary sources. Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP's affiliated undertakings. Matt Rebecca Catherine Townsend Lawson Weller