GGI add firms in Mexico, Italy and Pakistan

News Flash

Campagnola Advisers – Naples, Italy

Campagnola Advisers Dottori Commercialisti Associazione Professionale, also known as Campagnola Advisers was founded in 1992 in Naples a city in southern Italy, home of Mt. Vesuvius. Over the past 23 years they have steadily progressed and now offer professional services throughout Italy.

The firm is mainly focused on providing integrated consultancy services from the areas of Tax, Accounting, Law, Advisory and Consulting. Their wide array of Advisory Services includes M&A, Financial & Economic Planning, Company Start-up Assistance, Company Restructuring, Corporate Crisis Management, Bankruptcy Procedures, Temporary Management.

The firm currently employs 17 professionals, including two Managing Partners. The team have expertise in high-profile banking institutions, industrial, legal or consultancy firms, as well as Professional Associations. The main company languages are Italian and English.

Dr. Aldo Campagnola

Dr.  Aldo Campagnola
Naples, Italy
T:  +39 081 2461730
F: +39 081 2461722


García & Valdèz Asociados, S.C. – Culiacàn, Mexico

Founded in Sinaloa in 2014 García & Valdèz Asociados, S.C is the union of two accomplished individuals whom have created a solid workforce of experienced professionals in Audit, Internal Control, Accounting, Financial and Tax Advice.

This combination of knowledge, experience and capacity provided by the two founding partners, whom together have accrued more than 40 years of experience in major global firms, allows them to offer comprehensive services to large, small and medium-sized professional services firms.

With a customer focused work culture, García & Valdèz Asociados, S.C. have a multidiscipline multilingual professional workforce of 17 and have the ability to serve their national and international client base in English and Spanish.

Alejandro Valdez Mendoza

Alejandro Valdez Mendoza
Culiacàn, Mexico
T: +52 1 667 712 73 23


Tariq Abdul Ghani Maqbool & Co – Karachi, Pakistan

Established in 1998 by a team of public accountants from leading international accountancy firms, Tariq Abdul Ghani Maqbool & Co. are engaged in providing wide range of integrated solutions to a large portfolio of clients from a diversified activity segments within and outside Pakistan.

Based in Karachi, with additional offices in Islamabad and Lahore, they offer Auditing, Taxation, Management, IT, Accounting and Legal & Secretarial Consultancy and other related assistance to local and foreign private, public and other organizations. They also assist organisations in problem solving and providing practical and feasible solutions.

Their team of 195 professionals from multifaceted proficient background and experience, effectively deal with a versatile range of tasks to present practical solutions to the problems in small to large-scale organisations within and outside the country.

Tariq Abdul Ghani
Tariq Abdul Ghani
Karachi, Pakistan
T: +922 143 225 82 83
F: +922 145 224 92

GGI adds new members in Australia, Italy and Iran

News Flash

Westcourt Chartered Accountants, Perth

Westcourt is an accounting and consulting practice based in East Perth, Western Australia. Founded by Ross Forrester in 1998, the team at Westcourt are dedicated to providing outstanding advice to assist their clients. The fact that they have retained their first five clients, speaks volumes about the strong relationships developed over the years.

Westcourt specialise in providing accounting & taxation, business and strategic advice to family owned business. Some of the services that they provide are asset structuring, financial reporting, family business progression, strategic taxation, business consulting, superannuation advice and international services

Over the past 17 years the practice has grown from a single partner to a thriving accountancy and consultancy business employing 17 professional team members.

Ross D.R. Forrester







Ross D.R. Forrester
Perth, Australia
T: +61 8 9221 8811
F: +61 8 9223 8805


Loconte & Partners, Bari

Loconte & Partners, Studio legale e tributario (L&P) was founded in 2010 at the seat of Bari, which is the headquarters of the firm. The law firm, present in Bari, Rome, Milan and Padua, have a dynamic professional team, which assists local and international clients in Italy and abroad.

The firm offers advice in international consulting, legal, tax and private client matters, particularly in corporate contracts, M&A, insolvency, banking, finance, trusts and asset protection. This allows individual team members to develop their professional expertise over a broad range of topics, ensuring that they constantly keep up with the ever-changing market. L&P also provides fiduciary services through an authorized Italian fiduciaria (Fiport Srl), and a trust company (L&P Trustee Srl).

With a multi-discipline multilingual professional staff of more than 55 attorneys and tax advisers, managed by five partners Loconte & Partners, Studio legale e tributario, serve their clients with a strong international approach in English, French, Italian, and Spanish.


Prof. Avv. Stefano Loconte







Prof. Avv. Stefano Loconte
Bari, Italy
T: +39 080 5722880


Ettefagh & Co., Tehran

Ettefagh & Co. is a new GGI member firm based in Tehran. Since their origin almost 18 years ago, the firm have been consistently offering high quality and innovative service in the area of law, accounting, tax consulting, auditing and management consulting.

The firm has a strong cross-border vision with experienced correspondents, using local solutions to address clients’ needs in many areas, including unique international experience and expertise, cross-border vision and correspondents, local solutions, commercial matters, claims & civil litigation and arbitration, banking, finance & funding structures, trade-related issues, compliance, due diligence & sanctions, foreign direct Investment, fraud & white-collar crime, IP and property restitution for Iranian émigrés.

With a multi-discipline, multilingual staff of 18 mentored by 2 partners, Ettefagh & Co. have the ability to deal with their clients in an array of languages, including Arabic, Azeri, English, French, German, Italian, Persian (Farsi), Spanish and Turkish.

Dr. Ali Ettefagh

Dr. Ali Ettefagh
Tehran, Iran
T: +98 21 8854 76 46

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Registration Open: GGI New Zealand Business Summit

GGI New Zealand Business Summit

REGISTRATION IS OPEN for the inaugural GGI New Zealand Business Summit, organized by Morrison Kent and co-hosted by GGI member firms Blackmore, Virtue & Owens and Walker Davey Ltd.

Register directly with Morrison Kent. The Registration Form and Draft Programme are available online in the internal area of the GGI Website (Log In > Click on the Events tab > Locate the Event > Click on the Document icon).

Work with Me: The 8 Blind Spots between Men and Women in Business

Book Review Work WIth Me

Book Review

Each day, men and women, looking to bring their best to work, are often challenged by what are no more than false assumptions and mistaken opinions about the other gender—persistent blind spots that frequently result in miscommunication, misunderstanding, resentment, and frustration, negatively affecting their work life as well as their personal life.

Work with Me is the timely collaboration of Barbara Annis, world-renowned expert on gender issues in the workplace, and John Gray, author of the number one relationship book of all time, Men Are from Mars, Women Are from Venus. Revealed for the first time are the Eight Gender Blind Spots that create tension between the sexes at work and in their personal lives—Do Women Want Men to Change?; Do Men Appreciate Women?; Are Women Being Excluded?; Do Men Have to Walk on Eggshells with Women?; Do Women Ask Too Many Questions?; Do Men Listen?; Are Women Too Emotional?; Are Men Insensitive?.

Told through science, stories, and the results of over 100,000 in-depth interviews of men and women executives in over 60 Fortune 500 companies, readers will discover the biological and social influences that compel men and women to think and act as they do, and direct how they communicate, solve problems, make decisions, resolve conflict, lead others, and deal with stress. This definitive work-personal life relational guide brings insights and offers solutions to help both men and women remove the blind spots that separate them, allowing for greater success and satisfaction in their professional and personal lives.

Paperback: 272 pages

ISBN-10: 1137279117

Work with Me: The 8 Blind Spots Between Men and Women in Business
by Barbara Annis & John Gray

Travel Tip: Boston MA, USA

Boston Travel Tips

By Ady Nordman & Adam Crowson

20 years since a dream of one Claudio G. Cocca has become reality and steadily growing to become one of the largest Multidisciplinary Alliances.

Many of us will join the 20th GGI birthday this coming October in Boston during the world conference. I have asked our friend and colleague Adam Crowson, our ever smiling GGI CEO North America to share his recommendations as a Bostonian resident.

Some culture before we eat.

  • Boston MFA – During the world conference Boston MFA is holding a very interesting art show showing a new approach to understanding 17th-century Dutch painting ( ).
  • Make Way for Ducklings book – Just a year ago a nice children’s (if you have one or at least have one on your mind) book shop has opened in Boston whilst in many other places book stores are closing down. Located in Faneuil Hall Marketplace, North Market Street, Boston, MA 02109 this store has a great selection which is unique books particularly with duckling motifs.
  • Whale Watching – If you haven’t seen a real whale in your life, do take time to join a whale watch tour. In a three hour trip, you will see these amazing animals. Many ferries for this tour start near the New England Aquarium only an 8 minute walk from the Intercontinental Hotel Boston GGI world conference venue.

The Surf and Turf:

  • Drink (that is the name of the place itself) – 348 Congress Street Boston, MA 02210 (tel: 617.695.1806) –

Early or late craft mixology cocktails (open from 4PM) with lovely modern atmosphere. Cocktail menus are in limited supply at this location as the mixologists prefer to create custom drinks for their guests. Do not miss the large block of ice on either side of the bar. It is the source of every ice cube in your glass as they are chipped off the massive block (in front of you) for each individual order.

  • Island Creek Oyster Bar – 500 Commonwealth Ave, Boston, MA 02215 (tel: 617.532.5300) – – Boston is known for its superb sea food. Island Creek offers implacable shellfish. The Cocktails there are also crafted and very good.

Another excellent Oyster Bar with no-reservations policy is Neptune Oyster – 63 Salem St. (Cross St.) Boston, MA 02113 (tel: 617.742.3474) –

  • Sportello – 348 Congress Street, Boston MA 02210 (tel: 617.737.1234) – – A very good and fresh Italian Pasta non formal place – The U-shaped counter is a unique twist which allows for engagement with your fellow diners. When you are craving Italian cuisine and a social setting, this location will not disappoint.
  • Mooo Restaurant (Meat) – 15 Beacon Street, Boston MA 02108 (tel: 617.670.2515) – – elite carnivore palace. Meat is made here with passion and love. For more “traditional” American’s bites you can head to Abe & Louie’s steakhouse – 793 Boylston Street, Boston MA 02116 (tel: 617.536.6300) –
  • Sorellina (Italian) – 1 Huntington Ave, Boston MA 02116 (tel: 617.412.4600) – – One of Boston’s outstanding top restaurants since 2006 (!) – Dress well, prepare for one of the best wine lists in Boston, and bring your pocketbook. Lastly, enjoy!
  • 9 Park (French, Italian) – 9 Park St. (bet. Beacon & Tremont Sts.) Boston, MA 02108 (tel: 617.742.9991) – – French Italian located in a beautiful townhouse corner of the park. Still my personal favorite within Boston.

All the best


Ady Nordman & Adam Crowson

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Challenging an English Will

Challenging an English Will

By Jessica Bermingham

When a loved one dies, it is a hugely emotional and challenging time. Family tensions often run high, and where the deceased has left behind a Will that is not as expected, creates disappointment or jealousy, or perhaps even arises suspicion as to the circumstances surrounding its creation, the situation can become all the more difficult.

Generally speaking, where there is an English domiciled deceased, with assets in England or an English Will, the English laws of succession apply. There are a number of routes that may be available to those who wish to challenge an English Will made by an English domiciled testator.

Validity of the Will

The main way to challenge the Will of the deceased is to contest whether it is actually a valid document. If a Will is found to be invalid then the most recent valid Will would take its place. If there is no previous valid Will then the deceased will have died ‘intestate’ (ie without a Will) and the estate passes under the ‘intestacy’ rules. The intestacy rules are enshrined in statute, and dictate that the estate will pass to the next of kin, in a specified order and proportions. Where, for example, there is a surviving spouse and children then the spouse will take the personal belongings of the deceased, a fixed sum of £250,000 plus interest and half of the residue of the estate. The children will take the other half share of the residue.

When considering whether to challenge a Will, regardless of the circumstances surrounding its execution and the perceived strength of the case, the ultimate consequence of a successful claim should first be considered. Would the potential claimant be in any better position should they be successful at Court and a previous Will is declared valid or if the intestacy provisions apply? There are other considerations too. It may be for instance that many of the deceased’s assets are in another jurisdiction. A finding of invalidity by an English Court could be persuasive when considering validity in relation to Wills made in another jurisdiction at around the same time.

Under Section 9 of the Wills Act 1837 there are certain formal requirements a Will or testamentary document must comply with. It must be in writing and signed by the testator in the presence of two or more witnesses. If it is not clear whether or not the formalities have been complied with, obtaining affidavits from those witnesses present at the execution can assist.

The deceased must have had ‘testamentary capacity’ in order to make a valid Will. This is a legal test not a medical test. It has recently been clarified by the English Court in Walker v Badmin [2014] that the applicable legal test for testamentary capacity comes from the case law rather than the Mental Capacity Act 2005. The test comes from Banks v Goodfellow [1869-70] which states that the testator must understand the nature, meaning and effect of making a Will, the extent of the property they are disposing of, and appreciate any potential claims against the estate. If reasonable suspicion is raised as to the testator’s capacity, it is for the person seeking to prove the Will is valid to prove on the balance of probabilities that the deceased had testamentary capacity.

There is a general presumption that a testator knew and understood the terms of their Will and approved its contents. The strength of this presumption depends on, for example, whether the Will was prepared by a solicitor, and whether it was read by the testator. However where, for example, the testator was blind or illiterate, or a beneficiary was involved in the preparation or execution of the Will, this presumption does not normally arise. A Will can be challenged on the basis that the testator did not know and approve its contents and this often ties in with allegations relating to testamentary capacity.

Another way of challenging the validity of a Will is by alleging ‘undue influence’. With lifetime gifts, in certain circumstances a presumption of undue influence can apply. This does not arise in the context of Wills and undue influence in the context of Wills is notoriously difficult to prove. To establish undue influence it would need to be proved that a testator was forced into making a Will that went against their wishes. Persuasion is not enough, there has to be something akin to coercion. Where certain individuals encourage and draw up a Will, and stand to benefit under it, this could indicate undue influence, but is not always enough.

Inheritance (Provision for Family and Dependants) Act 1975 Claims

This involves an application for provision out of the deceased’s estate rather than a challenge to the will itself. The claim would be on the basis that the Will (or lack) failed to adequately provide for applicant. An application can also be made where there is an intestacy.

Those who can apply include the spouse, children, and cohabitees of the deceased. The categories of applicant also include those who were being maintained by the deceased immediately before their death. Where a claim is not by a spouse, the amount that could be awarded relates to what is required for their maintenance. This limit does not apply in relation to spouses. Instead the test that would be applied is akin to that which would be applied in a divorce; this is termed ‘the divorce hypothesis’.


Where a challenge to the validity of an English Will is being contemplated, a ‘caveat’ should be lodged. This essentially tells the Court there are some concerns over the supposed last Will of the deceased and prevents the Executors from taking out probate and administering the estate. This means that validity issues can often be resolved prior to the estate being administered, which helps simplify matters. If a validity claim is contemplated it is therefore important to act promptly to ensure a caveat is lodged.

Jessica Bermingham

GGI member firm

Thomson Snell & Passmore LLP

Law Firm

Dartford, Tunbridge Wells, UK

Jessica Bermingham





Recent Changes to Canada’s Immigration Policy and Related Tax Rules

Canada Immigration Policy Tax Rules

By Robert Worthington and Prof Robert Anthony

Canada is a capital-importing nation and is generally open to immigration. However, high net-worth individuals moving to Canada should be advised of changes made by the Canadian government to its immigration incentive programs. Recent changes include the repeal of both the tax holiday for immigration trusts and the investor class immigrant program, but new opportunities as well.

The Canadian Income Tax Act has non-resident trust rules (often referred to as the “NRT rules”) that may deem a trust to be resident in Canada where it would be factually resident elsewhere. Under the NRT rules, a deemed-resident trust is subject to Canadian tax on the trust’s worldwide income. The “immigration trust” was one of the exceptions to the NRT rules. The NRT rules apply where there is a Canadian “resident beneficiary” of the trust, or alternatively a “resident contributor” to the trust. The legislative concept of “contribution” to a trust is quite broad, and captures most transfers of property and loans to a trust, other than certain arm’s length transfers. Since a trust may be deemed resident in Canada but factually resident in another country, a dual residency issue may arise.

If a trust is resident in one country under a tax treaty between that country and Canada, can the NRT rules validly deem the trust to be resident in Canada notwithstanding the treaty? Domestic Canadian legislation states that NRT rules can override treaties. This domestic override is inconsistent with Canada’s approach to treaty negotiation in other contexts. For example, the anti-deferral regime in the controlled foreign corporation rules is explicitly carved out of Canada’s treaties. However, the interesting legal issues as to the effect or validity of the unilateral treaty override with respect to the NRT rules have not yet been considered by the courts.

If the NRT rules deem a trust to be resident in Canada, the trust will be subject to tax at a current federal rate of 42.92%, assuming the trust has no income earned in a province, and may in some cases be subject to provincial tax. Generally, distributions by a trust to beneficiaries are deductible to a trust and taxable in the hands of a beneficiary, but there are restrictions to such deductions in the case of a deemed resident trust. The calculation of the available deduction depends on various factors including whether the beneficiary is resident in a country with which Canada has a tax treaty. Distributions made by the trust to a non-resident beneficiary may be subject to withholding tax at a rate of up to 25%.

As mentioned, one important exception to the NRT rules that was available until recently was the “immigration trust”. Where the person who created a trust had not been a Canadian resident for 60 months, the trust would not be deemed resident in Canada until after the 60-month period expired. In short, the trust enjoyed a 5 year tax holiday from the time of the immigrant’s arrival in Canada. Unfortunately, the immigration trust exception was repealed in the 2014 budget, and so this structure is no longer available. Despite the tax community’s efforts to persuade the Canadian government to grandfather existing immigration trusts, no such relief was provided. Apparently the government believed this tax holiday was no longer useful.

In the same budget that the immigration trust exception was repealed, Canada cancelled its investor immigrant program. Under that program, an investor class immigrant could obtain favoured application conditions by providing an $800,000 interest-free loan to the government (most of which could be financed by a Canadian bank). The relatively low cash requirement made this program very attractive compared to similar programs in other countries. The cancellation of the program was controversial. A large number of Chinese applicants filed a class action lawsuit against the government in response to their pending immigration applications being cancelled.

Although the Canadian government has cancelled the investor class immigration program, new opportunities are available under programs for high net worth individuals and entrepreneurs. The “Start-up Visa Program” requires an investment commitment from an angel investor group or venture capital fund of at least CAD $75,000 or CAD $200,000, respectively. Another program, not yet in effect, is the Immigrant Investor Venture Capital Program, which requires a personal net worth of CAD $10,000,000 or more and a CAD $2,000,000 investment.

Similarly, the repeal of the immigration trust rule does not eliminate all tax planning opportunities for immigrants using trusts. For example, it may be possible for a non-resident contributor to establish a so-called “granny trust” so long as all contributions are made at a non-resident time. Additionally, other civil law entities such as private foundations may fall outside the scope of the NRT rules and create tax deferrals. It goes without saying that it is always worthwhile to seek tax advice for pre-immigration planning.

PEIWM Authors

GGI member firm

Shea Nerland Calnan LLP

Tax, Law Firm

Calgary, Canada

Robert Worthington





GGI member firm

Anthony & Cie

Auditing & Accounting, Tax, Advisory, Corporate Finance, Fiduciary & Estate Planning

Valbonne, Sophia Antipolis, France

Prof. Robert Anthony





The UK – Major Changes for Foreigners

Uk Major Changes for Foreigners

By Graham Busch

The past 12 months or so has seen some of the most significant developments in many years affecting people coming to live in the UK or investing in the UK. These include:

  • An end to the long-term non-domiciled status
  • Tax on the gains on all sales of residential properties
  • See through for Inheritance Tax on UK residential properties held in offshore companies
  • Main residence election
  • Some good news

The new Non-Dom regime

People who come to the UK to live and/or work are usually classified as non-domiciled. This allows them to elect to be taxed on the “remittance basis”. In this way they can avoid UK taxes on unremitted income and gains. For the first 7 years of UK residence this privilege comes at only a minimal loss of certain allowances. Thereafter, an annual “remittance basis charge” of between £30,000 – £90,000 is payable.

Most importantly, their non-dom status can be claimed indefinitely, so long as they can demonstrate close ties to their claimed country of domicile, usually their country of birth.

A special rule exists in respect of Inheritance Tax (death and gift duties). Individuals resident in the UK for less than 17 out of the last 20 years can claim to be “deemed domiciled” for this tax. The effect of this is that they can avoid Inheritance Tax on death on non-UK assets, and on gifting any such assets.

The UK government has now announced a non-dom time limit. From April 2017, anyone resident in the UK for more than 15 out of the past 20 years will automatically be considered to be domiciled. As a result, they will thereafter be taxed on the “arising basis”, i.e. on worldwide income and gains, remitted to the UK or not. The 15 year rule will also apply to Inheritance Tax and replaces the 17 year rule.

So the world famous UK non-dom status will from April 2017 have a finite lifespan. Individuals coming to the UK will now have a shorter time during which they can benefit from the generous advantages that the remittance basis currently offers. Non-doms currently resident in the UK will need to keep a close check on the number of years they have been UK resident and may wish to consider structuring changes to their worldwide assets sooner than before.

Tax on Residential Property Gains

Legislation was introduced in 2013 to tax gains on the sale of high value UK residential property by companies or corporate-type entities. Individuals and trusts remained outside of this new regime. Now the net has widened such that gains on all residential properties by all entities/individuals will be subject to Capital Gains Tax. There are certain fairly specialised/narrow exceptions. The gain will be calculated with reference to the April 2015 value as the base cost (or earlier at the seller’s election), so unrealised gains prior to April 2015 will not be taxed. The applicable tax rates will be:

Companies      20% (*)

Individuals       18%/28% depending on their total taxable income/gains in the tax year.

Trusts              28%

(*) – companies under the “ATED” (Annual Tax on Enveloped Dwellings) regime will continue to pay Capital Gains Tax on such gains at 28%.

Inheritance Tax on UK Residential Property

UK resident non-doms can currently shelter their UK residential property from Inheritance Tax by holding the property in an offshore company. From April 2017, the UK tax authorities will “look through” such offshore companies and treat the underlying residential property as if owned by the non-dom. Consequently such properties will be subject to Inheritance Tax on death. Non-doms will need to review their structures and Inheritance Tax exposure, with a view to possible mitigation of such exposure.

Owning More Than One Property – Main Residence Election

UK residential property owners are exempt from Capital Gains Tax on the sale of their main home. Owners of more than one residential property can elect which is their main residence (subject of course to the reality test) which may then be sold free of Capital Gains Tax. Non-residents can now elect for their UK property to be their main residence for the purposes of this exemption if they spend at least 90 days in the relevant tax year in the property.   Conversely, UK residents receive the reciprocal exemption if they spend at least 90 days in a tax year in one or more residences in an overseas territory.

The Good News

The UK government is committed to encouraging business to come to the UK. Our corporation tax rate of 20% gives us the joint lowest rate of corporation tax in the G20. The government has announced that this rate will fall to 19% in 2017 and 18% in 2020. Together with other corporate tax advantages such as tax-free receipt and payments of dividends, tax-free sales of underlying companies, transfer of tax losses, generous first year tax write offs of fixed assets and the 230% research and development tax credit, the UK remains an attractive tax jurisdiction in which to locate an international business.

Graham Busch

GGI member firm

Lawrence Grant

Auditing & Accounting, Tax, Advisory, Fiduciary & Estate Planning

London, United Kingdom

Graham Busch



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Is online defamation threatening your or your clients’ business?

Online Defamation

By Jane Marsden and Ryan Lynch

GGI member firm Memery Crystal has seen an increasing trend of businesses being defamed online. This includes statements on share trading websites, share blogger websites and on social media, such as Facebook and Twitter.

This can have a rapid and devastating effect on the reputation of a business and, indeed, its share price. In these situations, urgent action needs to be taken.

What is Online Defamation?

The rise of the internet has seen a growing trend of shareholders, commentators, rampers, derampers and others, defaming companies and their directors online. Typical outlets for online defamation include share trading websites’ bulletin boards (such as ADVFN, Interactive Investor and LSE), share tipster websites (such as ShareProphets), websites set up by shareholders  seeking to hold companies and their directors to account, social media sites (such as Twitter and Facebook) and individual blogs.

What do you have to prove for online defamation?

Where statements of fact are published online which damage a company’s or director’s reputation and are untrue, the statements will be defamatory if they cause or are likely to cause serious harm. UK law does not distinguish between online defamation and, for example, defamation in other written forms such as letters or newspapers.

New requirement to show Serious Harm

The requirement for companies and individuals to show that “serious harm” has been caused or “is likely” to be caused by the offending statement is a new requirement introduced by the Defamation Act 2013. It significantly raises the bar for defamation claims as it means that statements which are untrue and defamatory but are merely trivial will no longer be defamatory.

In the case of a company which trades for profit, under the Defamation Act 2013, “serious harm” equates to serious financial loss. Thus a company must show that serious financial loss has been caused or is likely to be caused to it by the statement. Where allegations are made against the directors rather than the company itself, there is no need to show serious financial loss but it is still necessary to show that the statements have caused or are likely to cause serious harm.

Some statements made online which might be considered frivolous or trivial will therefore fall short of this threshold. There is no doubt also that the internet is a more transient form of communication. The need to show serious harm/a likelihood of serious harm will generally be more difficult in the case of bulletin board posts or chat room blogs. The question of how many people have read a particular statement or post will also have a significant bearing on whether the “serious harm” threshold has been reached.

That being said, many statements made online about companies and their directors are often extremely serious ones. Allegations of dishonesty, misleading the market, insider dealing are not uncommon. In our view, it is likely that at least some of these cases will continue to satisfy the threshold of being likely to give rise to serious harm and, in the case of companies trading for profit, serious financial loss.

Getting Round the Anonymity Issue

A frequent difficulty when dealing with online defamation has been the difficulty of establishing the identity of the author of the statement complained of.

Share trading sites, in particular, have historically not verified the identification of those wishing to post on their forums. This is perhaps understandable, given the administrative burden this would entail.

The Defamation Act 2013 seeks indirectly to place greater onus on website operators to verify the identity of those signing up to use their websites. It has long been the case under UK law that website operators such as iii, ADVFN, Twitter or Facebook are generally not liable for content posted on websites operated by them, unless and until they have been put on notice of defamatory content on their sites and asked to remove it.

The Defamation Act 2013 does not change this basic position. It reinforces the fact that website operators who are not themselves the originators of the statement, eg those who merely host a forum/share trading bulletin board, are not liable for content unless they have been put on notice.

However, what the Defamation Act 2013 does do is to add a further protection for website operators. That protection, however, comes at a price. What the Defamation Act 2013 says is that a website operator which has been notified of defamatory material on its site will only be liable for defamation if, in addition to failing to remove/deal with the defamatory item, the complainant is unable to identify the person who posted the statement.

It is therefore highly beneficial to website operators to know who is posting on their websites. The prudent website operator would clearly be well advised to verify the identity of persons signing up to forums/chatrooms hosted by them. In such circumstances, the  complainant alleging that their site contains defamatory material will then have a way of identifying the person behind the defamatory content (see below for the process this entails) and the website operator will potentially be able to escape liability for defamation.

Can I obtain details of the person making the defamatory online statements?

Whilst website operators cannot voluntarily divulge the identity of those registering usernames and posting on share trading bulletin boards due to issues of data protection, a straightforward court application process known as a “Norwich Pharmacal” order is available at reasonably low cost against website operators requiring them to disclose the identity of the poster. Many website operators will not contest the making of the order as they are in reality neutral and it is therefore a formality.

What should anyone concerned about online defamation do?

Some key practical points arise from the above which can be summarised as follows:

  1. Print off and retain hard copies of the offending online material immediately as online statements may be removed or only published for a certain amount of time.
  2. It is important to take legal advice at the earliest opportunity on whether there is an actionable claim for defamation. This will involve examining the defamatory statements and whether any defences are available. Not all potentially defamatory online statements will meet the threshold of serious harm.
  3. Look up who is hosting the website on one of the various domain name look-up services.
  4. Write to the website operator. Look for the email address on the website for complaining. Typically this may be “abuse@name of company”. Always email your complaint. Not only is this faster but many companies will not deal with issues of defamation by telephone or by letter. Ask for the offending statements to be removed immediately.
  5. In the case of serious or repeated defamatory statements, consider instructing lawyers to obtain a “Norwich Pharmacal” order i.e. an order requiring the website operator to identify the poster of the defamatory material.
  6. Retain any emails received from third parties who have viewed the defamatory material/complaining about the defamatory statements.
  7. If you want to sue the perpetrator, compile evidence of any actual financial loss caused by the defamatory statements e.g. loss of sales, loss of contracts, loss of opportunity. Where loss has not yet been caused, you will need to put forward a witness statement explaining why the statements are likely to cause serious financial harm/loss.

Managing online reputation is a serious issue for companies and it is important to actively decide on a policy to manage online reputation issues. This may include some monitoring of bulletin boards and websites at particularly sensitive times for the company.
Removal of offending posts by the website operator is often a fast and pragmatic solution to reputational damage.
In extreme cases, legal action is available to silence wrongdoers. It takes guts and determination to see a defamation action through. However, increasingly, shareholders expect Boards of Directors to take a proactive approach to protecting a company’s reputation, including legal action against derogatory and often downright fictitious allegations.
Ironically, in this age of shareholder activism, it may well be the shareholders themselves whose voices are the loudest in their demands for legal action against the rogue elements in their own ranks who step out of line.

Memery Crystal Authors

GGI member firm

Memery Crystal LLP

Law Firm

London, UK

Jane Marsden

Ryan Lynch




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Material adverse change in Dutch M&A transactions

Adverse Change Dutch M&A

By Rudolph A. I. Snethlage

Problems occur…

Over the past 15 years, there have been several serious events which had a negative economic impact on a global scale. A few examples include 9/11, the bankruptcy of Lehman Brothers and the subsequent credit crunch and recession, not to mention the more recent threat of a Grexit.

Imagine being absorbed in closing an important deal and pending completion when, quite suddenly, Greece announces it is leaving the European Monetary Union. Fortunately, your client, who is the purchaser, stipulated that the sale and purchase agreement (SPA) should contain a “MAC-clause”. Does the Grexit qualify as material adverse change (MAC), allowing your client to step back or modify the deal?

Typically, a MAC clause is structured as a condition precedent so that a purchaser is not obliged to complete in case a MAC occurs. Such clauses usually define a MAC as “a change that is materially adverse to the business, financial condition or results of operations of the business taken as a whole”. Another form of a MAC clause is the warranty of a seller that, at completion, no MAC has occurred, giving the other party the right to terminate in case of a MAC or to claim damages as a consequence of the non-fulfilment of that guarantee.

Dutch law

What is the statutory framework for this issue in the Netherlands? Under Dutch law, there is the notion of “unforeseen circumstances”, which can lead to an amendment or even termination of the contract. The criterion is: can keeping the contract unchanged be required without infringing the principles of reasonableness and fairness (Section 6: 258 of the Dutch Civil Code)? Another Dutch law principle refers to the legal concept of conformity, meaning the requirement that the subject matter of the contract “should conform to the agreement” (Section 7:17 of the DCC).

In case the SPA does not contain a MAC clause, the question arises as to whether serious events such as a Grexit could be used for successfully claiming termination on the basis of unforeseen circumstances or non-conformity.

Case law in connection with the unforeseen circumstances and non-conformity ascertains that it is almost impossible to successfully claim termination (or an amendment) of a contract in court for these reasons.

Consequently, as is the case in all common law jurisdictions, we use MAC clauses in our Dutch law SPAs, in order for the parties to be able to respond to substantial changes in the circumstances.

Dutch case law on MAC clauses

There is only one relevant Dutch case in connection with a MAC clause and that is Philips vs. Phoenix (Dutch Supreme Court 2007) regarding the sale to Phoenix of BCC. In this case, Phoenix tried to lower the purchaser price or even rescind the SPA on the basis that Philips had given the warranty that at completion no MAC had occurred. Pending completion, the operational profit of BCC dropped significantly, which according to Phoenix did qualify as a MAC. However, the Dutch Supreme Court ruled that BCC’s lower EBITDA levels as such did not qualify as a MAC. External market conditions, according to the Supreme Court, could qualify as a MAC, and lower EBITDA levels could be an indicator, but then only to the extent that material chances in the market conditions would have a material impact on the business, financial condition or results of operations of the business as a whole.

This way of thinking is in line with case law in the USA. In IBP, Inc. vs. Tyson Foods (2001), the Delaware Chancery Court ruled that lower results in the last two quarters pending completion could not be seen as a MAC, because a MAC clause is “a backstop protecting the acquirer from the occurrence of unknown events that substantially threaten the overall earning potential of the target in a durationally-significant manner”.

In The Finish Line, Inc. vs. Genesco, Inc.(2007), the Chancery Court of Tennessee ruled that although the EBITDA levels of Genesco dropped significantly pending completion, this was caused by general market conditions which had similar impact on competitors of Genesco. The MAC clause in this case specifically ruled out such general MAC events. In addition, the Tennessee Court pointed out that in case of a strategic buyer, the MAC can only be based on “a demonstrated, unexpected and durationally-significant adverse event”.

Lesson learnt: MAC provisions are not boiler plate clauses

In conclusion, case law shows that it is dangerous to rely on a generally phrased, boiler plate-like MAC clause. Instead, a MAC clause should always be drafted bearing the specific value drivers of the transaction in mind.

If it is essential for the funding to keep the operational profit at a certain level, dropping below that level before completion should specifically be mentioned as a MAC. If a Grexit or similar important event in the European Monetary Union should qualify as a MAC, the MAC clause should specify that kind of event as well.

Of course, any MAC clause should also contain the generally phrased catch-all provision as mentioned above, just in case.

Last but not least

Having been in the M&A business for many years, since 1986 to be precise, I have witnessed circumstances where clients panicked and sought to get out of a deal. One particular MAC is unforgettable: we were trying to close a deal when the first plane hit the WTC in New York. The other party immediately withdrew from the transaction, claiming that a MAC as defined in the SPA had occurred. As pointed out in this article, we could have tried to argue that 9/11 did not qualify as a MAC as defined in the SPA. In fact, it turned out that it did qualify as such in the financing arrangements, as well as closing of the funding by the purchaser and the lenders being a condition indispensable to completion in the SPA. So it is quite essential to synchronise the definitions of a material adverse change in the transaction documentation.

Rudolph Snethlage

GGI member firm

TeekensKarstens advocaten notarissen

Law Firm

Alphen aan den Rijn, Leiden, The Netherlands

Rudolph Snethlage



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