Partners
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Dear
Subscriber,
Welcome to the first issue of K-Zine, e-briefings for business
from an Irish and European perspective. In this issue we comment
on the draft e-Commerce Regulations, the PIAB and VRT. You
can access full articles by clicking through to our website.
K-Zine has been designed to provide practical information
in an accessible format. If there are any topics that you
would like to see covered please let us know by using the
contact
us link.
Kind regards,
Kevin O'Brien |
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e-Business
& I.T.
New Irish Regulations to govern on-line advertising
and sales |
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Insurance
Driving insurance costs down? |
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Financial
Services
e-Money - it's here! |
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Motor
VRT - will it stay or will it go? |
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Environment
Ambitious Strategy to cut Packaging Waste |
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Corporate
Directors Loans - the pitfalls! |
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KILROYS.IE
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New
Irish Regulations to govern on-line advertising and sales
The draft Irish e-Commerce Regulations that will govern on-line
advertising and sales, were submitted by the Department of Enterprise,
Trade and Employment to the EU Commission and the member states
on the 7th August 2002.
If no objections are submitted within the three month "stand
still period" under the EU Notification Procedure, then
these Regulations will become law in Ireland some time after
the 7th November 2002. These Regulations will have particular
relevance to businesses providing or advertising goods or services
online, the transmission or storing of electronic content or
the provision of access to a communications network.
So what will Irish businesses have to do to comply with these
Regulations when they are implemented?
Irish businesses that advertise or provide goods or services
online will be required to adapt their websites or other communications
media to reflect the new Regulations. Examples of such online
businesses would be newspapers, shopping, entertainment services,
financial services, direct marketing, advertising and Internet
access services.
Some of these requirements include the following:
- Unsolicited
emails i.e. direct marketing material, will have to be clearly
identified as such and direct marketers will have to identify
themselves.
- Recipients
will have to be afforded the opportunity to opt out from
receiving such direct marketing communications.
- For
consumers the technical steps to conclude a contract, the
means of correcting errors and the language of the contract
will have to be clearly outlined.
- Before
any contract is made, the business will have to provide
it's name, address, VAT number and e-mail address.
- Consumers
will have to be provided with a prompt electronic receipt
from the supplier.
- A
printable copy of the terms and conditions of the on-line
contract will have to be accessible to consumers.
- Regulated
professionals will have to honour the rules of their profession
in the use of such communications.
Failure
to comply with these requirements when implemented will result
in fines of up to €3,000 or three months imprisonment or
both.
For
more information on e-Business in Ireland visit:
http://www.kilroys.ie
 Contact:
Patrick Ryan
pryan@kilroys.ie
Driving
insurance costs down?
On
the 25th October, 2002, under the banner "Driving Insurance
Reform", the Tánaiste and Minister for Enterprise,
Trade & Employment, Mary Harney, announced the immediate
establishment of a Personal Injuries Assessment Board (PIAB)
on an interim basis and the prioritising of the legislative
drafting necessary to put the body on a statutory footing by
2003. This is part of the action plan announced by the Tanaiste
in September to reduce the cost of insurance premiums in Ireland.
The
PIAB will enable claimants to process a claim for compensation
through the PIAB as an alternative to court action. However,
claimants are not bound by the PIAB's award. If the claimant
is dissatisfied they still have the entitlement to appeal the
award to the courts.
Other
proposals being put forward for the PIAB include:
- All
personal injury cases valued up to €100,000, where
liability is not an issue will be dealt with before the
PIAB rather than the courts. Initially the PIAB will deal
with employers' liability matters only, then progress to
motor accident and public liability claims, giving it a
wide jurisdiction.
- To
ensure that awards in personal injury cases can be defined
and consistent, it is proposed to introduce a "book
of quantum", setting out guidelines for court awards
of damages for various types of injury.
- The
PIAB will be able to take into account a refusal by a claimant
to accept an offer of rehabilitation in deciding on the
value of awards.
The
Director General of the Law Society, Mr Ken Murphy, stated that
the Law Society had "no objection in principle to the introduction
of a PIAB, provided that in its operation it was fair and makes
sense in economic terms".
The
Law Society's published its own report on 18th October 2002,
entitled "Real Reform: Law Society Proposals to Reduce
the Costs of Personal Injuries Litigation in Ireland".
Recommendations in the report include:
- Sanctions
against persons making fraudulent claims;
- Greater
levels of disclosure throughout the litigation process and
reducing the involvement of expert witnesses at trial;
- Better
case management ;
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Provisional and interim damages awards in cases of hardship
where liability is not an issue;
- Structured
settlements and awards in catastrophic injury cases;
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Raising the Circuit Court monetary jurisdiction to €75,000.
It
remains to be seen if the PIAB will deliver real cost savings
to the Irish business community.
Contact:
Thomas Simpson
tsimpson@kilroys.ie
e-Money
- it's here!
On the 29th May 2002, the European Communities (Electronic Money)
Regulations 2002 were implemented in Ireland to govern the issue
and use of electronic money ("e-money"). These Regulations
introduce the regime to regulate the issuers of e-money in Ireland
and also introduce the concept of a single "European passport"
for these issuing institutions. In other words institutions
authorised to issue e-money in any EU member state are entitled
to do so in Ireland.
So
what is e-money? The Regulations define "e-money"
as money stored in an electronic medium, such as a chip card
or a computer memory that can be substituted for bank notes
and coins and generally intended to be used for making limited
payments electronically. The Regulations also set out the requirements
in terms of capital adequacy and operations for the issuers
of e-money.
These
institutions may not issue e-money at a discount or on credit
terms and the business activities that such institutions engage
in are limited and must be closely related to the administration
of e-money. The Regulations provide that for the purposes of
the Central Bank Acts 1942 to 1998, money exchanged for e-money
shall not be regarded as a "re-payable fund" or a
"deposit". E-money must be redeemed for full value
on demand. In order to protect the consumer and to limit any
money laundering opportunities that may arise, the Regulations
have placed a ceiling on the value of a single "e-purse"
of €5,000.
The
enactment of these Regulations is an important step in the evolution
of e-Commerce in Ireland. It remains to be seen how long it
will be before e-money becomes a part of everyday transactions
for people in Ireland in the same way that credit and debit
cards are now used.
Contact:
Hilary Griffey
hgriffey@kilroys.ie
VRT
- will it stay or will it go?
Vehicle
Registration Tax (VRT) is applied on the sale of private cars
in most EU member states. On the 9th September 2002, EU Commissioner
Frits Bolkestein announced a package designed to first reduce,
and ultimately to abolish VRT. He called the tax an obstacle
to free movement of goods and suggested an alternative system
of annual road and fuel taxes instead. He said that VRT serves
neither consumers nor the industry, makes a mockery of the principle
of a single market and distorts free market conditions.
VRT
rates are uneven across the EU - car manufacturing countries
(Germany, Italy, France and the UK) have low or even nil rates,
while non-producing countries like Ireland, Denmark and Finland
have the highest rates.
Finance
Minister Charlie McCreevy has said, if VRT were to go, the revenue
that would be lost (which was €790 million in 2001) would
have to be made up by significant alternative taxes. It has
been suggested that in order to compensate for the loss in revenue,
a 2% increase in the standard rate of income tax or a 36% hike
in the price of a litre of petrol.
The
European Court of Justice has recently ruled against Greece
for the imposition of registration taxes for temporary use of
cars registered in another member state and against Finland
for calculating VRT on second-hand cars by comparison with new
models of the same make with similar specifications.
VRT
is included in the price of new cars sold in Ireland. For motorists
importing new or used cars, Revenue calculate the tax payable
by reference not to the actual price paid by the purchaser but
to an estimate, called the Open Market Selling Price (OMSP),
of what Revenue determines the same car would cost on the Irish
market.
Despite
the fact that it has been paid already in the a member state,
VRT must normally be paid a second time when a car is moved
to another member state without a permanent change of residence,
and the tax is not refunded by the first member state.
The
Society of the Irish Motor Industry (SIMI) has said that it
is important to remember that this is only a consultative document,
which was delayed initially by resistance within the EU Commission
and further and greater opposition is likely to be met from
the Council of Ministers. Following this, the recommendation
would still have to be voted on by the European Parliament,
which means it could be years before any of the proposals will
come into effect.
The
Consumer Association of Ireland and the Dublin-based European
Consumer Association as well as industry groups are supporting
the EU Commission proposal.
If
Irish VRT rates have to come down, it is likely that taxes will
increase elsewhere to make up for the shortfall as Minister
McCreevy has indicated.
Contact:
Tony Layng
alayng@kilroys.ie
Ambitious
Strategy to cut Packaging Waste
The
European Parliament voted on the 3rd September 2002 and approved
the EU Commission's proposals on recycling and recovery of packaging
waste with some amendments.
The
EU Commission's proposal includes the following:-
- To
increase the minimum recycling target by weight for packaging
materials contained in packaging waste to 55%. The European
Parliament increased this to 65%.
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To increase the target for energy recovery to 60%.
- To
introduce specific minimum recycling targets for different
packaging materials, 20% for plastics, 50% for metals, 55%
for paper and cardboard and 60% for glass.
Ireland
will have to comply with the Parliaments decision that from
1st January 2004 new packaging should only be put on the market
"if the producer has taken all necessary measures to minimise
its environmental impact as far as possible without compromising
the essential functions of the packaging", (EU Parliament
Sep 2002).
The
Minister for the Environment, Mr Cullen recently spoke at the
4th National Environmental Conference and said;
"I
have also made known my intention to dramatically cut the volume
of waste going to landfill. The first step in this regard will
be new packaging regulations, which I am now finalising. These
will ensure that any commercial packaging waste, which can be
recycled, will be recycled. Disposal will not be permitted."
These
new regulations will join an already complex body of environmental
legislation, which dictates the obligations of a company in
relation to waste management.
Business
attitudes towards waste management in Ireland are dramatically
changing as a result of the rising cost in landfill and the
enforcement of EU directives. The Irish Government is actively
enforcing European Union directives, which focus on waste prevention,
recovery and recycling.
Directors and members of companies must assess the environmental
risks of the business and environmental reporting and waste
management must all be part of company policy. Company directors
and members must identify what environmental legislation is
relevant to their business and ensure compliance with that legislation,
failure to do so can lead to fines as high as €12.7 million.
Contact:
Tom Simpson
tsimpson@kilroys.ie
Directors
Loans - the pitfalls!
Directors of companies should be aware of the introduction of
the "whitewash" procedure introduced by the Company
Law Enforcement Act 2001 which substitutes Section 34 of the
Companies Act 1990.
This
procedure will have the following impact:
- A
company is no longer prohibited from giving a guarantee
or providing security in connection with a loan to a director
of the company or a person connected with a director.
- The
guarantee or security must be authorised by a special resolution
of the company and certain additional provisions must be
complied with by the company e.g. the making of a statutory
declaration by the directors dealing with the solvency of
the company.
- The
declaration has no effect however unless it is accompanied
by a report from an independent person who is qualified
to be an auditor of the company that, in the opinion of
the independent person, the declaration is reasonable.
In
practice, it appears that certain accountancy firms have expressed
concerns with what they perceive to be the open-ended nature
of the declaration and the independent persons report. Arising
from this concern, some firms are not prepared to furnish the
requisite report. Effectively, this neutralises the whitewash
procedure as the declaration is ineffective without the report.
Proposals
for amendments to the existing provision have been disputed
and the First Report of the Company Law Review Group published
in February this year recommends that the requirement of an
independent person's report is unnecessary as part of the validation
procedure and should be dispensed with.
For
the moment however, directors who are drawing down funding for
which security is to be provided by a company, should attempt
to ensure that reliance can be had either on the group exception
or one of the other exceptions to Section 31. In the event that
only the Section 34 exception is available on the basis that
it is not possible to re-structure the security, the issue of
the independent persons report should be discussed with the
company's auditors at the earliest possible opportunity.
Contact:
Joanne Griffin
jgriffin@kilroys.ie
Forthcoming
Seminars If you would like more information on
forthcoming
seminars or would like to register click on the appropriate
seminar below:
- Employment
- Dataprotection
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