South Africa: Hybrid Financial Instruments (Tax Update - May 2005)

Last Updated: 13 June 2005
Article by Peter Surtees

The Minister of Finance has had the banking sector in his sights for some time, not only because he believes that banks are enjoying excessive tax benefits, but because, both for themselves and for their clients, they are devising tax-driven investment schemes that erode the tax base. Recent additions to the Income Tax Act give effect to the legislature’s intention of reining in these practices.

SARS already has at its disposal section 8E, which provides for the treatment of preference share dividends as interest in certain types of transactions formerly used by banks. There is also section 103(5), which seeks to nullify the benefits of dividend-interest swaps. Then a year ago section 76A appeared and has been operative since 1 March 2005. The section requires "reportable transactions" to be reported to SARS in some detail. A reportable transaction, in broad terms, is one that derives much of its attraction from tax benefits, and provides for amendment to its terms if the tax effects turn out to be other than the parties anticipated.

In addition, of course, there is section 103(1), the general anti-avoidance provision of the Act.

The most recent addition to this parcel of provisions aimed at the financial sector has been introduced into the Act by the 2004 Revenue Laws Amendment Bill, and is aimed at so-called hybrid financial instruments. A new section 8F, titled "Limitation of Deduction of Certain Interest Payments" has been introduced, as well as several amendments to sections 24J (incurral and accrual of interest) and 64C (certain amounts deemed to be dividends). In addition, the scope of sections 8E and 103(5) has been extended.

The SARS Explanatory Memorandum gives as the reasons for the amendments and additions:

  • "Of special concern is debt convertible or exchangeable into shares because the nature of these instruments often means that the obligor need not actually repay principal (a key characteristic of a true debt instrument)".
  • "Taxpayers are attempting to escape the deemed interest rules of section 24J by designing complex structures with multiple inter-related agreements involving connected persons or third parties, which are facilitated by financial institutions. The purpose of these arrangements includes the claiming of the principal amount of a loan as disguised interest, although tax policy principles would only allow deductions for the incurral of interest on a real loan".
  • "Lastly, we have become aware of a number of financial institutions that are attempting to manipulate the tax system through various forms of revenue stream swaps. The purpose of these swaps is to convert amounts of taxable interest or dividends into interest-free dividends by utilising trading entities as well as exemption provisions to shield the swapped taxable interest".

The new legislation discussed below should be considered in the light of these concerns of SARS.

Section 24J

One of the perceived abuses in certain schemes is a circular flow of funds within a group, enabling the parties to manipulate interest charges so that a company claiming an interest deduction suffers an inflated charge. This has been addressed by providing that the interest claimed by members of a group as a deduction is only deductible to the extent that it is paid to unconnected persons outside the group. The wording of the section in this respect is likely to invite disputes between taxpayers and SARS, because the restriction will apply in respect of "any transaction, operation or scheme" and specifically to payments made by the issuer of an instrument "pursuant to that transaction, operation or scheme with a purpose or with the probable effect of making payment directly or indirectly to the holder or a connected person in relation to the holder". Commencing with the phrase "any transaction, operation or scheme", this provision is redolent with subjective, judgmental decisions, and hence of the potential for conflict with SARS.

Section 8E

Up to the present, this section has applied only to a limited class of transactions defined as "affected instruments". These were essentially preference shares that were redeemable within three years either in terms of their conditions of issue or at the behest of the holder. In other words, they were disguised debt instruments. The definition has been replaced with a definition of "hybrid equity instrument", which includes instruments covered by the previous definition as well as any share issued by a company whose existence will or is likely to be terminated within three years "upon a reasonable consideration of all the facts at the time that share is issued". Once again, the subjective elements of this provision are noteworthy.

If the terms of issue do not provide for redemption within three years, but they are subsequently changed so that the shares fall into the definition, the shares will be deemed to be hybrid equity instruments from the date of the change.

The operative provisions of section 8E will apply to hybrid equity instruments, namely, that dividends on the shares will be treated as interest in the hands of the recipient shareholder but as dividends in the hands of the company. This has the doubly punitive result that, not only will the amount be taxable in the hands of the shareholder and not be deductible by the company, but the company will be liable for STC on the amount.

Section 8F

As expressed in the Explanatory Memorandum, there is a spectrum with pure equity at one end and pure debt at the other. Many instruments have conditions that place them somewhere between these extremes. Section 8F applies to instruments that have the legal form of debt but have sufficient equity features that they may be placed nearer the equity end of the spectrum.

In an echo of section 8E, the main feature of such an instrument, called a "hybrid debt instrument", is that it is convertible or exchangeable into shares within three years. It matters not whether the option lies with the issuer or the holder; in both instances the section applies. When an instrument has this characteristic, interest payable is disallowed as a deduction in the hands of the issuer but fully taxable in those of the holder. Moreover, if the issuer is a company, the payment is deemed to be a dividend, which means that STC is payable. Section 64C has been amended to provide specifically for this result.

The conversion may be into shares of the issuer or a connected person in relation to the issuer. It follows that section 8F can apply to a debt instrument issued by a person other than a company if the instrument is convertible into shares of a company connected to the issuer.

Like hybrid equity instruments, if the terms of issue do not provide for conversion or exchange within three years, but they are subsequently changed so that the instrument falls into the definition, the instrument will be deemed to be a hybrid debt instrument from the date of the change.

Section 103(5) is an anti-avoidance provision aimed against transactions in which a right to interest is ceded in exchange for a right to dividends. The section gives C:SARS the right to treat the participants as if the transaction had not taken place. As the final piece in the hybrid instrument legislation, the section has been amended so C:SARS may now apply it to a transaction where any form of income, not only interest, is ceded in exchange for the right to dividends.

Reportable arrangements

The first notice, presently still a draft, issued by the Minister in terms of his powers and duties under section 76A, identifying certain arrangements as reportable arrangements, uses the provisions of sections 8E and 8F to categorise certain hybrid instruments as reportable arrangements. A detailed summary of the draft notice will be issued as our next TaxMail.


The first arrangements are identified

Section 76A of the Income Tax Act came into operation on 1 March 2005. The Minister has issued a draft notice, likely to be the first of many, identifying arrangements that he deems are reportable and therefore subject to the provisions of the section, and others that are not reportable. In terms of the definition of "reportable arrangement", the Minister has certain powers and duties to identify arrangements by notice.

A reportable arrangement is one with three characteristics: (a) the calculation of interest, fees or other charges is wholly or partly dependent on the tax treatment of the arrangement; (b) provision is made for a variation in such calculations if the tax treatment is other than anticipated; and (c) the amount of the variation exceeds R5 million. According to the first of his two powers, the Minister may identify arrangements that in his view are to be excluded form the definition because they are not likely to lead to undue tax benefits. His second power under the section is to identify arrangements with characteristics that are likely to lead to undue tax benefits.

It seems that, if an arrangement has the three characteristics set out in the definition, it is a reportable arrangement unless excluded by notice. Conversely, even if an arrangement does not have these characteristics, the Minister may determine that the characteristics it does have are likely to lead to an undue tax benefit, and he is able to bring it within the provisions of the section by notice.

Schedule A of the draft notice identifies four classes of arrangement that are not likely to lead to undue tax benefits:

  • any loan, advance or debt in terms of which the borrower either receives an amount of cash and agrees to repay at least the full amount back at a determinable future date, or receives fungible property and agrees to return property of at least the same kind, quantity or quality at a determinable future date;
  • any finance lease that transfers substantially all the risks and rewards of ownership to the lessee;
  • any transaction undertaken through an exchange regulated in terms of the Securities Services Act;
  • any transaction regulated in terms of the Collective Investment Schemes Act.

The Schedule makes it clear that, in order to qualify as an excluded arrangement, the transaction must be undertaken on a stand-alone basis and not be connected to any other arrangement, directly or indirectly. There may, however, be a connected arrangement provided its sole purpose is to provide security and there is no tax benefit from it.

In all instances, however, if one of the main purposes of the arrangement is to obtain or enhance a tax benefit, the exclusion will not apply.

Schedule B identifies certain arrangements that are deemed to be reportable. These are hybrid equity and debt instruments as defined in sections 8E and 8F of the Act respectively. In essence, these sections provide for punitive results where preference shares in the case of section 8E are redeemable within three years, or debt instruments in the case of section 8F are convertible into shares within three years. In the case of section 8E, dividends paid on the preference shares are deemed to be interest in the hands of the shareholder; in the case of section 8F, interest paid on the debt instrument is not deductible. Clearly these are very unfavourable provisions, because in both cases the amount is taxable in the hands of the recipient but not deductible by the payer.

In terms of Schedule B, any arrangement that would be a hybrid instrument if the period provided for in section 8E or 8F, as the case may be, was 10 years instead of three is deemed to have characteristics that are likely to lead to an undue tax benefit and is therefore reportable. This does not mean that hybrid instruments that are convertible or redeemable within 10 years suffer the punitive consequences of sections 8E and 8F; it merely means that they are reportable in terms of section 76A.

Section 76A requires that full details of a reportable transaction must be disclosed to C:SARS, including:

  • a description of all the steps and key features of the arrangement;
  • a list of the parties to the arrangement;
  • copies of all the signed documents relating to the arrangement;
  • any financial model of the arrangement, including spreadsheets or computer models.


South Africa's return to the international community in 1994 has seen an increase in the number of foreign investors investing in South African companies. Such inward investment requires a balance between equity on the one hand and debt on the other. An important consideration in this balancing act is that the interest earned by a non-resident lender who does not carry on a business in South Africa is exempt from tax in South Africa in terms of section 10(h) of the Income Tax Act, 1962 ("the Act") but will be deductible by the borrower if it was incurred in the production of income. Therefore, it might suit an investor to maximise debt rather than equity, especially as dividends paid would not be deductible from income, and to impose as high an interest rate as possible. However, two factors operate to limit the benefits a foreign investor may obtain in this way. These factors require that, in making these loans, consideration be given to:

  • the rate of interest that can be charged by a foreign lender (see transfer pricing below); and
  • the South African company's debt to equity ratio (see thin capitalisation below).

In South Africa, intra group financial assistance (comprising loans by a foreign lender to a South African company where the lender has an interest of not less than 25% or loans by a foreign lender to a connected person in South Africa) falls within the ambit of section 31 of the Act. This section governs both transfer pricing and thin capitalisation. SARS has issued two practice notes in respect of section 31, Practice Note 2, issued on 14 May 1996 and later amended by an addendum dated 17 May 2002, and Practice Note 7 issued on 6 August 1999. Whilst Practice Note 2 is of more general application, Practice Note 7 makes provision for guidelines setting out the procedures to be followed in determining arm's length prices within the South African business environment. It also sets out the Commissioner's views on documentation and other practical issues relevant to the analysis of international agreements.

An article by Suné Millard on our website (, titled as above, seeks to explain the complex inter-relationship that exists between the transfer pricing and thin capitalisation provisions in the Act as well as emphasising important factors such as a company’s obligation to submit a transfer pricing policy document together with its annual tax return.


One of the hallowed tenets of tax law in South Africa is the accrual system, in terms of which an amount is deemed to have accrued as soon as the person to whom it is due acquires an unconditional entitlement to it, and deemed to have been incurred by the other party at the same time. This may in some circumstances lead to cash flow problems where an amount accrues before it is payable. Indeed, the Income Tax Act has long recognised this disadvantage to taxpayers and provided a limited degree of relief. Section 24 permits a deduction of the gross profit element of amounts due more than 12 months hence in credit agreements, while section 24C makes a similar concession in respect of future expenditure on contracts such as service agreements.

This principle works perfectly well in most instances; however, difficult situations occasionally arise where the parties are unable to predict the exact amounts involved. This happens when the price payable depends on future events. In such cases the parties have in the past had to estimate the values of transactions, and this results in under- or over-estimates of prices and consequent future adjustments.

Section 24M of the Act and paragraph 39A of the Eighth Schedule, introduced in the December 2004 amending Act, provide for the treatment of amounts that are as yet unquantifiable at the time of the transaction. In doing so, the new provisions create some interesting potential recording difficulties for accountants.

Section 24M

If a person disposes of an asset for a consideration that cannot be quantified in that year of assessment, the portion that cannot be quantified will be deemed not to have accrued during that year, but in the year in which it becomes quantifiable.

Where the asset is not subject to any of the deductions or allowances provided for in the Act, that is to say it is not a depreciable asset, the tax and accounting implications are straightforward. For example, say a building is sold for R1 million plus R150 000,
R200 000 and R250 000 respectively at the beginning of each of the following three years, provided that during each previous year in question the rental income achieves certain projected targets. As each annual target is met, the purchaser adds the additional
R200 000 to the base cost of the building.

Now consider the effect of the section for a purchaser of a depreciable asset to be used in a process of manufacture. Section 12C provides for the cost of such an asset to be written off over four years in the ration 40:20:20:20. As each amount becomes quantified, the capital allowances in respect of that amount for the previous tax periods must be brought to account in the current year.

Year 1:

Allowance on R1.0m: 40% x R1m=


R400 000

Year 2:

Allowance on R1.0m: 20% x R1m=

R200 000



Allowance on R0.15m: 40% x R0.15m =

R60 000



Allowance on R0.15m: 20% x R0.15m

R30 000

R290 000

Year 3:

Allowance on R1.0m: 20% x R1m=

R200 000



Allowance on R0.15m: 20% x R0.15m

R30 000



Allowance on R0.20m: 40% x R0.20m

R80 000



Allowance on R0.20m: 20% x R0.20m

R40 000



Allowance on R0.20m: 20% x R0.2m

R40 000

R390 000

Year 4:

Allowance on R1.0m: 20% x R1m =

R200 000



Allowance on R0.15m: 20% x R0.15m

R30 000



Allowance on R0.20m: 20% x R0.20m

R40 000



Allowance on R0.25m: 40% x R0.25m

R100 000



Allowance on R0.25m: 20% R0.25m

R50 000



Allowance on R0.25m: 20% x R0.25m

R50 000



Allowance on R0.25m: 20% x R0.25m

R50 000

R520 000


Total allowances


R1 600 000

It is clear that some tricky record-keeping will be required, not to mention the deferred tax implications.

Paragraph 39A

This new paragraph deals with capital gains and losses arising from a disposal where the proceeds are unquantifiable. It provides that capital losses incurred in transactions where the proceeds are unquantifiable may not be set off against gains from other transactions; they are ring-fenced and may be set off only against subsequent gains from the same transaction as more of the proceeds become quantifiable. Only if the taxpayer is able to satisfy SARS that no further proceeds will accrue may any outstanding ring-fenced loss be brought to account and set off against other gains.

This may be illustrated using the above example, viewing it from the point of view of the seller. If the seller is not a property trader, the capital gain or loss in year 1 will be the difference between the seller’s base cost and R1 million. Each subsequent amount received will be treated as a capital gain in that year. Assuming a base cost of R1.1 million and that the targets are all met, the results for the seller will be:

Year 1:

Base cost R1.1m - proceeds R1 m = capital loss



Year 2:

Proceeds, being capital gain



Year 3:

Proceeds, being capital gain



Year 4:

Proceeds, being capital gain



Net effect

Proceeds R1m + (R150k + R200k + R250k) =




Base cost




Net capital gain



The gains or losses will, in terms of paragraph 39A, be recognised as follows:

Year 1:

Capital loss, ring-fenced



Year 2:

Capital gain, being newly quantified amount




Less ring-fenced loss from year 1




Taxable gain



Year 3:

Taxable capital gain, being newly quantified amount



Year 4:

Taxable capital gain, being newly quantified amount




Net capital gain



It is clear that the net effect is the same; Paragraph 39A merely determines the timing of the recognition of the gain.

The illustrative examples on this subject in the Explanatory Memorandum to the amending Act are misleading and violate established tax principles. The facts on which they are based are that a person sells retail property to another person for a determined sum plus a percentage of the net profits for each of the next five years. The annual percentages of the net profits, which of course are unquantifiable at the date of the transaction, are treated in the examples as part of the proceeds, that is, capital accruals in the hands of the seller. However, in Deary v Deputy CIR 32 SATC 92, one of the oldest South African tax cases, amounts paid out of future profits were deemed to be revenue in nature. In our view the wording in the SARS example is likely to lead to the conclusion that the seller is sharing in the profits of the enterprise, resulting in the subsequent payments being fully taxable. The agreement would have to be carefully worded to ensure that these amounts, when quantified, retained the nature of capital.

NEW CASE - Is a forex dealer trading inside or outside South Africa?

The mass of recent tax legislation and the increasing complexity of business have meant that not many tax cases reported in the past few years have involved a simple enquiry to be dealt with by means of old established precedent from the courts. The recently reported ITC 1779 66 SATC 353 is, however, such a case.

The taxpayer, who resided in Cape Town, was employed on a full time basis by a firm of registered accountants and auditors. During the 2002 year of assessment, after attending a course in South Africa provided by the local franchise holder of a United States entity called Global Forex Trading ("GFT"), he began to trade after hours as a foreign exchange dealer. GFT was a division of a corporation based in Michigan in the United States of America. The facilities provided by the local franchise holder included appropriate computer software as well as a dedicated line for trading on the internet. The taxpayer also required the use of a suitable computer for his trading purposes because, in order to carry on this trade, he had to keep himself informed of political and economic events that might influence exchange rate movements and to study the trends and other information available to him through the software on his computer. In addition, before trading he acquired the necessary Reserve Bank approval, on the strength of which he had transmitted to GFT an obligatory amount of USD1 000 and an additional voluntary amount of USD2 000. These amounts were intended as security for any losses that he might incur from his dealings.

The manner of his trading was that he effected currency swaps with GFT. He would, for example, one day take a short position in USD by selling USD100 000 for an equivalent amount of pounds sterling ("GBP") at the current exchange rate. The procedure was that GFT would make an offer at a particular exchange rate and the taxpayer could, if he found the rate attractive, accept by conveying his decision electronically. Within two days he would effect a counter swap transaction in terms of which he would dispose of an amount of GBP equal to USD100 000 at the rate of exchange ruling at the time of the second transaction. He would then make a loss or profit on these transactions depending upon the movement of the USD-GBP exchange rate. There were no actual transfers of the currencies involved. Alternatively, the taxpayer could also take a long position by purchasing USD100 000 on day one and then effect a reverse transaction within two days. Any profit that he made was credited to his forex trading account with GFT and any loss was discharged from that account. During the course of the year of assessment he transferred a total of USD10 500 to GFT in order to meet his obligations to it.

In his income tax return for the 2002 year of assessment, the taxpayer set off against his other income a loss of R158 964 which had arisen from his foreign exchange dealings. Because there was no dispute as to the fact that the taxpayer’s foreign exchange dealings constituted a trade as defined in the Act, the only issue was whether this trade was carried on outside South Africa as contemplated in the proviso to section 20(1) of the Income Tax Act.

C:SARS refused to allow the set-off on the grounds that the taxpayer was carrying on the trade outside South Africa, and disallowed the set-off in assessing him. The taxpayer’s objection having been rejected, he appealed to the tax court, contending that his trade had been conducted in the Republic.

The relevant part of section 20 provides that, whereas losses from one trade either incurred during the year or brought forward from a previous year may be set off against the income of the taxpayer, set-off is not permitted where such a loss has been incurred "in carrying on any trade outside the Republic".

Of vital importance to his trading success and to the case was his decision-making as to which transactions to enter into and the timing of those decisions. Equally important to the case was the fact that all his trading took place from his home in Cape Town.

There seems to have been consensus between counsel and the court that the various income tax cases, all emanating from the Appellate Division and dealing with the concept "from any source within the Republic", contained useful guidelines for considering the matter here in issue. The first and, as appears from the judgment, most useful case considered was Millin v CIR 3 SATC 170. Mrs Millin, a celebrated author, received income in the form of royalties from sales of her books in the United Kingdom. The taxpayer argued that the source of the income was the UK, because that was where the contract with her publishers had been concluded. However, according to the judgment of Solomon CJ,

"If we apply the same test here it would appear that the source of the whole amount received for royalties was in the Union. It is true that in this case no capital in the ordinary sense of that term was employed by Mrs Millin. It was the exercise of her wits and labour that produced the royalties. They were employed in the Union, and it matters not, on the analogy of the Overseas Trust case, that the grant to her publishers of the right to publish her book was contained in a contract made in England. Her faculties were employed in the Union both in writing the book and in dealing with her publishers, and, therefore, on the test applied in the cases cited, the source of the whole of her income would be in the Union."

The next case considered was CIR v Lever Bros and Unilever Ltd 14 SATC 1, where the court was burdened with the task of deciding the source of interest received in terms of a loan. Watermeyer CJ, in one of his many profound dicta in tax matters, found that "the source of receipts, received as income, is not the quarter whence they come, but the originating cause of their being received as income, and that this originating cause is the work which the taxpayer does to earn them, the quid pro quo which he gives in return for which he receives them".

In CIR v Epstein 19 SATC 221 the facts were that the taxpayer, an agent in Johannesburg, had entered into an agreement with a partnership Hendrickse & Co in Argentina, in terms of which he exported asbestos for sale there by the partnership. In effect, Epstein and Hendrickse & Co were in partnership in this enterprise. The taxpayer contended that the source of his profits from the sales was Argentina, where the sales had taken place. However, the court found that, as all the activities of the taxpayer had taken place in South Africa, and as it was as a result of them that he had earned the profits, their source was South Africa.

Also on point was the decision in CIR v Black 21 SATC 226, where a stockbroker was able to show that he was carrying on two separate and distinct businesses, one in Johannesburg and the other in London, as a result of which the profit from his London operations was found not to be from a South African source. Schreiner ACJ said in his judgment: "But the Commissioner would be entitled to succeed in this appeal if he could show that the only true and reasonable conclusion on the facts found was that the dominant, or main or substantial or real and basic cause of the accrual of income was to be found in Johannesburg".

Finally, in Transvaal Associated Hides and Skin Merchants v COT 29 SATC 97 the taxpayer , a South African company, carried on its business in both Botwana and South Africa. Hides were purchased and cured in Botswana, after which they were despatched to purchasers. The Court of Appeal of Botswana found that the processes carried out in Botswana were the dominant factors in the accrual of the income. Maisels JA, drawing from Schreiner ACJ’s judgment in Black’s case, said: "the position is different when the activities of a person are performed in two or more countries. In such cases, it would appear that the locality of the source must be determined by reference to those of the activities which constitute ‘the dominant or main or substantial or real and basic cause’ of the accrual of income".

After considering all these judgments, the court applied the Millin dictum and found that, although certain elements of the taxpayer’s trading activities took place in the USA, the exercise of his wits and labour played the essential role in his trading. There was no doubt that he had exercised these in the Republic when he made the crucial trading decisions. The application of the "dominant" or "main" or "substantial" or "real and basic" cause tests that had emerged from the other cases cited would, in the view of the court, lead to the same result.

It is interesting that, in all the cases cited, the taxpayer had been trying to show that the source had been elsewhere. In the present case, the decisions were successfully used to show the opposite.

Because this case involved the treatment of an assessed loss in the 2002 year of assessment, section 20A, which was introduced into the Act in 2003, was not applicable. This section provides for the ring-fencing of assessed losses from secondary trades, which the trade in this case certainly was. Under section 20A, taxpayers such as the appellant in this case will have to ensure that they do not incur losses in their secondary trades in three out of any five years. If they do, they will not be able to set off their losses against other income, but only against future profits from the secondary trade.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions