Alan Burns – Client Secondment
Merrill Lynch, London
Robert F. Kennedy, speaking at the University of Cape Town in 1966 in what became known as the Day of Affirmation address said, "There is a Chinese curse which says 'May he live in interesting times.' Like it or not, we live in interesting times."
Less than a fortnight into my secondment working in the Office of General Counsel (OGC) of Merrill Lynch, times became very interesting indeed. The sudden bankruptcy of Lehman Brothers, the fourth biggest investment bank in the world, followed that of the fifth (Bear Stearns) in March and pre-empted the takeover of the third (Merrill Lynch) by Bank of America. Wall Street hadn't witnessed a crisis like it in 70 years. Perhaps ever. Amidst the panic, hand-wringing commentators warned that everyone involved in the global banking system had been complicit in this unprecedented catastrophe. That didn't bode well for my trainee evaluation.
I worked for four months in Merrill's regional headquarters for Europe, Middle East and Africa, an imposing building near St. Paul's Cathedral. It is at the heart of the City, in every sense.
During my time there, most of the lawyers in the OGC dedicated themselves to extricating the firm from the morass caused by Lehman's demise. It was a fascinating process for a trainee to be involved in: not only was this a journey into the unknown, even for the most experienced lawyers, but unimaginable amounts of money urgently depended on its outcome.
Michael Coyle – Corporate and Tax Groups
Corporate Migration Transactions
US Senator Carl Levin introduced the Stop Tax Haven Abuse Bill 2009 on 2 March 2009. The Bill was designed to stop big US companies reducing tax by basing their tax residence in tax havens such as Bermuda or the Cayman Islands. Although this Bill has yet to be enacted as legislation, a number of companies who were concerned they might be caught by the legislation decided to pre-empt it by migrating their tax residence to a jurisdiction that would not be affected by the new legislation.
The companies potentially affected by this Bill did not wish to move their tax residence back to the US due to its high rate of corporation tax, which includes both state and federal tax, with an effective tax rate of up to 35% on company profits. Ireland is not one of the jurisdictions listed as a tax haven in the Bill as it charges corporation tax and has a tax treaty with the US. It is therefore a viable jurisdiction for these US companies to consider for their tax residence. In addition, Ireland has an attractive corporation tax rate of 12.5%, a double tax treaty network with 50 countries and has introduced various tax incentive schemes such as research and development tax credits.
As a result, since early 2009, a number of US listed companies have migrated their tax residence to Ireland. The process of migrating the tax residence of a huge corporate entity is a complex and intricate one. It requires input from corporate, litigation and tax legal experts from multiple legal jurisdictions. It involves a scheme of arrangement which requires Supreme Court approval in the tax haven jurisdiction, shareholder approval and Irish High Court approval.
Arthur Cox has had the privilege of advising on numerous migrations following the introduction of the Bill. We were tasked with co-ordinating the entire process from Ireland, which involved daily correspondence with lawyers in Bermuda, the Cayman Islands, the US and sometimes other jurisdictions such as Luxembourg and the UK. The scheme of arrangement is a document intensive exercise, but when we had gone through the entire process for one company, it was a lot easier to go ahead and do it for other companies. In a sense, we developed our own intellectual property for this type of transaction.
Some of the companies we have advised are Accenture, Covidien, Ingersoll Rand, TBS International, United America Indemnity, Cooper Industries, Seagate, Warner Chilcott and Willis. The initial logic for these companies to move to Ireland was to avoid falling foul of the forthcoming US legislation. The other benefits of moving to Ireland were soon apparent to them.
The publicity that Ireland received as a result of these well known corporations moving here has also resulted in companies based in other countries who are unaffected by the US Bill considering a move to Ireland to avail of the benefits of being tax resident here. For example, we have also advised James Hardie (an Australian and US listed company) on its migration to Ireland.
As a trainee, I had the opportunity to work on some of these migrations during my rotations in the Corporate and Tax Departments. My work involved preparing tax submissions to the Irish Revenue Commissioners, filing dividend withholding tax returns, incorporating the Irish holding company, preparing High Court documents, and preparing legal notices for advertisement in international newspapers such as the Financial Times and the Wall Street Journal. I also got to attend the board meetings of some of the migrating companies in order to take minutes at their meeting. This was a great opportunity to meet directors of NYSE and NASDAQ listed companies and to see how they operate.
Working on the migrations has been a great experience. I really enjoyed working with other international law firms and being part of a transaction that had not been done before. It was fulfilling to see our interpretation of complex legislation being confirmed by the High Court and the Revenue Commissioners.
Alan Burns – Client Secondment
Merrill Lynch, London
Robert F. Kennedy, speaking at the University of Cape Town in 1966 in what became known as the Day of Affirmation address said, "There is a Chinese curse which says 'May he live in interesting times.' Like it or not, we live in interesting times."
Less than a fortnight into my secondment working in the Office of General Counsel (OGC) of Merrill Lynch, times became very interesting indeed. The sudden bankruptcy of Lehman Brothers, the fourth biggest investment bank in the world, followed that of the fifth (Bear Stearns) in March and pre-empted the takeover of the third (Merrill Lynch) by Bank of America. Wall Street hadn't witnessed a crisis like it in 70 years. Perhaps ever. Amidst the panic, hand-wringing commentators warned that everyone involved in the global banking system had been complicit in this unprecedented catastrophe. That didn't bode well for my trainee evaluation.
I worked for four months in Merrill's regional headquarters for Europe, Middle East and Africa, an imposing building near St. Paul's Cathedral. It is at the heart of the City, in every sense.
During my time there, most of the lawyers in the OGC dedicated themselves to extricating the firm from the morass caused by Lehman's demise. It was a fascinating process for a trainee to be involved in: not only was this a journey into the unknown, even for the most experienced lawyers, but unimaginable amounts of money urgently depended on its outcome.
Padraic Kinsella – Capital Markets Group
Bank of Scotland (Ireland) Limited - €4.3 billion Securitisation
During the period August to December 2008, I spent the third rotation of my traineeship working in the Capital Markets Group. Within that time I gained significant exposure to some very high profile and complex structured finance transactions.
One particular transaction that I spent the majority of my time working on was a securitisation for Bank of Scotland (Ireland) Limited (“BoSI”). This was essentially a capital raising exercise for BoSI whereby it converted a substantial part of its Irish residential mortgage portfolio into €4.3 billion worth of available capital. This capital was raised through the issue of two classes of bonds to investors by a company called Wolfhound Funding 2008-1 Limited. In terms of Irish structured finance generally, it was a unique deal due to its size and the fact that all parties and contractual documentation involved were Irish.
As a trainee assigned to the project, a large part of my role included drafting some of the many agreements to be put in place between the newly incorporated issuing company and various financial counterparties. I also assisted a senior associate in preparing the 162 page Prospectus, which was the offer document being submitted to the Irish Stock Exchange to inform potential investors in the bonds. Working alongside two partners and two associates, I liaised directly with BoSI and the London based treasury of its UK parent company HBOS plc throughout all stages of the transaction. In relation to the Prospectus, I also worked closely with Arthur Cox Listing Services Limited in connection with the listing of the bonds on the Irish Stock Exchange. The build up to the closing date in late November involved a great deal of preparation in terms of ensuring that all necessary documentation was complete, agreed and ready for signing by the many parties involved. We also had to ensure that all documentation was satisfactory to the credit rating agencies who had been asked to give the bonds their highest rating.
Overall, it was a very exciting deal to be a part of and was one which I thoroughly enjoyed contributing to and learning from, especially given its unique and significant nature. The extensive knowledge and experience of my senior colleagues was prominent at all stages of the project and it was very gratifying that BoSI was complimentary about the whole team’s performance. While I have now moved on to the Banking Group as a newly qualified solicitor, I am glad to hear that the group has since commenced work on a second BoSI/Wolfhound transaction and I have no doubt that it will be as successful as the first.