Please click here to print 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 ; Provisional and interim damages awards in cases of hardship where liability is not an issue; Structured settlements and awards in catastrophic injury cases; 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%. 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