Sovereign Wealth Fund Institute

Nick Sherry

According to the Government of Australia – Assistant Treasurer, “The Assistant Treasurer, Senator Nick Sherry, has today released a consultation paper on the proposed changes to the income tax law to formalise the existing tax practice of exempting certain income earned by foreign governments.

“Currently, there are around 50 sovereign wealth funds around the world with approximately US$3.8 trillion under management and it’s expected that this will rise to around US$10 trillion by 2015,” said the Assistant Treasurer.

“The Rudd Government wants to provide certainty to these funds when they’re considering investing in Australia, and this measure will greatly assist in delivering that outcome.”

“The proposed changes will make Australia a more attractive destination for sovereign investment and will also contribute to the Government’s financial hub strategy.”

The consultation paper seeks comments on the broad legislative design principles of the proposed changes, including:

“We are strongly committed to close consultation with industry on tax measures. We will undertake a further consultation on the draft legislation, which is expected to be introduced in the first half of 2010,” said the Assistant Treasurer.”

read more: Government of Australia – Assistant Treasurer | Consultation Paper

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The National Security Foreign Investment Reform and Strengthened Transparency Act of 2007 was written less than one year after the Bush administration received criticism for allowing Dubai Ports World (a United Arab Emirates firm) to manage security at U.S. ports. The bill would direct the executive branch to review business transactions to determine their affect on national security. On February 28, 2007, the House passed the bill 423-0.

Read the bill at: FINSA

Reuters reports that, “Switzerland will monitor sovereign wealth funds and work with other countries to set rules for such funds which have built up stakes in Western banks during the credit crisis.” The article says from a Swiss government statement says that, “Internationally, the relevant federal authorities must cooperate actively in creating transparency standards and working practices for sovereign funds.”

The Wall Street Journal writes that, “Lawmakers and the White House are welcoming the cash, and there is hardly a peep from the public. This is no accident. The warm reception reflects millions of dollars in shrewd lobbying by both overseas governments and their Wall Street targets – aided by Washington veterans from both parties, including big-time Republican fund-raiser and lobbyist Wayne Berman.

Also easing the way: The investments have been carefully designed to avoid triggering close U.S. government oversight.” The article also mentions that, “Under CFIUS rules, a passive stake – one in which investors don’t seek to influence a company’s behavior – is presumed not to pose national-security problems. Neither is a small voting stake, usually of less than 10%. During the recent string of deals, financial companies whose investments have met those requirements have notified CFIUS and haven’t had to go through 30-day initial reviews.”

Read more Wall Street Journal

According to the press release, “Nasdaq Stock Market Inc. said Monday it has obtained official US clearance for Borse Dubai’s investment in Nasdaq, which will allow Nasdaq to proceed with its plan to combine with Nordic exchange OMX.

As a result of the approval by the Committee on Foreign Investment, Nasdaq said it has formally withdrawn its stand-alone offer for OMX, and that it supports Borse Dubai’s all-cash 265 kronor (49.95 dollars) per share offer for the Stockholm, Sweden-based OMX.

Once Borse Dubai owns at least 67 percent of the shares of OMX, it will transfer all OMX shares it owns to Nasdaq. At the same time, Borse Dubai will make a minority investment in Nasdaq and Nasdaq will make a minority investment in Dubai International Financial Exchange.

Borse Dubai is the holding company for Dubai International Financial Exchange and Dubai Financial Market.

The cash offer by Borse Dubai values OMX at 32 billion kronor (4.9 billion dollars).

OMX operates exchanges in Copenhagen, Stockholm, Helsinki, Reykjavik, Riga, Tallinn and Vilnius.”

Source: AFP