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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
United Kingdom | Publication | agosto 2023
The Upper Tribunal (Tax and Chancery Chamber) has rejected a reference by the target of a contribution notice against a decision of the Regulator's Determinations Panel which had found that the target and his nephew had been party to a series of financial transactions that had caused material detriment to a group pension scheme.
In Shah v Pensions Regulator [2023], the Panel had determined that a contribution notice requiring a payment of £3.69m to the scheme should be issued to the targets. This sum represented the sale proceeds of shares held by one of the scheme's statutory employers in an Indian joint venture company. The sale proceeds were paid in 2014 to another group company which was not a statutory employer in relation to the scheme. Later that year, the scheme went into winding-up after a creditors’ voluntary arrangement in respect of its principal employer. At that time, the buyout deficit in the scheme was estimated to be £5.85m.
The targets referred the determination to the Upper Tribunal. The Regulator asked the tribunal to direct the issue of a contribution notice under which the uncle would be required to pay 50% of the sum specified in the notice, plus an uplift for the passage of time since the acts had occurred. A settlement was reached with the nephew before the hearing.
The tribunal held that it was reasonable to issue a contribution notice in the terms sought by the Regulator, as all the legal conditions were satisfied governing when a contribution notice should be issued on the material detriment basis.
As regards the amount specified in the notice, the tribunal ruled that there was nothing in the relevant law which suggested that there was a need to base the quantum on any kind of compensatory analysis based on the loss to the scheme as a result of the act or failure to act. The focus should therefore be on the extent to which the act or failure to act had caused detriment to the prospects of members of the scheme receiving the benefits to which they were entitled.
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