ABSTRACT
DV ZHOO DV V\PSDWKHWLF :KLWHV UDOOLHG WR WKH FDXVH RI WKH &LYLO 5LJKWV 0RYHPHQW ZKLFK FDOOHG IRU DQ HQG WR WKH LQMXVWLFHV SHUSHWUDWHG DJDLQVW %ODFNVHVSHFLDOO\ EXWQRWH[FOXVLYHO\ LQWKH6RXWKDQGIRUWKHSDUWLFLSDWLRQ RI%ODFNV LQ$PHULFDQ VRFLHW\ DV IXOO FLWL]HQV 7KH VWUXJJOH WR DFKLHYH WKHVH JRDOV ZDV OHG E\ WKH 5HYHUHQG 0DUWLQ /XWKHU .LQJ -U ZKRVH HIIHFWLYH VWUDWHJ\RIFLYLOGLVREHGLHQFHDQGQRQYLROHQWUHVLVWDQFHZDVLQVSLUHGE\WKDW RI 0DKDWPD *DQGKL LQ WKH VWUXJJOH IRU ,QGLDQ LQGHSHQGHQFH %\ WKH ODWH
VDQGHDUO\V WKH&LYLO5LJKWV0RYHPHQWVXFFHHGHGLQSURGGLQJWKH 86 IHGHUDO JRYHUQPHQW LQWR WDNLQJ DFWLRQ DJDLQVW WKH VHJUHJDWLRQ RI%ODFNV LQWRLQIHULRUVFKRROVDQGSXEOLFIDFLOLWLHVDQGSURYLGLQJ%ODFNVZLWKDFFHVVWR ULJKWV DQG RSSRUWXQLWLHV WKDW KDG ORQJ EHHQ GHQLHG WKHP EHFDXVH RI WKHLU UDFLDO LGHQWLW\ )ROORZLQJWKHH[DPSOHVHWE\%ODFNV RWKHUXQGHUUHSUHVHQWHG HWKQLFJURXSV²VXFKDV+LVSDQLF$PHULFDQVDQG1DWLYH$PHULFDQV²EHJDQ WRPRELOL]H LQ WKH ODWHVDQGHDUO\V WRSXVK IRUDQHQGWRYDULRXV IRUPVRIGLVFULPLQDWLRQWKDWWKH\IDFHGLQ$PHULFDQVRFLHW\ 7KH PRVW LPSRUWDQW OHJLVODWLYH VWHS LQ UHVSRQVH WR WKH &LYLO 5LJKWV
0RYHPHQWZDVWKH&LYLO5LJKWV$FW FKDPSLRQHGE\3UHVLGHQW/\QGRQ % -RKQVRQDQGSDVVHGE\ERWK+RXVHVRI&RQJUHVVLQWKHZDNHRIWKHDVVDVVL QDWLRQRI3UHVLGHQW-RKQ) .HQQHG\ 7KLV$FW EDVHGRQWKH(TXDO3URWHFWLRQ &ODXVHRIWKH86&RQVWLWXWLRQ IRUPDOO\RXWODZHGGLVFULPLQDWRU\SUDFWLFHVLQ DOPRVWDOOSXEOLF²DVRSSRVHG WRSHUVRQDORUSULYDWH²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´DIILUPDWLYHDFWLRQµ ZDVDSSOLHGWRDFWLYHRXWUHDFKHIIRUWVPDGHE\ RUJDQL]DWLRQV DQG HQWHUSULVHV WR DVVXUH WKDW PHPEHUV RI XQGHUUHSUHVHQWHG JURXSVZRXOGKDYHWKHVDPHNLQGRIDFFHVVWRMREVDQGHGXFDWLRQDORSSRUWX QLWLHVDVWKHLUPRUHDGYDQWDJHGIHOORZFLWL]HQV²ZLWKRXWDQ\UHJDUGIRUWKHLU HWKQLFVWDWXV 7KH OHJDO DXWKRULW\ IRU DIILUPDWLYH DFWLRQ LQ LWV RULJLQDO IRUP ZDV
HPEHGGHGLQ7LWOHV9,DQG9,,RIWKH&LYLO5LJKWV$FWRI 7KHVHWZR WLWOHVEDQGLVFULPLQDWLRQ ZKHWKHUQHJDWLYHRUSRVLWLYH RQJURXQGVRI UDFH FRORU UHOLJLRQ VH[ RU QDWLRQDO RULJLQ LQ IHGHUDOO\ DVVLVWHG DFWLYLWLHV DQG LQ HPSOR\PHQW UHVSHFWLYHO\ 7R UHLQIRUFH WKHVH SURYLVLRQV 3UHVLGHQW -RKQVRQ LVVXHG([HFXWLYH2UGHU1R ZKLFKGLUHFWHGJRYHUQPHQWFRQWUDFWRUVWR DFWLYHO\VHHNRXW%ODFNFDQGLGDWHVIRUMREV DQGFDOOHGIRUFROOHJHVDQGXQLYHU VLWLHV WR UHFUXLWPRUH%ODFN VWXGHQWVDQG IDFXOW\PHPEHUV ´ZLWKRXW WUHDWLQJ WKHPGLIIHUHQWO\ZKHQPDNLQJDFWXDOGHFLVLRQVµ 7KH2UGHUDOVRFUHDWHG WKH 2IILFHRI)HGHUDO&RQWUDFW&RPSOLDQFH3URJUDPWRPRQLWRUDQGHQIRUFHWKH SROLF\GLUHFWLYH ,W VRRQ EHFDPH DSSDUHQW KRZHYHU WKDW DIILUPDWLYH DFWLRQ RI WKLV NLQG
ZRXOG QRW KDYH DQ LPPHGLDWH DQG VLJQLILFDQW LPSDFW RQ WKH QXPEHUV RI %ODFNV LQ PRVW SURIHVVLRQV DQG HGXFDWLRQDO LQVWLWXWLRQV LQ ZKLFK WKH\ KDG DOZD\V EHHQ JUHDWO\ XQGHUUHSUHVHQWHG LQ SURSRUWLRQ WR WKHLU SRSXODWLRQ 7KHUH ZDV PXFK GHEDWH RYHU WKH H[WHQW WR ZKLFK WKH FRQWLQXLQJ XQGHU UHSUHVHQWDWLRQ ZDV GXH WR FRQWLQXLQJ LI RQ WKH ZKROH VXEWOHU IRUPV RI GLVFULPLQDWLRQ DJDLQVW%ODFNV DV RSSRVHG WR ODFNRI VXIILFLHQW TXDOLILFDWLRQV IRU VSHFLILFSRVLWLRQV 2QWKHSUHPLVH WKDW WKH IRUPHUZDV LQGHHGD VLJQLIL
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
DVZHOODVVRPHSULYDWHRUJDQL]DWLRQV WRGLVFULPLQDWHLQIDYRURI%ODFNFDQGL GDWHV IRU MREVRUFRQWUDFWV 6XFKSRVLWLYHGLVFULPLQDWLRQPRVWRIWHQWRRNWKH IRUP RI JLYLQJ VRPH GHJUHH RI SUHIHUHQFH ² LQ UHODWLRQ WR WUDGLWLRQDO RU FRQYHQWLRQDOTXDOLILFDWLRQFULWHULD²WR%ODFNFDQGLGDWHVLQRUGHUWRRYHUFRPH WKHLU XQGHUUHSUHVHQWDWLRQ ,Q VRPH FDVHV HIIRUWV ZHUH PDGH WR ILOO WDUJHW TXRWDVRI%ODFNUHSUHVHQWDWLRQRUWRVHWDVLGHDFHUWDLQIUDFWLRQRIFRQWUDFWVIRU %ODFNRZQHG ILUPV 0RUHRYHU PDQ\ HGXFDWLRQDO LQVWLWXWLRQV ² ERWK SXEOLF DQGSULYDWH²DQGVRPHRWKHUQRQSURILWRUJDQL]DWLRQVVRXJKWWRLQFUHDVHWKH UHSUHVHQWDWLRQ RI %ODFNV E\ DSSO\LQJ SUHIHUHQFHV LQ DGPLVVLRQ RU VHOHFWLRQ 'XULQJ WKHV VXFKSUHIHUHQFHVZHUHJHQHUDOO\ H[WHQGHG WRPHPEHUVRI RWKHUXQGHUUHSUHVHQWHGHWKQLFJURXSVDVZHOO²QRWDEO\+LVSDQLF$PHULFDQV DQG 1DWLYH $PHULFDQV ,Q WKLV FRQWH[W WKH WHUP´DIILUPDWLYH DFWLRQµ $$ WRRN RQ D QHZ PHDQLQJ ² ZKLFK LW KDV UHWDLQHG HYHU VLQFH ² RI SRVLWLYH GLVFULPLQDWLRQLQIDYRURIXQGHUUHSUHVHQWHGJURXSV )HGHUDO JRYHUQPHQW PHDVXUHV LVVXHG ERWK E\ 3UHVLGHQW -RKQVRQ·V
$GPLQLVWUDWLRQ ² DQG E\ 3UHVLGHQW 5LFKDUG 0 1L[RQ·V $GPLQLVWUDWLRQ ² KHOSHG WR VSXU WKH WUDQVLWLRQ IURP WKHRULJLQDO WRWKHVWURQJHUIRUPRIDIILUPDWLYHDFWLRQLQWKHVSKHUHRIHPSOR\PHQW )RU H[DPSOH LQ WKH 86 /DERU 'HSDUWPHQW LVVXHG UHJXODWLRQV GLUHFWLQJ JRYHUQPHQWFRQWUDFWRUV WRDGRSW´JRDOVDQGWLPHWDEOHVµ WRKLUHPLQRULWLHV DQGZRPHQ DQGLWDQQRXQFHGWKDWLWZRXOGVRRQLPSRVHPDQGDWRU\UDFLDO KLULQJ TXRWDV RQ FHUWDLQ IHGHUDOO\ VSRQVRUHG FRQVWUXFWLRQ SURMHFWV ,Q WKH ODWHVDQGHDUO\VWKHIHGHUDOFRXUWVZHUHDOVRVXSSRUWLYHRIVWURQJ $$ HIIRUWV ,Q D IHGHUDO GLVWULFW FRXUW HVWDEOLVKHG WKH OHJLWLPDF\ RI TXRWDVDVDZD\RILPSOHPHQWLQJ([HFXWLYH2UGHU1R DQGLQ WKH 6XSUHPH &RXUW UXOHG WKDW DQ HPSOR\HU FRXOG QRW UHTXLUH FHUWDLQ PLQLPXPFUHGHQWLDOVEHIRUHKLULQJDSHUVRQLIVXFKDUHTXLUHPHQWKDGWKH HIIHFWRID´EXLOWLQKHDGZLQGµ IRUPLQRULWLHV ,Q WKHVSKHUHRI HGXFDWLRQ WKHDSSOLFDWLRQRI$$SUHIHUHQFHVLQDGPLVVLRQV WRLQFUHDVHWKHQXPEHUVRI VWXGHQWV IURP XQGHUUHSUHVHQWHG JURXSV ZDV QRW VR PXFK D UHVSRQVH WR JRYHUQPHQWRUFRXUWDFWLRQLQVXSSRUWRIVXFKSROLFLHV 5DWKHU VXFKSUDF WLFHV ZHUH XQGHUWDNHQ YROXQWDULO\ E\ HGXFDWLRQDO OHDGHUV DQG DGPLQLVWUDWRUV LQDSROLWLFDOFOLPDWHUHVRXQGLQJZLWKFDOOV WR UHGXFHUDFLDO DQGHWKQLFLQHTXDOLWLHV
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
FRXUWFDVHXQWLOUHFHQWO\ZDVWKDWRI$ODQ%DNNH %DNNHVXHGWKH8QLYHUVLW\ RI &DOLIRUQLD DW 'DYLV 0HGLFDO 6FKRRO IRU GHQ\LQJ KLP DGPLVVLRQ HYHQ WKRXJK KLV FRQYHQWLRQDO DFDGHPLF TXDOLILFDWLRQV ZHUH VXSHULRU WR WKRVH RI PDQ\DGPLWWHG%ODFNVWXGHQWV 7KH6XSUHPH&RXUWLVVXHGLWVGHFLVLRQRQWKH %DNNHFDVH LQ UXOLQJRXW WKHXVHRITXRWDV LQDGPLVVLRQVEXWDOORZLQJ WKHXVHRIRWKHUIRUPVRISUHIHUHQFHIRUVWXGHQWVIURPSDUWLFXODUUDFLDOHWKQLF JURXSV ² SURYLGHG WKDW WKH LQVWLWXWLRQ KDV D FRPSHOOLQJ LQWHUHVW LQ D UDFLDOO\HWKQLFDOO\GLYHUVHVWXGHQWERG\DVDPHDQVRIFDUU\LQJRXWLWVHGXFD WLRQDOPLVVLRQDQGWKDWUDFHHWKQLFLW\LVRQO\RQHRIPDQ\IDFWRUVWDNHQLQWR DFFRXQW LQ WKHDGPLVVLRQVSURFHVV 7KHVXSSRUW WKDW WKLV UXOLQJ SURYLGHG IRU DIILUPDWLYHDFWLRQLQHGXFDWLRQDODGPLVVLRQVZDVWHQXRXV EHFDXVHLWUHVWHGRQ WKHVRORRSLQLRQRI-XVWLFH/HZLV3RZHOO WKHUHVWRIWKH&RXUWZDVVSOLW² EHWZHHQMXVWLFHVZKRIDYRUHGVWURQJHUSUHIHUHQFHVIRUUDFLDOHWKQLFPLQRULW\ JURXSVDQGMXVWLFHVZKRRSSRVHGDQ\VXFKSUHIHUHQFHV 7KH%DNNHUXOLQJHQDEOHGHGXFDWLRQDOLQVWLWXWLRQVWRFRQWLQXHWRDSSO\$$
SUHIHUHQFHVLQDGPLVVLRQV DQGPRVWVHOHFWLYHFROOHJHVDQGXQLYHUVLWLHVGLGVR )URPWKHPLGVRQ KRZHYHU VRPHXQLYHUVLW\UHJHQWDODFWLRQV DIHZVWDWH UHIHUHQGD DQG VHYHUDO IHGHUDO ORZHUFRXUW UXOLQJV VWUXFN GRZQ DIILUPDWLYH DFWLRQ LQ HGXFDWLRQDO DGPLVVLRQV ²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
WKH0LFKLJDQFDVHV 7KH&RXUWYRWHG²LQIDYRURI WKHV\VWHPRIDGPLV VLRQV SUHIHUHQFHV IRU XQGHUUHSUHVHQWHGPLQRULWLHV XWLOL]HG E\ WKH80/DZ 6FKRRODQG²DJDLQVWWKHV\VWHPXVHGE\WKH80XQGHUJUDGXDWHDGPLVVLRQV RIILFH 6SHDNLQJIRUWKHPDMRULW\LQWKH/DZ6FKRROFDVH -XVWLFH6DQGUD'D\ 2·&RQQRU DUJXHG IRUFHIXOO\ WKDW WKH QDWLRQ KDV D FRPSHOOLQJ LQWHUHVW LQ SURPRWLQJ UDFLDOHWKQLF GLYHUVLW\ DPRQJ VWXGHQWV DW VHOHFWLYH KLJKHU HGXFD WLRQDO LQVWLWXWLRQV DQG WKDW WKH /DZ 6FKRRO·V SURFHGXUHV IRU JUDQWLQJ
SUHIHUHQFHVWRXQGHUUHSUHVHQWHGPLQRULW\DSSOLFDQWV²LQYROYLQJKROLVWLFDQG LQGLYLGXDOL]HG FRQVLGHUDWLRQ RI HYHU\ DSSOLFDWLRQ ² ZHUH DSSURSULDWHO\ QDUURZO\ WDLORUHG WRDFKLHYH WKDWHQG 2QWKHRWKHUKDQG D&RXUWPDMRULW\ LQFOXGLQJ -XVWLFH 2·&RQQRU IRXQG WKDW WKH SURFHGXUHV XVHG E\ WKH 80 XQGHUJUDGXDWHDGPLVVLRQVRIILFH WR LQFUHDVH WKHUDFLDOHWKQLFGLYHUVLW\RI WKH VWXGHQWERG\ZHUH WRRPHFKDQLVWLF DQG IRUPXODLF WRSDVVPXVWHU 7KHPDLQ LPSDFWRIWKHVHUXOLQJVZDVWRSURYLGHDILUPMXGLFLDOEDVLVIRUWKHSUDFWLFHRI DIILUPDWLYH DFWLRQ LQ 86 FROOHJHV DQG XQLYHUVLWLHV UHLQIRUFLQJ WKH UDWKHU WHQXRXV VXSSRUW SURYLGHG IRU WKH SUHYLRXV WZHQW\ILYH \HDUV E\ -XVWLFH 3RZHOO·VVRORRSLQLRQLQWKH%DNNHFDVH
,WEHJLQVLQWKHODWHQLQHWHHQWKDQGHDUO\WZHQWLHWKFHQWXULHV ZLWKWKHGHYHO RSPHQW RI RUJDQL]HG PRYHPHQWV HVSHFLDOO\ LQ WKH VRXWKHUQ SDUW RI ,QGLD GHVLJQHG WR UHGXFH WKHSRZHURI%UDKPDQV $OWKRXJK WKH\FRQVWLWXWHGRQO\ DERXWSHUFHQWRIWKHSRSXODWLRQLQWKHVHDUHDV %UDKPDQVGRPLQDWHGWKRVH HOLWHSRVLWLRQV²LQWKHFLYLOVHUYLFHDQGLQUHODWHGSURIHVVLRQV²WKDWZHUHRSHQ WR ,QGLDQVXQGHU%ULWLVKFRORQLDO UXOH 7KHDQWL%UDKPDQPRYHPHQWV OHG WR LQFUHDVLQJ SUHVVXUH WR HVWDEOLVK UHVHUYHG VHDWV IRU QRQ%UDKPDQV LQ SXEOLF VHUYLFHDQGDOVRWRSURYLGHDLGIRUQRQ%UDKPDQVLQHGXFDWLRQDOLQVWLWXWLRQV 7KH QRQ%UDKPDQ FRPPXQLWLHV LQFOXGHG UHODWLYHO\ ZHOORII XSSHUFDVWH +LQGXVDVZHOODVPHPEHUVRIYDULRXVUHOLJLRXVDQGHWKQLFPLQRULW\FRPPX QLWLHV DQG+LQGX RXWFDVWHV WKH WKHQ´XQWRXFKDEOHVµ 1RW VXUSULVLQJO\ WKH QRQ%UDKPDQPRYHPHQWVZHUH JHQHUDOO\ OHG E\PHPEHUV RI WKH EHWWHURII FRPPXQLWLHV DQG RULHQWHG WR WKHLU LQWHUHVWV DV GLVWLQFW IURP WKRVH RI WKH SRRUHVWJURXSV 7KHVHODWWHU LQFOXGLQJ,QGLD·VDERULJLQDOWULEDOJURXSVDVZHOO DVWKH+LQGXRXWFDVWHV ZHUHFRPPRQO\ODEHOHG´ WKHGHSUHVVHGFODVVHVµ ,Q WKH V WKH SUHVVXUH IRU SRVLWLYH GLVFULPLQDWLRQ LQ IDYRU RI QRQ
%UDKPDQVZDVWUDQVODWHGLQWRDFWLRQLQWKH3ULQFHO\6WDWHRI0\VRUHDVZHOODV LQ WKH%RPED\DQG0DGUDV3UHVLGHQFLHV GLUHFWO\FRQWUROOHGE\ WKH%ULWLVK 7KH0\VRUH*RYHUQPHQW LQ LQVWLWXWHG D V\VWHP RI UHVHUYHG SODFHV LQ SXEOLF VHUYLFHSRVLWLRQV DQG LQKLJKHU HGXFDWLRQDO DGPLVVLRQV IRU´EDFNZDUG FRPPXQLWLHVµ GHILQHGDVDOOEXWWKH%UDKPDQFRPPXQLW\ 6LPLODUUHVHUYDWLRQV IRUDVOLJKWO\OHVVH[WHQVLYHJURXSLQJRI´ EDFNZDUGFRPPXQLWLHVµ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´EDFNZDUGµ LH ORZFDVWH+LQGXV VL[ WR RWKHU+LQGXV
WZR WR ´GHSUHVVHGµ LH XQWRXFKDEOH FDVWHV WZR WR $QJOR,QGLDQV DQG &KULVWLDQV DQGRQHWRD0XVOLP ,QWKHV UHVHUYDWLRQSROLFLHVZHUHLPSOHPHQWHGLQWKHSROLWLFDODUHQD
WKURXJKRXW%ULWLVK ,QGLD $QHZ URXQGRIPDMRU FRQVWLWXWLRQDO UHIRUPVKDG FRPHXQGHUGLVFXVVLRQLQWKHODWHVDQGWKHHDUO\V DV WKHFRORQLDO DXWKRULWLHVVRXJKWWRHVWDEOLVKDIHGHUDODVVHPEO\ DVZHOODVSURYLQFLDODVVHP EOLHV WR ZKLFK ,QGLDQV ZRXOG HOHFW UHSUHVHQWDWLYHV ZKRVH OHDGHUV ZRXOG H[HUFLVHVXEVWDQWLDOO\H[SDQGHGSRZHUVXQGHURYHUDOO%ULWLVKUXOH 7KH%ULWLVK SURSRVHG DQGWKH,QGLDQQDWLRQDOLVWPRYHPHQWOHGE\0DKDWPD*DQGKLXOWL PDWHO\ DFFHSWHG JUXGJLQJO\ WKH HVWDEOLVKPHQW RI VHSDUDWH HOHFWRUDWHV DQG VHDWVIRUIRXURI,QGLD·VPLQRULW\FRPPXQLWLHV 0XVOLPV &KULVWLDQV 6LNKV DQG $QJOR,QGLDQV 'U %5 $PEHGNDU ZKR KDG ULVHQ WR SURPLQHQFH DV WKH JUHDWO\ UHYHUHG OHDGHU RI ,QGLD·V XQWRXFKDEOHV VWURQJO\ DGYRFDWHG WKH VDPH DUUDQJHPHQWIRUWKHXQWRXFKDEOHFRPPXQLW\ *DQGKLZDVWRWDOO\RSSRVHGWR DQ\ NLQG RI VHSDUDWLRQ RI WKH´+DULMDQVµ OLWHUDOO\´SHRSOH RI *RGµ D WHUP *DQGKLFRLQHGIRUWKHXQWRXFKDEOHVIURPWKHUHVWRIWKH+LQGXFRPPXQLW\ 7KHWZROHDGHUVVWUXJJOHGLQWHQVHO\RYHUWKLVLVVXH EXWWKH\XOWLPDWHO\DJUHHG WRDFRPSURPLVH WKH´3RRQD3DFWµ LQZKLFK WKHUHZRXOG LQGHHGEH UHVHUYHG VHDWV IRU WKH GHSUHVVHG FODVVHV LQ WKH IHGHUDO DQG SURYLQFLDO OHJLVOD WXUHV EXW FDQGLGDWHV IRU WKHVH VHDWVZRXOG EH HOHFWHG E\ JHQHUDO HOHFWRUDWHV UDWKHUWKDQE\VHSDUDWHXQWRXFKDEOHHOHFWRUDWHV 7KLVFRPSURPLVHZDVLQFRU SRUDWHG LQWR WKH *RYHUQPHQW RI ,QGLD $FW RI ZKLFK HVWDEOLVKHG WKH QHZ IHGHUDO DQG SURYLQFLDO DVVHPEOLHV 7KH $FW HVWDEOLVKHG D V\VWHP RI UHVHUYHG VHDWV EXW QRW VHSDUDWH HOHFWRUDWHV IRU WZR FRPPXQLWLHV ² WKH XQWRXFKDEOHVDQGWKHWULEDOV QRZRIILFLDOO\ODEHOHG´6FKHGXOHG&DVWHVµ 6&V DQG´ 6FKHGXOHG7ULEHVµ 67V 7KHUDLVHGFRQVFLRXVQHVVRIWKHXQWRXFKDEOHV²DQG WRDOHVVHUH[WHQW WKH
WULEDOV²KDG OHGWKHPE\WKLV WLPHWRSDUWZD\VZLWKWKHEHWWHURIIFDVWHRI +LQGXVLQWKHQRQ%UDKPDQPRYHPHQWVDQGWRFDOOIRUDYDULHW\RIPHDVXUHV GHVLJQHG WR HQG WKH SDUWLFXODUO\ RSSUHVVLYH GLVFULPLQDWLRQ DQG UHPHG\ WKH UHODWHG LQMXVWLFHV WKH\KDG VXIIHUHGRYHU WKHFHQWXULHV 7KH,QGLDQSURYLQFLDO JRYHUQPHQWV WKDW FDPH LQWR SRZHU LQ PDLQWDLQHG DQG LQ VRPH FDVHV H[SDQGHG SUHYLRXVO\ HQDFWHG UHVHUYDWLRQV LQ SXEOLF VHUYLFH MREV DQG HGXFD WLRQDO DGPLVVLRQV IRU UHOLJLRXV PLQRULW\ JURXSV DQG IRU GHSUHVVHG FODVVHV DGGLWLRQDOVSHFLDOPHDVXUHVZHUHDOVRDGRSWHGWRDLGWKHODWWHU $WWKHIHGHUDO OHYHO KRZHYHU UHVHUYDWLRQVZHUHDGRSWHGRQO\LQWKHSXEOLFVHUYLFHVDQGRQO\ IRUUHOLJLRXVPLQRULWLHV $IWHU ,QGLD EHFDPH LQGHSHQGHQW LQ DQG WKH VHSDUDWH QDWLRQ RI
3DNLVWDQ ZDV IRUPHG IURP PDQ\ RI WKH 0XVOLPPDMRULW\ DUHDV RI %ULWLVK FRQWUROOHG,QGLD WKHLVVXHRIUHVHUYDWLRQVFDPHWRWKHIRUHLQWKHFRQWH[WRI WKH GUDIWLQJ RI WKH ,QGLDQ &RQVWLWXWLRQ 7KH HVWDEOLVKPHQW RI ,QGLD DV D VHFXODUVWDWHXQGHUPLQHGWKHFDVHIRUFRQWLQXDWLRQRIWKHUHVHUYDWLRQVIRUUHOL JLRXVPLQRULWLHV LQWURGXFHG XQGHU WKH %ULWLVK -DZDKDUODO1HKUX DV ZHOO DV PRVWRIWKHRWKHUOHDGHUVRIWKH,QGLDQ1DWLRQDO&RQJUHVVWKDWKDGZRQLQGH SHQGHQFH ZHUH FRPPLWWHG WR LPSURYLQJ WKH ORW RI ,QGLD·V LPSRYHULVKHG
PDVVHV EXW WKH\ ZHUH RSSRVHG WR JURXSEDVHG UHVHUYDWLRQV DV D PHDQV RI DFFRPSOLVKLQJWKLV +RZHYHU 1HKUXQDPHG%5 $PEHGNDUDVODZPLQLVWHU DQG FKDLUPDQ RI WKH FRQVWLWXWLRQGUDIWLQJ FRPPLWWHH RI WKH &RQVWLWXHQW $VVHPEO\ DQGIURPWKDWSRVLWLRQ$PEHGNDUZDVDEOHWRSUHVVIRU DFRQVWLWX WLRQDOEDVLVIRUUHVHUYDWLRQVIDYRULQJ,QGLD·V6&V ,Q WKH HQG WKH ,QGLDQ &RQVWLWXWLRQ WKDW FDPH LQWR IRUFH LQ DQG
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²DVD´ 'LUHFWLYH 3ULQFLSOHRI6WDWH3ROLF\µ ²WKHRIWTXRWHG$UWLFOH
7KH6WDWHVKDOOSURPRWHZLWKVSHFLDOFDUHWKHHGXFDWLRQDODQGHFRQRPLF LQWHUHVWV RI WKHZHDNHU VHFWLRQV RI WKH SHRSOH DQG LQ SDUWLFXODU RI WKH 6FKHGXOHG&DVWHVDQGWKH6FKHGXOHG7ULEHV DQGVKDOOSURWHFWWKHPIURP VRFLDOLQMXVWLFHDQGDOOIRUPVRIH[SORLWDWLRQ
3XUVXDQWWRWKLVGLUHFWLYH WKHUHDUHDVHULHVRISURYLVLRQVWKDWDOORZIRUSRVLWLYH GLVFULPLQDWLRQLQIDYRURIPHPEHUVRIXQGHUUHSUHVHQWHGJURXSV²DVGHWDLOHG EHORZ ,QWKHSROLWLFDOVSKHUH WKHIUDPHUVRIWKH&RQVWLWXWLRQGURSSHGWKHQRWLRQ
WKDW UHOLJLRXVPLQRULW\ FRPPXQLWLHVGHVHUYHGDQ\NLQGRI VSHFLDO VWDWXV EXW WKH\UHWDLQHGWKHV\VWHPRIUHVHUYHGVHDWVZLWKFRPPRQHOHFWRUDWHVIRU6&V DQG67V WKDW KDG ILUVW EHHQ HVWDEOLVKHGE\ WKH*RYHUQPHQWRI ,QGLD$FW RI $UWLFOHV DQGRIWKH&RQVWLWXWLRQRIUHTXLUHWKDWD FHUWDLQ QXPEHU RI SDUOLDPHQWDU\ FRQVWLWXHQFLHV ERWK DW WKH QDWLRQDO DQG DW WKHSURYLQFLDO OHYHO EHUHSUHVHQWHGE\DQ6&PHPEHU HOHFWHGE\ DOOHOLJLEOH YRWHUVLQWKHFRQVWLWXHQF\ ZLWKWKHQXPEHURIUHVHUYHGVHDWVSURSRUWLRQDOWR WKH 6& SRSXODWLRQ LQ WKH FRQVWLWXHQF\ DQG OLNHZLVH IRU 67V $UWLFOH OLPLWV WKHSHULRGRI VXFK UHVHUYDWLRQV WR WZHQW\\HDUV EXW LQ WKHHYHQW WKH UHVHUYDWLRQVKDYHEHHQUHJXODUO\H[WHQGHGE\DPHQGPHQWIRUDGGLWLRQDOWHQ \HDUSHULRGV ,Q WKH VSKHUHRIHPSOR\PHQW WKH&RQVWLWXWLRQ·VDSSDUHQWJHQHUDOEDQRQ
GLVFULPLQDWLRQLQSXEOLFVHUYLFHMREVLVTXDOLILHGE\6HFWLRQRIWKHUHOHYDQW $UWLFOH ZKLFKSHUPLWVWKHVWDWHWRPDNH´ DQ\SURYLVLRQIRUWKHUHVHUYDWLRQV RIDSSRLQWPHQWVRUSRVWVLQIDYRXURIDQ\EDFNZDUGFODVVRIFLWL]HQVZKLFK LQ WKHRSLQLRQRI WKH6WDWH LVQRWDGHTXDWHO\UHSUHVHQWHG LQ WKHVHUYLFHVXQGHU WKH6WDWHµ 0RUHRYHU $UWLFOHDVVHUWVWKDW´WKHFODLPVRIWKH6&VDQG67V VKDOO EH WDNHQ LQWR FRQVLGHUDWLRQ FRQVLVWHQW ZLWK WKH PDLQWHQDQFH RI HIIL FLHQF\RI DGPLQLVWUDWLRQµ DQG LW FDOOV IRU WKH FHQWUDO JRYHUQPHQW WR UHVHUYH IRU 6&V DQG 67V D FHUWDLQ SHUFHQWDJH RI MREV LQ WKH FLYLO DQG WHFKQLFDO
VHUYLFHV LQVWDWHUXQDQGVHPLDXWRQRPRXVHQWHUSULVHV DQGLQSULYDWHDVZHOO DVSXEOLFWHFKQLFDOLQVWLWXWLRQV ,QWKHDUHQDRIHGXFDWLRQ WKH&RQVWLWXWLRQRULJLQDOO\EDQQHGDQ\NLQGRI
GLVFULPLQDWLRQ LQ JRYHUQPHQWDLGHG HGXFDWLRQDO LQVWLWXWLRQV 6HFWLRQ RI $UWLFOH )ROORZLQJWZRHDUO\6XSUHPH&RXUWGHFLVLRQVUHMHFWLQJGLVFULPL QDWLRQLQHGXFDWLRQDODGPLVVLRQV KRZHYHU WKH&RQVWLWXWLRQZDVDPHQGHGLQ WRDGGDQHZSURYLVLRQWR$UWLFOH 7KHQHZ6HFWLRQTXDOLILHGWKH $UWLFOH·VJHQHUDOGHFODUDWLRQRIQRQGLVFULPLQDWLRQE\H[SOLFLWO\DVVHUWLQJWKDW QRWKLQJLQWKH&RQVWLWXWLRQ´VKDOOSUHYHQWWKH6WDWHIURPPDNLQJDQ\VSHFLDO SURYLVLRQ IRU WKH DGYDQFHPHQW RI DQ\ VRFLDOO\ DQG HGXFDWLRQDOO\ EDFNZDUG FODVVHVRIFLWL]HQVRUIRUWKH6FKHGXOHG&DVWHVDQG6FKHGXOHG7ULEHVµ 7KXVLQLQGHSHQGHQW,QGLDVLQFHWKHUHKDVEHHQDFOHDUFRQVWLWXWLRQDO
EDVLV IRU SRVLWLYH GLVFULPLQDWLRQ LQ IDYRU RI EDFNZDUG JURXSV GHILQHG WR LQFOXGH H[SOLFLWO\ 6&V DQG 67V DQG SRWHQWLDOO\ RWKHU´ZHDNHU VHFWLRQVµ RU ´EDFNZDUGFODVVHVµ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
FLDOO\ HOLJLEOH IRU UHVHUYDWLRQV KDV QRW EHHQ XQSUREOHPDWLF 7R LPSOHPHQW WKH UHODWHGSURYLVLRQVRI WKH*RYHUQPHQWRI ,QGLD$FWRI OLVWVRIRIIL FLDOO\ VFKHGXOHG FDVWHV DQG VFKHGXOHG WULEHVZHUH GUDZQXS LQ RQ WKH EDVLVRILQIRUPDWLRQFROOHFWHGLQWKHFHQVXVRI,QGLDDERXWUHVSRQGHQWV· HWKQLFDQGRUFDVWHVWDWXVDQGDERXWWKHNLQGVRIGLVDGYDQWDJHVDVVRFLDWHGZLWK GLIIHUHQWHWKQLFDQGFDVWHFRPPXQLWLHV ,QSULQFLSOH 6&VZHUHWREHLGHQWLILHG DVFRPPXQLWLHVWKDWZHUHEDFNZDUGEHFDXVHRIXQWRXFKDELOLW\ GHILQHGHVVHQ WLDOO\LQWHUPVRIWKHLUULWXDOO\´SROOXWLQJµ VWDWXVLQ+LQGXVRFLHW\ 7KHUHZDV DOVR DQ DGPL[WXUH RI HFRQRPLF DQG HGXFDWLRQDO FULWHULD DV ZHOO DV VRPH FRQVLGHUDWLRQ RI ORFDO SROLWLFV DQG LW ZDV JHQHUDOO\ WKH VRFLRHFRQRPLFDOO\ ORZHVWJURXSVRI+LQGXV LQDQ\JLYHQDUHDZKRZHUHXOWLPDWHO\ LQFOXGHGLQ WKH6&OLVW 7KHGHVLJQDWLRQRI67VZDV OHVVSUREOHPDWLF VSDWLDODQGFXOWXUDO LVRODWLRQZDV WKH NH\ DQG WKHVH FKDUDFWHULVWLFV ZHUH FORVHO\ FRUUHODWHGZLWK
VRFLRHFRQRPLF EDFNZDUGQHVV 7KH OLVWV RI 6&V DQG 67VZHUH ODUJHO\ GXSOLFDWHGLQLQGHSHQGHQW,QGLD ZLWKVRPHPLQRUDGGLWLRQVHJ WRLQFOXGHD IHZ´EDFNZDUGµ 6LNK DQG QHR%XGGKLVW FDVWHV LQ WKH HDUO\ V DQG DW VHYHUDOWLPHVWKHUHDIWHU 5HVHUYDWLRQV LQSROLWLFDO DVVHPEOLHV WKRXJKRULJLQDOO\ FRQVLGHUHG WHPSR
UDU\ KDYH EHFRPH IRU DOO LQWHQWV DQG SXUSRVHV SHUPDQHQW LQ FRQWHPSRUDU\ ,QGLD 7KHUHLVQRVHULRXVFRQWURYHUV\DERXWWKLV 5HVHUYDWLRQVLQHGXFDWLRQDO DGPLVVLRQV DQG SXEOLF HPSOR\PHQW KRZHYHU KDYH EHFRPH PXFK PRUH FRQWURYHUVLDO 7KH LPSHWXV IRU WKH KHLJKWHQHG FRQWHQWLRQ KDV FRPH QRW VR PXFK IURP WKH 6& DQG 67 UHVHUYDWLRQV LQ SDUWLFXODU DV IURP HIIRUWV WR H[SDQG WKH UDQJH RI UHVHUYDWLRQV JUDQWHG WR ´2WKHU %DFNZDUG &ODVVHVµ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²EULQJLQJWKHRYHUDOOSHUFHQWDJHRIUHVHUYHGVHDWVLQSXEOLF HPSOR\PHQWWRSHUFHQW
7KH0DQGDO&RPPLVVLRQUHSRUWJDWKHUHGGXVW IRUDGHFDGH DV WKH -DQDWD 3DUW\ORVWSRZHULQQDWLRQDOHOHFWLRQVDQGVXEVHTXHQW&RQJUHVV3DUW\DGPLQLV WUDWLRQV XQGHU ,QGLUD *DQGKL DQG 5DMLY *DQGKL VKRZHG QR LQWHUHVW LQ SXUVXLQJ WKHPDWWHU ,Q$XJXVW KRZHYHU 3ULPH0LQLVWHU93 6LQJK² SULPH PLQLVWHU RI D VKDN\ QHZ FRDOLWLRQ JRYHUQPHQW OHG E\ WKH SRSXOLVW -DQDWD'DO² VWXQQHG WKHQDWLRQE\ DQQRXQFLQJ WKDWKLV JRYHUQPHQWZRXOG DFWXDOO\ LPSOHPHQW WKH UHFRPPHQGDWLRQV RI WKH0DQGDO&RPPLVVLRQ 7KLV DQQRXQFHPHQW VHW RII D ILUHVWRUP RI GHPRQVWUDWLYH RSSRVLWLRQ ² LQFOXGLQJ ULRWVLQWKHVWUHHWVDVZHOODVVRPHVHOILPPRODWLRQV²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
7KH VLJQLILFDQWQHJDWLYH UHVSRQVH WR93 6LQJK·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²
HVSHFLDOO\DPRQJWKH,QGLDQHOLWH LQFOXGLQJPDQ\SROLWLFDOOHDGHUV²QRQHRI ,QGLD·V SROLWLFDO SDUWLHV DUH SUHSDUHG WR DOLHQDWH WKH YDULRXV JURXSV RI YRWHUV VXSSRUWLQJ UHVHUYDWLRQV E\ SXEOLFO\ RSSRVLQJ WKHP $V D FRQVHTXHQFH WKH 0DQGDOUHFRPPHQGDWLRQVIRUHPSOR\PHQWUHVHUYDWLRQVDWWKHFHQWUDOJRYHUQ PHQW OHYHO KDYH EHHQ LQFUHDVLQJO\ SXW LQWR HIIHFW VLQFH WKH 6XSUHPH&RXUW UXOLQJLQ 3UHYLRXVO\ HVWDEOLVKHG UHVHUYDWLRQ SROLFLHV LQ HPSOR\PHQW DQG HGXFDWLRQ
UHPDLQILUPO\LQSODFHLQFRQWHPSRUDU\,QGLD :KLOHWKH0DQGDOFRQWURYHUV\ IRFXVHGWKHVSRWOLJKWRQUHVHUYDWLRQVIRU2%&V VRPHQHZOLJKWZDVLQHYLWDEO\ FDVW DV ZHOO RQ WKH LVVXH RI UHVHUYDWLRQV IRU 6&V DQG 67V 6XSSRUW IRU WKH FRQWLQXDWLRQRIHPSOR\PHQWDQGHGXFDWLRQDOUHVHUYDWLRQVIRU6&VDQG67VLV QRORQJHUDVZLGHVSUHDGDVLWZDVVHYHUDOGHFDGHVDJR EXWIHZ,QGLDQV²DQG QRSROLWLFLDQV²DGYRFDWHWKHLUWHUPLQDWLRQ
7KHFXUUHQWVWDWHRI3'SROLFLHVLQWKH86DQG,QGLD ,W LV FOHDU IURP WKH IRUHJRLQJ WKDW WKHQDWXUH DVZHOO DV WKHRULJLQVRISRVLWLYH GLVFULPLQDWLRQ LQ WKH86 DQG ,QGLD DUH YHU\ GLIIHUHQW 5HVHUYDWLRQ SROLFLHV LQ ,QGLDKDYHDORQJHUKLVWRU\ DQGWKH\KDYHEHFRPHERWKGHHSHUPRUHLQWHUYHQ WLRQLVWDQGEURDGHUDIIHFWLQJPRUHVRFLHWDODUHQDVWKDQ$$SROLFLHVLQWKH86
,QWKH86 $$SROLFLHVQRZJHQHUDOO\WDNHWKHIRUPRISUHIHUHQWLDOERRVWV ZKLFK LPSURYH WKH FRPSHWLWLYH SRVLWLRQ RI HOLJLEOH FDQGLGDWHV UDWKHU WKDQ TXRWDV ZKLFKUHVHUYHVHDWVRURSSRUWXQLWLHV IRUVXFKFDQGLGDWHV ,QWKHHDUO\ GHFDGHVRIDIILUPDWLYHDFWLRQ KRZHYHU TXRWDVZHUHVRPHWLPHVXVHG 7KHVL]H RI WKH SUHIHUHQWLDO ERRVW H[WHQGHG WR HOLJLEOH FDQGLGDWHV KDV YDULHG ZLGHO\ IURPPRGHVWWRTXLWHVXEVWDQWLDO ,Q,QGLD SRVLWLYHGLVFULPLQDWLRQKDVIURPWKH EHJLQQLQJ WDNHQ PDLQO\ WKH IRUP RI UHVHUYHG VHDWV RU SRVLWLRQV WR ZKLFK HOLJLEOH FDQGLGDWHV FDQJDLQ DFFHVVZLWKRXW FRPSHWLQJZLWK FDQGLGDWHV IURP QRQHOLJLEOHJURXSV 0RUHRYHU LQ,QGLDEHQHILFLDU\JURXSVDUHRIWHQHQWLWOHG WRWKHLUSURSRUWLRQRIUHVHUYHGVHDWVRUSRVLWLRQVRYHUDQGDERYHWKHQXPEHU WKDW WKH\ JDLQ LQ RSHQ FRPSHWLWLRQ VR UHVHUYDWLRQV HVWDEOLVK D PLQLPXP GHVLUHG SHUFHQWDJH RI UHSUHVHQWDWLRQ +RZHYHU LQPDQ\ FDVHV UHVHUYHG VHDWV DQGSRVLWLRQVJRXQILOOHG EHFDXVHRI D ODFNRIHOLJLEOHFDQGLGDWHVZKRPHHW HVWDEOLVKHGPLQLPXPTXDOLILFDWLRQV ,QWKH86 JRYHUQPHQWDFWRUVSOD\HGWKHNH\UROH LQ LQLWLDWLQJDIILUPDWLYH
DFWLRQ LQ WKH V EXW VLQFH WKHQ QRQJRYHUQPHQWDO RUJDQL]DWLRQV KDYH SOD\HGDQLQFUHDVLQJO\LPSRUWDQWUROHLQH[WHQGLQJLWVVFRSH %HFDXVHDIILUPD WLYHDFWLRQLVQRWDGGUHVVHG²PXFKOHVVPDQGDWHG²LQWKH86&RQVWLWXWLRQ WKH UDQJHRI DOORZDEOH$$SUDFWLFHVKDV EHHQZKROO\GHSHQGHQWRQ MXGLFLDO RSLQLRQV WKHVH LQ WXUQ DUH LQIOXHQFHG E\ WKH JHQHUDO SROLWLFDO FOLPDWH DQG PRUH VSHFLILFDOO\ E\ SUHVVXUHV IURP JURXSV IDYRULQJ RU RSSRVLQJ SRVLWLYH GLVFULPLQDWLRQ ,Q,QGLD E\FRQWUDVW UHVHUYDWLRQSROLFLHVDUHPXFKPRUHILUPO\ JURXQGHG
RQDFRQVWLWXWLRQDOEDVLV²HYHQ WKRXJK WKHDXWKRUL]DWLRQRISUHIHUHQFHV IRU SDUWLFXODU JURXSV FRH[LVWV XQHDVLO\ ZLWK WKH ,QGLDQ &RQVWLWXWLRQ·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²EXW QRWLQGHWHUPLQLQJZKHWKHUWKH\FDQH[LVWDWDOO $VDSUDFWLFDOPDWWHU ERWKLQ ,QGLD DQG WKH86 WKH VWUHQJWKRI WKH FRPPLWPHQW WR3'SROLFLHV WHQGV WR GHSHQGRQWKHYLJLODQFHRIEHQHILFLDU\JURXSVDQGSUHVVXUHVIURPWKHLUSROLW LFDOUHSUHVHQWDWLYHV ,QERWKWKH86DQG,QGLD 3'SROLFLHVKDYHEHHQDSSOLHGLQWKHVSKHUHVRI
HPSOR\PHQW DQG HGXFDWLRQ DQG LQ ERWK FRXQWULHV WKHVH DUH WKH VSKHUHV LQ
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
PDQGDWHG WKURXJKRXW PRVW RI WKH SXEOLF VHFWRU ² LQFOXGLQJ JRYHUQPHQW VHUYLFHV JRYHUQPHQW HQWHUSULVHV DQG JRYHUQPHQWFRQWUROOHG FROOHJHV DQG XQLYHUVLWLHV ²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
LVSUDFWLFHGPDLQO\DWWKHOHYHORIKLJKHUHGXFDWLRQ²WKRXJKLWFDQEHIRXQG DWD IHZUHODWLYHO\HOLWH VHFRQGDU\VFKRROVDVZHOO 0RUHRYHU LW LVPDLQO\DW WKH PRUH VHOHFWLYH DQG SUHVWLJLRXV KLJKHU HGXFDWLRQDO LQVWLWXWLRQV WKDW 3' SUHIHUHQFHVDUHV\VWHPDWLFDOO\DSSOLHG DWORZHUOHYHOVRIWKHKLJKHUHGXFDWLRQDO KLHUDUFK\ WKHUH LV JHQHUDOO\ URRP HQRXJK WR DGPLW DOO LQWHUHVWHG DQGPLQL PDOO\TXDOLILHGDSSOLFDQWV $ORQJZLWKSUHIHUHQWLDOERRVWVRUUHVHUYHGVHDWVIRU XQGHUUHSUHVHQWHGHWKQLFPLQRULW\JURXSV PDQ\FROOHJHV DQGXQLYHUVLWLHV LQ ERWK FRXQWULHV PDNH DYDLODEOH YDULRXV IRUPV RI DLG ² VXFK DV VFKRODUVKLSV VXEVLGL]HGOLYLQJTXDUWHUVDQGPHDOV VSHFLDOSURJUDPV DQGWH[WERRNORDQV ,Q ,QGLD WKLVNLQGRIDLGFRPHVDOPRVWHQWLUHO\ IURPJRYHUQPHQW VRXUFHV VLQFH PRVWHGXFDWLRQDOLQVWLWXWLRQVDUHIXQGHGE\JRYHUQPHQWDWWKHFHQWUDORUVWDWH OHYHO ,QWKH86 SULYDWHFRQWULEXWLRQVSOD\DPDMRUUROHLQVXFKIXQGLQJ 7KHVFRSHRIUHVHUYDWLRQVLQ,QGLDH[WHQGVDOVRWRWKHSROLWLFDOGRPDLQ VHDWV
DUHUHVHUYHGIRUFDQGLGDWHVIURPHOLJLEOHJURXSVLQFHQWUDODQGVWDWHOHJLVODWLYH DVVHPEOLHV LQ FRQVWLWXHQFLHVZKHUH WKRVH JURXSV IRUP D UHODWLYHO\ VLJQLILFDQW WKRXJK VWLOO D PLQRULW\ SDUW RI WKH SRSXODWLRQ 7KHVH UHVHUYHG VHDWV KDYH XQTXHVWLRQDEO\HQDEOHG'DOLWVDQG$GLYDVLVWRJDLQIDUPRUHSRVLWLRQVRISROLW LFDO SRZHU WKDQ ZRXOG RWKHUZLVH KDYH EHHQ SRVVLEOH DQG WKLV UHSUHVHQWV D
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
LQWKDWLWLVPRUHLQWHUYHQWLRQLVWUHVHUYHGVHDWVUDWKHUWKDQSUHIHUHQWLDOERRVWV DQGEURDGHULQVFRSHLQFOXGLQJWKHSROLWLFDODUHQDDVZHOODVHPSOR\PHQWDQG HGXFDWLRQ ,W LV DOVR WKH FDVH WKDW WKH SURSRUWLRQ RI WKH SRSXODWLRQ UHSUH VHQWHGE\HWKQLFJURXSVHOLJLEOHIRUSRVLWLYHGLVFULPLQDWLRQLVJUHDWHULQ,QGLD WKDQ LQ WKH 86 7KH SULPDU\ ,QGLDQ EHQHILFLDULHV DUH WKH 6&V QRZPRUH FRPPRQO\UHIHUUHGWRDV'DOLWVDQGWKH67VRU$GLYDVLV ZKRQRZFRQVWL WXWHDERXWSHUFHQWDQGSHUFHQWRIWKH,QGLDQSRSXODWLRQ UHVSHFWLYHO\
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
V 6LQFHWKHV KRZHYHU WKHEHQHILFLDU\HWKQLFJURXSVKDYHXVXDOO\ LQFOXGHGDOVR+LVSDQLF$PHULFDQVDQG1DWLYH$PHULFDQV 7KHVHJURXSVUHSUH VHQW DV RI WKH \HDU URXJKO\ DQG SHU FHQW RI WKH WRWDO 86 SRSXODWLRQ UHVSHFWLYHO\ 7DNHQWRJHWKHU WKHLUSURSRUWLRQRIWKHSRSXODWLRQ LVFORVHWRWKDWRIWKH6&VDQG67VLQ,QGLD²EXWPXFKOHVVWKDQWKDWRIWKH 6&V 67V DQG2%&VFRPELQHG :KHUHDVWKHGHVLJQDWLRQRIEHQHILFLDU\JURXSVLQ,QGLDLVIL[HGE\JRYHUQ
PHQWDO DXWKRULW\ LQ WKH 86 LW LV RIWHQ GHFHQWUDOL]HG WR QRQJRYHUQPHQWDO RUJDQL]DWLRQV DQGHQWHUSULVHV ZKRPDNH WKHLURZQ MXGJPHQWV DERXWZKLFK JURXSVDUHXQGHUUHSUHVHQWHGDQGGHVHUYH$$SUHIHUHQFHV ,QWKH86 FHUWLIL FDWLRQ RI LQGLYLGXDO EHQHILFLDU\ VWDWXV GHSHQGV VLPSO\ RQ VHOILGHQWLILFDWLRQ ZKLFK LV UDUHO\FKDOOHQJHG ,Q ,QGLD FHUWLILFDWLRQRIEHQHILFLDU\ VWDWXV LV DQ RIILFLDO JRYHUQPHQW SURFHVV KDQGOHG E\ RIILFLDOV LQ WKH ORFDOLW\ ZKHUH WKH LQGLYLGXDOZDVERUQDQGRUUDLVHG
6RXUFHVRIWKHGLIIHUHQFHVLQ3'SROLFLHVLQWKH86 DQG,QGLD $GLVWLQJXLVKHG,QGLDQVRFLRORJLVWKDVFRQWUDVWHGWKHRULJLQVRI,QGLD·VUHVHUYD WLRQSROLFLHVZLWKWKHRULJLQVRIWKH86·V$$SROLFLHVDVIROORZV ´:KDWWRRN
DERXW\HDUVWRPDNHDWHQWDWLYHDSSHDUDQFHLQWKH86HPHUJHGIXOO\DUWLF XODWHGDQGWKHRUL]HGDOPRVWDWWKHLQVWDQWWKDW,QGLDEHFDPHD VRYHUHLJQDQG GHPRFUDWLFQDWLRQVWDWHµ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
GHILQHG LQ HWKQLF RU UHOLJLRXV WHUPV KDYH DOZD\V EHHQ KLJKO\ VDOLHQW &RPPXQLW\LGHQWLW\KDVIRUPRVWRI,QGLD·VKLVWRU\EHHQPRUHLPSRUWDQWWKDQ LQGLYLGXDOLGHQWLW\ DQGHYHQQRZWKDWUHPDLQVWUXHIRUDVXEVWDQWLDOPDMRULW\ RI ,QGLDQV &RQFHUQ IRU RQH·V FRPPXQLW\ LV VHFRQG QDWXUH DQG FROOHFWLYH DFWLRQ WR SURPRWH FRPPXQLW\ LQWHUHVWV LV FRPPRQSODFH 7KH VDOLHQFH RI FRPPXQLW\ LGHQWLW\ ² DQG WKHUHIRUH DOVR FRPPXQLW\ ULJKWV ² FDQ EH DWWULEXWHG WR WKH KLJKO\ PXOWLFXOWXUDO QDWXUH RI ,QGLDQ VRFLHW\ DQG WR LWV FRPSOH[VWUDWLILFDWLRQLQWRGLIIHUHQWJURXSVRYHUDYHU\ORQJKLVWRULFDOSHULRG RIWLPH 7KHVWUDWLILFDWLRQLVPXOWLGLPHQVLRQDO &XOWXUDO OLQJXLVWLF DQGRUUHOL JLRXV GLIIHUHQFHV VWUDWLI\ WKH VRFLHW\ KRUL]RQWDOO\ 7KH FDVWH V\VWHP²ZKRVH LQIOXHQFHH[WHQGVZHOOEH\RQG+LQGXVRFLHW\WRPLQRULW\UHOLJLRQVDVZHOO² VWUDWLILHVWKHVRFLHW\YHUWLFDOO\DVZHOODVKRUL]RQWDOO\ 0RUHRYHU WKH´GLYLGH
DQG UXOHµ SROLFLHVRI WKH%ULWLVK FRORQLDO DXWKRULWLHV DFFHQWXDWHG DQG DJJUD YDWHG VRPHRI WKHPRVW LPSRUWDQW GLIIHUHQFHV DPRQJ FRPPXQLWLHV QRWDEO\ WKRVH EHWZHHQ +LQGXV DQG0XVOLPV ZKLFK OHG WR WKH SDUWLWLRQ RI %ULWLVK ,QGLD 7KXV JURXS GLIIHUHQWLDWLRQ DQG QRW LQIUHTXHQWO\ GLVFULPLQDWLRQ KDV ORQJEHHQWKHQRUPLQ,QGLD ,Q WKLV FRQWH[W LW LV QRW VXUSULVLQJ WKDW SRVLWLYH GLVFULPLQDWLRQ ² LQ WKH
VWURQJ IRUPRI UHVHUYDWLRQSROLFLHV²EHFDPHDQ LPSRUWDQWPHDQVE\ZKLFK ,QGLDQOHDGHUVUHVSRQGHGWRSUHVVXUHVWRLPSURYHWKHORWRIWKHGLVDGYDQWDJHG ,QWKH86 WKHILUVWJURXSWRSUHVVVXFFHVVIXOO\IRUSRVLWLYHGLVFULPLQDWLRQZDV WKHPLQRULW\ JURXS WKDW KDG VXIIHUHGPRVW IURPQHJDWLYH GLVFULPLQDWLRQ ,Q ,QGLD LWZDVDODUJHFRDOLWLRQRIJURXSV QHLWKHUDWWKHWRSQRUDWWKHERWWRP RI WKH VRFLRHFRQRPLF VFDOH ZKR IRUPHG QRQ%UDKPDQPRYHPHQWV LQ WKH 6RXWKDQGVXFFHVVIXOO\SUHVVHGIRUEHWWHURSSRUWXQLWLHVYLVjYLVWKHGRPLQDQW %UDKPDQV 7KH PRVW GRZQWURGGHQ RI ,QGLD·V HWKQLF JURXSV ² WKH 'DOLWV DQG WKH
$GLYDVLV ²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·V2%&VGLGQRW GR VRZHOO DW WKH FRQVWLWXWLRQDO
WDEOH IRUPDQ\ UHDVRQV 7KH\ZHUH UHJLRQDOO\GLYLGHG UDWKHU WKDQQDWLRQDOO\ EDVHG WKH\ ODFNHG D FRPPDQGLQJ OHDGHU OLNH $PEHGNDU DQG WKHUH ZDV QR FOHDU ZD\ RI OLPLWLQJ WKH SURSRUWLRQ RI WKH ,QGLDQ SRSXODWLRQ LQFOXGHG LQ WKHLU FRQVWLWXHQFLHV 7KXV WKH SUHGRPLQDQWO\ XSSHUFDVWH &RQJUHVV 3DUW\ OHDGHUVKLS KHOG RII DGGLWLRQDO UHVHUYDWLRQV IRU 2%&V ² XQWLO WKH &RQJUHVV 3DUW\EHJDQ WR ORVHSROLWLFDOSRZHU ILUVW DW WKH VWDWH DQG WKHQ DW WKH FHQWUDO OHYHO WR ULYDO UHJLRQDO SDUWLHV ZLWK VWURQJ SROLWLFDO EDVHV DPRQJ WKH ORZHU FDVWHV 6XFK SDUWLHV SURYLGHG WKH LPSHWXV ILUVW IRU WKH H[SDQVLRQ RI 2%& UHVHUYDWLRQV LQ PDQ\ VWDWHV DQG WKHQ IRU WKH LPSOHPHQWDWLRQ RI 0DQGDO &RPPLVVLRQUHFRPPHQGDWLRQVIRU2%&UHVHUYDWLRQVDWWKHQDWLRQDOOHYHO
