Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 7

Investor compliance with the laws and regulations in the home countries of their investments should be part of their regulators' due diligence process. They, in turn, should be treated equitably in the home country of their investments especially in respect to their rights to shareholder benefits and concessionary arrangements under double tax agreements.

1.	Do domestic regulators monitor the procedures in place at their locally based cross-border custodians to assure compliance with the laws and regulations of the home countries of their investments?	There is an over riding requirement for domestic custodians to comply with the laws in the home country of their investments. This is part of the regulatory oversight process as is the due diligence undertaken on any agents used overseas. There is normally a strong dependency on local agents to keep custodians aware of and advise on compliance with local laws and regulations.
2.	What are the areas (e.g. benefits, investor compensation) where foreign investors are not treated in the same way as local investors?	There is no discrimination under UK law of foreign investors. There are specific issues where problems may arise and these are: Compliance with the reporting requirements of the UK revenue where this would conflict with local laws on bank secrecy in certain jurisdictions Rights issues in the UK may not be acceptable securities for certain investors due to their local country regulations (US and Canada are key examples) Foreign investors buying UK shares through a local depository may be subject to different stamp duty rates to those buying and holding these in the UK Tax deductions on dividends may favour the foreign investor through local double tax treaty A few stocks require nationality declarations and/or maintain foreign ownership limitations.
3.	Can sales proceeds and income be repatriated without any restrictions?	There are no restrictions on repatriation of funds although active stock traders in UK securities should establish with their professional advisors whether they are not subject to UK tax on gains.
4.	Are double tax agreements simple to apply, and do foreign investors receive promptly their full entitlement to dividends and interest payments?	The rules are not simple to apply. There is non-standard practice across registrars as to the handling of treaty rate concessions. Income received gross is handled efficiently as custodians normally operate as agents in this respect for the UK Inland Revenue.