The Grand Duchy of Luxembourg, being one of the foundation members of the European Community, is situated at the crossroads of Europe, in the triangle where the borders of Belgium, France and Germany meet, and covers an area of 2,586 square kilometers. Luxembourg enjoys a mild climate and its population is about 420,000.

   The official languages are French, German and the Luxembourgian language. English is also widely spoken and is used daily in commercial transactions.

   The currency of Luxembourg is the Luxembourg Franc. Belgian Francs also circulate freely in Luxembourg, as the two currencies are at par.

   There is no exchange control. A well protected banking secrecy is strictly guaranteed by law. The principle Corporate Legislation is the Commercial Companies Act of August 10, 1915 as amended and the Law of July 31, 1929 as amended.

   There are mainly two types of companies for international trade and/or investment operations: 1929 Holding Company and 1990 Societe de Participations Financiere ( 1990 SOPAPFI Company).

   There is no withholding tax on bank or bond interest and the above-mentioned companies are either completely (1929 Holding Company) or at least partially exempted from taxes on profits.

   The Luxembourgian 1929 Holding Companies are an attractive corporate vehicle for international purposes as these companies are not liable to taxation in Luxembourg. Their object is however limited to the following activities:

   - Acquire, administer, manage and sell participating interests (bearer or registered (preferential) shares, (convertible) bonds, warrants, options, quoted or not quoted on the stock exchange) in Luxembourg or foreign corporations.

   - Administer and manage the own liquid assets by opening accounts or time deposit accounts with Luxembourgian or foreign banks or by investing in securities.

   - Corporate subsidiaries in Luxembourg or foreign countries or participate in the foundation of any other corporations in Luxembourg or foreign countries.

   - Grant short term or long term advances, loans or guarantees to subsidiaries or other corporations in which a direct participation is held, or to whom a licence is granted on the basis of a patent or brand.

   - Acquire and manage patent rights, the exploitation of which must be strictly limited to granting licences to subsidiaries in the framework of the normal course of doing business.

   - Acquire brands, and licence such brands to subsidiaries, but only as an auxiliary activity.

   The Luxembourgian 1990 SOPARFI Companies are as well an attractive corporate vehicle for international transactions. This type of company is in fact an ordinary commercial company being in principle taxable in Luxembourg, but benefiting from tax exemptions by reason of the type of income it receives. In contrast to the 1929 Holding Company the 1990 SOPARFI Company may engage in any type of commercial activity and is not restricted as to the activities it can carry on, with the additionally possibility to purchase and own real estate.

   Usually the 1929 Holding Company as well as the 1990 SOPARFL Company are founded in the juridical form of a Joint-Stock Company (Societe Anonyme = S.A.) which gives among others the possibility that the shareholders of the company can stay completely anonymous. This is the reason why only this juridical form is described in the following. As well it is however possible to incorporate these companies in the juridical form of a limited liability company (Societe Responsabilite Limitee = S. a. r. 1.) with a lower capital requirement and another organisational structure than mentioned below. Further information in so far wil1 be given on request.

   It could be advantageous to combine a 1929 Holding Company with a 1990 SOPARFI Company or an Off-shore-Company with a 1929 Holding Company. Also it brings advantages to combine a Cyprus Company with a 1929 Holding Company.

   The minimum number of shareholders is two.

   The company organs requested by law are the Board of Directors and the Auditor. The minimum number of directors is three and that of the auditor one. A Company Secretary is not requested by law. The directors as well as the auditors might be natural persons or legal entities. They may be of any nationality and need not to be resident in Luxembourg. But it is advisable to have at least a majority of directors being resident in Luxembourg otherwise the tax authorities of the directors native country might consider that the centre of management is settled in their country and therefore consequently tax the profits there.

   The Articles of Incorporation have to be drawn up in the form of a notarial deed. This deed has in particular to include:

   -The name of the newly founded company.

  -The name and the addresses of the appearing parties wishing to incorporate the company.

   -The place and the address of the registered office which has to be in Luxembourg.

  -The amount and the currency of the subscribed capital expressed in any transferable currency.

   -The number, type and classes of the subscribed shares.

   -The amount of the capital paid up.

   -The voting rights of the shares.

   -The names, professions and places of residence of the directors.

   -The names, professions and places of residence of the auditors.

   -The place and the time of the annual General Meetings of Shareholders.

   The Articles of Incorporation are registered and then published in the Official Gazette of the Grand Duchy of Luxembourg,

   The legal minimum share-capital of a 1929 Holding Company as well as of a 1990 SOPARFI Company is 1,250,000.- Luxembourg

   Francs =about 34,000.- USD at the current exchange rate. The capital can be expressed and paid up in any transferable currency.

   There are permitted registered shares, bearer shares, preference shares and shares with or without voting rights.

   The companies have to have a bookkeeping. A balance sheet has to been drawn up after the end of each financial year confirmed by the auditor in an audit report. Additionally the 1900 SOPARFI Company has the obligation to file a tax return.

   The 1919 Holding Companies are exempted from all taxes in Luxembourg except a contribution of 1 % of the subscribed capital which has to be paid once when the company is founded or the capital is increased and the annual " Taxe d' Abonnement " of 0,2 % calculated on the value of the company's share-capital . From this it follows that neither corporation income tax nor other taxes on profits are due to be paid on profits from the sale of participations, dividends, income from interests of money investments, loan interests, patent royalties, licensing fees and other earnings received by the company and that furthermore no other taxes, like capital gains tax and municipal trade tax, have to been paid. There is no withholding tax on interests or dividends paid by the 1929 Holding Company to the shareholders. In the case that the 1929 Holding Company is liquidated the liquidation proceeds will be paid to the shareholders without a withholding tax.

   The 1990 SOPARFI Companies, which also have to pay a contribution of 1 % of the subscribed share-capital when they are founded respectively the share-capital is increased, are in principle taxable in Luxembourg, but benefit from the regulations of the Luxembourgian tax laws in connection with the tax regulations of the European Community and the benefits of the Grand Duchy tax treaty network. The benefits exist first of all in the taxation of dividends received by the company and secondly in the sale of participations in other corporations. If particular conditions are fulfilled the income and profit of such transactions is tax-free. This results from the fact that in contrast to the 1929 Holding Company, which is excluded from all double taxation treaties concluded by the Grand Duchy of Luxembourg, the 1990 SOPARFI Company participates in these treaties and profits from the benefits given by them. Furthermore it is possible that the liquidation exceeds gained in the liquidation of a 1990 SOPARFI Company will stay tax-free if certain conditions are fulfilled. Further information on the before-mentioned points can be given on request.

*       + legal VAT (at the moment 15%)

**     + legal VAT (at the moment 12%)

***  a) Holding Company 1929: the fees refer to a work volume of not more than 40                   operations on the company’s account per year
         b) SOPARFI Business Company: the fees refer to a work volume which is normal for a                    Holding Company