Legal Framework and International Conventions affecting LVHMSA

This research papers seeks to highlight the legal framework and conventions and treaties affecting LVMHSA group of companies. The laws and treaties apply to all business entities; however, this paper will focus on the specific laws affecting LVHMSA Company.

LVMHSA 1
Legal Framework and International Conventions affecting LVHMSA
Student’s Name
Course Name
Professor’s Name
Institutional Affiliation
6th May 2019

LVMHSA 2
Executive Summary
This research papers seeks to highlight the legal framework and conventions and treaties
affecting LVMHSA group of companies. The laws and treaties apply to all business entities;
however, this paper will focus on the specific laws affecting LVHMSA Company. LVMH’s
subsidiary companies that are located in foreign countries (Moet Hennessy Australia Pty Ltd
in this case located in Australia) have to comply with the local and international trading laws.
The laws relevant here are the Australian Consumer Law (ACL), Competition and Consumer
Act 2010 (CCA), and The Corporations Act 2001.
Key Words: LVMHSA, Moet Hennessy Australia Pty Ltd, legislative frameworks, treaties,
and conventions

LVMHSA 3
Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................4
Legislative Regulatory Framework in Australia........................................................................4
Business Registrations...........................................................................................................4
Australian Corporations Law.................................................................................................5
Competition and Consumer Act 2010 (CCA)........................................................................6
Australian Consumer Law..................................................................................................6
Trade Practices Act............................................................................................................7
Codes of practice................................................................................................................7
Treaties, conventions, and agreements that have impacted on the products or services that
LVMHSA provides in Australia................................................................................................8
Corporations Agreement 2002...............................................................................................8
Australian Free Trade Agreements (FTAs)........................................................................8
The Multilateral Convention..............................................................................................9
Agreement on Technical Barriers of Trade (TBT Agreement)..........................................9
Impact of Australian legislation and treaties on the provision of products and services.........10
Conclusion................................................................................................................................11
References................................................................................................................................12

LVMHSA 4
Introduction
LVMH Moët Hennessy Louis Vuitton SA is a worldwide multinational corporation that was
founded in 1987 by the Arnault Family (Bernard Arnault) (LVMH.com, 2019). The company
deals with luxury goods and has its headquarters based in Paris, France. LVMH is a top
employer boasting of 145,247 employees globally. The company through its subsidiary
(Moet Hennessy Australia Pty Ltd) has employed 81 personnel in Australia. The company
has a series of foundations; it consists of the acquisition of Louis Vuitton by Moët Hennessy.
LVMHSA has about sixty independently managed subsidiaries that produce prestigious
commodities (LVMH.com, 2019). Deloitte’s “Global Powers of Luxury Goods” ranked LVH
as the first luxury consumer goods company. LVMHSA deals with several products: Fashion
outfits, Cosmetics, Fashion trappings, Jewelleries, Colognes, Spirits, Watches, and Wines.
This research will look into the legal framework and conventions and treaties operational in
Australia and how they impact LVMHSA group of companies.
Legislative Regulatory Framework in Australia
Business Registrations
Before beginning, any business operation in Australia business owners must register with the
necessary trade authorities. The business name is not the only registration sort by businesses;
there are various tax registrations that a business owner should make (Lignier and Evans,
2012). They include:
 Australian Business Number (ABN)
Moet Hennessy Australia Pty Ltd has an ABN (26 104 454 604) (Abr.business.gov.au.,
2019).
 Goods and Services Tax (GST)
Moet Hennessy Australia Pty Ltd has an active GST that was registered on 16th April 2003
(Abr.business.gov.au., 2019)
 Tax File Number (TFN)
Moet Hennessy Australia Pty Ltd’s TFN is discussed under the Australian Corporations Law.

LVMHSA 5
 PAYG Withholding
Pay as you go is a system installed for businesses to make fixed instalments for the expected
income tax liability.
Australian Company Number (ACN), ABN, and TFN are issued by the “Australian Securities
and Investments Commission”. CAN and Certificate of Incorporation are issued after
registration by ASIC.
Australian Corporations Law
The Australian Government borrowed this business law from the United Kingdom. The
structure of this law constitutes one federal statute, the Corporations Act 2001. The
“Australian Securities and Investments Commission” (ASIC) is the appointed national
regulatory authority in charge of the statute. ASIC incorporates Australian companies through
registration. Applying for registration determines whether the company will be public or an
established company. Moet Hennessy Australia Pty Ltd, in this case, is a public company;
therefore LVMHSA must have registered with ASIC (Securities, 2012). The registration also
determines the liability type of a company operating on shares:
 Restricted by guarantee
 Partial shares
 No legal responsibility (for mining companies)
 Unlimited share capital
LVMHSA is a luxury company dealing with consumer goods and has several shareholders
with Arnault family being the major shareholder with about 46% share capital. Share-linked
capital is a popular Australian business entity. Moet Hennessy Australia Pty Ltd (a subsidiary
of LVMHSA in Australia) operates on shares. LVMHSA boasts of over 506,980,299 shares
that is why it was ranked as the first luxury consumer goods company.
Moet Hennessy Australia Pty Ltd is a proprietary company; such companies are restricted
from raising capital on public equity markets and are not allowed to consist of more than 50
shareholders (Hill, 2000). Joint structuring of shareholdings is often used to breach the
shareholders’ restriction. Section 45A of the Corporations Act 2001 requires propriety
companies with joint shareholdings to include “Proprietary” or “Pty” in their names (Ramsay

LVMHSA 6
and Noakes, 2001). Moet Hennessy Australia Pty Ltd has the “Pty” indicating that ASIC
registers it as a proprietary company with joint shareholdings.
“Companies incorporated outside Australia wishing to carry on business in Australia must
either incorporate a wholly owned or partly owned subsidiary company in Australia (or
acquire an existing company) or register a branch office in Australia. In the absence of
special situations, Australian companies can be fully foreign owned, though one director
needs to be resident in Australia and must have an office address in Australia." Moet
Hennessy Australia Pty Ltd is a subsidiary of LVMHSA which is a French company. Being a
foreign company, LVMHSA had to acquire Moet Hennessy Australia Pty Ltd as its
subsidiary to operate in Australia as required by the law. Proprietary companies are usually
prominent during private ventures; they help in limiting owners’ liability.
Competition and Consumer Act 2010 (CCA)
CCA applies to almost every corporate in Australia. The law ensures that there is a fair
trading competition. It is appropriate in advertising, setting prices, and transactions between
companies and consumers. Complying with CCA is essential in:
 avoiding the legal proceedings’ costs
 effectively assessing and managing risks
 enhancing the business’s reputation
 improving customer relations
 improving staff awareness about fair trading laws
LVMHSA complies with the CCA by ensuring fair trade deals are enhanced; the company
takes part in the price setting procedure. There are three things declared illegal by the CCA:
 Fixing prices
 Selling goods below the set price/cost
 Resale price maintenance
Australian Consumer Law
The national “Australian Consumer Law” (ACL) was put to effect on 1st January 2011 to
regulate business operations. It is recommended that you know what your obligations and

LVMHSA 7
rights are. It applies to those working with businesses, customers, sell goods or offer services;
it does not discriminate or lock any entity out. The several federal laws replaced by ACL
include:
 fundamental consumer rights (goods and services)
 dangerous business practices
 standards of business conduct
 ensuring consumer product safety
 the management of particular categories of business-to-customer transactions
 Unfair contract laws (Corones, 2011).
The “Australian Competition and Consumer Commission” (ACCC) and State and Territory
consumer protection agencies jointly administer and enforce ACL (Richards, Lawrence,
Loong and Burch, 2012). LVMHSA has a set of ethical guidelines and code of conduct which
ensures that consumer rights are not violated.
Trade Practices Act
This Act was incorporated in the Australian law in 1974. It prevents anti-competitive conduct
thus ensuring that there is efficient and fair competition by businesses in the market. It also
ensures the welfare and wellbeing of consumers are sufficiently protected in their transactions
with sellers. “Australian Competition and Consumer Commission” (ACCC) was set up to
ensure compliance with the Act.
Codes of practice
They determine the principle ways of conduct for industries. The codes provide guiding
principles on fair dealings between a business like LVMHSA and its customers. A business
can establish their code of practices or adopt a Code of Practice precise for the industry; this
is obligatory in some cases. Mandatory codes of practices provide a minimum standard of
protection to the consumers making them regulations under the fair trading laws. Voluntary
codes can be in partnership with a state agency LVMHSA follows. The code of conduct
ensures that the company adheres to the Australian regulations.

LVMHSA 8
Treaties, conventions, and agreements that have impacted on the products or services
that LVMHSA provides in Australia.
LVMHSA, being a multinational company based in Australia is guided by various national
laws on consumer products and provision of services. These laws may be in the form of
treaties that every business is obliged to observe, conventions and agreements. They enable
multinational companies to provide products and services in an ethical manner, fair terms of
trade and consumer guarantees.
Corporations Agreement 2002
This is an agreement between the states and the commonwealth that provides the political
underpinning of the legislative framework for companies' regulation, fundraising, and
financial services industry. The Corporations Agreement was amended in 2005 to make
Australia a party to the agreement. The agreement works concurrently with the Australian
national laws to ensure that companies like LVMHSA do not defy the cross-border trade
regulations outlined by the ratified agreement.
Australian Free Trade Agreements (FTAs)
Australia is part of 11 FTAs with individual and group of countries. FTAS provides easy
access to the International market for investors, exporters, importers, and producers.
LVMHSA is an international company headquartered in France; there might not be an FTA
between France and Australia, but LVMHSA has subsidiaries in other countries that are
affected by the FTAs. For instance, Moet Hennessy Australia Pty Ltd is LVMHSA’s
subsidiary in Australia; the company is bound by the FTAs ratified by the Australian
government.
 “Australia–New Zealand (ANZCERTA or CER) 1983
 Singapore–Australia (SAFTA) 2003
 Australia–United States (AUSFTA) 2005
 Thailand–Australia (TAFTA) 2005
 Australia–Chile (AClFTA) 2009

LVMHSA 9
 ASEAN–Australia–New Zealand (AANZFTA) 2010: It covers Australia, Brunei,
Burma, Cambodia (2011), Indonesia (2012), Laos (2011), Malaysia, New Zealand,
Singapore and the Philippines, Thailand (2010), and Vietnam.
 Malaysia–Australia (MAFTA) 2013
 Korea–Australia (KAFTA) 2014
 Japan–Australia (JAEPA) 2015
 China–Australia (ChAFTA) 2015
 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
2018.” (Department of Foreign Affairs and Trade, 2019)
The Multilateral Convention
The convention was ratified by Australia in 2009 to ensure that resident companies are dually
taxed efficiently while transacting between border countries. The countries that have ratified
the convention ensure that there is transparency in the taxation; it ensures that there are
partnership and trust between the countries. Attempts to evade taxation or reduce the
expected tax to be paid to promote economic development are outlined by article 6 of the
convention. The treaty requires partnership companies to create a single resident company to
be taxed under domestic laws. LVMHSA through its subsidiary in Australia (Moet Hennessy
Australia Pty Ltd) can be taxed in compliance with the Australian taxation laws. The double
taxation agreement ensures that LVMHSA pays the permanent residency tax in Australia as
well as the global taxation on its general profits. This treaty ensures that companies do not
avoid multinational taxation (Treasury.gov.au., 2019).
Agreement on Technical Barriers of Trade (TBT Agreement)
It is an international pact administered by the “World Trade Organization” and is binding to
all the WTO members. This agreement ensures that “technical regulations, standards, testing
and certification procedures” do not create unnecessary obstacles to trade. Moreover, it
prohibits technical requirements created to limit trade, as opposed to technical requirements
created for legal practices. By observing the TBT Agreement, LVMHSA is protected from
unnecessary trade obstacles and receives legitimate interests according to international
standards (LVMH.com, 2019).

LVMHSA 10
Impact of Australian legislation and treaties on the provision of products and services
 Competition and Consumers Act, for example, covers anti-competitive conduct,
advertising, price fixing, unacceptable conduct and other issues. It, therefore, creates a
fair and competitive operating environment for businesses. Moreover, it reduces the
exploitation of some competitors leading to an efficient market place.
 “Australian Competition and Consumer Commission” (ACCC) provides valuable
information to consumers about products and services that makes it easy for
consumers to decide between the various competing goods and services. Since it deals
more in advertising, it can create awareness to consumers by advertising different
products in the market, both new and existing ones.
 Competitors in the market benefit from ACCC because it allows fair competition in
the market. LVMHSA benefits from this since it can promote their merchandise and
differentiate them from their competitors.
 Consumer laws protect consumers from unfair trade practices and high market prices.
They ensure prices are regulated and determined by the interplay of demand and
supply.
 Federal laws protect both consumers and businesses from untruthful and misleading
advertising.
 Product safety laws regulate consumer products and ensure that consumers get only
safe products.
 Federal consumer laws enable consumers to sue wholesalers, retailers, and producers
if they purchased illegal goods or if there were unfair practices involved in the
business.
 Federal and state laws govern the issuing of warranties to consumers by providing
guidelines and requirements that a business must meet on warranties.
International trade agreements like the Corporations Agreement reduce tariffs on imports
allowing companies to expand to other countries. LVMHSA is a multinational company that
is involved in export and import trade, by being an Australian company it operates on
guidelines and requirements of the Corporations Agreement and as a result benefits from the
reduction of tariffs. Low-cost goods imported from other countries will cost less if there are
minimal or no tariffs.

LVMHSA 11
Conclusion
It has not been reported anywhere that LVMHSA group has engaged in the mentioned illegal
activities. “Agreement on Technical Barriers of Trade (TBT Agreement), Australian
Consumer Law (ACL), Codes of Practice, Competition and Consumer Act 2010 (CCA),
Corporations Agreement 2002, The Corporations Act 2001, and the Trade Practices Act”
regulating business operations ensure that the company acts according to the domestic and
international laws. The company strives to provide quality services and goods within the
constraints of the law.

LVMHSA 12
References
Articles, Books, and Reports
Corones, S.G., 2011. The Australian Consumer Law. Thomson Reuters Lawbook Co.
Hill, J., 2000. Visions and Revisions of the Shareholder. The American Journal of
Comparative Law, 48(1), pp.39-79.
Lignier, P. and Evans, C., 2012, August. The rise and rise of tax compliance costs for the
small business sector in Australia. In Australian Tax Forum (Vol. 27, No. 3, pp. 615-672).
Ramsay, I. and Noakes, D.B., 2001. Piercing the corporate veil in Australia. Available at
SSRN 299488.
Richards, C., Lawrence, G., Loong, M. and Burch, D., 2012. A toothless Chihuahua? The
Australian Competition and Consumer Commission, neoliberalism and supermarket power in
Australia. Rural Society, 21(3), pp.250-263.
Securities, A., 2012. Investments Commission (ASIC) (2011). Report 413: Review of retail
life insurance advice, pp.5-42.
Legislation
Agreement on Technical Barriers of Trade (TBT Agreement)
Australian Consumer Law (ACL)
Codes of Practice
Competition and Consumer Act 2010 (CCA)
Corporations Agreement 2002
The Corporations Act 2001
Trade Practices Act 1974

LVMHSA 13
Websites
Abr.business.gov.au. (2019). Historical details for ABN 26 104 454 604 | ABN Lookup.
[Online] Available at: http://www.abr.business.gov.au/AbnHistory/View/26104454604
[Accessed 6 May 2019].
Department of Foreign Affairs and Trade. (2019). Free trade agreements in force. [Online]
Available at: https://dfat.gov.au/trade/agreements/in-force/Pages/free-trade-agreements-in-
force.aspx [Accessed 7 May 2019].
LVMH. (2019). LVMH, world leader in high-quality products. [Online] Available at:
https://www.lvmh.com/ [Accessed 6 May 2019].
Treasury.gov.au. (2019). Multilateral Instrument | Treasury.gov.au. [Online] Available at:
https://treasury.gov.au/tax-treaties/multilateral-instrument [Accessed 7 May 2019].