18 December, 2018
Singapore Law: Year in Review 2018 summarises some key developments in Singapore this year and Year to Come 2019 gives an overview of important changes that we anticipate in 2019. There are also links to further reading, where applicable.
"There were significant changes to the Singapore legal and regulatory landscape in 2018. Our review gives a snapshot of changes which are most likely to affect our clients and transactions. We also look ahead to potential challenges in 2019."
Christopher Bradley, Managing Partner, Singapore
Significant legal and regulatory events in 2018
Arbitration and Disputes
Deferred prosecution agreements: Singapore has introduced a legislative framework for the use of deferred prosecution agreements (“DPAs”), by which the public prosecutor may agree to defer criminal prosecution of a corporate entity on the condition that the company performs the terms of the DPA. The terms might include payment of a fine and remedial measures.
Read our overview of the framework here.
“Wrotham Park” damages:
A Singapore Court of Appeal decision confirmed that a type of relief known as “Wrotham Park” damages are available to parties facing a breach of a contractual restrictive covenant but who are unable to establish pecuniary loss. Wrotham Park damages represent the sum of money which the innocent party might reasonably have demanded as the price for relaxing or releasing the restrictive covenant.
Loss of right to arbitrate: A Singapore Court of Appeal decision held that a party would lose its right to arbitrate if it commences court proceedings in respect of a dispute which is subject to an arbitration agreement.
Read our briefing on the decision here.
High-profile non-compete employment case:
In Ricardo Leiman v Noble Resources Ltd [2018] SGHC 166, Linklaters successfully defended the Noble Group in High Court proceedings brought by its former CEO, Mr Leiman for breach of contract and various tortious claims in respect of Noble’s decision to forfeit his share options, shares and discretionary bonus as a result of his breach of non-compete and other employment duties.
Read our overview of the case here.
Capital Markets
Listing Rules:
The SGX finally allowed the listings of companies with dual class share structures in June 2018. In August 2018, the SGX allowed MOG companies to raise funds at an early stage of development.
Amendments to the Securities and Futures Act: Amendments in July 2018 required issuers to classify their capital markets products (“CMPs”) in accordance with a prescribed list of CMPs set out in the regulations and notify the classification to approved exchanges and certain Singapore-licensed institutions who distribute the CMPs in Singapore.
Amendments in October 2018 introduced wide ranging changes to rules in connection with licensing, prospectus requirements, conduct of business and market misconduct.
Read our briefing on the amendments here.
Enhancements to the resolution regime for financial institutions:
The Monetary Authority of Singapore (“MAS”) continues to enhance the resolution regime for Singapore financial institutions following the introduction of such enhancements in 2017. The latest developments include the implementation of the statutory bail-in regime for banks and MAS’ power to temporarily stay termination rights for within-scope financial institutions.
Read our overview of the enhancements here.
Variable Capital Companies:
The Variable Capital Companies Bill was passed, which sets up a legislative framework for a new corporate structure (Singapore Variable Capital Companies) that provides collective investment schemes with an additional corporate structure option to the common unit trust structure.
Corporate
Company:
Company law reform to reduce the administrative burden for private companies continued with changes to align the timelines for holding AGMs and filing annual returns with the financial year end for companies. Additional exemptions for holding AGMs were also introduced.
Private M&A:
In 2017, amendments to the Stamp Duties Act had the inadvertent effect of bringing forward the time for stamping of share transfers from the execution of the instrument of transfer to the execution of the SPA. New rules were introduced in April 2018 to clarify that we are back to the position before the 2017 amendments.
Public M&A:
The Takeovers Code was amended in May 2018 to introduce an exempt status regime for fund managers and principal traders. The regime facilitates large multi-service financial groups acting as financial advisers in a Takeovers Code transaction.
Listing Rules:
The SGX finally allowed the listings of companies with dual class share structures in June 2018. In August 2018, the SGX allowed MOG companies to raise funds at an early stage of development.
Contract: The courts clarified the rules on illegality (read more) and penalty clauses (read more) in contracts.
Employment
Higher salary criteria for dependant privileges:
From January 2018, the salary criteria for work pass holders to qualify for dependant privileges were raised from S$5,000 to S$6,000 (for spouses and children) and S$10,000 to S$12,000 (for parents).
Read our update here.
Expansion of Jobs Bank advertising requirements:
From July 2018, the Jobs Bank advertising requirements were extended to cover companies with at least 10 employees and jobs paying up to S$15,000 a month.
Read our briefing on the requirements here.
High-profile non-compete employment case:
In Ricardo Leiman v Noble Resources Ltd [2018] SGHC 166, Linklaters successfully defended the Noble Group in High Court proceedings brought by its former CEO, Mr Leiman for breach of contract and various tortious claims in respect of Noble’s decision to forfeit his share options, shares and discretionary bonus as a result of his breach of non-compete and other employment duties.
Read our overview of the case here.
New Tripartite Standards:
The Tripartite Partners launched Tripartite Standards covering (i) unpaid leave for unexpected care needs; (ii) contracting with self-employed persons and (iii) age-friendly workplace practices.
Financial Regulation
Enhancements to the resolution regime for financial institutions:
The Monetary Authority of Singapore (“MAS”) continues to enhance the resolution regime for Singapore financial institutions following the introduction of such enhancements in 2017. The latest developments include the implementation of the statutory bail-in regime for banks and MAS’ power to temporarily stay termination rights for within-scope financial institutions.
Read our briefing on the statutory bail-in regime here.
Payment and Settlement Systems Finality and Netting:
The Payment and Settlement Systems (Finality and Netting) (Amendment) Bill came into effect, which aims to enhance the protection of payment transactions; set out clear criteria for the MAS to designate payment systems; and strengthen the MAS’ administrative powers.
Moneylenders Act:
The Moneylenders (Amendment) Bill was passed and aims to strengthen the regulation of moneylending by enhancing the protection of borrowers; strengthening the regulation of moneylenders; and professionalising the moneylending industry.
Non-face to face customer onboarding:
The MAS issued guidance to financial institutions on the use of technology solutions for the purposes of non-face-to-face customer on-boarding, including using identification and verification measures such as biometric identification, real-time video conferencing and secure digital signatures.
Liquidity risk management framework:
Following consultation on a liquidity risk management framework for fund management companies (“FMCs”), the MAS issued the implementing Guidelines and an amended Code on Collective Investment Scheme. The MAS expects FMCs to start incorporating liquidity considerations in product design processes for new funds that are launched after the issuance of the Guidelines.
Amendments to the Securities and Futures Act:
Amendments in July 2018 required issuers to classify their capital markets products (“CMPs”) in accordance with a prescribed list of CMPs set out in the regulations and notify the classification to approved exchanges and certain Singapore-licensed institutions who distribute the CMPs in Singapore.
Variable Capital Companies:
The Variable Capital Companies Bill was passed, which sets up a legislative framework for a new corporate structure (Singapore Variable Capital Companies) that provides collective investment schemes with an additional corporate structure option to the common unit trust structure.
Robo-advisory Guidelines:
The MAS issued its "Guidelines on Provision of Digital Advisory Services" which seeks to give clarity on the rules and requirements in respect of digital advisory services, including licensing requirements and exemptions available for digital advisers, and related operational and compliance obligations.
Projects
Contract: The courts clarified the rules on illegality (read more) and penalty clauses (read more) in contracts.
Carbon Pricing Act 2018:
The Carbon Pricing Act 2018 was passed in March 2018 (the “Act”). Under the Act, a business facility will be subject to reporting requirements where emissions exceed 2,000 tCO2e, and carbon tax where emissions exceed 25,000 tCO2e. Carbon tax will be payable through a carbon credits mechanism, under which a business facility will purchase and surrender carbon credits with a total value equivalent to the amount of carbon tax owed. The carbon tax rate is S$5/tCO2e.
Technology, Media and Telecommunications
Robo-advisory Guidelines:
The MAS issued its "Guidelines on Provision of Digital Advisory Services" which seeks to give clarity on the rules and requirements in respect of digital advisory services, including licensing requirements and exemptions available for digital advisers, and related operational and compliance obligations.
Non-face to face customer onboarding:
The MAS issued guidance to financial institutions on the use of technology solutions for the purposes of non-face-to-face customer on-boarding, including using identification and verification measures such as biometric identification, real-time video conferencing and secure digital signatures.
Significant legal and regulatory events in 2019
Arbitration and Disputes
Misconduct reporting requirements:
The MAS issued a consultation paper on revisions to misconduct reporting requirements and proposals to mandate reference checks for representatives.
Read our overview of the proposals here.
Reforms to the Singapore civil justice system:
The Ministry of Law and Supreme Court have proposed dramatic reforms to the Singapore civil procedure rules. The key reforms seek to streamline and expedite the civil litigation process, and grant the courts greater control and flexibility over proceedings. The public consultation of the reforms closed in November 2018.
New insolvency law:
In 2018 a new insolvency bill was passed that is expected to come into effect in early 2019. The bill consolidates the existing provisions on corporate and personal insolvency laws. New provisions include a restriction on ipso facto clauses, voluntary judicial management provisions and a new regime for licensing insolvency practitioners.
Capital Markets
Listing Rules:
SGX closed its consultations on enhancements to the disclosure regime and changes to the quarterly reporting regime in 2018. We expect the conclusions to be released in 2019. A consultation exercise was launched in November 2018 to change the exit offer and voluntary delisting regime and changes are expected to be implemented in 2019.
Relaxing rules for exchanges:
The MAS issued two consultation papers which aim to introduce greater flexibility for market operators when establishing new trading facilities and allow for quicker launch of new products. The consultations form part of the MAS’ broader objectives to facilitate innovation in financial services to meet market needs.
Settlement of tokenised assets:
The MAS and Singapore Exchange have developed Delivery versus Payment capabilities for the settlement of tokenised assets across different blockchain platforms.
Corporate
Corporate governance:
The Code of Corporate Governance and the Listing Rules will be amended in January 2019 to implement key changes relating to independent directors, board composition and the comply or explain regime for listed companies.
Listing Rules:
SGX closed its consultations on enhancements to the disclosure regime and changes to the quarterly reporting regime in 2018. We expect the conclusions to be released in 2019. A consultation exercise was launched in November 2018 to change the exit offer and voluntary delisting regime and changes are expected to be implemented in 2019.
New insolvency law:
In 2018 a new insolvency bill was passed that is expected to come into effect in early 2019. The bill consolidates the existing provisions on corporate and personal insolvency laws. New provisions include a restriction on ipso facto clauses, voluntary judicial management provisions and a new regime for licensing insolvency practitioners.
Employment
Individual accountability of senior managers:
The MAS published a consultation paper proposing guidelines to strengthen individual accountability of senior managers and raise standards of conduct in financial institutions as part of its broader efforts to foster a culture of ethical behaviour and responsible risk-taking in the financial industry. The Guidelines are targeted to be issued in Q4 2018.
Read our briefing on the consultation here.
Misconduct reporting requirements:
The MAS issued a consultation paper on revisions to misconduct reporting requirements and proposals to mandate reference checks for representatives.
Read our overview of the proposals here.
Amendments to the Employment Act:
Amendments were passed in November 2018 and expected to take effect in April 2019. Key amendments include: (i) extending the core provisions of the legislation to all employees, irrespective of salary levels; (ii) increasing the scope of application of the provisions on working hours and overtime payment; (iii) extending the statutory entitlement to paid annual leave to all employees and (iv) empowering the Employment Claims Tribunal to hear wrongful dismissal claims.
Read our overview of the key changes to the Employment Act here.
Updates to S-Pass eligibility:
The minimum qualifying salary to apply for a S-Pass for foreign mid-level skilled staff will increase from S$2,200 over two phases: (i) to S$2,300 in January 2019 and (ii) to S$2,400 in January 2020.
Read our alert on the updates here.
Amendments to the Personal Data Protection Act:
Following public consultations held by the Personal Data Protection Commission (“PDPC”) in 2018, the PDPA may be amended in 2019. The key proposed changes will likely include a relaxation of the requirement to gather consent at data collection by introducing a concept of “legitimate interests” for businesses, and introducing a mandatory breach notification requirement, which would require businesses to notify the PDPC and the affected individuals if there had been an unauthorised disclosure of personal information.
Financial Regulation
Execution of customers’ orders:
The MAS issued a consultation paper on execution of customers’ orders, which proposes to require financial institutions to establish and implement written policies and procedures to place and/or execute customers’ orders on the best available terms.
Payment Services Bill:
The MAS issued a consultation paper on a proposed Payment Services Bill, which will implement an activity-based regulatory framework to regulate entities operating within the payments ecosystem. This framework will expand the scope of regulated payment activities to include fintech participants in the payments space, including those offering virtual currency services and other innovations. The Bill has been moved for First Reading in Parliament and will likely come into effect in mid-2019.
Cyber hygiene of financial institutions:
The MAS issued a consultation paper proposing the issuance of a Notice on Cyber Hygiene prescribing essential cyber security measures to be implemented by a wide range of financial institutions with a view to enhancing cyber resilience and guarding against cyberattacks.
Rules on large exposures of Singapore-incorporated banks:
The MAS issued a consultation paper on proposed revisions to the regulatory framework for large exposures of Singapore-incorporated banks, including revisions to large exposures limits and substantial exposures limits. If adopted, the proposals will be implemented in January 2019.
AML/CFT requirements imposed on money-changing and remittance businesses:
The MAS issued a consultation paper on changes to such requirements, including facilitating the conduct of non-face-to-face business through guidance on mitigating associated risks.
Enhancements to Deposit Insurance Scheme and Policy Owners’ Protection Scheme: The MAS had finalised proposed enhancements to the Deposit Insurance Scheme and Policy Owners’ Protection Scheme to strengthen protection for depositors and policy owners and improve the operational efficiency of the Schemes. The MAS intends to effect the enhancements in April 2019.
Revised reporting standards for banks:
The MAS has revised Notices setting out regulatory requirements relating to the revised reporting standards for banks and merchant banks in Singapore, which will take effect in October 2020. The MAS also established a working group of banks to assess the feasibility of using transactional data provided to the DTCC Data Repository (Singapore) Pte Ltd to compute requested aggregate statistics, which will be completed by the second half of 2019.
Guidelines for financial advisers:
The MAS published a consultation paper on two new proposed guidelines for firms providing financial advisory services. These will provide additional clarity on what constitutes the provision of financial advisory services, and setting out key principles on the design of advisory and sales forms.
Misconduct reporting requirements:
The MAS issued a consultation paper on revisions to misconduct reporting requirements and proposals to mandate reference checks for representatives.
Responsible and ethical use of AI:
The MAS announced that it is working with a group of thought leaders and practitioners in data analytics in the financial sector (together, the Fairness, Ethics, Accountability and Transparency Committee) to develop a guide to promote the responsible and ethical use of artificial intelligence and data analytics by financial institutions.
Protection of e-payments users: The MAS issued a consultation paper on proposed guidelines to protect users of electronic payments.
Read our overview of the proposals here.
Relaxing rules for exchanges:
The MAS issued two consultation papers which aim to introduce greater flexibility for market operators when establishing new trading facilities and allow for quicker launch of new products. The consultations form part of the MAS’ broader objectives to facilitate innovation in financial services to meet market needs.
Settlement of tokenised assets:
The MAS and Singapore Exchange have developed Delivery versus Payment capabilities for the settlement of tokenised assets across different blockchain platforms.
Arbitration and Disputes
Misconduct reporting requirements:
The MAS issued a consultation paper on revisions to misconduct reporting requirements and proposals to mandate reference checks for representatives.
Read our overview of the proposals.
Reforms to the Singapore civil justice system:
The Ministry of Law and Supreme Court have proposed dramatic reforms to the Singapore civil procedure rules. The key reforms seek to streamline and expedite the civil litigation process, and grant the courts greater control and flexibility over proceedings. The public consultation of the reforms closed in November 2018.
New insolvency law:
In 2018 a new insolvency bill was passed that is expected to come into effect in early 2019. The bill consolidates the existing provisions on corporate and personal insolvency laws. New provisions include a restriction on ipso facto clauses, voluntary judicial management provisions and a new regime for licensing insolvency practitioners.
Capital Markets
Listing Rules:
SGX closed its consultations on enhancements to the disclosure regime and changes to the quarterly reporting regime in 2018. We expect the conclusions to be released in 2019. A consultation exercise was launched in November 2018 to change the exit offer and voluntary delisting regime and changes are expected to be implemented in 2019.
Relaxing rules for exchanges:
The MAS issued two consultation papers which aim to introduce greater flexibility for market operators when establishing new trading facilities and allow for quicker launch of new products. The consultations form part of the MAS’ broader objectives to facilitate innovation in financial services to meet market needs.
Settlement of tokenised assets:
The MAS and Singapore Exchange have developed Delivery versus Payment capabilities for the settlement of tokenised assets across different blockchain platforms.
Corporate
Corporate governance:
The Code of Corporate Governance and the Listing Rules will be amended in January 2019 to implement key changes relating to independent directors, board composition and the comply or explain regime for listed companies.
Listing Rules:
SGX closed its consultations on enhancements to the disclosure regime and changes to the quarterly reporting regime in 2018. We expect the conclusions to be released in 2019. A consultation exercise was launched in November 2018 to change the exit offer and voluntary delisting regime and changes are expected to be implemented in 2019.
New insolvency law:
In 2018 a new insolvency bill was passed that is expected to come into effect in early 2019. The bill consolidates the existing provisions on corporate and personal insolvency laws. New provisions include a restriction on ipso facto clauses, voluntary judicial management provisions and a new regime for licensing insolvency practitioners.
Employment
Individual accountability of senior managers:
The MAS published a consultation paper proposing guidelines to strengthen individual accountability of senior managers and raise standards of conduct in financial institutions as part of its broader efforts to foster a culture of ethical behaviour and responsible risk-taking in the financial industry. The Guidelines are targeted to be issued in Q4 2018.
Read our briefing on the consultation here.
Misconduct reporting requirements:
The MAS issued a consultation paper on revisions to misconduct reporting requirements and proposals to mandate reference checks for representatives.
Read our overview of the proposals here.
Amendments to the Employment Act:
Amendments were passed in November 2018 and expected to take effect in April 2019. Key amendments include: (i) extending the core provisions of the legislation to all employees, irrespective of salary levels; (ii) increasing the scope of application of the provisions on working hours and overtime payment; (iii) extending the statutory entitlement to paid annual leave to all employees and (iv) empowering the Employment Claims Tribunal to hear wrongful dismissal claims.
Read our overview of the key changes to the Employment Act here.
Updates to S-Pass eligibility:
The minimum qualifying salary to apply for a S-Pass for foreign mid-level skilled staff will increase from S$2,200 over two phases: (i) to S$2,300 in January 2019 and (ii) to S$2,400 in January 2020.
Read our alert on the updates here.
Amendments to the Personal Data Protection Act:
Following public consultations held by the Personal Data Protection Commission (“PDPC”) in 2018, the PDPA may be amended in 2019. The key proposed changes will likely include a relaxation of the requirement to gather consent at data collection by introducing a concept of “legitimate interests” for businesses, and introducing a mandatory breach notification requirement, which would require businesses to notify the PDPC and the affected individuals if there had been an unauthorised disclosure of personal information.
Financial Regulation
Execution of customers’ orders:
The MAS issued a consultation paper on execution of customers’ orders, which proposes to require financial institutions to establish and implement written policies and procedures to place and/or execute customers’ orders on the best available terms.
Payment Services Bill:
The MAS issued a consultation paper on a proposed Payment Services Bill, which will implement an activity-based regulatory framework to regulate entities operating within the payments ecosystem. This framework will expand the scope of regulated payment activities to include fintech participants in the payments space, including those offering virtual currency services and other innovations. The Bill has been moved for First Reading in Parliament and will likely come into effect in mid-2019.
Cyber hygiene of financial institutions:
The MAS issued a consultation paper proposing the issuance of a Notice on Cyber Hygiene prescribing essential cyber security measures to be implemented by a wide range of financial institutions with a view to enhancing cyber resilience and guarding against cyberattacks.
Rules on large exposures of Singapore-incorporated banks:
The MAS issued a consultation paper on proposed revisions to the regulatory framework for large exposures of Singapore-incorporated banks, including revisions to large exposures limits and substantial exposures limits. If adopted, the proposals will be implemented in January 2019.
AML/CFT requirements imposed on money-changing and remittance businesses:
The MAS issued a consultation paper on changes to such requirements, including facilitating the conduct of non-face-to-face business through guidance on mitigating associated risks.
Enhancements to Deposit Insurance Scheme and Policy Owners’ Protection Scheme:
The MAS had finalised proposed enhancements to the Deposit Insurance Scheme and Policy Owners’ Protection Scheme to strengthen protection for depositors and policy owners and improve the operational efficiency of the Schemes. The MAS intends to effect the enhancements in April 2019.
Revised reporting standards for banks:
The MAS has revised Notices setting out regulatory requirements relating to the revised reporting standards for banks and merchant banks in Singapore, which will take effect in October 2020. The MAS also established a working group of banks to assess the feasibility of using transactional data provided to the DTCC Data Repository (Singapore) Pte Ltd to compute requested aggregate statistics, which will be completed by the second half of 2019.
Guidelines for financial advisers:
The MAS published a consultation paper on two new proposed guidelines for firms providing financial advisory services. These will provide additional clarity on what constitutes the provision of financial advisory services, and setting out key principles on the design of advisory and sales forms.
Misconduct reporting requirements:
The MAS issued a consultation paper on revisions to misconduct reporting requirements and proposals to mandate reference checks for representatives.
Responsible and ethical use of AI:
The MAS announced that it is working with a group of thought leaders and practitioners in data analytics in the financial sector (together, the Fairness, Ethics, Accountability and Transparency Committee) to develop a guide to promote the responsible and ethical use of artificial intelligence and data analytics by financial institutions.
Protection of e-payments users:
The MAS issued a consultation paper on proposed guidelines to protect users of electronic payments.
Read our overview of the proposals here.
Relaxing rules for exchanges:
The MAS issued two consultation papers which aim to introduce greater flexibility for market operators when establishing new trading facilities and allow for quicker launch of new products. The consultations form part of the MAS’ broader objectives to facilitate innovation in financial services to meet market needs.
Settlement of tokenised assets:
The MAS and Singapore Exchange have developed Delivery versus Payment capabilities for the settlement of tokenised assets across different blockchain platforms.
Technology, Media and Telecommunications
Payment Services Bill:
The MAS issued a consultation paper on a proposed Payment Services Bill, which will implement an activity-based regulatory framework to regulate entities operating within the payments ecosystem. This framework will expand the scope of regulated payment activities to include fintech participants in the payments space, including those offering virtual currency services and other innovations. The Bill has been moved for First Reading in Parliament and will likely come into effect in mid-2019.
Responsible and ethical use of AI:
The MAS announced that it is working with a group of thought leaders and practitioners in data analytics in the financial sector (together, the Fairness, Ethics, Accountability and Transparency Committee) to develop a guide to promote the responsible and ethical use of artificial intelligence and data analytics by financial institutions.
Settlement of tokenised assets:
The MAS and Singapore Exchange have developed Delivery versus Payment capabilities for the settlement of tokenised assets across different blockchain platforms.
Cyber hygiene of financial institutions:
The MAS issued a consultation paper proposing the issuance of a Notice on Cyber Hygiene prescribing essential cyber security measures to be implemented by a wide range of financial institutions with a view to enhancing cyber resilience and guarding against cyberattacks.
Protection of e-payments users:
The MAS issued a consultation paper on proposed guidelines to protect users of electronic payments.
Read our overview of the proposals here.
Amendments to the Personal Data Protection Act:
Following public consultations held by the Personal Data Protection Commission (“PDPC”) in 2018, the PDPA may be amended in 2019. The key proposed changes will likely include a relaxation of the requirement to gather consent at data collection by introducing a concept of “legitimate interests” for businesses, and introducing a mandatory breach notification requirement, which would require businesses to notify the PDPC and the affected individuals if there had been an unauthorised disclosure of personal information.
Licensing regime for cybersecurity service providers:
The Cybersecurity Act introduced a “light touch” licensing regime for service providers providing certain types of cybersecurity services. Licensed service providers will need to meet certain basic conditions such as retaining service records for three years. This licensing regime is likely to apply to Singapore companies as well as overseas service providers offering such services in Singapore. The licensing regime is expected to be implemented in the second half of 2019.
For further information, please contact:
Christopher Bradley, Partner, Linklaters
christopher.bradley@linklaters.com
