17 January, 2018
Year in Review – Singapore Law in 2017
Company law reform: Significant company law reform initiatives included: (i) removal of the requirement for Singapore companies to have a common seal which has made executing deeds simpler in practice; (ii) introduction of an inward re-domiciliation regime which allows a foreign company to transfer its registration to Singapore whereby it will continue as a Singapore company; and (iii) introduction of a disclosure regime for controllers and nominee directors of Singapore companies following recommendations of the Financial Action Task Force. Read more…
New restructuring regime: As part of the Company law reform, new corporate restructuring provisions were introduced which include: (i) an automatic moratorium on making an application for scheme of arrangement or judicial management; (ii) introduction of pre-packs; (iii) rescue financings for schemes of arrangement and judicial management; and (iv) adoption of the UNCITRAL Model Law on Cross Border Insolvency.
Penalty clauses: Three Singapore High Court decisions, although not expressly rejecting the genuine pre-estimate of loss test as set out in Dunlop, have applied the penalty rule as reformulated in Cavendish Square. Another High Court decision, without referring to any of the three earlier High Court decisions, has taken the position that the old test in Dunlop continues to be law in Singapore. Read more…
Public M&A developments: The Securities Industry Council issued guidance on various takeovers issues, including: (i) the effect of dividends declared by the target on the offer price; (ii) independent financial advisor opinions and recommendations; (iii) pre-conditional offers; (iv) the types of information to be provided to a competing offeror; and (v) situations where a significant change in the balance between concert party group shareholdings may trigger a mandatory general offer.
Stamp duty on share transfers: Amendments to the Stamp Duties Act changed the stamp duty regime for transfers of shares so that stamp duty is now typically paid at signing of the sale and purchase agreement rather than at closing when the instrument of transfer is signed.
Independent regulatory subsidiary: The Singapore Stock Exchange (“SGX”) established Singapore Exchange Regulation Pte Ltd (“RegCo”) as an independent subsidiary in order to separate its regulatory functions from its commercial and operating activities. RegCo commenced operations in September.
MAS’ Guide to Digital Token Offerings: In August, the Monetary Authority of Singapore (“MAS”) clarified that if a digital token constitutes a product regulated under the securities laws administered by MAS, the offer or issue of such digital token must comply with applicable securities laws. In November, MAS published a guide to digital token offerings to provide general guidance on the application of the securities laws administered by MAS to digital tokens marketed, offered or issued in Singapore. Read more…
Enhanced resolution regime for financial institutions: The MAS (Amendment) Bill 2017 was passed in July; it aims to enhance the existing powers of MAS to resolve non-viable financial institution(s). Read more…
Payments systems framework: MAS has confirmed that it will establish a Payments Council to address payments-related issues and improve the Singapore payments ecosystem, proposed to amend the Payment and Settlement Systems (Finality and Netting) Act and is consulting on legislation to implement a single streamlined regulatory framework for payments, the Payment Services Bill.
Fighting financial crime: MAS and the Commercial Affairs Department announced in April the launch of a government-industry partnership to strengthen Singapore’s capabilities in fighting money laundering and terrorism financing. MAS also completed its two-year review of financial institutions involved in 1MDB-related transactions known to date, and announced further action against financial institutions and individuals.
Commission payout structure for life insurance products: MAS’ amendments to the Financial Advisers (Remuneration) Regulations 2015 and the Insurance (Remuneration) Regulations 2015 took effect in April and implemented changes to the commission payout structure in relation to certain types of life policies.
Changes to the fund managers regime: A simplified regulatory regime for venture capital fund managers (“VCFMs”) was launched by MAS in October. This aims to simplify the authorisation process for VCFMs in order to enhance the VCFM operating environment. MAS has also proposed a new corporate structure for investment funds (Singapore Variable Capital Company), and the introduction of a liquidity risk management framework for fund managers with respect to the collective investment schemes that they manage.
MAS’ Bond Grant Schemes: MAS launched the Asian Bond, Green Bond and SGD Credit Rating Grant Schemes to further develop Singapore’s (i) bond market, (ii) green bond market and (iii) SGD denominated bond market, respectively. The schemes aim to co-fund eligible expenses attributable to the relevant issuance. Read more…
5G mobile networks: In April, 2G services ceased to be available in Singapore. The spectrum freed up has been allocated to mobile network operators to provide 3G and 4G services. Additionally, in May, the Info-communications Media Development Authority (“IMDA”) issued a consultation paper to seek views on 5G technology development and spectrum requirements, to prepare for the adoption of 5G mobile technologies.
Amendment to the Telecommunications Act:The Telecommunications Act was amended with effect from February to empower IMDA to facilitate the deployment of telecommunication infrastructure and to prohibit exclusive arrangements between telecommunication service providers and building owners.
Computer Misuse and Cybersecurity (Amendment) Bill: The Computer Misuse and Cybersecurity (Amendment) Bill was passed in April to broaden the scope of criminal offences to include dealing with personal information obtained in contravention of the Computer Misuse and Cybersecurity Act and using tools to commit an offence under the Act.
PDPC public consultations: The Personal Data Protection Commission consulted on the approaches to managing personal data in the digital economy. Read more…. It also consulted on a revision to its advisory guidelines on the collection, use and disclosure of National Registration Identity Card numbers in Singapore.
Submission of notice of intent to join the APEC Cross-Border Privacy Rules: In July, Singapore submitted its notice of intent to join the APEC Cross-Border Privacy Rules (“CBPR”) system and the APEC Privacy Recognition for Processors System. Singapore would be only the sixth member of the CBPR System, joining Canada, Mexico, Japan, South Korea and the United States, and the first from South East Asia.
Increase in qualifying salary for EP applications: From January, the qualifying salary for Employment Pass (“EP”) applications increased from S$3,300 to S$3,600.
Mandatory retrenchment notification: From January, employers with at least 10 employees are required to notify MOM if five or more employees are retrenched within any six-month period.
New Employment Claims Tribunal: A new Employment Claims Tribunal was established in April to hear: (i) statutory salary-related disputes from employees covered under the Employment Act, the Retirement and Re-employment Act and the Child Development Co-Savings Act; and (ii) contractual salary-related claims from all employees except domestic workers, public servants and seafarers. All parties have to first go through mediation with a limit of S$30,000 for claims with union involvement and S$20,000 for all other claims.
Enhanced statutory family-friendly leave benefits: From January, eligible unwed mothers received the same maternity leave entitlement as lawfully wed mothers and paid paternity leave for eligible fathers increased from one week to two weeks. From July, paid adoption leave for eligible mothers increased from four to 12 weeks and mothers can share up to four weeks of maternity leave with their husbands.
Increase of re-employment age: From July, the re-employment age of employees who are Singapore citizens or Permanent Residents increased from 65 to 67. The statutory provision which allowed employers to reduce wages of workers turning 60 by up to 10 per cent was removed, and the recommended Employment Assistance Payment amount increased at its minimum to S$5,500 and its maximum to S$13,000.
New Tripartite Standards: The Tripartite Partners launched Tripartite Standards covering (i) the employment of term contract employees; (ii) flexible work arrangements; (iii) grievance handling; (iv) recruitment practices and (v) procurement of services from media freelancers. Read more…
Right to withhold salary payment: The Court of Appeal in Goh Chan Peng v Beyonics Technology Ltd ruled that an employer cannot rely on an employee’s breach of fiduciary duties to justify withholding payment of salary without an express contractual right to do so. The Court ultimately allowed the employer to claw back paid salary as the agreed shortened contractual termination notice period was not supported by consideration.
“Due inquiry” in employment context: In Long Kim Wing v LTX-Credence Singapore Pte Ltd, the High Court considered the meaning of “due inquiry” before deciding to dismiss an employee. There must be a process in which the employee is informed about the allegation(s) and the evidence against him and he has an opportunity to defend himself. Contemporaneous written records ought to be kept for evidential purposes.
New questions for EP applications: In November, MOM added several new questions in the EP online application form requiring employers to disclose information about their efforts to hire Singaporean candidates. Read more…
Arbitration and mediation: The Civil Law (Amendment) Act came into force in March, allowing international arbitration proceedings and their related court and mediation proceedings to be financed by third party funding. Also, the Mediation Act, which came into force in November, strengthens the framework for Singapore mediation. The Act allows for certain mediation agreements to be recorded as an order of court.
Year to Come – Singapore Law in 2018
Dual class shares: In February 2017, SGX issued a consultation paper focusing on the nature of the safeguards which should accompany the dual class share (“DCS”) regime. Consultation conclusions are expected in 2018 with another round of consultation on the draft actual listing rules thereafter. While the position on the primary listing of DCS companies is being finalised, SGX confirmed in July 2017 that the existing listing framework allows a DCS company with a primary listing in a developed market to seek a secondary listing in Singapore.
Code of Corporate Governance Review: In February 2017, MAS established a committee to review the Code of Corporate Governance which applies to SGX-listed companies. We expect that board independence will be a significant focus of the review. A public consultation exercise is expected after the committee completes its review.
Disclosure, disclosure, disclosure: In December 2017, SGX issued a consultation paper setting out proposed amendments to the Listing Rules to enhance disclosure requirements in various areas including secondary fund raising, interested person transactions and major transactions and loans. If adopted, the amendments will come into effect in 2018.
Changes to rules on securities trading and market practices: SGX issued a consultation paper in November 2017 proposing changes to SGX’s rules on securities trading and market practices. The changes aim to produce a less prescriptive and more principles-based approach, and to ensure that SGX’s rules remain relevant as market practices evolve.
Tabling of Cybersecurity Bill: The Singapore Cyber Security Agency released a draft Cybersecurity Bill in July 2017, inviting the public to provide feedback on the proposed Bill as part of a public consultation exercise Read more…. The Government announced in September 2017 that the tabling of the proposed Bill, will be delayed until 2018.
Draft Carbon Pricing Bill: A draft Carbon Pricing Bill was released in October 2017. Under the draft Bill, 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 was not included in the draft Bill but was announced in the February 2017 Budget speech to be between S$10 and S$20 per tonne of greenhouse gas emissions from 2019.
The Securities and Futures (Amendment) Act 2017 was passed in Parliament in January 2017 and is not yet in force. Key changes include: (i) the regulation of OTC derivatives market intermediaries and operators; (ii) enhancing regulatory safeguards for retail investors; (iii) enhancing credibility and transparency of the capital markets (including a new framework for disclosing and reporting of short-sell orders); and (iv) strengthening the enforcement regime against market misconduct. MAS subsequently issued several consultation papers seeking views on the draft regulations to support the implementation of the legislative amendments.
Changes to SIBOR: In December 2017, the ABS Benchmarks Administration Co Pte Ltd and Singapore Foreign Exchange Market Committee issued a consultation paper setting out proposals to enhance the Singapore Interbank Offered Rates (“SIBOR”). The proposals include changes to the methodology for calculating SIBOR and discontinuing the 12-month SIBOR rate. The changes will be tested in 2018 and implemented by 2019.
The Banking (Amendment) Act 2016 was passed in Parliament in February 2016 and is not yet in force. Key changes include introducing measures to (i) strengthen prudential safeguards and enhance depositor protection; and (ii) enhance the corporate governance of banks, and requiring banks to (i) institute risk management systems and controls that are commensurate with their business profiles and operations; and (ii) inform MAS, as soon as possible, of material adverse developments.
Amendments to the banking regime: MAS has issued several consultation papers and responses on proposed amendments to the banking regime. Key proposals relate to amending the Banking Regulations and the Banking (Corporate Governance) Regulations, implementation issues arising from MAS’ removal of the DBU-ACU divide, and streamlining regulatory requirements for banks seeking to conduct or invest in businesses that are related or complementary to banks’ core financial businesses. MAS has also confirmed an introduction of mandatory audit firm re-tendering for local banks.
Digital advisory services: MAS issued a consultation paper on proposals to facilitate the provision of digital advisory services (also known as robo-advisory services) in Singapore. The consultation sets out MAS’ expectations in respect of the governance and supervision of algorithms by institutions, suitability assessments in respect of investment
recommendations to customers, and portfolio management by digital advisers. It also proposes certain exemptions to facilitate digital advisory services. Read more…
FinTech initiatives: MAS announced various FinTech initiatives at the Singapore FinTech Festival in November 2017 including (i) agreeing with the Massachusetts Institute of Technology an R&D collaboration in FinTech; (ii) reviewing its Technology Risk Management Guidelines and partnering the Association of Banks in Singapore to co-create the guidelines; (iii) working closely with local and foreign banks to explore a Banking KYC Shared-Services Utility that will streamline end-to-end KYC; (iv) jointly developing with the Hong Kong Monetary Authority the Global Trade Connectivity Network, a cross-border platform for trade finance using distributed ledger technology; (v) measures to strengthen supervision and reduce compliance cost such as a data analytics and pattern recognition system to study trading behaviour and working towards all data requests from MAS being in machine-readable templates; and (vi) collaborating on cross-border payments with the Bank of Canada using blockchain technology.
Higher salary criteria for dependant privileges: In October 2017, MOM announced that the salary criteria for work pass holders to qualify for dependant privileges will be raised from S$5,000 to S$6,000 (for spouses and children) and S$10,000 to S$12,000 (for parents) with effect from 1 January 2018. Read more…
New Tripartite Standards: Future Tripartite Standards will cover areas such as the conduct of retrenchment exercises, age-friendly workplace practices and contracting with self-employed persons.
Expansion of the Employment Claims Tribunal scope: The Tripartite Partners are in discussions to expand the scope of the Tripartite Alliance for Dispute Management and the Employment Claims Tribunal to include mandatory mediation and resolution of non-salary-related disputes, including disputes relating to wrongful dismissals of employees not covered under the Employment Act. The aim is to reach agreement by 2018.
Tripartite workgroup on self-employed persons: MOM announced in March 2017 that a tripartite workgroup has been formed to look into self-employed persons’ concerns and to formulate practical solutions for their well-being. Public consultation ended in December 2017 and key findings will be published in due course.
New Insolvency Bill: The Minister for Law announced in August that a new law will be enacted in 2018 to streamline and consolidate Singapore’s personal bankruptcy and corporate insolvency regimes, currently contained in the Bankruptcy Act and the Companies Act respectively.
SIAC Guidelines on Party-Representative Ethics: The Singapore International Arbitration Centre has concluded its public consultation on its draft Guidelines for Party-Representative Ethics, and is likely to issue the Guidelines in 2018. The Guidelines are meant to bring greater uniformity and clarity to ethical standards for external and in-house legal counsel involved in international arbitration.
Extraterritoriality of EU MiFID II product governance rules: From 3 January 2018, EEA Member States will need to apply new product governance rules under MiFID II. Although this only applies to MiFID Firms, non-MiFID Firms (typically, these would be the local banks and securities houses in Asia) will be indirectly impacted (i) when doing business with MiFID Firms or (ii) distributing financial instruments (both within and outside the EEA) manufactured by MiFID Firms. Read more…
For further information, please contact:
Hyung Ahn, Partner, Linklaters
hyung.ahn@linklaters.com
