Legal Updates for December 2019
Proposed Changes to Payment Services Act 2019 to Address New AML/CFT Risks and Regulatory Issues with Stablecoins
On 23 December 2019, the Monetary Authority of Singapore ("MAS") published the following two Consultation Papers on the Payment Services Act 2019 ("PS Act").
(i) Proposed Amendments to the Act: In this Consultation Paper, MAS proposes to amend the PS Act so that the anti-money laundering and countering the financing of terrorism (AML/CFT) requirements for payment service providers providing payment services relating to digital payment tokens ("DPT") and cross-border money transfer are in line with the enhanced Financial Action Task Force Standards. The Consultation Paper also sets out proposals on other technical amendments to the PS Act.
(ii) Scope of E-money and Digital Payment Tokens: MAS has observed that changes in the product development of e-money and DPT and the way in which the public has been using these modes of payment may be blurring the line between the e-money and DPT regimes under the PS Act. One such example is the emergence of stablecoins as a new class of cryptocurrencies. This Consultation Paper seeks views from the public, financial institutions including the payments industry, and academics on various issues arising from the emergence of stablecoins.
The consultation period for the above consultation papers ends on 28 January 2020.
MAS issues Guidelines and Specimen Forms on Licensing for Payment Service Providers
On 18 December 2019, the Monetary Authority of Singapore ("MAS") issued the Guidelines on Licensing for Payment Service Providers (PS-G01) which are intended to provide guidance on the licensing criteria and ongoing requirements for payment service providers under the Payment Services Act 2019 ("PS Act").
The MAS also published the specimen forms on licensing matters relating to a payment service provider, including the Notification Form for the Purpose of Exemption from Holding a Licence under the Payment Services Act for the Specified Period ("Notification Form"). The Notification Form is for entities to notify MAS of the date on which they commenced the business of providing the specific payment services set out in the Payment Services (Exemption for Specified Period) Regulations 2019 and to be exempted from licensing for specific payment services for a transitional period. Notifications and applications with these Forms will only be accepted via the online form after the PS Act commences on 28 January 2020.
Limits of Assistance in Foreign Insolvency
The Singapore court has demonstrated its willingness to recognise and assist in foreign insolvencies over recent years. However, the court's readiness to assist should not be regarded as being without limit or discretion. In Re Rooftop Group International Pte Ltd and another (Triumphant Gold Limited and another, non-parties)  SGHC 280, the Singapore High Court had to assess how far it could (and should) assist in a foreign insolvency. The Court provided guidance on the difference between foreign main and non-main proceedings and the respective scopes of assistance. The Court also considered whether it could grant an order prohibiting the disposition of property, or designating an alternative person to serve as foreign representative.
Hong Kong Court Upholds Clause Excluding Trustee's Supervisory Duty over Trust’s Investments
In a welcome reassurance to trustees, the Hong Kong Court of Final Appeal ("Court") recently ruled that the terms of a trust can operate to exclude obligations and liabilities otherwise incumbent upon trustees.
As a general rule, trustees owe numerous obligations to the trust that they must discharge. To minimise the trustees’ liability, trust deeds often include anti-Bartlett clauses which purport to exclude the trustees’ supervisory duties. In IQ EQ (NTC) Trustees Asia (Jersey) Limited and another v Bruno Arboit and Roderick John Sutton and another  HKCFA 45, the Court upheld the anti-Bartlett clause in the trust deed, ruling that it had successfully excluded any "high level supervisory duty" owed by the trustee.
Are You Ready for SOP Act Version 2.0 Commencing 15 December 2019?
The upcoming amendments to the Building and Construction Security of Payment Act ("SOP Act") are the first set of changes to the SOP Act since its introduction in 2005 to facilitate cash flow in the construction industry. Representing the culmination of five years of consultations with key stakeholders, they are targeted at simplifying and clarifying the basic processes of the SOP Act, and reducing the cost and time associated with compliance.
The amendments will come into force on 15 December 2019. The Building and Construction Security of Payment Regulations will also be amended with effect from 15 December 2019 ("Amended Regulations") to implement these changes.
Key Executive Officer Personally Liable for Negligent Misrepresentations Made in Course of Business
When is a director of a company personally liable for representations that he made in the course of promoting the business of the company?
In Sim Tee Meng v Haw Wan Sin David and another  SGCA 71, Harish Kumar and Jonathan Toh of Rajah & Tann Singapore successfully assisted victims of a fraudulent foreign real estate project marketed in Singapore to hold the director and Key Executive Officer ("KEO") of the real estate agency personally liable for their loss. On appeal, the Appellant argued that he was not personally liable – only his estate agency was. The Court of Appeal rejected this argument, holding that the Appellant personally owed a duty of care to the Respondents. As the KEO, he had breached his duty of care to the victims by making negligent misrepresentations without carrying out the necessary due diligence checks and was therefore liable for the loss they suffered due to his misrepresentations.
TRADE BITES 2019 - Issue 2
In this second issue of 2019, we discuss various developments, including the new laws relating to taxation on transfer pricing and e-commerce businesses, as well as energy labeling requirements on motorbikes in Vietnam, signing of double-taxation agreements involving Cambodia, and new laws involving weapons of mass destruction and dual-use items in Thailand. With the trade tensions in the world today and the increased need for businesses to be cost-efficient, we also set out a note as to how businesses can benefit from free trade agreements in the context of Malaysia. We also set out a reminder in relation to export of strategic goods from Singapore, in particular to the scope and implication of the ‘catch-all’ provision of such export.
Application of Discounts in Valuing Shares for a Buy-Out Order Where There is No Finding of Oppression
The Rajah & Tann team comprising Patrick Ang, Jared Kok, Derek On and Torsten Cheong has secured a significant victory before the Court of Appeal in the long-running dispute between the shareholders of the Samwoh Group. In Liew Kit Fah and others v Koh Keng Chew and others  SGCA 78, the Court of Appeal, reversing the High Court’s decision, held that shares which are ordered to be purchased following a compromised oppression suit where liability was not admitted are liable to be discounted to reflect their fair market value. The Court of Appeal’s judgment contains important and authoritative guidance on the proper approach to valuing shares ordered to be sold in this context, when the sale would be treated as one between a willing buyer and a willing seller, and consequently the kind of discounts which would be applicable for the purposes of determining the fair market value of the shares.
Payment Services Act 2019 To Take Effect on 28 January 2020
The Payment Services Act 2019 ("PS Act") will come into force on 28 January 2020 (except three provisions setting out related amendments to other Acts), and will repeal the Payment Systems (Oversight) Act and the Money changing and Remittance Businesses Act to consolidate the regulation of payment services under a single legislation.
In addition, the PS Act will expand the scope of regulated payment services to keep up with new technological developments in payment services and the various risks they pose. It adopts a licence-based framework for payment service providers and a designation regime for payment systems.
Rajah & Tann's Specialist Litigation Team Clinches Another Victory in the Skaugen Litigation
The Rajah & Tann team led by Danny Ong and Yam Wern-Jhien, specialists in international litigation, has clinched another significant victory on behalf of the MAN group in the Singapore chapter of the long-running litigation against the Skaugen group arising from the supply of marine diesel engines manufactured by MAN.
In MAN Diesel & Turbo SE and anor v IM Skaugen SE and anor  SGCA 80, the Singapore Court of Appeal reversed the decision of the High Court and ordered the service of writ on the MAN entities outside jurisdiction to be set aside, effectively spelling the end of the Singapore chapter of this long-running litigation.
The case is of both practical and academic importance, as it contains authoritative guidance on the role of an appellate court in the review of decisions on jurisdictional issues, the relevance of subsequent events in an application to set aside service out of jurisdiction, how multiple inter-related claims are to be treated in the jurisdiction inquiry, how the availability of the Singapore International Commercial Court (SICC) features in the forum non conveniens analysis, and the test to be applied when assessing where a tortious cause of action arises for purposes of the jurisdiction gateway analysis.
Public Consultation on the New Domestic Controls for Transboundary Movement of Plastic Waste
On 25 November 2019, the Singapore National Environment Agency ("NEA") launched a public consultation on the new domestic controls pertaining to the new requirements regarding the transboundary movement of plastics waste under the Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and Their Disposal ("Basel Convention"). The public consultation ends on 15 December 2019.
The Basel Convention sets out Prior Informed Consent ("PIC") procedure for the transboundary movement of hazardous waste and other controlled wastes. Presently, solid plastic wastes are not considered as hazardous waste unless they contain hazardous substances. Certain plastic waste will eventually be subjected to the PIC procedure.
This will mean that domestically, companies involved in the transboundary movement of such plastic waste will be required to adhere to the PIC procedure, obtain a Basel Permit from NEA, as well as obtain a Bank Guarantee. These new control measures will tentatively come into effect on 1 October 2020.
CCCS Seeks Injunction Against E-Commerce Retailer for Subscription Traps
On 29 November 2019, the Competition and Consumer Commission of Singapore ("CCCS") announced that it has applied to the State Courts for an injunction under the Consumer Protection (Fair Trading) Act ("CPFTA") against Fashion Interactive Pte. Ltd. and its owner for engaging in an unfair practice (a "subscription trap") on its e-commerce website, myglamorous.sg. This is the first time that the CCCS formally sought a court order against an errant retailer for engaging in an unfair practice under the CPFTA since it took over the enforcement of the CPFTA in April 2018.
SGX Consults on Removal of Minimum Trading Price Framework and Criteria for Exiting Financial Watch-List
On 28 November 2019, the Singapore Exchange Regulation issued a consultation paper titled "Review of the Tools Used to Deal with Market Manipulation Risk" seeking feedback on its proposal to remove the minimum trading price framework and the expectations of the Singapore Exchange Limited in relation to companies applying to exit from the financial watch-list. The consultation closes on 27 December 2019.