Legal Updates

Legal Updates for March 2020

COVID-19 Resilience Budget and MOM Relief Measures: Additional Support for Businesses
Since the announcement of Budget 2020 (also known as the Unity Budget) a bare five weeks ago, the Deputy Prime Minister and Minister of Finance, Mr Heng Swee Keat, has unveiled the S$48 billion Resilience Budget on 26 March 2020 to help Singapore weather the "mighty storm" of COVID-19. In a mark of the extraordinary times, this is only the second time that Singapore's reserves have been drawn on in her history.

Apart from the relief measures that directly assist households, the Resilience Budget sets aside funds to implement new schemes and enhance existing ones to support businesses in these crippling times. Key measures are elaborated on below, together with a consolidation of recent non-Budget measures implemented by the Ministry of Manpower ("MOM") to provide relief to employers to cope with manpower issues.

Singapore High Court Approves of General Distributions by Judicial Managers
It was traditionally understood in England and Singapore that judicial managers had no power to distribute funds to creditors to pay existing debts. However, in February 2020, the High Court in Standard Chartered Bank v Ryobi Kiso (S) Pte Ltd and another (unreported) granted leave for judicial managers (“JMs”) to distribute up to S$27 million to all unsecured creditors of two debtor companies, in the same priorities as that in liquidation. This marks the first known instance where the Singapore High Court has granted general distributive powers to JMs. Wilson Zhu and Lye Yu Min of Rajah & Tann Singapore LLP successfully represented the JMs in this novel application.

Singapore Court Grants Rare Instance of Super Priority Rescue Financing
Under section 211E of Singapore's Companies Act, the Court is empowered to grant super priority status for rescue financing. Since the introduction of these provisions in 2017, the Singapore courts have only granted super priority on one previous occasion. On 7 February 2020, the Singapore High Court granted its second successful application for super priority rescue financing in Re Swee Hong Limited (unreported). It is also the first instance where super priority was granted over assets not otherwise subject to a security interest in respect of rescue financing to be obtained, as well as separately granted super priority over all preferential and unsecured debt in respect of rescue financing that had already been provided to the applicant company. Patrick Ang, Sheila Ng, Priscilla Soh and Celine Kee of Rajah & Tann Singapore LLP represented the applicant company.

Singapore Court Decides on Jurisdiction in SFA-Related Dispute
In CA Investment (Brazil) S.A. v Joesley Mendonca Batista and others (unreported), the Singapore apex court and High Court issued a series of decisions relating to service out of Singapore and the jurisdiction of the court in the context of an unusual dispute relating to claims under the Singapore Securities and Futures Act ("SFA"), whereby the proposed bond issuance alleged to be in breach of the SFA had already been abandoned. The Defendants successfully set aside the service out of jurisdiction, with the court ruling that it did not have jurisdiction over the dispute. The 3rd to 8th Defendants in this matter were represented by Gregory Vijayendran SC, Leow Jiamin, Devathas Satianathan and Mark Teo of Rajah & Tann Singapore LLP.

Rajah & Tann Singapore Contributes to Singapore Capital & Private Equity Guide 2021: “Deep Dive into Down-Round Mechanics”
Rajah & Tann Singapore contributes an article titled “Deep Dive into Down-Round Mechanics” in the Singapore Venture Capital & Private Equity Guide 2021. The Guide is published by the Singapore Venture Capital & Private Equity Association.

Authored by Private Equity and Venture Capital Partners Brian Ng, Tracy-Anne Ang and Terence Quek, the article discusses headline issues often encountered in a down-round scenario. A down-round is a fundraising round of a company in which the pre-money valuation is lower than its post-money valuation in the preceding fundraising round. Terms that are relevant in a down-round, including anti-dilution rights, liquidation events and liquidation preferences, and redemption rights are examined in the article.

The full e-Edition of the Singapore Venture Capital & Private Equity Guide 2021 is available for purchase here. Please click here to read our contribution titled “Deep Dive into Down-Round Mechanics”.

Holding AGMs Amid COVID-19: Guidance from SGX RegCo
On 19 March 2020, the Singapore Exchange Regulation ("SGX RegCo") provided guidance on the holding of general meetings amid the COVID-19 situation, in furtherance of the latest advisories from the Ministry of Health. The SGX RegCo's guidance was developed in consultation with the Accounting and Corporate Regulatory Authority and the Monetary Authority of Singapore.

This guidance is a welcome complement to SGX RegCo's previous announcement providing issuers listed on the SGX-ST Mainboard and Catalist which meet certain criteria two more months to hold their annual general meetings ("AGMs") to approve their 31 December 2019 financial results.

This Update sets out further guidance by SGX RegCo on the holding of AGMs/general meetings amid the challenges posed by the COVID-19 situation.

Latest - Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment in View of COVID-19
In view of COVID-19, the Ministry of Manpower, the National Trade Union Congress and Singapore National Employers Federation issued an update to their Advisory on Managing Excess Manpower and Responsible Retrenchment ("Advisory") on 11 March 2020. The Advisory sets out possible measures to manage excess manpower and is intended to help employees continue to retain a job amidst a likely prolonged difficult period even as employers work towards keeping their businesses and employees' jobs viable. We highlight some of these updates below.

Averting Director Disqualification when Struck Off Company Restored
In Bijynath s/o Ram Nawal v Innovationz Pte Ltd (Accounting and Corporate Regulatory Authority, intervener) [2019] SGHC 218, the Singapore High Court was faced with a contested application for relief from disqualification as director. The case involved novel questions of law of restoration of companies and concomitant reinstatement of directors under Companies Act amendments that came into force in January 2016. The Applicant in this case was successfully represented by Gregory Vijayendran SC and Leow Jiamin of Rajah & Tann Singapore LLP.

In Containing COVID-19 and Complying with the PDPA: Practical Tips
As part of the DORSCON Orange risk assessment, organisations have started implementing precautionary measures to minimise the risk of further transmission of COVID-19, including requiring visitors and employees to fill in health declaration forms to enable ease of contract tracing. When implementing these measures, organisations should be aware that large amounts of personal data may be amassed, and hence should pay particular attention in complying with the Personal Data Protection Act 2012 ("PDPA"). The Personal Data Protection Commission has released an "Advisory on Collection of Personal Data for COVID-19 Contact Tracing" on 13 February 2020 ("Advisory") to provide some guidance in this regard. In this Update, we look at the key aspects of the Advisory and how organisations can ensure compliance with the PDPA.

Can Trade Debts with a Company in Receivership be Set Off against Pre-receivership Claims?
When a company in receivership is wound up, can its trading partners set off debts they incurred to the company against unsecured debts the company incurred to them before entering into receivership? Is there mutuality between the trading partners' indebtedness and the company's pre-receivership indebtedness to justify a set-off which would effectively reduce the value of the company's secured assets? In BP Singapore Pte Ltd v Jurong Aromatics Corp Pte Ltd (receivers and managers appointed) and others and another appeal) [2020] SGCA 09, the Singapore Court of Appeal answered in the negative, agreeing with the receivers of the company in question that there was no mutuality and therefore no set-off available, because the debts were at all material times subject to the secured creditors' fixed security. The receivers were successfully represented by Lee Eng Beng SC, Disa Sim and Torsten Cheong of Rajah & Tann Singapore LLP.

Deadline for Holding AGMs for SGX-ST Listed Issuers Extended to 30 June 2020 Due to Covid-19 Outbreak
Issuers listed on the SGX-ST Mainboard and Catalist are given two more months to hold their annual general meetings ("AGMs") to approve their 31 December 2019 financial results. Under the Listing Rules of the SGX-ST Mainboard and Catalist, issuers are required to hold their AGMs within four months from the end of their financial years. However, in response to feedback by shareholders who want to participate in and vote at AGMs but may be concerned about attending large-group meetings amid the COVID-19 outbreak, on 27 February 2020, Singapore Exchange Regulation (SGX RegCo) announced that a waiver from the foregoing requirement will be granted to issuers which satisfy the prescribed criteria ("Waiver"). Issuers which are granted the Waiver have up to 30 June 2020 to hold their AGMs.

This Update provides a brief overview of the relevant requirements and the steps issuers can take to obtain the Waiver.

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