Legal Updates for September 2020
Are Arbitrations Shifting Away from Hong Kong and Towards Singapore? The Impact of the Hong Kong National Security Law
In the field of arbitration, Singapore and Hong Kong have been considered to be competitors for the position of regional hub for commercial dispute resolution. Both jurisdictions stand among the leading destinations for arbitration not just in Asia, but in the world.
However, Hong Kong has been facing months of demonstrations since 2019 regarding mainland China's influence in the special administrative region. Following this, on 30 June 2020, the Law of the People's Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (more commonly known as the Hong Kong National Security Law) was enacted by the Standing Committee of the National People's Congress of the People's Republic of China.
The National Security Law has raised concerns amongst some commercial parties over the stability of Hong Kong and the implications for its legal system. While it remains to be seen whether these concerns are overstated, the current impact of such sentiment can be seen in statistical and anecdotal evidence. In this Update, we take a look at the effect of the National Security Law and what it might mean for arbitration in Hong Kong and Singapore.
MAS Consults on Draft Notices Setting Out Revised Examination Requirements for Appointed Representatives under SFA and FAA
The Monetary Authority of Singapore ("MAS”) is seeking comments on proposed changes to the Notices which prescribe the competency requirements for representatives conducting regulated activities under the Financial Advisers Act ("FAA") and Securities and Futures Act ("SFA"). Appointed representatives are required to meet minimum academic qualifications and pass the relevant modules of the Capital Markets and Financial Advisory Services Examination ("CMFAS Examination") before they are allowed to carry out the relevant regulated activities under the FAA and SFA.
The draft Notices which are the subjects of the current MAS consultation exercise aim to incorporate the following key changes to the CMFAS Examination requirements:
Comments on the draft Notices set out in the MAS "Consultation Paper on Draft Notices on the Competency Requirements for Representatives Conducting Regulated Activities under the Financial Advisers Act and Securities and Futures Act" must be submitted to MAS by 5 October 2020.
- Introducing ethics and skills content to form the new rules, ethics and skills modules;
- Customising content of the CMFAS modules with reference to job roles instead of regulated activities;
- Streamlining the securities and derivatives exchange rules content; and
- Providing an option to take new combined product knowledge modules.
Further Changes to COVID-19 (Temporary Measures) Act Concerning Rental Relief, Collective Sales, Construction Contracts and Meetings
On 4 September 2020, the COVID-19 (Temporary Measures) (Amendment No. 2) Bill ("Bill") was passed in Parliament, setting out further proposed amendments. The Bill seeks to strengthen the COVID-19 (Temporary Measures) Act by:
This Update highlights the key features of the Bill.
- Expanding the powers of rental relief assessors;
- Allowing applications for the extensions of deadlines for collective sales;
- Clarifying the interaction between Part 8 of the Act (which deals with contracts affected by delay in the performance or breach of a construction contract, supply contract or related contract) and other dispute resolution proceedings; and
- Enhancing the certainty of alternative meeting arrangements.
MAS Imposes New Requirements on Execution of Customers’ Orders on Capital Market Intermediaries w.e.f. 3 March 2022
With effect from 3 March 2022, capital markets intermediaries will be required to establish and implement written policies and procedures to:
Place and/or execute customers’ orders on the best available terms ("Best Execution"); and
Place and/or execute comparable customers’ orders according to time of receipt of such orders.
This new requirement is set out in new Notice SFA 04-N16 on Execution of Customers' Orders issued by the Monetary Authority of Singapore ("MAS") on 3 September 2020. The accompanying Guidelines to MAS Notice SFA 04-N16 on Execution of Customers' Orders was also issued on the same day to provide guidance on the interpretation of the Notice.
This follows the MAS' consultation on the proposal in November 2017. A Response to the Feedback Received on the Consultation was published on 3 September 2020.
This Update highlights the key features of the Best Execution requirement and its application on capital markets intermediaries.
CCCS Price Transparency Guidelines for Suppliers to Take Effect on 1 November 2020
The Consumer Protection (Fair Trading) Act ("CPFTA") is a major pillar of Singapore's consumer protection framework. It provides consumers with legal safeguards against unfair practices, enables them to have recourse to civil remedies before the courts, and is administered by the Competition and Consumer Commission of Singapore ("CCCS"). Under the CPTFA, consumers have the statutory right to commence legal action against a supplier who engages in an unfair practice.
On 7 September 2020, CCCS published the Guidelines on Price Transparency ("Guidelines") to set out how CCCS will give effect to the CPFTA in relation to four pricing practices: drip pricing; price comparisons; discounts; and the use of the term "free". The Guidelines are founded on the principles that suppliers should not make false or misleading claims, and should be transparent and clear in their communication with consumers. The Guidelines were finalised by CCCS after considering the responses received from a public consultation on the draft Guidelines last year (see here for our Client Update on the draft Guidelines).
This Update provides an overview of the Guidelines and flags key points that suppliers should take note of, particularly as the onus falls on suppliers, in the event of a consumer dispute, to prove that they did not engage in an unfair practice.
Updated Public Sector Standard Conditions of Contract (or "PSSCOC", 8th Edition, July 2020)
The Public Sector Standard Conditions of Contract ("PSSCOC") is a standard contract form commonly used for public sector construction contracts in Singapore. It was first published in 1995 by the Building and Construction Authority and had undergone updates throughout the years. Recently, the BCA published the latest edition of the PSSCOC ("8th Edition") which serves as an update of the previous edition published in July 2014 ("7th Edition").
Generally, the 8th Edition does not make fundamental changes to the allocation of risks and responsibilities between the Employer and the Contractor but serves to provide greater clarity and certainty to parties by introducing several points of clarification. In this update, we highlight a number of differences between the 7th and 8th Editions of the PSSCOC.
Restructuring & Insolvency Regimes in Southeast Asia: A Comparative Overview
As business and commerce becomes increasingly cross-border in nature, it is important for businesses to have knowledge of restructuring and insolvency regimes of foreign jurisdictions. This is particularly relevant in the Southeast Asia region, given the close connection and links amongst the Southeast Asian states.
In this publication, we take a broad look at the key areas of interest in the restructuring and insolvency regimes across the region. The comparative overview covers various differences and similarities in the respective restructuring and insolvency frameworks in these jurisdictions.
Rajah & Tann Asia, as a regional network of law firms, has an established presence across Southeast Asia. Our regional offices have the requisite restructuring and insolvency expertise to assist with your queries and restructuring and insolvency needs across these jurisdictions.
Setting Aside Recognition of Foreign Bankruptcy Orders for Breach of Natural Justice
With the cross-border nature of transactions and the holding of assets across jurisdictions, the cooperation of foreign courts is often vital in the effective conduct of insolvency proceedings. In Paulus Tannos v Heince Tombak Simanjuntak  SGCA 85, the Singapore Court of Appeal set aside the High Court's recognition of Indonesian bankruptcy orders on the ground of breach of natural justice. The Court of Appeal found that the appellants had not received due notice of the relevant bankruptcy proceedings, and that they were accordingly deprived of the opportunity to be heard.
The decision highlights the main principles of natural justice in enforcement and recognition proceedings. On a practical level, it demonstrates the evidence that should be produced in order to demonstrate compliance with the rules of natural justice, including evidence of service and of foreign law.
Do Professional Services Firms Owe a Duty of Care for Findings Affecting Third Parties?
It is uncontroversial that an auditor, if appointed by a company to conduct an audit, owes a duty of care to the company, but does not generally owe a duty of care to any third party, such as a director or shareholder of the company. A question arises whether this principle also applies to the similar but not identical situation of a professional services firm engaged to perform a fact-finding review of transactions of a company. Would that firm owe a duty of care to a third party who may be affected by its factual findings? This was the question considered by the Singapore High Court in Tan Woo Thian v Pricewaterhousecoopers Advisory Services Pte Ltd  SGHC 171.
The Defendant professional services firm in this case had been engaged by a Singapore-listed company to conduct a fact-finding review on certain transactions. The Court found that the Defendant did not owe the Plaintiff officer of the company a duty of care in its investigation of the transactions and the preparation of its report, as the Defendant had failed to prove the existence of a special relationship between himself and the Defendant, and because there were policy considerations which militated against the imposition of a duty of care. The Defendant was successfully represented by Patrick Ang, Chew Xiang, Chow Jie Ying and Torsten Cheong from Rajah & Tann Singapore LLP.
Food Regulations Revised on 31 August 2020 to Align Requirements on Use of Food Additives with International Standards & Facilitate Trade
The Food Regulations ("Regulations") has been amended on 31 August 2020 to:
This Update provides a brief summary of the amendments to the Regulations with reference to the consultation conducted previously by the Singapore Food Agency and its responses to comments received.
- allow the use of new food additives;
- extend the use of existing food additives;
- align existing provisions with international standards; and
- facilitate trade by deleting Regulation 204(2) specifying the geographical origin of Scotch whisky.