Legal Updates

Legal Updates for May 2021

PDPC Issues Decision on Access Obligation and the Evaluative Purpose Exception in Relation to Artificial Intelligence Systems and Deterministic Algorithms
In [redacted] v HSBC Bank (Singapore) Limited [2021] SGPDPC 3, the Personal Data Protection Commission ("PDPC") issued its decision on the obligation to provide access to personal data in an organisation's possession as well as the exception allowing organisations to deny access to opinion data for evaluative purposes, both in the context of Artificial Intelligence ("AI") systems and deterministic algorithms. The PDPC affirmed the Respondent Bank's decision to redact certain opinion data when providing to the Applicant individual an internal evaluation report regarding his unsuccessful credit card application, finding that the redaction fell within the applicable exception to the Access Obligation. The pragmatism exhibited by the PDPC in this decision is exemplary. It places Singapore squarely as one of the best jurisdictions in the world, from a regulatory standpoint, to run AI systems and conduct data analytics. This is so provided organisations ensure adequate transparency and accountability policies are maintained.

Notably, the redacted data pertained to opinion data auto-generated by the Bank's Artificial Intelligence algorithms, which makes the decision a significant one for all organisations that utilise AI systems to make business evaluations. The Bank was successfully represented by Rajesh Sreenivasan and Justin Lee of Rajah & Tann Singapore LLP. In this Update, we provide a summary of the case and highlight the key points and impact of the decision.

MAS Proposes Mandatory Reference Checks for Representatives & Certain Employees of Financial Institutions
On 14 May 2021, the Monetary Authority of Singapore ("MAS") issued a consultation paper seeking feedback on proposals to mandate reference checks of representatives and specific employees of financial institutions in Singapore ("FIs").

This consultation follows an earlier July 2018 MAS consultation paper on proposals to mandate reference checks for representatives of FIs where MAS proposed, among other things, that FIs conduct reference checks and respond to reference check requests on prospective representatives.

In the present consultation, to maintain public confidence and trust in the financial industry, a collective effort across the financial industry in the form of mandatory reference checks extending beyond representatives to other employees, and to ensure meaningful information exchange, will be introduced. Under the proposed mandatory reference check framework, FIs will be required to respond to reference check requests, based on a set of minimum mandatory information within a specified period of time.

This Update highlights the salient points of MAS' proposals in the present consultation relating to the scope of FIs and employees that will be subject to these mandatory reference checks requirements, standardising requirements concerning request and response to reference checks, FIs' duty on record keeping and investigation/disciplinary process as well as the implementation timeline.

MAS Consults on Revisions to Corporate Governance Requirements for Banks & Insurers Incorporated in Singapore
The Monetary Authority of Singapore ("MAS") is seeking feedback on proposed revisions to the corporate governance requirements for financial holding companies, banks, direct insurers, reinsurers and captive insurers which are incorporated in Singapore in the Consultation Paper titled "Consultation Paper on Revisions to the Guidelines on Corporate Governance" issued on 7 May 2021.

The MAS Guidelines on Corporate Governance ("CG Guidelines") provide guidance on best good practices on corporate governance that financial institutions should observe. The CG Guidelines comprise the principles and provisions of the Code of Corporate Governance which apply to all companies listed on the SGX-ST (including banks and insurers incorporated in Singapore) as well as additional guidelines for locally-incorporated banks and insurers ("FI-specific Guidelines").

This Update highlights the following main proposed revisions MAS is seeking feedback on:

  • Compliance with the Principles of the Code of Corporate Governance in the CG Guidelines;
  • Revision of FI-specific Guidelines relating to the roles and responsibility of the board of directors of financial institutions, remuneration practices, documentation of unresolved concerns of independent directors, and appointment of non-directors to the Board Risk Committee; and
  • Inclusion of certain fundamental corporate governance requirements as statutory requirements in the Banking (Corporate Governance) Regulations 2005 and Insurance (Corporate) Governance Regulations 2013.
The consultation ends on 18 June 2021.

Singapore Court of Appeal Strikes Out Appeal against Bankruptcy Decision
In Aathar Ah Kong Andrew v OUE Lippo Healthcare Ltd [2021] SGCA 48, the Singapore Court of Appeal has struck out an appeal against a bankruptcy decision, thus bringing to a close the latest chapter in a long-running bankruptcy and voluntary arrangement dispute. The Court's decision highlights the importance of complying with the procedural requirements of bankruptcy proceedings and appeals, including observing the relevant timelines and obtaining the prior sanction of the Official Assignee.

The respondent was successfully represented by Jansen Chow and Sasha Gonsalves from Rajah & Tann Singapore LLP. This Update provides a summary of the judgment and highlights the key points of the decision.

Singapore Ramps Up Combat against Trade Financing Fraud
On 19 March 2021, the Electronic Transactions (Amendment) Act ("ETAA") came into operation in Singapore, making Singapore the second country to adopt the United Nations Model Law on Electronic Transferable Record. The changes that the ETAA effects essentially enable the digitalisation of transferable documents which are often used in cross-border trade.

This Update focuses on how the ETAA may feature in Singapore's effort to combat fraud in relation to transferable documents, particularly through legislative support for the use and recognition of electronic transferable documents.

Merger Control Regime in Singapore – Voluntary, But Really?
It is often stated that Singapore has a voluntary merger notification regime and thus, parties are not obliged to notify their mergers to the Competition and Consumer Commission of Singapore ("CCCS"). However, it has become increasingly apparent over the years, and perhaps reinforced by the developments since the seminal Infringement Decision in relation to the Sale of Uber's Southeast Asian business to Grab in consideration of a 27.5% stake in Grab (CCCS 500/001/18) ("Grab-Uber case"), that CCCS does in fact expect merging parties to notify CCCS as long as the merger could result in a substantial lessening of competition and thus be prohibited under Section 54 of the Competition Act (Cap. 50B).

In this Update, we look at (a) when merging parties should consider notifying their merger to CCCS; (b) explain the importance of notification and the possible consequences of failing to notify; and (c) provide suggestions on undertaking a proper merger analysis and managing the Singapore leg of the transaction potentially with the regulator.

Alongside this, we remind our readers that merger control compliance is now in at least four other countries in Southeast Asia, namely, Indonesia, Thailand, Vietnam, and the Philippines. These are countries where notification is mandatory when the prescribed thresholds are crossed (with each country applying different thresholds). Any multi-jurisdictional analysis will need to bear these countries in mind.

Land Betterment Charge Bill Introduced to Replace Development Charge and Differential Premium
The Land Betterment Charge Bill ("Bill") was passed in Parliament on 10 May 2021. The Bill provides for the imposition of a tax (called a Land Betterment Charge or "LBC") on the increase in the value of land resulting from a chargeable consent given in relation to land.

Under the existing framework, landowners and developers currently have to pay either a Development Charge, Temporary Development Levy or a Differential Premium to either the Urban Redevelopment Authority or the Singapore Land Authority ("SLA") where there is an enhancement in land value for various reasons. The LBC would replace the DC, TDL and DP and would be payable to a single entity, consolidating these charges and taxes under SLA. The principles for computing LBC and the proposed rates of charging remain largely unchanged from the current regime.

The Bill sets out the framework for the operation of the LBC, including the rules for calculating the applicable tax, who is liable for payment, and how the obligation is to be satisfied and enforced. In this Update, we highlight the key features of the Bill and the LBC regime and how it differs from the current regime, as well as what developers should be aware of regarding their liability for payment of LBC.

Relief for Construction Firms Facing Higher Foreign Manpower Costs Due to COVID-19
The COVID-19 pandemic has brought about a whole host of challenges for construction firms. Among them, the cost of foreign manpower necessary for the construction works has increased due to travel restrictions and limited supply. To provide relief for affected firms, the COVID-19 (Temporary Measures) (Amendment No. 3) Bill ("Bill") was introduced in Parliament on 10 May 2021.

The Bill introduces a new Part 10A to the COVID-19 (Temporary Measures) Act, which provides a framework for parties to construction contracts to apply for relief from their contractual counterparties if they are affected by an increase in remuneration for work permit holders as a result of a COVID-19 event. Such increase may be caused by border control quotas set by the Government limiting the inflow of workers from particular countries facing a spike in COVID-19 cases, or by travel restrictions imposed by other countries on their citizens.

Having been tabled on a Certificate of Urgency, the Bill has since been passed on 11 May 2021. In this Update, we highlight the key provisions of the Bill and the framework for relief applications set out therein.

Singapore IP Strategy 2030 – What It Means for Your Business
Singapore has unveiled its Singapore IP Strategy 2030 ("SIPS 2030"), which is a 10-year blueprint to strengthen Singapore's position as a global intangible assets ("IA") and intellectual property ("IP") hub as well as maintain Singapore's position as a top-ranked IP regime. The SIPS 2030 report details the various aspects of SIPS 2030, highlighting that the global economy is increasingly driven by IA, and that it is vital for Singapore to remain at the forefront of this movement and for businesses to fully utilise the opportunities afforded in this thrust of initiatives.

In this Update, we highlight the key elements of SIPS 2030, including the impending changes to Singapore's IA/IP regime, both in terms of policy and infrastructure, as well as how businesses can benefit from the government's efforts to increase enterprises' access to IA/IP services and to help enterprises unlock potential new sources of capital through IA/IP.

Leniency Applications – Important Dos and Don'ts
Cartel conduct or anti-competitive agreements in general remain in focus as enforcement priorities for competition regulators around the world. In this regard, leniency applications are becoming more common for businesses involved in cartel activities. The rationale for submitting a leniency application is because leniency programmes run by competition regulators offer potential immunity against financial penalties and even criminal liability in certain jurisdictions for cartel behaviour and/or other competition violations.

However, businesses should not treat leniency applications as a default solution without carefully weighing its pros and cons. Some critical questions which are often left unanswered by leniency applicants include whether there is truly a cartel in place, the chances of securing immunity as the first leniency applicant (or one of the first leniency applicants), the indirect costs of exposing a cartel in favour for leniency, and the alternative options to leniency.

In this Update, we highlight some hidden pitfalls and identify specific dos and don'ts that businesses must keep in mind before proceeding with leniency applications.

Guide on COVID-19 Vaccination: Regulatory Issues
COVID-19, the disease caused by the severe acute respiratory syndrome coronavirus 2 (SARS-CoV- 2), has spread across the globe causing severe economic and social disruption worldwide. While the world continues to see the detrimental effects of COVID-19, it also begins to welcome the unfolding global endeavour of vaccine development and deployment. The global pharmaceutical industry has announced its commitment towards developing vaccines for COVID-19, and several vaccines have since been authorised by various national regulatory authorities for public use, with vaccinations taking place in several countries across Southeast Asia.

This quick guide explores the various regulatory issues arising in different parts of Southeast Asia, briefly covering vaccine registration and administration, as well as each country's regulatory framework, as of 20 April 2021.

Consultation to Amend Food Regulations to Permit New Food Additives etc to Align with International Standards
To align regulations with international standards and ensure coherence in legislation, the Singapore Food Agency is seeking comments from the food industry and interested parties on proposed amendments to the Food Regulations under the Sale of Food Act.

This Update provides an overview of the proposed key amendments in relation to:

  1. Permitting the use of new food additives and ingredients;
  2. Extending the use of existing food additives;
  3. Revising the maximum limits for heavy metals in food; and
  4. Ensuring coherence in legislation concerning specifications relating to purity of food additives.

The proposed amendments are set out in the draft Food (Amendment No. X) Regulations 2021 and is targeted to come into effect in the fourth quarter of 2021. The consultation is open from 3 May 2021 and ends on 2 July 2021.

Singapore High Court Decides on Landmark Claim for Mass Poaching and Solicitation of Insurance Agents
In mid-2016, the attention of the financial services industry was captured by the exodus of a record number of agents then – numbering more than 240 – from Prudential Singapore ("Prudential") to a competitor financial advisory firm ("Aviva FA") solely owned by Aviva Ltd ("Aviva"). The move led to a landmark claim against a former top agency leader ("AL") from Prudential, Peter Tan ("Tan"), for orchestrating the mass exodus.

After a lengthy 49-day trial conducted over three months in 2019 and 2020, the Singapore High Court has now issued its decision on the claim. In Prudential Assurance Company Singapore (Pte) Limited v Peter Tan Shou Yi and another [2021] SGHC 109, the Court found that Tan had, whilst contracted with Prudential, indeed carried out preparatory steps such as having discussions with Aviva on an arrangement which would involve him procuring Prudential's ALs and agents to leave and to join the Aviva FA, as well as the subsequent acts of solicitation. The Court therefore held that Tan was liable for breach of his contractual obligation to conduct his insurance business with integrity and honesty, and also dismissed all of Tan’s four counterclaims against Prudential.

Prudential was represented by Murali Pillai SC, Luo Qinghui, Jared Kok, Andrea Tan, Tao Tao and Joey Ng of Rajah & Tann Singapore LLP. This Update provides a summary of the case and highlights the key aspects of the Court's decision.

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