Legal Updates

Legal Updates for July 2021

Legislative Changes Take Effect on 24 July 2021 to Implement Salvage Convention
As a global maritime hub, Singapore is one of the key jurisdictions for admiralty and shipping dispute resolution. In 2019, the Merchant Shipping (Miscellaneous Amendments) Bill 2018 was passed in Parliament to implement, among other things, two key developments, namely, the International Convention on Salvage, 1989 ("Salvage Convention") and the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims, 1976 ("1996 Protocol"). The provisions relating to the 1996 Protocol that serve to increase the limits of liability for claims against shipowners came into force on 29 December 2019.

With effect from 24 July 2021, the relevant provisions in several pieces of legislation came into effect to implement the Salvage Convention. These revisions mainly aim to allow special compensation claims arising from salvage operations that averted or mitigated the effect of environmental damage even if the vessels or their cargo were not salvaged successfully. They also extend the Singapore High Court's admiralty jurisdiction to such special compensation claims, thereby allowing enforcement of such claims through ship arrest.

In this Update, we look at the key aspects of the legislative revisions that took effect from 24 July 2021 to implement the Salvage Convention and the potential impact on the shipping industry.

Application Period for Simplified Insolvency Programme Extended to 28 July 2022
The Ministry of Law has announced that the application period for the Simplified Insolvency Programme ("SIP") has been extended to 28 July 2022. The SIP helps eligible micro and small companies facing financial difficulties restructure their debts or wind up via simpler, faster and lower-cost restructuring processes. Entry into the SIP is initiated by the applicant company submitting an application to the Official Receiver. The application period was originally set at six months (from 29 January 2021 to 28 July 2021). However, in light of the continued challenges in the business environment arising from the COVID-19 pandemic, the application period has been extended for another year.

MAS Consults on AML/CFT Notice for Precious Stones and Precious Metals Activities & Updates on AML/CFT Notices for Financial Institutions and Variable Capital Companies
The Monetary Authority of Singapore ("MAS") is seeking comments on changes to the requirements on anti-money laundering and countering the financing of terrorism ("AML/CFT") applicable to financial institutions regulated by MAS ("FIs") and variable capital companies ("VCCs") under the purview of MAS for AML/CFT obligations. The proposals are set out in the "Consultation Paper on the Proposed New AML/CFT Notice for Precious Stones and Precious Metals Activities and Updates to AML/CFT Notices" ("Consultation Paper") which is open for public consultation until 10 August 2021.

The key proposals in the Consultation Paper concern:

  • Setting out the AML/CFT requirements applicable to FIs dealing in precious stones, precious metals and precious products in a new AML/CFT Notice.
  • Updating the existing MAS AML/CFT Notices for FIs and VCCs to provide for: ­
    • New requirements relating to digital token services for FIs;
    • New requirements relating to shell company that presents higher money laundering and terrorism financing risks for FIs and VCCs:
    • New wire transfer and correspondent account requirements for credit card or charge card licensees;
    • New disclosure requirement to designated non-financial businesses and professionals and VCCs for licensed trust companies and approved trustees; and
    • Other clarifications on the requirements relating to group policy, identification and verification of customer and beneficial ownership exemptions.
This Update provides a summary of these proposals.

CCCS Announces Plans for General Business Collaboration Guidance Note to Replace its Guidance Note on Collaboration During COVID-19
In July 2020, to deal with the effects of the COVID-19 pandemic, the Competition & Consumer Commission of Singapore ("CCCS") issued a Guidance Note on Collaborations between Competitors in response to the COVID-19 Pandemic ("COVID-19 Guidance Note") to provide clarity to businesses on how CCCS would treat collaborations between competitors during these exceptional times, as well as examples of collaborations that would fall under the COVID-19 Guidance Note. The COVID-19 Guidance Note, however, is due to expire 31 July 2021.

On 23 July 2021, CCCS confirmed that the COVID-19 Guidance Note will no longer apply from 31 July 2021. Interestingly, however, CCCS announced its intention to consult on an upcoming draft General Business Collaboration Guidance Note to provide businesses with more clarity on common collaborations between competitors.

MAS Proposes Refining Tier Structure Requirements and New Remuneration Restrictions for Financial Advisers
The remuneration practice of the financial advisory ("FA") industry is regulated by the Monetary Authority of Singapore ("MAS"). To better align the interests of FA representatives and supervisors with those of their clients, MAS made the following key proposals on remuneration requirements:

  • Clarification on policy intent and refinement to the tier structure requirements, including defining "overriding benefits" and when they may be paid;
  • New restrictions on direct payment of remuneration to, and acceptance of remuneration by, representatives and/or supervisors of other FA firms.
MAS also suggested extending the application of the proposed refined tier structure requirements to all financial advisers, including exempt financial advisers that operate tier structures.

These proposals come on the back of MAS reprimanding a number of major insurers for failing to meet requirements on remuneration of FA supervisors in June 2021, and are set out in MAS' Consultation Paper titled "Proposals to Refine the Tier Structure Requirements and to Introduce New Requirements Relating to Remuneration”.

The consultation period is from 12 July 2021 to 13 August 2021.

Cautions against Using Statutory Demands Based on Adjudication Determinations
In Diamond Glass Enterprise Pte Ltd v Zhong Kai Construction Co Pte Ltd [2021] SGCA 61, the Singapore Court of Appeal had the occasion of considering the interaction between the temporary finality of adjudication determinations under the statutory adjudication regime in the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) and the corporate insolvency regime. The case involved winding-up proceedings against the applicant company on the basis of an unsatisfied statutory demand for payment of the sum awarded under an adjudication determination. The Court granted a stay of winding-up proceedings as the applicant had shown the prima facie existence of justiciable cross-claims.

This Update provides a summary of the decision and highlights the implications for successful claimants in statutory adjudication regarding their options for enforcement of the adjudication determination.

CCCS Consults on Amendments to Penalty Guidelines
On 16 July 2021, the Competition and Consumer Commission of Singapore ("CCCS") announced a public consultation on proposed changes to the CCCS Guidelines on the Appropriate Amount of Penalty in Competition Cases ("Penalty Guidelines").

CCCS is seeking feedback on two clarificatory amendments to mitigating factors which are set out in the Penalty Guidelines. It is highly likely that these changes have been introduced following recent infringement decisions, including one which was appealed to the Competition Appeal Board.

The Consultation will run from 16 July 2021 to 5 August 2021, with feedback to be summarised and published in due course. We strongly recommend that businesses and trade associations in particular review the proposals very carefully and consider responding.

Disagreement Over Relocation of Club Facilities: Members Awarded Nominal Damages for Failure to Prove Loss
In Meow Moy Lan and Others v Exklusiv Resorts Pte Ltd and Another [2021] SGHC 155, the Singapore High Court considered claims by a group of members of a social club against the club's owner and its indirect shareholder arising from the relocation of the club's facilities. The Court dismissed the majority of the 170 members' claims, which were brought via representative proceedings. Although the Court allowed the claim for breach of contract, it awarded nominal damages to the members as they had failed to prove that they had suffered loss as a result of the breach.

The club's owner and its indirect shareholder were represented by Vikram Nair and Foo Xian Fong of Rajah & Tann Singapore LLP. This Update provides a summary and highlights the key points of the decision.

Impending Changes to the Copyright Regime – Copyright Bill Introduced in Parliament
In February 2021, the Ministry of Law and the Intellectual Property Office of Singapore introduced and conducted a two-month long public consultation on the draft copyright bill which is set to repeal and replace the current Copyright Act (Cap. 60, Rev. Ed. 2006) as part of an overall review of Singapore's copyright regime. After incorporating the feedback received, the Copyright Bill ("Bill") was introduced for First Reading in Parliament by on 6 July 2021.

Overall, the Bill aims to ensure that copyright continues to reward the creation of works and that such works continue to be made available for the benefit of society at large, as well as to strengthen the copyright ecosystem. Amongst other things, the Bill aims to make copyright laws clear and accessible by employing plain English and by consolidating the exceptions to the rights granted to copyright owners into a "Permitted Uses" section. This Update highlights the key features of the Bill.

Public Consultation on Proposed Amendments to Laws Governing Gambling Activities
The Ministry of Home Affairs ("MHA") is conducting a public consultation ("Consultation") on proposed amendments to the laws regulating gambling in Singapore. The amendments primarily seek to address two recent trends in the gambling landscape: (1) Advancements in technology – which have made gambling products more accessible, leading to the increase in online gambling; and (2) Blurring of boundaries between gambling and gaming, given that new business models have increasingly introduced gambling elements in products that are not traditionally not related to gambling, e.g. chance-based loot boxes in video games.

It appears that MHA intends to enact a single consolidated Act in order to streamline current provisions set out in the various disparate legislation, while simultaneously proposing updates to the law. This Update highlights the key points of the proposed amendments in the Consultation, and the implications and concerns arising from such changes.

MAS Proposes Enhanced Transaction Safeguards for Retail Clients by Financial Advisers
To raise industry standards and promote greater consumer trust in the financial advisory ("FA") industry in Singapore, the Monetary Authority of Singapore ("MAS") seeks feedback on proposed enhanced regulatory safeguards by FA firms to protect the interests of retail clients, particularly selected clients ("SCs"), who meet any two of the following criteria: (a) is 62 years of age or older; (b) is not proficient in spoken or written English; (c) has below GCE "O" or "N" level certifications (or the equivalent).

To safeguard the interests of clients, MAS introduced the Balanced Scorecard Framework ("BSC Framework") in 2016. The requirements and guidance on the BSC Framework are set out in various MAS Notices and Guidelines. To assess the standards of FA representatives' advisory and sales process, MAS conducted a mystery shopping exercise ("MSE") in 2018/2019 and recently released its findings. To address the areas of deficiencies from its review of the effectiveness of the BSC Framework and MSE findings, MAS sets out its proposals to enhance pre- and post-transaction safeguards for retail clients in a consultation paper titled "Consultation Paper on Enhancing Pre and Post-Transaction Safeguards for Retail Clients".

This {start}Update{end} highlights the following MAS' key proposals in the consultation:

  • Strengthening the requirement to identify SCs;
  • Requiring a Trusted Individual ("TI") to be present for all investment recommendations made to SCs, as well as the criteria to quality as a TI;
  • Reinforcing requirements relating to call-backs;
  • Requiring an independent panel to be set up to review all investment recommendations made to SCs; and
  • Requiring the Independent Sales Audit Unit of the FA firm to sample and review transactions involving higher risk clients.
The consultation ends on 3 August 2021.

SGX Enhances SGX RegCo's Enforcement Powers and Disclosures on Whistleblowing Practices
With effect from 1 August 2021, Singapore Exchange Regulation ("SGX RegCo") will have a wider range of enforcement and administrative powers, including the power to require a director or executive officer to resign from an existing position with an issuer listed on the Singapore Exchange Securities Trading Limited. With effect from 1 January 2022, issuers listed on the SGX-ST Mainboard and Catalist ("listed issuers") will be required to state in their annual reports that they have put in place a whistleblowing policy, starting with their annual reports relating to financial years commencing from 1 January 2021.

These changes follow a public consultation conducted by the Singapore Exchange Limited in August 2020 on the proposals. The proposals received broad support from market participants.

This Update provides an overview of the key enhanced enforcement and administrative powers of SGX RegCo and the new requirement mandating a listed issuer to establish a whistleblowing policy.

Sustainability Update: In Conversation with Jaclyn Seow, Openspace Ventures, on ESG & Responsible Investing
We are pleased to present you the second issue of our Sustainability Update which shares with you insights from our Sustainability Partners as well as experts across sectors and domains on key environmental, social and governance ("ESG") developments and trends.

In this issue, Lee Weilin, our Partner with the Sustainability Practice, speaks with Jaclyn Seow, Vice President of ESG & Impact of Openspace Ventures, a venture capital firm investing exclusively in Southeast Asia. We tap on Jaclyn's experience in helping technology start-ups in the region adopt beneficial ESG practices to understand ESG & impact investing, its trends and pitfalls.

Commencement of Part 8C of the COVID-19 (Temporary Measures) Act 2020
On 1 July 2021, Part 8C of the COVID-19 (Temporary Measures) Act 2020 ("Part 8C") and the subsidiary legislation in the COVID-19 (Temporary Measures) (Part 8C Relief) Regulations 2021 ("Part 8C Relief Regulations") came into operation. Part 8C serves to provide support to developers who face delays in the construction of properties due to the pandemic and are unable to meet the date of delivery of vacant possession to purchasers under the Sale and Purchase Agreement ("SPA"). Part 8C also allows purchasers to seek, from developers, reimbursement of certain qualifying costs (capped at 70% of the liquidated damages which the developer would originally have been liable under SPA) for expenses incurred by the purchasers as a result of the delay in delivery of possession of their units (after the delivery date/vacant possession date stated in the SPA).

This Update provides an overview of the key features of Part 8C and the Part 8C Relief Regulations.

Guide to Lending and Security in Southeast Asia
We are pleased to bring you the 2021 Regional Guide to Lending and Taking Security in Southeast Asia ("Guide"). This Guide provides a useful overview of key legal and regulatory requirements concerning lending and taking security in Southeast Asia, focusing on Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Leveraging on our experience in carrying out cross-border transactions through our Rajah & Tann Asia network, the Guide gives an overview of the domestic laws across the region and addresses typical key issues and considerations relating to lending and taking security.

Rajah & Tann Asia's Banking and Finance team comes highly recommended by industry commentators and international clients, including multi-national corporations who rely on Rajah & Tann Asia's experienced Banking and Finance practice to advise them on all aspects on finance transactions, including cross-border arrangements. Our strength lies in offering insightful and comprehensive legal advice made available through our Rajah & Tann Asia network of offices, including offices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Court Rejects Consultant's Claim for Fees for Breach of the Legal Profession Act
In Choo Cheng Tong Wilfred v Phua Swee Khiang [2021] SGHC 154, the Singapore High Court rejected the Plaintiff's claim for alleged unpaid 'consultancy fees' of over S$2 million for work done over a 16-year period for breach of the Legal Profession Act. This is the first reported decision where the Singapore High Court has struck down a claim for fees for work done in breach of the Legal Profession Act.

This decision clearly marks out the boundaries of what constitutes regulated work under the Legal Profession Act and the Court's focus on the substance (rather than the form) of the work done. The guidance in this decision is significant and timely as the legal industry enters into transition, with an increasing number of alternative legal service providers entering the market to provide legal services to the general public.

Jansen Chow and Ang Leong Hao of Rajah & Tann Singapore LLP successfully represented the 2nd Defendant in this decision.

Further Extension of Electronic Dissemination of Rights Issue and Take-over Documents Beyond 30 June 2021
Issuers listed on the SGX-ST Mainboard and Catalist and parties involved in rights issues and take-over or merger transactions will continue to have the option to disseminate an electronic version of the relevant offer documents through publication on SGXNET and their corporate websites, beyond 30 June 2021, until revoked or amended by the Monetary Authority of Singapore, the Securities Industry Council and the Singapore Exchange Regulation (with at least six months' prior notice of any such cessation).

The Singapore Securities and Futures Act requires an offer of securities, securities-based derivatives contracts or units in collective investment schemes listed on the SGX-ST (whether by means of a rights issue or otherwise) to be made in or accompanied by an offer information statement. The SGX-ST Mainboard Listing Rules and Catalist Listing Rules require hard copies of the notices and documents relating to rights issues of listed issuers to be despatched. In addition, the Singapore Code on Take-overs and Mergers requires hardcopy take-over or merger documents to be posted.

The temporary measures and/or exemption allowing electronic dissemination of relevant offer documents were introduced to overcome the challenges to the mass production of hard copy rights issue and take-over or merger documents amid the control measures put in place to deal with the COVID-19 pandemic. They were first introduced on 6 May 2020, and were last extended to 30 June 2021.

Extension to Temporary Relief Measures for Property Sector due to COVID-19 Pandemic
On 28 June 2021, the Singapore Government announced an extension to the temporary relief measures ("June 2021 Extension of Temporary Relief Measures") for the property sector. The June 2021 Extension of Temporary Relief Measures extends the temporary relief measures announced on 6 May 2020 and the additional temporary relief measures announced on 8 October 2020 which were granted to offer immediate relief for eligible property developers in view of disruptions to construction timelines arising from the COVID-19 pandemic.

This Update provides a summary of the key extensions under the June 2021 Extension of Temporary Relief Measures and the relevant eligibility conditions.

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