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Legal Updates

Legal Updates for August 2021

State of Emergency in Myanmar – Six Months On
On 1 February 2021, the military-nominated then Vice President U Myint Swe (who is now the current President of Myanmar) declared a state of emergency for a period of one year ("Declaration") pursuant to Article 417 of the Constitution of the Republic of the Union of Myanmar 2008. Six months to the day after the Declaration, a new caretaker government was established on 1 August 2021 pursuant to Order No. 152/2021 issued by the SAC, with the military pledging to hold elections by August 2023. At the same time, the intensifying COVID-19 situation has to date posed considerable challenges for the healthcare sector and the broader business community in Myanmar.

Against the backdrop of the unstable political situation and fragile healthcare system in the country, this Update discusses the legal and regulatory developments that have taken place in the country over the past six months since the Declaration, as well as what they mean for investors moving forward.

A Guide to the Real Estate Industry in Asia
A keen understanding of the nature of real estate and the legal and regulatory issues related to this asset class is critical to working out the basic features of any real estate deal. The Rajah & Tann Asia’s “Guide to the Real Estate Industry in Asia” gives you a brief overview of certain key insights to the real estate industry in the ten jurisdictions across Rajah & Tann Asia’s geographical footprint, namely, Cambodia, China, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. Topics covered in the Guide include the legal framework, types of real estate, ownership and tenure, taxes as well as important issues that an investor of real estate in the region should take note of.

In its second edition, we hope that this Guide will be a useful aid to investors who are navigating or looking to navigate this part of the world for their real estate investments.

A key pillar of our strength is our Rajah & Tann Asia network with offices in these ten jurisdictions, as well as dedicated desks focusing on Japan and South Asia. With the most extensive legal network in Asia, our lawyers have a tight grasp of the local culture, business practices, and language not just within their own home countries, but in the other markets in which they frequently conduct cross-border deals as well. Our depth of transactional and regulatory experience allows us to advise clients strategically and creatively, from structuring to eventual execution and implementation of the transaction.

This gives us an unparalleled edge over our competitors in presenting and pursuing solutions that are both practical and cost-effective. It provides our clients with the "home advantage" in any corporate real estate matters.

How to Conduct an Employment Investigation: Court Rules on Applicable Standards
When an employer has to deal with an employee who has been accused of committing an act of misconduct, the law requires that employers must inform the employee and conduct an inquiry before deciding whether to dismiss an employee or to take other forms of disciplinary action. Given a more litigious modern workforce, employers should be prepared that their decision to discipline or dismiss an employee will almost certainly be challenged. How then should an employer conduct an investigation? What are the applicable standards and procedural requirements?

In Dong Wei v Shell Eastern Trading (Pte) Ltd and another [2021] SGHC 123, the Singapore High Court provided guidance on the standards to be met when conducting an investigation. The Court highlighted that the term of mutual trust and confidence is implied into all employment contracts, and shed light on what this implied term means for employers in the context of suspensions and investigations into employees. In this Update, we look at the Court's decision and examine what this means for employers, and how a proper investigation should be conducted so as to comply with the prevailing legal requirements.

Developments in Cross-Border Paperless Trade - Singapore Collaborates with Australia and Trade Partners on Blockchain and Other Trade Initiatives
Singapore's Infocomm Media Development Authority and Singapore Customs began a blockchain trial with the Australian Border Force on 23 November 2020 to simplify cross-border trade between Singapore and Australia. The trial, which aimed to prove that trade documents could be issued and verified digitally across two independent systems, was part of an initiative under the Singapore-Australia Digital Economy Agreement (SADEA). The trial successfully concluded on 18 August 2021. How trade is conducted will progressively change and businesses are advised to keep themselves updated of the developments.

Capital Gains, Branch Profits, Royalties: Updates to the Singapore-Indonesia Double Taxation Agreement
On 23 July 2021, the Agreement between the Government of the Republic of Singapore and the Government of the Republic of Indonesia for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance ("UpdatedDTA") entered into force, following Indonesia's ratification of the Updated DTA on 11 May 2021.

In its official statement, Indonesia's Directorate General of Tax stated that the Updated DTA is meant to strengthen efforts to prevent tax evasion, protect and increase Indonesia's tax base, and at the same time encourage increased investment from Singapore. Similarly, Singapore's Ministry of Finance stated in its press release of 23 July 2021 that the Updated DTA would boost bilateral trade and investment flows between the two countries.

We examine some of the key changes arising from the Updated DTA below, including:

  1. The new Article 13 on capital gains;
  2. A reduction in branch profit tax;
  3. A reduction in royalties tax;
  4. Removal of exemption for interest paid on government bonds or debentures;
  5. Abolishment of articles on income not expressly mentioned and limitation of relief;
  6. Expanded exchange of information provisions; and
  7. Application of the principal purpose test.

Singapore Court of Appeal Considers Application of UNCITRAL Model Law on Cross-Border Insolvency for the First Time
The UNCITRAL Model Law on Cross-Border Insolvency ("Model Law") aims to facilitate the conduct of cross-border insolvencies. The case of United Securities Sdn Bhd (in receivership and liquidation) and another v United Overseas Bank Ltd [2021] SGCA 78 was the first time the Singapore Court of Appeal considered the recognition of foreign insolvency proceedings under the Model Law and the effects of such recognition.

Notwithstanding the commencement of insolvency proceedings in Malaysia, the Court of Appeal declined to grant a stay of Singapore proceedings, allowing the Respondent bank to continue with its court application for declarations relating to its security interests. The Respondent was successfully represented by Lee Eng Beng S.C. and Torsten Cheong of Rajah & Tann Singapore LLP.

COVID-19 Relief Framework for Construction Firms Facing Higher Foreign Manpower Costs Comes into Operation
Part 10A of the COVID-19 (Temporary Measures) Act ("Part 10A") has come into operation on 6 August 2021, along with the COVID-19 (Temporary Measures) (Part 10A Relief) Regulations 2021. Part 10A provides a framework for parties to construction contracts to apply for relief from their contractual counterparties if they are affected by an increase in cost for work permit holders as a result of a COVID-19 event, such as border control quotas set by the Government limiting the inflow of foreign workers.

In this Update, we recap the key features of the Part 10A framework and highlight the Part 10A Regulations.

CCCS Consults on New General Business Collaboration Guidance Note
To facilitate businesses' collaboration in this climate of swiftly evolving business conditions, the Competition and Consumer Commission of Singapore ("CCCS") has issued a public consultation on a proposed Business Collaboration Guidance Note ("Guidance Note") to help businesses and trade associations understand the competition issues that may arise from their collaboration and provide ways to avoid or alleviate these issues. The Guidance Note focusses on six common types of business collaborations, namely information sharing, joint production, joint commercialisation, joint purchasing, joint research and development and standardisation.

In this Update, we cover salient features of the proposed Guidance Note, such as its applicability, key competition concerns of the common types of collaborations, how CCCS generally assesses compliance of such collaborations with section 34 of the Competition Act, and how to minimise competition concerns. We will also briefly touch on how trade associations may support collaborations amongst their members without falling foul of the law.

The consultation closes on 27 August 2021.

A Guide to Sustainable Financing in Southeast Asia
The COVID-19 pandemic has brought about a renewed realisation on how existential threats can debilitate the global economy. With this, issues affecting sustainability, climate change, social economics and governance have taken on a new priority on the agenda of governments, industries and businesses.

This renewed focus is aligned with what has been already a growing investment trend and corporate behaviour in recent years – where corporates have started to look beyond short-terms returns, and focus on environmental, social and governance (ESG) factors for long-term sustained growth.

Adequate financial support is important to support the achievement of sustainability and ESG targets. To this end, there has been a global push for financing products that incorporate elements of environmental protection and performance-based sustainability linked targets.

In this publication, we provide an overview of these sustainable financing options across the nine jurisdictions of Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Each Country Chapter covers the policy, legal or regulatory framework supporting sustainable financing in each jurisdiction and highlights the trends, government incentives and initiatives that help shape the sustainable financing landscape in these Southeast Asia jurisdictions.

The Chinese version of the guide can be accessed here.

Shipping Law Updates
The Shipping Law Updates is a publication by our Regional Shipping Group which marshals legal expertise, industry insight, and commercial acumen in the fields of maritime and trade from the diverse talent pool of specialist lawyers at the Rajah & Tann Asia offices. The publication provides a snapshot of the key legal, regulatory, case law and industry developments in the region that have an impact on the shipping industry.

In this issue, we report on the amendments to the rules of service of admiralty writs and warrants of arrest in Malaysia to ensure safety amidst the COVID-19 pandemic. We also look at developments in the rules for the registration and licensing of shipbreaking and ship recycling in the Philippines.

The Reform of the Singapore Court System – Keeping Pace with Changing Business Needs
On 26 July 2021, the Courts (Civil and Criminal Justice) Reform Bill ("Bill") was tabled for its First Reading in Parliament. The Bill seeks to reform the Singapore court system to keep pace with the changing needs of litigants and businesses seeking to resolve commercial disputes, creating a more efficient and facilitative framework.

The Bill sets out a host of amendments, including a number of changes directed at improving how the court system functions in relation to the practical and experiential concerns of litigants. In this Update, we explore some of the key changes in the Bill and how they may positively impact the user experience of Singapore litigants.

High Court Sets out New Sentencing Framework for Tax Evasion Offences
For justice to be achieved, like cases should be treated alike. When a court is faced with two very similar cases, it should arrive at broadly similar outcomes. Consistency in sentencing – encompassing both the adoption of a consistent methodology as well as the achievement of consistent sentencing outcomes – is therefore crucial to ensuring a fair justice system.

In Tan Song Cheng v Public Prosecutor and another appeal [2021] SGHC 138, the High Court agreed with the prosecution that previous sentencing decisions under section 96(1) of the Income Tax Act lacked a consistent or coherent sentencing approach. As such, the High Court substantially endorsed the five-step framework proposed by the prosecution, transposed from the five-step framework in Logachev Vladislav v Public Prosecutor [2018] 4 SLR 609:

  1. Identify the level of harm and the level of culpability;
  2. Identify the applicable indicative sentencing range;
  3. Identify the appropriate starting point within the indicative sentencing range;
  4. Make adjustments to the starting point to take into account offender-specific factors; and
  5. Make further adjustments to take into account the totality principle.
In this Update, we elaborate on the framework and examine the factors to be considered.

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