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Legal Updates

Legal Updates for May 2022

New Initiatives Introduced to Combat E-Commerce Scams
In May 2022, the Inter-Ministry Committee on Scams (IMCS) launched the "E-commerce Marketplace Transaction Safety Ratings" ("TSR") which apply to e-commerce marketplaces operating in Singapore. Under the TSR, e-commerce marketplaces are given an overall safety rating based on the extent to which they have implemented certain safety measures that are identified as critical in combating e-commerce scams.

At the same time, the Technical Reference 76 on Guidelines for Electronic Commerce Transactions ("TR 76") was updated to include additional guidelines on measures which e-commerce marketplaces and e-retailers may implement to secure different areas of e-commerce transactions (namely, pre-purchase, purchase and post-purchase activities) from scams, customer support and merchant verification. The best practices recommended in TR 76 include anti-scam measures that would enable e-commerce marketplaces to score better on the TSR.

This Update provides a summary of the TSR and additional anti-scam measures set out in TR 76 which e-retailers and e-commerce marketplaces may implement to secure e-commerce transactions and enhance customers' protection.

SGX RegCo Elaborates on Directors’ Duties under the SGX-ST Listing Rules
On 5 May 2022, the Singapore Exchange Regulation ("SGX RegCo") issued a Regulator's Column on "Duties of directors under the Listing Rules", elaborating upon its expectations on the duties of directors of issuers listed on the Singapore Exchange Securities Trading Limited ("Listed Issuers").

Under Singapore law, directors' duties and responsibilities can be found at common law as well as in legislation. For instance, the Companies Act 1967 sets out among other things, the duties and responsibilities of directors of Singapore-incorporated companies. Directors of Listed Issuers must note the interaction of their statutory duties with their obligations under the SGX-ST Listing Rules (Mainboard) and SGX-ST Listing Rules (Catalist), collectively, "Listing Rules".

In this Regulator's Column, SGX RegCo shared that what it expects of directors of Listed Issuers under the Listing Rules is aligned with what is expected of directors under Singapore law, namely the duties to: (a) act in good faith and in the best interests of the company; (b) avoid conflicts of interest; and (c) exercise due care, skill and diligence.

This Update highlights SGX RegCo's key expectations concerning the duties of directors of Listed Issuers under the Listing Rules, how directors are expected to fulfil them, and possible actions that SGX RegCo may take in the event of breaches of directors' duties under the Listing Rules. We also briefly include some practical comments for consideration.

Court's Power to Set Aside Garnishee Order and Order Return of Sums Paid
The Singapore courts are empowered to support arbitration proceedings in a number of ways, including through the granting of orders to aid in the enforcement of arbitral awards. However, what happens if the judicial decision to enforce the arbitral award is reversed on appeal to a higher court? Can the orders granted to aid enforcement be set aside? Can sums already paid be ordered to be returned?

These were the issues faced by the Singapore Court of Appeal in ST Group Co Ltd and others v Sanum Investments Limited [2022] SGCA 2, a dispute involving commercial arrangements in and parties from Laos. Here, an earlier Singapore Court of Appeal had previously set aside an order granting leave to the Respondent to enforce an arbitral award against the Appellants. Prior to the Court of Appeal's decision, and pursuant to the leave order, the Respondent had obtained a judgment in terms of the arbitral award and three garnishee orders, and had garnished sums from the Appellants.

After the Court of Appeal's decision, the Respondent refused to return the garnished sums to the Appellants. The Appellants thus applied to set aside the judgment and final garnishee orders, and for the return of the garnished sums.

The Singapore Court of Appeal here considered the existence and exercise of a Singapore court's inherent power to set aside a judgment and garnishee orders, and to order the return of sums paid pursuant to those garnishee orders in circumstances where the earlier order giving rise to the judgment and garnishee orders was reversed.

The Appellants were successfully represented by Francis Xavier, SC, Edwin Tan, Kristin Ng and Alvin Tay from Rajah & Tann Singapore LLP.

Visit our Arbitration Asia website for insights from our thought leaders across Asia concerning arbitration and other alternative dispute resolution mechanisms, ranging from legal and case law developments to market updates and many more.

Framework for Conditional Fee Agreements in Singapore Comes into Operation
Conditional fee agreements ("CFAs"), which were previously prohibited under Singapore law, are now allowed for specific contentious proceedings. On 4 May 2022, the framework for CFAs in Singapore came into operation, opening the door for lawyers and clients to enter into a wider range of permitted fee arrangements. This development has been keenly anticipated in the legal industry, serving to enhance litigation funding in Singapore and support the dispute resolution needs of businesses and individuals.

In this Update, we provide an overview of the key elements of the newly operational CFA framework, including the permitted types of CFAs, the situations in which CFAs are allowed, and the requirements for a valid CFA.

Building Green Data Centres – Singapore Lifts Moratorium on New Data Centres, Introduces Environmental Sustainability Standards
Data centres are important enablers of the digital economy, but are also intense consumers of resources. In Singapore, the Government had sought to manage the growth of data centres by imposing a moratorium on new data centre projects since 2019. However, there have been indications from the relevant Government Ministries that this moratorium is set to be lifted soon, albeit subject to certain prescribed environmental standards and restrictions. In doing so, Singapore seeks not only to balance digitalisations and decarbonisation, but to harmonise its efforts on both fronts.

In this Update, we look at the lifting of the moratorium on new data centres, the restrictions that may be imposed, and what it means for the technology industry on the sustainability front.

Additional Conveyance Duties to be Imposed on Transfers of Equity Interests in Property Holding Entities into Living Trusts
On 9 May 2022, the Stamp Duties (Amendment) Bill 2022 ("Bill") was introduced in Parliament. The Bill seeks to effect two main changes: (a) Introduce the Additional Conveyance Duties for Trust, which will be payable on transfers of equity interests in property-holding entities ("PHEs") into a living trust, provided the significant ownership threshold has been reached; and (b) Sets out the stamp duty payable on the renunciation of an interest in a residential property held on bare trust.

The Bill is part of the measures introduced by the Government to plug a gap in the existing Additional Conveyancing Duties and Additional Buyer's Stamp Duty regime relating to the transfer of property, or equity interests in PHEs, into a living trust. This Update provides a summary of the key points of the Bill.

CCCS’ Guide to Contractors on Fair Trading Practices for Renovation Industry
On 5 May 2022, the Competition and Consumer Commission of Singapore ("CCCS") published a Guide on Fair Trading Practices for the Renovation Industry ("Guide") with the intention of improving business practices in the renovation industry and reducing unfair practices by suppliers of interior design or renovation services ("Contractors").

The Guide comes in response to a high rate of complaints received by the Consumers Association of Singapore ("CASE") against Contractors in 2021 and Q1 2022. The majority of the complaints related to Contractors’ unsatisfactory service and failure to honour contractual obligations. These include poor workmanship, poor quality of material used for renovation, slow progress or failure to complete renovation works on time. The Guide was finalised with feedback from CASE and other stakeholders such as the Singapore Renovation Contractors and Material Suppliers Association, the Singapore Interior Design Accreditation Council and the Ministry of National Development.

Contractors should review the Guide carefully and adopt the recommended practices, to avoid the types of conduct that may constitute unfair practices under the Consumer Protection (Fair Trading) Act 2003 ("CPFTA"). We highlight that CASE will refer errant merchants to CCCS for investigation under the CPFTA for engaging in unfair practices and have been proven to do so.

In this Update, we briefly highlight the five areas of trading practices covered in the Guide, and the key Do’s and Don’ts. We also provide a checklist of key items that Contactors should set out in their renovation contracts.

Additional Buyer's Stamp Duty (ABSD) Imposed on All Transfers of Residential Property into Living Trust
When a residential property is transferred into a living trust, buyer's stamp duty is payable. Additional buyer's stamp duty ("ABSD") may also be payable, depending on the profile of the beneficial owners of the residential property transferred into the trust. The Singapore Government imposes ABSD on the transfer or sale and purchase agreements of residential properties in Singapore as part of the cooling measures on the purchase of residential properties.

On 8 May 2022, the Singapore Government announced changes to the ABSD regime by imposing ABSD at the rate of 35% for all conveyance, assignments or transfers on sale and purchase of residential properties into a living trust that occur on or after 9 May 2022 (regardless of whether there are identifiable beneficial owners of the residential properties) ("ABSD (Trust)"). ABSD (Trust) is to be paid upfront when the residential properties are transferred into the living trust, but is subject to remission if certain prescribed conditions are met.

This Update sets out a summary of the key changes to ABSD (Trust) and highlights some practical issues to note in determining the appropriate trust structure to hold residential properties for succession planning purposes.

Recoverability of Wage Payments Made to Seafarers by a P&I Club as Sheriff's Expenses – A Landmark Decision in India
The Indian courts, in the recent decision of the Bombay High Court in The Swedish Club v V8 Pool Inc. and Other. (Commercial Appeal Nos. 108 and 111 of 2021), were accorded the opportunity to pronounce upon whether crew wages incurred post-arrest could be ranked as Sheriff's (or marshal's) expenses. The judgment also considered whether recoupment of such wages, as well as sustenance provisions supplied by a Protection & Indemnity Club ("P&I Club") pursuant to the Maritime Labour Convention, are also to be treated as Sheriff's expenses by virtue of subrogation to all "top-drawer" recovery.

Rajah & Tann Singapore LLP was heartened by the opportunity to act alongside the P&I Club's Hong Kong offices, and to formulate legal submissions in conjunction with its Bombay counsel team. The Club was advised by Kendall Tan and Yip Li Ming from the Shipping & International Trade Practice.

MAS Consults on Revised Notices on Misconduct Reporting Requirements under Financial Advisers Act, Insurance Act, Securities and Futures Act
On 19 April 2022, the Monetary Authority of Singapore ("MAS") issued a Consultation Paper on "Revised Notices on Misconduct Reporting Requirements under the Financial Advisers Act, Insurance Act and Securities and Futures Act" ("2022 Consultation Paper"). This follows from a 2018 consultation exercise conducted by MAS where it sought views on, among other things, changes to misconduct reporting requirements under the Financial Advisers Act 2001 ("FAA"), Insurance Act 1966 ("IA") and Securities and Futures Act 2001 ("SFA"). MAS issued its Response to feedback received on the 2018 consultation in 2021.

At present, financial institutions ("FIs") are required under the FAA, IA and SFA to lodge a report with MAS when they become aware of misconduct committed by their representatives or broking staff. The misconduct reporting requirements are set out in the following existing MAS Notices: FAA-N14 Notice on Reporting of Misconduct of Representatives by Financial Advisers ("FAA Notice"); MAS 504 Notice on Reporting of Misconduct of Broking Staff by Insurance Brokers ("IA Notice"); and SFA 04-N11 Notice on Reporting of Misconduct of Representatives by Holders of Capital Markets Services Licence and Exempt Financial Institutions ("SFA Notice").

The 2022 Consultation Paper seeks comments on the proposed legal amendments to the FAA Notice, IA Notice and SFA Notice to implement the proposed changes to the misconduct reporting requirements. MAS also seeks views on the new prescribed templates for FIs to submit the misconduct and investigation reports to MAS. The 2022 consultation exercise closes on 20 May 2022.

This Update briefly highlights some of the key proposed changes to the misconduct reporting requirements following feedback from the 2018 MAS consultation and the new prescribed templates for misconduct and investigation reports.

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