Legal Updates

Legal Updates for November 2023

Regional Competition Conference 2023 Podcast Series – Panel 4
Sustainability and ESG have taken over the world like a storm. They are important considerations for business, even as countries tax carbon emissions. Even more importantly, supply chain disruptions have a direct impact on the production lines as well as on exports.

Titled “Sustainability and ESG – When trade flows and supply chains are impacted given ESG concerns, how does one work around this?”, episode 4 of our podcast series takes a pragmatic approach, examining critical questions that are reshaping industries:

• What must businesses do differently?
• What is the potential competition law impact as businesses seek to comply with sustainability requirements?
• Can they collaborate to improve on sustainability in the industry?
• What if a trade association recommends certain steps and all businesses follow?
• What is the impact of changing laws in the EU, US, UK and even Singapore have on trade in the region?

This episode offers more than insights; it provides a practical examination of the challenges and opportunities businesses encounter in the intricate tapestry of global trade influenced by ESG concerns.

Click to listen to this podcast.

The Rajah & Tann Asia Competition & Antitrust team remains engaged and up to date with the ever-evolving landscape of competition law in the region. Please reach out to us if you wish to further discuss these developments.

Three Documents and an Oral Agreement: Singapore Court of Appeal Determines if a Specific Term is Part of an Agreement
Disagreements as to the existence of contractual terms frequently occur between contracting parties. In Lim Siau Hing @ Lim Kim Hoe and another v Compass Consulting Pte Ltd and another appeal [2023] SGCA 39, the Court of Appeal was required to determine two related appeals concerning whether a specific term formed part of the agreement between the parties. Unfortunately, the agreement was primarily contained in three different documents, which – on their face – did not appear to bear an obvious nexus with each other and were not drafted by lawyers.

Mr Lim Siau Hing @ Lim Kim Hoe and Mr Lim Vhe Kai (collectively, "Lims") had appointed Compass Consulting Pte Ltd ("Compass") to structure a reverse takeover of a company ("RTO"). The Lims agreed to pay a success fee of S$1.1 million to Compass upon completion of the RTO. In addition, at a subsequent meeting, the parties agreed that Compass would be paid incentives in the form of bonus shares ("Bonus Shares") and a cash fee ("Cash Fee") for its services in respect of the RTO ("Agreement") provided certain conditions were satisfied, namely that the Lims' shares would be worth at least S$30 million and constitute at least 65% of the shares in the listed entity. The three material documents ("17 July Documents"), which contained the Agreement, were drafted by a representative of Compass and without any advice from lawyers. The parties agreed that the Agreement was partly written and partly oral. Following the completion of the RTO, the Lims duly paid the success fees of S$1.1 million. However, the Lims did not pay Compass the Bonus Shares and the Cash Fee, as the conditions had not been fulfilled.

When deciding the appeals, the Court of Appeal considered it imperative to consider the totality of the evidence surrounding the signing and preparation of the 17 July Documents and found that the 17 July Documents were meant to collectively evidence an oral agreement that was reached between the parties. The Court of Appeal agreed with the Lims and found that the Bonus Shares and the Cash Fee were not due to Compass as the agreed conditions relating to the RTO had not been fulfilled.

Kelvin Poon SC, Mark Cheng and Tan Tian Hui of Rajah & Tann Singapore LLP successfully represented the Lims, the Appellants in the appeal and Respondents in the cross-appeal.

Regional Competition Conference 2023 Podcast Series – Panel 3
In our latest episode of our podcast series for the Regional Competition Conference 2023, we delve into the intricate intersection of data protection regulations and competition law, with a focus on the challenges posed by data dominance.

Entitled “Regulation of Personal Data, Collection of Data, Usage and Management of Data, and AI and the cross-over impact from competition laws – How can businesses manage this multi-prong regulatory environment with different regulators?”, we explore how the collection and utilisation of data, especially by parties with significant data holdings, can establish dominance in the market. Discussing the digital market landscape, we also address the potential risks associated with AI, such as collusion and discriminatory practices, while acknowledging its role in enhancing competition through targeted marketing.

Click to listen to this podcast and join us as we navigate the complexities of persuading that data collection aligns with competition laws and implementing measures to prevent collusion and potential abuse.

The Rajah & Tann Asia Competition & Antitrust team remains engaged and up to date with the ever-evolving landscape of competition law in the region. Please reach out to us if you wish to further discuss these developments.

When does a Wine Become a "Prosecco"? Singapore Court of Appeal Sets out Approach to Geographical Indications Applications
Most of us are familiar with "Champagne" or "Bordeaux" wines. These are known as Geographical Indications ("GI"), which are signs or marks used to identify that certain goods originate from a particular region or territory, where a given quality, reputation or other characteristic of the goods is essentially attributable to their geographical origin. In the intellectual property regime, GIs play an important consumer protection role, much like trademarks do, but are far less explored in terms of judicial consideration.

In Consorzio di Tutela della Denominazione di Origine Controllata Prosecco v Australian Grape and Wine Incorporated [2023] SGCA 37, the Singapore Court of Appeal ("Court") considered an application for the registration of "Prosecco" as a GI in respect of wines in Singapore. This was the first time the Court of Appeal had to consider the operation and interpretation of various provisions under the Geographical Indications Act 2014 ("GIA"). The appeal concerned section 41(1)(f) of the GIA, which provides that a GI should not be registered if it contains the name of a plant variety or an animal breed and is likely to mislead the consumer as to the true origin of the product.

The Court allowed the application to register "Prosecco" as a GI, finding that the grounds of opposition had not been made out. In reaching its decision, the Court provided insight on how it would consider GI applications, the purpose of GI protection, and the proper approach to section 41(1)(f) of the GIA.

This Update provides a summary of the case and highlights the key elements of the Court's decision.

Significant Investments Review Bill Tabled in Parliament - New Investment Management Regime for Entities Critical to Singapore
On 6 November 2023, the Significant Investments Review Bill ("Bill") was introduced in Parliament. The Bill sets out a new investment management regime which seeks to strengthen the resilience of Singapore's economy and enhance Singapore's national security by ensuring the continuity of critical entities. Moreover, to provide a level playing field for all investors, the new investment regime will apply to both local and foreign investors. The approach of the new law is to address national security threats whilst still preserving Singapore's attractiveness to foreign investors.

To achieve this, only entities that are critical to Singapore’s national security interests will be designated under this new regime ("Designated Entities") and be regulated, rather than adopting an entire sector approach for regulation. Entities that have not been designated but have acted against Singapore's national security interests may also have their transactions reviewed under certain circumstances. This means that the designation is not finite and could potentially be undertaken ad hoc.

The Bill complements existing sectoral legislation, which extends to entities in sectors such as banking, insurance, telecommunications and utilities, where approvals are required for acquisitions that cross certain pre-fixed thresholds. The nature of the approval varies from sector to sector, with some akin to detailed market information being provided and the fact of competition not being affected being established. The approval approach for transactions involving a Designated Entity remains to be seen.

In this Update, we consider the key aspects of the Bill.

CCCS Greenwashing Study and Upcoming Guidelines
Greenwashing has gained considerable prominence in recent times. This naturally followed the growth and importance of environmental sustainability in the global landscape. Greenwashing practices refer to conduct that deceives or misleads consumers on the alleged environmental benefits of products or services. The Competition and Consumer Commission of Singapore ("CCCS") has just issued a report from a commissioned study on greenwashing in online marketing ("Greenwashing Study"), which reviewed environmental claims made on over 1,000 products offered on the 100 most visited e-commerce sites by Singapore residents in October 2022, and seeks to provide guidance on next steps. We set out an overview of the key findings from the Greenwashing Study, the practices that CCCS may potentially cover in its upcoming guidelines, and the potential impact on businesses.

First of its Kind Generative AI Evaluation Sandbox for Trusted AI
Trust is at the core of most, if not all, successful ventures, initiatives and relationships. This human concept extends to the digital realm, and the advancement of artificial intelligence ("AI") solutions into an ever-increasing number of everyday tasks brings the issue of trusted AI models clearly into the limelight.

Seeking to ensure that generative AI is utilised in a safe and responsible manner where trust is sustained, the Infocomm Media Development Authority ("IMDA") and the AI Verify Foundation announced, on 31 October 2023, the first of its kind Generative AI Evaluation Sandbox ("Sandbox"). The Sandbox will bring together key global players to build capabilities in the testing and evaluation of generative AI and is part of efforts to have a common standard approach to assess generative AI. The Sandbox utilises a new draft Evaluation Catalogue that sets out common baseline methods and recommendations for Large Language Models ("LLMs").

In this Update, we briefly explore the risks associated with generative AI models, the key aspects of the Sandbox and how Rajah & Tann can help you successfully navigate the myriad of issues relating to the adoption of AI solutions to meet your business needs.

Regional Competition Conference 2023 Podcast Series – Panel 2
Introducing Part 2 of our podcast series for the Regional Competition Conference 2023, where we delve into insightful conversations with our next panel of distinguished competition lawyers.

Entitled "How to manage a regional M&A transaction from a competition law perspective?", this panel takes you on a journey through the intricacies of managing an M&A transaction while adhering to competition law regulations. We explore the hypothetical scenario of an M&A transaction and discuss the practical aspects of addressing competition law considerations. We also cover the essential elements of complying with merger control requirements in the region.

Click to listen to this podcast, equipping yourself with the knowledge to confidently navigate the complex terrain of competition laws.

The Rajah & Tann Asia Competition & Antitrust team remains engaged and up to date with the ever-evolving landscape of competition law in the region. Please reach out to us if you wish to further discuss these developments.

Dealing with Digitally-Enabled Scams – MAS and IMDA Launch Consultations on Duties and Liability of Financial Institutions and Telcos
As digital payments and transactions continue their rapid growth, so too has the risk posed by digitally-enabled scams. The Singapore regulators have sought to implement greater certainty in this regard by introducing relevant frameworks and guidelines. The Monetary Authority of Singapore ("MAS") and the Infocomm Media Development Authority ("IMDA") are now looking to establish specific measures to address the responsibilities, duties and liability of the relevant parties – in particular, financial institutions ("FIs") and telecommunication operators ("Telcos"). The following consultations have been launched:

• Shared Responsibility Framework: MAS and IMDA published a joint consultation paper proposing a Shared Responsibility Framework ("SRF") specifically dealing with phishing scams. The SRF sets out anti-scam duties for FIs and Telcos and proposes a "waterfall approach" for sharing losses.
• E-Payments User Protection Guidelines: MAS also published a consultation paper on proposed enhancements to the E-Payments User Protection Guidelines ("EUPG"). The enhancements seek to address digitally-enabled scams by including established anti-scam measures and enhancing the duties of responsible FIs and consumers.

Major Payment Institutions, Exempt Payment Services Providers to Note SGQR Guidelines Taking Effect On 1 Dec 2023
The Singapore Quick Response Code ("SGQR") is a single standardised quick response ("QR") code for e-payments and combines multiple payment schemes into a single SGQR label. The Monetary Authority of Singapore has set out its expectations on Relevant Merchant Acquirers who participate in the SGQR scheme in the earlier issued Guidelines on Participation in the SGQR Scheme ("Guidelines"). A "Relevant Merchant Acquirer" refers to any major payment institution or any exempt payment service provider under the Payment Services Act 2019 that provides merchant acquisition service to any merchant through a static QR code at that merchant’s physical place of business. The Guidelines takes effect on 1 December 2023. This Update outlines key aspects of the Guidelines.

Balancing Rights within the Collective Management Ecosystem - Class Licensing Scheme for Collective Management Organisations
Collective Management Organisations ("CMOs") perform a vital role in Singapore's creative sector by acting as a conduit between content rights owners and content users. CMOs represent thousands of content rights owners in Singapore and provide content users with efficient and cost-effective access to protected content.

Seeking to enhance Singapore's collective management ecosystem, the Copyright (Collective Management Organisations) Regulations 2023 ("Regulations"), which are made pursuant to Part 9 of the Copyright Act 2021, were gazetted on 31 October 2023. The Regulations set out a new CMO class licensing scheme ("Licensing Scheme"), which will come into operation on 1 May 2024.

The Licensing Scheme seeks to achieve a well-functioning collective management ecosystem by raising standards of transparency, accountability, efficiency and good governance amongst CMOs. It applies a light-touch model of regulation targeted at five critical areas, while leaving CMOs with the flexibility to choose how to best comply with the licence conditions.

In this Update, we consider the key aspects of the forthcoming Licensing Scheme.

Recognising Foreign Proceedings under Singapore's Restructuring and Insolvency Regime: Court of Appeal Clarifies Whether Company Must be Insolvent
The UNCITRAL Model Law on Cross-Border Insolvency, which has been enacted in Singapore in an adapted form ("SG Model Law"), sets out a framework for the effective management of cross-border insolvency proceedings, allowing courts to recognise foreign restructuring and insolvency proceedings and foreign representatives. In Ascentra Holdings, Inc (In Official Liquidation) & 2 Ors v SPGK Pte Ltd [2023] SGCA 32, the Singapore Court of Appeal was faced with a fundamental question regarding the scope of the SG Model Law - whether a company has to be insolvent before the relevant proceedings may be regarded as foreign proceedings.

The Court held that the SG Model Law does not require a company to be insolvent or in severe financial distress before a proceeding concerning that company may be recognised as a foreign proceeding, and that it is sufficient if the law under which the relevant proceeding is conducted includes provisions dealing with the insolvency of a company or the adjustment of its debts. Here, the appellant company was undergoing a voluntary liquidation in the Cayman Islands along a legislative "track" which applied to solvent companies. The Court held that this qualified as a foreign proceeding under the SG Model Law and recognised it as a foreign main proceeding in Singapore.

Lee Eng Beng SC and Walter Yeo of Rajah & Tann Singapore LLP successfully represented the appellants as instructed counsel in this appeal.

Regional Competition Conference 2023 Podcast Series – Panel 1
Rajah & Tann Asia's Regional Competition Conference was successfully held in Bangkok in October 2023. In case you were not able to join us for the live event, we are pleased to introduce our new podcast series capturing key highlights of the conference.

Part 1 of the podcast series will immerse you in the thought-provoking discussions of the first panel, titled "Cartels, Abuse of Dominance and Unfair Trade Practices – Impact on Your Day-to-Day Business and Transactions in Thailand and the Region". This session takes a practical look at the impact of competition laws on your business in the following areas:

1. your everyday business, whether you are selling or manufacturing and distributing;
2. planned collaborations with your customer or supplier or customer; and
3. what actions may be deemed unfair practices.

We analyse the concept of market power and share real-life examples of enforcement actions by regulators in the region and the associated penalties. Our discussion also illuminates regulators' information sharing and communication practices, shedding light on the regional enforcement landscape. While doing so, we explore the nuanced topic of leniency, addressing its significance, even in the absence of a formal leniency program in Thailand.

Click to listen to the podcast, empowering yourself to navigate the complex landscape of competition laws.

The Rajah & Tann Asia Competition & Antitrust team remains engaged and up to date with the ever-evolving landscape of competition law in the region. Please reach out to us if you wish to further discuss these developments.

MAS Consults on Repealing Registered Fund Management Companies (RFMC) Regime
On 24 October 2023, the Monetary Authority of Singapore ("MAS") published the Consultation Paper on Repeal of Regulatory Regime for Registered Fund Management Companies which (i) proposes to repeal the regulatory regime for Registered Fund Management Companies ("RFMCs") as part of enhancing the regulatory regime for fund management companies and (ii) sets out MAS' proposed transitional arrangements for existing RFMCs that intend to continue to carry on fund management business following the repeal. Existing RFMCs that are in operation may apply to become licensed fund management companies (LFMCs) that are restricted to serve accredited or institutional investors. Feedback should be submitted by 31 December 2023. This Update spotlights the salient aspects of the new revised simplified regime after the repeal of the RFMC regime.

Bankruptcy Regime Administered by Private Trustees in Bankruptcy in Effect from 1 November 2023
From 1 November 2023, bankruptcy estates are required to be administered by Private Trustees in Bankruptcy ("PTIBs"), except for cases where the Official Assignee ("OA") considers there is public interest and consents to be appointed as the trustee in bankruptcy. The amendments also introduce certain changes to protect persons dealing with bankrupts and provide continued support to the PTIB industry.

This marks a significant development for Singapore’s personal bankruptcy regime, where the OA would previously act as the trustee administering the bankruptcy in most cases. In this Update, we highlight the key features of the amendments that have come into force.