Legal Updates for March 2023Consultation on Bill to Enhance Oversight of Goods Passing through Free Trade Zones
On 20 March 2023, the Ministry of Finance ("MOF") announced that it is proposing legislative amendments to the Free Trade Zones Act 1966. The amendments will update and strengthen the free trade zone ("FTZ") regime and thereby support Singapore’s position as a trusted global trade hub by: (i) enabling the better detection, deterrence and prevention of money laundering, associated predicate offences and terrorism financing; and (ii) protecting Singapore’s financial system against illegal activities and illicit fund flows.
This Update provides a summary of the key changes proposed in the draft Free Trade Zones (Amendment) Bill ("Bill"), which include: (i) the proposed requirements for licensed FTZ operators, licensed FTZ cargo handlers, shipping agents and air cargo agents; and (ii) the proposed regulatory and enforcement regime.
MOF is seeking comments on the draft Bill. The draft Bill is released only for the purpose of the public consultation and does not represent the final legislation. The public consultation is open till 9 April 2023. As the draft Bill will introduce significant changes that will affect industry players, we recommend carefully reviewing the draft Bill and providing comments or concerns, if any, to MOF.
How the Courts are Dealing with Crypto Disputes – Recent Developments in Crypto Asset Litigation across Jurisdictions
The crypto market has been through a tumultuous past year. Within months, the market went from all-time highs to the coldest crypto winter as Three Arrows Capital cratered, spreading a contagion that consumed the likes of Celsius, Voyage, TerraLuna and FTX amongst others. Meanwhile, the industry continues to be ravaged by crypto crime, with Chainalysis reporting crypto scam 'revenue' at US$5.9 billion in 2022 led by 'investment'-type scams. These developments have led to an uptick in crypto litigation.
In this Update, we explore the notable crypto litigation developments in the past year, taking a closer look at significant cases from Singapore, the UK, and the US. We examine how the courts are dealing with key issues in crypto disputes, including issues of jurisdiction, service of court documents, and the duties of blockchain developers and crypto exchanges.
New Anti-Money Laundering and Terrorism Financing Measures for Property Developers to be Implemented from 28 June 2023
Property developers can soon expect to be subject to new requirements regarding anti-money laundering and terrorism financing ("AML") measures. Earlier introduced in Parliament in 2018, these measures are now set to be implemented from 28 June 2023. The main measures are as follows:
Introduction of requirements for developers to facilitate the detection of money laundering and terrorism financing; and Barring persons from being involved in developer activities if they have been previously convicted for money laundering and terrorism financing offences.
This Update provides a summary of the AML measures set to be implemented and highlights the key requirements which developers should be aware of.
MAS Imposes Business Conduct Requirements for Corporate Finance Advisers, with Effect from 1 October 2023
On 23 February 2023, the Monetary Authority of Singapore ("MAS") issued a new Notice SFA-04-N21 on "Business Conduct Requirements for Corporate Finance Advisers" ("Notice"). The Notice imposes a mandatory baseline standard of conduct for corporate finance advisers. MAS views this exercise to be important for enhancing the overall quality of the corporate finance industry, strengthening public confidence and promoting informed decision making by investors via quality disclosures.
The Notice applies to holders of a capital markets services licence to advise on corporate finance, and persons who are exempted from holding a capital markets services licence under Section 99(1)(a), (b) or (c) of the Securities and Futures Act 2001 of Singapore in respect of advising on corporate finance, which include banks, merchant banks, and finance companies (each a “CF Adviser”) and their representatives in respect of advising on corporate finance.
Part 1 of the Notice applies when a CF Adviser advises on corporate finance and pertains to: (1) identifying and mitigating any potential or actual material conflict between the CF Adviser’s interests and the interests of the customer and disclosing, to the extent appropriate, any such conflict to the customer; and (2) ensuring proper governance and supervision of the CF Adviser’s business.
Part 2 of the Notice covers the due diligence requirements. The Due Diligence for Transactions Generally requirement in paragraph 19 of the Notice applies when a CF Adviser advises on corporate finance, other than as provided in paragraph 3(a)(i) of the Notice. The remainder of Part 2 of the Notice applies when giving advice on corporate finance in the capacity of an issue manager, sponsor or financial adviser (as the case may be) for entities listed or to be listed on the Singapore Exchange Securities Trading Limited relating to:
- an initial public offer of shares, units in a business trust or collective investment scheme ("IPOs");
- a reverse takeover ("RTOs"); and
- a business combination entered into by a special purpose acquisition company.
The Notice comes into effect on 1 October 2023 and applies to all engagements to advise on corporate finance entered into by a CF Adviser on or after 1 October 2023. Nonetheless, CF Advisers are encouraged to start applying the requirements in the interim, particularly when advising on IPOs and RTOs.
This Update provides a summary of the salient requirements in the Notice.
Determining an Employer's Liability for Employee's Copyright Infringement - Court Finds Employer Vicariously Liable for Use of Unauthorised Software
In the Singapore High Court case of Siemens Industry Software Inc v Inzign Pte Ltd [2023] SGHC 50, the Court found the defendant employer to be liable for its employee’s actions in installing an unauthorised version of a commercial software onto a laptop which he found at his workplace. In reaching its decision, the Court considered a number of key issues, including the novel question of whether the doctrine of vicarious liability in tort extends to cases involving copyright infringement.
The Court's decision also provides guidance on issues of employment law, including the adequacy of administrative controls over office IT equipment, the supervision and management of employees, and internal policies relating to technology, training and anti-software piracy. This Update provides a summary of the Court's decision and highlights the key takeaways for employers.
MAS Sets Out Revised Expectations for Notification of Data Breaches by Licensed Insurers
Data breaches are a key concern for organisations, particularly in light of the increasing incidents of data leaks. As part of Singapore's regulatory framework to protect personal data, there are various requirements in place regarding notification of data breaches to the relevant authorities. For licensed insurers, which collect and hold large quantities of personal data, it is important to be aware of the applicable notification requirements and timelines.
On 22 February 2023, the Monetary Authority of Singapore ("MAS") issued Circular No. ID 03/23 – Notification of Data Breaches to the Monetary Authority of Singapore ("Circular 03/23"). Circular 03/23 sets out the revised expectations for licensed insurers regarding notifying MAS of data breaches. This Update highlights the applicable notification requirements for the prescribed categories of data breaches, as well as the relevant timelines for notification, under Circular 03/23.
New Regulations for Filing-Based Administration of Overseas Securities Offering and Listing by Domestic Companies
On 17 February 2023, the China Securities Regulatory Commission published new regulations for the filing-based administration of overseas securities offering and listing by companies that are incorporated in the People's Republic of China and the domestic operating entities of companies whose securities are indirectly offered and listed overseas (collectively referred to as "domestic companies"). The new regulations, which will come into effect on 31 March 2023, establish a filing-based approach instead of the current approval-based approach.
The new regulations are made up of six sets of documents, namely, the "Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (境内企业境外发行证券和上市管理试行办法)" ("Measures") and five supporting guidelines.
This Update provides a broad overview of several key areas under the Measures that may be of significance to domestic companies seeking to carry out a direct or indirect offering of securities and listing on an overseas securities exchange.
Landmark Singapore Decision on GST Liability for Goods Sold via Direct Selling Business Model
The recent landmark decision of Herbalife International Singapore Pte Ltd v Comptroller of Goods and Services Tax [2023] SGHC 54 lays down the principles in calculating the Goods and Services Tax ("GST") liability for goods sold via a direct selling model where the goods are supplied only to members who are registered with the business ("Members") at a discount and the Members may in turn sell the goods to consumers. The primary issue before the Singapore High Court was whether GST should be levied on the discounted rate of goods sold by the business to its Members or the open market value of the goods. Ruling in favour of the business in this case, Herbalife International Singapore Pte Ltd ("Herbalife"), the Singapore High Court held that it should be the discounted rate of the goods. The Singapore High Court’s decision provides helpful guidance on the meaning of consideration under GST law and whether contractual undertaking of obligations could constitute non-monetary consideration for the purposes of section 17(3) of the Goods and Services Tax Act 1993.
This landmark decision will impact all direct marketing companies. Herbalife was represented by Vikna Rajah, Head of Tax & Trust practice and Co-Head of Private Wealth practice, and Koh Chon Kiat, Senior Associate in the Tax & Trust practice.
In this Update, we consider the decision of the Singapore High Court.
Receivership vs Judicial Management – Court Considers Interplay of Regimes in Insolvent Company
When a company enters financial trouble, the Singapore restructuring and insolvency framework provides a number of avenues through which the rights of the company's creditors may be addressed. In Yap Sze Kam v Yang Kee Logistics Pte Ltd [2023] SGHC 43, the Singapore High Court was faced with a scenario where it had to consider the interplay between the judicial management regime and the receivership regime. The case involved bondholders, with a debt of about S$110 million, who had appointed receivers over the majority of the shares of the relevant companies, thus achieving effective control of the companies. However, a creditor and a founder of the companies sought to appoint judicial managers over the companies instead.
The Court declined to appoint judicial managers in the circumstances, finding that it would not achieve the statutory purposes of judicial management, and would not be in the best interests of the creditors as a whole. The decision demonstrates the areas where conflict may arise between the receivership and judicial management, and how the Court may resolve such tensions by addressing the interests of the various groups of creditors.
Jansen Chow of Rajah & Tann Singapore LLP successfully represented one of the largest bondholders in this matter.
Changes to Healthcare Services Act Introduced in Parliament to Enhance Regulatory Framework
The Healthcare Services (Amendment) Bill ("Bill") was introduced in Parliament on 6 February 2023. This follows a public consultation conducted by the Ministry of Health ("MOH") from 12 October 2022 to 11 November 2022 to seek feedback on the proposed amendments to the Healthcare Services Act ("HCSA") aimed at, inter alia, enhancing the regulatory regime governing healthcare services and ensuring greater clarity and transparency in healthcare services advertising. The HCSA amendments are targeted for implementation in June 2023.
To recap, the HCSA was enacted in 2020 to replace the Private Hospitals and Medical Clinics Act ("PHMCA") to better safeguard the safety and well-being of patients amidst the changing healthcare environment in Singapore and the evolving development of innovative healthcare services.
The HCSA is being implemented progressively in three phases, with Phase 1 completed in January 2022. In its press release dated 12 October 2022 when it launched the public consultation, MOH had indicated that the implementation would be completed in end-2023 when the PHMCA will be repealed.
This Update provides a very broad overview of the key features of the Bill. Where there are specific questions and issues, these may not be covered in this Update but you are encouraged to reach out to the contacts stated herein.
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