Legal Updates for May 2023Key Issues in Opposing a Winding Up Application: Standing of Shareholders and the Basis of Abuse of Process
In Adcrop Pte Ltd v Gokul Vegetarian Restaurant and Cafe Pte Ltd [2023] SGHC 152, the Singapore High Court considered and clarified a number of key issues relating to winding up applications, including the relevant factors that the Court will consider in deciding whether shareholders of the company being wound up have standing to oppose the winding up application, and the Court's discretion to disallow a winding up application commenced as an abuse of process. The decision involved a winding up application that had been filed by a purported creditor against a company and was opposed by one of the company’s two shareholders.
The Court found that the opposing shareholder had standing to oppose the winding up application in her position as a shareholder (or contributory) of the company, even if the company was indisputably insolvent and there would be no returns to the shareholders after distribution to the creditors. The Court also found that the winding up application was commenced as part of a scheme to terminate the company and allow the other shareholder's new company to take over the company's business, and that the purported creditor's application was motivated by the collateral and improper purpose of advancing the scheme, and therefore the winding up application should be dismissed.
Amendments to OTC Derivatives Reporting Regime Expected to Commence in Oct 2024
The Monetary Authority of Singapore ("MAS") reporting regime for over-the-counter ("OTC") derivatives contracts started in 2013, and the enabling provisions are set out in the Securities & Futures (Reporting of Derivatives Contracts) Regulations 2013 ("SF(RDC)R"). To ease the aggregation of OTC derivatives data through standardisation and harmonisation of data elements, the International Organisation of Securities Commissions had issued three sets of Technical Guidance respectively on unique transaction identifier (“UTI”), unique product identifier (“UPI”) and other critical data elements (“CDE”).Earlier, MAS issued a Consultation Paper setting out the following key proposed amendments to the SF(RDC)R, namely:
- Adoption of the sets of Technical Guidance;
- Changes to the reportable data fields under the SF(RDC)R, including UTI, UPI, and CDE;
- Implementation timeline of revised requirements; and
- Adoption of the ISO 20022 XML message format for OTC derivatives reporting to the trade repository
On 16 May 2023, MAS shared the close-to-final revised SF(RDC)R and the Guidelines to the SF(RDC)R.
This Update provides a high-level outline of the key proposed amendments to the OTC derivatives reporting regime which are expected to commence in October 2024.
Managing Greenwashing Risks: A Southeast Asian Lens
As governments, corporates and individuals double down on efforts on their sustainability and environmental, social and governance (ESG) agenda, there are emerging concerns of "greenwashing" and whether products and services labelled as "green" or "sustainable" are indeed so. What exactly is "greenwashing" and are there legal and regulatory frameworks in place to deal with this?
In this Guide, we aim to provide you with the state of play in the greenwashing legal landscape from a Southeast Asian perspective. Each Country Chapter provides a summary of the existing laws and regulations in each of the nine Southeast Asia jurisdictions that are available for enforcing against greenwashing, as well as some of their key regulators' approaches and initiatives to set clear and enforceable standards on green claims, green credentials, green products or green investments.
Reiterating the Procedural and Substantive Requirements for a Moratorium for Schemes of Arrangement
The Insolvency, Restructuring and Dissolution Act 2018 (2020 Rev Ed) allows companies intending to propose a scheme of arrangement to apply to court for a moratorium, during which proceedings against the company would be restrained so as to allow breathing room for its restructuring efforts. In Re All Measure Technology (S) Pte Ltd (RHB Bank Bhd, non-party) [2023] SGHC 148, the Singapore High Court reiterated the applicable principles regarding the granting of a moratorium, including the procedural and substantive requirements.
The Court here dismissed an application for a moratorium, finding that the applicant had not complied with both the procedural and substantive requirements. Sim Kwan Kiat, Walter Yeo and Timothy Ang from Rajah & Tann Singapore LLP represented two of the opposing creditors in this application. Walter Yeo successfully argued the case for the main opposing creditor.
Towards the Harmonised Service of Documents Abroad - Singapore Accedes to the Hague Service Convention
On 16 May 2023, Singapore acceded to the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters ("Service Convention"), which provides a harmonised set of rules for the service of judicial and extrajudicial documents abroad. This means that litigants in Singapore will be able to utilise the simplified mechanism for service of documents on parties from other Contracting Parties to the Service Convention, providing for a more streamlined and cost-efficient process.
The Ministry of Law has stated that the Service Convention will enter into force on 1 December 2023 for Singapore. In this Update, we highlight the key features of the Service Convention and what it will mean for litigants in Singapore.
MAS Proposes Amendments to Subsidiary Legislation to Operationalise Revisions to Payment Services Act
On 8 May 2023, the Monetary Authority of Singapore issued a consultation paper ("Consultation Paper") on proposed amendments to the Payment Services Regulations 2019, existing notices applicable to payment service providers, and new proposed Regulations on exemptions for a specified period, in order to operationalise the amendments to the Payment Services Act 2019 ("PS Act") that were passed under the Payment Services (Amendment) Act 2021 ("Amendment Act") when they come into effect. Comments on the Consultation Paper must be submitted by 8 June 2023.
The Payment Services (Amendment) Bill was passed on 4 January 2021 and subsequently gazetted as the Amendment Act. On the date the Amendment Act comes into effect, the Amendment Act will make several key changes to the PS Act. In particular, the scope of payment services regulated under the PS Act will be expanded. The Amendment Act will also make other changes to the PS Act to align with the enhanced standards adopted by the Financial Action Task Force Standards applicable to digital payment token service providers to address money laundering and terrorism financing risks.
This Update highlights the key proposals in the Consultation Paper.
Data & Digital Economy: Beyond the Hype of the Metaverse
The latest feature in the line-up of 'next-big-things' has been the advent of the metaverse, which has promised to revolutionise lifestyle, commerce, and business. But as the hype cycle runs its course, and the industry begins to question the actual impact of the metaverse, it becomes increasingly important to look beyond the superficial and towards what the metaverse truly represents – the continued and exponential digitalisation of the world around us. From that vantage point, we can strip back the buzz and begin to see the real legal issues at play, which all revolve around the common axis of Data and Digital Economy. With the incremental advancement of the Data and Digital Economy space, individuals and businesses will be faced with both opportunities and challenges. The commercial and investment opportunities associated with digitalisation and the metaverse are vast, and businesses would be well advised to begin preparatory steps towards capitalising on such prospects.
However, this may be easier said than done. The developmental and exploratory nature of Data and Digital Economy means that there will be uncertainties abound regarding how to operate in this unfamiliar space. In particular, users and businesses will have to grapple with complex legal issues spanning numerous areas of law – issues that will require multi-disciplinary expertise to effectively navigate. In this article, we take a closer look at Data and Digital Economy and the concept of the metaverse, the various sectors to explore opportunities that may arise, as well as the respective legal issues that will undoubtedly be intertwined with such opportunities.
Proposals for Tighter Controls on Prospecting and Marketing of Financial Products in Singapore
To better protect retail investors in Singapore against inappropriate prospecting and marketing activities and tactics engaged by some financial institutions ("FIs") and their representatives, the Monetary Authority of Singapore ("MAS") is proposing various measures to address conduct risks and issues associated with these activities.
The proposed measures are set out in the following two consultation papers issued by MAS on 25 April 2023. Comments on the consultation papers must be submitted to MAS by 30 June 2023.
- Consultation Paper on Enhancing Safeguards for Proper Conduct of Prospecting Activities at Public Places and Telemarketing. This paper focuses on safeguards for prospecting and marketing activities by physical means and telemarketing.
- Consultation Paper on Enhancing Safeguards for Proper Conduct of Digital Prospecting and Marketing Activities. This paper focuses on safeguards for digital prospecting and marketing activities.
FIs should review the proposed measures set out in the MAS consultation papers and consider the impact of these proposals on their current prospecting and marketing practices.
This Update highlights some of the key proposed measures set out in the MAS consultation papers.
中国-新加坡跨境破产合作项目
作为中资企业热点投资地区之一的新加坡于 2017 年批准了《联合国国际贸易法委员会跨境破产示范法》（"示范法"）。该示范法代表了在破产程序中跨境承认和援助方面的一个重大进步，也为更有效的重组或跨地域的资产变现铺平了道路。 本文是对《示范法》以及有关外国破产程序的简要介绍。
Conducting Virtual or Hybrid Meetings for Companies, VCCs and BTs: Tabling of Bill, Amendment of Practice Notes
To allow various business entities to convene, hold, or conduct their general meetings despite various movement control orders during the COVID-19 pandemic, the COVID-19 (Temporary Measures) (Alternative Arrangements for Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts and Debenture Holders) Order 2020 ("Order") came into effect on 27 March 2020 and was extended multiple times.
Since then, almost all COVID-19 movement restrictions have been lifted. Accordingly, the Ministry of Law ("MinLaw") announced that the Order will be revoked on 1 July 2023.
On 18 April 2023, the Companies, Business Trusts and Other Bodies (Miscellaneous Amendments) Bill 2023 ("Bill") was tabled for First Reading in Parliament (and is expected to be tabled for Second Reading in May 2023). Among other matters, the Bill enables the continued utilisation of virtual and hybrid meetings. Key changes include:
- Clarifying that companies, variable capital companies ("VCCs") and business trusts ("BTs") have the option to conduct fully virtual or hybrid meetings; and
- Ensuring that the rights of the members of the companies and VCCs and unitholders of BTs to attend and participate in such general meetings are safeguarded.
To provide additional guidance on the conduct of general meetings for issuers (including an issuer that is a REIT or BT) primary-listed on the Mainboard of the Singapore Exchange Securities Trading Limited ("SGX-ST") and Catalist (collectively "Issuers"), the Singapore Exchange Regulation ("SGX RegCo") issued amendments to Practice Note 7.5 (General Meetings) of the SGX Mainboard Rules and Practice Note 7E (General Meetings) of the SGX Catalist Rules (collectively "Practice Notes"). Key changes include:
- Provisions relating to the conduct of hybrid general meetings; and
- Shareholders' rights to fully participate in such meetings.
In this Update, we cover the key points of the Bill and the Practice Notes relating to the holding of virtual or hybrid meetings.
Upcoming Changes to Criteria for Computing 90% Threshold for Compulsory Acquisition
On 18 April 2023, the Companies, Business Trusts and Other Bodies (Miscellaneous Amendments) Bill 2023 ("Bill") was tabled for first reading in Parliament, and is expected to be tabled for second reading in May 2023. Among other key changes, the Bill seeks to revise the exclusion criteria for the computation of the 90% threshold requirement for compulsory acquisition under section 215 of the Companies Act 1967 ("CA").
The compulsory acquisition provision under section 215 of the CA allows an acquiror ("acquiror") in a takeover offer who has acquired a very substantial number of shares in the target company (the "target company") to compulsorily acquire the shares of the minority dissenting shareholders. This allows the acquiror to convert the target company into a wholly-owned subsidiary, an important right if the objective of the takeover is to delist the target company.
Section 215 of the CA provides that the acquiror is entitled to exercise the right to compulsorily acquire the shares of any dissenting shareholders in the target company when the takeover offer for all the shares in the target company has been approved by shareholders who hold at least 90% of the shares of the target company ("90% threshold requirement").
The proposed amendment to section 215 of the CA will expand the scope of shareholders whose shares will be excluded from the computation of the 90% threshold requirement to, in broad terms, also cover shares owned by related parties who are controlled by the acquiror and shares owned by related parties who control the acquiror (as elaborated further within this Update).
This Update covers (a) the background to the proposed amendment to section 215 of the CA; and (b) the proposed amended 90% threshold requirement.
Court Grants Extension of Moratoria and Sealing of Documents in Restructuring of Cryptocurrency Business
In Re Babel Holding Ltd and other matters [2023] SGHC 98, the Singapore High Court had to apply restructuring and insolvency law in the context of a cryptocurrency-related business. The applicants were a group of companies in the cryptocurrency industry. Here, they successfully applied to extend moratoria under section 64 of the Insolvency, Restructuring and Dissolution Act 2018 to facilitate the formulation of a restructuring plan, as well as to seal certain documents relating to the group's creditors.
The decision demonstrates the application of Singapore's restructuring and insolvency framework to foreign companies and the Court's approach to the grant of moratoria and sealing orders in the particular circumstances of cryptocurrency and other digital businesses. This Update provides a summary of the key points of the decision.
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